Annual report 2013 lasko group

LAŠKO GROUP

ANNUAL REPORT

2013

LAŠKO GROUP

ANNUAL REPORT

2013

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CONTENTS

1. INTRODUCTION 4

1.1 Address by the Chairman of the Management Board of Pivovarna Laško, d. d. 5

1.2 Report of the Supervisory Board on the verification of the Annual Report 7

1.3 Data on the operations of the Laško Group 11

1.4 Data on the operations of Pivovarna Laško 15

1.5 Vision, mission, and strategic goals 20

1.6 Presentation of the Laško Group 21

1.7 Presentation of the parent company Pivovarna Laško 24

2. BUSINESS REPORT 26

2.1 Corporate governance 27

2.2 Statement on corporate governance and compliance

with the Corporate Governance Code 42

2.3 Report of the Management Board of Pivovarna Laško

on dependency according to Article 545 of the Companies ACT (ZGD-1) 46

2.4 Amended report of the Management Board of Pivovarna Laško

on dependency according to Article 545 of the Companies ACT (ZGD-1) 50

2.5 Shareholders 52

2.6 Sales and marketing 61

2.7 Supply flows 70

2.8 Quality and standards 72

2.9 Investments 79

2.10 Performance analysis 85

2.11 Risk management 89

2.12 Financing and sale of the investments 94

2.13 Overview of significant events in 2013 99

2.14 Development landmarks 109

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3. SUSTAINABLE DEVELOPMENT 112

3.1 Human resources management in the Laško Group 113

3.2 Communications 117

3.3 Corporate responsibility 119

3.4 Environmental protection 120

4. FINANCIAL REPORT OF THE LAŠKO GROUP 132

5. FINANCIAL REPORT OF PIVOVARNA LAŠKO, D. D. 232

L A Š K O G R O U P , A N N U A L R E P O R T 2 0 1 3

I N T R O D U C T I O N

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1INTRODUCTION



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1.1

address by the chairman

of the management board

of pivovarna laško, d. d.

IN 2013, THE LAŠKO GROUP WAS HEAVILY INVOLVED IN PROCESSES RELATING TO SELLING-OFF ASSETS

WITH THE AIM OF REDUCING THE GROUP’S DEBT AND GROWING SALES IN THE MOST IMPORTANT FOREIGN

MARKETS.

Dear Shareholders, esteemed Business Partners and Colleagues!

THE ECONOMIC CONDITIONS IN 2013 WERE DIFFICULT

Especially on the domestic market, and partly also on the most important markets in the region,

the economic conditions continued to worsen in 2013. The economic crisis has had a further negative

impact on sales of consumer goods, especially beverages. At the Laško Group we were pleased to see

that our most important brands retained their market position on the domestic market; at the same

time, we were able to substitute a substantial part of the lost sales by improving our market presence

and taking advantage of synergies on our most important foreign markets. Companies in the Laško

Group succeeded in retaining their fairly high margins, resulting in good current performance results.

All global producers of beverages and beers found the economic conditions of the first part of 2013

difficult due to the long and cold winter, as all the largest global breweries recorded declining sales in

the first four months of the year. The market conditions in Slovenia were even more demanding due to

the increase in taxes and a significant drop in the purchasing power of households. In 2013 we gener-

ated EUR 267 million of net sales revenue and a normalised EBITDA of EUR 41.8 million.

ASSET SALES AIMED AT REDUCING THE DEBT OF THE LAŠKO GROUP

The operations of the Laško Group continue to be hindered by the high debt that arose due to the

wrong decisions taken by the Group’s former management. In 2013 we succeeded in agreeing loan



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rescheduling with our crediting banks - initially until the autumn, and then until April 2014. At the

same time we regularly settled our liabilities relating to loan interest and principal.

We began proceedings aimed at selling our holdings in Radenska, Delo, and Birra Peja in order to

significantly reduce the Group’s debt. These proceedings are continuing in accordance with the deter-

mined timeline and they are expected to be concluded in 2014. The process of disposing of the invest-

ment in Večer is underway. The Laško Group is also member of the consortium selling a majority stake

in Mercator. In June 2013, the consortium concluded an agreement with the potential investor Agrokor,

namely the only investor that offered to pay for Mercator shares at the international tender that was

conducted at that time. Providing all the stakeholders fulfil their contractually-agreed obligations and

activities, the transaction is expected to be completed in the summer of 2014.

Upon the successful completion of the currently pending asset sale procedures and the capital in-

crease of Pivovarna Laško, the Laško Group will have in a relatively short time deleveraged to a sustain-

able level that will allow the Group to develop high-quality brands for future generations and preserve

jobs. At the end of April, the Group concluded a Loan Restructuring Agreement by the end of 2016 with

the crediting banks, ensuring financial stability by respecting the agreed milestones and conditions.

OPERATIONAL RATIONALISATION, CARE FOR BRANDS AND CORPORATE SOCIAL RESPONSIBILITY

In light of the expected difficult market conditions, in 2013 the Laško Group rationalised opera-

tions and optimised costs in all Group companies. We have harmonised the workplace systematisation

across all companies and concluded a new collective agreement. Risk management has helped us

ensure that the current operating results in 2014 will also be favourable.

In the first half of 2013 the Laško Group brands were very successful at international quality compe-

titions - even at the most prestigious “Monde Selection”. The handy 10-bottle case, which aims to en-

courage our customers to use more environmentally-friendly and cheaper returnable packaging when

purchasing beer and Radenska water, also received a prestigious regional award. In 2013, the Laško

Group remained the largest sponsor of Slovenian sports and actively helped organise the European

Basketball Championship, the largest sporting event in the history of independent Slovenia. As part

of its social corporate responsibility, the Company supported various projects in the local community,

culture and other activities.

Despite the challenging economic conditions in 2013, Laško Group companies recorded good op-

erating results from current operations. This, combined with the anticipated corporate deleveraging,

is a source of optimism, as our top brands constantly prove that we are able to counter even the most

challenging market conditions.

mag. Dušan Zorko

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



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1.2

report of the supervisory board on the

verification of the annual report

THE SUPERVISORY BOARD APPROVED THE AUDITED ANNUAL REPORT OF THE LAŠKO GROUP AND

PIVOVARNA LAŠKO, D. D. FOR 2013 AT ITS TENTH SESSION HELD ON 30 APRIL 2014.

COMPOSITION OF THE SUPERVISORY BOARD

In the 2013 financial year, the Supervisory Board of the Company was comprised of the following

members:

CAPITAL REPRESENTATIVES

Dr Peter Groznik, Member (Chairman since 5 September 2013)

Mr Goran Brankovič, Member (since 1 September 2013)

Mr Jože Bajuk, Member (since 1 September 2013)

Dr Vladimir Malenković, Chairman (up to 31 August 2013)

Dr Borut Bratina, Member (up to 31 August 2013)

Mr Borut Jamnik, Member (up to 31 August 2013)

Mr Enzo Smrekar, Member (between 1 September 2013 and 12 December 2013)

EMPLOYEE REPRESENTATIVES

Mr Bojan Cizej, Deputy Chairman

Mag. Dragica Čepin, Member

COMPOSITION OF THE SUPERVISORY BOARD COMMITTEES

The Audit Committee, Human Resources Committee and Documentation Review Committee oper-

ated within the Supervisory Board in 2013. A Benchmark Committee was founded at the end of 2013

and began operating in early 2014.

AUDIT COMMITTEE

Dr Peter Groznik, Chairman (up to 5 September 2013)

Mr Jože Bajuk, Chairman (since 18 December 2013)

Mr Bojan Cizej, Member

Mr Igor Teslić, External Member



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HUMAN RESOURCES COMMITTEE (CEASED OPERATING AS OF 18 DECEMBER 2013)

Mr Borut Jamnik, Chairman (up to 31 August 2013)

Dr Borut Bratina, Member (up to 31 August 2013)


DOCUMENTATION REVIEW COMMITTEE (BETWEEN 7 NOVEMBER 2013 AND 12 DECEMBER 2013)

Mr Jože Bajuk, Chairman

Dr Peter Groznik, Member

Mr Bojan Cizej, Member


BENCHMARK COMMITTEE (SINCE 18 DECEMBER 2013)

Mr Goran Brankovič, Chairman


Dr Peter Groznik, Member (up to 31 March 2014)

Mr Keith Miles, Member (since 1 April 2014)

FUNCTIONING OF THE SUPERVISORY BOARD

The operations of Pivovarna Laško, d. d. and the Laško Group were monitored by the Supervisory

Board of Pivovarna Laško, d. d., in accordance with the statutory provisions and the Articles of Associa-

tion of Pivovarna Laško, d. d. In 2013, the Supervisory Board met at 10 regular and 4 correspondence

sessions.

The Supervisory Board continuously reviewed the work of the Management Board throughout 2013.

The Supervisory Board paid special attention to monitoring the key capital adequacy and solvency

ratios of Pivovarna Laško, d. d., the disposal of the investments of companies in the Laško Group,

especially the disposal of Mercator, d. d. shares, activities related to the restructuring of the financial li-

abilities of Pivovarna Laško, d. d. and Laško Group companies, cost management, material legal issues

and verifying achievement of the operating results. The Supervisory Board constantly dealt with these

issues which were regular items on the agenda of the Supervisory Board’s sessions.

KEY RESOLUTIONS OF THE SUPERVISORY BOARD IN 2013

In addition to the above-mentioned issues, the Supervisory Board also discussed other current mat-

ters and adopted the following key resolutions:

• 7 March 2013: the Supervisory Board was briefed on the project of operational and financial restruc-

turing of the Laško Group,

• 20 March 2013: the Supervisory Board approved the audited Annual Report of Pivovarna Laško, d.

d. and the Laško Group for 2012,

• 16 May 2013: the Supervisory Board proposed the General Meeting should appoint the audit firm

Ernst & Young, d. o. o., Ljubljana, as auditor of the financial statements for 2013,

• 14 June 2013: the Supervisory Board was briefed on the contents of the share purchase agreement

for Poslovni sistem Mercator, d. d. and gave its consent to Pivovarna Laško, d. d. selling 317,498

ordinary registered shares with the MELR ticker symbol issued by Poslovni sistem Mercator, d. d.,

representing a 8.43% share at a fixed price of EUR 120 per share, to Agrokor, d. d., Trg Dražena

Petrovića 3, Zagreb,



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• 29 August 2013: the Supervisory Board charged the Management Board with concluding a contract

on the audit of transactions conducted at Birra Peja with Ernst & Young, d. o. o., and to immediately

implement such a contract,

• 5 September 2013: the Supervisory Board appointed Dr Peter Groznik as the Chairman of the Su-

pervisory Board of Pivovarna Laško, d. d.,

• 18 November 2013: the Supervisory Board agreed to the Management Board of Pivovarna Laško, d. d.,

signing the Term Sheet, the contents of which materially equal those in the Term Sheet the Su-

pervisory Board was briefed on, and the Restructuring Agreement consistent with the concluded

Term Sheet,

• 18 November 2013: the Supervisory Board instructed the Management Board to start looking for a

strategic partner for the Company,

• 17 December 2013: the Supervisory Board was briefed on the report on the operating restructuring

measures of the Laško Group,

• 17 December 2013: the Supervisory Board approved the Business Plan of the Laško Group and

Pivovarna Laško, d. d. for the 2013 financial year.

FUNCTIONING OF THE AUDIT COMMITTEE

The Audit Committee met six times in 2013. The Committee discussed the findings and recommen-

dations of the external audit firm Deloitte, d. o. o., Ljubljana based on their prior audit of the financial

statements for 2012 and the audited Annual Report of the Laško Group and Pivovarna Laško, d. d., for

2012, it was briefed on the bids received from audit firms for the audit of the financial statements of

the Laško Group for 2013, and proposed the Supervisory Board select the audit firm Ernst & Young, d.

o. o., Ljubljana, analysed individual transactions of the Laško Group, discussed the Semi-annual report

of the Laško Group and Pivovarna Laško, d. d. for 2013, and was regularly briefed on the operations of

the internal audit department. The Audit Committee regularly reported to the Supervisory Board on

its findings.

FUNCTIONING OF THE HUMAN RESOURCES COMMITTEE

The Human Resources Committee met twice in 2013. Pursuant to the Supervisory Board’s resolu-

tion, the Supervisory Board’s Human Resources Committee conducted proceedings for obtaining can-

didates for members of the Supervisory Board of Pivovarna Laško, d. d. - namely capital representatives

as the mandates of the existing Supervisory Board capital representatives expired on 31 August 2013. At

its session on 17 April 2013, the Human Resources Committee discussed the candidates for members

of the Supervisory Board. On this basis, at its sixty-second session on 26 April 2013, the Supervisory

Board drafted its proposal for a General Meeting resolution appointing new members of the Supervi-

sory Board - capital representatives.

The Human Resources Committee was disbanded as of 17 December 2013 pursuant to the Supervi-

sory Board resolution adopted at its fourth session of 17 December 2013.

FUNCTIONING OF THE DOCUMENTATION REVIEW COMMITTEE

At its second regular session on 7 November 2013, the Supervisory Board established the Documen-

tation Review Committee. The Committee was established due to greater diligence in the Supervisory

Board’s operations due to the existence of a conflict of interest with respect to two Supervisory Board

members. The Committee’s tasks were to review the material for individual Supervisory Board ses-

sions and to determine whether the respective Supervisory Board members can receive the mate-



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rial given the conflict of interest. During its existence, from 7 November 2013 to 12 December 2013,

the Documentation Review Committee conducted two correspondence sessions. The Committee was

comprised of: Jože Bajuk (Chairman), Dr Peter Groznik (Member), Bojan Cizej (Member) and mag.

Dragica Čepin (Member).

FUNCTIONING OF THE BENCHMARK COMMITTEE

The Benchmark Committee, established by the Supervisory Board at its fourth session of 17 De-

cember 2013, did not meet in 2013. The Benchmark Committee began functioning in early 2014. The

Benchmark Committee’s primary task is to determine which companies Pivovarna Laško, d. d. will

benchmark its performance to. The Committee primarily deals with questions of methodology and

determining the underlying benchmark criteria. The Committee defines the methods and indicators

of deliverables and aims to improve strategy and strategic planning.

ANNUAL REPORT VERIFICATION

The Audit Committee performed a prior review of the audited Annual Report of the Laško Group

and Pivovarna Laško, d. d. for 2013 at its second session on 30 April 2014, which the certified auditor

also attended. The Audit Committee briefed the Supervisory Board of its findings at the tenth Supervi-

sory Board session held on 30 April 2014.

The Supervisory Board reviewed the audited Annual Report of the Laško Group and Pivovarna

Laško, d. d. for 2013 at its tenth session held on 30 April 2014. The Annual Report was audited by the

audit firm Ernst & Young, d. o. o., Ljubljana. The audit firm issued its positive opinions to the Annual

Report of the Laško Group and Pivovarna Laško, d. d. on 30 April 2014. The Supervisory Board had no

objection to the Auditor’s reports and approved them.

THE SUPERVISORY BOARD APPROVED THE AUDITED ANNUAL REPORT OF THE LAŠKO GROUP AND PIVOVAR-

NA LAŠKO, D. D. FOR 2013 AT ITS TENTH SESSION HELD ON 30 APRIL 2014.

In 2013, Pivovarna Laško, d. d. recorded a net loss of EUR 27,912,685 EUR, which the Company

covered by retained earnings of EUR 526,849, other profit reserves of EUR 59,275 and capital reserves

of EUR 27,326,561. Thus the distributable profit or loss of Pivovarna Laško, d. d. in 2013 amounts to

EUR 0.

The Supervisory Board has drawn up this report for the General Meeting of the Company in accord-

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

Laško, on 30 April 2014

dr. Peter Groznik

Chairman of the Supervisory Board



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1.3

data on the operations

of the laško group

OUR SALES STRATEGY ON FOREIGN MARKETS IS BEING SUCCESSFULLY IMPLEMENTED. IN QUANTITATIVE

TERMS, SALES ON MARKETS OTHER THAN SLOVENIA HAVE GROWN BY 10.2 PER CENT.

SALES REVENUES AND OPERATING PROFIT INCLUDING DEPRECIATION AND AMORTISATION (EBITDA)

0.0

in E

UR

mill

ion

Net sales revenues

Normalised EBITDA

2012 2013

45.749.2

267.0271.5

90.0

180.0

270.0

360.0

450.0

Sales revenues fell by 1.7% in 2013 compared to the previous year, while normalised operating profit

including amortisation (EBITDA) decreased by 7.0%.

The Business report provides total net sales revenues unless expressly stated otherwise, while only

revenues from continued operations are shown in the consolidated income statement.

Normalised EBIT is calculated from operating profit increased or decreased by the impact of one-off

business events such as the revaluation of real estate and investment property and the formation of

more significant revaluation adjustments. Normalised EBITDA is the sum of normalised EBIT and

normalised depreciation.

In addition to the listed adjustments, normalised EBIT is also adjusted for the impairment of invest-

ments and accrued deferred tax receivables under this heading.



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

0.0

in %

Return on equity (ROE)

Return on assets (ROA)

2012 2013

2.02.2

12.211.2

6.0

3.0

9.0

12.0

15.0

KEY DATA ON THE OPERATIONS OF THE LAŠKO GROUP (CONTINUED AND DISCONTINUED OPERATIONS)

(in EUR) (adjusted)* 2012 2013

Net sales revenues 271,548,163 267,020,040

EBIT 21,766,861 10,530,503

Normalised EBIT 29,096,657 28,085,876

EBITDA 41,831,060 28,149,931

Normalised EBITDA 49,160,855 45,705,304

Net interest expense1 -21,446,176 -17,406,476

Net profit or loss -32,938,018 -30,157,611

Normalised earnings 13,379,599 9,798,867

Non-current assets 301,979,359 284,057,058

Property, plant and equipment 194,465,281 170,065,814

Current assets + deferred and accrued items 203,749,234 170,434,237

Equity 87,978,879 58,213,883

Non-current liabilities + accrued costs and deferred income 32,998,565 31,155,169

Current liabilities including accrued costs and deferred income 384,751,149 365,122,243

Net current assets or liabilities 2 -181,001,915 -194,688,006

Net financial debt 3 232,115,204 235,885,133

Net financial debt less investments in subsidiaries4 231,687,841 235,457,720

Cash flows from operating activities 42,134,920 49,985,697

Cash flows from investing -8,904,359 -672,340

Cash flows from financing -52,545,710 -48,497,249

Net cash flows -19,315,149 816,108

1Interest income - interest expense

2Current assets including deferred costs and accrued income - current liabilities including deferred costs and accrued income

3(Non-current and current financial liabilities) - non-current and current investments + cash)

4(Non-current and current financial liabilities) - (non-current investments less interests in subsidiary companies + current

investments and cash)

*The values of certain operating items presented herein differ from the values disclosed in the 2012 Annual Report. Adjust-

ments to the financial statements for the past periods are reported in a special disclosure in Section 4.4.5 ADJUSTMENT OF

THE HISTORICAL FINANCIAL STATEMENTS.



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INDICATORS

(adjusted)* 2012 2013

Share of normalised EBIT in sales revenue 10.7 % 10.5 %

Share of normalised EBITDA in sales revenue 18.1 % 17.1 %

Interest coverage5 1.357 1.614

Normalised earnings or loss in sales revenue 4.9 % 3.7 %

Return on equity (ROE)6 11.2 % 12.2 %

Return on assets (ROA)7 2.2 % 2.0 %

Liabilities /equity8 4.748 6.807

5Normalised EBIT/net interest expense

6Normalised net earnings or loss / average equity in the period

7Normalised net earnings or loss / average assets in the period

8(Liabilities + accruals and deferrals + provisions) /equity

*The values of certain operating items presented herein differ from the values disclosed in the 2012 Annual Report. Adjust-

ments to the financial statements for the past periods are reported in a special disclosure in Section 4.4.5 ADJUSTMENT OF

THE HISTORICAL FINANCIAL STATEMENTS.

NUMBER OF EMPLOYEES

(as at 31 December) 2012 2013

In the Laško Group, excluding the Delo Group 1,180 1,196

In the Delo Group 412 395

Total 1,592 1,591

Average number of employees according to hours 1,607 1,565

Net sales revenue per employee9 (EUR / employee) 168,978 170,620

9Net sales revenue (overall operations) / average number of employees according to hours

The employees of the Delo Group are displayed separately since the Delo Group does not fall under

the same activity as the other companies in the Laško Group.

SHARE OF EXPORT IN TOTAL SALES OF BEVERAGES THE LAŠKO GROUP

(in hl) 2012 2013

Sale of all beverages 3,788,929 3,894,939

on the markets outside Slovenia 1,221,596 1,346,026

Share in % 32.2 34.6



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SUMMARY OF THE 2014 BUSINESS PLAN

In the past years the economic crisis has significantly changed the market landscape both on the

local as well as on all key export markets for the Laško Group. The economic recession has resulted

in a marked drop of purchasing power, rationalised consumption, lower customer loyalty, growth of

supermarket brands, fewer impulse purchases and ever more frequent purchases of products on offer

and an increase in purchases at discount supermarkets.

Despite the negative trend in sales of beverages, the Group’s goal in 2014 is to retain its market share

on the Slovenian market, and achieve even greater growth of sales on foreign markets and fortify the

position of our leading brands on those markets. The realisation of this goal is based on a uniform

approach to key customers, forming an appropriate pricing policy, ensuring sales and marketing ef-

ficiency, and introducing new products in the beverages segment.

In 2014, the Laško Group plans on selling 4.0 million hl of beer, soft drinks and water, 62.5% of

which will be sold on the Slovenian market and the rest on foreign markets.

The Group expects to generate EUR 23.8 million of operating profit or an EBITDA of EUR 40.9 mil-

lion on EUR 270.3 million of net sales revenue.

Investments of EUR 15 million will be spent on upgrading technological equipment, with a smaller

part spent on IT development and market investments.

Due the high leveraging of the Group, priority goals include concluding the disposals process for

the Mercator shares, actively marketing other financial investments and other unnecessary assets,

concluding an agreement on long-term loan rescheduling, and the deleveraging of the Group partly

on account of the proceeds and partly from cash flow generated by the Group’s underlying activities.

In 2014, the Group’s environmental goals will continue towards reducing our environmental foot-

print in the form of waste water and waste, as well as more rational use of energy sources. Protecting

our own water sources and preventing any potential negative impacts also remains an important goal.



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1.4

data on the operations of

pivovarna laško

OUR SALES STRATEGY ON FOREIGN MARKETS IS BEING IMPLEMENTED SUCCESSFULLY. IN 2013, THE SHARE

OF EXPORTS IN THE ENTIRE SALES QUANTITIES REACHED 38 PERCENT AND IS 16 PERCENT HIGHER THAN IN

THE PREVIOUS YEAR.

SALES REVENUES AND OPERATING PROFIT INCLUDING DEPRECIATION AND AMORTISATION (EBITDA)

0

in E

UR

mill

ion

Net sales revenues

Normalised EBITDA

2012 2013

15.614.6

90.289.0

26.0

52.0

78.0

104.0

130.0

Sales revenues increased by 1.3% in 2013 compared to the previous year, while normalised operating

profit including amortisation (EBITDA) increased by 6.8%.

Normalised EBIT, EBITDA and net profit have been calculated in the same way as the data on the

operations of Laško Group provided in Section 1.3 Data on the operations of the Laško Group herein.



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

Return on equity (ROE)

Return on assets (ROA)

-3.0

-1.0

-2.0

1.0

0.0

2.0

3.0

in %

2012 2013

-0.5-0.7

-2.3-2.7

KEY DATA ON THE OPERATIONS OF THE PIVOVARNA LAŠKO

(in EUR) (adjusted)* 2012 2013

Net sales revenues 88,960,946 90,161,103

EBIT 8,690,491 2,993,447

Normalised EBIT 9,623,538 10,797,084

EBITDA 13,634,148 7,754,446

Normalised EBITDA 14,567,195 15,558,083

Net interest expense1 -13,741,037 -12,960,348

Net profit or loss -17,557,389 -27,912,686

Normalised earnings or loss -2,750,328 -1,967,727

Non-current assets 312,412,713 301,383,218

Property, plant and equipment 46,276,123 43,937,583

Current assets + deferred and accrued items 72,837,802 55,677,706

Equity 96,364,961 68,078,212

Non-current liabilities + accrued costs and deferred income 4,164,129 9,013,665

Current liabilities + accrued costs and deferred income 284,721,425 279,969,047

Net current assets or liabilities2 -211,883,623 -224,291,341

Net financial debt3 -17,970,859 3,662,778

Net financial debt less investments in subsidiaries4 219,744,282 228,189,002

Cash flows from operating activities 15,407,650 18,857,704

Cash flows from investing 5,033,916 -1,272,533

Cash flows from financing -20,485,951 -17,523,417

Net cash flows -44,385 61,754

1Interest income - interest expense

2Current assets including deferred costs and accrued income - current liabilities including deferred costs and accrued income

3(Non-current and current financial liabilities) - (non-current and current investments + cash)

4(Non-current and current financial liabilities) - (non-current investments less interests in subsidiary companies + current

investments and cash)

*The values of certain operating items presented herein differ from the values disclosed in the 2012 Annual Report. The

adjustments of the financial statements of previous periods are disclosed separately in Section 5.4.5 ADJUSTMENT OF THE

FINANCIAL STATEMENTS OF PREVIOUS PERIODS.



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INDICATORS

(adjusted)* 2012 2013

Share of normalised EBIT in net sales revenue 10.8 % 12.0 %

Share of normalised EBIT in net sales revenue 16.4 % 17.3 %

Interest coverage5 0.700 0.833

Normalised earnings or loss in net sales revenue -3.1 % -2.2 %

Return on equity (ROE)6 -2.7 % -2.3 %

Return on assets (ROA)7 -0.7 % -0.5 %

Liabilities /equity8 2.998 4.245

5Normalised EBIT/net interest expense

6Normalised net earnings or loss / average equity in the period

7Normalised net earnings or loss / average assets in the period

8(Liabilities + accruals and deferrals + provisions) /equity




NUMBER OF EMPLOYEES

2012 2013

Employees as at 31 December 324 337

Average number of employees according to hours 330 329

Added value per employee9 (EUR / employee) 77,511 63,456

Net sales revenue per employee10 (EUR / employee) 269,579 274,046

9(Operating revenue - costs of goods, materials and services - other operating expense) / average number of employees accor-

ding to hours

10Net sales revenue / average number of employees according to hours

According to the resolution of the Supervisory Board, the Chairman and four Members of the Man-

agement Board of Pivovarna Laško have been employed part-time also by Pivovarna Union as of 1

March 2013.

SHARE OF EXPORT IN TOTAL SALES OF BEVERAGES PIVOVARNA LAŠKO

(in hl) 2012 2013

Sale of all beverages 942,183 1,017,145

Exports 330,213 384,324

Share in % 35.0 37.8



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MARKET SHARE OF THE BEER SALES ON THE SLOVENIAN MARKET

(in %) 2012 2013

Pivovarna Laško, d. d. 38.1 39.0

Pivovarna Union, d. d. 45.9 45.0

Imported beer 16.0 16.0

Total 100.0 100.0

DATA ON PILR SHARES

(adjusted)* 2012 2013

Total shares issued 8,747,652 8,747,652

Normalised earnings or loss per share in EUR -0.31 -0.22

Share market value on 31 December in EUR 6.99 4.01

Share carrying value on 31 December in EUR11 11.02 7.78

TV shares / KV shares 0.63 0.52

Market capitalisation in EUR12 61,146,087 35,078,085

11Capital at 31 December / total number of shares

12Total number of shares issued times market value per share at 31 December




SUMMARY OF THE 2014 BUSINESS PLAN

As illustrated by the macroeconomic indicators and the economic conditions in the country and the

region where Pivovarna Laško sells its products, 2014 will be even more challenging from an operating

viewpoint than 2013. Negative macroeconomic trends, a growing tax burden and more challenging

competition will be the key challenges on the Slovenian market that Pivovarna Laško will have to face

in order to achieve its goals.

Objectives have been set for 2014 that can be identified as a 4.8% increase in the quantities of

beer and other beverages sold. Sales growth is planned for foreign markets where the quantities are

expected to increase by nearly 16%. At the same time, the shares on the domestic market should be

maintained. Over 1 million hl of all types of beverages are planned to be sold in 2014.

We plan on generating a total of EUR 90.3 million net sales revenue. We expect to generate 80%

of all revenue on the Slovenian market, and 20% (or EUR 18.1 million) on foreign markets. Funds

earmarked for investments of EUR 4.7 million will mainly be spent on upgrading the technological

equipment, with a smaller part being spent on packaging, IT and market development.



~ 19 ~

Due to the high leveraging of the Company, priority goals include concluding the disposals process

for the Mercator shares, disposing of the investments in Radenska and Delo, actively marketing other

financial investments and other unnecessary assets, concluding an agreement on long-term loan re-

scheduling, and the deleveraging of Pivovarna Laško, partly on account of the proceeds and partly from

cash flow generated by the Company’s underlying activities.

In 2014, the Company’s environmental goals will continue towards reducing our environmental

footprint in the form of waste water and waste, as well as more rational use of electricity and natural

gas. The preservation of the water protection area, a vital resource of the Company, is a constant objec-

tive of Pivovarna Laško.



~ 20 ~

1.5

vision, mission and strategic goals

BECOMING THE FIRST CHOICE OF CUSTOMERS OF QUALITY BRANDS, A TOP CLASS INVESTMENT FOR

THE SHAREHOLDERS AND AN ATTRACTIVE EMPLOYER. STRENGTHENING THE MARKET POSITION OF THE

COMPANIES IN THE LAŠKO GROUP AND THE PRODUCTION AND SALE OF INNOVATIVE, TRENDY PRODUCTS.

LAŠKO GROUP PIVOVARNA LAŠKO

VISION Becoming the first choice of the customers Becoming a leader in

of quality brands in the industry the production and sale of

and on the markets where we operate, beverages, strengthening our

being a top class investment for our reputation, recognition and

shareholders and an attractive employer the market shares of our

for staff attracted to excellence, brands on the domestic as

development and team work well as on foreign markets.

MISSION The brands that maintain tradition We create brands with added

and direct the trends generate added value for our customers

value for our customers and shareholders, and shareholders.

with emphasis on motivating Through responsible and

the employees we preserve environmentally-friendly

the market position of the operations we

Laško Group companies on all major achieve top results in

markets. a better world.

STRATEGIC GOALS Our strategic goals for the forthcoming period include to produce and sell innova-

tive and trendy products, maintain the market positions of our own brands on the

domestic market, and recover and expand on our previously achieved positions on

foreign markets. The planned cost-effectiveness will be achieved through profes-

sionally qualified employees acting as teams and in accordance with the policies

of the Laško Group.



~ 21 ~

1.6

presentation of the laško group

THE LAŠKO GROUP BRINGS TOGETHER PRODUCERS OF BEER, MINERAL, SPRING AND NATURAL WATER,

SOFT DRINKS, SPIRITS AND OTHER ALCOHOLIC BEVERAGES, SYRUPS FOR BEVERAGE PRODUCTION,

NEWSPAPER AND PUBLISHING ACTIVITIES, AS WELL AS RETAIL AND WHOLESALE TRADE.

Shareholders and their holdings as at 31 December 2013:

Controlling company

• PIVOVARNA LAŠKO, d. d., Slovenia

Associated companies

• RADENSKA, d. d., Radenci, Slovenia

82.058% ownership stake

An explanation of the shareholding and voting rights is provided in Section 2.5.2 OWNERSHIP

STRUCTURE OF EQUITY under the Ownership structure of the equity of subsidiaries heading.

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


• BIRRA PEJA, Sh. a. Peć, Kosovo

(Pivovarna Union, d. d., Ljubljana owns a 57.627% stake)

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


• VITAL MESTINJE, d. o. o., Slovenia

96.920% shareholding

• DELO, d. d., Ljubljana, Slovenia

100% ownership stake – of that Pivovarna Laško holds an 80.834% stake and Radenska holds a

19.166% stake



~ 22 ~

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

100% ownership stake – of that Pivovarna Laško holds a 69.22% stake, Radenska holds a 15.39%

stake and Pivovarna Union a 15.39% stake

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

100% shareholding

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

100% shareholding

Pivovarna Laško draws up the consolidated Annual Report for the parent company and for the subsidi-

aries 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 and Radenska Miral, d. o. o.,

Radenci, Radenska, d. o. o., Zagreb and Radenska, d. o. o., Beograd. All other subsidiaries are consoli-

dated using the full consolidation method.

Subsidaries

• THERMANA, d. d., Laško, Slovenia


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

29.22% shareholding



~ 23 ~

An

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ny

as a

t 31 D

ecem

ber

2013



~ 24 ~

1.7

presentation of the parent company

pivovarna laško

FROM A HISTORICAL STANDPOINT, THE ORIGINS OF PIVOVARNA LAŠKO LIE IN 1825 WHEN THE MEAD AND

GINGERBREAD MAKER FRANZ GEYER SET UP A BREWERY IN THE FORMER VALVASOR HOSPITAL, A BUILDING

WHICH STILL EXISTS TODAY AND IS THE LOCATION OF THE SAVINJA HOTEL.

1.7.1 COMPANY PROFILE

PIVOVARNA LAŠKO, Trubarjeva 28, 3270 Laško, registered with the District Court in Celje under

the registration no. Srg 95/00673 and under the application No 1/00171/00 dated -September 1995.

Abbreviated company name: PIVOVARNA LAŠKO, d. d.

Organisational form: public limited company

Share capital: EUR 36,503,305

Number of issued shares: 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 number: SI90355580

Activity code: 11.050

Type of business and principal activity:

B E E R P R O D U C T I O N

Management Board: mag. Dušan Zorko, Chairman

composition as at 31 December 2013 Marjeta Zevnik

Mirjam Hočevar

Gorazd Lukman

Matej Oset



~ 25 ~

Supervisory Board: Dr Peter Groznik, Chairman

composition as at 31 December 2013 Goran Brankovič

Jože Bajuk

Bojan Cizej

mag. Dragica Čepin

Transaction accounts:

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

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

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

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

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

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

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

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

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

Podravska banka, d. d., Koprivnica IBAN HR61 2386 0021 1600 120 84

Telephone: +386 3 734 80 00

Fax: +386 3 573 18 17

E-mail: [email protected]

Website: http://www.pivo-lasko.si


B U S I N E S S R E P O R T

~ 26 ~

2BUSINESS

REPORT



~ 27 ~

2.1

corporate governance

THE COMPANY IS MANAGED ACCORDING TO A TWO-TIER SYSTEM WHEREBY THE COMPANY IS MANAGED

BY THE MANAGEMENT BOARD AND ITS OPERATIONS SUPERVISED BY THE SUPERVISORY BOARD.

The corporate governance principles of Pivovarna Laško arise from applicable legal provisions in the

Republic of Slovenia, internal by-laws of the Company and established good work practices. Corporate

governance is carried out according 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 Articles of Association of Pivovarna Laško are the

General Meeting of shareholders, the Supervisory Board and the Management Board of the Company.

2.1.1 GENERAL MEETING OF SHAREHOLDERS

In accordance with the provisions of the Companies Act, the General Meeting of shareholders is

the supreme body of the Company. This is where the shareholders’ will is directly realised and fun-

damental and statutory decisions are adopted. One share represents one vote at the General Meeting.

Pivovarna Laško has no shares with limited voting rights. Treasury shares do not convey voting rights

at the General Meeting.

The General Meeting of shareholders is convened by the Management Board at its own initiative, at

the request of the Supervisory Board or at the written request of the shareholders of the Company pos-

sessing at least a 5% equity stake in the Company. The Supervisory Board may also convene a General

Meeting. Shareholders can exercise their rights arising from shares directly at the General Meeting or

through their representatives.

The General Meeting decides by a majority of the votes cast (simple majority) except where other-

wise provided so by law or the Articles of Association. A qualified three-quarters majority is prescribed

for the following matters:

• modifying the Articles of Association,

• decreasing share capital (including conditional increase),

• approved increase in share capital,

• status changes and winding up of the Company,

• exclusion of the shareholders’ preferential rights when issuing new shares,

• election and early discharge of the Supervisory Board members,

• other matters, if so prescribed by law or the Articles of Association.



~ 28 ~

The General Meeting decides whether to grant discharge to the Company’s Management and Su-

pervisory Board and how to use the distributable profit. By granting discharge, the General Meeting

confirms and approves the work of the Management and Supervisory Boards for the financial year.

Discussions regarding the granting of discharge are carried out in parallel with discussions on the use

of distributable profit. If the General Meeting does not grant discharge, it is not considered 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 distrib-

uted as dividends, the dividends belong to the shareholders who have been registered as owners in the

central register of securities at the Central Securities Clearing Corporation on the cut-off date which

shall be decided in each decision on the use of distributable profit.

ATTENDANCE AT GENERAL MEETINGS

Those shareholders who have been entered into the share register 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 have the right to participate and

vote at the General Meeting.

The Management Board members and the Supervisory Board members 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.

CONVENING AND ORGANISING GENERAL MEETINGS OF SHAREHOLDERS

A General Meeting of shareholders is convened when necessary for the benefit of the Company or

when necessary in accordance with law and the Articles of Association.

One General Meeting was convened in 2013: the 21st General Meeting, which was convened on 18

May 2013 and held of 20 June 2013. The General Meeting convened on 12 November 2013 for 3 Decem-

ber 2013 was cancelled on 12 December 2013.

RESOLUTIONS OF THE 21ST GENERAL MEETING OF SHAREHOLDERS OF PIVOVARNA LAŠKO

The following important decisions were adopted at the 21st regular General Meeting:

Resolution to Item 2: Briefing the General Meeting on the audited Annual Report for 2012 and the

Report of the Supervisory Board on its verification of the Annual Report, briefing the General Meeting

on the cover of net loss, briefing the General Meeting on the remuneration of the Management and

Supervisory Board members and the decision concerning the discharge to be given to the Management

Board and the Supervisory Board

2.1. The General Meeting is briefed on the audited Annual Report of the Laško Group and Pivovarna

Laško for 2013 and the Report of the Supervisory Board on its verification of the Annual Report.

2.2. The General Meeting is briefed on the fact that as at 31 December 2012, the net loss of the Com-

pany amounts to EUR 18,510,265, which the Management Board will cover as agreed by the Supervisory

Board from retained earnings (EUR 859,740), other profit reserves (EUR 232,097) and capital reserves

(EUR 17,418,428). Thus the distributable profit or loss of Pivovarna Laško in 2012 amounts to EUR 0.



~ 29 ~

2.3. The General Meeting is informed of the remuneration of the Management Board and Supervi-

sory Board members in the Company and its subsidiaries in the 2012 financial year.

(note: resolutions 2.1., 2.2. and 2.3. were informative in nature and thus not subject to the General

Meeting’s vote)

2.4. The General Meeting grants the Supervisory Board discharge for the 2012 financial year.

2.5. The General Meeting grants the Supervisory Board discharge for the 2012 financial year.

Resolution to Item 3: Increase in share capital paid-in cash (capital injection)

(note: the General Meeting did not adopt this resolution)

The Company’s share capital, amounting to EUR 36,503,304.96 and divided into 8,747,652 regu-

lar freely-transferable registered no par-value shares as at the passing of the resolution, is hereby in-

creased by no more than EUR 36,503,304.96 to amount to no more than EUR 73,006,609.92, namely

by issuing new shares belonging to the same group as those already issued.

The increase in share capital by no more than EUR 36,503,304.96 shall be performed by issuing

no more than 8,747,652 new regular freely-transferable registered no par-value shares in exchange

for monetary contributions, at an initial share price of EUR 6.4760. The final amount of share capital

increase equals the number of newly registered and paid-up shares multiplied by the proportion of one

share in the share capital.

The share capital increase shall be performed in two rounds. In the first round, the shares shall be

offered to all shareholders listed in the share register on the date this resolution is passed. They will be

able to pay-up a number of shares proportional to their existing share in the Company’s share capital.

The Company’s Management Board shall no later than within 30 (thirty) days of adoption of this reso-

lution invite the Company’s existing shareholders to register and pay-up new shares (first round) by

way of notification in the daily press.

Shares not registered and paid-up in the first round can be offered to third persons by the Manage-

ment Board upon the Supervisory Board’s consent (second round).

In both rounds, existing shareholders and third persons will be able to, by providing an appropri-

ate statement on the registration certificate, limit their registration by pre-determining the maximum

ownership stake or number of shares they wish to have in the Company after completion of the capital

increase pursuant to this resolution of the General Meeting.

Details on the capital increase in the two rounds shall be decided by the Management Board provided

the Company’s Supervisory Board has given its agreement. The details will be provided in the prospectus.

When purchasing shares, all registrars are obligated to pay-in the full issue amount of each regis-

tered share.

The Supervisory Board is authorised to adopt the amendments to the Articles of Associations in

order to adjust the text to the implemented increase in the share capital of the Company.

Resolution to Item 4: Appointing Members of the Supervisory Board (counter proposal of NLB)

4.1. The General Meeting appointed Mr Enzo Smrekar, Mesarska cesta 12, Ljubljana, as member of

the Supervisory Board of the company (capital representative) for the period from 1 September 2013 to

31 August 2017. He resigned from his position on 12 December 2013.



~ 30 ~

4.2. The General Meeting appointed Dr Peter Groznik, Mesarska cesta 38, Ljubljana, as member of

the Supervisory Board of the company (capital representative) for the period from 1 September 2013 to

31 August 2017.

4.3. The General Meeting appointed Mr Goran Brankovič, Onger 15, Trzin, as member of the Supervi-

sory Board of the company (capital representative) for the period from 1 September 2013 to 31 August 2017.

4.4. The General Meeting appointed Mr Jože Bajuk, Gabrje 10, Dobrova, as member of the Superviso-

ry Board of the company (capital representative) for the period from 1 September 2013 to 31 August 2017.

Resolution to Item 5: Appointment of the auditor for the 2013 financial year

The General Meeting appoints the audit firm Ernst & Young, Dunajska cesta 111, Ljubljana as the

auditor of the Company’s 2013 financial statements.

The resolutions of the General Meeting were published on the SEOnet portal and on the Company’s

website www.pivo-lasko.si on 21 June 2013. The minutes of the General Meeting and appendices there-

to are available on the website of AJPES (Business register of Slovenia).

2.1.2 SUPERVISORY BOARD

The fundamental function of the Supervisory Board is to supervise the management of the Com-

pany’s operations. The Supervisory Board appoints and discharges the members and Chairman of the

Management Board.

The composition of the Supervisory Board is determined by the Articles of Association. The Super-

visory Board of Pivovarna Laško has six members, each of whom has the same rights and responsi-

bilities unless otherwise stipulated by the Articles of Association. Four Members of the Supervisory

Board elected by the General Meeting of shareholders are capital representatives, while the other two

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

The Supervisory Board is appointed by the General Meeting of shareholders by a majority of the

votes of the shareholders cast except for the Members of the Supervisory Board who are elected by

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

appointment is renewable following the expiry of their term of office. The Supervisory Board elects its

own Chairman and Deputy Chairman among its members.

The Chairman convenes and chairs the sessions of the Supervisory Board and is authorised to de-

clare its will and announce decisions adopted by the Supervisory Board. The Chairman of the Super-

visory Board represents the Company in disputes with Members of the Management Board, and the

Supervisory Board in disputes against other bodies of the Company and third parties, unless otherwise

specified in each particular case. The Chairman of the Supervisory Board is always a representative of

the shareholders. Sessions of the Supervisory Board are convened by the Chairman at his own initia-

tive, at the initiative of any member of the Supervisory Board, or at the initiative of the Management

Board. The Supervisory Board takes decisions at sessions.

Within one year of it being submitted the Annual Report, the Supervisory Board must verify the

Annual Report and profit distribution proposal and draft a written report for the General Meeting,

which it provides to the Management Board. If the Supervisory Board approves the Annual Report, the

Annual Report is deemed adopted.



~ 31 ~

COMPOSITION OF THE SUPERVISORY BOARD COMPOSITION OF THE SUPERVISORY BOARD

AS AT 31 DECEMBER 2012 AS AT 31 DECEMBER 2013

Capital representatives: Capital representatives:

Dr Vladimir Malenković, Chairman Dr Peter Groznik, Chairman

Dr Borut Bratina Goran Brankovič

Borut Jamnik Jože Bajuk

Dr Peter Groznik

Employee representatives: Employee representatives:

Bojan Cizej, Deputy Chairman Bojan Cizej, Deputy Chairman

mag. Dragica Čepin mag. Dragica Čepin

CHAIRMAN OF THE SUPERVISORY BOARD

PETER GROZNIK

Education: DSc in Finance, Kelley School of

Business, Indiana University Bloomington

(United States of America).

Employment: member of the Management Board of

Gorenje, d. d.

MEMBER OF THE SUPERVISORY BOARD

GORAN BRANKOVIČ

Education: BSc in Electrical Engineering, Faculty of

Electrical Engineering, University of Ljubljana.

Employment: Zavarovalnica Triglav, management of

subsidiaries, Assistant to the Executive Director.



~ 32 ~

JOŽE BAJUK

Education: BSc in Law, Faculty of Law, University of

Ljubljana.

Employment: Regional Director of Interenergo,

Ljubljana.

BOJAN CIZEJ

Education: BSc in Food Technology, Biotechnical

Faculty, University of Ljubljana.

Employment: Director of the Production and Techni-

cal Unit of Pivovarna Laško.

DRAGICA ČEPIN

Education: MSc in Economy, Faculty of Economics

and Business, University of Maribor.

Employment: Director of Accounting at Laško

Group.

CHANGES IN THE COMPOSITION OF THE SUPERVISORY BOARD OF PIVOVARNA LAŠKO

At the 21st General Meeting of the shareholders of Pivovarna Laško on 20 June 2013, Enzo Smrekar,

Dr Peter Groznik, Goran Brankovič and Jože Bajuk were appointed Members of the Supervisory Board

of the company for the period from 1 September 2013 to 31 August 2017. After giving his irrevocable



~ 33 ~

notice on 12 December 2013, the term of office of Enzo Smrekar as member of the Supervisory Board

expired as of that date.

At the Supervisory Board’s 1st constituent meeting on 5 September 2013, the Supervisory Board

elected Dr Peter Groznik as Chairman of the Supervisory Board.

COMMITTEES OF THE SUPERVISORY BOARD OF PIVOVARNA LAŠKO

1. AUDIT COMMITTEE

The tasks of the Audit Committee are specified in Article 280 of the Companies Act, with the key

ones comprising:

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

financial statements,

• monitoring the independence, impartiality and effectiveness of the auditor of the Company’s An-

nual Report,

• submitting a proposal to the Supervisory Board for the appointment of a candidate for the Annual

Report auditor,

• supervising the integrity of the financial information provided by the Company,

• evaluating the drafted Annual Report, including forming its proposal for the Supervisory Board.

COMPOSITION OF THE AUDIT COMMITTEE COMPOSITION OF THE AUDIT COMMITTEE


Dr Peter Groznik – Chairman Jože Bajuk – Chairman

Bojan Cizej Bojan Cizej

Igor Teslić Igor Teslić

CHANGES IN THE COMPOSITION OF THE AUDIT COMMITTEE

At the Supervisory Board’s 1st constituent meeting on 5 September 2013, Dr Peter Groznik resigned

from his position of Chairman of the Supervisory Board and Member of the Audit Committee of the

Supervisory Board. At its 4th regular session on 18 December 2013, Jože Bajuk was appointed Chair-

man of the Supervisory Board and Member of the Audit Committee of the Supervisory Board.

2. HUMAN RESOURCES COMMITTEE

The Companies Act does not define the tasks of the Human Resources Committee. In accordance

with point B.2 of Appendix B to the Corporate Governance Code (Ljubljana, 8 December 2009), the

Human Resources Committee is mainly responsible for:

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

the Management Board members whereby it needs to balance the skills, knowledge and experience

and prepare a description of the qualifications required for each individual post,

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

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

grounds for the recall of individual board members if required,

• providing support in the design and implementation of the remuneration system for the Manage-ment Board.



~ 34 ~

COMPOSITION OF THE HUMAN COMPOSITION OF THE HUMAN

RESOURCES COMMITTEE RESOURCES COMMITTEE


Borut Jamnik - Chairman /

Dr Borut Bratina /

mag. Dragica Čepin /

CHANGES TO THE COMPOSITION OF THE HUMAN RESOURCES COMMITTEE

At its 4th regular session on 17 December 2013, the Supervisory Board adopted a resolution dissolv-

ing the Human Resources Committee as of 17 December 2013.

3. BENCHMARK COMMITTEE

At its 4th regular session on 17 December 2013, as at 18 December 2013 the Supervisory Board ap-

pointed a Benchmark Committee comprised of: Goran Brankovič - Chairman, mag. Dragica Čepin

- Member and Dr Peter Groznik - Member.

The Benchmark Committee’s primary task is to determine which companies Pivovarna Laško will

benchmark its performance to. The Committee primarily deals with questions of methodology and

determining the underlying benchmark criteria. The Committee defines the methods and indicators

of deliverables and aims to improve strategy and strategic planning.

COMPOSITION OF THE BENCHMARK COMMITTEE COMPOSITION OF THE BENCHMARK

AS AT 31 DECEMBER 2012 COMMITTEE AS AT 31 DECEMBER 2013

/ Goran Brankovič, Chairman

/ mag. Dragica Čepin - Member

/ Dr Peter Groznik - Member

CHANGES TO THE COMPOSITION OF THE BENCHMARK COMMITTEE

No changes to the composition of the Benchmark Committee occurred in 2013. At its 8th regular ses-

sion on 31 March 2014, Dr Peter Groznik resigned as member of the Benchmark Committee effective

31 March 2014. The Supervisory Board appointed Keith Miles as the new member of the Benchmark

Committee as of 1 April 2014.

4. DOCUMENTATION REVIEW COMMITTEE

At its 2nd regular session on 7 November 2013, the Supervisory Board established the Documenta-

tion Review Committee. The Committee was established due to greater diligence in the Supervisory

Board’s operations due to the existence of a conflict of interest with respect to two Supervisory Board

members. The Committee’s tasks was to review the material for individual Supervisory Board ses-

sions and to determine whether the respective Supervisory Board members can receive the material

given their conflict of interest. During its existence, from 7 November 2013 to 12 December 2013,

the Documentation Review Committee conducted two correspondence sessions. The Committee was

comprised of: Jože Bajuk (Chairman), Dr Peter Groznik (Member), Bojan Cizej (Member) and mag.

Dragica Čepin (Member).

CHANGES IN THE COMPOSITION OF THE DOCUMENTATION REVIEW COMMITTEE

Since the conflict of interest with respect to Member of the Supervisory Board Goran Brankovič

ceased to exist, and due to the irrevocable resignation of Member of the Supervisory Board Enzo Sm-

rekar from the Supervisory Board, on 12 December 2013 the reason the Supervisory Board established

the Documentation Review Committee ceased to exist. As a result, on 12 December 2013, the Docu-

mentation Review Committee ceased to exist.



~ 35 ~

CHANGES IN THE SUPERVISORY BOARDS OF SUBSIDIARIES

RADENSKA, RADENCI

At the 21st General Meeting of Radenska, mag. Dragica Čepin and mag. Brigita Oplotnik Rajh, both

employed by Pivovarna Laško, were appointed Members of the Supervisory Board (capital representa-

tives) for a term of office of four years, beginning on 14 October 2013.

At its meeting held on 7 November 2013, pursuant to the Rules of Procedure of the Worker’s Council

and after electing Members of the Supervisory Board (employee representatives), the Workers’ Council

of Radenska, appointed Frank Lipičar and Dominik Omar for a term of office of four years beginning

on 9 November 2013.

PIVOVARNA UNION, LJUBLJANA

On 6 September 2013, Dr Peter Groznik resigned from his position of Chairman of the Supervisory

Board of Pivovarna Union. Dr Groznik continues to be a Member of the Supervisory Board of Pivo-

varna Union. On 18 November 2013, Dr Vladimir Malenković was appointed Chairman of the Supervi-

sory Board of Pivovarna Union.

DELO, LJUBLJANA

Up to 5 October 2013, the Supervisory Board had the following composition: Robert Šega (Chairman

until 30 June 2013, Deputy Chairman from 1 July 2013 to 5 October 2013), Marjeta Zevnik (Member un-

til 30 June 2013, Chairwoman between 1 July 2013 and 5 October 2013), mag. Dragica Čepin (Member),

Jure Flerin (Member) and Branimir Piano (Member).

As of 6 October 2013, the Supervisory Board has the following composition: Marjeta Zevnik (Chair-

woman since 8 November 2013), mag. Dragica Čepin (Deputy Chairwoman since 8 November 2013),

mag. Brigita Oplotnik Rajh (Member), Branimir Piano (Member) and Jure Flerin (Member).

LAŠKO GRUPA, ZAGREB

As of 1 October 2013, Laško Grupa, Zagreb, has a three-member Supervisory Board comprised of:

mag. Dragica Čepin (Chairwoman), Tatjana Fintić (Deputy Chairwoman) and Matjaž Zupin (Member).

The Members of the Supervisory Board have a four-year term of office.

LAŠKO GRUPA, SARAJEVO

As of 11 1 2013, Laško Grupa, Sarajevo, has a three-member Supervisory Board comprised of: Matjaž

Zupin (Chairman), Pavel Teršek (Deputy Chairman) and mag. Dragica Čepin (Member). The Members

of the Supervisory Board have a four-year term of office.

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 develop-

ment strategy, ensures proper risk treatment and management, acts with due care and diligence and

protects the business secrets of the Company.

The Company’s Management Board is comprised of the following five members: mag. Dušan Zorko

– Chairman of the Management Board, Marjeta Zevnik – Management Board member responsible

for legal affairs, human resources and general affairs, Mirjam Hočevar – Management Board member

responsible for finance, Gorazd Lukman – Management Board member responsible for sales and

commerce and Matej Oset – Management Board member responsible for the production and techni-

cal sector.



~ 36 ~

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

Board, whereby Members of the Management Board are appointed upon the proposal of the Chair-

man of the Management Board. The term of office 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 represent and act on behalf of the Company. The Management Board may appoint

a procurator.

MANAGEMENT BOARD OF PIVOVARNA LAŠKO

COMPOSITION OF THE MANAGEMENT BOARD COMPOSITION OF THE MANAGEMENT BOARD


mag. Dušan Zorko – Chairman mag. Dušan Zorko – Chairman

Marjeta Zevnik Marjeta Zevnik

Mirjam Hočevar Mirjam Hočevar

Gorazd Lukman Gorazd Lukman

Matej Oset Matej Oset

CHAIRMAN OF THE MANAGEMENT BOARD. - MAG. DUŠAN ZORKO

Education: Master’s degree in economic sciences,

VEKŠ Maribor.

Areas of expertise:

• organising, coordinating and chairing the Manage-

ment Board of Pivovarna Laško and coordinating

the activities of the Laško Group,

• carrying out tasks of strategic importance,

• public relations.

MEMBER OF THE MANAGEMENT BOARD RESPONSIBLE FOR LEGAL, HUMAN RESOURCES AND GENERAL AF-

FAIRS – MARJETA ZEVNIK

Education: BSc in Law, Faculty of Law, University of

Ljubljana.

Areas of expertise:

• carrying out tasks of strategic importance and

coordinating the following areas: the legal depart-

ment, HR & administration department, workplace

health and safety department,

• coordinating the legal, human resources and gen-

eral affairs of the Laško Group.



~ 37 ~

MEMBER OF THE MANAGEMENT BOARD RESPONSIBLE FOR FINANCE – MIRJAM HOČEVAR

Education: BSc in Mathematics Engineering, Faculty

of Mathematics and Physics, University of Ljubljana.

Areas of expertise:

• carrying out tasks of strategic importance and coor-

dinating the following areas: the finance depart-

ment, the accounting department, the controlling

• coordinating the finance, controlling, accounting

and IT functions of the Laško Group.

MEMBER OF THE MANAGEMENT BOARD RESPONSIBLE FOR SALES AND COMMERCE – GORAZD LUKMAN

Education: Sales Clerk, Business Commercial Col-

lege Celje.

Areas of expertise:

• carrying out tasks of strategic importance and co-

ordinating the following areas: retail and wholesale

operations on the Slovenian market, export opera-

tions, marketing and development functions, sales

logistics and servicing beverage pumping devices,

and the sales promotion department,

• coordinating the sales, marketing and development

functions of the Laško Group.

MEMBER OF THE MANAGEMENT BOARD RESPONSIBLE FOR THE PRODUCTION-TECHNICAL SECTOR AND

PROCUREMENT – MATEJ OSET

Education: MBA from IEDC Bled, BSc in Food

Technology, Biotechnological Faculty, University of

Ljubljana.

Areas of expertise:

• carrying out tasks of strategic importance and

coordinating the production-technical sector and

procurement department,

• coordinating the production-technical sector and

procurement department of the Laško Group.



~ 38 ~

CHANGES IN THE COMPOSITION OF MANAGEMENT BOARDS OF SUBSIDIARIES

DELO, LJUBLJANA

At its session on 1 July 2013, the Supervisory Board of Delo appointed Irma Gubanec, Member of

the Management Board of Delo for finance, as Chairwoman of the Management Board of Delo for a

term of office of 5 years. As the new Chairwoman of the Management Board was appointed, the term

of office of the existing Chairwoman Marjeta Zevnik ended, after having temporarily assumed the

management of Delo as Member of the Supervisory Board of Delo pursuant to paragraph 2 of Article

273 of the Companies Act.

At its session on 28 August 2013, the Supervisory Board of Delo appointed Nada Jakopec member of

the Management Board of Delo responsible for general, human resources and legal affairs for a term

of office from 1 September 2013 to 30 June 2018.

IZBERI, LJUBLJANA

As of 4 March 2013, Alojz Slavko Bogataj is the Director of Izberi, Ljubljana.

LAŠKO GRUPA, SARAJEVO

As of 1 April 2013, Haris Hadžić is the Director of Laško Grupa, Sarajevo.

BIRRA PEJA, PEĆ, KOSOVO

As of 26 August 2013, Ernest Jusufi is Chairman of the Board of Directors of Birra Peja, Peć, Kosovo,

while Virtyt Ibrahimaga is Member of the Board of Directors. As at 26 August 2013, the office of the

existing Chairman of the Board of Directors Ekremo Lluka and of the existing Member of the Board of

Directors Fatmir Gashi expired.

2.1.4 MANAGEMENT IN THE LAŠKO GROUP

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

three subsidiaries abroad. All subsidiaries are in the majority ownership of the controlling entity (for

further details, see Section 1.6 Overview of the Laško Group.)

Members of the management and administrative bodies of the subsidiaries as of 31 December 2013:

RADENSKA, D. D., RADENCI

Management Board Milan Hojnik

Supervisory Board Employee representatives: Capital representatives:

mag. Dragica Čepin – Franko Lipičar –

Chairwoman Deputy Chairman

mag. Brigita Oplotnik Rajh Dominik Omar

Pavel Teršek

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

Management Board Milan Hojnik

Supervisory Board The company has no

Supervisory Board



~ 39 ~

PIVOVARNA UNION, D. D., LJUBLJANA

Management Board mag. Dušan Zorko –

Chairman

Gorazd Lukman

Mirjam Hočevar

Marjeta Zevnik

Matej Oset


Dr Vladimir Malenković – Terezija Peterka –

Chairman Deputy Chairwoman

Dr Peter Groznik Primož Mlekuš

Bojan Cizej

BIRA PEJA, SH. A., PEČ, KOSOVO (SUBSIDIARY OF PIVOVARNA UNION)

Executive Director Sebastjan Gergeta

Board of Directors Ernest Jusufi –

Chairman

mag. Dušan Zorko

Mirjam Hočevar

Gorazd Lukman

Virtyt Ibrahimaga

BIRRA PEJA, SH. P. K., TIRANA, ALBANIJA (SUBSIDIARY OF BIRRA PEJA, PEĆ, KOSOVO)

Management Board Korab Lluka (resigned)

Supervisory Board The company has no

Supervisory Board.

JADRANSKA PIVOVARNA - SPLIT, D. D.

Management Board Zlatko Bebić

Supervisory Board Capital representatives: Employee representatives:

Gorazd Lukman – Goran Domljanović

Chairman

Pavel Teršek -

Deputy Chairman

VITAL MESTINJE, D. O. O.

Management Board Mira Močnik

Supervisory Board The company has no Supervisory Board.



~ 40 ~

DELO, D. D., LJUBLJANA

Management Board Irma Gubanec –

Chairwoman

Nada Jakopec


Marjeta Zevnik – Branimir Piano

Chairwoman Jure Flerin

mag. Dragica Čepin -

Deputy Chairwoman

mag. Brigita Oplotnik Rajh

IZBERI, D. O. O., LJUBLJANA (SUBSIDIARY OF DELO)

Management Board Alojz Slavko Bogataj


LAŠKO GRUPA, D. O. O., SARAJEVO

Management Board Haris Hadžić

Supervisory Board Capital representatives:

Matjaž Zupin –

Chairman

Pavel Teršek -

Deputy Chairman

mag. Dragica Čepin

FIRMA DEL, D. O. O., LAŠKO

Management Board mag. Dušan Zorko


LAŠKO GRUPA, D. O. O., ZAGREB

Management Board Boris Matijaščić

Supervisory Board: mag. Dragica Čepin -

Chairwoman

Tatjana Fintić –

Deputy Chairwoman

Matjaž Zupin



~ 42 ~

2.2

statement on corporate governance and

compliance with the corporate

governance code

THE MANAGEMENT BOARD AND SUPERVISORY BOARD OF PIVOVARNA LAŠKO HEREBY DECLARE THAT THE

COMPANY COMPLIES WITH THE PROVISIONS OF THE CORPORATE GOVERNANCE CODE.

2.2.1 COMPLIANCE OF COMPANY MANAGEMENT WITH THE PROVISIONS OF THE CORPORATE GOVERNANCE CODE

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

observes the provisions of the Corporate Governance Code of 8 December 2009 that entered into force

on 1 January 2010 (hereinafter: the Code), with some exceptions that do not intervene in good manage-

ment practices and which are explained in this Statement. The Statement is a constituent part of the

Annual Report for 2013 and is also available on the Company’s website www.pivo-Laško.si.

The Statement refers to the 2013 financial year, i.e. from 1 January 2013 to 31 December 2013. 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 at www.ljse.si.

The explanations regarding discrepancies from individual provisions of the Code are given by the

Management and Supervisory Board of the Company below:

• Provision 1; The Company operates in accordance with its key objective, which is to maximise the

Company’s value, and other objectives such as long-term value creation for shareholders, obser-

vance of social and environmental aspects of operations with the aim of ensuring sustainable de-

velopment of the Company, even though these objectives are not stated in the Company’s Articles

of Association;

• Provision 2; The Management of the Company is focused at realising the strategic growth objec-

tives of the Laško Group until 2014 and the establishment of a new business model of the Group.

The starting points for the growth strategy and new business model were approved by the Super-

visory Board at 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



~ 43 ~

May 2010; the Management and Supervisory Boards of the company failed to adopt the special

document entitled Corporate Governance Policy;

• Provision 8 (paragraph 2) and 17.2; The Supervisory Board members did not sign individual state-

ments regarding the fulfilment of the independence criteria as denoted in Point C.3 Annex C of the

Code. Based on information available to the Company, the Members of the Supervisory Board fulfil

all the criteria of independence 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 any 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, author-

ised to communicate 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

Supervisory Board are performed by the General Sector employees;

• Provision 20; The Company has not defined a Communications Strategy as a constituent part

of the Corporate Governance Policy. Expert services draft Company communications and ensure

transparency of operations;

• Provision 21.3; The Company does not publish announcements in foreign languages.

2.2.2 MAIN CHARACTERISTICS OF THE INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMS IN CONNECTION WITH THE FINANCIAL REPORTING PROCEDURE

Pivovarna Laško manages risks and implements internal control procedures at all levels. The purpose

of internal controls is to ensure the accuracy, reliability, transparency and visibility of all processes and

the management of risks related to financial reporting. At the same time, the internal control system

establishes a mechanism for preventing irrational use of assets and contributes to cost-effectiveness.

The system of internal controls includes procedures that ensure:

• transactions are recorded on the basis of credible accounting documents, based on which transac-

tions 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;

• unauthorised acquisition, use and disposal of company assets, which would have a material impact

on the financial statements, are prevented or detected in a timely manner.

In 2013, an internal assessment of the Company was carried out by the Finance, Accounting and

Controlling Department which is responsible for bookkeeping and the preparation of financial state-

ments in accordance with applicable accounting, tax and other regulations and by the Internal audit

service established on 1 October 2012. The adequacy of control operations within the scope of the infor-

mation system is examined by the authorised external contractors on an annual basis.



~ 44 ~

2.2.3 EXTERNAL AUDIT

REGULAR EXTERNAL AUDIT

To ensure consolidation and standardisation within the Laško Group, the General Meetings of Pivo-

varna Laško, Pivovarna Union, Radenska and Delo appointed the audit firm Ernst & Young, Dunajska

cesta 111, Ljubljana as the certified auditor for the 2013 financial year, 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 POINTS 3, 4, 6, 8 and 9 of PARAGRAPH 6 of ARTICLE 70 OF THE COMPANIES ACT

SIGNIFICANT DIRECT AND INDIRECT OWNERSHIP OF THE COMPANY’S SECURITIES

Data on significant direct ownership of the Company’s securities is given in Section 2.5.2 OWNER-

SHIP STRUCTURE OF EQUITY of this Annual Report.

HOLDERS OF SECURITIES GRANTING SPECIALLY CONTROLLING RIGHTS

The Company’s Articles of Association do not contain any provisions granting holders of securities

any special controlling rights.

LIMITATIONS TO VOTING RIGHTS

The Articles of Association of the Company do not contain limitations regarding particular shares

or a defined number of votes. The Articles of Association of the Company prescribe that shareholders

intending to attend a General Meeting need to 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 exercise their voting rights.

COMPANY RULES ON THE APPOINTMENT AND REPLACEMENT OF MEMBERS OF THE MANAGEMENT OR SU-

PERVISORY BODIES AND ON CHANGES TO THE ARTICLES OF ASSOCIATION

In accordance with the Articles of Association of the Company, the 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 Manage-

ment 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 Articles of Association the Supervisory Board consists of six members

of whom four are capital representatives and two are employee representatives. The Supervisory Board

members – capital representatives – are appointed by the General Meeting of shareholders through a

simple majority vote of the shareholders in attendance whereas the two Members of the Supervisory

Board who are employee representatives are elected by the Worker’s Council. A three-quarter majority

vote is required for the premature recall of a Supervisory Board member.

A three-quarter majority vote by the General Meeting is required for any amendment of the Articles

of Association.

AUTHORISATION GRANTED TO MEMBERS OF THE MANAGEMENT BODIES, ESPECIALLY POWERS TO ISSUE OR

PURCHASE TREASURY SHARES

In 2013, members of the management bodies had no power to issue or purchase treasury shares.



~ 45 ~

2.2.5 DATA ON THE ACTIVITIES OF THE GENERAL MEETING

Data on the activities of the General Meeting and its key competences and a description of share-

holders’ rights and the method of their implementation are included in Section 2.1 CORPORATE

GOVERNANCE of this Annual Report.

2.2.6 DATA ON THE MANAGEMENT BOARD AND SUPERVISORY BOARD

Data on the composition and activities of the management and control bodies and their committees

is provided in Section 2.1 CORPORATE GOVERNANCE of this Annual Report.

Laško, 30 April 2014

mag. Dušan Zorko Dr Peter Groznik

Chairman of the Management Board Chairman of the Supervisory Board

Marjeta Zevnik

Member of the Management Board

Mirjam Hočevar


Gorazd Lukman


Matej Oset




~ 46 ~

2.3

report of the management board

of pivovarna laško on dependency

according to article 545 of the

companies act (zgd-1)

IN THIS REPORT PIVOVARNA LAŠKO INDICATES MEASURES TO COMPENSATE THE DAMAGE ARISING FROM

HARMFUL LEGAL TRANSACTIONS BY THE FORMER MANAGEMENT BOARD OF THE COMPANY.

2.3.1 DAMAGESAs a subsidiary within a multi-level de facto group, the former Management Board of Pivovarna

Laško concluded legal transactions in 2008 and 2009 which subsequently proved to be damaging.

The loans given to the companies Center naložbe and Infond Holding, including interest, were never

repaid. The purchase of shares of Thermana – Zdravilišče Laško by Infond Holding was implemented

at an acquisition price that was higher than the assessed market value of the Thermana shares at that

time. The parent company in the multi-level de facto group, namely Atka - Prima, did not compensate

the damaged party, namely Pivovarna Laško, for the loss either in the relevant financial year or later.

The Management Board of Pivovarna Laško took all measures required with due diligence, namely:

• Pivovarna Laško declared the outstanding receivables with default interest in the bankruptcy pro-

ceedings against Infond Holding, finančna družba, d. d. – v stečaju on 29 March 2010 amounting

to EUR 1,892,319.26 and submitted a request for the establishment of a creditor’s committee. The

bankruptcy proceedings are pending. On 24 September 2013, Pivovarna Laško received partial pay-

ment of EUR 89,382.56 from the bankruptcy estate.

• On 10 November it declared the outstanding receivables with default interest in the bankruptcy pro-

ceedings against Center Naložbe, d. d. – v stečaju amounting to EUR 6,487,493.35, amending the

declaration with the right to separate settlement, and submitted a request for the establishment of

a creditor’s committee. The bankruptcy proceedings are pending. On 30 December 2013, Pivovarna

Laško, d. d., received partial payment of EUR 410,236.03 from the bankruptcy estate.

• The Company filed an action for damages on 12 January 2011 against the defendants: the company

Atka – Prima and Boško Šrot as its co-owner and the legal representative and director of Pivovarna

Laško at that time for the payment of EUR 13.3 million plus costs and interest (as at 22 January

2014, according to the interest calculation due to the partial payment from the bankruptcy estate

of Infond Holding, d. d. – v stečaju, the amount at issue is EUR 16.4 million). The proceedings are

pending. The witnesses were heard and then an expert in economics was appointed. Due to the



~ 47 ~

partial payment from the bankruptcy estate of Infond Holding, d. d. – v stečaju, the action has been

partially revoked for the amount of EUR 89,382.56. At the same time, due to the partial payment

from the bankruptcy estate of Center Naložbe, d. d. – v stečaju, the action has been partially revoked

for the amount of EUR 410,236.03. The case is currently pending before continuation of the main

hearing at the court of first instance.

• On 3 July 2012, an application for an interim order against Atka – Prima and Boško Šrot was filed

for prohibition of disposing of securities, prohibition of disposal and burdening of property and

other matters relating to the previous indent. The proceedings were concluded with a final judge-

ment in 2013, as the Celje High Court upheld the appeal of the defendants, annulled the decision

of the court of first instance and rejected the proposal of the plaintiff for issuing an interim order.

• On 3 July 2012, an action was brought before the court to challenge the debtor’s legal actions togeth-

er with an application for an interim order (together with the companies Pivovarna Union, Raden-

ska, Delo and Fructal) due to the prohibition of the alienation or disposal of movable property and

due to the prohibition of the alienation or disposal of the securities against Anica Šrot Aužner. The

reason for bringing an action was the transfer of securities and property by Atka-Prima and Boško

Šrot to Anica Šrot Aužner. The has resulted is damage to creditors. The court has not yet scheduled

the main hearing in these litigious proceedings. The proceedings for the issue of the interim order

were concluded with a final judgement in 2013, in which the court of second instance rejected the

defendant’s appeal and confirmed the order of the court of first instance issuing the interim order.

The possibility exists that Pivovarna Laško will file additional lawsuits in the future for damages

since the entire scope of damages suffered is not yet known. Two potential damages exist according to

the currently known facts:

• The pledge of 345,304 RARG shares of Radenska, whose owner is Pivovarna Laško, to secure a

loan from NKBM granted to the company Center Naložbe in the amount of EUR 6,250,000 on

12 March 2009. In this transaction, Pivovarna Laško acted as the lienee based on the loan agree-

ment on the pledge of book-entry securities of 5 June 2009. The carrying amount of the pledged

RARG shares as at 31 December 2012 amounts to EUR 3,637,650. On 22 November 2011, Pivovarna

Laško received the judgement of the Maribor District Court allowing the payment of claims from

the value of the pledged shares and authorising the enforcement on the pledged shares in order

to repay the claim in the amount of EUR 7,349,552.25 and statutory default interest. On 11 January

2012, Pivovarna Laško received the enforcement order from the Maribor District Court allowing

the proposed enforcement by entering the enforcement decision into the register of KDD for the

345,304 RARG pledged shares, the sale of these shares, and repayment of the creditor (NKBM)

from the proceeds of the sale. Once the shares are sold in the enforcement proceedings and NKBM

is paid from the resulting amount, Pivovarna Laško will incur a loss or damages. The amount of

damages Pivovarna Laško will incur as a result of this damaging transaction cannot be assessed at

this moment in time since the actual amount of damages will be known when the shares are sold

in the enforcement proceedings of NKBM against Pivovarna Laško. Thus Pivovarna Laško as the

legal entity incurring damages will subsequently file a claim for damages.

• Comfort letter dated 31 December 2008 and 10 January 2009; Pivovarna Laško received a letter

from Perutnina Ptuj on 23 November 2009 in which the latter indicated that based on the loan

agreement with the companies Infond Holding and Center Naložbe, and the comfort letter of 31

December 2008 signed by the former Director of Pivovarna Laško, Boško Šrot, it had been paying

liabilities on the behalf of Pivovarna Laško. Since the companies had ceased repaying the loans,

Perutnina Ptuj demanded payment in the approximate amount of EUR 11 million from Pivovarna

Laško based on the comfort letter. Pivovarna Laško did not acknowledge the claim as it was not ac-



~ 48 ~

quainted with the existence of the comfort letter of 31 December 2008 nor with the circumstances

and business relationships among the legal persons involved. Perutnina Ptuj filed a lawsuit for the

enforcement of the aforementioned claim; Pivovarna Laško received the lawsuit on 15 February

2011 in which Perutnina Ptuj demands payment in the amount of EUR 10,116,488.71 plus interest

and costs from the defendant, Pivovarna Laško. The plaintiff stated in the lawsuit that it had suf-

fered damages since the defendant had failed to fulfil the obligations stemming from the comfort

letter of 10 January 2009. Pivovarna Laško responded to the lawsuit and repudiated the claim in

full, seeing no grounds for the plaintiff’s claim. By order of 22 November 2011, the Court allowed

the intervention by former Director of Pivovarna Laško, Boško Šrot in the interest of the defendant

Pivovarna Laško. The Court of first instance has not yet decided the claim. If Perutnina Ptuj suc-

ceeds with the lawsuit, Pivovarna Laško will be at a disadvantage and suffer a loss.

2.3.2 SETTLEMENT CLAIMS

On 6 January 2014, Pivovarna Laško received two settlement claims pursuant to paragraph 1 of Arti-

cle 542 of the Companies Act (ZGD-1) filed by Pivovarna Union dated 31 December 2013 and Radenska

dated 30 December 2013. The companies prepared interim balance sheets on the loss sustained dur-

ing the period of the contractual group: Pivovarna Union for the period from 11 April 2012 to 26 April

2012 and Radenska for the period from 6 February 2012 to 26 April 2012. Pivovarna Laško concluded a

Controlling agreement and Agreement organising a contractual group dated 27 November 2011, which

were approved by the General Meetings of all companies. With effect as of 26 April 2012, Pivovarna

Laško terminated both agreements in accordance with paragraph 1 of Article 539 of the Companies

Act, this being one of the conditions one of the crediting banks gave to all three companies in order

to restructure their financial liabilities. In its letters dated 13 February 2014, Pivovarna Laško rejected

both settlement claims since they contained no appendices showing the net loss calculation confirmed

by auditors.

The dependency reports of Pivovarna Union and Radenska state that due to the uncertainty concern-

ing the corrections of the financial statements, the companies have not yet obtained the respective

auditor’s reports on the losses sustained for the period of the contractual group. As a result, they have

not yet issued the relevant settlement claims to the controlling entity, namely Pivovarna Laško. The

settlement claims will be provided when the uncertainty concerning the auditors’ reports are explained

and the settlement claims can be calculated unequivocally.



~ 49 ~

2.3.3 TRANSACTIONS WITH GROUP COMPANIES

In 2013, Pivovarna Laško recorded several transactions with Laško Group companies. The sales and

purchases, as well as the balances of receivables and liabilities are presented in the Financial Report,

namely in Section 4.4.9 RELATED PARTY TRANSACTIONS. The values reflect the actual balances

and transactions effected in the 2013 financial year. In 2013, Pivovarna Laško recorded no transactions

or business with other legal or natural entities referred to in IAS 24.

Laško, 31 March 2014

mag. Dušan Zorko

Chairman of the Management Board

Marjeta Zevnik


Mirjam Hočevar


Gorazd Lukman


Matej Oset




~ 50 ~

2.4

amended report of the management

board of pivovarna laško on

dependency according to article

545 of the companies act (zgd-1)

THIS AMENDED REPORT OF PIVOVARNA LAŠKO EXPLAINS THE SETTLEMENT CLAIMS OF PIVOVARNA UNION

AND RADENSKA RELATING TO THE PERIOD OF THE EXISTENCE OF THE CONTRACTUAL GROUP IN 2012.



~ 51 ~

SETTLEMENT CLAIMS – AMENDMENT OF THE REPORT ON DEPENDENCY DATED 31 MARCH 2014

On 23 April 2012, Pivovarna Laško received the letters entitled “Settlement claim pursuant to para-

graph 1 of Article 542 of the Companies Act”, both dated 22 April 2014 and sent by Pivovarna Union

and Radenska. In the letters, the aforementioned companies inform Pivovarna Laško of the unaudited

amounts of their settlement claims aimed to cover the losses of both companies generated during the

contractual group with Pivovarna Laško as the controlling entity. The unaudited amount of the claim

of Pivovarna Union for the period from 11 April to 26 April 2012 amounts to EUR 0 (nil), while the

unaudited amount of the claim of Radenska for the period from 6 February to 26 April 2012 amounts

to EUR 1,044,183.99. An overview of the calculations was attached to the letters.

On 23 April 2014, Pivovarna Laško replied to the letters of Pivovarna Union and Radenska, inform-

ing both companies that it has been informed of their claims. At the same time, both companies were

requested to provide confirmation of the amounts by auditors.

In light of the aforementioned, provisions of EUR 1,044,183.99 have been disclosed in the financial

statements of Pivovarna Laško for the financial year ended 31 December 2013.


mag. Dušan Zorko


Marjeta Zevnik


Mirjam Hočevar


Gorazd Lukman


Matej Oset




~ 52 ~

2.5

shareholders

PIVOVARNA LAŠKO, A PUBLIC LIMITED COMPANY OWNED BY MORE THAN 7,000 DOMESTIC AND FOREIGN

SHAREHOLDERS, HAS BEEN TREADING DOWN THE PATH OF DEVELOPMENT WITH THE FUNDAMENTAL

OPERATING ORIENTATION: TO OFFER CONSUMERS THE HIGHEST QUALITY BEER AND ENSURE EXCELLENT

MARKET SUPPLY.

Since 1995, Pivovarna Laško has been organised as a public limited company. At the end of the 2013

financial year, it had 7,047 shareholders, which is 162 shareholders or 2.2% less than at the end of

2012.

NUMBER OF SHAREHOLDERS

2011 2012 2013

Shareholders at 31 December 7,492 7,209 7,047

Chain index / 96.2 97.8

2.5.1 PILR SHARES ON THE STOCK EXCHANGE

In 2013, there was no significant trading in Pivovarna Laško (PILR) shares on the Ljubljana Stock

Exchange. As in recent years, there was little interest in PILR shares also in 2013, as the average value

of the share at the end of 2013 was lower than at the beginning of the same year. Such movements of

the share value are also the result of the challenging economic situation.

2.5.2 OWNERSHIP STRUCTURE OF EQUITYAs of 31 December 2013, the share capital of the Company amounts to EUR 36,503,305 and is divided

into 8,747,652 no par-value shares all of which have been paid in full. These are all ordinary and regis-

tered shares issued in uncertificated form bearing the PILR and PILH ticker symbols.



~ 53 ~

OWNERSHIP STRUCTURE OF THE EQUITY OF PIVOVARNA LAŠKO

OWNERSHIP STRUCTURE OF THE EQUITY OF PIVOVARNA LAŠKO AS AT 31 DECEMBER 2013

DUBT, d. d.

Kapitalska družba, d.d.

Hypo Alpe-Adria-Bank. AG - fiduciary account

Probanka, d. d.

Other legal entities

Individuals

Foreign entities

17.9 %

15.0 %

22.5 % 7.0 %

7.0 %

7.1 %

23.5 %

OWNERSHIP STRUCTURE OF THE EQUITY OF PIVOVARNA LAŠKO AS AT 31 DECEMBER 2012

NLB, d. d.

Kapitalska družba, d.d.

Hypo Alpe-Adria-Bank, AG

Probanka, d. d.

Other legal entities

Individuals

Foreign entities

15.3 %

13.7 %

26.4 % 7.0 %

7.0 %

7.1 %

23.5 %

(in %) 2011 2012 2013

Legal entities 71.3 71.0 67.1

Individuals 13.6 13.7 15.0

Foreign entities 15.1 15.3 17.9

Total 100.0 100.0 100.0



~ 54 ~

MAJOR SHAREHOLDERS OF PIVOVARNA LAŠKO

(at 31 December 2013) no. of shares in % position

DUBT, d. d. 2,056,738 23.512 1.

Kapitalska družba, d. d. 617,488 7.059 2.

Hypo Alpe-Adria-Bank, AG - fiduciary account 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, mešani fleksibilni podsklad - jug 439,557 5.025 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 - 10 largest shareholders 6,154,377 70.355

Other minority shareholders 2,593,275 29.645

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 podsklad 439,557 5.025 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.


Other minority shareholders 2,593,275 29.645


On 20 December 2013, NLB transferred to Družba za upravljanje terjatev bank, d. d., Ljubljana (the

Banking Asset Management Company - BAMC) its total holding of 2,056,738 PILR shares, accounting

for a 23.512% stake in the company.

As at 31 December 2013, the ten biggest shareholders possessed a total of 6,154,377 shares or 70.4%

of total share capital, the same as at 31 December 2012.



~ 55 ~

OWNERSHIP STRUCTURE OF THE EQUITY OF SUBSIDIARIES

BIGGEST SHAREHOLDERS OF RADENSKA (ACCORDING TO THE EXCERPT FROM THE CENTRAL SECURITIES

CLEARING CORPORATION (KDD))


Pivovarna Laško, d. d. 4,153,644 82.058 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.

Slatnar Sonja 2,063 0.041 5.

4 F, d. o. o. 1,820 0.036 6.

Žnidar Robert 1,527 0.030 7.

Vrankar Anton 1,500 0.030 8.

Potočnik Marko 1,451 0.029 9.

Camlek Marija 1,164 0.023 10.


Other minority shareholders 257,389 5.085


* The ownership of DBS of 11.853% of the shares of Radenska is also registered with the Central Securities Clearing Corporation

(KDD). In substance, this regards a redemption right, whereby under the contract, the voting rights arising from the ownership

lie with the temporary seller, that is, Pivovarna Laško, which as at 31 December 2013 had a total of 93.911% of the voting rights.

For further information, see Section 5.4.6 NOTES TO INDIVIDUAL ITEMS OF THE FINANCIAL STATEMENTS, Financial

investment into the subsidiary Radenska.



*DBS, d. d. 600,000 11.853 2.

Slovenijales, d. d. 22,062 0.436 3.


Slatnar Sonja 2,063 0.041 5.

Vrankar Anton 1,500 0.030 6.

Potočnik Marko 1,451 0.029 7.

4 F, d. o. o. 1,260 0.025 8.

Camlek Marija 1,164 0.023 9.

Molj Bojan 1,162 0.023 10.




As at 31 December 2013, the ownership stake of the parent company, Pivovarna Laško in Radenska

amounted to 82.058% and was the same as at 2012 year-end.



~ 56 ~

BIGGEST SHAREHOLDERS OF PIVOVARNA UNION


Pivovarna Laško, d. d. 441,765 97.928 1.

May Alexander 3,652 0.810 2.

Skandij, d. o. o 384 0.085 3.

Potočnik Marko 118 0.026 4.

Pintar Nina 100 0.022 5.

Molj Bojan 94 0.021 6.

Srakar Drago 86 0.019 7.

Pivovarna Union, d. d. 69 0.015 8.

MIF Invest, d. d. 60 0.013 9.

Slatnar Sonja 50 0.011 10.

Total - 10 largest shareholders 446,378 98.950


Total - all shareholders 451,114 100.000



May Alexander 3,652 0.810 2.

Skandij, d. o. o 384 0.085 3.

Potočnik Marko 118 0.026 4.

Pintar Nina 100 0.022 5.

Molj Bojan 94 0.021 6.

Srakar Drago 86 0.019 7.

Pivovarna Union, d. d. 69 0.015 8.

MIF Invest, d. d. 60 0.013 9.

Slatnar Sonja 50 0.011 10.

Total - 10 largest shareholders 446,353 98.945



As at 31 December 2013, the ownership stake of the parent company Pivovarna Laško in Pivovarna

Union increased from 97.922% to 97.928%.



~ 57 ~

OWNERSHIP INTERESTS IN JADRANSKA PIVOVARA – SPLIT



Other minority shareholders 29,285 0.540 2.


As at 31 December 2013, the ownership stake of the parent company Pivovarna Laško and of other

minority shareholders in Jadranska pivovara – Split is the same as on the last day in 2012.

OWNERSHIP INTERESTS IN VITAL MESTINJE

(at 31 December 2013) in % position

Pivovarna Laško, d. d. 96.920 1.

Other shareholders 3.080 2.

Total - all shareholders 100.000


minority shareholders in Vital Mestinje remains unchanged compared to the previous year.

OWNERSHIP INTERESTS IN DELO






shareholders in Delo remains unchanged compared to the previous year.



~ 58 ~

BALANCE OF SHARES AND STAKES OF THE MANAGEMENT BOARD MEMBERS OF PIVOVARNA LAŠKO

IN THE SHARE CAPITAL OF THE COMPANY AS AT 31 DECEMBER 2013

(shareholder) Membership No. of shares Participation in %

mag. Dušan Zorko Chairman of the Management Board 3,019 0.0345

Marjeta Zevnik Member of the Management Board 2,247 0.0257

Mirjam Hočevar Member of the Management Board 2,244 0.0257

Mirjam Hočevar Member of the Management Board 1,696 0.0194

Matej Oset Member of the Management Board 2,275 0.0260

Total 11,481 0.1313

BALANCE OF SHARES AND STAKES OF THE SUPERVISORY BOARD MEMBERS OF PIVOVARNA LAŠKO

IN THE SHARE CAPITAL OF THE COMPANY AS AT 31 DECEMBER 2013

(shareholder) Membership No. of shares Participation in %

Bojan Cizej Member of the Supervisory Board 3,180 0.0364

mag. Dragica Čepin Member of the Supervisory Board 3,413 0.0390

Total 6,593 0.0754

The other Members of the Supervisory Board were not holders of PILR (Pivovarna Laško) shares as

at 31 December 2013.

INCREASE IN THE SHARE CAPITAL

On 20 June 2013, the General Meeting of Pivovarna Laško discussed increasing the share capital of

the Company by cash contributions, but the resolution was not adopted.

AUTHORISED AND CONDITIONAL CAPITAL

The General Meeting of the Company did not take any decisions regarding the conditional increase

in share capital or regarding authorised capital in 2013.

2.5.3 SHARES

The shares of Pivovarna Laško with the PILR ticker symbol have been quoted on the regulated

securities market of the Ljubljana Stock Exchange since 1 February 2000 as ordinary shares. As of

31 December 2013, the share capital of the Company amounts to EUR 36,503,305 and is divided into

8,747,652 no par-value shares. 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 as at 31 December 2013.

The Company still has PILH shares from the ownership restructuring procedure reserved for dena-

tionalisation beneficiaries. If a decision is issued in favour of a denationalisation beneficiary, the share

changes from a PILH share to a PILR and is then quoted on the regulated securities market.

RESERVES FOR TREASURY SHARES

In 2013, reserves for treasury shares decreased due to the revaluation to a lower quoted price totalling

EUR 59,275.



~ 59 ~

As at 31 December 2013 Pivovarna Union holds no treasury shares; however, its subsidiary Radenska

holds 17,760 share lots and Pivovarna Union 2,131 share lots. As at 31 December, 2013 treasury shares

were restated to the quoted price amounting to EUR 4.01. The controlling entity Pivovarna Laško has

created treasury shares reserves for the total amount of treasury shares held by the Group.

BOOK VALUE AND MARKET VALUE OF THE SHARE

The audited book value of a PILR share according to the IFRS as of 31 December 2013 amounted to

EUR 7.78. The market value of one share at the end of 2013 amounted to EUR 4.01, and is 48.5% lower

than its carrying amount. Each share gives its owner a voting right at the annual General Meeting of

shareholders and the right to participate in the profit.

AVERAGE MARKET VALUE OF PILR SHARES IN 2013

0

4

8

12

16

20

jan feb mar apr maj jun jul aug sep oct nov dec

in E

UR

(in EUR) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Average

market 7.74 7.36 6.50 5.94 5.25 4.74 4.79 6.00 5.44 4.92 4.50 3.82

value

of shares



~ 60 ~

2.5.4 FINANCIAL CALENDAR FOR 2014

General Meeting Expected to take place between June and August 2014.

Dividend entitlement If the General Meeting decides to distribute

dividends, the shareholders who have

been entered into the Central Securities

Depository maintained by the KDD

on the reporting date determined in the decision on the

use of net profit, will be entitled to dividends.

Dividend payment No later than 60 days after adoption of the

resolution to pay out the dividends.

ANNUAL REPORT

The Company should publish the Annual Report within four months at the latest following the con-

clusion of the financial year, namely by 30 April.

HALF-YEARLY REPORT

The Company should publish a half-yearly report for the first six months of the financial year as

soon as possible and no later than two months following the end of this period, namely by 31 August.

OTHER QUARTERLY REPORTING

The Company should also publish quarterly reports on the first three and nine months of operations

(quarterly reporting). The quarterly reports are to be published no later than two months following the

end of quarterly accounting period (31 May and 30 November).



~ 61 ~

2.6

sales and marketing

IN ACCORDANCE WITH OUR FIVE-YEAR BUSINESS STRATEGY AND THE UTILISATION OF THE SYNERGIES OF

THE JOINT PERFORMANCE OF ALL COMPANIES IN THE GROUP WE SUCCESSFULLY MAINTAIN OUR MARKET

SHARES ON THE DOMESTIC MARKET AND ACHIEVE AMBITIOUSLY SET SALES OBJECTIVES ON FOREIGN

MARKETS.

2.6.1 SALES OF THE LAŠKO GROUP

In 2013, the Laško Group (Pivovarna Laško, Pivovarna Union, Radenska, Vital and Birra Peja) sold

2.8% more than in 2012, which was in line with the plan. The growth of supermarket brands was noted

in all beverage segments.

2013 was characterised by negative macroeconomic indicators. Greater unemployment, additional

tax burdens and a decline in purchasing power have all influenced greater saving. The economic situ-

ation has a great impact on customer expectations and changes in purchasing habits. Customers are

ever more cautious, while prices are impacting purchasing decisions more and more. Customer at-

titudes to brands have changed and are becoming much more rational. Changes in the consumption

structure reveal a growth in the discount supermarket segment and customer inclination towards

supermarket brands.

The economic situation has brought about changes in retail and has completely transformed the

business environment. Payment indiscipline is on the rise; retailers are reducing the number of dif-

ferent products offered and are above all maintaining lower inventory levels, while more and more

products are sold in various promotions.

Despite more difficult operations, we have successfully maintained our market shares on the do-

mestic market and have achieved ambitiously set sales objectives on foreign markets in accordance

with our five-year business strategy and the utilisation of the synergies of the joint performance of all

companies in the group.



~ 62 ~

QUANTITATIVE SALES OF THE LAŠKO GROUP ON THE DOMESTIC MARKET AND ON FOREIGN MARKETS

Index Index

(in hl) Sales in 2013 2013/2012 2013/2013 plan

Beer 2,231,923 104.9 100.8

Water 1,075,870 98.3 96.4

Soft beverages 587,144 103.6 103.1

Other alcoholic beverages 2 0.7 /

Total 3,894,939 102.8 99.9

MARKETING AND DEVELOPMENT

BEER

LAŠKO GROUP

In 2013, most emphasis was placed on sponsoring the largest sports event in Slovenia - the Eurobas-

ket championship. Activities included sports and music events organised in Slovenia, Croatia and

Bosnia and Herzegovina through the BasketPartyBus. We also took advantage of our sponsoring of Eu-

robasket 2013 by organising points of sale promotions. We organised co-marketing activities together

with retailers and food & drink establishments.

At the Laško Group level we organised the “Vrni se” (“Return me”) project aimed at encouraging

customers to purchase returnable packaging. Communications were mainly focused on points of sale

in cooperation with retailers. This project represents the continuation of the Laško Group’s corpo-

rate social responsibility, combining environmental guidelines and a consumer-friendly offering. We

launched a new product on the Slovenian market in June - a user-friendly ergonomic case for 10 return-

able bottles. At the REGPACK regional competition, our new case was declared best packaging in the

region, while we were also awarded the WORLDSTAR award for best packaging.

We also took part in the prestigious international quality competition Monde Selection, where the

Laško Zlatorog and Union ale were awarded gold medals, while Radler even received the large gold

medal.

PIVOVARNA LAŠKO

As part of our sponsoring of the Eurobasket championship we redesigned the Zlatorog bottle and

can in Slovenia and Croatia and organised a competition, thus strengthening the brand’s position and

positive image with its customers.

We designed a new corporate TV spot with the “Full of Pride” slogan, and organised a billboard

campaign with the “Proud of” catchphrase, thus emphasizing all the advantages of the Laško brand

(sponsoring, the Pivo in cvetje festival, quality), and the quality awards we have received. This advertis-

ing campaign ran from May to the end of August. In addition to Zlatorog, our media activities also

included: a competition, Malt, Light, Radler and the “Gremo v hribe” (“Off to the mountains”) project.

In June we launched the redesigned corporate website www.lasko.eu.

In Italy we organised a brief marketing campaign using the “Laško, Spirito Creativo” slogan; the

campaign ran in June and July.



~ 63 ~

In Croatia and Bosnia and Herzegovina we repeated the “Moj trenutak, moj užitak” campaign, com-

prised of TV and FaceBook campaigns. The campaign ran in May and June 2013.

Other major projects that were provided media support include: Pivo in cvetje – the complete media

mix, Sarajevo Film Festival, sponsoring and activation projects (RK Celje, NK Maribor).

PIVOVARNA UNION

Most of the marketing activities, including the competition that was held between April and Octo-

ber 2013, were geared towards the Eurobasket championship. In addition, we ran a new corporate TV

campaign for Pivovarna Union, thus improving brand recall. Advertisements were also published in

the media, on the Internet and CL.

In the shandy segment we modified the design of Union’s alcohol-free lemon-elderflower Radler,

and marketed the product through a CL and TV campaign aimed at younger customers. At the end of

the year we drafted and tested the redesigned brand for this shandy segment.

In late 2013, preparations were under way at Pivovarna Union to celebrate the brewery’s 150th an-

niversary. Thus in December we launched a special promotional packaging of specialist beer with an

anniversary motif as the introduction to communications in 2014. We also launched the project of

organising our own pub in the old malt facility, which will be opened in autumn 2014.

NON-ALCOHOLIC BEVERAGES

PIVOVARNA UNION

In early 2013 we launched the new Sola Ananas (pineapple) product in a plastic bottle, supported by

BB ads, promotion and sampling. In June we added a new cola flavour product to the successful range

of Sola ice teas, supported by a small advertising campaign and points of sale activities. We organised

a prize competition entitled “Z dobro družbo se daleč pride” for the complete range of ice teas, which

were advertised through the caps of Sola products, as well as through BB, Internet, FB and bus adver-

tisements.

During the Eurobasket 2013 championship we launched redesigned Sola peach and cranberry prod-

ucts with basketball players Dragić and Blažič on the label, which were received well by customers. We

began the new school year with the “Sola ni šala” campaign that ran on BB and the TV.

We developed a modified Sola Ice Tea Peach product for the Albanian market, comprising a new

design and flavour adapted to the market. This product is produced under licence by Birra Peja.

RADENSKA

A new advertising campaign “VSE ZA ORO” was organised for the Ora group of products, aiming

to re-launch the Ora brand and the new flavour, Ora Red. The complete Ora brand was advertised on

the TV, Internet and radio, with emphasis on the new flavour. The new Ora flavour was also supported

at points of sale with tastings and customer give-aways. In 2013, a few FB activities were organised,

attracting a somewhat younger target group. The “Pisma Dedku Mrazu” application was one of the

most successful.

Pepsi Cola – in 2013 we focused on retail BTL activities, digital and radio advertisements. We pro-

moted the new global Pepsi slogan (“LAJF JE MOJ”) and visuals. We ran three radio campaigns linked

to our sponsoring deals. Throughout the year we constantly promoted sales through sales activities at

all major supermarkets.



~ 64 ~

In May we launched the new apple and kiwi ACE Radenska flavour. The product received support in

the form of print advertising, tastings at supermarkets and events promotion.

VITAL

At Vital we completely redesigned the Frupi juice drink range (flavours include apple, orange, peach

and pineapple), switching to a one-litre packaging instead of the existing two-litre packaging. Despite

the significant drop in sales of juice drinks in Slovenia, the first sales results of the redesigned range

(the range has been on the shelves since September 2013) are encouraging.

Two flavours (lemon - 1.5l and apple - 1l) were removed from the syrup range of products and replaced

with two new flavours in one-litre packaging.

Due to the severely limited funds, communication activities were focused on FB activities and point

of sale trade marketing.

WATER

LAŠKO GROUP

Tailored marketing activities were carried out for all brands of water and flavoured water, in accord-

ance with the annual plan and the goals. Each brand addressed its customers in its own tone of com-

munication, both in the media and at points of sale, depending on the funds available.

The project aimed at ensuring the active and visible exposure of each brand of water at points of

sale was carried out throughout the year at all major supermarkets and is one of the largest common

projects of the water group of products of the Laško Group. We also carried out the group promotion

of products and new water brands by handing out free samples during the Eurobasket championship,

while we presented the “Story of the bottle” containing environmental contents on PET materials to

schools and kindergartens at educational workshops.

RADENSKA

Radenska Classic and Radenska Light; during the winter sports and Eurobasket championship we

ran advertisements featuring water sources on the Slovenian National Television and in print media.

In September we began activities aimed at celebrating the 180th anniversary of discovering the first

spring, which encompassed print advertisements, online advertisements, fed advertisements; BB at

Bonacca. We also organised sales promotions at points of sale.

We ran Radenska Naturelle advertisements on TV and Radenska Classic advertisement in the press,

at events and on special billboards outside schools.

In 2013 we designed and implemented projects focused on the new Radenska IN brand. We sup-

ported the brand through an ALT campaign and BLT activities which focused on point of sale promo-

tional activities.

We launched a new flavour (OAZA blackcurrant white tea) and advertised it in print, on FB and on

the online portal, and provided support through point of sale activities.

PIVOVARNA UNION

We drafted a new strategy and redesigned the ZA brand, and designed a new product - Za Jazzy,

which was also supported in communication terms. In the main season we conducted promotional

and sales activities in both the retail and horeca segments.



~ 65 ~

A mini advertising campaign ran for the Zala brand during the Eurobasket championship, sup-

ported by parallel promotional activities in city centres, on FB, competitions and through a presence

and public activation at major events.

PIVOVARNA LAŠKO

In November 2013 we launched the Oda spring water with a updated brand graphic image and a

new packaging, the result of the project team’s one year of efforts. The new Oda brand plastic bottles

represent our transition to a so-called lighter shorty HDPE cap and have resulted in a reduction of the

weight of both types of bottles by more than 25%. This significantly impacts a smaller carbon footprint

(less raw materials and energy consumed) and a lower quantity of waste - as a company devoted to

sustainability, this is one of the ways we reduce our environmental footprint.

The launch of the updated brand with its repositioning in the mainstream segment was supported

with a small ATL and BTL communications campaign - TV, print, outdoor and online advertisements,

and points of sale and event promotion activities.

2.6.2 SALES OF THE LAŠKO GROUP ON THE DOMESTIC MARKET

LAŠKO GROUP

In 2013, despite a major fall in private consumption on the Slovenian market, we succeeded in

retaining sales at last year’s levels and even exceeded the annual plan. According to the Retail panel

(Nielsen), 2013 saw a decline in the value of beer sales in the Slovenian market of 5.2 percentage points

compared to 2012. In value terms, sales of beer brands fell by 7.9 percentage points, while sales of

supermarket brands of beer (not counting discount supermarkets) grew by 14.1 percentage points. In

the beer category, the greatest decline (19.8 percentage points) was recorded in the category of beer

mixtures (shandy). The market’s decline is also reflected in the sales of water, ice teas and fruit bever-

ages. Despite the decline in private consumption in Slovenia we retained and even fortified the market

positions of Laško Group brands.

Changes include strong competition among retailers, while even recognised brand are investing

more in promotions and providing greater price discounts. Due to the ever greater price sensitivity of

customers, generating huger added value for the customer while at the same time competing with the

low prices of supermarket brands and the brands of other competitors proved challenging.

In our work we constantly strive to improvements since we work in an environment where it counts

to be more responsive and different from others. We adapt to the market through attractive sales and

marketing activities, the responsiveness and efficiency of our sales teams in the field, and by introduc-

ing new concepts and products in all categories. We actively communicate with all supermarkets and

other customers on a day-to-day basis. We work together with our key customers in preparing the most

effective activities for our customers, loyalty programmes, we provide final consumers with added

value activities, we have introduced innovative promotional material, equipment, etc. We are focused

on finding the best solution for each sales channel and aim to provide consumers with the right range

of products and an interesting shopping experience.

In 2013 we focused on introducing the new standards of Laško Group products on the domestic

market, as well as the PIA concept of product presence, visibility and activation at points of sale. Both

were designed based on the strategic positioning of our brands, their value and quantitative sales, mar-

ket position, market shares and other research. Clear and transparent standards apply to the Group’s

products and are the basis for high-quality points of sale implementation.



~ 66 ~

QUANTITATIVE SALES OF THE LAŠKO GROUP ON THE DOMESTIC MARKET

Index Index

(in hl) Sales in 2013 2013/2012 2013/2013 plan

Beer 1,304,794 101.9 102.8

Water 857,134 98.2 98.8

Soft beverages 386,983 93.5 97.8

Other alcoholic beverages 2 1.4 /

Total 2,548,913 99.3 100.6

PIVOVARNA LAŠKO

Sales of Pivovarna Laško on the domestic market grew by 3.4% compared to 2012, and exceeded the

plan by 7.5%. Growth has been recorded in the beer segment and also in the water segment.

PIVOVARNA UNION

Sales of Pivovarna Union on the domestic market fell by 4.4% compared to 2012, and fell behind

the plan by 1.5%. Most of the drop in sales in the beer segment was recorded in the segment of beer

mixes, where we managed to increase our market share despite the significant general decline in this

segment. The segment of flavoured water also recorded a major fall.

RADENSKA

Sales of Radenska on the domestic market grew by 1.7% compared to 2012, but fell behind the plan

by 0.5%. The most important segment is mineral water, where growth was recorded compared to last

year. We also recorded significant growth of the segment of spring waters, while the flavoured water

and soft drinks segments recorded a decline.

VITAL MESTINJE

Sales of Vital on the domestic market fell by 5% compared to 2012, and fell behind the plan by 5.5%.

The lower quantities sold are the result of abandoning some supermarket brands due to their insuf-

ficient added value. The positive results of the optimisation of the product range and re-branding of

the Frupi syrups are still showing.

2.6.3 SALES OF THE LAŠKO GROUP ON FOREIGN MARKETS

SALES OF THE LAŠKO GROUP BY COUNTRY - FOREIGN MARKETS

LAŠKO GROUP

In 2013, the Laško group continued its intensive sales approach to foreign markets and at the end of

the year we recorded excellent results. On foreign markets, the Laško Group sold 1.346 million hl of

beverages in 2013, which is 10% more than in 2012. Despite the harsh economic conditions that also

marked our export markets, 2013 was a very successful year. More intensive work and the continuation

of the strategy of fostering joint participation on the markets outside Slovenia increased sales in the

beer segment as well as in the segment of non-alcoholic beverages.

In 2013, sales continued to be organised at the Group level, so that the heads of markets from individ-

ual members of the Laško Group cover individual markets for all Group companies, which contributed

to streamlining of the organisation. Sales promotion and the launch of new products on foreign mar-

kets are performed in cooperation with the Group marketing department. On the Croatian market the



~ 67 ~

Laško Group has a presence through its company Laško Grupa, Zagreb, whose primary activity is pro-

moting sales and being intensively involved in sales to exporters and Croatian customers. Also in Bos-

nia and Herzegovina the Group has its own company, Laško Grupa, Sarajevo, which coordinates the ac-

tivities with the importers and principals. Since 2012, Birra Peja has also been part of the Laško Group.

The Group’s export strategy consists of selling products through exporters we have established long-

term business relationships with. We have also been developing partnerships with key customers on

individual markets, thus ensuring the clear visibility of our brands. Supermarket or private brands also

represent a significant portion of our sales on foreign markets.

PIVOVARNA LAŠKO

In 2013, Pivovarna Laško sold 384.3 thousand hl of all beverages on foreign markets, exceeding last

year’s figure by 16%. The sale of beer is the most important and more beer was sold on most foreign

markets compared to 2012. Despite the difficult conditions in the region, a decline in purchasing

power and a decline in beer consumption, we exceeded our goals.

ITALY

LAŠKO GROUP

Italy is the Laško Group’s most important foreign market. In 2013, the Group sold 373.4 hl of bever-

ages on the Italian market, 14.7% more than last year. The Laško Group sold most beer on the Italian

market. We also sold large amounts of water and some soft drinks.

The growth in beer sales compared to the previous year is the result of intensive cooperation with

importers. Most growth was the result of our enhanced presence in supermarkets and discount super-

markets, as well as greater investments in brand marketing, advertising and sales promotion. A lot of

attention was placed on the recognisability of Laško Group beer brands. Increased sales of supermar-

ket brands are also the consequence of improved production processes and a more flexible approach

with regard to the range of products. The results achieved are the result of intensified activities, a con-

stant market presence as well as active cooperation with importers and sub-distributors.

PIVOVARNA LAŠKO

In 2013, Pivovarna Laško sold 120.1 thousand hl of beer on the Italian market. In 2013 we succeeded

in growing sales of our own brands, which is the result of our intensified presence on the supermarket

segment of the Italian market and increased marketing activities aimed at ensuring greater market

visibility of our brands. Pivovarna Laško provides Danish brewery Royal Unibrew with beer manufac-

turing and filing services with respect to the Ceres Top Pilsner beer, which is only sold on the Italian

market.

CROATIA

LAŠKO GROUP

In 2013, the Laško Group exported 15.4% more beverages to the Croatian market than in the previous

year, and 7.4% more than planned. The beer market recorded a decline of nearly 5%, although sales

of non-returnable, mainly PET packaging is on the rise, accounting for about 35% of retail beer sales.

Until 1 July 2013 we were subject to high customs duties on water imports, which impacted the value

of Radenska sold. Also this year, the extremely aggressive approach of domestic water fillers can be

felt, reflected in many offers and enormous investments in marketing communications. The competi-

tion remains strong also in the soft drinks segment. Adequate support activities focused on the largest



~ 68 ~

customers and at promoting our products (campaigns, publications in catalogues and leaflets, palette

exposure) within the scope of the marketing budget.

In Pivovarna Union we did not only concentrate on sales of products of the Group in 2013, but also

filled vast amounts of Bavaria beer for the Croatian market, mainly as a result of beginning filling kegs

in 2013.

PIVOVARNA LAŠKO

Compared to 2012, Pivovarna Laško achieved a 32% growth of sales on the Croatian market, thus

exceeding the plan for 2013. Growth in sales of supermarket brands was also recorded on the Croatian

market; we also achieved growth in this segment thanks to our cooperation with the Konzum super-

market chain. Sales of our own brands are at last year’s levels, which is a very good result considering

the general decline of the market.

BOSNIA AND HERZEGOVINA

LAŠKO GROUP

Laško Group recorded a 41% growth in its sales on the market of Bosnia and Herzegovina compared

to 2012, which is 18% more than planned. Beer sales grew by 50% compared to last year. Sales of

non-alcoholic beverages were also up on last year. As on other foreign markets, sales of beer in PET

packaging are also on the rise in Bosnia and Herzegovina, to which the Laško Group has adapted. This

decision was one of the key factors in sales growth.

An important factor for the increase in sales is the continuation of our concept of market activities,

which began in 2011. All the distributors sell the entire range of products of the Group and thus our

coverage and distribution have significantly improved.

In addition to selling Laško Group products, in 2013, Pivovarna Union filled Bavaria beer for the

market of Bosnia and Herzegovina.

PIVOVARNA LAŠKO

In 2013, Pivovarna Laško increased beer sales on the market of Bosnia and Herzegovina by 21%

compared to 2012.

KOSOVO

LAŠKO GROUP

In 2013, the Laško Group sold 3.4% more on the market of Kosovo than in 2012, which was more

than planned. Beer and water sales remained at the 2012 level, while plans were exceeded in the non-

alcoholic beverages segment, recording 18.8% growth.

In 2012, Birra Peja became a subsidiary of the Union Group and consequently part of the Laško

Group. Birra Peja exports Pivovarna Union products to the market of Kosovo, and continued to pro-

duce Sola peach ice tea under licence for the markets of Kosovo, Macedonia and Albania in 2013. Birra

Peja also continues to bottle Laško Zlatorog beer sold on the markets of Kosovo, Macedonia and Mon-

tenegro. In addition, Birra Peja also sells its own brand beer and Akull spring water on the market of

Kosovo.



~ 69 ~

The growth in sales in 2013 compared to 2012 is mainly the result of the growth in sales of Laško beer

and Sola soft drinks. Sales of Radenska mineral water fell short of the plan due to the new competition

of domestic water bottlers who are entering the market with very low prices. The growth in sales of

Sola soft drinks is the result of systematically purchasing shelf space at all points of sale, direct market-

ing at the shelf and co-marketing activities with the favourite crisps on the market of Kosovo, Patos.

PIVOVARNA LAŠKO

In 2013, Pivovarna Laško recorded a 31% growth in its exports to Kosovo compared to 2012. Only a

part of the product range of Pivovarna Laško is exported to Kosovo, especially for the horeca segment,

while the remaining products are filled by Birra Peja under licence.

OTHER MARKETS

LAŠKO GROUP

In 2013, the Laško Group sold 3.6% more than in the previous year. Other markets represent 15.6%

of the total sales on foreign markets. Sales on the markets of Austria, Serbia, Hungary, Macedonia

and Montenegro were actively promoted. Other markets where the Laško Group also sold its products

included Malta, China, the USA, Canada, the Czech Republic, Sweden, Slovakia, Albania, Greece, Ger-

many, Switzerland, France, Great Britain, Chile, Latvia, Australia, Romania, Poland, the Netherlands,

the UAE and Libya.

In addition to selling Laško Group products, in 2013, Pivovarna Union filled Bavaria beer for the

markets of Serbia and Bosnia and Herzegovina.

PIVOVARNA LAŠKO

Compared to 2013, Pivovarna Laško achieved a 14% growth of sales on other markets. In addition,

Pivovarna Laško sold its products on the markets of Austria, Hungary, Montenegro, the USA, and

Canada.



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2.7

supply flows

GOOD AND CORRECT RELATIONS AMONG GROUP COMPANIES, A COMMON AND UNIFIED APPROACH AND

CONSTANT COMMUNICATION WITH OUR SUPPLIERS REPRESENT THE PATH WE PLAN TO CONTINUE TO

FOLLOW IN 2014.

We continued coordinated activities of the purchase offices of the Laško Group in 2013. Such coop-

eration has allowed us to achieve great synergy effects in the past. Good and correct relations among

Group companies, a joint and unified approach and ongoing communication represent the path we

intend to nurture and continue to follow. To further improve the effects of procurement, the goal

should be to centralise the procurement activities of all Laško Group companies and apply a unified

approach to our suppliers.

In 2013, the supply of all types of materials was good. In general, the supply in 2013 was better than

in the past few years, which most likely reflects lower consumption in this part of Europe.

The offer of all basic raw materials in 2013 was good and there were even some surpluses of particu-

lar raw materials. Interestingly, we noted that the prices of most raw materials (malt, corn) were very

high in 2013. A very special situation pertains to hops. Since both breweries exclusively use Slovene

hops we are dependent on the situation in Slovenian hop growing that in recent years was based on

speculation and a failure to comply with the contractual provisions. Traditionally, long-term contracts

were concluded based on the fact that hop production is a long-term process of investing into culti-

vars. Slovenia mainly produces aromatic sorts of hops that give Slovenian beer its specific flavour. In

2013, the inventories of our several-year-old hops fell. Hops production was below average, and prices

increased by 10%.

The agricultural production in 2013 was below that in 2012, while the quantities of beer-making

barely of an appropriate quality for malt were below average in some parts of Europe. The main issue

was the high protein content, which negatively impacts beer stability. As a result, the prices of malt

sky-rocketed in 2013. Being a commodity exchange product, the situation with corn continued in the

first half of 2013, while prices began falling in the second half of the year, recording a 25% year-on-year

drop. In terms of maize meal procurement we are still 100% tied to the Serbian market, where prices

are still 20% below those in the EU. In the final quarter of 2013 we began purchasing beer-making

barley, which is expected to replace most of the corn meal used in the future.



~ 71 ~

The 2014 forecasts are more favourable, as lower prices of raw materials are expected on the global

market. However, agriculture is highly weather-dependent.

Sugar is a very important raw material for the Laško Group. Since last year we have been very suc-

cessfully procuring it through a purchase consortium led by Mercator. They ensure the relevant quan-

tities, quality, timely deliveries and an acceptable price. We will continue to purchase sugar in such a

fashion in 2014. In the final quarter of 2013, sugar prices fell significantly, resulting in major savings

for the Group. We have already secured even more favourable conditions for 2014.

In terms of packaging materials, the 2013 prices were stable and contractually agreed. Major fluctua-

tions were only recorded with respect to materials tied to the petrochemical industry, oil prices and

dollar fluctuations. The prices of preforms, foils and PVC caps were harmonised with the ICES or Plats

index for the relevant material on a monthly or quarterly basis. At 2013 year-end, granulate prices were

very favourable.

The prices of labels, cardboard, glue and other strategic materials were agreed in contracts and sta-

ble; furthermore, on the annual level there were no increases compared to 2012.

Global trends on the market of PET granulates were slightly more favourable in 2013. In individual

months we recorded a slight increase in the price of granulates at the beginning of the year, followed

by a decrease. The average purchase price in 2013 was 2% lower than the comparable price in 2012.

In 2013, we recorded a significant shift on the energy market (electricity, gas). Lower prices in 2013

translated into significant savings.

Despite the general economic situation, the deepening of the crisis in Slovenia and our continued

efforts to resolve the solvency position of the Laško Group, we have succeeded in retaining the trust of

our suppliers. Worsening liquidity, payment delays and the uncertainty concerning our future raised

concerns among our suppliers. We are faced with the fact that more and more suppliers require instru-

ments to secure receivables and are setting authorised debt limits. Due to the good relationships with

our suppliers we have now secured normal supply conditions. In 2013, we managed to additionally

extend or at least maintain long payment deadlines with the vast majority of our suppliers.

The joint cooperation of the procurement departments of Laško Group companies continues, which

in the past has generated goods results and resulted in certain synergies. Good and correct relation-

ships among the Group’s members, a joint and unified approach and ongoing communications form

the path we intend to follow also in 2014.

In 2013, we were successful in managing costs by reducing and optimising inventories, replacing

certain materials with alternatives and securing longer payment deadlines. In 2013, we managed to

retain the costs of supplied materials at the level recorded in 2012.

With regard to the activities to preserve a human-friendly environment, we will make significant

efforts to use ecologically suitable materials which preserve the natural environment. In the procure-

ment processes this predominantly involves handling various types of packaging comprised of a va-

riety of materials and the collection and recycling thereof. Priority must be given to the use of lighter

packaging, the use of all types of packaging with the addition of recycled materials and similar. Raising

environmental awareness is a constituent part of our operations.



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2.8

quality and standards

THE NON-CONFORMITIES IDENTIFIED DURING OUR INTERNAL QUALITY AND SAFETY ASSESSMENT WERE

FOLLOWED BY SUITABLE CORRECTIVE ACTIONS THAT ELIMINATED THE RISKS OF NON-CONFORMITIES OR

MITIGATED THEM TO AN ACCEPTABLE LEVEL.

An internal quality and safety assessment was carried out in 2013 in all Group companies in accord-

ance with the legislation in force and with our internal by-laws. Any non-conformities identified were

followed by suitable corrective actions that eliminated the risks of non-conformities or mitigated them

to an acceptable level.

In the area of individual supplier control, the technologists and representatives of quality control and

procurement conducted several reviews of our suppliers of raw materials and intermediate goods. The

quality control departments of Pivovarna Union and Pivovarna Laško also perform quality control of

raw materials and the final products of Birra Peja.

Based on quality reviews of our distribution centres we have intensively begun resolving issues

that are not visible during the process itself (hidden defects). These issues include broken handles of

plastic bottles used in the non-alcoholic programme and the poor image of returnable bottles due to

wear and tear.

2.8.1 PIVOVARNA LAŠKO

We controlled input materials in accordance with the plan of control of malt, corn meal, hops and

barley. We reached an agreement with the supplier Sladovny Soufflet to provide a pre-sample before

each delivery, which will be approved or rejected in light of the result of our analyses. We also have

such arrangements in place with Malteurope, supplier of light malt, and they have proved appropriate.

We also visited our corn meal suppliers in May 2013, namely Agroposlovi, Žitko and Granexport

(Serbia). Occasionally, minor deviations in terms of fat content are still found with respect to corn meal

supplier Žitko.

No major deviations were recorded during our laboratory control of intermediate materials such as

bottle caps and labels. However, in light of the notifications received from the bottling plant, in 2013



~ 73 ~

we did issue some warnings and file some complaints with our intermediate materials suppliers due

to deviations from the agreed standards.

CONTROL OF INDIVIDUAL PHASES AND IN-PROCESS CONTROL

In terms of process control we continue to constantly monitor the oxygen content of our final prod-

ucts. Together with the staff of the bottling plant we have managed to optimise the oxygen content

while filling certain PET and other packing (e.g. 0.25 l), which were most at issue in the past.

In terms of our control of individual phases, most deviations were noted with respect to the mi-

crobiological control on line ST1; in addition, we spent a lot of time and conducted many controls on

filling Malt beverages.

The tanks of beer that are filled in Pivovarna Laško and then transported to the filling plant Dines

duo in Zagreb were also subject to our control of individual phases, mostly with respect to microbio-

logical and chemical testing.

In 2013 we introduced the quick swab method, which are also sampled by heads of shifts of the

bottling plan in addition to the laboratory. This method has been proven successful and effective, as

the results are quickly obtained and clear for the employees charged with production line cleanliness

to see. As a result, production line cleanliness is better controlled, which is also important due to the

ageing of the bottling equipment.

In 2013 we increased the frequency of microbiological control of fermenting and maturing beer.

CONTROL OF FINISHED PRODUCTS

In 2013 we continued to maintain a Q (SAP) inventory of products which are most sensitive in terms

of safety (e.g. spring water, Malt, Radler, PET beer).

We organised fifty-five regular tastings in 2013, and took 477 samples of beer and other beverages.

The tasting group is comprised of 14 members. All of them participate in the Flavoractiv scheme,

which is used to verify each taster’s ability to determine when beer is of an insufficient sensory quality.

We also organised Sensory Training in 2013: Descriptone Flavour Profiling (FlavorActive)).

CONTROL OF DRINKING WATER

Control of drinking water is performed according to the plans defined in internal and legislative

rules. In 2013 we re-acquired the waterway management certificate (Codex alimetarius CAC/RCP

1-1969, Rev. 4-2003). As part of the assessment of our waterway HACCP system, one non-conformity

was identified, which has since been resolved. There were no issues in terms of ensuring safe drink-

ing water with respect to the Laško water system. In future we will continue to control the quality of

drinking water at all 12 water systems according to the plan.

COMPLAINTS

In 2013 there were no major quality complaints; some complaints were received relating to individ-

ual items rather than whole batches. In most cases the reason for a complaint was inadequate storage

of beer on the market that caused a change in the sensory properties of the beer.

FOOD SAFETY, MANAGEMENT STANDARDS

As part of the HACCP system management and control we performed the forecast number of in-

ternal reviews and organised training for employees and external contractors. Other activities also

progressed as planned.



~ 74 ~

We re-certified the HACCP system in October. No non-conformities were discovered, and we also

received fewer recommendations than the year before. In October we also underwent a food safety

audit, which had no comments.

We also successfully underwent LVA assessment for the Hofer supermarket chain. We gained the

same number of points as last year (95).

There were no product safety complaints in 2013.

Activities geared towards ISO 9001 and 14001 standards were intensively implemented in all areas.

OTHER

In 2013 we gave two lectures (presentations), namely at the EBC1 congress in Luxembourg and at the

Academy organised at the 20th anniversary of microbiology studies2.

1KOČAR, Nataša, OSET, Matej, KOŠIR, Iztok Jože, RASPOR, Peter: The effect of successive use of lager

yeast starter culture on sugar uptake dynamics from wort.

2KOČAR, Nataša: Kje je moč mikrobiologa v živilski branži najbolj potrebna?

In 2013 we also received confirmation from the Ministry of Education, Science, Culture and Sport

with respect to the project we applied with in the Research voucher public tender entitled “Vpliv

zaporedne kvasovke spodnjega vrenja na njeno fiziološko stanje pri proizvodnji piva” (cooperation

with the Biotechnology Faculty of the University in Ljubljana). The project began on 1 July 2013 and

will be completed by the end of 2014.

2.8.2 PIVOVARNA UNION, LJUBLJANA and BIRRA PEJA, PEĆ, KOSOVO

ISO 9001, ISO 14001 AND IFS STANDARDS

The assessments of conformity with the ISO 9001, 14001 and IFS standards were successfully com-

pleted in October, and as regards the IFS standard again at the higher level. Based on the findings and

recommendations of the external assessments we will begin introducing key process indicators, which

will be one of the gauges of our performance in the future.

The Birra Peja brewery has been certified according to two standards, namely ISO 9001 and HAC-

CP, whose validity was successful proven last year and this year. In March of last year, internal assess-

ment was undertaken before the external review.

INPUT, IN-PROCESS AND FINAL CONTROL

A lot of attention was placed on the control of the suppliers of basic raw materials and intermediate

materials. In 2013 we visited corn meal suppliers in Croatia and suppliers of caps and labels. These

visits have improved our suppliers’ understanding of our quality requirements.

In 2013 we had problems with a supplier of raw materials used in non-alcoholic beverages. The

aroma was not typical and we successfully negotiated a refund. Early in the year we noted the presence

of red grains in the malt of one of our suppliers, which can cause “gushing” (excessive foaming of

beer). We also quickly resolved this issue in agreement with the supplier.

Any deviations determined during in-process and final control are resolved as they arise. Last year

the microbiological results of in-process product testing were slightly higher than in 2012, while the



~ 75 ~

results of the chemical testing were at the same level. Based on the analysis results of technology water

we replaced the nanofiltration and KRO3 modules in the water preparation facility. In 2013 we gradu-

ally began using beer-making barley, which is now the main raw material used in our brand products,

in addition to malt.

Birra Peja continued producing soft drinks and introduced a new own brand product exclusively for

the Albanian market. A review of the production including analysis and tasting of samples confirmed

that the production of our soft drinks under licence by Birra Peja last year was successful.

Process control means monitoring control devices and processes in the production and remote

warehouses. Especially the latter is important as it involves testing products immediately before they

are sold to the final customer. Issues include broken handles of plastic bottles used in the non-alcoholic

programme and the poor image of returnable bottles due to their wear.

Due to the instability of the colour of cranberry flavour ice tea, its sale on the market of Kosovo did

not go ahead. After the development department amended the formulation, the stability is now satis-

factory. Last year, in agreement with the development and sales department, we prolonged the shelf life

of some products for commercial reasons.

In 2013 we organised two taster training sessions. In June we organised internal training for 15 tast-

ers, while FlavorActiva training was organised in November. We are now also included in Internetaster

ring tastings. Accordingly, we will receive unidentified samples six times a year which the tasters will

have to detect.

Last year we organised 167 beer and 53 BAP tastings.

Beer:

• we continue to organise samplings of unfiltered beer once a week,

• we have organised over 15 tastings of Slovenian breweries,

• last year we made significant progress in terms of development complaints (barley, beer stability, NF).

Soft drinks range:

• We determined the appropriateness of final products twenty-five times due to their deviation from

our internal standards,

• We tasted forcing test samples 5 times,

• We tested out-of-date samples 12 times.

COMPLAINTS

The complaints index is below last year’s for all product ranges with the exception of Zala canisters.

The reason for this were ageing canisters, since sales had been falling for some time and no new can-

isters had been purchased.

FOOD SAFETY

Both companies follow the HACCP principles, which is also a legal requirement in Slovenia. The

Food Safety Agency verified samples of our products on the market and had no comments.

The HACCP team met 17 times. We discussed risks in introducing new products in terms of extend-

ing use-by-dates in light of the IFS standards, as well as the risk of sabotage.

There were no complaints due to the safety of products.



~ 76 ~

2.8.3 RADENSKA

MANAGEMENT STANDARDS

An integrated system of quality management has been introduced at Radenska that combines qual-

ity management, environmental and energy management, food (product) safety and safety and health

at work.

We recognise customer and consumer requirements in accordance with a process approach in ac-

cordance with the ISO 9001 : 2008 requirements.

The HACCP system is an integral part of our management system used to determine, assess and

monitor risks relating to the safety of final products, and thus our customers and consumers. We in-

troduced QM index and customer complaints monitoring in the SAP system in 2013.

We are striving to constantly reduce product-related complaints. In 2013 there were no product with-

drawals or recalls due to health hazards.

The Company has acquired the relevant environmental permit. The environmental permit focuses

on the Company’s sustainable development. It is supported by IS0 14001 : 2004 standard require-

ments and by implementing the environmental goals and programmes for 2013, as well as in the

long-term.

In 2013 we noted no extraordinary circumstances or complaints from the nearby inhabitant or any

other groups of interested public.

We are gradually integrating ISO 50001 requirements in our management system, in accordance

with our abilities.

We ensure the workplace health and safety of all employees in accordance with applicable legislation

and BS OHSAS 18001 requirements.

The introduced system of innovation has already born fruit. In 2013, four innovative ideas were pre-

sented to improve the production process. All have already been put in place.

Internal assessments have confirmed the findings of the external audits of the integrated system

of quality management + HACCP and the system of environmental management by the certification

body (SIQ) and also by the assessments of our customers and partners (Hofer, Pepsi) who audited us

according to the requirements of the IFS standard. We retained our A supplier rating and even im-

proved our result compared to last year.

INPUT, IN-PROCESS AND FINAL CONTROL

There were 18 complaints to our suppliers recorded in 2013. These complaints resulted in us return-

ing the complete shipment to the supplier. Many more warnings were issued with respect to the qual-

ity of the supplied materials.

The quality control department of Radenska has three laboratories, all of which aim to ensure the

quality and safety of our products. Before releasing a product to the market, we generally perform at

least a minimal analysis, which is used to confirm the health safety and compliance of products.

We monitor the microbiological conformity and quality of our products through indices. The follow-

ing goal was set for 2013: both indices (NMV and BP) should be above 75. We actually exceeded this goal:



~ 77 ~

• NMV: 92.81 and BP: 93.63,

• with only some particular sub-indices standing out, especially the cleanliness of production lines,

where the aseptic line stood out.

Most non-conformities determined as a result of monitoring line technology processes relate to the

age of the lines. Consequently, many interventions into the technology processes are needed, which

impact quality:

• imprecise CO2 dosing in the carbonated NMV and BP programmes – high process instability,

• unstable processes in terms of brix and citric acid parameters,

• non-compliance of the technology regime of line cleaning - insufficient line cleaning and thus an

after-taste in products,

• most microbiology deviations relate to initial bottling due to the line being inadequately prepared.

INSPECTION AND OTHER REVIEWS

In 2013, official inspection reviews failed to determine any major non-conformities.

• We were warned of our non-compliance with Regulation (EC) No. 1924/2006 of the European

Parliament and of the Council dated 20 December 2006 on nutrition and health claims made

on foods with respect to the Radenska Plus Body Shape label; the warning referred to the general

health clam “bodyshape” and the nutrition claim “enriched with l-carnitine”. The non-conformities

were rectified and the proceedings were halted.

• The inspection authorities also warned us of the non-conformity of the Pepsi Cola and Hofer Cola

labels with the Rules on nutritional labelling of foodstuffs. The deficiencies of the product labels

were rapidly rectified and the proceedings halted.

• PepsiCo conducted three audits, twice by PepsiCo representative Mr Thedy, and once by the author-

ised accreditors AIB. No major deviations were identified in any of the three audits.

• Hofer performed a review according to the IFS standard. The final assessment was very good,

excellent even.

• An audit was performed by IKC (the Institute for the control and certification of organic products).

No non-conformities were found.

• An inspection of our compliance with regulations governing packaging that comes into contact

with food was performed (FCM). No non-conformities were found.

• Two audits were performed in the field of the safety of drinking water. No non-conformities were

found.

COMPLAINTS

In 2013 we began recording complaints in the SAP IT system. This allows us to continuously and

systematically record and resolve complaints. The number of complaints is at the level of 2012.



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2.8.4 VITAL MESTINJE

Last year we introduced more stringent control of input raw materials and increased the frequency

of final product sampling, thus ensuring the greater safety and quality of our products.

In terms of microbiology, we partly began using pre-prepared culture media. This saves time, al-

lowing us to focus on additional analyses (using enrichment culture media). We are beginning to

use luminometers in controlling line and surface cleanliness, allowing us to immediately assess the

hygiene and cleaning efficiency.

In the quality controls process we began using an oximeter to monitor oxygen levels in water and

beverages as we are currently investigating the possibility of using nitrogen to reduce the content of

oxygen in our final products, which will enhance their quality.

There were no complaints, withdrawals or recalls.



~ 79 ~

2.9

investments

THE OBJECTIVE OF THE INVESTMENT AND MAINTENANCE PROJECTS IS TO ACHIEVE OPTIMAL

PERFORMANCE OF THE FILLING LINES AND EFFECTIVE CONTROL OF THE USE OF FUNDS IN MAINTENANCE.

Laško Group’s strategic orientation in the area of production, maintenance, investments, energy and

ecology is based on the achievement of optimal productivity, balance between adaptability and perfor-

mance of individual parts of the production process, the achievement of synergy effects between the

companies in the Group, the integration of information technology into production processes, poten-

tial modular extensions of a certain set of production and focusing on investments with the return on

invested capital as high as possible. Thus, this development and innovation orientation in all areas of

beverage production was also continued in 2013. Furthermore, the sustainable development objectives

were also consistently achieved.

In 2013, we succeeded in producing and filling the entire range of products in the Laško Group and

at the same time introduced some very important novelties that confirmed our development orienta-

tion and the innovativeness of the Group’s development teams. It has been established that the quality

standards of the companies in the Group exceeds the norms and standards of the suppliers who also

supply their products and services to globally renowned companies in our industry.

Irrespective of the obsolescence of certain parts of our production equipment and limited invest-

ments, we have achieved a rather optimistic objective of securing optimum maintenance costs. We

carried out all preventive maintenance works to ensure the smooth operation of production capacities

during the seasonal months.

In 2013, we tried to ensure improved utilisation of capacities and at the same time merge production

programmes where possible and to provide the basis for future investments in individual companies

in the Group by optimising the time necessary for the realisation of orders in the sales department,

inventories and logistic processes, which is in accordance with the policy of optimising and rationalisa-

tion of production lines.

We continued to optimise the use of materials and raw materials and strived for all savings defined

in our 2013 plan.



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The projects of energy management and the establishment of complete control over the use of

individual energy products enable us to achieve lower specific use of individual energy products and

consequently lower costs although the prices of energy products depend on the stock market condi-

tions. Energy and environment optimisation of production processes was performed in a certain part

in cooperation with renowned Slovenian institutes and well established providers of such services.

2.9.1 INVESTMENTS IN PIVOVARNA LAŠKO

The following investment projects were carried out and successfully finalised in 2013:

• New ST3 labelling format - paper-backed label: the project was completed in February 2013;

• Purchase of the Kalinšek facility: finalised in February 2013;

• Separation of beer and yeast VMF /start-up of a membrane filter head: completed in May 2013;

• Manufacture of tools for 10 x 0.5 l cases / first deliveries of new cases: the project was completed

in May 2013;

From January to December we delivered a total of 250,000 new 10 x 0.5 l cases. The first marketing

tests involving the new packaging were carried out. At the REGPACK 2013 competition, our new case

was declared the best packaging in the region.

• Reconstruction of pressure tanks - acceptance of road tankers: the project was completed in June 2013.

• Reconstruction of the PET bottling line - new plastic bottle design for “Oda”: completed in June 2013.

• New plastic bottle design (1.5 l and 0.5 l) was developed and approved. Due to their new modern de-

sign, new cap and much lighter weight (one-quarter reduction in weight) the new plastic bottle meets

all market requirements as well as optimum production parameters demanded by modern times.

• The new Oda plastic bottles were introduced on the market in December 2013 after the completion of

the project of modification of all machinery in the PET bottling line to suit the new plastic bottle design.

• Purchase of the Slimšek facility: finalised in June 2013.

• Refurbishment of the pumping devices plant: completed in August 2013.

• Introduction of the “Energy Management” project, which is expected to be completed in 2014.

• Introduction of the “Rational use of biogas” project. The project was completed in December 2013

with the installation of a new biogas burner on K2 steam boiler.

• Along with all other planned projects, activities involving reconstruction of the ST2 bottling line

dry part continued over the entire year. In addition to replacement of obsolete equipment, the pro-

ject, once completed, will enable products being packaged in the new 10 x 0,5l cases.

• In August we completed preparatory work on all technical, technological and economic parameters

and submitted the order to Krones, our general supplier of equipment. Equipment will be deliv-

ered in January 2014 and the installation is expected to be finished in April 2014.



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• SPTE 400 kWe + 500 kWe – October 2013.

A building permit for SPTE installation project was obtained in July. Construction and installation

work was completed before the end of 2013. Start-up of the first 400 kWe phase will follow after suc-

cessful technical inspection and issue of the operating permit in February 2014; start-up of the second

phase - 500 kWe is expected in May 2014.

• Eco project - pilot tests of beer press residue degradation.

Using the pilot device installed on the Pivovarna Laško purifying plant, beer press residue degrada-

tion tests continued from March until November 2013 as planned. The results show beer press residue

degradation of up to 60%, with energy potential of approx. 100 m3bio-gas per ton of beer press residue,

which could be generated from the substrate with relevant investment in a reactor.

• Some of the funds earmarked for investments were used for the purchase of refundable packaging

and equipment used in sales promotion (coolers, pumping devices, etc.).

• Some funds were also earmarked for the purchase of IT equipment and equipment used for vari-

ous business functions.

For investment projects and capital investments in the production and technical equipment as

well as commercial and IT departments in 2013, we spent a total EUR 3,574,900, which accounts for

86.52% of the funds planned for investments.

2.9.2 INVESTMENTS IN THE UNION GROUP

In 2013, we made the following investments:

• purchase of the bottling line control for S5 refundable bottle, which is the crucial element in ensur-

ing faultless products. Both devices were fixed and installed in the bottling line so that the control

of filled bottles is fully functional and ensures control of the filling levels, labelling and bottle caps.

• Reconstruction of the cans line to 18 pack pallets and Duess for export services is completed. The

line enables additional packaging and stacking of 18 cans on trays and stacking of half-pallets to

pallets.

• Reconstruction of technological lines for beer during fermentation process; this allows for addi-

tional flexibility of beer lines and tanks.

• Final implementation of the MEPIS system for production monitoring. The system is operational

and the first data is available. The project will be accepted into production at the beginning of 2014

after elimination of minor defects and optimisation of its operation.

• Modification of the production line to internally constructed case 10 on the existing equipment on

the S4 line. In cooperation with KHS we began the project of renovation of the dry part of the bot-

tling line and signed a contract for equipment supply and installation. The renovation is expected

to be completed in January or February 2014.

• A porch was constructed over the forklifts parking and loading area.



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• Purchase of 10-ka cases and bottles required that we reallocate assets earmarked for renovation of

the PET bottling line and postpone the latter to the next year.

• We purchased and installed a new air compressor for preparation of technical compressed air. The

compressor was installed as the main compressor in the compressed air system. Due to its specific

energy characteristics the compressor will provide savings on electricity consumption in 2014 and

future years.

• We successfully completed renovation of the façade of bottling plant I and II, replaced old opaque

glass and constructed two prefabricated openings for delivery of machinery. By doing so we met

requirements set by external inspections and improved the plant’s appearance.

• We strengthened the back plate of the fermentation plant and prevented further leakage in the

fermentation plant.

• Some of the funds earmarked for investments were used for the purchase of refundable packaging

and equipment used in sales promotions (coolers, pumping devices, etc.).

• The project “Filter for the Pall” beer was completed. The filter is operating as expected and meets

all the required technical parameters. Official acceptance of the filter into production is expected

in the beginning of 2014.

• Some of the investments in the Union Group included the purchase of IT equipment and equip-

ment used for various business functions.

BIRRA PEJA, PEĆ, KOSOVO

• Increased capacities of the bottling machine from 8,000 to 12,000 cans per hour.

• Increased capacities of the tunnel pasteurisation machine from 8,000 to 12,000 cans per hour.

• New programmes for palletisation for packaging of beer bottles 0.33l 1/24 and 1/12; and 0.5l bottle 1/12.

• Purchase of a machine for strength control of Heuft cans.

• Upgrading of the washing machine by fitting a de-aeration system enabling the use of aluminium labels.

• We upgraded the filling control system on the can and PET filing line with an additional control

of can pressure.

• We are currently drafting plans for a filling line for cans and plastic bottles.

In accordance with the medium-term investment plan, the remaining projects are pending imple-

mentation, while some are in the bids collection phase.

2.9.3 INVESTMENTS AT RADENSKA

In 2013, Radenska spent EUR 1,529,700 on investments and purchases of property, plant and equip-

ment, which is 84.75% of the budget. We also spent EUR 55,530 on completing (implementing) some in-

vestment projects still from 2012 and an additional EUR 116,956 on purchasing refrigerators (the Hlad-

no project), which was agreed within the Laško Group but was not forecast in the 2013 investment plan.



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Below we describe the major investment projects and purchases of property, plant and equipment

by Radenska in 2013:

• We purchased and replaced the aged control devices for the filling level and airtightness on the

Sidel-2 and TPO-2 filling lines. The old control devices were obsolete and occasionally broke down.

By their replacement we have also removed two devices that emitted radiation, thus improving the

level of product control.

• Implementation of the energy review and optimising the use and monitoring of energy sources.

This project was launched in 2012. In early 2013 we completed the energy review and immediately

implemented certain measures. We also began establishing an IT system for energy management

and installed meters of energy usage at major users of the most important energy sources. This

project continues in 2014.

• We completed the project of procuring devices used in preparing the Naturelle natural mineral

water which began in 2012. We introduced filter formation in mid-2013. This ensures the faultless

preparation of NMV Radenska Naturelle for all packaging units.

• We replaced part of the aged pallet conveyors used to transport empty and full packaging on the

TPO-1 filling line. The old conveyors caused delays during the filling process, as well as a lot of

waste due to empty packaging falling off the conveyors.

• In accordance with the Energy review findings and in an aim to fulfil HACCP standard require-

ments we were forced to replace and regulate the aged or inappropriate lighting of part of the

production and warehousing facilities (insufficient luminance, lack of light protection in accord-

ance with HACCP requirements, energy inefficient lights). Thus we replaced the lighting in the

Aseptika, PPET, UPET and Pločevinke filling facilities (approx. 2,000 m2) and in Warehouse 3 (ap-

prox. 3,200 m2). This will result in annual savings of 130 MWh of electricity (approx. EUR 11,000).

• Due to the water ingress from the flat roof of the caps warehouse (approx. 460 m2) we repaired the

roof and its covering (insulation + SICA lining). We were also forced to replace part of the 40 year-

old attic of the filling hall due to ageing. In 2013 we replaced approx. 1,900 m2 of a total 6,800 m2.

We expect to replace the rest over the following two years. The wooden attic is fairly weathered and

the load-bearing elements and screws no longer keep the roofing in place. As a result, water ingress

has set in the insulation, and the risk exists that the roof could be uncovered in case of heavy wind.

The existing roofing will remain as it is in good condition.

• In light of the fact that the average age of our forklifts is 15 years, we decided to purchase a new 4.5

ton forklift, which we expect to take delivery of in early 2014. This forklift will be driven by electric-

ity, in contrast to our existing similar forklifts, which run on gas. Electrical forklifts are cheaper to

operate due to energy costs and are more appropriate for the food industry.

• Radenska’s purchase of the blowing and filling bloc for the Sidel-2 filling line is its largest invest-

ment project in 2013. Although this investment was not planned for 2013, it had to be made due to

issues in filling plastic bottles using the existing blowing machine on this line. The existing blow-

ing machine was 20 years old. In 2013 we experienced difficulties regulating the furnace of the

aforementioned blowing machine and the control valves of the blowing machine. The electronic

controls of the machine itself are also dated and obsolete. Due to these issues there were several

market complaints in 2013 (as a result of the plastic bottles bursting).



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After obtaining bids for the blowing machine and inspecting references we noted that in approxi-

mately 70% to 80% of cases, blowers are sold together with filling machines as monobloc devices. In

light of the fact that both the blowing machine subject to replacement and the filling machine with

rinsing device are 20 years old, we decided to replace both. The filling-blowing monobloc will have

the following advantages:

• no need for air transport between the blower and filler,

• no need for a rinsing device (thus reducing energy and water usage),

• higher energy efficiency compared to a “standard” solution,

• one job position will become obsolete.

Since no funds were earmarked for this investment in 2013, we transferred funds from other invest-

ments which will thus remain unfulfilled or only partially fulfilled. We will also transfer part of the

funding for this project into our 2014, 2015 and 2016 investment plans since the scope of our annual

investment plans does not allow us to undertake major investments in only one annual plan. Along-

side high-quality bottle production, replacing the blowing and filling bloc on this line will also sig-

nificantly reduce energy used per bottle produced, also allowing us to blow lightweight plastic bottles.

Our purchases of property, plant and equipment mainly relate to replacements of obsolete equip-

ment, while some market investments were also made.

In 2013, we spent EUR 237,452 on purchases of returnable packaging compared to a plan of EUR

194,750, recording an excess of 22.4%. This excess represents approximately 50,000 pieces of extra

returnable one-litre bottles purchased. This was caused by issues in ensuring the necessary quantities

of returnable packing in 2013. Due to low return rates of empty packaging from the market we expe-

rienced difficulties in filling returnable bottles and were thus forced to purchase a greater number of

new bottles than planned.

2.9.4 INVESTMENTS AT VITAL MESTINJE

Due to its absolute obsolescence, the existing washing system was replaced with a new one, ensur-

ing microbiologically sustainable and rational production.

In the PET line, our own know-how and implementation now allows us to bottle syrups up to 65°Bx.

We also carried out all the necessary works on this line on our own.

The three-litre line of syrups was also additionally automated as we implemented certain applica-

tions allowing a greater quality and economy of operations.

Some minor items of property, plant and equipment were purchased for control needs (an Oxi me-

ter, laboratory scales). A new forklift was purchased for the warehouse.

Together with the local community we concluded the pending investment in the parking lot.



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2.10

performance analysis

AT THE LAŠKO GROUP, THE 2013 FINANCIAL YEAR WAS CHARACTERISED BY SEARCHING FOR SOLUTIONS

AND TACKLING THE LIQUIDITY PROBLEMS RESULTING FROM THE NON-STRATEGIC FINANCIAL

INVESTMENTS MADE IN THE PAST. THE REORGANISATION, DIVESTMENT AND RESCHEDULING WILL BRING

NEW FOUNDATIONS FOR FURTHER DEVELOPMENT.

2.10.1 PERFORMANCE OF THE LAŠKO GROUP (CONTINUED AND DISCONTINUED OPE-RATIONS)

NOTES TO THE INCOME STATEMENT OF THE LAŠKO GROUP

In 2013 the Laško Group generated EUR 267 million of net sales, which is 1.7% less than in the

previous year.

In the structure of sales revenues, the revenues generated on the domestic market account for 86.8%

of total sales revenue (domestic market includes the markets of Slovenia and Kosovo, the registered

seat of Birra Peja). Compared to the previous year, the sales revenue on the domestic market dropped

by 3.7%. Sales revenues generated on foreign markets account for 12.2% of total sales revenue, which is

an increase of 14.6% compared to 2012. The biggest share of revenues on foreign markets is generated

on the markets of former Yugoslavia, in particular in Croatia.

Operating expenses of the Laško Group in the amount of EUR 265.2 million represent a 3.3% in-

crease over the previous year. The costs of materials and services fell slightly and account for 60.9%

of total operating expenses.

The costs of services, which account for 25.2% of total operating expenses, amounted to EUR 66.9

million, which is a reduction of 4.6% compared to 2012. Majority of the costs of services are costs of

sales (34%), followed by marketing costs (33%), transportation costs (12.5%), costs of repair and over-

haul (7%) and other costs. The costs of services incurred in 2013 are not inclusive of costs of consult-

ants regarding financial debt restructuring (legal and financial consultations) amounting to EUR 1,2

million. The reason for this is the fact that these costs are tied to the total amount of borrowings to be

repaid in accordance with debt rescheduling. In 2013, the costs incurred are recognised as a reduction

in financial liabilities measured at amortised cost. Subsequently they will be recognised in profit or loss

in line with the repayments of the total amount of relevant borrowings in 2014 and 2015.



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Labour costs totalling EUR 50.1 million are slightly lower than in 2012 (a decrease of EUR 1.3 million

or 2.4%). This reduction is primarily the result of salary reductions in the Delo Group. Due to reduc-

tion in severance payments, other labour costs also fell.

Write-offs amounting to EUR 34 million represent an increase of 14% compared to 2012 as a result of

revaluation of property and brands to lower fair values. The Laško Group recognised EUR 9.8 million

of revaluation operating expenses on account of property revaluation, and EUR 5.5 million of revalua-

tion operating expenses on account of revaluation of brands. In 2013 the depreciation costs decreased

by EUR 2.4 million or 12.2%, as a consequence of a low investment activity in recent years and conse-

quently an amount of fixed assets that were already written-off.

In 2013, other operating expenses increased by as much as 72.5% or EUR 5,2 million. Majority of

the increase in other operating expenses relates to underpayment of water concession fee in the period

from 2005 to 2013 amounting to EUR 5.6 million. Of the total amount paid, 75% relates to the liability

of the controlling company Pivovarna Laško and 25% to Radenska.

In the 2013 financial year the Laško Group generated an EBIT of EUR 10.5 million and an EBITDA

of EUR 29.1 million. In 2013 the Group recognised certain one-off business events such as revaluation

of property, investment property and brands; setting up of additional provisions as well as other events;

depreciation not accounted for as a result of discontinuing an operation; and gains and losses from

disposal of investment property. All these events negatively impacted the operating profit and EBITDA

to the total amount of EUR 17.6 million. The normalised EBITDA adjusted by the effects of these busi-

ness events amounts to EUR 28.1 million, which is a decrease of EUR 1 million compared to the previ-

ous year, while EBITDA amounts to EUR 45.7 million, a decrease of EUR 3.5 million compared to 2012.

In 2013 the Laško Group earned EUR 51.3 million of financial loss. The majority of the amount of

financial revenue of EUR 6.9 million (77.2%) resulted from derecognition of non-performing loans

issued in the past to Infond Holding and Center naložbe, that is the income from the bankruptcy es-

tate of both companies amounting to EUR 5.3 million. In comparison, the Group recognised financial

income from dividends in the amount of EUR 6.7 million in 2012, of which dividends paid by Poslovni

sistem Mercator amounted to EUR 5.3 million.

Financial expenses for interest from bank borrowings amounted to EUR 17.9 million, while financial

expenses from impairment of investments amounted to EUR 39.8 million.

In the 2013 financial year, the Laško Group generated a net operating loss of EUR 30.2 million. The

normalised net operating profit of the Laško Group for 2013 equals EUR 9.8 million, which is EUR 3.6

million less than in the previous year.

NOTES TO THE STATEMENT OF FINANCIAL POSITION OF THE LAŠKO GROUP

At the end of 2013, the assets of the Laško Group amounted to EUR 454.5 million. Long-term assets

decreased by EUR 17.9 million, while short-term assets reduced by EUR 33.8 million. The reduction of

short-term assets was mainly the result of reduced available-for-sale financial assets.

Compared to 2012, total capital of the Laško Group in the amount of EUR 58.2 million decreased by

EUR 29.8 million or 33.8%. This reduction is mainly due to the net loss of the financial year amount-

ing to EUR 30.2 million and changes in other comprehensive income totalling EUR 3.8 million; capital

attributed to the non-controlling interests was increased by the amount of the resulting difference.

Short-term and long-term liabilities of the Laško Group amounting to EUR 396.3 on the last day of

the year have reduced by EUR 21.5 million or 5.1% compared to the previous year. On the last day of



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the year, borrowings from banks total EUR 333.6 million. The Group repaid EUR 27.4 million of bor-

rowings in 2013.

On the last day of the year, the surplus of short-term liabilities over short-term assets amounts to

EUR 194.7 million, which has resulted in a high degree of liquidity risk. Compared to the last day of

2012, this surplus has increased further by EUR 13.7 million.

At the end of April 2014 the Laško Group signed a Restructuring and standstill Agreement with

creditor banks. More information is included in the Section 2.13.2SUBSEQUENT EVENTS- Signing of

the Restructuring and Standstill Agreement.

2.10.2 PERFORMANCE OF PIVOVARNA LAŠKO

NOTES TO THE INCOME STATEMENT OF PIVOVARNA LAŠKO

In 2013, Pivovarna Laško generated EUR 90.2 million of net sales revenues, which is 1.3% more than

in 2012. The reason was a 3% quantity increase in sales on the Slovene market, and as much as 16%

increase on foreign markets. Since the share of the products with lower added value has been increas-

ing, the revenues generated on the domestic market are at the level of revenues recorded in the previ-

ous year. Compared to 2012, we recorded a 15% increase in revenues generated on foreign markets.

Operating expenses of Pivovarna Laško in 2013 were 10% higher than in 2012 and amounted to EUR

88.4 million. The additional provisions set aside for the payment of water concession fee for the 2005-

2013 period in the amount of EUR 4.2 million, and provisions amounting to EUR 1 million on account

of the settlement claim of Radenska for the settlement of losses that arose during the validity of the

contractual group in accordance with Article 542 of the Companies Act, contributed most to the total

increase in costs. Compared to the previous year, costs of services increased by 3%. The revaluation

operating expenses were significantly higher as a result of the valuation assessment of property and

investment property in 2013. Labour costs have decreased compared to the previous year.

Costs of materials amounting to EUR 26.2 million increased by 5.2% over the comparable period of

the previous year and account for almost one-third of operating expenses. Costs of energy resources

dropped by 10% or EUR 0.3 million despite increased production compared to the previous year.

Costs of services account for 21.7% of total operating expenses and amounted to EUR 19.2 million,

which is an increase of 3% over the previous year. Majority of these costs are marketing costs totalling

EUR 8.9 million. The costs of services incurred in 2013 are not inclusive of costs of consultants regard-

ing financial debt restructuring (legal and financial consultations) amounting to EUR 0.8 million. The

reason for this is the fact that these costs are tied to the total amount of borrowings to be repaid in ac-

cordance with debt rescheduling. In 2013, the costs incurred are recognised as a reduction in financial

liabilities measured at amortised cost. Subsequently they will be recognised in profit or loss in line

with the repayments of the total amount of relevant borrowings in 2014 and 2015.

Labour costs of EUR 10.5 million are 5.4% less than in 2012 due to the reassignment of the Members

of the Management Board as from 1 March 2013 to part-time employment in Pivovarna Union, and

reduced wages of newly employed workforce.

In 2013 the write-offs amounting to EUR 6.4 million increased by 14%; depreciation is lower mainly

due to lower level of investments in recent years and of already written-off fixed assets. Revaluation

operating expenses for fixed assets are significantly higher since in 2013, the assessment of property

was conducted that resulted in impairment of certain fixed assets.



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In 2013 the Company recognised certain one-off business events such as provisions amounting to

EUR 5.3 million, impairments of property and investment property, which negatively affected the cur-

rent performance, as well as certain events that had a positive effect on the Company’s performance.

The normalised EBIT adjusted by EUR 7,8 million of the effects of these business events amounts to

EUR 10,8 million, which is an increase of EUR 1.2 million compared to the previous year.

Normalised EBITDA totalling EUR 15.6 million has increased by EUR 1 million compared to the

previous year.

In 2013 the Laško Group incurred a financial loss amounting to EUR 37 million. Financial income

of EUR 1.1. million is lower compared to the previous year mainly since dividends were not paid by the

subsidiary Pivovarna Union and as a result of a significantly reduced dividend payment by Radenska.

Financial expenses exceed financial revenues by EUR 37 million. Financial expenses for interest paid

on bank borrowings amounted to EUR 13 million. Majority of the interest was paid to banks and partly

also to companies in the Laško Group. In 2013 a total EUR 25 million of investments were permanently

impaired, which is EUR 4.4 million more than in the previous year. Financial expenses were recog-

nised also on account of impairment of the investments in Pivovarna Union (EUR 7.2 million), in Delo

(EUR 6 million), in the Poslovni sistem Mercator shares (EUR 10.2 million), in Probanka shares (0.8

million) and investments in Elektro Gorenjska shares (EUR 0.7 million).

Due to the negative financial result, in 2013 the Company incurred a net loss amounting to EUR 27.9

million. The net loss for 2013 is EUR 10.3 million higher than the net loss of the 2012 financial year.

The normalised net operating loss of the Laško Group for 2013 equals EUR 2 million, which is EUR

0.8 million less than in the previous year.

NOTES TO THE STATEMENT OF FINANCIAL POSITION OF PIVOVARNA LAŠKO

At the end of 2013, Pivovarna Laško assets amounted to EUR 357 million, which is a decrease of 7.3%

compared to 2012. This decrease is mainly due to reduction in long-term investments in subsidiaries

(EUR 13.2 million) and fixed assets, which reduced by EUR 2.3 million. We invested less in the fixed

assets than their total amortisation and depreciation cost.

Short-term assets amounting to EUR 55.6 million decreased by 23.6% or EUR 17.2 million compared

to the previous year. Available-for-sale financial assets in the amount of EUR 26.3 million account for

the majority of short-term assets and have decreased compared to the previous year by EUR 11.6 mil-

lion or 30.6%. This reduction is mainly due to the impairment of the Mercator shares to the lower

quoted price. Short-term loans decreased by EUR 1.2 million or 40.3%, while short-term operating

receivables increased by EUR 0.9 million.

Compared to the previous year, the capital of the Company (EUR 68.1 million) decreased by 29.4%

or EUR 28.3 million. The majority of the change in equity is a result of the loss generated in the current

year of EUR 27.9 million.

As at 31 December 2013, total financial liabilities of Pivovarna Laško amounted to EUR 257.5 million,

which is a reduction of EUR 4.4 million or 1.7% compared to the previous year.

On the last day of 2013, net indebtedness as the difference between debt and investments amounts

to EUR 4 million, which is a decrease of EUR 21.7 million compared to the previous year.



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2.11

risk management

THE LAŠKO GROUP HAS IMPLEMENTED A SYSTEMATIC PROCESS OF RECOGNISING AND ASSESSING RISKS

THE GROUP COMPANIES ENCOUNTER IN REALISING THEIR STRATEGY AND OPERATING GOALS.

The Management Board, the responsible departments and heads thereof, as well as all key employ-

ees in the companies who have been defined as persons responsible for particular risks are responsible

for actively managing and controlling risks in the Laško Group.

In order to ensure better and timely recognition of risks and in order to adopt the correct and ef-

fective measures that can prevent or at least mitigate the identified risks, in 2013 the Laško Group

established a systematic process of identifying and assessing the risks Group companies encounter in

realising their strategy and operating goals.

Without a doubt, the establishment of the internal audit service represents a significant milestone

in this process. With respect to risk management, the internal audit service provides counselling, a

systematic approach to and an appropriate methodology for recognising and assessing risks and thus

helps the Management Board manage and control risks.

In 2013, a risk analysis was completed for all Group companies, a risk register was established, a Risk

management committee was established and the persons responsible for particular risks were defined,

which serves as the basis for establishing a systematic process of risk recognition and management.

KEY RISKS IN 2013

The negative impacts of the economic recession were even more pronounced in 2013 than in 2012,

having a significant impact on the operations of all Laško Group companies, which were thus exposed

to all types of risks even more.

Financial risks, especially liquidity risk, the risk of changes in the fair value of financial investments,

credit, capital and market risk most impacted the operations of Group companies in 2013. The liquidity

risk was especially pronounced mainly as a result of delayed payments from our customers, which had

a significant impact on the solvency and repayment of due liabilities of all Group companies.

In 2013, the risk of non-implementation of the projected Strategy of the Laško Group by 2016 was

more pronounced, as we have already noted deviations from the projections, while some activities

relating to Group restructuring have also begun.

The Management Board focused most on these risks in forming its measures and activities.



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2.11.1 BUSINESS RISKS

Business risks are associated with the overall business operations and core business of Laško Group

companies. In 2013, procurement risk and retail risks remained the most significant business risks.

PROCUREMENT RISKS

are important due to the exposure to prices of raw materials, which are dependent on the harvest of

individual crops which slightly reduces the impact of globalisation.

In 2013 we continued to tap into the procurement synergies of purchasing the same or similar ma-

terials for all Group companies to the greatest possible extent. Furthermore, we verified, assessed and

selected suppliers based on the already introduced standards and organisational guidelines which have

already been proven effective.

In addition to the requisite quality and supply terms, in selecting suppliers, payment terms were also

of specific importance. At the same time, some materials were purchased on commodity exchanges,

resulting in savings stemming from the fixing of purchase prices for a specified period.

MARKET RISKS

Mainly on account of the negative impact of the recession and decline in purchasing power on all

our strategic markets, in 2013 we recorded a decline in the demand for our product range.

On the domestic market, these risks have increased further due to the appearance of competitive

providers who are offering consumers products at a lower price point. This of course dictated several

of our activities with retailers and distributors, which resulted in good quantities sold, but a lower

financial result due to the number of offers and discounts offered.

2.11.2 OPERATING RISKS

Operating risks are associated with the implementation and monitoring of business processes and

activities of the Laško Group and the costs incurred during the implementation of the business pro-

cesses.

After expiry (termination) of the contractual group, Laško Group companies acted as a de facto

group. This resulted in a deviation from the defined Strategy and the aforementioned ability to make

use of synergies, especially in the area of reducing certain operating expenses.

RISK OF DEVIATIONS FROM THE STRATEGY

is closely connected to other business and price risks, as well as to financial and interest rate risks

and the risk of changes to the fair value of financial investments.

RISKS ASSOCIATED WITH THE PRODUCTION PROCESS

encompass the risk of disturbed processes in the production capacities due to potential major break-

downs. This risk is estimated to be moderate and was mostly neutralised through regular preventive

routine maintenance, regular annual repairs and the replacement of worn parts with new ones.

Due to a lack of funds, investments in production remained less than optimal in 2013. We expect

these risks to grow even further as time progresses.



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RISKS RELATED TO EMPLOYEE SAFETY

and producing safe products: as in previous years, this risk was mitigated through various standards,

such as ISO 9001, HACCP, ISO 14001, NSF and IFS.

In 2013, we particularly focused on the following operating risks and implemented the relevant

activities:

• regulatory risks(changes to regulations in various areas, such as in the area of food production,

consumer health protection, taxes and excise duties, etc.). In 2013, the relevant departments fo-

cused most efforts on negotiating and resolving issues relating to the Water Act (concessions for

using water) and sugar tax,

• environmental risks related to the ineffective use of all forms of energy, non-optimal functioning of

business processes and embedded technologies, which we attempted to manage by implementing

investments in accordance with the business plan, ensuring regular servicing and through auster-

ity measures, and

• HR risks due to a lack of adequate personnel and healthy members of staff. These risks were

mainly mitigated with the planned and timely filling-in for employees as well as through inform-

ing all employees of the importance of health through various training sessions and in cooperation

with healthcare providers (health check-ups, “manager” check-ups, etc.).

2.11.3 FINANCIAL RISKS

Financial risks are risks that may negatively influence the ability to generate financial revenue, con-

trol financial expenses, to preserve the value of financial assets and to control financial liabilities.

All the risk management activities in the Laško Group focus on the unpredictability and illiquidity

of financial markets, that have increased under the conditions of the financial crisis, and attempt to

minimise the potential negative effects on the financial stability and performance of the Group. The fi-

nance department predominantly deals with financial risks while the sales department is also involved

in credit risk management.

Long-term stability of the Group’s operations dictates concurrent and detailed monitoring and as-

sessment of financial risks. In 2013, the Company continued to follow the objective of achieving stable

operations and reducing exposure to individual risks to a sustainable level. The companies are unable

to fully hedge all risks, but can reduce or avoid risks from materialising with timely measures. To

this end, the companies continuously recognise and assess risks, taking the relevant measured de-

pending on the target risk exposure. Risk management measures have been built into our day-to-day

operations. All recognised risks have been recorded in the risks register, which is amended as needed.

Particularly significant among financial risks faced by the Group are liquidity risk, risk related to the

decrease in investment fair value, credit risk and to some extent also interest rate risk. The exposure

to particular types of financial risks and measures for protection against them are implemented and

evaluated based on the impacts on cash flows.

LIQUIDITY RISK

With regard to financial risks, monitoring liquidity risk which means the risk of loss due to short-

term and long-term insolvency is of particular significance. The Group, and especially Pivovarna Laško,

discloses an excess of current liabilities over current assets, signifying the existence of a significant

liquidity risk in particular in the parent company. To avoid liquidity issues, Group companies manage



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their liquidity risk, design and implement a policy of regular liquidity management including the plan-

ning of cash outflows and sufficient inflows both on an annual and a monthly level.

By securing relevant credit lines for short-term cash flow balancing in the form of revolving credits

and agreed overdraft facilities, the Company has so far successfully managed to secure coverage of

potential daily liquidity shortcomes. However, in view of deteriorating conditions on financial markets

and continuing financial crisis, it will become progressively more difficult to successfully manage the

liquidity risk. On 29 July 2013 the Company signed a debt rescheduling agreement with all creditor

banks extending maturity of all borrowings until 30 April 2014 at the earliest. After activities span-

ning nearly a year, we managed to come to an agreement with the banks on the long-term financial

restructuring of Pivovarna Laško, Pivovarna Union and Radenska until 2016, which also contains the

significant milestones relating to the disposal of financial investments as part of the companies’ re-

structuring.

Monitoring of the fundamental financing and liquidity ratios pursuant to Article 14 of the Financial

Operations, Insolvency Proceedings and Compulsory Dissolution Act, which prescribes criteria under

which an entity is deemed insolvent, is particularly important and necessary in ensuring effective

liquidity risk management. Regular monitoring of an entity’s liquidity position is of particular impor-

tance as it ensures timely response and helps avoid the unfavourable consequences of an emerging

liquidity crisis.

In 2013 we continued activities related to disinvestment of all our investments that are not of crucial

importance for the core activity in order to achieve a sustainable level of debt. Until the divestment pro-

cess is completed, the Group will continue to experience a rather difficult liquidity situation. In view of

the aforementioned and difficult situation on financial markets and the entire economic environment,

we have assessed the Group’s exposure to liquidity risk as very high and requiring special attention.

THE RISK OF CHANGES IN FAIR VALUE

The risk of changes in fair value of financial investments, property, plant and equipment and invest-

ment property is undoubtedly also an important financial risk. In should be highlighted that financial

investments are increasingly difficult to sell at desirable prices compared to the purchase price a few

years ago when most of them were acquired. The risk can be observed in the segment of financial

expenses where financial expenses from impairment and write-offs are disclosed. In 2013, the Group

recorded EUR 59.9 million of impairments of financial assets; Pivovarna Laško recorded EUR 30.3

million, Pivovarna Union EUR 19.2 million, Radenska EUR 7.6 million and Delo EUR 2.8 million.

Impairments are predominantly the result of a drop in the value of strategically most important invest-

ments such as Mercator, Probanka, Rudnik Velenje and others.

CREDIT RISKS

include all those risks resulting in the decline of the Company’s economic benefits due to insol-

vency of the Company’s business partners (customers) and failure to meet their contractual obliga-

tions. To this end, the receivables from our business partners, wholesalers and retailers, are regularly

monitored. In addition, we actively manage receivables, rapidly implement collection procedures by

reminding customers, collecting receivables via telephone or in the field, as well as debt recovery

through an external agent and through the courts. The receivables from export buyers are secured with

bank guarantees and partly via the SID insurance company, and we only operate under the system of

advance payments with some customers. Also on the domestic market the receivables from final users

are partly secured with bank guarantees, mortgages on immovable property and bonds. Business with

less credit-worthy customers is made on the basis of advance payments and immediate payments so

that the risk of non-payment for the purchased goods is avoided to some extent.



~ 93 ~

Receivables due from our major wholesalers on the local market are only partly collateralised and

subsequently, there is a large credit risk exposure to this particular segment. Over the entire 2013 fi-

nancial year the payment discipline of our major buyers worsened, which caused constant difficulties

ensuring the current daily liquidity of the Group. Our largest customers are especially prone to pay-

ment delays, generating additional liquidity difficulties for our companies. It is believed that there is

a considerable risk of spreading late-payment culture also in 2014, which is the result of the financial

crisis in all the segments of the economy. The management believes that the credit risk is increasing

due to fierce economic conditions.

INTEREST RATE RISK

is the risk of a possible change in the reference interest rate on the financial market, mainly due

to euro borrowings linked to a variable interest rate (EURIBOR). In 2013 a decreasing tendency of

EURIBOR has continued, which had a positive impact on borrowing costs linked to a variable interest

rate (EURIBOR). Towards the end of the year the reference interest rate rose slightly, however this had

no major impact on interest paid. However, a minimal growing trend has been noted in 2014. Financ-

ing under variable interest rate conditions represents one-third of all the Group’s financing while the

other two-thirds represent borrowings with a fixed interest rate. Interest rate hedging of long-term

debt at variable interest rate is doubtlessly sensible however, majority of the Company’s borrowings

mature within a period of 12 months. We have agreed and signed a contract for long-term financial

debt rescheduling until 31 December 2016 with the banks, and hence we will monitor developments

on financial markets and take appropriate action at the right time. We have assessed the Company’s

interest rate risk as rather high but manageable.

More information on the financial risks of the Laško Group is provided in the Financial Report, Sec-

tion 4.4.7 FINANCIAL INSTRUMENTS AND RISK.



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2.12

financing and sale of the investments

DESPITE ITS OTHERWISE STABLE OPERATIONS IN TERMS OF ITS CORE ACTIVITY, WHICH ARE COMPARABLE

TO OTHER COMPANIES IN THE INDUSTRY, THE LAŠKO GROUP WILL BE ABLE TO ACHIEVE A SUSTAINABLE

LEVEL OF DEBT BY SUCCESSFULLY DISPOSING OF ITS ASSETS AND POTENTIALLY BY A STRATEGIC OWNER

ENTERING ITS BEVERAGE AND BEER ACTIVITY.

2.12.1 FINANCING IN THE LAŠKO GROUP

The general financial and economic crisis which has been present in the Slovenian business en-

vironment since 2008 is also reflected in the constant difficulties in ensuring current liquidity, both

within the Laško Group and even more in the parent company Pivovarna Laško.

We have been experiencing difficulties managing current liquidity for some years. As usual, the

liquidity situation was the worst in the first three months when our sales were lower due to the sea-

sonal impact. The payment discipline of our customers is also usually worse in this period. In 2013,

the negative seasonal impact also influenced June due to the bad weather. It was only in late June and

July that slightly better quantitative sales were recorded. In terms of liquidity management, the most

significant issue is the payment indiscipline of our major customers, who account for over 70% of

our total revenue. On average, our receivables are paid in 70 days, while some wholesalers take even

longer. In the first quarter, both breweries had commitments according to the loan agreements con-

cluded with the banks in accordance with the loan rescheduling agreement up to 31 March 2013, which

was agreed in 2012. After this date, the loan agreements were prolonged to 30 September 2013, then to

30 April 2014 in light of the sales process for the investment in Mercator, which was initially expected

to be completed by that date. On 28 February 2014 the buyer and sellers modified the sales agreement

for Mercator, and inter alia concluded an Annex to the Sales Agreement changing the share price from

EUR 120 to EUR 86, and extending the deadline for closing of the sale to 30 June 2014.

In 2013, the Laško Group has reduced its exposure to banks by repaying net principal of EUR 27.4

million, of which EUR 2.9 million was repaid by Pivovarna Laško, EUR 12.4 million by Pivovarna

Union, EUR 6.2 million by Radenska, with the difference being repaid by the remaining Laško Group

companies.

The inter-Group debt remains at the same level as at 2012 year-end, meaning that Pivovarna Laško

has outstanding loans due to Radenska and Pivovarna Union of EUR 42.4 million, while the debt of

Pivovarna Union to Radenska amounts to EUR 1.1 million.



~ 95 ~

In 2013, the Laško Group recorded EUR 18 million of liabilities due to banks on account of interest

and financing costs, generating an EBITDA of EUR 28.2 million, normalised to EUR 41.9 million.

Most interest (EUR 10.8 million) was paid by Pivovarna Laško, which generated an EBITDA of EUR

7.8 million (normalised to EUR 15.6 million).

We concluded an Agreement on the long-term restructuring of the Laško Group by the end of 2016

with the banks; this agreement also defines the major divestment milestones.

In accordance with the terms of the Agreement on the sale and purchase of shares (SPA) for Merca-

tor, three Laško Group companies, namely Pivovarna Laško, Pivovarna Union and Radenska concluded

an Escrow Agreement with the lienors on 29 July 2013. In order for the Laško Group to be able to

ensure its liquidity during the whole sales process, all crediting banks of Pivovarna Laško, Pivovarna

Union and Radenska agreed to reschedule all loans to no earlier than 30 April 2014, when the transac-

tion was expected to close at the latest.

Accordingly, by 29 July 2013, both the loan agreements extending the financing of all crediting banks

of Pivovarna Laško, Pivovarna Union and Radenska to 30 April 2014, as well as the Escrow Agreement,

were signed, thus fulfilling one of the SPA conditions.

The framework bilateral annex extending the loans until 30 April 2014 commits all three companies

to implementing operational and financial restructuring measures. The agreement was finally signed

after nearly a year of efforts invested in concluding a framework agreement on the restructuring of

the companies up to 2016. Deleveraging from the proceeds of the disposal of MELR shares is one of

the key milestones of the financial restructuring of the Laško Group, as referred to in the Term Sheet

concluded at the end of December 2013, as well as in the Restructuring Agreement concluded by the

crediting banks of Pivovarna Laško, Pivovarna Union and Radenska.

In close cooperation with the banks, since 2013 the management of the Laško Group has prepared

for implementation of the operational and financial restructuring of the Laško Group. In coopera-

tion with legal experts, Laško Group’s financial advisers analysed 17 various financial restructuring

scenarios from a financial, tax and legal perspective as part of the Group’s operational and financial

restructuring. The crediting banks expect the Laško Group to deleverage to a sustainable level as soon

as possible. As a result, the Management Board of the company continues to dispose of its shares in

companies not part of its core activity in accordance with the operational and financial restructuring

project. On 1 September 2013, the Company began selling its share in Radenska, and on 1 October 2013

also its share in Birra Peja. The financial restructuring scenario also foresees the capital increase of

Pivovarna Laško as a significant milestone. A transparent and competitive two-round process of capital

increase of Pivovarna Laško will maximise value for all stakeholders of the Laško Group, including its

owners and creditors, and will at the same time allow its tradition and development to continue, its

brands to survive and develop, and jobs to be retained. The process of searching for a strategic investor

for the beer production activity requires the responsible decision-making of both the Company’s own-

ers and creditors, and will also require more time due to the corporate approvals needed in order to

harmonise the restructuring strategy with the operational strategy and legal requirements; this is also

reflected in the agreed milestones.

2.12.2 SALE OF THE INVESTMENTS OF THE LAŠKO GROUP

In 2013, the Laško Group continued activities related to the divestment of financial investments and

other assets not necessary for its operations. Pursuant to the operational and financial restructuring

plan of the Laško Group, in order to deleverage the Group as planned and ensure its widely recognised



~ 96 ~

brands and jobs are retained, in addition to divestment, we began selling investments that comprise

our core activity - namely our investments in Radenska and Birra Peja - in September 2013. The dispos-

als process of both companies is being managed by the M&A advisers, UniCredit Banka Slovenije.

Activities relating to the sale of our 79.25% stake in Večer continued in 2013. In January, the CPO

prolonged the deadline for the sale of the company to 31 March 2013, which was again prolonged to

31 July 2013. A sales agreement was concluded with a potential buyer containing several suspensive

conditions, which however remained unfulfilled by the cut-off date. As a result, negotiations with thus

customer fell through in early April. Delo continued negotiations aiming at the sale of ČZP Večer with

other potential buyers. In June 2013, a two-month exclusivity agreement was signed with one of the

buyers who in the past expressed its interest in acquiring Večer. The buyer performed a due diligence

review but decided not to continue the procedure. On 26 July 2013, Delo addressed a request to the

Agency of the Republic of Slovenia for Protection of Competition for another extension of the deadline

for the sale of 79.24% share in Večer; however, the request was rejected.

Delo will continue its efforts to sell or alienate its share in Večer, and will continue discussions with

potential buyers of Večer in order to ensure early completion of the sale and payment of consideration,

and thus elimination of the non-compliance with competition rules.

The sale of Delo was temporarily halted in 2012 after we failed to receive any binding offer fulfilling

the tender requirements. In light of the sales process of Večer we will also continue the sales process

for Delo. As part of the Laško Group restructuring process, the sale of Delo is being managed by the

M&A advisers, namely UniCredit CAIB, which began sales efforts on 1 September 2013 by sending a

teaser to potential buyers. An IM was sent in December to those who agreed to signing an NDA. The

non-binding proposals arrived in March 2014.

Sale of the shares of Mercator

On 14 June 2013, the consortium of sellers comprised of Pivovarna Laško, Pivovarna Union, Raden-

ska, NLB, Nova KBM, Gorenjska banka, Prvi faktor – Faktoring, Banka Koper, Hypo Alpe-Adria Bank,

NFD, Banka Celje, and NFD holding concluded with Agrokor an Agreement on the sale of a 53.12%

share in Mercator.

The signing of the sales agreement is the result of an extensive procedure led by the London team

of international investment bank ING Bank N.V. The process was performed in compliance with inter-

national good practice with the aim of involving all potential investors. Transparency of the process as

well as maximising benefits for all Mercator’s stakeholders were ensured.

In accordance with the sales agreement, members of the consortium were to receive EUR 120 per

share, or proceeds of EUR 240 million for their 53% share. Laško Group companies would receive

proceeds of EUR 105.5 million for their 23.34% share.

Closing of the transaction, resulting in the proceeds being paid, is tied to several conditions, includ-

ing obtaining the relevant regulatory approvals, the rescheduling of Mercator’s debt, and Laško Group

companies concluding an Escrow Agreement with the crediting banks with collateral on MELR shares.

The transaction was expected to close no later than by the end of April 2014.

On 28 February 2014, the sales consortium concluded an Annex to the Sales Agreement for the

53.12% share in Mercator (MELR) to Agrokor, which, inter alia, reduces the share price from EUR 120

to EUR 86 and extends the closing date to 30 June 2014. This means that the Laško Group will partici-

pate in the sale in the same scope, namely with:



~ 97 ~

• 317,498 MELR shares owned by Pivovarna Laško (PL),

• 464,390 MELR shares owned by Pivovarna Union (PU),

• 96,952 MELR shares owned by Radenska (RA).

In light of the new sales price of EUR 86 per share, the Laško Group will receive proceeds of EUR

75,580,240. The individual Laško Group companies will receive the following sums:

• Pivovarna Laško (PL) EUR 27,304,828,

• Pivovarna Union (PU) EUR 39,937,540,

• Radenska (RA) EUR 8,337,872.

One of the conditions for successfully closing the transaction is signing the Annex to the Escrow

Agreement (EA) no later than by 15 May 2014.

Disposal of the investment in Radenska began pursuant to the project of the operational and finan-

cial restructuring of the Laško Group on 1 September 2013, while the disposal of the investment in

Birra Peja began on 1 October 2013. In September, a teaser was sent to potential investors in Raden-

ska, followed by an IM. In December, management pitches were organised for potential investors at

Radenska’s headquarters. In January and February 2014, due diligence reviews and negotiations with

the investors that provided binding bids were underway.

Birra Peja, Peć

A teaser was sent to potential investors in Birra Peja in October, while the IM as sent to qualifying

investors in January 2014. Non-binding bids were received in March.

The disposal of Jadranska pivovara – Split closed unsuccessfully in December 2012 as no party ex-

pressed its serious interest. In 2013 we began selling-off the remaining production equipment and

the remaining assets of Jadranska pivovara. A sales agreement for the production equipment was

concluded with a broker; some of the production equipment was sold, with the proceeds being received

by the end of May 2014.

The sales broker NLB began activities for the sale of the share in Thermana already in 2012, begin-

ning with searching for and contacting potential buyers of the target company; however, no bids were

received. The broker believes there is currently no interest in the market to purchase a majority stake

in Thermana.

In 2013, the Laško Group continued activities related to the divestment of assets not necessary for

its operations, namely:

• Pivovarna Laško: the Hum hotel in Laško, the “Tri lilije” sports hall in Laško and the warehouse at

Letališka 32, Ljubljana. The warehouse was actually sold and the transaction closed in late Decem-

ber 2013,

• Pivovarna Union: the “Center Bellevue” development and plots of land, and warehouses in Maribor,

• Radenska: the commercial building in Radenci,



~ 98 ~

• while both breweries also began selling their holiday capacities and have already sold a part thereof.

The Group will intensively continue all sales processes, and as a result, all divestment activities are

continuing rapidly also in 2014.



~ 99 ~

2.13

overview of significant events in 2013

IN 2013 WE RECEIVED THE JUDGEMENT OF THE SUPREME COURT OF THE REPUBLIC OF SLOVENIA FINDING

THAT THE DECISION OF THE CPO FROM 2011, WHICH PREVENTED LAŠKO GROUP COMPANIES FROM

ALIENATING THEIR SHARES IN MERCATOR, WAS UNLAWFUL.

2.13.1 EVENTS DURING THE REPORTING PERIOD

AGREEMENT REACHED WITH BANKS ON LOAN RESTRUCTURING

Laško Group activities relating to the bank loan restructuring are described in Section 2.12.1 FI-

NANCING IN THE LAŠKO GROUP.

PROCEDURES RELATING TO THE DISPOSAL OF LAŠKO GROUP INVESTMENTS

Laško Group activities relating to the disposal of its investments are described in Section 2.12.2 DIS-

POSAL OF LAŠKO GROUP INVESTMENTS.

COMPENSATORY ACTIONS AGAINST ATKA-PRIMA / BOŠKO ŠROT

In early 2011, compensatory actions were filed at the relevant courts against the defendants Atka-

Prima and Boško Šrot, demanding the defendants pay damages to the plaintiffs relating to the dam-

ages incurred by the plaintiffs as a result of transactions effected in 2008 and 2009. The following

actions were filed: by Pivovarna Laško on 12 January 2011 for the payment of EUR 13,336,488.76 plus

costs and interest; by Pivovarna Union for the payment of EUR 51,662,307.74 plus costs and interest;

by Radenska for the payment of EUR 46,238,893.69 plus costs and interest, by Delo for the payment

of EUR 8,003,311.06 plus costs and interest, and by Fructal for the payment of EUR 10,784,720.85 plus

costs and interest (the latter were all filed on 15 February 2011). These proceedings are all pending.

COMPENSATORY ACTIONS AGAINST THE REPUBLIC OF SLOVENIA, THE CPO AND THE THEN DIRECTOR OF

THE CPO - NOW CPA

On 14 September 2012, Pivovarna Laško, Pivovarna Union and Radenska (hereinafter referred to as:

the Laško Group companies) filed a compensatory action against the Republic of Slovenia (the Compe-

tition Protection Office) (hereinafter referred to as: CPO) and the director of the CPO. In the opinion

of the Laško Group companies, the reason for the action was the unlawful prevention of the sale of the

shares of Mercator owned by the Laško Group companies by the CPO in 2011. Because of the decision

of 26 April 2011 taken by CPO, the Laško Group companies were not able to accept the binding offer of

Agrokor for the purchase of the shares of Mercator owned by the Laško Group companies in 2011 since



~ 100 ~

the above-mentioned decision prevented the Laško Group companies from disposing of their shares

of Mercator. The Laško Group companies believe that the CPO unlawfully prevented the conclusion

of the aforementioned transaction with Agrokor, which consequently resulted in damages arising to

the Laško Group companies of a total EUR 59.2 million up to the date the action was filed (of that,

Pivovarna Laško incurred damages of EUR 21,877,385.84 plus costs and interest, Pivovarna Union

damages of EUR 31,322,586.77 plus costs and interest, and Radenska, damages of EUR 6,157,355.78

plus costs and interest).

On 14 October 2013 we received the judgement of the Supreme Court of the Republic of Slovenia

ruling that the aforementioned CPO decision dated 26 April 2011 is unlawful. The judgement of the

Supreme Court was forwarded to the court dealing with the plaintiffs’ actions.

INFOND HOLDING

Bankruptcy proceedings were instigated against the debtor Infond Holding at the end of 2009. In

the bankruptcy proceedings, Laško Group companies have reported the following claims: Pivovarna

Laško: EUR 1,892,319.26, Pivovarna Union: EUR 28,107,482.28, Radenska: EUR 17,062,078.14 and

Delo: EUR 6,771,147.94, amounting to a total of EUR 53,833,027.62. The bankruptcy proceedings are

still pending.

The first interim division of the bankruptcy estate was performed on 24 September 2013. Pivovarna

Laško received EUR 89,382.56, Pivovarna Union EUR 1,485,332.23, Radenska EUR 805,916.99 and

Delo EUR 319,831.10. The bankruptcy proceedings are still pending.

CENTER NALOŽBE

Bankruptcy proceedings were instigated against the debtor Center naložbe at the end of 2009. In the

bankruptcy proceedings, Laško Group companies have reported the following claims: Pivovarna Laško:

EUR 6,487,493.35, Pivovarna Union: EUR 19,991,859.46, Radenska,: EUR 26,414,066.45 and Delo:

EUR 547,784.42, amounting to a total of EUR 53,441,203.68.

The first interim division of the bankruptcy estate was performed on 30 December 2013. Pivovarna

Laško received EUR 410,236.03, Pivovarna Union EUR 1,695,898.66, Radenska EUR 1,670,291.01 and

Delo EUR 34,639.10. The bankruptcy proceedings are still pending.

ACTION OF ERA GOOD

On 13 January 2012, we received a lawsuit from the plaintiff Era Good against the defendants Pivo-

varna Laško, Pivovarna Union and Radenska for the payment of compensation in the total amount of

EUR 958,356.00 (Pivovarna Laško EUR 509,749.55, Pivovarna Union EUR 348,458.24 and Radenska

EUR 100,148.21) together with default interest. The plaintiff in its lawsuit asserts that the rebate policy

established by the Laško Group was discriminatory and constituted an abuse of its dominant position

under the Prevention of the Restriction of Competition Act (ZPOmK-1). The rebate policy of the Laško

Group allegedly placed the defendant at a competitive disadvantage, causing damage to the defendant.

In this matter, the Ljubljana District Court issued a decision on 3 July 2012 dismissing the plaintiff’s ac-

tion in full. The plaintiff brought an appeal against the decision to which all the defendants responded

on 26 October 2012. On 12 March 2013, the plaintiff withdrew its appeal against the first instance rul-

ing.

ACTION OF MINORITY SHAREHOLDERS IN JADRANSKA PIVOVARA – SPLIT

On 4 April 2012, Jadranska pivovara - Split received the action of twenty-eight minority sharehold-

ers challenging the resolution of the General Meeting of Jadranska pivovara adopted on 24 February

2012 on the exclusion of the minority shareholders. On 13 February 2013, Jadranska pivovara received

the judgement of the court of first instance recognising the claim of two shareholders and finding the



~ 101 ~

resolution on the exclusion of the minority shareholders void. Jadranska pivovara appealed the judge-

ment. On 10 July 2013, Jadranska pivovara received the judgement of the Zagreb High Court annulling

the decision of the court of first instance and deciding the case should be re-examined.

On 3 December 2013, Jadranska pivovara received the judgement of the court of first instance, which

again recognised the claim of the two shareholders and found the resolution on the exclusion of the

minority shareholders void. Jadranska pivovara appealed the judgement.

DENATIONALISATION REQUESTS IN RADENSKA

The court proceedings are taking place before the Administrative unit Gornja Radgona in compli-

ance with the Denationalisation Act and in the non-contentious proceedings before the District Court

in Novo mesto pursuant to the Enforcement and Criminal Actions Act. The beneficiaries are demand-

ing restitution of property, company, trademarks and mineral springs that were nationalised during

the nationalisation process, and the payment of damages.

The Gornja Radgona Administrative unit issued a decision on 27 June 2012, which rejected the re-

quest for the privatisation of the nationalised company Zdravilišče Slatina Radenci, Höhn and Comp.,

public trading company in Radenci with a 48% stake owned by Wilhelmina Höhn Šarič. With the sup-

plementary decision issued on 31 August 2012 the Zdravilišče Slatina Radenci, Höhn and Comp., pub-

lic trading company is corrected and renamed Kuranstalt Sauerbrun Radein AG. The claim was lodged

by the legal successor dr. Rudolf Höhn Šarič on 4 May 1993. In the appeal proceedings, the Ministry of

Economic Development and technology on 25 February 2013 rejected the appeal against the decision

of the Administrative unit Gornja Radgona as being unjustified. The beneficiary lodged a lawsuit and

the proceedings continue before the Administrative Court of the Republic of Slovenia.

Non-contentious proceedings for the return of property pursuant to the Enforcement and Criminal

Actions Act are taking place before the District Court in Novo mesto. The motion was filed on 20 De-

cember 2010 for the benefit of beneficiaries, grandchildren of dr. Anton Šarič. The Novo mesto District

Court in issued an order, which was received on 19 June 2013, dismissing the request for the return of

nationalised property. An appeal was filed with the Ljubljana High Court, which was rejected and the

decision of the Novo mesto District Court upheld. The latter also rejected the return of the nationalised

property. This matter is thus res iudicata as concerns regular legal remedies.

ACTION OF PERUTNINA PTUJ AGAINST PIVOVARNA LAŠKO

The plaintiff filed a claim against Pivovarna Laško on 31 December 2010 at the District Court of Celje

demanding payment of EUR 10,116,488.71 plus costs and interest. The plaintiff justified its claim by

stating that the legal representative of Pivovarna Laško signed a comfort letter on 10 January 2009 and

thus allegedly committing to fulfil the obligation of Perutnina Ptuj to Poslovni sistem Mercator on ac-

count of loan contracts. The proceedings are pending.

ENFORCEMENT PROCEEDINGS OF NKBM AGAINST PIVOVARNA LAŠKO

Pursuant to the agreement on the pledge of book-entry securities concluded on 5 June 2009 between

Nova kreditna banka Maribor (NKBM) as the creditor, Center Naložbe as the debtor and Pivovarna

Laško as the lienor, Pivovarna Laško pledged to NKBM 345,304 shares of Radenska (ticker symbol:

RARG) as collateral for a loan raised by Center Naložbe with NKBM. The aforementioned agreement

on the pledge of book-entry securities was signed by the former director Boško Šrot on behalf of Pivo-

varna Laško.

On 22 November 2011, Pivovarna Laško received the judgement of the Maribor District Court allow-

ing the enforcement on the pledged shares to repay the claim in the amount of EUR 7,349,552.25 plus

costs and interest from 29 July 2011 in the commercial dispute between NKBM as the plaintiff and



~ 102 ~

Pivovarna Laško as the defendant. The court thus allowed the enforcement against the 345,304 RARG

pledged shares, ruling that the the defendant Pivovarna Laško is obligated to allow the sale of these

shares and repay the claim from the proceeds of the sale. The judgement became final and enforceable

on 8 December 2011.

Pursuant to the aforementioned judgement and the enforcement motion of NKBM, on 22 Decem-

ber 2011 the court issued an enforcement order whereby the court approved the proposed enforcement

against the pledged RARG shares by selling the shares and repaying the creditor from the proceeds.

So far the RARG shares have not been sold in the enforcement procedure. NKBM proposed deferred

enforcement and accordingly on 28 October 2013 the court ruled for the enforcement to be postponed

until 1 October 2014.

THE ACTION OF MIP AGAINST PIVOVARNA LAŠKO

On 21 March 2013 we received from the Celje District Court the action of MIP, Gornji Vakuf, Usko-

plje, for the payment of EUR 1,135,481.43. In the action, the plaintiff demands the payment of damages

for loss of income of EUR 1,085,481.43 alleged to have arisen as a result of the unlawful withdrawal of

Pivovarna Laško from the sales agreement, as well as damages for the loss of reputation in the amount

of EUR 50,000.00. On 22 April 2013 we replied to the action stating that the plaintiff’s claim was un-

founded. The court of first instance has not ruled on this matter yet.

THE ACTION PIVOVARNA LAŠKO AGAINST MIP

On 25 September 2012, Pivovarna Laško filed an action against MIP demanding payment of EUR

200,975.51 plus costs and interest due to the failure to pay for the goods that Pivovarna Laško sold

and supplied to the defendant, as well as the payment of EUR 245,316.75 plus costs and interest due

to packaging not returned, for a total of EUR 446,292.26 plus costs and interest. On 23 April 2013 we

received the reply of the defendant stating that the claim of Pivovarna Laško is unjustified. The court

of first instance has not ruled on this matter yet.

CEN ADRIA, D. O. O. – V STEČAJU, MATULJI (CROATIA)

In 2006 Pivovarna Laško filed an application for enforcement against Cen Adria, Metulj, demand-

ing payment of outstanding invoices totalling Kn 857,292.53 (euro equivalent of 114,764.73) inclusive

of the legally prescribed default interest. Cen Adria appealed against the enforcement ruling and cur-

rently the case is proceeding in the same way as in the case of an appeal against payment order in

litigious proceedings. In 2006, during the above proceedings, Cen Adria filed a counter action against

Pivovarna Laško and Jadranska pivovara - Split, Vranjic, demanding payment of damages totalling Kn

25,000,000.00 (euro equivalent of approx. 3,346,720.21), which Cen Adria allegedly incurred due to

untimely termination of the Contract on Business Cooperation (Ugovor o poslovnoj suradnji).

In 2012, bankruptcy proceedings were instigated against Cen Adria.

In the case of Pivovarna Laško against Cen Adria, on 8 November 2013 Pivovarna Laško received the

judgement of the court of first instance awarding Pivovarna Laško the total amount of Kn 1,688,990.71

(EUR 221,361.82). Cen Adria appealed the judgement.

NON-LITIGIOUS PROCEEDINGS FOR THE JUDICIAL VERIFICATION OF MONETARY COMPENSATION

The applicants, namely Skandij, d. o. o. (384 PULG shares; amount at issue: EUR 211,084.80), Enlux,

d. d. (22 PULG shares; amount at issue: EUR 12,093.40), Marko Potočnik (118 PULG shares; amount

at issue: EUR 64,864.60 and 1451 RARG shares; amount at issue: EUR 30,819.24), BPH, d. o. o.

(169 PULG shares; amount at issue: EUR 3,589.56), Sonja Slatnar (2,063 RARG shares; amount at

issue: EUR 39,197.00 and 50 RARG shares; amount at issue: EUR 24,344.00), Javna razsvetljava, d. d.

(22 PULG shares; amount at issue: EUR 12,093.40), Mif Invest, d. d. (50 PULG shares; amount at



~ 103 ~

issue: EUR 24,344.00), and Nina Pintar (100 PULG shares, amount at issue: EUR 44,700.00) filed a

request for the judicial verification of monetary compensation paid for the shares of Pivovarna Union

and the shares of Radenska against Pivovarna Laško as the defendant. The applicants request the court

defines appropriate compensation for the purchase of all PULG and RARG shares owned by the appli-

cants, while some applicants also demand that Pivovarna Laško as the main shareholder be required to

purchase their PULG and/or RARG shares and conclude the relevant sales agreement. In our replies

to the applications we objected to them in full.

The cases of Enlux, Skandij, Marko Potočnik, Javna razsvetljava, BPH, Mif Invest and Sonja Slatnar

are now final. We (Pivovarna Laško) have purchased or will purchase the shares of the aforementioned

applicants.

POTENTIAL SETTLEMENT OBLIGATION ACCORDING TO PARAGRAPH 1 OF ARTICLE 542 OF THE COMPANIES

ACT (ZGD-1)

Pivovarna Laško as the controlling entity concluded a control agreement with its subsidiaries Pivo-

varna Union and Radenska on 27 December 2011, thus establishing a contractual group. The control

agreement concluded between Pivovarna Union and Pivovarna Laško was in force between 11 April

2012 and 26 April 2012, while the control agreement concluded between Radenska and Pivovarna

Laško was in force between 6 February 2012 and 26 April 2012. In accordance with paragraph 1 of Arti-

cle 539 of the Companies Act, on 26 April 2012, Pivovarna Laško sent written notice of termination of

both Control Agreements as this was the fundamental condition one of the banks required Pivovarna

Laško, Pivovarna Union and Radenska to fulfil in order for their financial liabilities to be rescheduled.

Pursuant to paragraph 542 of the Companies Act, the controlling entity must settle any annual loss

incurred by the subsidiary unless the loss is settled from other profit reserves that were credited with

profit generated during the contract’s validity.

On 6 January 2014, Pivovarna Laško received the settlement claims of its subsidiaries, namely Pivo-

varna Union and Radenska pursuant to paragraph 1 of Article 542 of the Companies Act. The subsidi-

aries’ settlement claims demanded Pivovarna Laško repay the losses they sustained during the validity

of the contractual group.

With its letter dated 13 February 2014, Pivovarna Laško rejected the settlement claims due to the fact

that the claimed amounts had not been proven (For further information, see Section 2.3.2 SETTLE-

MENT CLAIMS of this Annual Report).

CRIMINAL INVESTIGATION REF. NO. KP 53791/2010

On 9 March 2012, Pivovarna Laško received the decision of the Ljubljana High Court allowing,

pursuant to the appeal of the district state prosecutor, the criminal investigation which the Ljubljana

District Court had already suspended on 3 June 2011. These criminal proceedings are being conducted

against Marko Pogačnik, Tomaž Toplak, Boško Šrot, Igor Bavčar, Pivovarna Laško and Istrabenz as the

suspects. Marko Pogačnik and Tomaž Toplak are suspected of abuse of office pursuant to Article 244 of

the CC, Igor Bavčar and Boško Šrot are suspected of fraud pursuant to Article 217 of the CC in conjunc-

tion with Article 25 of the CC, while the legal entities are suspected of fraud pursuant to Article 217 of

the CC in conjunction with Article 25 of the CC on account of the alleged actions of Boško Šrot and

Igor Bavčar. In the case of Pivovarna Laško, the purchase of Mercator shares from SOD on 30 August

2005 is at issue. The investigation is still pending.

CRIMINAL PROCEEDINGS REF. NO. X K 59294/2010

These criminal proceedings refer to two groups of crimes - on the one hand to actions related to

the conclusion of loan agreements with Infond Holding and Center Naložbe, and on the other hand

to actions related to the sale of Istrabenz shares (ticker symbol: ITBG). Initially the proceedings were



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merged; however, now the court has ordered the proceedings be separated, namely against Boško

Šrot as the defendant and Igor Bavčar as the co-defendant for crimes according to Article 240/I of the

Criminal Code (KZ-1).

On 7 March 2013, Pivovarna Laško brought a claim for damages against Boško Šrot, Igor Bavčar and

the other defendants due to crimes relating to the sale of a lot of ITBG shares in 2007. The claim for

damages demands repayment of lost profit of EUR 25,490,616.16, plus statutory default interest, due

to the sale of a lot of ITBG shares at an excessively low price. On 19 July 2013, the court of first instance

issued its guilty verdict, while Pivovarna Laško’s claim for damages was referred to the civil court.

CRIMINAL PROCEEDINGS REF. NO. X K 6155/2013

On 29 November 2013, we received notification of the Ljubljana District Court concerning the pre-

trial hearing in the criminal proceedings against Boško Šrot, Matjaž Rutar, Vesna Rosenfeld and the

legal entity Atka-Prima as suspects of crimes according to 244/II of the Criminal Code, and others.

On 17 January 2014 we informed the court of the course of the claims against Boško Šrot and the

legal entity Atka-Prima for damages, and that we would not claim damages in the criminal proceedings

due to the fact that claims for damages had already been lodged against Boško Šrot and the legal entity

Atka-Prima. On 24 February 2014, we lodged claims for damages against Vesna Rosenfeld (Pivovarna

Union: EUR 23.2 million) and Matjaž Rutar (Pivovarna Laško EUR 2.3 million, Pivovarna Union EUR

36.8 million, Delo EUR 8.9 million, Radenska EUR 2.4 million).

CHANGES TO THE COMPOSITION OF THE MANAGEMENT BOARD OF DELO

At its session of 1 July 2013, the Supervisory Board of Delo appointed Irma Gubanec, Member of the

Management Board of Delo for finance, as Chairwoman of the Management Board of Delo for a term

of office of 5 years. As the new Chairwoman of the Management Board was appointed, the term of of-

fice of the existing Chairwoman Marjeta Zevnik ended, after having temporarily assumed the manage-

ment of Delo in September 2012 as Member of the Supervisory Board of Delo pursuant to paragraph

2 of Article 273 of the Companies Act.

At its session on 28 August 2013 the Supervisory Board of Delo appointed Nada Jakopec member of

the Management Board of Delo responsible for general, human resources and legal affairs for a term

of office from 1 September 2013 to 30 June 2018.

GENERAL MEETING OF SHAREHOLDERS OF PIVOVARNA LAŠKO

On 20 June 2013, the 21st General Meeting of shareholders of Pivovarna Laško. was held. The Gen-

eral Meeting was briefed on the audited Annual Report for 2012 and the Report of the Supervisory

Board on its verification of the Annual Report, on the cover of net loss, on the remuneration of the

Management and Supervisory Board members and granted discharge to the Management Board and

the Supervisory Board. The resolution on the capital increase with cash contributions proposed by the

Management Board and the Supervisory Board failed to receive sufficient support to be adopted. Due

to the expiry of the office of the existing Members of the Supervisory Board, new Members of the Su-

pervisory Board (capital representatives) were appointed as of 1 September 2013, namely Peter Groznik,

Jože Bajuk, Enzo Smrekar and Goran Brankovič. The General Meeting appointed Ernst & Young as

the auditor for 2013.

The resolutions of the General Meeting were published on the SEOnet portal and on the Company’s

website www.pivo-lasko.si on 21 June 2013. The minutes of the General Meeting and appendices there-

to are available on the website of AJPES (Business register of Slovenia).



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GENERAL MEETING OF SHAREHOLDERS OF PIVOVARNA UNION

On 23 July 2013, the 21st General Meeting of shareholders of Pivovarna Union was held. The General

Meeting was briefed on the audited Annual Report for 2012 and the Report of the Supervisory Board

on its verification of the Annual Report and of the Management Board’s report on transactions with

related parties on the remuneration of the Management and Supervisory Board members and granted

discharge to the Management Board and the Supervisory Board. Under item 3 of the agenda (General

Meeting’s consent to the Sales agreement for shares in Poslovni sistem Mercator), the General Meeting

adopted a resolution pursuant to Article 330 of the Companies Act, namely that it had been briefed on

the elements and contents of the Sales agreement for shares in Poslovni sistem Mercator (MELR), and

that it consented to Pivovarna Union selling to Agrokor 464,390 MELR shares, representing a 12.33%

stake in Mercator for EUR 120 a share. The General Meeting appointed Ernst & Young as the auditor

for 2013.

The resolutions of the General Meeting were published on the Company’s website www.pivo-union.

si on 23 July 2013. The minutes of the General Meeting and appendices thereto are available on the

website of AJPES (Business register of Slovenia).

GENERAL MEETING OF SHAREHOLDERS OF THE SUBSIDIARY RADENSKA

The 21st General Meeting of the shareholders of Radenska was held on 30 August 2013. The General

Meeting was briefed on the audited Annual Report for 2012 and the Report of the Supervisory Board

on its verification of the Annual Report and of the Management Board’s report on transactions with

related parties, on the remuneration of the Management and Supervisory Board members and granted

discharge to the Management Board and the Supervisory Board. The General Meeting adopted a reso-

lution on distributing EUR 302,557.20 as dividends of EUR 0.06 gross per share, with the remaining

distributable profit of EUR 197,442.80 being posted to retained earnings. Due to the expiry of office

of two Members of the Supervisory Board, the General Meeting appointed Ms Dragica Čepin and Ms

Brigita Oplotnik Rajh as Members of the Supervisory Board (capital representatives) as of 14 October

2013. The General Meeting appointed Ernst & Young as the auditor for 2013.

The resolutions of the General Meeting were published on the Company’s website www.radenska.

si on 30 August 2013. The minutes of the General Meeting and appendices thereto are available on the

website of AJPES (Business register of Slovenia).

BEGINNING OF THE SALES PROCESS FOR SHARES IN RADENSKA, DELO AND BIRRA PEJA

More information on the course of the sales process for shares in Radenska, Delo and Birra Peja can

be found in Section 2.12.2 DISPOSAL OF LAŠKO GROUP INVESTMENTS of this Annual Report.

FILING CRIMINAL CHARGES

On 25 October 2013, Pivovarna Laško filed criminal charges against the former director of Pivovarna

Laško, Boško Šrot. Pivovarna Laško believes that reasons exist to suspect that the actions of the former

director Boško Šrot, who pledged 345,304 RARG shares with NKBM pursuant to the pledge agreement

of book-entry securities dated 5 June 2009 constitute an abuse of office or trust in an economic activ-

ity, a crime referred to in Article 240 of the Criminal Code (KZ-1). The amount of damages Pivovarna

Laško will incur as a result of this damaging transaction cannot be assessed at this moment in time

(the actual amount of damages will be known when the shares are sold in the enforcement proceed-

ings of NKBM against Pivovarna Laško - see event Enforcement of NKBM against Pivovarna Laško);

thus Pivovarna Laško as the legal entity incurring damage will subsequently file a claim for damages.

CONVOCATION OF THE GENERAL MEETING OF SHAREHOLDERS OF PIVOVARNA LAŠKO

On 11 November 2013, the Supervisory Board of the Company convened the 22nd General Meeting

of shareholders expected to take place on 13 December 2013 in order to inform shareholders of the con-



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flict of interest existing with respect to members of the Supervisor Board Goran Brankovič and Enzo

Smrekar, both of whom took office on 1 September 2013.

On 2 December 2013, member of the Supervisory Board of Pivovarna Laško Goran Brankovič for-

warded to Pivovarna Laško a notice and documentation explaining that he is no longer director of

Presad as of 30 November 2013. He terminated his employment with Presad on the same date. On 12

December 2013 Pivovarna Laško received notice of Enzo Smrekar’s irrevocable resignation as member

of the Supervisory Board of Pivovarna Laško, effective as of 12 December 2013.

After receiving the resignation of Enzo Smrekar and considering the potential conflict of interest of

Mr Brankovič had ceased to exist, at its correspondence session of 12 December 2013, the Supervisory

Board resolved to cancel the 22nd General Meeting of Pivovarna Laško, which had been scheduled for

13 December 2013.

CHANGE IN SIGNIFICANT OWNERSHIP STAKES IN PIVOVARNA LAŠKO



for a 23.51% share. Pivovarna Laško was informed of this by the BAMC on 9 January 2014. Pivovarna

Laško received notification of the transfer (purchase) of the shares in Pivovarna Laško from NLB on

9 January 2014. Through this transfer, the BAMC has become the largest shareholder in Pivovarna

Laško.

2.13.2 SUBSEQUENT EVENTS

DISPOSAL OF MERCATOR SHARES

On 14 June 2013, the consortium of sellers of the stake in Poslovni sistem Mercator (hereinafter: Mer-

cator) comprised of Pivovarna Laško, Pivovarna Union, Radenska, NLB, Nova KBM, Gorenjska banka,

Prvi faktor – Faktoring, Banka Koper, Hypo Alpe-Adria Bank, NFD, Banka Celje, and NFD holding

(hereinafter: consortium of sellers) concluded with Agrokor, d. d. (hereinafter: Agrokor) an Agreement

on the sale and purchase of a total 53% share in Mercator (hereinafter: SPA).

One of the conditions for fulfilling the SPA was the restructuring of Mercator’s debt. This condition

should have been fulfilled by 31 January 2014. On 31 January 2014, before expiry of the deadline, the

buyer issued a statement to the consortium of sellers extending the joint debt restructuring condition

and thus the validity of SPA until 4 February 2014.

On 3 February 2014, the buyer issued another statement regarding a change in joint debt restructur-

ing condition and extended the deadline and thus validity of the SAP until 28 February 2014.

On 28 February 2014, the consortium of sellers and Agrokor agreed and concluded an annex to

the SPA. Inter alia, the annex redefines the price (now EUR 86 a share) and extends the deadline for

transaction closing (now 30 June 2014).

The closing of the transaction is tied to the fulfilment of certain suspensive conditions. One of these

is acquiring the necessary approvals of the Laško Group decision-making bodies.

At its 7th session held on 6 March and 12 March 2014, the Supervisory Board of Pivovarna Laško

together with the Supervisory Board of Pivovarna Union was briefed on the contents of annex no. 1 to

the share purchase agreement for Poslovni sistem Mercator, as well as on the basis and explanation

of the sale. As the 7th session progressed, the Supervisory Board of Pivovarna Laško, separately from



~ 107 ~

the Supervisory Board of Pivovarna Union, consented to the sale of 317,498 MELR (Poslovni sistem

Mercator) shares to the company Agrokor, d. d., Trg Dražena Petrovića 3, Zagreb, representing a 8.43%

stake in Poslovni sistem Mercator, at the fixed price of EUR 86 per share.

Furthermore, at its session held on 14 March 2014, the Supervisory Board of Pivovarna Laško con-

sented to the Management Board’s proposal that Pivovarna Laško, as the majority owner of Pivovarna

Union, votes at the mandatory General Meeting of Pivovarna Union in accordance with Article 330 of

the Companies Act in favour of the resolution allowing Pivovarna Union to sell 464,390 ordinary reg-

istered shares with the MELR ticker symbol issued by Poslovni sistem Mercator, representing a 12.33%

share at a fixed price of EUR 86 per share, to Agrokor, d. d., Trg Dražena Petrovića 3, Zagreb. Pivovarna

Union adopted the aforementioned resolution on 15 April 2014.

On 11 March 2014, the Supervisory Board of Radenska consented to the sale of Mercator shares to

Agrokor at a price of EUR 86 per share, as did the Supervisory Board of Pivovarna Union on 14 March

2014.

After obtaining the aforementioned consent, all internal consents of the decision-making bodies of

the Laško Group have been obtained for the sale of Mercator sharers owned by Laško Group compa-

nies to Agrokor.

PUBLIC AUCTION FOR THE SALE OF ČZP VEČER SHARES

A public auction for the sale of shares of ČZP Večer was held on 28 February 2014 at 12 noon in the

premises of Delo. The Committee determined that the security required for participation in the auc-

tion had not been paid within the set deadlines. Consequently, the auction was unsuccessful.

The subject of the public auction was a lot of 202,788 (79.24% interest) of ordinary nominal shares

of ČZP Večer (VEMG), held by Delo. The starting price at the auction was EUR 3,098,000.00.

Delo will continue its efforts aimed at fulfilment of provisions of the Competition Protection Office

of the Republic of Slovenia, Ref. No. 306-195/2008-57 of 23 September 2009 ordering it to dispose of

191,943 shares (75%) and successful completion of the sale of the ČZP Večer shares.

SETTLEMENT CLAIMS OF PIVOVARNA UNION AND RADENSKA IN ACCORDANCE WITH ARTICLE 542 OF THE

COMPANIES ACT (ZGD-1)

On 23 April 2012, Pivovarna Laško received the letters entitled “Settlement claim pursuant to para-








On 23 April 2014, Pivovarna Laško replied to the letters of Pivovarna Union and Radenska inform-







~ 108 ~

SIGNING OF THE RESTRUCTURING AND STANDSTILL AGREEMENT

At the end of April 2014, Pivovarna Laško, Pivovarna Union and Radenska signed a Debt Reschedul-

ing and Standstill Agreement with all of the 18 creditor banks. The Agreement defines important fi-

nancial restructuring milestones, whereas final maturity of the majority of the Company’s borrowings

has been rescheduled to the end of 2016.

The project of determining the concept of operational and financial restructuring of companies con-

tinued over the entire 2013 period, with close participation of all companies involved, creditors, and

consultants. The aim was to define an agreement that will on the one hand ensure financial stability

of the Laško Group through long-term reprogramming of its borrowings and through deleveraging

of the Group to a sustainable level of indebtedness, and on the other hand, to ensure fulfilment of

creditors’ expectations for rapid deleveraging and simultaneous maximising of the value for the own-

ers. This will ensure the Laško Group of companies a sustainable development of quality brands and

preservation of jobs.

A total of 17 various scenarios of the Group’s restructuring plan were prepared and following the

analysis from the financial, fiscal and legal points of view, the concept which provided the basis for

the signed Agreement, was dully selected.

The Agreement regulates the Group’s commitments to creditors until the end of 2016. In addition

to deleveraging through repayments to creditors from the cash flow from the Group’s principal activ-

ity, the Agreement sets important deleveraging milestones from the consortium sale of Mercator and

processes for disposal of Radenska, Birra Peja and Delo, all of which began in 2013.

One of the key milestones for all stakeholders, including creditors, the Company and the owners, is

the capital increase of Pivovarna Laško. After a transparent process of finding the investor, the capital

increase will be discussed by the owners at the Annual General Meeting of Pivovarna Laško.

The first significant milestone is repayment of borrowings with the proceeds from sale of Merca-

tor by the end of July 2014. The next milestone is the end of 2014, when repayment of borrowings is

planned from the consideration received for disposal of investments in auxiliary activities. The third

key milestone is deleveraging from additional injection of capital, planned for mid-2015.

If the first milestone is not fulfilled, the third one should be met at the earliest opportunity. In this

case the restructuring would not be terminated, however the majority of creditor banks (85% of liabili-

ties are due to creditor banks), may opt for a different option or solution. Non-compliance with the pro-

visions of the Agreement, the amortisation plan based on the cash flow from the primary activity and

deleveraging milestones, will terminate the agreement only, if so desired by the majority of creditors.



~ 109 ~

2.14

development landmarks

187 YEARS HAVE PASSED SINCE THE VERY BEGINNING AND PIVOVARNA LAŠKO HAS GROWN OUT OF A

LOCAL BREWERY TO A LEADING BEER PRODUCER AND TOGETHER WITH THE COMPANIES IN THE GROUP IT

IS ALSO THE LEADING PRODUCER OF MINERAL AND NATURAL WATERS AND NON-ALCOHOLIC AND OTHER

DRINKS ON SLOVENE MARKET.

1825

Historical beginnings of Pivovarna Laško. A producer and seller of honey and gingerbread, Mr Franz

Geyer, establishes a crafts brewery in the former Valvasor Špital, whose building still stands today.

1838

The brewery is bought by Mr Heinrich August Uhlich who begins to export beer to India and Egypt.

1867

Mr Anton Larisch constructs the largest brewery of the time in Lower Styria at the bottom 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 re-

named to Dark Laško beer. The Laško pivo brand becomes increasingly more validated and is also sold

in Egypt and Budapest.

1924

The brewery brews its final beer. The Ljubljana Brewery Union secretly buys up the majority of its

shares and ceases production. The closing of the Laško brewery has more than just a material effect.

The innkeepers warmly welcome the initiators of the brewery’s reopening.

1929

The representatives of innkeeper cooperatives decide to construct a catering shareholding brewery

in Laško.



~ 110 ~

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 like the beer so much that German occupiers allow maintenance of the Laško beer brand due

to the quality of the beer.

1944

Because of the bombing of the railway bridge the brewery was also hit and demolished. After World

War II production in the brewery began again already in 1946 and was officially established in 1947.

Since World War II Pivovarna Laško has constituted a single company the entire time. Particu-

larly after 1960, the Company recorded an extraordinary development in sales: from 60,000 hl to

1,300,000 hl.

1990

After harmonisation with the provisions of the Companies Act, the organisation of the socially

owned company is entered into the court register on the basis of the court decision No Srg 23/90 of

31 May 1990.

1991

In accordance with the provisions of the Companies Act, the Company is transformed into a public

limited 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 on 20 April 1995, Pivovarna Laško is subject to owner-

ship transformation 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 public

limited company with more than 15,000 shareholders.

2000

Capital connections with Radenska, Radenci, Jadranska Pivovara, Split, and Vital, Mestinje, repre-

sent 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, Ljubljana. It obtains 47.86%

of all its shares.

2003

Continuation of capital investments. The Company gains a 24.98% share in Delo, Ljubljana. The

Company becomes its largest owner.

2004

In December, the Company obtains additional 27,011 shares (5.98% of the assets) of the public lim-

ited company Union Ljubljana. Pivovarna Laško 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 Pivo-

varna Union, Ljubljana from Interbrew Central European Holding B. V., Netherlands, thus becoming

the majority owner with a 95.17% stake of the company.



~ 111 ~

In May, the Competition Protection Office issues consent for the announced concentration of the

companies Pivovarna Laško and Pivovarna Union.

2006

Transfer of 106,950 newly issued shares of Poslovni sistem Mercator, Ljubljana, from Slovenska

odškodninska družba to Pivovarna Laško. After the aforementioned transfer, the public limited com-

pany Pivovarna Laško owns 317,498 MELR shares or a 8.34% stake in Mercator.

2007

The takeover bid for the buyout of shares of the company Delo, časopisno in založniško podjetje,

Ljubljana. The acquirers Pivovarna Laško, Radenska, and Talis 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 was published in February. The acquir-

ers, Infond Holding, Maribor, Cestno Podjetje Maribor, Fidina, Ljubljana and Koto, Ljubljana, acquire

a total of 4,818,151 shares, representing a 55.08% stake in the target company. The acquirers offer EUR

88.00 per PILR share and 2,488 shareholders of Pivovarna Laško accept the takeover bid. As at 31 De-

cember 2008, Infond Holding is the majority owner of the company Pivovarna Laško with a 52.97%

stake.

2009

In the period from August to September 2009, the creditor banks, namely NLB, Hypo Alpe-Adria-

Bank, Abanka, Banka Celje, Gorenjska Banka, Probanka, Nova kreditna banka Maribor and Banka

Koper were acquiring shares of Pivovarna Laško (PILR) held by the company Infond Holding and

pledged as insurance for the bank loans. The banks thus acquired significant ownership stakes in

Pivovarna Laško. As of 5 August 2009, Infond Holding, Maribor is no longer the majority owner of

Pivovarna Laško.

2010

On 23 April 2010, the Supervisory Board confirms the bases of the new business model and reor-

ganisation of the Laško Group that has been prepared and submitted by the Management Board and

also confirms 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 group and afterwards into

a unified company.

In their letter dated 18 August 2010, the creditor banks (some at the same time the owners) of Pivo-

varna Laško responded and requested amendments to the strategy in terms of the disposal of all Mer-

cator shares owned by the Laško Group. As a result, the Group presented a newly amended strategy of

the Pivovarna Laško Group to 2014, which includes the sale of the complete 23.34% ownership stake in

Mercator. The strategy was approved by the Supervisory Board of Pivovarna Laško at its 22nd regular

meeting of 27 September 2010.

2013



for a 23.51% share. Pivovarna Laško was informed of this by the BAMC on 9 January 2014. Pivovarna

Laško received notification of the transfer (purchase) of the shares in Pivovarna Laško from NLB on

9 January 2014. Through this transfer, the BAMC has become the largest shareholder in Pivovarna

Laško.


S U S T A I N A B L E D E V E L O P M E N T

~ 112 ~

3SUSTAINABLE

DEVELOPMENT



~ 113 ~

3.1

human resources management in the

laško group

THROUGH THE REORGANISATION AND OPTIMISATION OF BUSINESS PROCESSES, IMPROVED

TECHNOLOGICAL EQUIPMENT OF THE COMPANIES AND IMPROVED EDUCATIONAL STRUCTURE, THE

GROUP HAS SYSTEMATICALLY OPTIMISED THE NUMBER OF EMPLOYEES IN RECENT YEARS.

Managing successful teams that create leading brands with added value for customers and share-

holders requires the right people.

The Laško Group is aware of the importance of its key staff, and thus implements programmes

aimed at motivating and stimulating our employees to fulfil the goals set by the Laško Group. As a

result, in 2013, some major steps were taken in our human resources strategy. We enhance the knowl-

edge and skills of our employees through practical work, training and a culture that rewards people for

taking responsibility and achieving results. The collective agreement for the industry adopted in 2012

provides the basis for focused management and rewarding employees based on their performance. In

2013, we conducted an annual performance review of all employees, thus establishing the conditions

allowing the transition to the new employee bonuses system. This has empowered management em-

ployees and underscored their responsibility for achieving the set goals. We reached agreement with

employee representatives on the system for determining the variable part of wages in 2014.

As a socially responsible company we are aware of the importance of developing young talents. As

a result, Pivovarna Laško, Pivovarna Union and Radenska again in 2013 published a competition and

selected ten of the best students to receive our company scholarships.

3.1.1 EMPLOYMENT POLICY

Through the reorganisation and optimisation of business processes, improved technological equip-

ment of the companies and improved educational structure, we have systematically optimised the

number of employees in recent years. We observe the strategies of individual companies and the en-

tire Group and individual workloads and complexity of the work process in this endeavour. The good

cooperation developed with our employees over the years and strict respect for the labour law are of

key importance.



~ 114 ~

3.1.2 HUMAN RESOURCES DEVELOPMENT

Human resources development, both in the professional and personal sense, it key for achieving

the Company’s goals. The Group ensures development of our staff after the need to develop addi-

tional know-how and skills has been identified. Employees can acquire additional know-how and skills

through:

• the transfer of best practices and know-how within the Group,

• external training aimed at acquiring specific expert skills not available within the Group,

• a combination of internal and external training.

3.1.3 NUMBER OF EMPLOYEES

NUMBER OF EMPLOYEES PER LAŠKO GROUP AS AT 31 DECEMBER 2013

Number of employees Share in %

Pivovarna Laško, d. d. *5 members of

the Management Board 337 21.0

Radenska, d. d., Radenci 204 12.8

Pivovarna Union, d. d., Ljubljana *5 members of

the Management Board 378 23.6

Jadranska pivovara - Split, d. d. 11 0.7

Vital Mestinje, d. o. o. 34 2.1

Delo, d. d., Ljubljana 381 23.9

Izberi, d. o. o., Ljubljana 14 0.9

Birra Peja, Sh. a., Kosovo 206 12.9

Laško Grupa, d. o. o., Hrvaška 31 1.9

Total 1,591 100.0

Note: *Pivovarna Laško and Pivovarna Union share the same Chairman and Members of the Man-

agement Board, which are all employed part-time in each of the companies. In both companies, the

number of employees as at 31 December 2013 equals the actual number of employees, while five em-

ployees have been deducted from the grand total for the Laško Group. The share is calculated under

the assumption that Members of the Management Board are employed part-time.

The Laško Group employs 1,591 employees, one less than in 2012. Employees in the Group’s bever-

age companies prevail.

According to the decision of the Supervisory Board, as of 1 March 2013, the Chairman and Members

of the Management Board of Pivovarna Laško are also employed part-time by Pivovarna Union. At

the same time, their employment contracts were re-defined; they now envisage a lower fixed salary

component and a newly introduced variable component which is paid providing the clearly defined

targets are met.



~ 115 ~

NUMBER OF TEMPORARY AND PERMANENT EMPLOYEES

(number of employees Difference

as at 31 December) 2011 2012 2013 2013-2012

Permanent employment 1,329 1,279 1,282 3

Temporary employment 280 288 273 -15

Part time employment 21 24 29 5

Interns 2 1 7 6

Total 1,632 1,592 1,591 -1

Eighty percent of employees are employed for an indefinite period of time. Most temporary employ-

ees are employed by Birra Peja. Compared to the previous year, the share of employees on temporary

employment contracts fell by 15 in 2013. Twenty-nine employees, mainly disabled workers, are em-

ployed for a definite period of time.

EDUCATIONAL STRUCTURE OF EMPLOYEES

As at 31 December the educational structure of employees was as follows:

NUMBER OF EMPLOYEES BY LEVEL OF EDUCATION

Difference

(education as at 31 December) 2011 2012 2013 2013-2012

Primary school 204 201 195 -6

Vocational school 397 355 349 -6

Comprehensive school 511 515 539 24

College 126 130 139 9

University 355 351 330 -21

Masters‘ Degree 36 34 33 -1

Doctor‘s Degree 3 6 6 0

Total 1,632 1,592 1,591 -1

AGE STRUCTURE OF EMPLOYEES

As at 31 December 2013 the actual age structure of employees was as follows:

NUMBER OF EMPLOYEES BY AGE CATEGORY

Difference

(age as at 31 December) 2011 2012 2013 2013-2012

Younger than 30 112 101 122 21

Between 30 and 40 467 422 374 -48

Between 41 and 50 588 606 578 -28

Between 51 and 60 447 433 487 54

Older than 60 18 30 30 0

Total 1,632 1,592 1,591 -1



~ 116 ~

3.1.4 EMPLOYEE SATISFACTION

In 2013, employees of the Laško Group enjoyed further benefits such as:

• payment of contributions to the additional voluntary pension scheme for all employees on perma-

nent employment contracts,

• holiday accommodation at reasonable prices in Laško Group facilities located at the seaside, in the

mountains and thermal spas. Employees can make use of the holiday accommodation of various

Group companies,

• awareness raising and health and safety at work training, a pleasant working environment and

regular medical checks.

In addition, the employees were able to cooperate and provide useful proposals at the level of the

organisational unit and at the level of the company as a whole. To this end, so-called suggestion boxes

have been introduced where employees can post their suggestions and comments.

3.1.5 EDUCATION AND TRAINING

Education and training is aimed at acquiring specific competences of the staff that are relevant to

the successful operations of our companies. Therefore, the available funds have been spent on targeted

seminars, courses and additional educational programmes. Courses on IT, foreign languages, environ-

mental protection, legislation and other specific skills in various work areas have been provided to our

employees.

In 2013 we applied to the tender of the Slovene Human Resources Development and Scholarship

Fund for financing the establishment of competence centres for the 2012 - 2015 period. Pivovarna

Laško was selected as the entity responsible for the Beverage production competence centre which

brings together 17 companies in the industry, including Pivovarna Union, Radenska and Vital Mestin-

je. The aim of the project is to raise the competences of key human resources in the beverage industry

and ensure greater competitiveness and fortify our market position. As part of this project, employees

participated at conferences and seminars both in Slovenia and abroad. In 2013, 22 microbiology, IT,

project management and customer interest and expectation recognition training sessions were organ-

ised. Internal training was also organised as part of the project, enabling the exchange of knowledge,

experience and industry best practices.

3.1.6 SAFETY AND HEALTH AT WORK

Employees are regularly made aware of the importance of safe and healthy working conditions and

are also provided such conditions. They are also regularly provided with the prescribed protective

equipment and means of protection. Regular checks of posts, the control of using working and protec-

tive clothes and the emphasis placed on potential threats related to a post play an important role in the

prevention of accidents at work. Regular training courses focusing on safety and health at work are

often provided as well as regular medical checks.

Compared to 2012 the number of workplace injuries has fallen. The reason mainly lies in more fre-

quent verifications that employees use personal protective equipment, and the more frequent warning

of dangers, as well as in changes to the manner of hiring employees (tenders, interviews).

In 2013, seven Pivovarna Laško employees were involved in workplace accidents, four less than in 2012.



~ 117 ~

3.2

communications

IN 2013, PIVOVARNA LAŠKO CONTINUED TO IMPLEMENT ITS COMMUNICATION STRATEGY BASED ON

SYSTEMATIC, TWO-WAY COMMUNICATION OF THE COMPANY WITH ITS INTERNAL AND EXTERNAL

ENVIRONMENT. IN ADDITION, COMMUNICATION THROUGH SOCIAL NETWORKS CONTINUED.

In 2013, Pivovarna Laško continued its communication strategy of systematic two-way communica-

tion between the Company and its internal and external environment. The team of Pivovarna Laško

provides communications in accordance with the plan and adapts the tactics and tools to interests of

various groups of the public that impact the operations of the Company.

3.2.1 COMMUNICATIONS WITH INVESTORS

In accordance with the law, Pivovarna Laško continues to provide investors and potential investors

with sufficient, accurate and timely information, thus complying with the Company’s information

disclosure policy which encompasses business performance in the past and strategic development of

the Company in the future.

Since the shares of Pivovarna Laško are quoted on the Ljubljana Stock Exchange, the Company is legal-

ly obligated to publish the 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 (pivo-lasko.si).

Communication with investors and potential investors was performed through regular General

Meetings of shareholders, press conferences organised for the purpose of reporting on interim and

annual operating results, individual meetings of representatives of the Company with representatives

of investment companies, and the announcement of interim and annual reports in printed media and

on the Company’s web site.

3.2.2 COMMUNICATIONS WITH THE MEDIA

Intensive media communication activities were implemented in 2013. Pivovarna Laško regularly

informs the media of the activities of the Company, its business operations, plans and strategic guide-

lines via press releases. Media relations are based on planned, two-way cooperation, timely and con-

current responses to the questions of journalists in accordance with applicable standards of the public

relations profession.



~ 118 ~

3.2.3 COMMUNICATIONS WITH CUSTOMERS

In 2013, for the fifth year in a row, operators were available at the 080 1825 toll-free telephone number

that accepts customer orders for all Laško Group products. The call centre located in the Distribution

Centre of the Laško Group in Ljubljana takes orders for all distribution channels (trade, catering and

institutions). In its five years of operation, the call centre has established itself well among customers

who see it as a key tool for ordering products which is now easier and more user-friendly than before.

We also communicate with our customers through the field representatives of our sales department

and at one-on-one customer meetings.

3.2.4 COMMUNICATIONS WITH EMPLOYEES

Communications with employees are based on healthy mutual relationships and are one of the

essential elements for attaining good business results of the Company. The proper implementation

of internal communication plans provides for the sufficient information, motivation and satisfaction

of employees. Pivovarna Laško concurrently informs employees of relevant information and of press

releases. At the highest frequency points in the Company, bulletin boards are available and in recent

years information provision via the Internet has been gaining importance. The Intranet systems of

Pivovarna Laško and of the Laško Group are also important internal communication tools. The use of

this new tool has increased alongside the increased needs for mutual communications between dif-

ferent organisational departments and mixed project teams. The Intranet provides interested persons

with shared access to specific documents. As a communication tool it has significantly contributed to

the increased effectiveness of business processes.

In five years after resuming the publication of the Pivovarna Laško newsletter “Laško brewer” 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 internal and other interested groups of the public. At the end of 2013, the newsletter’s

design was upgraded in order to provide continuity with the online application which will be released

in 2014. Employees can receive it in electronic format; printed copies are available at five points within

the Company and at two points in other subsidiaries, while printed copies are also provided to Pivo-

varna Laško retirees, the press and representatives of other segments of the public. The newsletter is

also available as a file on the Pivovarna Laško website.



~ 119 ~

3.3

corporate social responsibility

DESPITE THE CHALLENGING ECONOMIC ENVIRONMENT, IN 2013 WE CONTINUED TO SUPPORT SPORTS

AND CULTURAL PROJECTS AND PROJECTS THAT REDUCE THE ENVIRONMENTAL FOOTPRINT OF THE

COMPANIES, NAMELY BY REDUCING AND STREAMLINING THE USE OF NATURAL RESOURCES AND ENERGY.

Social responsibility is one of the most important traditional values adopted in the companies of the

Laško Group. In 2013 we continued implementing projects that ground the Laško Group companies

in their environment despite the challenging economic environment. We continued to reduce the net

weight of plastic bottles and support recycling projects, thus contributing to reducing the burden on

the environment. We also continued projects aimed at reducing the environmental footprint of the

companies by reducing and rationalising the use of natural resources and energy.

Laško Group companies remained some of the most important Slovenian sponsors of top sports

in 2013 and thus contributed to the achievements of the Slovenian team, other Slovene sports teams

and individual athletes at various competitions. For example, in 2013, Laško Group companies were

involved in the success of Slovenia’s national football team and the Maribor Football Club, in organis-

ing the European Basketball Championship, in the success of the Slovenian national basketball team,

Slovenian Nordic sportsmen and sportswomen, the success of the Celje Pivovarna Laško Handball

Club, in organising major running and cycling marathons, and many other projects. We successfully

continued our cooperation with the largest film festival in the region (the Sarajevo Film Festival).

In 2013, Pivovarna Laško continued to organise one of the most visited tourist events in Slovenia

– Pivo in cvetje (Beer and Blossoms) Festival that we have managed to give new impetus and added

value in terms of the content for the numerous guests who have been coming to this event for decades.

We celebrated our 50th anniversary in 2013. The Zlatorog long-distance trail of pride has been well

accepted by hikers, and we continued being patron to Slovenian contemporary music that received

overwhelming response among the musicians.

The companies of the Laško Group continue to actively support civil society organisations at the local

or national level.



~ 120 ~

3.4

environmental protection

ONE OF THE GOALS OF THE LAŠKO GROUP IS TO INCREASE THE NUMBER OF BEVERAGE UNITS SOLD

IN RETURNABLE GLASS BOTTLES, WHICH ENSURE EXCELLENT QUALITY. THE USE OF SUCH PACKAGING

SIGNIFICANTLY CONTRIBUTES TO REDUCING THE VOLUME OF WASTE, RAW MATERIALS AND ENERGY

SOURCES USED.

All Laško Group companies are aware of the importance of environmental protection and sustain-

able development. Despite the fact that less funds are available to invest in technology and thus also in

environmentally more advanced systems, we are constantly seeking for ways to supplement our exist-

ing technology processes aimed at improving environmental and costs efficiency, something which

is of great importance in the modern business environment. To this end we are implementing the

relevant technical and organisational measures and are recording constant progress in using fewer

natural resources, energy and hazardous substances.

We can also declare that the operations of the Group companies fully comply with all requirements

provided by law. The external assessments of our environmental management systems and other qual-

ity systems have revealed no non-conformities, only some recommendations that can help us improve

our existing systems.

One of the goals of the Laško Group is to increase the share of beverage units sold in returnable glass

bottles, which currently stands at 40%. We all realise that returnable glass bottles are more sustainable

from several aspects, including social, economic and environmental aspects. Glass bottles preserve

quality excellently and are economical for the consumer, something that is especially important today.

To this end we have and continue to implement several projects. One such project is the “Radi

vračamo” project, which includes the market launch of our new case for ten bottles, which began

development as early as in 2007. The use of glass packaging significantly contributes to reducing the

volume of waste, raw materials and energy sources used.

We are also making progress in using recycled PET containers for beverages, which can only be

achieved by using the best technology available and following the vision of environmental responsibil-

ity, thus contributing to the strengthening of our brands.



~ 121 ~

In addition to constant improvements aimed at saving all raw materials, protecting our water sourc-

es and effective energy management, we will strive to harmonise reporting, search for synergies and

exchange our experience in best environmental practices.

3.4.1 ECOLOGICAL REPORT OF PIVOVARNA LAŠKO

The Company’s sustainable development in terms of environmental management is a constituent

part of the Company’s management, which can only be achieved through a concerted effort of all em-

ployees. We regularly implement the following environmental activities: we measure and monitor our

impact on the environment, introduce the best technology available into our technology procedures

ensuring efficient use of materials and energy and a reduction in emissions and waste, while we

design our production and products in a manner that mitigate the negative environmental impacts.

At Pivovarna Laško, specific long-term improvements to the functioning of the anaerobic waste

treatment plan have resulted in major progress in our use of renewable energy sources. The biogas

produced from waste water represent an important energy source used for heating.

Our production companies are committed to investments in the environmentally most advanced

products and solutions, and pay green taxes, while at the same time we expect a response from the

relevant state institutions which could introduce refunds for environmental investments.

Due to corrosion and leakage, we performed challenging repair to the MAB tank of the anaerobic

waste treatment plant. During the six months of repairs, our rate of obtaining biogas from waste

water dropped. As a source of heat energy for the production of steam in the boiler room, the biogas

generated in the waste water treatment plant amounted to 318,000 m3 or 11 % of the total natural gas

consumption. The anaerobic waste water treatment plant of Pivovarna Laško continues to ensure ad-

equate treatment of the entire quantities of waste technological water. As an authorised measurement

provider, the Institute of Public Health Maribor regularly performs monitoring of influx and outflux

of the treatment plant and establishes a high level of purification in accordance with the applicable

regulations.

We have begun establishing the ISO 14001 standard, and we are expecting the first assessments

and certifications to take place in 2014. Thus will result in improved process implementation, records,

goals and a systemic approach to our environmental activities.

We provided the Slovenian Environmental Agency with all the relevant reports in a timely manner

and regularly paid green taxes. In May, a regular annual environmental inspection was carried out that

confirmed our very good environmental status. Only one measure was requested relating to establish-

ing records on drafting the Annual Report for cooling devices that contain more than three kilograms

of harmful substances to the environment.

The needs of the technological processes were completely met with the energy installations in line

with the relevant norms. At the same time, monitoring of emissions and measurements have proved

that the relevant processes are managed within the framework stipulated by law.

The specific use of electricity for production and other processes amounts to 12.3 kWh per hl of beer,

representing a drop of 12% compared to the previous year. Specific consumption of natural gas totalled

2.7 Sm3 per hl of sold beer and is thus 9.5% lower than in the previous year.



~ 122 ~

USE OF NATURAL RESOURCES IN PIVOVARNA LAŠKO (PUMPED AND CHANNELLED WATER)

Unit of measure Cumulative figure Cumulative figure Index 13/12

for 2013 for 2012

Water used m3 609,504 628,406 97.0

Water supplied to the cleaning plant m3 367,382 387,483 94.8

Electricity MWh 12,843 12,912 99.5

Gas Sm3 2,804,874 2,810,384 99.8

CO2 emissions t 5,286 5,296 99.8

In the beer production and filling, measures to reduce the use of fresh water are constantly adopted

in accordance with best practice and through the support of relevant measurements. In the past year,

specific fresh water consumption equalled 5.82 hl per hl of sold beer and water, which is 13% below

that in the previous year, a clear sign of the viability of the solutions introduced.

SPECIFIC WATER USE PER PRODUCED AND BOTTLED QUANTITIES OF BEER IN 2013

0,0

2,0

4,0

6,0

8,0

10,02,0

2,5

10,0

1,0

0,5

0,0

12,0

jan feb mar apr maj jun jul avg sep okt nov dec

Spec

ific

wat

er u

se (i

n hl

/hl)

Cos

t of w

aste

wat

er p

er h

ecto

litre

of b

eer

(in

EUR

)

Beer produced Beer filled Average 2013Monthly use in 2013

We have drafted a new Waste management plan which forecasts a negative trend of most waste gen-

erated in the Company. The separate waste collection system at two collection points continues to work

well. We have also included the Company in the IT system used to issue and archive waste records,

which became a legal requirement in 2013.

Dinos remains the sole recipient of all separately collected waste packaging and other secondary raw

materials generated by the Company.

In the second half of the year we launched a new plastic bottle for the Oda mineral water. This bottle

was designed as part of the brand renewal and is 25% lighter than the previous plastic bottle, represent-

ing a significant saving in the materials used in their production and in logistics. As a result, the new

plastic bottle is more environmentally-friendly with a significantly smaller CO2 footprint.



~ 123 ~

The annual use of chemicals is presented in the following two tables.

ANNUAL USE OF CHEMICALS

Unit of measure 2013 2012 Index 13/12

Sodium hydroxide, 35% NaOH kg 327,879 310,250 105.7

Nitric acid, 50% HNO3 kg 46,604 55,599 83.8

Sulphuric acid, 96 % H2SO4 kg 48,040 47,560 101.0

Lubricants kg 26,900 31,915 84.3

SPECIFIC USE OF CHEMICALS (ANNUALLY)

(kg / hl) Target 2013 2013 Index 13/12 Target 2014

Caustic soda, 35% NaOH 0.35 0.32 101.3 0.30

Nitric acid, 50% HNO3 0.05 0.05 114.8 0.06

Sulphuric acid, 96 % H2SO4 0.06 0.05 96.0 0.05

In the area of water sources we acquired environmental permission for using the Lurd water source

for technology purposes. In 2014 we plan to acquire environmental permissions for all our needs for

technology water.

In terms of hydrology, 2013 was one of the most favourable in our region. Due to the relatively fa-

vourable winter, the conditions in reservoirs under our management have improved, resulting in no

difficulties in quantity terms. We are of course aware of the fact that the conditions will deteriorate in

the future. Due to this, as new well was drilled at Trije studenci, which will supply the Trije studenci

public water supply. This public water supply has been subject to the greatest expansion in recent

years.

After several years of negotiations with land owners, the public water supply at Jagoče was replaced

and a new pumping stations constructed. This has significantly improved the quality of the water sup-

ply. This area is now provided water from the Laško public supply system.

A new water reservoir with a water preparation facility was constructed in Jurklošter. The surround-

ings of the reservoir have also been organised. This investment will enhance the reliability of supply.

The water reservoir and renovated pipeline also contribute to greater water safety of the area.

After many years, last year we finally obtained environmental permissions for most of the reservoirs

under our management. We are currently obtaining the remaining permissions, which we expect to

be issued this current year.

3.4.2 ECOLOGICAL REPORT OF PIVOVARNA UNION, LJUBLJANA

In the course of its ordinary activities, Pivovarna Union places great attention to environmental

concerns. Its environmental policy is committed to the constant improvement of environmental man-

agement and prevention of pollution as well as compliance with statutory requirements related to en-

vironmental management. For many years the company has focused on efficient use of raw materials



~ 124 ~

and energy sources and protecting natural resources, which is reflected in the declining trends of the

past several years. We are aware that we need to protect the environment while remaining competi-

tive in a more and more difficult economic environment. In light of the reduced scope of investments

that could contribute to more sparing use of raw materials and energy, this is the main focus of those

responsible. In recent years we have more intensively focused on in-process measures and have thus

taken a systematic approach to determining so-called KPIs (key process indicators), which not only

reflect the value in a certain moment or period, but which we also hope reflect our progress. In addi-

tion to our own awareness of the importance of such measures for continuing the favourable trends of

materials usage, this is also motivated by the requirements of various standards and assessments (ISO

9001, 14001, IFS), which provide an independent and external view of our performance.

This is also one of the reasons for us introducing CSRE systems (target monitoring of energy usage)

at Pivovarna Union, and the MEPIS system (product monitoring system) at Laško Group companies.

The latter will allow us to monitor the most important ratios of each Group company, and on the other

hand we will be able to compare the companies according to the same criteria, allowing us to upgrade

and optimise processes.

In 2013, Pivovarna Union continued to operate in accordance with all environmental legislation and

standards.

In 2013 the administrative proceedings for the change of our environmental permit (EP) concluded -

resulting in us no longer needing to reduce the emissions of the beer-making facility. These emissions

concern volatile organic compounds from the must and cooking vats. Had this not been the case we

would have had to control these emissions with purification devices, which would translate into higher

costs. Due to the changes to the EP, the deadlines for compliance of our airborne emissions from the

burning devices have been shifted into 2017, allowing us to amend our investment plan accordingly.

Since the emissions of surface-active substances (SAS) were exceeded in 2012, we analysed the rea-

sons and occurrence of SAS in our waste water; on this basis we remedied the cause for the elevated

emissions. As a result, the 2013 parameters of waste water monitoring at Pivovarna Union were satis-

factory.

In 2013 we also conducted measurements of noise emissions into the environment; after minor

technical measures were implemented at a minimal cost (reworking of the ventilation channels from

the production plant), the noise emissions into the environment complied with the relevant legislation.

During its audit of excise duties, the Customs Administration also audited our green taxes report-

ing in 2013. The Customs Authorities demanded we establish records and archive the data that serves

as the basis for reporting on green taxes paid for waste packaging. Pivovarna Union established the

required records.

In 2013 we rationalised our use of chemicals compared to the previous use. We managed to reduce

the quantities used on account of introducing single phase washing in the filtration plant, significantly

reducing the use of cleaning agents and waste water generated. In addition to introducing single

phase washing we also changed the washing frequency; the microbiological and cleanliness indica-

tors remained as favourable as before. However, due to the ageing devices and issues with transport

conveyors, our use of lubricants has significantly increased.



~ 125 ~

ANNUAL USE OF CHEMICALS

Unit of measure 2013 2012 Index 13/12

Sodium hydroxide, 25% NaOH kg 924,772 1,016,825 90.9

Nitric acid, 50% HNO3 kg 72,460 73,234 98.9

Hydrochloric acid, 30% HCl kg 301,112 398,795 75.5

Lubricants kg 28,262 18,896 149.6

Single-phase CIP detergent,

(Calgonit SN 588) kg 7,612 10,002 76.1

In past years we recorded a declining trend of water use as a result of various measures. However,

in 2013, we used more water than in the previous year. It should be said that the growth index mirrors

the index of beverage quantities bottled. Despite the implemented measures, our use of water per

unit of beverage produced has remained at the level of 2012. The underlying causes for this halt in the

declining use trend include abandoning the recuperation process due to microbiological issues and

more precipitation (8 thousand m3). Abandoning recuperation resulted in a loss of about 20 thousand

m3 of water.

The current ratios are significantly impacted by the number of products and size of production

batches, which however cannot be shown due to the existing manner of data monitoring. Thus in 2014

we will introduce reporting which will significantly more precisely define the ratios and success of

each particular process and in-process activity.

USE OF NATURAL RESOURCES IN PIVOVARNA UNION (PUMPED AND CHANNELLED WATER)

Cumulative Cumulative

Unit of measure figure 2013 figure 2012 Index 13/12

Water pumped m3 644,838 598,902 107.7

Use of recuperated water m3 9,407 28,127 33.4

Channelled water

at the measurement reservoir m3 550,931 498,057 110.6

Volume of meteorological

water per PU surface m3 57,261 49,525 115.6

Electricity used MWh 18,150 18,092 100.3

Natural gas used Sm3 3,546,073 3,561,431 99.6

Quantity of CO2 produced

by burning devices t 6,738 6,767 99.6



~ 126 ~

SPECIFIC WATER USE PER PRODUCED, FILTERED AND BOTTLED QUANTITIES OF BEER IN 2013

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

1,6

1,8

jan feb mar apr may jun jul avg sep oct nov dec

Spec

ific

wat

er u

se (i

n hl

/hl)

Cos

t of w

aste

wat

er p

er h

ecto

litre

of b

eer

(in

EUR

)

Beer produced Beer filtreted Beer filled

Average 2013Monthly use in 2013

0,0

3.4.3 ENVIRONMENTAL REPORT OF RADENSKA

Environmental issues have been in the focus of Radenska for a number of years; even before the

introduction of the ISO 14001 standard since we depend on the natural resources – natural mineral

waters. This is something we are fully aware of. Our mission reflects our interaction with the envi-

ronment and nature. With the Radenska brand we transform the natural wealth of this environment,

natural mineral waters to marketable, attractive, quality and successful products.

Since our rational use of raw materials and energy sources is closely linked to operating costs, the

benefits are magnified.

Environmental activities are linked to fulfilling the environmental goals of previous years and the

current goals in 2013. The objectives were geared towards reducing the environmental burden of waste

water and waste and streamlining energy consumption. Some programmes aimed at reaching the

goals (especially those linked to investments) have been slightly scaled down or postponed to future

operating (investment) periods due to the ongoing cost-cutting project of the Group. Traditionally, the

environmental objectives are geared towards the protection of water resources, reduction of environ-

mental burden related to waste water, good waste management and reduction of emissions to the air

and streamlining of energy consumption. The projects covering environmental protection activities in

2013 were:

• activities 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 in the field of legislative matters;

• protection of water resources - compliance with the law;

• regulating the overall image of wells and investment maintenance of the surroundings and equip-

ment of wells; also in compliance with the law;



~ 127 ~

• activities to obtain concessions for the extraction of natural mineral, spring and tap water;

• use of recycled PET materials;

• reduction and optimisation of packaging materials;

• energy reviews and implementing the relevant findings (monitoring and optimising energy sourc-

es, processes and equipment);

• monitoring of natural mineral water, drinking and technological waters and waste water;

• renovation/replacement of the deteriorated doors at the filling facilities;

• inspection and replacement of deteriorated parts of the compressed air and CO2 networks;

• records of the quantities of pumped water and the use of CO2;

• seeking new technological solutions to reduce waste quantities;

• measurements and, if necessary, remediation of noise in the production area.

In 2014, our principal environmental goals remain unchanged. We especially expect to focus more

on activities related to the results of the energy review and equipment replacement. In 2013 we re-

placed the lighting of approximately 5,200 m2 production and water-housing facilities. In early 2014

we will replace our oldest plastic bottle-blowing machine with a combined blowing and filling bloc

and compressor. We expect these two projects to result in significant energy savings and reduction in

our environmental footprint. In the field of logistics we also made a first but significant step towards

reducing our environmental footprint. In 2014 we will take delivery of our first large (4.5 ton) electric

forklift. Currently, all such large forklifts at Radenska exclusively run on gas. In the future - funds

permitting - we expect to continue to replace gas forklifts with their environmentally more friendly

electric counterparts.

Preserving the water protection area, a vital resource of our Company, remains constant objective

of Radenska.



~ 128 ~

USE

OF

SIG

NIF

ICA

NT

EN

ER

GY

SO

UR

CE

S

C

umul

ativ

e C

umul

ativ

e C

umul

ativ

e In

dex

Inde

x Sp

ec. i

ndex

U

nit

figur

e fig

ure

figur

e U

se

Use

U

se p

er p

iece

of

mea

sure

20

13

2012

20

11

12/1

1 13

/12

of p

rodu

ct 1

3/12

Wat

er u

sed

m

3 16

7,16

1 16

5,76

7 18

6,12

5 89

.1

100.

8 98

.2W

aste

wat

er

m

3 14

6,61

7 14

6,15

7 15

8,49

9 92

.2

100.

3 97

.7El

ectr

icity

MW

h 9,

279

9,26

3 9,

508

97.4

10

0.2

97.6

Nat

ural

gas

Sm3

854,

439

851,

832

916,

689

92.9

10

0.3

97.7



~ 129 ~

Also in 2013, the regular annual environmental inspection was successfully conducted. It was estab-

lished that the plant operates in line with the environmental legislation and the environmental permit

issued. We provided an additional explanation of our management and supervision of the VČM-1 well

for which we have a concession, as well as an explanation on our use of the water from wells where the

relevant concession is still pending.

In 2014 we expect to resolve the issue of concessions and water rates which we applied for in 2004,

but have as yet not received the concession deeds (like many other applicants). In light of our discus-

sions with the Ministry of Agriculture and the Environment held in 2013 we expect to be obligated to

pay concession fees also for the past, albeit calculated at an adjusted formula.

In light of the finding of the environmental inspector from 2012 (inappropriate measurement loca-

tion for two gas boilers) and some minor changes compared to the issued EP, we received a modified

EP in November 2013 and now comply with all regulations, environmental standards and require-

ments.

In 2013, in accordance with Article 14 of the Rules on radioactive waste and spent fuel management

(Official Gazette of the RS, no. 49/2006), we transferred the ownership of one spent device used to

monitor the level of bottle filling to the Agency for Radioactive Waste.

In 2013 ZVD Ljubljana inspected our remaining radiation sources and issued the relevant inspection

report. We also acquired an inspection report for the X-ray machine used to control the level of filling

in cans.

WASTE

In Radenska, waste is managed in accordance with the legislation and the recommended sequence

is observed: separate waste collection, quantity reduction, reuse, processing and disposal.

A special press and a device for grinding plastic waste are used to reduce the volume of waste foil

and paper.

Waste PET-material generated during production is recycled by us. All waste plastic is sold to com-

panies that deal with the recycling of such materials.

The system of separate waste collection has been introduced in all production plants, technological

facilities as well as in the warehouses and in business buildings. Thus the volume of municipal waste

has been reduced.

3.4.4 ENVIRONMENTAL PROTECTION IN VITAL MESTINJE

In the area of environmental protection, the company constantly ensures the fulfilment of the re-

quirements defined in the environmental permit. This essentially means implementing the prescribed

number of monitorings of waste and cooling water, carefully managing other types of waste and ap-

propriate record keeping.

3.4.5 ECOLOGY IN DELO, LJUBLJANA

Delo has elaborated a waste management plan that is constantly supplemented and upgraded in

compliance with the permanent policy of providing conditions to meet the requirements of the envi-



~ 130 ~

ronmental legislation and to satisfy the regulations governing waste water, waste and clean air. Waste

raw materials are recycled, while materials harmless to the environment and humans are used in

production. In 2012, a noise protection wall was set up in the eastern part of the Printing Centre that

borders the residential area. Thus the noise impact on the environment has decreased by 10 dB.

The Printing Centre also shifted to the system of renting cleaning cloths that are washed and re-

used in 2012. This has reduced the number of cleaning cloths by more than a half. In the middle of the

year , most printed matter shifted to improved newsprint. This results in an increased share of recycled

paper used in our products.

In the field of technology, the Printing Centre has continued searching for solutions that are more

energy efficient. Due to a change introduced in the technological process of magazine production one

phase was abandoned - sewing. This is reflected in reduced electricity consumption and decreased

quantity of waste.

In the process of making printing forms, chemicals are currently used to develop them. In autumn

tests started in the printing works to enable this phase without the application of these chemicals.

Plates without chemicals are to replace the old ones in one or two years.


F I N A N C I A L R E P O R T O F T H E L A Š K O G R O U P

~ 132 ~

4FINANCIAL

REPORT OF THE

LAŠKO GROUP



~ 133 ~

C O N T E N T S

4.1 Statement of management responsibilities 134

4.2 Independent auditor’s report 136

4.3 Audited consolidated financial statements of the Laško Group 139

4.3.1 Consolidated statement of financial position 140

4.3.2 Consolidated income statement 142

4.3.3 Consolidated statement of other comprehensive income 144

4.3.4 Consolidated statement of changes in equity in 2013 145

4.3.5 Consolidated statement of changes in equity in 2012 147

4.3.6 Consolidated cash flow ststement 149

4.4 Notes to consolidated financial statements 151

4.4.1 General data 151

4.4.2 Statement of compliance with IFRS 151

4.4.3 Use of new and ameneded IFRS and IFRIC interpretations 154

4.4.4 Significant accounting policies 154

4.4.5. Adjustment of the historical financial statements 166

4.4.6 Notes to individual items of the financial statements 168

4.4.7 Financial instruments and financial risks 212

4.4.8 Segment reporting 219

4.4.9 Related party transactions 222

4.4.10 Remuneration of the Members of the Management Board and Supervisory

Board and those with individual contracts of employment 224

4.4.11 Contingent liabilities and assets 227

4.4.12 Costs of the auditor 230

4.4.13 Subsequent events 230



~ 134 ~

4.1statement of management

responsibilitiesThe Management Board of the Pivovarna Laško Company is responsible for the preparation of the

annual report of the Laško Group as well as the consolidated financial statements that give a fair

presentation of the financial position and the results of operations of the Group and the Company for

the year ended 31 December 2013 in accordance with the International Financial Reporting Standards

adopted by the European Union and the Companies Act.

The Management Board of Pivovarna Laško, d. d., hereby gives its approval to the business report

and the financial statements for the year ended 31 December 2013 and confirms the following:

• the financial statements have been compiled under assumption of Pivovarna Laško being able to

continue its operations as a going concern,

• the selected accounting policies are applied consistently and any changes in accounting policies

have been reported,

• the accounting estimates have been prepared in a fair and diligent manner and comply with the

principle of prudence and good management.

The Management Board is responsible for the implementation of measures to ensure the mainte-

nance of the value of the assets of the Laško Group and for the prevention and detection of fraud and

other irregularities.


mag. Dušan Zorko


Marjeta Zevnik


Mirjam Hočevar


Gorazd Lukman


Matej Oset




~ 136 ~

4.2independent auditor’s report



~ 137 ~



~ 139 ~

4.3

audited financial statements of the

laško group for the year ended

31 december 2013 compiled under ifrs



~ 140 ~

4.3.1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF THE LAŠKO GROUP AT 31 DECEMBER 2013

(adjusted)* (adjusted)*

(in EUR) Notes 31 December 2013 31 December 2012 1 January 2012

ASSETS

Long-term assets 284,057,058 301,979,359 309,415,815

Intangible assets 1 72,409,028 78,549,980 87,017,785

Property, plant and equipment 2 170,065,814 194,465,281 180,695,007

Investment property 3 5,847,085 7,199,033 9,117,703

Long-term investments

in the subsidiaries 4.A 427,413 427,413 364,803

Financial assets available for sale 4.C 1,207,647 1,249,643 1,239,563

Long-term financial lease receivables 4.D 287,276 421,340 -

Long-term borrowings 5 283,544 436,335 11,079,110

Long-term operating receivables 2,196,510 13,198 877,146

Long-term deferred tax liabilities 7 31,332,741 19,217,136 19,024,698

Short-term assets less short-term

deferred and accrued items 169,578,146 203,370,586 248,064,577

Non-current assets held for sale 8 9,208,603 6,570,939 8,960,939

Inventories 9 21,918,999 24,287,198 22,079,914

Long-term operating receivables 10.A 52,960,981 46,897,886 46,730,029

Short-term tax

credits - owerpayment of income tax 10.B 351,495 1,329,252 407,636

Financial assets available for sale 11 75,658,238 112,630,152 143,271,798

Short-term loans 12 6,475,107 9,466,544 5,110,497

Cash and cash equivalents 13 3,004,723 2,188,615 21,503,764

Short-term accruals

and prepaid expenditure 14 856,090 378,648 525,337

Total short-term assets 170,434,236 203,749,234 248,589,914

TOTAL ASSETS 454,491,294 505,728,593 558,005,729

*The values of certain items presented in these financial statements differ from those reported in the Annual Report 2012.

Adjustments to the historical financial statements are reported in a special disclosure in Section 4.4.5 ADJUSTMENT OF THE

HISTORICAL FINANCIAL STATEMENTS.

Accounting policies and notes form an integral part of these financial statements and should be read

in conjunction with them.



~ 141 ~

4.3.1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF LAŠKO GROUP AT 31 DECEMBER 2013( c o n t i n u a t i o n )



EQUITY 58,213,883 87,978,879 113,795,895 Equity of the owners of non-controlling interest 16 9,804,281 7,164,310 7,032,584 Equity of the owners of the controlling interest 15 48,409,602 80,814,569 106,763,311Share capital 36,503,305 36,503,305 36,503,305Share premium 30,993,977 55,681,553 78,908,924Profit reserves 3,650,331 3,650,331 3,650,331Revaluation reserves 5,701,570 9,655,319 10,907,339Retained earnings (72,940) 875,016 4,442,227Net profit or loss (28,354,042) (25,562,592) (27,669,598)Translation reserve (12,599) 11,637 20,783 LIABILITIES 396,277,411 417,749,714 444,209,834 Provisions and long-term accrued costs and deferred income 17 13,929,628 6,904,389 7,068,763Provisions for retirement benefits and anniversary bonuses 17.A 5,293,279 4,904,442 4,785,771Other provisions 17.B 8,587,422 1,898,251 2,282,992Long-term accrued costs and deferred revenue 17.B 48,927 101,696 - Long-term liabilities 17,225,540 26,094,176 40,536,520Long-term financial liabilities 18 17,225,540 26,093,882 40,532,009Long-term operating liabilities - 294 4,511 Short-term liabilities 358,968,014 377,287,617 388,171,256Liabilities for non-current assets held for sale 1,090,807 - -Short-term operating liabilities 19 40,130,797 37,943,110 36,777,184Short-term income tax payable 20 - 353,494 2,963,742Short-term financial liabilities 21 317,746,410 338,991,013 348,430,330 Short-term accrued cost and deferred income 22 6,154,229 7,463,532 8,433,295 Total short-term liabilities 365,122,243 384,751,149 396,604,551 TOTAL EQUITY AND LIABILITIES 454,491,294 505,728,593 558,005,729




Accounting policies and notes form an integral part of these financial statements and should be read in conjunction with them.



~ 142 ~

4.3.2 CONSOLIDATED INCOME STATEMENT OF LAŠKO GROUP FOR THE PERIOD 1 JANUARY TO 31 DECEMBER 2013

(adjusted)*

(in EUR) Notes 2013 2012

Net sales revenues 23.A 266,877,399 271,386,948

Change in inventories

of products and work in progress (114,014) (152,370)

Capitalised own products and services - 211,714

Other operating income 23.B,C 8,388,258 5,644,089

Costs of goods, materials and services 23.D (167,445,183) (166,811,670)

Employee benefit costs 23.D (49,508,915) (50,887,703)

Amortisation of intangible assets

and depreciation of property, plant and equipment 23.D (17,619,428) (20,064,199)

Revaluation operating expenses 23.D (15,384,781) (9,718,509)

Provisions 23.D (1,356,003) (801,307)

Other operating expenses 23.D (12,108,482) (6,590,812)

OPERATING PROFIT OR LOSS 11,728,851 22,216,181

Financial income 23.F 6,859,708 7,473,277

Financial expenses 23.F (58,005,512) (53,929,485)

PROFIT OR LOSS BEFORE TAX (39,416,953) (24,240,027)

Taxes 24 9,712,608 834,901

NET PROFIT OR LOSS OF THE

YEAR FROM CONTINUED OPERATIONS (29,704,345) (23,405,126)

Discontinued operations - Jadranska pivovarna Split (453,266) (2,541,655)

NET PROFIT OR LOSS OF THE YEAR

FROM DISCONTINUED OPERATIONS 25 (453,266) (2,541,655)

NET PROFIT OR LOSS FOR THE YEAR (30,157,611) (25,946,781)

Share of non-controlling interests in net profit /loss (1,803,568) (384,188)

Share of the controlling interests in net profit /loss (28,354,043) (25,562,593)

Total net profit /

loss per share of the controlling interest

Net profit/loss per share 27 (3.25) (2.93)

Diluted net profit/loss per share (3.25) (2.93)

Total net profit /

loss per share of the non-controlling interest

Net profit/loss per share (0.21) (0.04)




~ 143 ~

4.3.2 CONSOLIDATED INCOME STATEMENT OF LAŠKO GROUP FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013( c o n t i n u a t i o n )

(adjusted)*


Net profit /loss per share

from discontinued operations



Net profit /loss per share from

continued operations










~ 144 ~~ 144 ~

4.3.3 CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME OF LAŠKO GROUP FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013

(adjusted)*

(in EUR) 2013 2012

Net profit or loss for the period (30,157,611) (25,946,781)

Other comprehensive income

Financial assets available for sale (93,136) 10,431

Gains/losses from revaluation of property (3,434,740) 305,678

Deferred tax on account of revaluation (137,965) (1,292,900)

Translation reserve (24,236) -

Other - 474,983

TOTAL OTHER COMPREHENSIVE INCOME

THAT WILL BE RECLASSIFIED TO PROFIT

AND LOSS AT A FUTURE DATE (3,690,077) (501,808)

Unrealised actuarial gains /

losses from post-employment benefits (155,344) -

Deferred tax on unrealised actuarial gains / losses 22,592 -


THAT WILL NEVER BE RECLASSIFIED

TO PROFIT OR LOSS (132,752) -

OTHER COMPREHENSIVE INCOME (3,822,829) (501,808)

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (33,980,440) (26,448,589)






~ 145 ~~ 145 ~

4.3.

4 C

ON

SOLI

DAT

ED

STA

TEM

EN

T O

F C

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NG

ES

IN E

QU

ITY

OF

LAŠK

O G

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PE

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D F

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M 1

JAN

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1 DEC

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BE

R 2

013

Rese

rves

for

Tota

l cap

ital

of

Tota

l cap

ital

of

Sh

are

Sh

are

Le

gal

trea

sury

Tr

easu

ry

Tota

l pro

fit

Reta

ined

N

et

Reva

luat

ion

Tr

ansl

atio

n

the

cont

rolli

ng n

on-c

ontr

ollin

g

TOTA

L (in

EU

R)

capi

tal

prem

ium

re

serv

es

shar

es

shar

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rese

rves

ea

rnin

gs

profi

t or l

oss

rese

rve

rese

rve

inte

rest

s in

tere

sts

CA

PITA

L

OP

ENIN

G B

ALA

NC

E A

T

1 Ja

nuar

y 20

13

36.5

03.3

05

55.6

81.5

53

3.65

0.33

1

341.

170

(3

41.1

70)

3.65

0.33

1

875.

016

(2

5.56

2.59

2)

9.65

5.31

9

11.6

37

80.8

14.5

69

7.16

4.31

0

87.9

78.8

79

Tran

sact

ions

with

ow

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Dis

posa

l of t

reas

ury

shar

es (i

nter

ests

) -

- -

- -

- -

- -

-

(39.

063)

(3

9.06

3)

Paym

ent o

f div

iden

ds

- -

- -

- -

(621

.758

) -

-

(621

.758

) 4.

504.

470

3.

882.

712

Oth

er c

hang

es

- -

- -

59.2

75

59.2

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293.

543

-

- -

352.

818

-

352.

818

Tota

l tra

nsac

tions

with

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-

- -

- 59

.275

59

.275

(3

28.2

15)

- -

- (2

68.9

40)

4.46

5.40

7

4.19

6.46

7

Cha

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in c

ompr

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Net

pro

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ss fo

r th

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ar

- -

- -

- -

- (2

8.35

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- -

(28.

354.

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(1

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) (3

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7.61

1)

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- -

- -

- -

- -

(3.4

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) 27

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(3

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)

Inve

stm

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eval

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serv

e -

- -

- -

- -

- (8

1.11

2)

- (8

1.11

2)

(12.

024)

(9

3.13

6)

Tax

on in

divi

dual

item

s

of c

ompr

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sive

inco

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-

- -

- -

- -

- (9

4.39

9)

- (9

4.39

9)

(20.

974)

(1

15.3

73)

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- -

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(132

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) (2

4.23

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(157

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(179

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201

3

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(3.7

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(24.

236)

(3

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0)

(1.8

31.6

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(33.

980.

440)

~ 146 ~

4.3.

4 C

ON

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STA

TEM

EN

T O

F C

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ES

IN E

QU

ITY

OF

LAŠK

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1 DEC

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( c o

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To

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tal p

rofit

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Tran

slat

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th

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non

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(in E

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sh

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sh

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Mov

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-

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~ 147 ~

4.3.

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(499

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6,44

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9)

~ 148 ~

4.3.

5 C

ON

SOLI

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STA

TEM

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T O

F C

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IN E

QU

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(A

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thos

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in a

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nanc

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tate

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ts a

nd s

houl

d be

rea

d in

con

junc

tion

with

them

.



~ 149 ~

4.3.6 CONSOLIDATED CASH FLOW STATEMENT OF LAŠKO GROUP FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013

(in EUR) 2013 2012

OPERATING PROFIT 10,530,503 22,216,180

Adjustments for:

Elimination of other operating revenue (1,247,728) (2,515,861)

Depreciation of PPE and investment property 16,628,040 19,118,592

Amortisation of intangible assets 991,238 778,868

Long-term assets written-off 17,217,096 10,045,492

Short-term assets written-off 1,640,139 448,009

Net movements in provisions 7,421,311 (77,244)

Translation reserve - (15,871)

Foreign exchange differences from operations (8,439) 37

Total adjustments 42,641,657 27,782,022

MOVEMENTS IN WORKING CAPITAL

Inventories and non-current assets held for sale 758,828 970,877

Operating and other receivables (9,131,507) (688,278)

Operating and other liabilities 5,186,216 (2,010,048)

Total movements in working capital (3,186,463) (1,727,449)

NET CASH FLOWS FROM OPERATING ACTIVITIES 49,985,697 48,270,753

Cash flows from operating activities

Cash from operating activities 49,985,697 48,270,753

Disbursements for taxes - (6,135,833)

OFFSETTING CASH FLOWS

FROM OPERATING ACTIVITIES 49,985,697 42,134,920

Cash flows from investing activities

Acquisition of subsidiaries, net consideration paid - -

Disbursements for investments in associates - -

Acquisition of property, plant and equipment (11,677,203) (9,601,663)

Gains /losses from disposal of PPE 274,358 4,211

Acquisition of intangible assets (380,364) (689,469)

Acquisition / disposal of financial assets 3,929,018 (5,114,019)

Disposal of non-current assets and liabilities held for sale 315,000 -

Interest received 613,960 702,086

Dividends and capital profits received 6,252,891 5,794,495

NET CASH FLOWS FROM INVESTING (672,340) (8,904,359)





~ 150 ~

4.3.6 CONSOLIDATED CASH FLOW STATEMENT OF LAŠKO GROUP FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013( c o n t i n u a t i o n )

(in EUR) 2013 2012

Cash flows from financing activity

Interest paid (18,387,798) (20,749,463)

Repurchase of treasury shares - 114,292

Capital increase 78,252 1,000,000

Increase / decrease in financial debt (30,148,640) (32,604,397)

Dividends paid to the owners (39,063) (306,142)

NET CASH FLOWS FROM FINANCING (48,497,249) (52,545,710)

NET INCREASE / DECREASE

IN CASH AND CASH EQUIVALENTS 816,108 (19,315,149)

Cash and cash equivalents at the beginning of year 2,188,615 21,503,764

Cash and cash equivalents at the end of year 3,004,723 2,188,615





~ 151 ~

4.4notes to consolidated

financial statements

4.4.1 GENERAL DATA

Pivovarna Laško is a public limited company, registered with the District Court in Celje under the

decision No Srg 95/00673 and under the application No 1/00171/00. It is classified as a large company

and as such is subject to regular annual audit of its financial statements. The principal activity of the

Company is the production and sale of beer, malt and waters. The Company is also engaged in whole-

sale and retail trade.

Pivovarna Laško (hereafter: the Company) is the controlling entity of the Laško Group (hereafter: the

Group) with its registered seat in Slovenia at Trubarjeva ulica 28, 3270 Laško, Slovenia.

The Company’s ordinary shares are quoted on the Ljubljana Stock Exchange under the “PILR” des-

ignation. The Company’s share capital totals EUR 36,503,304.96 and is represented with 8,747,652

ordinary freely negotiable registered no-par-value shares. There are no limitations on the payment of

dividends or other distributions of equity.

4.4.2 STATEMENT OF COMPLIANCE WITH IFRS

The financial statements have been compiled in accordance with the International Financial Report-

ing Standards (IFRS) as adopted by the European Union, and provisions of the Companies Act.

4.4.3 USE OF NEW AND AMENDED IFRS AND IFRIC INTERPRETATIONS

A) STANDARDS AND INTERPRETATIONS THAT ENTERED INTO FORCE DURING THE REPORTING PERIOD

In the period under review, the following amendments to the existing standards issued by the Inter-

national Accounting Standards Board (IASB) were applicable as adopted by the EU:

• Amendments to IFRS 1 “First-time adoption of IFRS” – Severe hyperinflation and removal of fixed

dates for first-time adopters: the amended standard was adopted by the EU on 11 December 2012

(effective for annual periods beginning on or after 1 January 2013),



~ 152 ~

• Amendments to IFRS 1 “First-time adoption” – Government Grants; the amended standard was

adopted by the EU on 4 March 2013 and is effective for annual periods beginning on or after 1

January 2013,

• Amendments to IFRS 7 “Financial instruments: Disclosures” – Offsetting Financial Assets and

Financial Liabilities; the standard was adopted by the EU on 13 December 2012 and is effective for

annual periods beginning on or after 1 January 2013,

• Amendments to IAS 1 “Presentation of financial statements” – Presentation of Items of Other

Comprehensive Income; the standard was adopted by the EU on 5 June 2012 and is effective for

annual periods beginning on or after 1 July 2012),

• Amendments to IAS 12 “Income Taxes” – Deferred Tax: Recovery of Underlying Assets; the stand-

ard was adopted by the EU on 11 December 2012 and are effective for annual periods beginning on

or after 1 January 2013),

• Amendments to IAS 19 “Employee benefits”- Revision of Post-employment Benefits; the amended

standard was adopted by the EU on 5 June 2012 and is effective for annual periods beginning on


• Amendments to a number of standards “IFRS Improvements over the period 2009 to 2011”, ac-

cording to the annual IFRS improvement project encompassing IFRS 1, IAS 1, IAS 16, IAS 32 and

IAS 34, which is aimed primarily at elimination of discrepancies and clarification of wording. The

amended standards were adopted by the EU on 27 March 2013 and are effective for periods begin-

ning on or after 1 January 2013,

• IFRIC 20 “Stripping Costs in Production Phase of a Surface Mine”. The standard was adopted by

the EU on 11 December 2012 and is effective for annual periods beginning on or after 1 January 2013.

The adoption of these amendments to the existing standards led to no changes in the accounting

policies of the Group.

B) STANDARDS AND REPRESENTATIONS ISSUED BY THE IASB AND ADOPTED BY THE EU THAT HAVE NOT EN-

TERED INTO FORCE YET

On the date of the approval of these financial statements, the following standards, amendments and

interpretations were issued and adopted by the EU, but which are not yet effective:

• FRS 10 “Consolidated financial statements”, adopted by the EU on 11 December 2012 and effective

for annual periods beginning on or after 1 January 2014),

• IFRS 11 “Joint arrangements”, adopted by the EU on 11 December 2012 and effective for annual

periods beginning on or after 1 January 2014,

• IFRS 12 “Disclosure of interests in other entities”, adopted by the EU on 11 December 2012 and

effective for annual periods beginning on or after 1 January 2014,

• IAS 27 (amended in 2011) “Separate financial statements” was adopted by the EU on 11 December

2012 and is effective for annual periods beginning on or after 1 January 2014,



~ 153 ~

• IAS 28 (amended in 2011) “Investments in associates and joint ventures” was adopted by the EU on

11 December 2012 and is effective for annual periods beginning on or after 1 January 2014,

• Amendments to IFRS 10 “Consolidated financial statements”, IFRS 11 “Joint Arrangements” and

“IFRS 12 “Disclosure of Interests in Other Entities” – Transition Guidance, were adopted by the EU

on 4 April 2013 and are effective for annual periods beginning on or after 1 January 2014,

• Amendments to IFRS 10 “Consolidated financial statements”, IFRS 12 “Disclosure of Interests in

Other Entities” and IAS 27 “Separate Financial Statements” – Investment Entities, were adopted by

the EU on 20 November 2013 and are effective for annual periods beginning on or after 1 January

2014),

• Amendments to IAS 32 “Financial instruments: Presentation” – Offsetting Financial Assets and



• Amendments to IAS 36 “Impairment of Assets”- Recoverable Amount Disclosure for Non-Finan-

cial Assets, were adopted by the EU on 19 December 2013 and are effective for periods beginning

on or after 1 January 2014,

• Amendments to IAS 39 “Financial Instruments: Recognition and Measurement- Novation of De-

rivatives and Continuation of Hedge Accounting, were adopted by the EU on 19 December 2013

and are effective for periods beginning on or after 1 January 2014.

C) STANDARDS AND INTERPRETATIONS ISSUED BY IASB BUT WHICH HAVE NOT YET BEEN ADOPTED BY THE EU

Currently, the IFRS as adopted by the European Union do not considerably differ from those adopt-

ed by the International Accounting Standards Board (IASB) with the exception of the following stand-

ards, amendments to the existing standards and interpretations which were not confirmed for use on

30 April 2014.

• IFRS 9 “Financial Instruments” and subsequent amendments (the effective date has so far not

been determined),

• Amendments to IAS 19 “Employee Benefits”- Defined Benefit Plans: Employee Contributions are

effective for annual periods beginning on or after 1 July 2014,

• Amendments to a number of standards “Improvements to IFRS over the period 2010 to 2012”

stemming from the annual IFRS improvements projects that encompass IFRS 2, IFRS 3, IFRS 8,

IFRS 13, IAS 16, IAS 24 and IAS 38, mainly in order to eliminate discrepancies and misinterpreta-

tions, are effective for annual periods beginning on or after 1 July 2014,


stemming from the annual IFRS improvements projects that encompass IFRS 1, IFRS 3, IFRS 13

and IAS 40, mainly in order to eliminate discrepancies and misinterpretations, are effective for

annual periods beginning on or after 1 July 2014,

• IFRIC 21 “Levies” The interpretation sis effective for annual periods beginning on or after 1 Janu-

ary 2014.



~ 154 ~

The Group has assessed that the adoption of these standards, amendments and interpretations will

not have a significant impact on the Group’s consolidated financial statements during the period of

their initial application.

At the same time, the accounting for the hedging of risks associated with the portfolio of financial

assets and liabilities, the principles of which the EU has not yet adopted, still remains unregulated.

The Group assesses that the accounting of risk hedging in connection with the portfolio of financial

assets and liabilities in accordance with the requirements of IAS 39: “Financial Instruments: Recogni-

tion and Measurement” would not have a significant impact on the consolidated financial statements

of the Group, if applied as at the reporting date.

4.4.4 SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PREPARATION

The financial statements have been compiled under IFRS, the Companies Act, other acts and the

Accounting Manual of Pivovarna Laško, and are expressed in euro. When disclosing and measuring

the items, the provisions of the standards were directly applied, with the exception of the items where

standards provide a choice between several valuation methods.

The financial statements have been prepared taking into account historical costs except for the fi-

nancial assets, non-current assets held for sale (or assets and related liabilities of the disposal group),

property and investment property carried at revalued amount or fair value. The valuation of assets and

liabilities is presented in detail in individual sections below.

When selecting the accounting policies and when deciding on their use and in the compilation of

these financial statements, the Pivovarna Laško Management Board took into consideration the follow-

ing three requirements:

• Financial statements are understandable when they are easily understood by users,

• Information is relevant if it assists the user in making economic decisions,

• Information is essential if its omission or untrue statement could have an impact on economic

decisions of the users.

The accounting policies presented below were consistently applied in all of the periods presented.

GOING CONCERN ASSUMPTION

As at 31 December 2013, the Group’s short-term liabilities exceed the amount of its short-term assets

by EUR 194,688,007.

At the end of April 2014, Pivovarna Laško, Pivovarna Union, and Radenska signed a Debt Reschedul-






~ 155 ~

The project of determining the concept of operational and financial restructuring of companies

continued over the entire 2013 period, with close participation of all companies involved, creditors,

and consultants. The aim of the project was to define an agreement that will on the one hand ensure fi-

nancial stability of the Laško Group through long-term reprogramming of its borrowings and through

deleveraging of the Group to the sustainable level of indebtedness; and, on the other hand, to ensure

fulfilment of creditors’ expectations for rapid deleveraging and simultaneous maximising of the value

for the owners. This will ensure the Laško Group of companies a sustainable development of quality

brands and preservation of jobs.


analysis from the financial, fiscal and legal points of view, the concept that provided the basis for the

signed Agreement, was dully selected.





One of the key milestones for all stakeholders, including creditors, the Company and the owners,

is capital increase of Pivovarna Laško. After a transparent process of finding the investor, the capital










deleveraging milestones, will terminate the agreement only, if so desired by the majority of creditors.

The Management of the controlling entity of the Laško Group have assessed that the use of the go-

ing concern assumption in the preparation of the financial statements for the year ended 31 December

2013 is appropriate.

CONSOLIDATION

Subsidiaries in which the Group’s indirect or direct equity is larger than half of voting rights or the

Group can in any other way influence their operation, are considered consolidated. They are consoli-

dated in the Group’s financial statements from the day when the Group assumes a controlling interest

and their consolidation ends when the Group no longer holds a controlling interest in those entities.

All intragroup transactions including receivables and liabilities between the Group’s companies are

eliminated for the purpose of consolidation. Any impairments of investments in subsidiaries are also

eliminated in the consolidation. Impairment of the investment in subsidiary Delo to its estimated val-

ue is reflected in the consolidated financial statements as an impairment of the brands recognised on

acquisition. Dividends received from subsidiaries were also eliminated. For the purpose of ensuring

consistent and correct data for the needs of the Group’s consolidation and financial reporting, account-

ing policies of the subsidiaries were harmonised with the controlling company’s policies.



~ 156 ~

The Group uses the purchase method for the accounting of the takeovers. The acquisition cost of the

takeover is assessed as the fair value of assets and capital instruments issued and assumed liabilities

on the day of transaction, inclusive of expenses directly attributable to the takeover. Assumed assets,

liabilities and commitments attached to a takeover are initially recorded at fair value on the day of the

transaction irrespective of the size of the non-controlling interest. The surplus of the acquisition price

over fair value of the Group’s interest in net assets of the acquiree is recorded as goodwill. If the cost

is lower than the fair value of the net assets of the acquiree, the difference is recognised through profit

or loss as an impairment loss.

The Group accounts for transactions with the owners of the non-controlling interest in the same

way as those made with external partners. Gains and losses attributable to the minority holders are

disclosed in the profit or loss of the Group.

REPORTING CURRENCY

A) FUNCTIONAL AND REPORTING CURRENCY

The items presented in the separate financial statements of individual Group companies are de-

nominated in the currency of the primary environment – the country where the individual company

operates (this currency is the so-called “functional currency”). The consolidated financial statements

are presented in euro, which is also the functional and reporting currency of the parent company

(Pivovarna Laško).

B) TRANSACTIONS AND BALANCES

Foreign currency transactions are converted into the reporting currency using the exchange rate

prevailing on the day of the transaction. Gains and losses arising from these transactions and from

the conversion of cash and liabilities, denominated in a foreign currency, are recognised in the profit

or loss.

Exchange rate differences arising from debt securities and other monetary financial assets are rec-

ognised at fair value and are included in the gains or losses from transactions with foreign currencies.

Exchange rate differences from non-monetary items such as securities held for trading are reported

as an increase or decrease in fair value. Exchange rate differences from available-for-sale securities are

included in the revaluation reserve.

C) GROUP COMPANIES

Separate financial statements of income and cash flows of foreign subsidiaries are translated into

the reporting currency of the controlling entity using the average exchange rate, whereas separate fi-

nancial statements of financial position are translated into the reporting currency using the exchange

rate prevailing on 31 December 2013. On disposal of a foreign subsidiary, exchange rate differences

realised on disposal are recognised in the profit or loss as gains or losses from disposal.

THE USE OF ESTIMATES AND JUDGEMENTS

The preparation of financial statements requires management to make judgements, estimates and

assumptions that affect the carrying amounts of assets and liabilities of the Group as well as the re-

ported income and expenses for the period.

Management estimates include among others: determination of the useful life and residual value

of property, plant and equipment, as well as intangible assets; allowances made for inventories and



~ 157 ~

receivables; assumptions material to the actuarial calculation of defined employee benefits; assump-

tions used in the calculation of potential provisions for lawsuits, as well as assumptions and estimates

relating to impairment of goodwill. Regardless of the fact that management duly considers all factors

that may impact the preparation of these assumptions, the actual consequences of business events

may differ from those estimates. In the process of making accounting estimates, management makes

judgements while considering potential changes in the business environment, new business events,

new and additional information that may be available, as well as experience.

Key estimates and assumptions as at the day of the statement of financial position that are associated

with future operations and which could result in significant adjustment of the book values of assets

and liabilities are presented below.

Information on significant estimates about uncertainty and critical judgements in applying account-

ing policies that have the most significant impact on the amounts recognised in the financial state-

ments is presented in the following notes:

• The Group assesses on an annual basis whether there are any indications of impairment of an indi-

vidual cash-generating unit. If any such indications exist, the recoverable amount of non-financial

assets is determined as the present value of future cash flows, based on the estimate of expected

future cash flows from the cash-generating unit and determination of the relevant discount rate.

• Defined benefit obligations include the present value of termination benefits on retirement and ju-

bilee awards. They are recognised on the basis of the actuarial calculation approved by the manage-

ment. The actuarial calculation is made by using assumptions and estimates effective at the time

of the calculation, and may, as a result of future changes, differ from actual assumptions applicable

at that future time. This applies primarily to determination of the discount rate, assessment of

employee turnover, mortality assessment, as well as assessment of the increase in salaries. Due

to the complexity of the actuarial calculation and the long-term nature of the item, defined benefit

obligations are sensitive to changes in the above estimates and assessments.

• A provision is recognised when the Group has present obligations (legal or constructive) as a result

of past events, a reliable estimate can be made of the amount of obligation, and it is probable that

an outflow of resources embodying economic benefits will be required to settle the obligation.

Contingent liabilities are not recognised in the financial statements as their actual existence will

be confirmed only upon the occurrence or non-occurrence of one or more uncertain future events

not entirely within the control of the Group. The management of the Group continually assess con-

tingent liabilities to determine whether an outflow of resources embodying economic benefits has

become probable. In this case, a provision is recognised in the financial statements of the period in

which the change in probability occurs.

RECOGNITION OF REVENUE

Revenue is measured at the fair value of the consideration received or receivables for the sale of prod-

ucts, goods or services during the ordinary operations of the Group. Revenue is presented exclusive of

value added tax and excise duties, rebates and reimbursements.

Revenue from the sale of products, merchandise and materials is recognised if all of the following

conditions are fulfilled:

• All the significant risks and rewards of ownership of the object of sale are transferred to the buyer;



~ 158 ~

• The seller loses the management and control over what is covered by the sale;

• Amount of revenue can be reliably measured;

• A high degree of certainty is attached to the flow of economic benefits related to the transaction;

• The expenses incurred with respect to transaction can be reliably measured.

Other categories of revenue are recognised based on the following criteria:

• Interest income is recognised as the income of the period to which they pertain, in accordance

with the applicable interest rate and when the degree of certainty attached to the flow of economic

benefits is high;

• Dividend income is recognised when the right to receive payment is established;

• Revenue from royalties is recognised on the basis of the provisions of the licence agreements.

INTANGIBLE ASSETS

Intangible assets with a finite useful life acquired individually (not within a business combination)

and which are not created within the Group are measured under the cost model i.e. they are disclosed

at cost less any accumulated depreciation and accumulated impairment losses. They are amortised

according to the straight-line method in the period of their estimated expected useful life periods (pat-

ents, brands, licences 5 years; software 3 years). Estimates of expected functional life periods and the

amortisation method are checked on the preparation of financial statements; any changes of estimates

of the categories mentioned are considered in the future periods rather than retrospectively.

Intangible assets with indefinite useful lives acquired individually (not within a business combina-

tion) and not generated within the Group are disclosed at cost less any potential impairment losses.

An item of intangible assets is recognised as an asset only when it is probable that future economic

benefits will flow to the Group and the cost of an assets can be reliably measured.

Intangible assets are derecognised upon their disposal or when no future economic benefits are

expected from their further use. Gains or losses arising from derecognition of an item of intangible

assets are recognised in the profit or loss of the period of derecognition.

A) GOODWILL

Goodwill represents the excess of the cost of the acquisition over the Group’s interest in the net fair

value of the identifiable assets and contingent liabilities of the acquiree on the acquisition date. Good-

will arising upon the acquisition of subsidiaries is recognised as an item of intangible fixed assets.

Goodwill is checked, tested for impairments and measured at the initial value decreased by cumulated

impairments on an annual basis. Gains and losses on disposal of a subsidiary include the present

value of goodwill of the disposed entity. At 31 December 2013, the Group carried out impairment test of

goodwill relating to the investment in the Union Group. According to the results of goodwill tests, its

value had not changed as compared to the previous year.

B) PATENTS, BRANDS AND LICENCES

Expenditures for the acquisition of patents, brands and licences are capitalised and amortised us-



~ 159 ~

ing the straight-line amortisation method during their “useful life periods” (amortisation period). If

the useful life period cannot be determined, such assets are not amortised; instead, they are tested for

impairment on an annual basis.

If revaluation is required, the value of intangible assets needs to be estimated and written-off to the

amount of the assets replacement values. The useful life periods of brads are not determinable and

therefore the impairment test has to be carried out every year. The valuations provided by certified

business appraisers or by the management provide the basis for impairment recognition.

The useful lives of other intangible assets range from 3 to 10 years.

C) OTHER INTANGIBLE ASSETS

Whenever software applications are not considered a constituent part of the relevant computer hard-

ware, they are accounted for as the items of intangible assets. Other intangible assets are disclosed at

cost less any accumulated amortisation and accumulated impairment losses. The useful life period of

other intangible assets is 10 years.

PROPERTY, PLANT AND EQUIPMENT

Land and buildings in use are accounted for using the revaluation models and are disclosed at reval-

ued amount at the date of the revaluation, less any subsequent accumulated depreciation or impair-

ment losses. The revaluation is made with sufficient regularity to ensure that the carrying amount of

the assets does not differ materially from their fair value at the reporting date.

Appreciation of land and buildings is recognised or accumulated as the revaluation surplus in other

comprehensive income except when the previous revaluation of the same land and buildings recog-

nised in profit or loss is reversed; in this case the appreciation to the amount of the prior revaluation

of the assets is recognised in profit or loss. The revaluation of land and buildings in excess of the

previously appreciated amount recognised in the revaluation surplus of the same land and buildings

is recognised in profit or loss.

Production facilities, machinery, all types of equipment, reusable packaging and small tools are

recognised under the cost model and are disclosed at their cost less accumulated depreciation and ac-

cumulated impairment losses.

The items of property, plant and equipment being acquired are measured at cost less any impair-

ment loss. The cost of an item of property, plant and equipment includes the relevant borrowing costs

in accordance with the adopted accounting policy. They are classified under the relevant categories of

property, plant and equipment, to which they will belong when completed and made available for use.

Depreciation of the items of property, plant and equipment begins in the month following the month

when the assets are made available for their use.

Land is not depreciated.

The depreciation of buildings is recognised in profit or loss, while the reversal of the relevant revalu-

ation surplus is simultaneously recognised in retained earnings. On derecognition of buildings, the

attributable amount of revaluation surplus is reclassified directly to retained earnings.

Depreciation is calculated using the straight-line method (except for land and property, plant and

equipment being acquired, which are not depreciated) and is recognised so that the cost or the reval-

ued amount of the property, plant and equipment less any residual value is written-off in the period of



~ 160 ~

its estimated functional life period. The estimates of expected functional life period, their residual val-

ues and the depreciation method are checked on the preparation of financial statements; any changes

in estimates of those categories are accounted for in future periods rather than retrospectively. The

expected functional life periods of individual groups of assets are as follows:

Buildings 10 – 66 years

Plant and machinery 5 – 14 years

Hardware and software 3 years

Motor vehicles 3 – 9 years

Other equipment 3 – 20 years

Reusable packaging (barrels, bottles, crates) 4 – 5 years

Cost of borrowings raised to finance the purchase of land, the construction of buildings and the pur-

chase of equipment, are attributed to the asset’s cost until the day the asset is brought to its working

condition. Costs incurred in relation to property, plant and equipment increase their cost providing

they increase future benefits arising from the assets in excess of the originally assessed benefits; how-

ever costs that allow the extension of the useful life of the assets initially decrease their accumulated

depreciation. The extension of the useful life of an asset of property, plant and equipment relates to

the extension of its originally determined useful life during which the asset is depreciated. All other

repair and maintenance costs are included in profit or loss of the financial year when they are incurred.

The items of property, plant and equipment are derecognised upon their disposal or when no future

economic benefits are expected from their further use. Gains or losses arising from derecognition of

an item of property, plant and equipment are recognised in the profit or loss of the period of derecog-

nition.

INVESTMENT PROPERTY

Investment property is property owned by the Company for the purpose of earning rent or increas-

ing the value of the property in the long-term. On their initial recognition, they are measured at cost,

whereas subsequently they are measured using the fair value model (depreciation is not calculated),

which means that the increase or decrease in their fair value is recognised in the profit or loss of the

period in which these changes occurred.

An investment property is derecognised on its disposal or final termination of its use, when no fu-

ture economic benefits are expected from the asset on its disposal. Gains and losses on disposal of in-

vestment property are recognised in the profit or loss of the period in which the asset is derecognised.

IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT, AND INTANGIBLE ASSETS

On preparation of the financial statements, all items of property, plant and equipment, and intan-

gible assets are checked for any signs of impairment. If there are indications of impairment, the as-

set’s recoverable amount is assessed. When the recoverable amount of an individual asset cannot be

established, the recoverable amount of a cash-generating unit to which the asset belongs is assessed.

The recoverable amount of the asset is the higher of its fair value decreased by the costs to sell or

its value in use. The latter is assessed as the present value of discounted future cash flows associated

with the financial asset taking into account the pre-tax discount rate that reflects the current market

estimate of the time value of money and specific risks related to the assets that were not considered in

the assessment of future cash flows.



~ 161 ~

The asset (or a cash-generating unit) is impaired to its recoverable amount if its value in use is lower

than its carrying amount. Impairment is immediately recognised in profit or loss except when the as-

set is carried under the revaluation model; in this case the impairment is disclosed as a decrease in the

revaluation surplus.

In the event of impairment reversal the value of the asset (or a cash-generating unit) is increased to

its new assessed recoverable amount but only to the extent that the new recoverable amount does not

exceed the amount at which the assets would be valued if no impairment was recognised. Impairment

reversal is immediately recognised in profit or loss except when the asset is carried under the revalua-

tion model; in this case the impairment is disclosed as an increase in the revaluation surplus.

INVESTMENTS INTO THE ASSOCIATED COMPANIES

Associated companies are companies in which the Group holds between 20% and 50% of the voting

rights, and in which it has a significant influence on their business, but does not control them. Signifi-

cant influence is the power to participate in the financial and operating policy decisions of the investee

but does not include control or joint control over those policies.

In consolidated financial statements, profits and losses, as well as the assets and liabilities of the

associated companies are accounted for using the equity method unless they are classified as non-

current assets held for sale in accordance with IFRS 5. Under the equity method, the investment in an

associate is initially recognised in consolidated financial statement at cost; however, its later measure-

ment depends on related interests of the investor in profit, losses and other comprehensive income of

the associated company arising after the acquisition date.

If the investor’s share in losses or negative other comprehensive income of the associated company

is equal to or higher than the value of its stake in the associated company (carrying amount of the

financial investment into the associated company including any long-term shares that are in fact a

part of net financial investments of the investor in the associated company), the investor no longer

recognises its share in further losses. When the investor’s share is decreased to zero, further losses are

defined and the liability recognised only to the extent that the investor has incurred a legal or construc-

tive obligation or made payments on behalf of the associate company.

On the acquisition of an investment, any potential difference between the investment’s cost and

the investor’s stake in the net fair value of the identifiable assets, liabilities or contingent liabilities

in consolidated financial statements of the investor are accounted for as goodwill and contained in

the carrying amount of the financial investment in accordance with IFRS 3. The amortisation of that

goodwill is not allowed and as such is not included in the determination of the investor’s share of the

profits or losses of the associated company.

Any potential negative difference between the cost and the investor’s interest in the net fair value of

the identifiable assets, liabilities and contingent liabilities in consolidated financial statements of the

investor is immediately recognised in profit or loss.

In the determination of whether it is necessary to recognise any additional impairment loss with

respect to the investor’s net investment in the associated company, the provisions of IAS 39 or IAS 28

are taken into account. Furthermore, the entire carrying amount of the investment is tested as an asset

in accordance with IAS 36; its carrying amount is compared to the recoverable amount (the higher of

its fair value less costs to sell or value in use).



~ 162 ~

Gains and losses from transactions between the investor (and its consolidated subsidiaries) and

the associated company are recognised in the investor’s consolidated financial statements only to the

extent of unrelated investors’ interests in the associate. The investor’s interest in the profits or losses of

the associated company arising from these transactions is eliminated from the investor’s consolidated

financial statements.

LOANS AND DEPOSITS ISSUED, MONETARY ITEMS

Financial assets such as loans and deposits issued and monetary items are initially measured at fair

value on the date of their issue or placement.

After initial measurement they are disclosed at amortised cost using the effective interest method

less any impairment losses.

FINANCIAL ASSETS AVAILABLE FOR SALE

Available-for-sale financial assets are initially measured at their fair value on the date of acquisition.

This fair value is usually equal to the asset’s cost; however, sometimes adjustments are needed.

After the initial recognition, the financial assets available for sale are measured at fair value in the

statement of financial position, whereas changes in fair value are recognised under other comprehen-

sive income excluding the assets’ impairments and interest that are recognised by using the effective

interest rate and exchange rate differences.

The best evidence of an asset’s fair value is normally its quoted prices on an active market. If these

are not available, valuation techniques are applied that as far as possible take account of market inputs

including the most recent arm’s length market transactions, reference to the current fair value of

another instrument that has substantially similar characteristics, and discounted cash flow analysis.

If the fair value of a financial asset available for sale cannot be reliably measured, the asset is carried

at its cost taking into consideration any impairment losses.

On derecognition of an available-for-sale financial asset or its permanent impairment, the cumula-

tive other comprehensive income is reclassified to the profit or loss of the period in which the asset is

derecognised or permanently impaired.

DERIVATIVES

Derivative financial instruments are applied in interest rate hedging. They comprise interest options

and interest swaps.

Derivative financial instruments are initially recognised at cost on the day of the contract; subse-

quently, they are measured at fair value on the reporting date. Gains and losses arising from changes in

fair value are immediately recognised in profit and loss unless they are applied in the hedging of risks.



~ 163 ~

NON-CURRENT ASSETS HELD FOR SALE OR ASSETS OF DISPOSAL GROUPS (AND RELATED LIABILITIES)

Non-current assets held for sale or assets of disposal groups (and liabilities associated with the non-

current assets) are those non-current assets or liabilities for which it is reasonably assumed that their

carrying amount will be settled predominantly through their sale rather than their further use. This

condition is deemed to have been complied with only if the sale is highly probable and if the assets

or group of assets (and liabilities associated with them) are in the condition that makes the sale pos-

sible. The management needs to be committed to the closing of the sale process within a year from

the asset’s reclassification to non-current assets held for sale or to the assets of disposal group (and the

associated liabilities).

The assets (and associated liabilities) related to the subsidiary for which it is planned that the control-

ling influence will be lost, are reclassified to the group of assets (and associated liabilities) for disposal

irrespective of whether the controlling company is planning to keep the minority stake after the sale

or not.

Non-current assets held for sale and assets of disposal groups are measured at the lower of carrying

amount or fair value less costs to sell.

INVENTORIES

Inventories of raw materials and consumables are disclosed at the lower of cost and net realisable

value; declining values of inventories are accounted for using the weighted average cost method. Net

realisable value is the estimated selling price less the estimated costs of completion and the estimated

costs necessary to make the sale.

Inventories of finished products, semi-finished products and work in progress are valued at their

production costs. Production costs are direct costs of materials and raw materials (labour, production

services, depreciation ...) and indirect costs of production (costs of materials and raw materials, labour,

services and depreciation that are accounted for in the production process but cannot be directly linked

to emerging products and services).

Inventories of raw materials, materials, spare parts, products and merchandise are written-off on the

basis of inventory records, customer complaints and returns and other records or upon a proposal of

a responsible person (also damaged products, ullage and breakages) that requires the decision of the

Management Board of the company. The inventories are written-off in full if the sale is permanently

discontinued or their use is forbidden. The Group examines the serviceability of the inventory of ma-

terials and spare parts with no movement over a period of more than 12 months, 2 years or 3 years and

if necessary, their value is impaired. An impairment loss of 25% is recognised for inventories with no

movement over a period of more than 12 months, 50% impairment loss is recorded for inventories

with no movement over a period of more than 2 years, whereas inventories with no movement over a

period of more than 3 years are fully impaired.

OPERATING RECEIVABLES

On initial recognition, operating receivables are recognised at fair value; subsequently they are

measured at amortised cost using the effective interest rate method less any impairment loss.

Impairments of individual operating receivables are made when there is objective evidence that the

recovery of the full amount due is impossible. The impairment loss is the difference between the car-



~ 164 ~

rying amount and the present value of estimated future cash flows discounted at the effective interest

rate. The impairment loss is recognised in profit or loss.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents reported in the cash flow statement comprise cash on hand, sight de-

posits at banks and investments into the money market instruments without bank overdrafts. Bank

overdrafts are included under short-term financial liabilities in the statement of financial position.

SHARE CAPITAL

Ordinary shares are classified as capital. Transaction costs directly associated with the issue of new

shares which are not associated to the acquisition of a company are reported as a decrease in capital.

Any surplus over the fair value of amounts paid in excess of the carrying amount of newly issued

shares is recognised as capital surplus paid-in.

TREASURY SHARES

When the Group repurchases treasury shares, the amount paid inclusive of net transaction costs is

deducted from total capital as treasury shares until these shares are removed, reissued or sold. The

Group is required to create reserves for treasury shares in that same amount. Reserves for treasury

shares are released when the Group disposes of or removes its treasury shares, crediting the source

from which they were created. Upon the sale of treasury shares, the difference between their selling

price and carrying amount is accounted for in equity with no impact on the profit or loss. Treasury

shares are used for the purposes defined in Article 247 of the Companies Act.

DIVIDENDS

Until approved by the General Meeting of shareholders, proposed dividends are accounted for as

retained earnings.

PROVISIONS

Provisions are recognised when the Group has present legal or constructive obligations as a result

of past events, it is highly likely that the liabilities will have to be settled and a reliable estimate of the

liability can be made. Provisions may not be set aside to cover future losses from operations.

The amount of provisions is the best estimate of the outflows expected to be required to settle the

present obligation at the reporting date taking into account the related risks and uncertainties. If the

provisions are measured at the amounts of future cash flows required for the settlement of present

obligations, and the time value of money is important, provisions are discounted to their present value.

PROVISIONS FOR RETIREMENT BENEFITS AND JUBILEE AWARDS

In accordance with the statutory requirements and the collective agreement, the Group is obligated

to pay jubilee awards and termination benefits on retirement. These employee benefits are measured



~ 165 ~

using the method of accounting, which requires that an actuarial liability is assessed on the basis of the

expected salary increase from the valuation date until the anticipated retirement of an employee. This

means that benefits are accrued in proportion with the work performed. The assessed liability is rec-

ognised as the present value of expected future expenditure. Anticipated salary increase and employee

turnover are also considered as part of the measurement.

Unrealised actuarial gains or losses of the current year from termination benefits are recognised in

equity, whereas unrealised actuarial gains or losses based on the actuarial calculation of current em-

ployee benefits and interest are recognised in profit or loss. Current employee benefit costs and inter-

est expense associated with jubilee awards are recognised in profit or loss as actuarial gains or losses.

The net liabilities of the Group in connection with long-term benefits for years of service, except

for pension schemes, are equal to the earnings which employees have obtained in exchange for their

service during current and previous periods. Such liabilities are calculated using the projected unit

method and are discounted to their present values.

OPERATING LIABILITIES

Operating liabilities comprise suppliers credits for purchased merchandise or services and liabilities

to employees, the state, owners or others. Liabilities are recognised in books of account if it is likely

that economic benefits will decrease due to their settlement and the amount required for their set-

tlement can reliably be measured. They are initially recognised at fair value; subsequently they are

measured at amortised cost using the effective interest rate method.

FINANCIAL LIABILITIES

Initially, financial liabilities are recognised at fair value exclusive of any attributed transaction costs.

In subsequent periods, financial liabilities are measured at amortised cost using the effective interest

rate method. Any differences between receipts (exclusive of transaction costs) and liabilities are recog-

nised in profit or loss over the entire period of the financial liability.

DISCONTINUED OPERATION

A discontinued operation is a component of a group that either has been disposed of, or reclassified

as held for sale (disposal group) and:

• it represents a separate major line of business or geographical area of operation;

• is part of a single coordinated plan to dispose of a separate major lines of business or geographical

areas of operations or

• is a subsidiary acquired exclusively with a view to resale.

CORPORATE INCOME TAX

The amount of corporate income tax reported in the statement of comprehensive income is the sum

total of current and deferred tax.



~ 166 ~

Current tax is accounted for on the basis of taxable profit of the current year. In the statement of

comprehensive income, the amount of taxable profit can differ from pre-tax profit on account of in-

come and expenses taxed or fiscally recognised in other taxable periods or on account of income and

expenses that will never be taxed or fiscally recognised. Current amounts of corporate income tax is

accounted for at the tax rate of 17% applicable to all commercial companies registered in Slovenia. In

Croatia, the registered seat of Laško Grupa, d.o.o. Zagreb, the applicable corporate income tax rate is

20%. In Kosovo, the registered seat of Birra Peja, the applicable corporate income tax rate is 10%.

DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax is accounted for under the liability method based on temporary differences between

the carrying amounts of assets and liabilities and their corresponding tax amounts disclosed in the

financial statements. In principle, deferred tax liabilities are recognised on the basis of all temporary

differences whereas deferred tax assets are only recognised to the amount of temporary differences for

which taxable profits will be available in the future against which these temporary differences can be

utilised. Deferred tax is calculated using the tax rates (and tax legislation) as prescribed by applicable

legislation on the reporting date, which are expected to be used at the time when the deferred tax asset

is realised or a liability for deferred tax is settled.

Deferred tax assets are verified when annual accounts are drawn up and are recognised to the extent

that it is probable that taxable profits will be available against which the deductible temporary differ-

ence can be utilised.

Current and deferred taxes are recognised in profit or loss except when they refer to the items

recognised in other comprehensive income or equity; in such cases the current and deferred tax are

recognised in other comprehensive income or directly in equity.

SEGMENT REPORTING

Business segments manufacture products and render services which are in terms of risks and ben-

efits different from the products and services of other segments. Regional (geographic) segments pro-

vide products or services within a specific economic environment which are exposed to risks and

benefits which differ from those in other economic environments.

4.4.5 ADJUSTMENT OF THE HISTORICAL FINANCIAL STATEMENTS

A) ADJUSTMENTS TO THE STATEMENT OF FINANCIAL POSITION OF LAŠKO GROUP AT 1 JANUARY 2012

(reported) (adjusted)

(in EUR) 1 January 2012 Adjustment 1 January 2012

Assets

Deferred tax assets 30,702,257 (11,677,559) 19,024,698

Capital

Retained earnings 15,504,846 (11,062,618) 4,442,228

Equity of the owners of non-controlling stake 7,647,526 (614,942) 7,032,584



~ 167 ~

B) ADJUSTMENTS TO THE STATEMENT OF FINANCIAL POSITION OF LAŠKO GROUP AT 31 DECEMBER 2012


(in EUR) 31 December 2012 Adjustment 31 December 2012

Assets

Deferred tax assets 23,903,459 (4,686,323) 19,217,136

Capital

Share premium 66,744,172 (11,062,619) 55,681,553

Net profit for the year (32,346,133) 6,783,541 (25,562,592)

Equity of the owners of non-controlling stake 7,571,555 (407,246) 7,164,309

C) ADJUSTMENTS TO THE INCOME STATEMENT OF LAŠKO GROUP FOR THE YEAR ENDED 31 DECEMBER 2012



Deferred tax (5,920,803) 6,991,237 1,070,434

Net profit or loss for the year (32,938,018) 6,991,237 (25,946,781)

Total comprehensive income for the year (33,439,826) 6,991,237 (26,448,589)

The Laško Group adjusted its historical financial statements on account of the following:

• deferred tax assets were decreased on account of impairment of loans issued to Center naložbe and

Infond Holding in total EUR 19,950,000 as at 1 January 2012

• pursuant to the opinion of the Tax Authorities, deferred tax assets were increased by EUR 8,272,441

on account of impairment of investments in companies in which the Group holds more than 8%

interest as at 1 January 2012.

The effect of aforementioned retrospective adjustments is reported in table format in relation to the

statements of financial position as at 1 January 2012 and 31 December 2012, and as at 31 December 2012

in relation to the income statement and statement of other comprehensive income.

Deferred tax assets on account of impairment of loans issued to Center naložbe and Infond Holding

were reduced under the principle of due diligence, prudence and conservative approach to disclosure

of deferred tax assets and final tax recognition by the tax authorities of expenditure resulting from

impairment losses. In any case, the management of the group companies will use all legally available

means to demonstrate that expenditure on account of impairment losses should be recognised for tax

purposes as it is assessed that justifiable reasons exist for such treatment.



~ 168 ~

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4,30

8 -

(324

,308

) -

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irm

ent o

f the

bra

nd

(5,4

38,0

46)

- -

- -

(5,4

38,0

46)

Dis

posa

ls, r

educ

tions

-

- (9

6,04

7)

- -

(96,

047)

31 D

ecem

ber

2013

51

,211

,106

17

,197

,382

11

,855

,733

36

9,08

3 23

1,31

0 80

,864

,614

AC

CU

MU

LAT

ED A

MO

RT

ISA

TIO

N

1 Ja

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y 20

13

- -

7,31

7,47

5 16

3,79

6 -

7,48

1,27

1

Am

ortis

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n -

- 97

3,20

6 18

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-

991,

238

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posa

ls

- -

(16,

923)

-

- (1

6,92

3)

31 D

ecem

ber

2013

-

- 8,

273,

758

181,

828

- 8,

455,

586

CA

RR

YIN

G A

MO

UN

T

31 D

ecem

ber

2013

51

,211

,106

17

,197

,382

3,

581,

975

187,

255

231,

310

72,4

09,0

28

1 Ja

nuar

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13

56,6

49,1

52

17,1

97,3

82

4,22

5,89

1 70

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40

7,26

8 78

,549

,980



~ 169 ~

Prop

erty

righ

ts

2012

Li

cenc

es a

nd o

ther

an

d lo

ng-t

erm

In

tang

ible

ass

ets

Bran

d G

oodw

ill

inta

ngib

le a

sset

s de

ferr

ed c

osts

be

ing

acqu

ired

To

tal

CO

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1 Ja

nuar

y 20

12

65,1

38,4

32

17,1

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82

10,7

41,5

80

234,

083

387,

463

93,6

98,9

40

Dir

ect a

cqui

sitio

ns

- -

- -

797,

715

797,

715

Tran

sfer

s fr

om in

vest

men

ts in

pro

gres

s -

- 78

2,83

3 -

(777

,910

) 4,

923

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ent

(8,4

89,2

80)

- (2

1,00

1)

- -

(8,5

10,2

81)

Tran

sfer

from

pro

pert

y, p

lant

and

equ

ipm

ent

- -

27,8

90

- -

27,8

90

Dis

posa

ls

- -

(11,

154)

-

- (1

1,15

4)

31 D

ecem

ber

2012

56

,649

,152

17

,197

,382

11

,520

,148

23

4,08

3 40

7,26

8 86

,008

,033

AC

CU

MU

LAT

ED A

MO

RT

ISA

TIO

N

1 Ja

nuar

y 20

12

- -

6,53

5,39

1 14

5,76

4 -

6,68

1,15

5

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ortis

atio

n -

- 76

0,83

8 18

,032

-

778,

870

Tran

sfer

from

pro

pert

y, p

lant

and

equ

ipm

ent

- -

180

- -

180

Dis

posa

ls

- -

(2,1

52)

- -

(2,1

52)

31 D

ecem

ber

2012

-

- 7,

294,

257

163,

796

- 7,

458,

053

CA

RR

YIN

G A

MO

UN

T

31 D

ecem

ber

2012

56

,649

,152

17

,197

,382

4,

225,

891

70,2

87

407,

268

78,5

49,9

80

1 Ja

nuar

y 20

12

65,1

38,4

32

17,1

97,3

82

4,20

6,18

9 88

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38

7,46

3 87

,017

,785



~ 170 ~

All intangible assets are measured under the cost model. Major items of intangible assets are brands

and goodwill the value of which is verified on an annual basis to determine whether there is any need

for impairment.

The fair value of brands was verified as at 31 December 2013. Verification of the fair value of brands

was performed by a certified business appraiser registered with the Slovenian Institute of Auditors.

The method of the present value of expected free cash flows was used in assessing the value of these

brands.

Following valuation assessment of Delo in the consolidated financial statements, the Group recog-

nised impairment loss on the Delo brands in the amount of EUR 5,438,046 in 2013. As at 31 December

2013, total value of the Delo Group brands amounts to EUR 4,455,692.

The verification of the value of the brands and goodwill of Pivovarna Union and their potential im-

pairment was based on the valuation assessment of Pivovarna Union by a certified business appraiser.

Based on this assessment, the Pivovarna Union brands appreciated in value in 2013. However, in line

with the adopted accounting policy whereby intangible assets are measured at cost less any impair-

ment losses, the appreciation in the value of brands was not recognised. As at 31 December 2013,

the value of Pivovarna Union brands amounts to EUR 46,461,058 and the value of goodwill to EUR

17,197,380.

VALUATION OF PIVOVARNA UNION, LJUBLJANA

Valuation of the investment in Pivovarna Union as at 31 December 2013, was made by a certified

business appraiser, registered with the Slovenian Institute of Auditors.

The most important elements and findings of the valuation procedure are:

• The subject of the valuation was assessment of the recoverable amount of the investments in a

97.93% equity interest in Pivovarna Union, Ljubljana, as at 31 December 2013, for the purpose of

reporting required under IAS 36 i.e. verification of potential investment impairment. The assessed

investment in the subsidiary is measured at cost.

• The present value of future cash flows expected to be derived from the asset’s continued use (in

this case investment into a subsidiary) and its disposal at the end of its useful life, was used in the

valuation performed in compliance with the requirements of IAS 36.

• The company as a whole was identified as the asset with indefinite useful life, while taking into

account the relevant equity interest.

• Pursuant to provisions of IAS 36, the projected cash flow method was used for the investment

assessment:

- based on reasonable and acceptable assumptions that provide the management’s best estimate

of the circumstances prevailing in the remaining useful life of the asset, while primary emphasis

should be devoted to external sources;

- based on the most recent financial projections adopted by the management, exclusive of the as-

sessed future cash flows expected from future restructuring of the asset, improvements to or the as-

set’s enhanced performance. The projections based on these assumptions should cover the period

of no more than five years unless a prolonged period is justified;



~ 171 ~

- assessed for longer period than the one covered by the most recent forecasts, through extrapolation

of projections based on those forecasts using the stable or declining growth rate for future periods

unless the increasing percentage is justified. The rate of growth should not exceed the average

long-term percentage growth of products in the sector or the country (countries) where the entity

operates or the markets in which the asset is used, unless the higher percentage is justified;

- variability of assumptions used in cash flow projection is assessed through the verification of the

reasons for differences between past cash flow projections and the actual cash flows, and the actual

past profit or loss.

• The appraiser based its projections on the 2014 plan of projections for the period 2015-2018, while

taking into account the business cycle, macroeconomic circumstances and circumstances prevail-

ing in the industry sector.

• The appraiser based its assessment of future cash flows on assumptions used in the assessment

of the market value of the majority equity interest for reporting purposes that complies with all the

requirements of IAS 36.

• The appraiser based its assessment of the required rate of return on assumptions used in the as-

sessment of the market value of the majority equity interest for reporting purposes that complies

with all the requirements of IAS 36.

• The assessment of investments including the investment in the capital of Pivovarna Union, took

into account the market value of investments in 57.63% equity interest in Birra Peja, and 100%

ownership of Birra Peja and Akull brands since these assets are currently actively sold by the com-

pany. Costs of disposal were also taken into account.

The recoverable amount of the investment in Pivovarna Union was considered its value in use. The

value in use was assessed as the present value of the future cash flows expected to be derived from

the assets, while not considering the indebtedness. Detailed projections of future free cash flows were

made for the 2014-2019 period (the usual 5-year period was extended due to utilisation of tax losses),

whereas the residual amount was based on the perpetuity growth model with cash flows growing at an

assumed constant rate i.e. average 2% annual growth rate. The residual value accounts for 64% of the

total equity amount. The weighted average cost of capital (WACC) in the 2014-2019 period of 9.0% was

taken into account, with effective tax rate of 8.5%, whereas the WACC of 8.8% was taken into account

in the residual value (effective tax rate of 17%). The pre-tax weighted average cost of capital of 10.0%

was applied in the assessment of the recoverable value. Based on the sensitivity analysis, a 1 percentage

point increase of the weighted average cost of capital or a 1 percentage point decrease in the residual’s

growth would result in a 20.4% decrease of the assessed value in use of the investment in Pivovarna

Union, and consequently also its carrying amount.

The assessed value in use of the investment in 97.92% equity investment in Pivovarna Union, using

the above assumptions as at 31 December 2013 for the purpose of impairment testing in accordance

with IAS 36 requirements, is equal to the value in use i.e. EUR 162,127,755, which corresponds to EUR

367 per share.

ESTIMATED VALUE OF DELO, LJUBLJANA

The valuation of Delo which also included the assessment of its brands was carried out by a certified

business appraiser registered with the Slovenian Institute of Auditors.



~ 172 ~

Valuation of the investment in Delo, as at 31 December 2013, was made by a certified business ap-

praiser, registered with the Slovenian Institute of Auditors.


• The subject of the valuation was the majority stake of the company (80.83%) enabling the majority

owner to influence the process of adopting decisions by management bodies as well as to influence

the formation of strategy and business decisions concerning investments, borrowings and similar.

Furthermore, the majority owner may also implement status changes.

• The company’s market value is equal to the present value of expected free cash flows since in

accordance with the general financial assumption the company’s value equals the sum of future

benefits which it brings to its owners.

• The method of the present value of future cash flows expected excluding debt was used in assessing

the value of the company. Under this method, the present value of cash flows without payment of

interest and principal (the value of total capital) is assessed first; subsequently, all financial liabili-

ties of the company are deducted to arrive to the equity capital of the company. The resulting value

is additionally adjusted for any contingencies, premiums or discounts.

• The assessment of future returns takes into account the 2014-2016 strategic plan and future po-

tential of the company, based on its performance to date and results of the sector’s analysis. As

the 2014-2019 strategic plan was assessed as being optimistic, it was considered as such in the

valuation.

• Some of the assessed value was derived from investments whose market value was assessed in the

amount of EUR 4.0 million. Costs of investment disposal (2% of the market value of the invest-

ment in Večer) were also taken into account. Accordingly:

- the market value of the investment in 79.24% equity share in Večer was assessed using the liquida-

tion method, assuming disposal of the brand and activity) as at 30 September 2013 in the amount

of EUR 3,100 thousand.

- the market value of a 100% equity investment in Izberi was assessed under the present value of

future cash flows to EUR 475 thousand.

• The investment in property, apartments and holiday facilities was accounted for as surplus assets.

The value of these assets was assessed by the certified appraiser of property to EUR 267 thousand.

The costs of disposal in the amount of 5% and shift in the sale were also considered.

• The control premium of 0% was taken into account since future return projections for an average

majority strategic owner were made at inception, while a 15% discount on account of the lack of

liquidity was considered based on the analysis of a variety of factors that impact liquidity and mar-

ketability of the share or equity interest.

• In line with the provisions of IAS 36, the assessed fair value (market value for the majority owner)

was reduced by the costs of sale equal to approx. 2% of the value of equity interest i.e. the market

value).

In view of the anticipated sale of the investment in Delo, the investment’s recoverable amount is

considered the fair value less costs to sell. The fair value less costs to sell was assessed using the pre-



~ 173 ~

sent value of the future cash flows method, excluding the debt. Detailed projections of future free cash

flows were made for the 2014-2019 period, whereas the residual amount was based on the perpetuity

growth model with cash flows growing at an assumed constant rate i.e. average 2% annual growth

rate. The residual value accounts for 62% of the total equity amount. The weighted average cost of

capital (WACC) in the 2014-2019 period of 12.5% was taken into account, with effective tax rate of 8.5%,

whereas the WACC of 12.1% was taken into account in the residual value (effective tax rate of 17%).

Based on the sensitivity analysis, a 1 percentage point increase of the weighted average cost of capital or

a 1 percentage point decrease in the residual’s growth would result in a 19.4% decrease of the assessed

fair value less costs to sell of the investment in Delo, and consequently also its carrying amount.

Based on the aforementioned assumptions, the fair value less costs to sell of an 80.83% equity in-

vestment in Delo as at 31 December 2013 for the reporting purposes in compliance with IAS 36, equals

EUR 14,297,704 or EUR 26.50 per share.

BRAND PLEDGING

In order to secure its borrowings from banks, the controlling company, Pivovarna Laško, pledged

some of its brands in the amount of EUR 50,000,000 that are an integral part of the Group’s assets. In

accordance with the accounting standards, these brands are not disclosed in the financial statements.

The brands of the parent company Pivovarna Laško were assessed by a certified business appraiser in

2010 and again in 2012. The brands of the Pivovarna Union and Delo subsidiaries have been pledged

also within the scope of pledges on the investments in these companies. The Group pledged 440,295

(97.60%) of shares of its subsidiary Pivovarna Union and 667,444 (100%) shares of subsidiary Delo

as collateral against long-term and short-term borrowings from banks. Total amount pledged equals

EUR 173,991,991.



~ 174 ~

2. P

RO

PE

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Y, P

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52,3

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109,

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619

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s -

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193,

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s fr

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94,1

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(102

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- -

(7,2

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31 D

ecem

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42

,881

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10

2,31

4,96

2 37

4,18

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6 51

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1 Ja

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2 43

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-

- 42

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- -

- 12

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6 94

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7 3,

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- 16

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- (3

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(3,8

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31 D

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-

26,2

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21,8

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40

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430,

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31 D

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42

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76

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514,

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5,09

8,01

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4,55

3,84

9 -

1,04

9,91

1 19

4,46

5,28

1



~ 175 ~

Pr

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tion

and

Oth

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Fi

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2012

pl

ant

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t Sm

all

Ass

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1 Ja

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12

45,6

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81

101,

985,

292

348,

608,

576

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25

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3,74

8,38

0 57

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- -

- -

- 10

,400

,442

10

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Tran

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s fr

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s 23

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56

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5 2,

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activ

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-

- -

- 30

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-

- -

66,5

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66,5

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(3,1

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(671

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) -

(7,7

63,4

38)

31 D

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2012

52

,360

,802

10

4,55

6,49

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2,64

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~ 176 ~

( c o

n t

i n u

a t

i o n

)

Pr

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and

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pl

ant

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all

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CU

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31 D

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2011

-

19.0

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94

315.

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1 Ja

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s -

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(2.9

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31 D

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2012

-

21.6

55.5

35

319.

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020

39.8

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40

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1.86

2.54

3

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G A

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T

31 D

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2012

52

.360

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82

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.956

43

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.052

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4.

553.

849

1.04

9.91

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5.28

1

1 Ja

nuar

y 20

12

45.6

33.1

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98

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91.3

00

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8 4.

949.

930

3.74

8.38

0 18

0.69

5.00

7



~ 177 ~

Compared to the last day of 2012, the value of property, plant and equipment of the Group decreased

by EUR 24,399,467, which is mainly the result of the relevant depreciation expense in the amount of

EUR 16,628,040. Based on valuations performed by a certified appraiser of property, the revaluation

of property to lower fair values in the amount of EUR 10,411,436, also significantly contributed to this

reduction. Another factor impacting this reduction is reclassification of property, plant and equipment

of Jadranska pivovara in the amount of EUR 7,101,914 to non-current assets held for sale in compliance

with IFRS 5, and write-off of certain items of property, plant and equipment in the amount of EUR

399,808. In 2013, the Group spent EUR 10,453,247 on capital expenditure, EUR 6,174,793 or 37% less

than the total amount of depreciation expense.

The disposal of property, plant and equipment relates to the sale and write-off of such assets. Prop-

erty, plant and equipment amounting to EUR 296.072 have been acquired under finance lease. The

items of property, plant and equipment are measured under the revaluation model, whereas equip-

ment and low value assets are measured at cost.

Gains in the amount of EUR 470.703, which the Group realised on disposal of property, plant and

equipment is reported as an item of revaluation operating expenses, whereas EUR 50,775 of losses

realised on disposal of those assets is reported as the revaluation operating expense.

The Group pledged property, plant and equipment whose carrying amount as at 31 December 2013

amounted to EUR 101,300,944, as collateral for short-term and long-term borrowings. The carrying

amount of pledged property totals EUR 89,161,836 and the carrying amount of pledged equipment

equals EUR 12,139,107. As at 31 December 2013 the Group discloses liabilities for the acquisition of

property, plant and equipment in the amount of EUR 1,829,011.

3. INVESTMENT PROPERTY

2013

(in EUR) Land Buildings Total

COST

1 January 2013 776,343 6,422,690 7,199,033

Revaluation - appreciation / impairment (493,172) (801,329) (1,294,501)

Reclassifications (transfer from assets for sale) 1,221,666 (1,221,666) -

Decrease in value - (57,447) (57,447)

31 December 2013 1,504,837 4,342,248 5,847,085

CARRYING AMOUNT

31 December 2013 1,504,837 4,342,248 5,847,085

1 January 2013 776,343 6,422,690 7,199,033



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2012


COST

1 January 2012 1,214,099 8,861,531 10,075,630

Appreciation in value - - -

Transfer from property, plant and equipment 36,335 592,821 629,156

Revaluation - appreciation / impairment (90,145) (115,060) (205,205)

Disposals (188,565) (579,089) (767,654)

Decrease in value (195,381) (1,446,673) (1,642,054)

31 December 2012 776,343 7,313,530 8,089,873

ACCUMULATED DEPRECIATION

1 January 2012 - 957,927 957,927

Depreciation - 408 408

Disposals - (310,715) (310,715)

Transfer from property, plant and equipment - 243,220 243,220

31 December 2012 - 890,840 890,840

CARRYING AMOUNT

31 December 2012 776,343 6,422,690 7,199,033

1 January 2012 1,214,099 7,903,604 9,117,703

Investment property is measured at fair value. As at 31 December 2013, the investment property valu-

ation was assessed by the certified property appraiser, who assessed their value at EUR 5,847,085. As a

result of the revaluation of property to lower fair value, their value was reduced by EUR 1,294,501 and

this reduction was recognised in the profit or loss.

Investment property also includes property which is not used for carrying out the basic activity but

is leased out by the Group. As at the last day of 2013, investment property comprises the following: the

“Tri lilije” sports arena, Hotel Hum catering facilities, holiday facilities, office building in Radenci and

facilities in Boračevo, Petanjci and Sarajevo. During the process of ownership transformation into the

property of Pivovarna Laško, holiday facilities in Croatia which include holiday home at “Ičići” and holi-

day facilities in Barbariga, were recognised at the amount of EUR 0 i.e. the ownership transformation

was not successful. Accordingly, in 2013 Pivovarna Laško and DSU signed an Agreement on regulation

of mutual relationships, that specifies ownership share in the aforementioned investment property.

The certified appraiser of property on 1 May 2013 assessed the market value of full ownership rights

to the above property. Pivovarna Laško’s investments in the renovation of the above property were as-

sessed at EUR 530,100. The property held in Croatia is in the process of disposal.

The Group realised gains of total EUR 144.695 and losses in the amount of EUR 356,755 on account

of the investment property.

In 2013, the sales processes of the following property continued: catering facilities, Hotel Hum, the

“Tri Lilije” sports arena, the office building in Radenci and holiday facilities. The activities of the sale

of investment property continue. The companies will be selling the property not critical for the opera-

tions to ensure the solvency.

Investment property in the amount of EUR 4.316.042 have been pledged as collateral for long-term

and short-term borrowings raised from banks.



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4. LONG-TERM INVESTMENTS

4. A. LONG-TERM INVESTMENTS IN THE SUBSIDIARIES

Share in

(in EUR) Equity 2013 2012

INTERESTS IN GROUP COMPANIES

In Slovenia:

Radenska Miral Radenci, d. o. o. 100.00 % 182,589 182,589

Firma Del, d. o. o., Laško 100.00 % 7,427 7,427

190,016 190,016

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., Sarajevo 100.00 % 232,240 232,240

237,397 237,397

Total 427,413 427,413

DATA ON THE SUBSIDIARIES

Percentage Total Profit/ holding value of loss (in EUR) Activity Country in equity equity 2013

Subsidiaries

Radenska, d. d., beverage

Radenci production Slovenia 87.090 % 62,454,656 (3,685,486)

Union Group beer and

beverages production Slovenia 97.928 % 73,986,221 (5,948,512)

Vital Mestinje, beverage

d. o. o. production Slovenia 96.920 % 3,508,710 51,295

Delo Group newspaper and

publishing Slovenia 100.000 % 13,821,643 (1,218,518)

Firma Del, d. o. o.,

Laško beer Slovenia 100.000 % 15,254 (104)

Jadranska Pivovara -

Split, d. d. beer production Croatia 99.460 % (2,033,796) (1,355,943)

Laško Grupa, d. o. o., trade

Zagreb intermediation Croatia 100.000 % (102,111) (130,143)

Laško Grupa, d. o. o., trade Bosnia and

Sarajevo intermediation Herzegovina 100.000 % 163,603 6,724

In accordance with IAS 27, the Group measures long-term investments in the 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, Raden-



~ 180 ~

ska, d. o. o., Zagreb and Radenska, d. o. o., Beograd. All other subsidiaries are consolidated using the

full consolidation method.

Long-term investments in subsidiaries increased in 2013 by EUR 10,790 for additional acquisition of

Pivovarna Union shares, and decreased by EUR 9,921,952 of impairment loss. These amounts are re-

ported in the separate financial statements of the Group companies, however during the consolidation,

they were eliminated from the consolidated financial statements of the Group. There was no change

in the value of long-term investments in subsidiaries included in the consolidation as compared to the

last day of the previous year.

4. B. LONG-TERM INVESTMENTS INTO ASSOCIATED COMPANIES

DATA ON THE ASSOCIATED COMPANIES

Percentage Total Profit/ holding value of loss (in EUR) Activity Country in equity equity 2013

Associate

Thermana, d. d., health resorts Slovenia 20.630 % 26,208,534 (1,209,934)

Laško hotels and similar

accommodation

Slopak, d. o. o., waste packaging Slovenia 29.220 % 818,374 366,486

Ljubljana handling

Investments into associated companies are measured under the equity method. The value of invest-

ments either increases or decreases depending on the attributed profit or loss. Revaluation to higher

fair value in accordance with IFRS is not recognised. Fair value of investments traded on an organised

market is their quoted price on the Ljubljana Stock Exchange, whereas fair value of other investments

is determined on the basis of value assessments.

As at 31 December 2013, long-term investments in the Group’s associates include a 20.63% holding

in Thermana, Laško comprising a total of 645,003 shares, and a 29.22% holding in Slopak, Ljubljana.

Based on the valuation of both investments performed in the past, as at 31 December 2013 their value

equals nil. The valuation of the two investments was not re-assessed as at 31 December 2013 since the

assumptions used in the two valuations made in the past had not changed in 2013.

INVESTMENT IN THE ASSOCIATE THERMANA

The Group holds a total of 645,003 shares of Thermana, accounting for 20.63% equity holding.

The original purchase value of the investment equalled EUR 6,897,921. Based on the outcome of the

investment valuation, in 2009 the Group recognised investment impairment in the amount of EUR

5,303,921. In 2010 the investment was impaired by further EUR 1,594,000 i.e. its total remaining

value. The impairment was recognised based on the valuation made in 2009 and verification of the

operating projections used. At the same time, Thermana contracted additional debts in 2010 that nega-

tively affected cash flows in the years that followed. In 2013 Thermana incurred net loss in the amount

of EUR 1,209,934. As at 31 December 2013, total assets of Thermana amounted to EUR 74,512,360, and

liabilities totalled EUR 48,303,826. The ratio between foreign and own assets equals 65 : 35.



~ 181 ~

In 2010, the Management issued a mandate for the sale of Thermana to NLB. An agreement on

the implementation of the sale was prepared in 2010 and forwarded to owners of more than 50% of

the investment. The process for acquiring consent of subscribers was carried out in February 2011.

On 28 February 2011, the agreement was signed and harmonised between NLB, Pivovarna Laško and

Zavarovalnica Triglav which together represent 44.85% ownership stake in Thermana. Coordinating

activities with the remaining potential signatories to the agreement on the implementation of the sale

of shares continued in 2011.

Pivovarna Laško signed the Agreement on the joint sale of the Thermana shares (a 51.96% stake)

on 10 October 2011. NLB as the sales broker commenced sales 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.

In 2012, further contacts were made with potential buyers. Nobody expressed the intention to buy

and therefore the sale by the broker was stopped due to current lack of interest in the purchase of the

majority stake in Thermana.

INVESTMENT INTO THE ASSOCIATED COMPANY SLOPAK, LJUBLJANA

As of 31 December 2013, the Group holds a 29.22% stake of the Slopak Company. In 2011, the invest-

ment was fully impaired due to negative operating result and poor financial position.

4. C. AVAILABLE-FOR-SALE FINANCIAL ASSETS

(in EUR) 2013 2012

Other investments in shares and interests at cost 808,179 773,181

Other investments in shares and interests at fair value 399,468 476,462

Total 1,207,647 1,249,643

MOVEMENTS OF AVAILABLE-FOR-SALE FINANCIAL ASSETS

(in EUR) 2013 2012

Balance at 1 January 1,249,643 1,239,563

Changes during the year:

Revaluation - 31,150

Impairment (41,996) -

Sale - (21,070)

Balance at 31 December 1,207,647 1,249,643

Compared to the previous year, the value of financial assets available for sale decreased by EUR

41,996 due to their revaluation to new fair values as at 31 December 2013.



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4. D. LONG-TERM FINANCIAL LEASE RECEIVABLES

(in EUR) 2013 2012

Long-term financial lease receivables 287,276 421,340

Total 287,276 421,340

Long-term financial lease receivables refer to the production equipment for the Bandidos brand

which was leased under a finance lease to a business partner from Belarus. The value of the afore-

mentioned receivable on the last day of 2013 amounted to EUR 287,276. Long-term financial lease

receivables mature on 15 October 2015.

5. LONG-TERM LOANS ISSUED

(in EUR) 2013 2012

Long-term loans to others 283,544 436,335

Long-term loans to Infond Holding and Center Naložbe 17,100,000 17,100,000

Less impairments (17,100,000) (17,100,000)

Total 283,544 436,335

Compared to the previous year, long-term loans issued decreased by EUR 152,791 mainly due to the

repayments of loans.

Other long-terms loans issued primarily refer to long-term housing loans granted by the Group to its

employees. The interest rate on average equals a 6-month EURIBOR + 1%. The repayment period is 20

years. The last repayment is due in 2024. In 2013, the Group did not grant any new loans.

The loans granted by Radenska and Pivovarna Union to the Center naložbe in the past amounting to

EUR 17,100,000 are also disclosed under long-term loans issued. These were fully impaired in 2009.

6. LONG-TERM OPERATING RECEIVABLES

(in EUR) 2013 2012

Long-term operating receivables due from others 2,196,510 13,198

Total 2,196,510 13,198

Long-term operating receivables increased in 2013 by EUR 2,183,312. The increase of EUR 2,190,784

relates to receivables due from the state on account of overpaid concession fee for pumping of water

over the period from 2005 to 2013. The receivable was recognised by the Group pursuant to amend-

ment to the Waters Act; the decision of the relevant state authority has not been issued by the date of

the financial statements approval.



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7. LONG-TERM DEFERRED TAX ASSETS

(in EUR) 2013 2012

Long-term deferred tax assets 47,004,882 34,689,619

Long-term deferred tax liabilities (15,672,141) (15,472,483)

Net long-term deferred tax assets 31,332,741 19,217,136

Long-term deferred tax assets and liabilities are calculated on the basis of temporary differences,

using the liability method and by applying the 17% tax rate.

As of 31 December 2013, the Group discloses long-term deferred tax assets amounting to EUR

31,332,741, an increase of EUR 12,115,605 over the previous year. Long-term deferred tax assets increased

in 2013 mainly on account of investment impairment, increase in tax losses and on account of the con-

version of previously impaired receivables to new, higher corporate tax rate of 17%.

MOVEMENT OF DEFERRED TAX ASSETS

Fair value Liabilities to (financial (in EUR) Provisions employees assets) Other Total

DEFERRED TAX ASSETS

1 January 2012 reported 89,643 1,005,184 43,435,979 1,941,677 46,472,483

Retrospective adjustments - - (11,677,559) - (11,677,559)

1 January 2012 adjusted* 89,643 1,005,184 31,758,420 1,941,677 34,794,924

Changes in the income

statement (39,665) (238,907) (6,485,745) (282,110) (7,046,427)

Changes in the statement

of comprehensive income - - (50,114) - (50,114)

Adjustments for 2012 - - 6,991,236 - 6,991,236

31 December 2012 49,978 766,277 32,213,797 1,659,567 34,689,619

Changes in the income

statement 81,893 (104,249) 9,541,085 2,708,691 12,227,420


of comprehensive income - (1,817) 85,256 4,404 87,843

31 December 2013 131,871 660,211 41,840,138 4,372,662 47,004,882

As at 31 December 2013, deferred tax assets are disclosed related to financial investment impairment

amounting to EUR 41,840,138, related to the employees, severance grants, jubilee awards and holiday

leave not taken in the amount of EUR 660,211 and related to provisions in the amount of EUR 131,871

and other amounting to EUR 4,372,662.



~ 184 ~

As at 31 December 2013, deferred tax assets on account of tax losses incurred by Jadranska pivovara

Split in the amount of EUR 24,305,517 were not included in the deferred tax assets of the Group since

the subsidiary no longer expects taxable profits to be available in the future against which tax losses

could be utilised. Taking into account the 20% tax rate, the deferred tax assets would amount to EUR

4,861,103. Furthermore, deferred tax assets in the amount of EUR 587,937 on account of the 10% tax

loss incurred by Birra Peja in total EUR 5,879,368, was also not recognised by the Group.

Deferred tax assets that impact the profit or loss increased by EUR 12,227,420 compared to the pre-

vious year. Deferred tax assets recognised on account of investment impairment recognised in 2013

increased by EUR 9,626,341, an increase of EUR 2,794,988 is due to the increase in tax losses and

other items, whereas deferred tax assets on account of employee benefits decreased by EUR 106,066.

MOVEMENT OF DEFERRED TAX LIABILITIES

Fair value Fair value Fair value (land (financial (brand) (in EUR) buildings) assets) Other Total

DEFERRED TAX LIABILITIES

1 January 2012 4,181,901 737 11,159,946 427,638 15,770,222

Changes in the

income statement (62,718) - (1,103,630) 40,725 (1,125,623)


of comprehensive income 828,662 (737) - - 827,925

Changes in equity (41) - - - (41)

31 December 2012 4,947,804 - 10,056,316 468,363 15,472,483

Changes in the

income statement 76,352 - 43,401 (41,400) 78,353

Changes in the

statement of

comprehensive income 121,346 - - - 121,346

Changes in equity (41) - - - (41)

31 December 2013 5,145,461 - 10,099,717 426,963 15,672,141

As at 31 December 2013, deferred tax liabilities amounted to EUR 15,672,141 and were recognised

on account of revaluation of the Pivovarna Union brands (EUR 9,292,212) and the newspaper Delo

brands (EUR 807,505), and on revaluation of property owned by the Group in the amount of EUR

5,145,461. In the statement of financial position, deferred tax assets are decreased by the amount of

deferred tax liabilities.



~ 185 ~

8. NON-CURRENT ASSETS HELD FOR SALE

(in EUR) 2013 2012

Property held for sale - 770,939

Other non-current assets held for sale 9,208,603 5,800,000

Total 9,208,603 6,570,939

As of 31 December 2013, the value of non-current assets held for sale equals EUR 9,208,603. The

amount of non-current assets held for disposal includes the investment into ČZP Večer of EUR

3,098,000, which the Group intends to dispose of. Furthermore, pursuant to IFRS 5 (discontinued

operations), total assets of subsidiary Jadranska pivovara Split, in the amount of EUR 6,110,603 are also

included in the group of assets held for disposal. As at the last day of 2012, the assets of the aforemen-

tioned subsidiary amounted to EUR 7,171,512 and were reported under the items of individual groups of

assets. Of total amount, majority related to the items of property, plant and equipment in the amount

of EUR 7,101,914.

In 2013, the Group disposed of a business and storage facilities in Ljubljana, resulting in a EUR

770,939 decrease in the non-current assets of disposal groups.

INVESTMENT IN VEČER, MARIBOR

A) PROCESS OF A SALE OF 79.243% STAKE IN VEČER, MARIBOR

The subsidiary Delo acquired a 59.2395% stake in the ČZP Večer in 2008, thus becoming the

79.2376% owner of the aforementioned company. The newspaper Delo does not have voting rights

from the ownership of ČZP Večer shares surpassing 19.9% pursuant to Article 44 of the Prevention of

Restriction of Competition Act, therefore this investment is not included in the consolidation.

With the decision of 23 September 2009, the Competition Protection Office requested from the

newspaper Delo to finally dispose of the shares of the Večer Company to eliminate the effects of the

prohibited concentration. Initially, the deadline for the enforcement of the decision was one year; how-

ever, it can be extended upon a written request by the newspaper Delo.

On 16 December 2011, the acquirer, 3Lan informed the seller Delo, prior to the completion of the

transaction, that it withdrew from the contract. After the failure to continue the sale process, the Com-

mittee for the sale of the Večer Company, adopted a decision on 24 January 2012 that the sale to po-

tential acquirer 3Lan had failed. The Competition Protection Office was notified and asked in writing

to extend the deadline for the sale of shares and at the same time the Delo committed to publish an

international tender for the sale of the shares no later than 15 March 2012. The Competition Protection

Office adopted a decision on 27 February 2012 to extend the deadline for the disposal of the shares of

Večer up to and including 31 December 2012.

On 15 March 2012, the Delo and Večer, published a public tender for a sale of 79.23% of shares of

Večer. At the beginning of May 2012, the Committee was informed of the fact that no non-binding of-

fer to purchase the shares of the Večer Company had been received by the set deadline (7 May 2012).

In October 2012, a due diligence of the Večer publishers was carried by one of the potential buyers

and the management pitch. The negotiations are under the way to conclude a sales contract with one



~ 186 ~

of the buyers. Since it was not possible to sell the shares of Večer by 31 December 2012, the Manage-

ment Board requested that the Competition Protection Agency extends the deadline. The Competition

Protection Agency agreed and extended the deadline until 31 March 2013.

In February 2013, a sales agreement inclusive of several suspensive conditions was signed with the

buyer. In March 2013 the Competition Protection Agency extended the deadline for the sale of shares

until 31 July 2013. On 10 April 2013, the Delo publishers, the owner of the interest in Večer, received a

notification of the buyer failing to meet one of the suspensive conditions from the Contract for the sale

of shares in ČZP Večer, resulting in an unsuccessful completion of the sale process. KPMG consult-

ants and sale mediators began as early as in May 2013 to search for new potential buyers. In June 2013,

a two-monthly exclusivity agreement was signed with one of the buyers who in the past expressed his

interest in the acquisition of Večer; the buyer had performed due diligence review.

On 26 July 2013 the Delo publishers addressed a request to the Republic of Slovenia Agency for

Protection of Competition for another extension of the deadline for the sale of 79.24% share in Večer;

however, the request was rejected. Despite of this, the Delo publishers continued activities aimed at

the sale or disposal of its share in Večer. Discussions continued with potential buyers of Večer as well

as negotiations for early completion of the sale and payment of consideration, and thus elimination

of discrepancy with the competition rules. In January 2014, two non-binding proposals were received.

One of the bidders subsequently informed all those concerned that he was exercising 90-days morato-

rium on the bid. Another bidder only expressed his interest but did not provide any other information

requested in the tender.

At a public auction for the sale of a block of shares of ČZP Večer, held on 28 February 2014 at 12

noon on the premises of the Delo publishers, the Committee determined that the security required for

participation in the auction had not been paid within the set deadlines. Consequently, the auction was

unsuccessful. The subject of the public auction was a block of 202,788 (79.24% interest) of ordinary

nominal shares of ČZP Večer (VEMG), held by the Delo publishers. The starting price at the auction

was EUR 3,098,000.00.

The Delo publishers will continue its efforts aimed at fulfilment of provisions of the Competition

Protection Office of the Republic of Slovenia, Ref. No. 306-195/2008-57 of 23 September 2009 and

successful completion of the sale of the ČZP Večer shares.

B) ASSESSMENT OF THE VALUE OF INVESTMENT IN SHARES OF ČZP VEČER

The assessment of the investment in ČZP Večer was performed as at 31 December 2013 by a certi-

fied property appraiser of companies registered with the Slovenian Institute of Auditors from the P&S

Company.

The company’s market value was assessed using the liquidation method under the assumption of

the joint sale of the brand and the optimum number of employees. Accordingly, for financial reporting

purposes in accordance with IFRS 5, the value of the 79.24% holding in ČZP Večer as at 31 December

2013 equals EUR 3,098,000 or EUR 15.28 per share.

Based on the investment assessment using the liquidation method, in 2013 the Group recognised

investment impairment in the amount of EUR 2,702,000.



~ 187 ~

9. INVENTORIES

(in EUR) 2013 2012

Material and raw materials 12,677,894 14,975,622

Work in progress 2,461,296 2,457,754

Products 6,280,074 6,358,201

Merchandise 463,705 495,621

Inventory advances 36,030 -

Total 21,918,999 24,287,198

The value of inventories decreased by EUR 2,368,199 or 9.8% compared to the previous year. This

reduction relates mainly to the fall in the value of inventories of raw materials and materials in the

amount of EUR 2,297,728 The carrying amount of inventories does not exceed their realisable value.

In 2013, inventory allowances of total EUR 40,373 were recognised due to the write-off of obsolete

inventories.

INVENTORY SURPLUSES AND DEFICITS

(in EUR) 2013 2012

Inventory surplus 12,194 29,705

Inventory deficit (33,098) 84,583

The regular physical stock count established inventory surpluses amounting to EUR 12,194 and

deficits amounting to EUR 33,098.

10. A. SHORT-TERM OPERATING RECEIVABLES

(in EUR) 2013 2012

Short-term trade receivables:

On domestic market 49,293,009 46,453,732

On foreign markets 5,636,987 3,391,475


Total 48,985,226 43,607,075

Short-term operating receivables due from others 3,681,733 5,832,023

Tax credit for excess corporate tax payment 15,192 -

Advances 1,485,828 454,124


Receivables at 31 December 52,960,981 46,897,886



~ 188 ~

As of 31 December 2013, the Group reports short-term operating receivables of EUR 52,960,981,

which is an increase of EUR 6,063,095 compared to the last day of the previous year.

The reported value of short-term operating and other receivables reflects their fair value.

ALLOWANCES FOR SHORT-TERM OPERATING RECEIVABLES

(in EUR) 2013 2012


Collected written-off receivables (444,001) (148,748)

Final write-off of receivables (578,730) (529,577)

Formation of allowance 458,827 647,639

Increase in allowances 189,567 (38,960)

Interest transfer to disputed 80,975 -

Other - 19,417


Allowances made on account of trade receivables fell by EUR 293,362 in 2013 compared to the previ-

ous year. While allowances were increased on account of new allowances recognised in the amount of

EUR 729,369, they decreased on account of receivable write-offs in the amount of EUR 578,730 and by

the amounts recovered based on legal action in the amount of EUR 444,001.

Trade receivables in the amount of EUR 12,512,969 are collateralised by the guarantees, sureties and

mortgages received.

As at 31 December 2013, the borrowings raised by the Group are collateralised by trade receivables in

the amount of EUR 20,860,000.

10. B. SHORT-TERM RECEIVABLES FOR EXCESS PAYMENT OF CORPORATE INCOME TAX

(in EUR) 2013 2012

Tax credit for excess corporate tax payment 351,495 1,329,252

Total 351,495 1,329,252

Short-term receivables for excess payment of corporate income tax refer mainly to excess income tax

prepayments calculated on the basis of the liabilities of the Group for 2012. Income tax prepayment of

EUR 48,472 were paid for the Union Group and EUR 303,023 was paid by Radenska.



~ 189 ~

11. SHORT-TERM AVAILABLE-FOR-SALE FINANCIAL ASSETS

(in EUR) 2013 2012

Short-term available-for-sale financial assets - at fair value 74,738,430 100,954,761

Short-term available-for-sale financial assets - at cost 919,808 11,675,391

Total 75,658,238 112,630,152

As at the last day of 2013, the value of short-term financial assets available for sale equals EUR

75,658,238, which is a reduction of EUR 36,971,914 compared to the previous year. The decrease is the

result of investment impairment to lower fair values.

The Group discloses the following investments under financial assets available for sale: investment

into Poslovni sistem Mercator (23.34%) amounting to EUR 72,064,880 (quoted price as at 31 Decem-

ber 2013 was EUR 82.00), investment into shares of Elektro Maribor amounting to EUR 2,402,901

(5.74%), investment into shares of Premogovnik Velenje amounting to EUR 919,808 (7.09%), invest-

ment into shares of Elektro Gorenjska amounting to EUR 270,648 (1.6%) and the investment into

shares of Ceste mostovi Celje (5.49%) whose value as at 31 December 2013 equalled zero as a result of

impairment. Pursuant to the Bank of Slovenia decision of 17 December 2013 on extraordinary meas-

ures for termination of all qualified liabilities of Probanka in order to cover the bank’s losses, in De-

cember the Group deleted its ownership of Probanka shares and at the same time derecognised the

investment in Probanka from the books of accounts of Pivovarna Laško.

1. INVESTMENT IN POSLOVNI SISTEM MERCATOR, LJUBLJANA

As at 31 December 2013, the Group was the owner of 878,840 MELR shares or 23.34% stake of

Poslovni sistem Mercator (Pivovarna Laško 8.43%, Pivovarna Union 12.33% and Radenska 2.57%),

which taking into account a market value of EUR 82 per share as at 31 December 2013, amounts to

EUR 72,064,880. Fair value of the investment as at 31 December 2013 was by EUR 74,191,942 lower

compared to the initial cost of the investment in the amount of EUR 146,256,904 or EUR 166.42 per

share. The management estimates that the drop in the quoted price presents a permanent impairment

and therefore, total amount of the impairment loss is recognised as an item of financial expense.

PROCEDURES IN THE SALE OF A 23.43% STAKE IN PS MERCATOR, LJUBLJANA

In line with the strategy adopted in 2012 the companies in the Laško Group continued to pursue

activities aimed at a sale of the Group’s 23.34% stake in Mercator. Consequently, at the end of Octo-

ber 2012 a new Contract for joint sale of shares of Poslovni sistem Mercator was agreed between the

companies of the Laško Group and other entities interested in the sale of Poslovni Mercator shares.

The agreement was signed by the sellers who are together the majority owner of shares in Mercator. In

January 2013, a teaser was issued on the basis of which procedures for direct sale of shares began. The

non-binding proposals arrived in February. On a proposal from the financial consultant in the sales

process the consortium invited 4 bidders to continue the process. The selected bidders were invited to

conduct a due diligence of the company and submit binding offers by the deadline set for May 2013.

Following completion of due diligence of Mercator, binding proposals were issued by two potential

investors. While a financial investor proposed only capital increase of Mercator, Agrokor offered to pay

EUR 106 per one MELR share.



~ 190 ~

A contract for sale and acquisition of a joint 53% stake in Mercator was signed on 14 June 2013

between the consortium of sellers and the buyer Agrokor who paid EUR 120 per one MELR share.

The signing of the sale agreement is a result of an extensive procedure led by the London team of

international investment bank ING Bank N.V. The process was performed in compliance with inter-


well as maximising benefits for all Mercator’s stakeholders were ensured. The buyer provided bank

guarantees to the amount of 7.5% of total consideration. The Escrow Agreement for release of collateral

was signed on 29 July 2013 by the creditor banks, lienors of the Mercator shares. Bilateral agreement

signed on 29 July 2013 specify maturity date of the majority of borrowings on 30 April 2014 as well as

milestones set for the implementation of the restructuring project. The transactions is expected to be

completed by no later than the end of March 2014.

On 30 December 2013 the buyer informed the sellers that he had successfully obtained consent of

the regulator in Serbia and that he was waiving the competition condition of obtaining regulators’

consents in Croatia and Bosnia and Herzegovina, since at the time their consents had not been issued.

Thus the suspensive conditions other than the condition of rescheduling Mercator’s debts had been

fulfilled.

The restructuring of the Mercator debt condition should in accordance with SPA be fulfilled by no

later than 31 January 2014. If the condition is not met and the buyer does not waive the said condi-

tion or there is no other agreement between the parties, the SPA is terminated automatically and the

transaction will not take place. Since by 31 January 2014 the condition was not fulfilled, the buyer on

the eve of 31 January 2014 issued a statement to the consortium of sellers extending the joint debt re-

structuring condition and thus the validity of SPA until 4 February 2014. On 3 February 2014 the buyer

issued another statement regarding a change in joint debt restructuring condition and extended the

deadline and thus validity of the SAP until 28 February 2014. The statement was valid if confirmed by

the consortium of sellers by 2 p.m. on 5 February 2014. The consortium of sellers approved the state-

ment within the set deadline.

Since October 2013, negotiations had been ongoing between the buyer and major creditors of Merca-

tor (CoCom banks) regarding joint debt restructuring and conditions for the change in the ownership

of Mercator, that would be acceptable to the CoCom banks.

The CoCom banks asked the buyer to secure EUR 250 million of additional funds to Mercator; of

that EUR 200 million to be allocated for repayment of creditors and EUR 50 million for working capi-

tal. To secure the funding of Mercator as required by the CoCom banks and the time needed to sign the

documentation for joint debt restructuring, the buyer proposed a reduction in the price and extension

of the long stop date (LST).

As a result of negotiations between the buyer, sellers and creditor banks, Agrokor proposed an An-

nex to the Sale contract of 14 June 2013, amending some of the core elements of the original contract,

namely: the bid price for one MELR share is fixed at EUR 86; transaction completion date is set as 30

June 2014 under condition that Mercator and its creditors bank reach an agreement on long-term joint

debt restructuring by 31 May 2014, taking into account the fact that the buyer will assume part owner-

ship of Mercator.



~ 191 ~

Members of the management boards of the consortium signed an appendix to the sale contract

for the price of EUR 86 per MELR share inclusive of a suspensive condition relating to consent to

be obtained from the relevant supervisory boards and the annual General Meeting of shareholders of

Pivovarna Union. Another suspensive condition is also signing of a new Escrow Agreement.

2. IMPAIRMENTS OF THE AVAILABLE-FOR-SALE FINANCIAL ASSETS

In 2013, impairment of the shares of Poslovni sistem Mercator (MELR) is disclosed as financial ex-

pense totalling EUR 28,122,912; impairment of the shares of Elektro Maribor (EMAG) totalling EUR

4,325,223; impairment of the shares of Elektro Gorenjska (EGKG) amounting to EUR 676,620; im-

pairment of Premogovnik Velenje shares (PLVG) amounting to EUR 3,080,192; and of the shares of

Probanka (PRBR) totalling EUR 767,001. Pursuant to the Bank of Slovenia decision issued in 2013, the

total amount of Probanka shares was deleted from the books of account of the Laško Group.

MOVEMENT OF SHORT-TERM FINANCIAL ASSETS AVAILABLE-FOR-SALE

(in EUR) 2013 2012



Impairment (30,789,259) (30,532,516)

Revaluation (6,182,655) (22,065)

Transfer from reserves - (87,065)


As a collateral for long-term and short-term borrowings from banks, the Group pledged: 878.840

shares (23.34%) of Poslovni sistem Mercator (MELR), 1,922,321 shares (5.74%) of Elektro Maribor, and

270,648 shares of Elektro Gorenjska or 1.6% of all the shares totalling EUR 74,738,429.

12. SHORT-TERM LOANS ISSUED

(in EUR) 2013 2012

Short-term deposits 6,320,902 9,054,667

Interest on loans to others 21,598 221,639

Less impairments - interest (20,363) -

Short-term loans 79,774,733 83,239,515


Balance at 31 December 2012 6,475,107 9,466,544

As at 31 December 2013, the Group reports EUR 6,320,902 of short-term deposits, EUR 79,774,733

of short-term loans issued, and EUR 79,621,763 of impairment loss recognised on the loans issued. In

2009, the Laško Group (the Fructal Group was also included – the value of the loan issued was EUR

9,400,000) granted loans to companies that were then its parent companies), namely the short-term

loan of total EUR 92,050,000 of which EUR 54,250,000 was granted to Infond Holding and EUR

37,800,000 to Center naložbe. In 2009, the Group recognised impairment loss on account of loans



~ 192 ~

issued and disclosed financial expenses as a result of the publication of insolvency and the introduc-

tion of bankruptcy proceedings against both related companies. In 2013, the companies of the Laško

Group received EUR 3,391,018 as repayment of loans issued from bankruptcy estate of Center naložbe

- in bankruptcy and Infond Holding - in bankruptcy. At the same time the Laško Group recognised

financial income on account of reversal of previously impairments, and the balance of short-term loans

issued and the relevant impairment loss were also reduced.



~ 193 ~

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~ 194 ~

13. CASH AND CASH EQUIVALENTS

(in EUR) 2013 2012

Cash at bank 2,804,329 2,012,931

Cash in hand and cheques 73,326 29,740

Cash in foreign currency 65,246 61,523

Cash in transit 61,822 84,421

Total 3,004,723 2,188,615

Cash at bank, cheques and cash on hand reflect their fair value. Compared to the last day of 2012,

cash increased by EUR 816,108 in 2013.

14. SHORT-TERM ACCRUALS AND PREPAID EXPENDITURE

(in EUR) 2013 2012

Deferred cost and accrued income 856,090 378,648

Total 856,090 378,648

Short-term accruals and prepaid expenditure refer to short-term deferred costs or expenses and

short-term revenues not charged.

15. EQUITY OF THE OWNERS OF THE CONTROLLING STAKE

The capital of the Group consists of called-up capital, share premium, profit reserves, retained earn-

ings or accumulated loss, surplus from the revaluation of financial assets classified as assets of dis-

posal group and also transitionally undistributed profit for the financial year or the outstanding loss

for the financial year.

Share capital is shown as shareholders’ equity (capital from stakes or capital contribution). Share

capital is divided into called-up share capital and uncalled share capital. Uncalled share capital is de-

ductible from share capital.

Called-up capital of the Group is defined in the Articles of Association and equals EUR 36,503,305. It

is divided into 8,747,652 ordinary transferable nominal no-par-value shares. Each share gives its owner

a voting right at the annual General Meeting of Shareholders and the right to participate in the profit.

As at 31 December 2013, share premium amounted to EUR 30,993,977. In the past, share premium

was created from the surplus of capital paid-in based on two capital injections that exceeded the nomi-

nal value of paid-in shares and on the basis of the general capital revaluation adjustment. The value of

the surplus amount of capital paid-in amounted to EUR 79,231,564 and the value of the general capital

revaluation adjustment totalled EUR 23,146,157. In the past, share premium was used to cover losses

totalling EUR 71,383,744.



~ 195 ~

The reserves include legal reserves of EUR 3,650,331, reserves for treasury shares of EUR 281,895

and treasury shares as deductible amounting to EUR 281,895. Legal reserves may be used exclusively

to cover losses and for capital injections. In 2013, the value of reserves remains unchanged. Treasury

shares are composed of the PILR, RARG and PULG shares. On the last day of 2011, the Group’s treas-

ury shares comprised 19,891 of PILR shares, 85 PULG shares and 19,236 RARG shares. The value of

PILR shares as of 12 December 2013 amounts to EUR 79,763 and the value of the shares owned by

the subsidiaries amounts to EUR 202,132. Pivovarna Laško holds no treasury shares as at 31 December

2013. In 2013, reserves for treasury shares decreased due to the revaluation totalling EUR 59,275.

Total amount of retained earnings (adjusted by the effect of deferred tax) of EUR 875,016 as at 31

December 2012, was in the financial year 2013 used to cover losses incurred in 2012. The amount of

retained earnings increased in 2013 on account of derecognition of liabilities for unpaid dividends re-

lating to the previous years in the amount of EUR 293,543 and depreciation on account of the previous

revaluation of property, which resulted in a decrease of the revaluation surplus. On the other hand,

retained earnings were decreased by the effect of 6.82% reduction in the equity share of Radenska for

the benefit of non-controlling interests in the amount of EUR 621,758, as the difference between the

investment value and the attributed capital.

Revaluation surplus decreased by revaluation of property to lower fair value amounting to EUR

3,462,085, by revaluation of investments amounting to EUR 81,112, by actuarial losses from post-em-

ployment benefits amounting to EUR 132,896, by deferred tax amounting to EUR 94,399, and by

depreciation expense resulting from revaluation of property in the mount of EUR 183,257.

The capital of the Group in 2013 decreased by translation reserves related to exchange rate differ-

ences on translation of foreign operations in the amount of EUR 24,236.

16. EQUITY OF THE OWNERS OF NON-CONTROLLING INTERESTS

On the last day of 2013, the capital of the non-controlling interests amounts to EUR 9,804,281 and

compared to 2012 it increased by EUR 2,639,971. This increase is the result of a 6,82% increase in

the equity interest of Radenska for the benefit of a lienor Nova Kreditna banka Maribor in the amount

of EUR 4,504,470. On the other hand, the non-controlling interest was reduced by the net loss of the

financial year amounting to EUR 1,803,569 and by changes in other comprehensive income of total

EUR 28,101.

17. PROVISIONS AND LONG-TERM ACCRUED COSTS AND DEFERRED INCOME

(in EUR) 2013 2012

Other provisions 8,587,422 1,898,251

Provisions for retirement benefits and anniversary bonuses 5,292,495 4,904,442

Provisions for the disabled above the quota 49,711 101,696

Total 13,929,628 6,904,389

Majority of other provisions (61.6%) amounting to EUR 8,587,422 as at 31 December 2013, are provi-

sions for underpaid concession fees for the period from 2005 to 2013 in the amount of EUR 5,576,805.

The concession fee is payable by Pivovarna Laško and Radenska over a period of 30 years in equal



~ 196 ~

annual payments increased by the attributive interest. Some of the provisions amounting to EUR

1,340,000 relate to contractual bonds, whereas EUR 1,500,000 relates to liabilities arising from legal

action brought against the Group by Kajo. The remaining amount of provisions was set aside for as-

sessed liabilities from the outcome of legal actions. Majority of the latter were set aside based on as-

sessments and opinions of the legal counsel.

Long-term accruals and deferred income mainly refer to the exemptions in respect of the payment

of contributions for the disabled above the quota.

Provisions are established for estimated liabilities with regard to the payment of termination ben-

efits and jubilee awards such as long-term benefits for years of service. As at the reporting date, the

provisions were discounted to the present value.

When calculating potential liabilities with regard to the retirement benefits the provisions of the De-

cree on the levels of reimbursed work-related expenses and of certain income not to be included in the

tax base are taken into consideration. If the amount of the retirement benefit exceeds the amount from

the Decree on the levels of reimbursed work-related expenses and of certain income not to be included

in the tax base, the employer needs to pay the 16.1% contributions on the excess amount.

Overview of additional assumptions:

• Growth of average wages in the Republic of Slovenia is assumed to be 0.5% annually in 2014, 1% in

2015 and 3.0% in further years, which represents the estimated long-term growth of wages;

• The calculation takes into consideration the growth of amounts of the retirement benefits and jubi-

lee awards in the Decree on the levels of reimbursed work-related expenses and of certain income

not to be included in the tax base as assumed in the previous indent for the growth of the average

wage in the Republic of Slovenia (it is an assumption that the bases will be changing in accordance

with the growth of the average wage in the Republic of Slovenia since we are not aware of the actual

intention of the legislator concerning the amounts in the Decree on the levels of reimbursed work-

related expenses and of certain income not to be included in the tax base);

• The calculation of liabilities from severance payments is tied to the years of pensionable service of

each individual employee;

• The selected discounted interest rate is 4.10% annually, which equals the return on 10-year cor-

porate bonds with high credit rating in the Eurozone at the end of November 2013 increased by

add-on concerning the local risk.

Based on actuarial calculation, the Group recognised in the profit or loss unrealised actuarial gains

on account of severance payments in the amount of EUR 139,806, current employee benefit costs

amounting to EUR 130,010, and interest expenses in the amount of EUR 147,588. Regarding jubilee

awards, the Group recognised in the profit or loss current employee benefit costs, interest expense and

actuarial gains totalling EUR 93,077.

A change in actuarial assumptions would only have an insignificant impact on the amount of provi-

sions and hence adjustment for 2012 was not accounted for.



~ 197 ~

MOVEMENT OF PROVISIONS AND ACCRUALS AND DEFERRED INCOME

Termination benefits Jubilee Disabled workers

(in EUR) on retirement awards above the quota Other Total

At 1 January 2013 3,230,717 1,673,725 101,696 1,898,251 6,904,389

Provisions transfer JP - - - (396,071) (396,071)

Increase 417,405 253,864 51,831 7,105,753 7,828,853

Decrease - utilisation (122,429) (160,787) (103,816) (20,511) (407,543)

At 31 December 2013 3,525,693 1,766,802 49,711 8,587,422 13,929,628

In 2013 the Group additionally set aside provisions for retirement benefits and jubilee awards of total

EUR 671,269, whereas provisions in the amount of EUR 283,216 were reversed.

Compared to the previous year, other provisions increased by EUR 7,105,753. Majority of the increase

relates to establishment of provisions for payment of water concession fee for the period from 2005 to

2013 amounting to EUR 5,576,805; of the total amount due, EUR 4,209,805 is payable by Pivovarna

Laško, and EUR 1,367,000 by Radenska. These provisions were recognised by the Group pursuant to

the amendments to the Waters Act adopted in 2013 however, by the date of the financial statements

approval, the governing body’s decree regulating the aforementioned levies for the past periods had

not been issued. The increase also relates to provisions set aside in the amount of EUR 1,340,000

for bonuses to legal counsel representing Radenska in the denationalisation process. The basis for

establishment of these provisions was the contract agreed between the legal counsel and the company.

Other provisions decreased in 2013 on account of transfer of provisions created for legal actions of

Jadranska pivovara to liabilities relating to the assets of disposal group in the mount of EUR 396,071,

and reversal of provisions set aside for legal actions amounting to EUR 20,511.

Long-term accruals and deferred income decreased in 2013 on account of utilisation of exemption

for disability pension insurance for disabled persons in the amount of EUR 103,816, and increased

on account of the exemption of payment of contributions for the disables amounting to EUR 63,237.

18. LONG-TERM FINANCIAL LIABILITIES

(in EUR) 2013 2012

Long-term bank borrowings 68,740,558 80,907,079

Other long-term financial liabilities 18,132 126,592

Long-term borrowings from other companies 30,835 27,172

Total 68,789,525 81,060,843

Transfer to short-term financial liabilities (51,563,985) (54,966,961)

Total 17,225,540 26,093,882



~ 198 ~

MATURITY OF LONG-TERM BORROWINGS FROM BANKS

(in EUR) 2013 2012

Maturity from 4 to 6 years - 2,727,869

Maturity from 2 to 4 years 4,666,743 12,944,872


Short-term amounts of long-term borrowings 51,274,965 54,966,961

Total 68,794,830 80,907,079



~ 199 ~

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~ 200 ~

As at 31 December 2013 the Group reported EUR 68,794,830 of long-term borrowings. Of that, EUR

51,274,964, which matures in 2014 (mostly on 30 April 2014) is recognised under short-term borrow-

ings. Pursuant to applicable contracts, EUR 12,893,122 of borrowings mature within a period of two

years, whereas further EUR 4,666,743 of long-term borrowings mature within four years.

The Group pledged 707,321 Elektro Maribor shares (2.11% interest), 464,390 MELR shares (12.33%

interest), and 350 shares (19.77% interest) of Birra Peja. The carrying amount of pledged shares equals

EUR 238,992,831 as at 31 December 2013. Long-term financial liabilities of the Group are additionally

collateralised with pledged movable and immovable property with carrying amount of EUR 14,377,381

as at 31 December 2013.

The disclosed value of long-term financial liabilities reflects their fair value.

On average, the interest rate for long-term loans in 2012 ranged from 4.48% to 4.72% fixed rate or

6-month euribor increased by 4.8 percentage point. The disclosed value of long-term financial liabili-

ties reflects their fair value.

Long-term borrowings are fully collateralised by securities, mortgages and pledged property (de-

tailed notes under Short-term financial liabilities).

19. SHORT-TERM OPERATING LIABILITIES

(in EUR) 2013 2012

Short-term liabilities to Group companies as suppliers 131,671 89,693

Short-term operating liabilities to other suppliers 24,013,994 21,231,236

Short-term operating liabilities to others:

to employees 3,164,002 3,470,349

to the state 10,067,951 8,980,742

Short-term liabilities from advances 174,670 485,472

Other short-term liabilities 2,578,509 3,685,618

Total 40,130,797 37,943,110

Compared to the previous year, short-term operating liabilities amounted to EUR 40,130,797 as at 31

December 2013, an increase of EUR 2,187,687 over the previous year. Supplier payables increased by

EUR 2,782,758, payables to the state for the increase in excise duty rose by EUR 1,087,209, whereas

payables to employees, payables for advances and other short-term trade liabilities of the Group de-

creased by EUR 1,724,258.

Major share of trade liabilities (60.17%) represent supplier payables in the amount of EUR 24,145,665.



~ 201 ~

MATURITY STRUCTURE OF TRADE PAYABLES

(in EUR) 2013 2012

Not-past due 19,739,909 7,139,418

From 1 to 30 days past due 2,551,490 2,683,517

From 31 to 60 days past due 342,394 1,389,466


From 91 to 180 days past due 1,393,334 -

From 181 to 360 days past due 661 -

Due and outstanding in excess of 360 days 35,272 7,689,057

Total 24,145,665 21,320,929

20. SHORT-TERM CORPORATE TAX PAYABLE

(in EUR) 2013 2012

Short-term income tax payable - 353,494

Total - 353,494

As at the last day of 2013, none of the Group companies reported corporate income tax liabilities. In

its profit and loss account the Union Group reports corporate income tax payable for the financial year

2013 in the amount of EUR 1,609,371. However, the liability was offset against excess amount of tax

prepayments for the same period.

21. SHORT-TERM FINANCIAL LIABILITIES

(in EUR) 2013 2012

Short-term amounts of long-term financial liabilities 51,563,985 54,966,961

of that banks 51,274,964 -

of that leasing 289,021 -

Interest payable on borrowings 2,406,050 2,634,838

Short-term borrowings from the Group - 1,074

Short-term bank borrowings 264,773,071 280,066,666

Other short-term financial liabilities (996,696) 1,321,474

Total 317,746,410 338,991,013



~ 202 ~

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~ 203 ~

As at 31 December 2013, short-term financial liabilities of the Laško Group total EUR 317,746,410,

of which EUR 316,048,035 relates to borrowings raised from banks. Compared to the last day of the

previous year, short-term borrowings from banks decreased by EUR 18,985,592.

The Group pledged 667,444 shares (100%) of the Delo, 4,745,107 shares (93.74%) of Radenska,

440,295 shares (97.60%) of Pivovarna Union, 414,450 shares (11.00%) of Poslovni sistem Mercator,

1,215,000 shares (3.63 %) of Elektro Maribor, 270,648 shares (1.6 %) of Elektro Gorenjska, 645,003

shares (20.6%) of Thermana, and 202,788 shares (79.24 %) of ČZP Večer. According to data from

separate financial statements of group companies as at 31 December 2013, the carrying amount of

pledged shares equals EUR 262,864,135. Some of the short-term liabilities are collateralised with mort-

gage and pledges of movable property and investment property. The carrying amount of pledged im-

movable and movable property and investment property as at 31 December 2013 is EUR 82,915,574. In

addition, borrowings from banks are collateralised with receivables amounting to EUR 20,860,000

as at 31 December 2013, and by pledges of Pivovarna Laško brands amounting to EUR 50,000,000. As

at 31 December 2013, total value of outstanding short-term borrowings from banks collateralised with

shares, mortgage, pledges of movable property and investment property, equals EUR 316,048,035. All

of the Group’s borrowings from banks are collateralised.

The average effective interest rate for the short-term borrowings ranges as fixed from 4.65 to 5.26%

(Birra Peja 9.5%) or as variable 1- to 6-month EURIBOR increased by 4.4 to 4.5 percentage points.

The disclosed value of short-term financial liabilities reflects their fair value.

An debt restructuring and standstill agreement was signed with the banks on 30 April 2014. Detailed

information is included in Section 4.4.13 SUBSEQUENT EVENTS

22. SHORT-TERM ACCRUALS AND DEFERRED INCOME

(in EUR) 2013 2012

Short-term accrued cost and deferred income 6,154,229 7,463,532

Total 6,154,229 7,463,532

The liabilities related to the holiday entitlement not taken, severance pay for redundant workers,

excise duty on unsold products kept in the warehouse and other short- term deferred revenues are

disclosed under short-term accruals and deferred income. Compared to the previous year, short-term

accruals and deferred income decreased by EUR 1,309,303. In spite of the derecognition of liabilities

for guarantees issued to Nova Kreditna banka Maribor in 2009 amounting to EUR 3,637,650 for

borrowings raised by Center naložbe, Pivovarna Union and Delo recorded an increase in short-term

accruals and deferred income in total EUR 2,328,347. A dispute began at the District Court in Maribor

regarding the aforementioned guarantees between Nova Kreditna banka Maribor as the lienor and

Pivovarna Laško as the debtor. The court ruled in favour of the lienor and the enforcement order be-

came final in 2011. Although by the date of the Annual Report’s approval the enforcement had not been

exercised, as at 31 December 2013 the Group derecognised accruals and deferred income amounting

to EUR 3,637,650



~ 204 ~

23. OPERATING REVENUES AND EXPENSE

Operating revenues and expenses relate to continuing operations, therefore to the companies of the

Laško Group excluding Jadranska pivovara Split. The result of the latter was recognised as the profit or

loss from discontinuing operations in compliance with IFRS 5.

23. A. NET SALES REVENUES

(in EUR) 2013 2012

Revenue from the sale of products

and services on domestic market 225,209,963 235,462,588


and services on foreign market 34,866,062 30,696,525

Revenues from the sale of material

and merchandise on domestic market 6,418,170 5,163,620


and merchandise on foreign market 383,204 64,215

Total 266,877,399 271,386,948

(in EUR) 2013 2012

Net sales on the domestic market 231,628,133 240,626,208

Net sales on foreign markets 35,249,266 30,760,740

Total 266,877,399 271,386,948

Compared to the previous year, net sales revenues decreased by EUR 4,509,549 or 1.7%. Net sales on

the local market decreased by EUR 8,998,075, whereas net sales revenue in foreign markets increased

by EUR 4,488,526. The Group generated 86.79% of total sales revenue on the local market and 13.2%

on foreign markets in 2013.

The biggest share of revenues on foreign markets is generated on the markets of former Yugoslavia

in particular in Croatia, but also the share of sales on the EU markets has been on the increase.

23. B. OTHER OPERATING REVENUES (INCLUDING REVALUATION OPERATING REVENUES)

(in EUR) 2013 2012

Reversal of provisions 129,640 658,470

Other operating income 7,010,890 4,384,030

Revaluation operating revenue from short-term assets 581,599 280,849

Revaluation operating revenue from long-term assets 666,129 320,740

Total 8,388,258 5,644,089



~ 205 ~

Other operating revenues amount to EUR 8,388,258 and compared to the previous year they in-

creased by EUR 2,744,169. This includes revenues related to the excess payment of water concession

fee for the period from 2005 to 2013 in the amount of EUR 2,189,775, revenue from disposal of fixed

assets, recovery of receivables for which allowances were made in previous years, revenues from rever-

sal of provisions and received subsidies.

In addition to the above, in 2012 other operating revenue included positive effect i.e. negative good-

will from integration of Birra Peja in the consolidation in the amount of EUR 2,534,344.

23. C. COSTS AND OTHER OPERATING EXPENSES

(in EUR) 2013 2012

Costs of merchandise sold (Horeca) 2,007,509 2,066,300

Costs of materials, raw materials and merchandise 98,656,990 95,385,012

Cost of services 66,780,684 69,360,358

Depreciation 17,619,428 20,064,199

Revaluation operating expense from long-term assets 14,326,240 8,982,599

Revaluation operating expense from short-term assets 1,058,541 735,910

Payroll costs 36,613,598 37,238,547

Social security contributions on salaries 6,383,610 6,955,433

Other labour costs 6,511,707 6,693,723

Costs of provisions 1,356,003 801,307

Other operating expenses 12,108,482 6,590,812

Total 263,422,792 254,874,200

Compared to 2012, operating expenses increased by EUR 8,420,001 in 2013. Revaluation operat-

ing expenses increased by EUR 5,251,609 resulting from revaluation of property to lower fair values,

whereas other operating expenses increased by EUR 5,481,111. Majority of the increase in other operat-

ing expenses relates to underpayment of water concession fee in the period from 2005 to 2013 amount-

ing to EUR 5,576,805. Of the total amount, 75% relates to the liability of the controlling company Pivo-

varna Laško and 25% to Radenska. The costs of materials and merchandise increased by EUR 3,213,187,

costs of provisions rose by EUR 554,696, and current assets’ impairments increased by EUR 322,631.

Compared to the previous year, the costs of services of the Laško Group decreased by EUR 2,579,674,

employee benefit costs fell by EUR 1,377,788, and costs of amortisation and depreciation decreased by

EUR 2,444,771. The costs of services incurred in 2013 are not inclusive of costs of consultants regard-

ing financial debt restructuring (legal and financial consultations) amounting to EUR 1,213,839. The

reason for this is the fact that these costs are tied to the total amount of borrowings to be repaid in ac-

cordance with debt rescheduling. in 2013, the costs incurred are recognised as a reduction in financial

liabilities measured at amortised cost. Subsequently they will be recognised in profit or loss in line

with the repayments of the total amount of relevant borrowings in 2014 and 2015.



~ 206 ~

23. D. COSTS BY FUNCTIONAL GROUP

Production General 2013 Costs of products Selling administrative (in EUR) and merchandise sold expenses expenses Total

Costs of merchandise

sold (Horeca) - 2,007,509 - 2,007,509

Costs of materials,

raw materials

and merchandise 96,835,405 436,556 1,385,029 98,656,990

Cost of services 20,040,956 36,169,566 10,570,162 66,780,684

Depreciation 13,773,422 1,792,486 2,053,520 17,619,428

Revaluation

operating expense

from long-term assets 888,901 2,896,790 10,540,549 14,326,240

Revaluation

operating expense

from short-term assets 61,775 258,868 737,898 1,058,541

Employee benefit costs 31,242,553 7,913,713 10,352,649 49,508,915

Costs of provisions 16,003 - 1,340,000 1,356,003

Other operating expenses 2,619,427 385,155 9,103,900 12,108,482

Total 165,478,442 51,860,643 46,083,707 263,422,792

Production General 2012 Costs of products Selling administrative (in EUR) and merchandise sold expenses expenses Total

Costs of merchandise

sold (Horeca) - 2,066,300 - 2,066,300

Costs of materials,

raw materials

and merchandise 90,443,393 3,234,689 1,706,930 95,385,012

Cost of services 22,701,614 36,139,425 10,519,319 69,360,358

Depreciation 15,647,954 2,005,173 2,411,072 20,064,199

Revaluation

operating expense

from long-term assets 130,257 16,005 8,836,337 8,982,599

Revaluation

operating expense

from short-term assets 3,462 442,994 289,454 735,910


Costs of provisions 142,151 64,474 594,682 801,307

Other operating expenses 2,436,463 552,754 3,601,595 6,590,812

Total 163,457,177 52,679,222 38,737,801 254,874,200



~ 207 ~

23. E. FINANCIAL INCOME AND EXPENSE

(in EUR) 2013 2012

FINANCIAL INCOME less foreign exchange differences 6,859,247 7,470,518

Financial income from shares in the profits 486,002 6,712,171

Financial income from loans 565,235 480,204

Financial income from operating receivables 511,806 255,706

Financial income from disposal of securities 168 211

Financial income from reversal

of investment impairment in a subsidiary 5,296,036 22,226

FINANCIAL EXPENSE less foreign exchange differences (58,003,585) (53,914,548)

Financial expenses due to impairment

and write-offs of investments (39,785,214) (33,067,019)

Financial expenses from financial liabilities (17,888,061) (20,821,180)

Financial expenses for operating liabilities (330,310) (26,349)

FOREIGN EXCHANGE RATE DIFFERENCES on financing (1,466) (12,178)

Foreign exchange losses (1,927) (14,937)

Foreign exchange gains 461 2,759

Net financial expenses (51,145,804) (46,456,208)

In 2013 the Laško Group earned EUR 6,859,247 of financial income. Majority of the amount

(77.2%) resulted from derecognition of non-performing loans issued in the past to Holding and Center

naložbe, that is the income from bankruptcy estate of both companies amounting to EUR 5,296,036.

In comparison, the Group recognised financial income from dividends in the amount of EUR 6,712,171

in 2012, of which dividends paid by the Poslovni sistem Mercator amounted to EUR 5,273,046. No

dividends were paid in 2013 by the Poslovni sistem Mercator.

Financial expenses of the Laško Group exceed financial revenues by EUR 51,145,804. Financial ex-

penses for interest from bank borrowings amounted to EUR 17,888,061 while financial expenses from

impairment of investments amounted to EUR 39,785,214.

Financial expenses resulting from the impairment of investments relate mainly, namely in the

amount of EUR 28,122,912, to MELR share impairment. In addition, the following investments were

also impaired in 2013: investment in shares of Elektro Maribor in the amount of EUR 4,325,223, in-

vestment in RVLG shares of Rudnik Velenje in the amount of EUR 3,102,464, in shares of Elektro

Gorenjska in the amount of EUR 676,620, and in the Probanka shares in the amount of EUR 767,001.

The latter investment was pursuant to the Bank of Slovenia decision deleted from the Group’s books

of account.



~ 208 ~

24. TAX ON CONTINUED OPERATIONS

(adjusted)*

(in EUR) 2013 2012

Current tax on continued operations (1,609,371) (2,204,513)

Deferred tax from continued operations 11,321,979 3,039,414

Total 9,712,608 834,901




From continuing operations the Group discloses corporate tax expense amounting to EUR 1,609,371

and deferred tax totalling EUR 11,321,979.

In 2013, the positive tax basis and consequently corporate tax liability is reported only by Pivovarna

Union, whose tax basis amounts to EUR 9,396,794.

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 tax-

able revenues and taxable expenses at the level of each individual company in the Group. If taxable

expenses exceed taxable revenues, the Company will show a tax loss which can be covered by future

taxable income. The following companies in the Laško Group generated uncovered tax loss as at 31

December 2013 that will be covered by future taxable income: Pivovarna Laško in the amount of EUR

23,467,051, Jadranska pivovara – Split in the amount of EUR 24,305,517 and Birra Peja in the amount

of EUR 5,879,368.

The tax base is reduced by tax deductions related to:

• Fiscal benefits for research and development;

• Fiscal benefits for voluntary supplementary pension insurance;

• Fiscal benefits for the employment of disabled persons and

• Fiscal benefits deductions for donations.

The tax authorities may, at any time within a period of five years after the end of the year for which

a tax assessment was due, carry out an inspection of the Company’s operations, which may lead to as-

sessment of additional tax liabilities, default interest and penalties regarding corporate income tax or

other taxes and levies. The management of the Company is not aware of any circumstances that could

result in a significant tax liability.

Deferred tax which affects profit or loss is shown in the table of movements in deferred tax assets

and in the table of movements in deferred tax liabilities.



~ 209 ~

24. A. TAX ON DISCONTINUED OPERATIONS

(in EUR) 2013 2012

Deferred tax from discontinued operations 905,442 (1,968,980)

Total 905,442 (1,968,980)

24. B. TAX FROM CONTINUED AND DISCONTINUED OPERATIONS

(adjusted)*

(in EUR) 2013 2012

Current tax (1,609,371) (2,204,513)

Deferred tax 12,227,421 1,070,434

Total 10,618,050 (1,134,079)






~ 210 ~

25. DISCONTINUED OPERATION

PROFIT OR LOSS ACCOUNT FROM DISCONTINUED OPERATIONS

(in EUR) 2013 2012

Discontinued operatio

Net sales revenues 142,641 161,215

Other operating income 478,849 1,312,310

Costs of goods, materials and services (211,677) (785,060)

Employee benefit costs (547,691) (422,353)


and depreciation of property, plant and equipment (986,814) (47,680)

Provisions - (196,366)

Other operating expenses (73,657) (471,385)

OPERATING PROFIT OR LOSS (1,198,349) (449,319)

Financial income 7,142 7,915

Financial expenses (167,501) (131,271)

PROFIT OR LOSS BEFORE TAX (1,358,708) (572,675)

Income tax -

Deferred tax 905,442 (1,968,980)


FROM DISCONTINUED OPERATIONS (453,266) (2,541,655)

The Group discloses the effects of the discontinued operations of Jadranska pivovara Split (due to the

discontinuance of an operation in accordance with IFRS 5)

26. EXCHANGE RATE DIFFERENCES

Exchange rate differences from operations and financing considered in the profit or loss are as fol-

lows:

(in EUR) 2013 2012

Foreign exchange differences from operations 8,439 (1,257)

Foreign exchange differences from financing (1,698) (166)

Total net cash flow 6,741 (1,423)



~ 211 ~

27. NET LOSS PER SHARE

(in EUR) 2013 2012

Total loss of the controlling interest (28,354,043) (25,562,593)

Number of ordinary shares issued 8,747,652 8,747,652

Treasury shares 19,891 19,891

Weighted number of ordinary shares issued 8,727,761 8,727,761

Net loss per share (3.25) (2.93)

Diluted net loss per share (3.25) (2.93)

Net loss per share is calculated by dividing net revenue which belongs to the shareholders by the

weighted average number of shares on the market during the year, with the exception of the average

number of treasury shares.

28. CHANGES IN OTHER COMPREHENSIVE INCOME

(in EUR) 2013 2012

Financial assets available for sale (93,136) 10,431

Gains/losses from revaluation of property (3,434,740) 305,678

Deferred tax on account of revaluation (137,965) (1,292,900)

Translation reserve (24,236) -

Other - 474,983

Unrealised actuarial gains /

losses from post-employment benefits (155,344) -

Deferred tax on unrealised actuarial gains / losses 22,592 -

OTHER COMPREHENSIVE INCOME (3,822,829) (501,808)

29. DIVIDEND PER SHARE

The controlling company Pivovarna Laško did not pay out dividends in 2013 (2012: no dividend paid).

However, dividends were paid by Radenska. Accordingly, EUR 39,063 of dividends was paid to the

non-controlling interests.

30. BUSINESS COMBINATIONS - ACQUISITION OF A DOMINANT INFLUENCE

No business combinations occurred in 2013.



~ 212 ~

4.4.7 FINANCIAL INSTRUMENTS AND FINANCIAL RISKS

31. FINANCIAL RISK

31 A. CREDIT RISK

The carrying amount of financial assets represents exposure to credit risk.

CREDIT RISK EXPOSURE

(in EUR) 2013 2012

Issued loans 6,758,651 9,902,879

Investments 287,276 434,538

Receivables less receivables due by state and advances given 51,281,913 44,757,180

thereof trade receivables 48,985,226 43,607,075

Cash and cash equivalents 3,004,724 2,188,615

Total 61,332,564 57,283,212

Credit risk comprises all risks having an effect on decreasing the economic benefits of the Group

due to the insolvency of business partners, both customers and borrowers, which could lead to non-

fulfilment of their contractual liabilities. To this end, the receivables are constantly monitored by busi-

ness partner and maturity and the collection, reminders and charging interest on arrears and also

the recovery through enforcement of judicial decisions contribute to better payment discipline of the

Group’s customers. The Laško Group manages the credit risk also by collateralising its receivables on

foreign markets. Receivables from more risky partners on the domestic and foreign markets are ad-

ditionally collateralised by bank guarantees and mortgages, and by insuring them with the SID insur-

ance undertaking. When such security cannot be provided with certainty, business is conducted on the

basis of advance payments.


subsequently, there is a large credit risk exposure to this particular segment. Over the entire 2013

financial year the payment discipline of our major buyers worsened, which caused constant and daily

liquidity problems. Major delays in payments have been noted from our largest customers. The man-

agement believes that the credit risk is increasing due to fierce economic conditions.

MATURITY OF TRADE RECEIVABLES

(in EUR) 2013 2012

Not-past due 30,567,614 25,474,299

Up to 30 days 11,379,196 10,943,218



Maturity more than 90 days 9,917,459 7,850,076

At 31 December 54,929,996 49,845,207



~ 213 ~

Compared to the last day of 2012, the balance of trade receivables increased by EUR 5,084,789 or

10.2%. The increase was recorded primarily with regards to receivables that have not yet matured,

which is partly due to increased scope of sales and partly due to extension of contractually agreed pay-

ment terms and conditions. In terms of maturity, 55.7% of all receivables has not yet matured. Most

of matured receivables are in the group of maturity up to 30 days (20.7%) and those with maturity in

excess of 90 days (18.1%). A legal action was started against most of receivables with maturity exceed-

ing 90 days and allowances were recognised and charged to profit or loss. Detailed monitoring of

receivables that have matured and appropriate response ensure efficient credit risk management.

The Group received guarantees amounting to EUR 12,512,969 for trade receivables.

31. B. LIQUIDITY RISK

With regard to financial risks, monitoring liquidity risk, which is the risk of loss due to short-term

and long-term insolvency, is of particular significance. To avoid problems with the current liquidity,

the Group manages the liquidity risk, drafts and implements a policy of regular liquidity management

including the planning of cash outflows and sufficient inflows. The controlling entity Pivovarna Laško

is exposed to the highest liquidity risk. By securing relevant credit lines for short-term cash flow bal-

ancing in the form of revolving credits and agreed overdraft facilities, the parent has so far successfully

managed to secure coverage of potential daily liquidity shortcomes. However, in view of deteriorating

conditions on financial markets and continuing financial crisis, it will become progressively more dif-

ficult to successfully manage the liquidity risk. Pivovarna Union, Birra Peja and Delo publishers are

also exposed to liquidity risk.

On 29 July 2013, management boards of Pivovarna Laško, Pivovarna Union and Radenska signed a

debt rescheduling agreement with all creditor banks extending maturity to 30 April 2014 at the earliest,

and subsequently also a long-term debt Restructuring Agreement until 31 December 2016. Currently

procedures for securing the disposal of investments are pursued actively as part of the companies’

restructuring which is expected to be completed by 2016.

Monitoring of fundamental financing and liquidity ratios pursuant to Article 14 of the Financial Op-

erations, Insolvency Proceedings and Compulsory Dissolution Act, prescribing criteria under which

an entity is deemed solvent, is particularly important and necessary to ensure effective liquidity risk

management. Regular monitoring of an entity’s liquidity position is of particular importance as it en-

sures timely response and helps to avoid unfavourable consequences of an emerging liquidity crisis.

To attain sustainable level of financial debt, in 2013 the Laško Group of companies continued activi-

ties aimed at debt restructuring including deleveraging of all investments which are not crucial for

the performance of the Group’s principal activity. Until the debt restructuring process is completed,

the controlling company will continue to experience a rather difficult liquidity situation. In view of the

aforementioned and difficult situation on financial markets and the entire economic environment, we

have assessed the Group’s exposure to liquidity risk as very high and requiring special attention.

The results of the Group’s operations are good and positive; however, due to negative financing cash

flow being the result of high interest expenses and the impairment of investments, the Group has been

incurring loss for several successive years.

As at the last day of 2013, the Group’s short-term liabilities exceed the amount of short-term assets

by EUR 194,688,007; the ratio between short-term assets and short-term liabilities of 0.47 reflects a

very high liquidity risk.



~ 214 ~

In accordance with the adopted five-year strategy of operations of the Laško Group, procedures for

the sale of all non-strategic investments began to intensify already in 2010. Procedures for the sale of a

79.25% stake in the newspaper company Večer, a 23.34% stake in Poslovni sistem Mercator, a 57.63%

stake in Birra Peja and a 100% stake in the Delo publishers and all other investments and property not

required for business, continued in 2013.

Since it is possible that until a successful disposal of investments the Laško Group could face seri-

ous liquidity issues, and since the controlling entity will continue to face these issues even in the event

of successful disposal of those investments, the Restructuring Agreement was negotiated and signed

by the creditor banks, which specifies in detail individual milestones in the implementation of the

adopted debt rescheduling plan until the end of 2016.

MATURITY STRUCTURE OF SUPPLIER PAYABLES

(in EUR) 2013 2012

Not-past due 19,739,909 7,139,418





From 181 to 360 days past due 661 -

Maturity more than 360 days 35,272 -

Total 24,145,665 21,320,929

MATURITY OF SHORT-TERM FINANCIAL LIABILITIES TO BANKS

2014 2014

(in EUR) Principal Interest Total

January - March 4,706,410 3,891,559 8,597,969

April - June 299,529,124 1,564,833 301,093,957

July - September 6,969,831 187,810 7,157,641

October - December 5,131,691 118,016 5,249,707

Total 316,337,056 5,762,218 322,099,274

MATURITY OF LONG-TERM FINANCIAL LIABILITIES TO BANKS

(in EUR) 2013 2012




Short-term amounts of long-term borrowings 51,274,965 51,018,746

Total 68,794,830 77,023,189



~ 215 ~

A Debt Restructuring and Standstill Agreement was signed with the banks on 30 April 2014. De-

tailed information is included in Section 4.4.13SUBSEQUENT EVENTS

31. C. INTEREST RATE RISK

Interest rate risk is the risk of a possible change in the reference interest rate on the financial market,

mainly due to borrowings linked to a variable interest rate (EURIBOR). In 2013 a decreasing tendency

of EURIBOR has continued, which had a positive impact on borrowing costs linked to a variable inter-

est rate (EURIBOR). Towards the end of the year the reference interest rate rose slightly, however this

had no major impact on interest rates. Financing under variable interest rate conditions represents

two-thirds of all the Group’s financing while the other one-third represent borrowings with a fixed

interest rate. Interest rate hedging of long-term debt at variable interest rates is sensible however,

majority of the Group’s borrowings mature in a period of less than 12 months. The Group has already

agreed and signed a contract for long-term financial debt rescheduling until 31 December 2016. The

management have assessed the interest rate risk as rather high but manageable.

Average interest Difference (in EUR) Interest rate in % Interest

Actual financial expense for interest paid 17,888,061 5.13 -

Expenses resulting from 1% increase

in interest rates 21,375,012 6.13 3,486,951

Expenses resulting from 1% decrease

in interest rates 14,401,110 4.13 (3,486,951)

Expenses resulting from 1.5% increase


Expenses resulting from 1.5% decrease


If the average interest rate increased by 1%, and the indebtedness remained at the same level, ex-

penses would increase by EUR 3,486,951 and in the event of a 1.5% increase in the average interest rate,

expenses would increase by EUR 5,230,427.

If the average interest rate decreased by 1%, and the indebtedness remained at the same level, fi-

nancial expense would decrease by EUR 3,486,951 and by EUR 5,230,427 if the average interest rate

decreased by 1.5%.

The Group issues loans and deposits at fixed interest rates.

31. D. PRICE RISK

The Group is exposed to price risks on the downstream side and on the upstream side.

On the downstream side, a risk is the increase of retail prices compared to the declining purchasing

power of the population. The retail prices are also affected by the trade margin, the level of excise duty

and value added tax. With regard to the situation in the country, there is a potential risk of increasing

excise duty on alcohol and alcoholic beverages – beer, the introduction of excise duty on sweet drinks

and increased rate of value added tax. All these risks can result in increased retail prices. This increase

can cause a shift of focus of consumers to cheaper products, the substitutes of our products (e.g.: shift



~ 216 ~

from beer to wine since there is no excise duty on wine and is thus relatively cheaper) or a shift to shop-

ping abroad where these duties are lower. Each drop in sales of the beer on the domestic market by 1%

represents the decrease in revenues by EUR 560,000 compared to the revenues in 2013. The Company

has no influence on this risk, which is assessed as significant.

Risks on the upstream side due to the exposure to the prices of input materials that depend on the

individual harvest of barley, maize and hops are assessed as moderate since the impact is slightly

reduced by globalisation. However, global inflation pressures of oil, poor harvests, climate changes,

currency fluctuations and similar could gain in importance. The risks are minimised by including all

the adequate suppliers into the supply chains within the Laško Group and thus ensure optimal prices

and smooth supply.

31. E. FOREIGN EXCHANGE RISK

Foreign exchange risk is insignificant since the majority of contracts concluded by the Group with

the suppliers is expressed in EUR and therefore the changes in exchange rates have little or no direct

effect on our prices. The same applies to our products that are invoiced in EUR.

31. F. CAPITAL MANAGEMENT

The main purpose of the management of the Group’s equity is to ensure, as far as possible, the best

credit rating and capital adequacy to finance the operations and to maximise the value for the owners.

CALCULATION OF THE RATIO BETWEEN NET FINANCIAL LIABILITIES AND EQUITY (GEARING RATIO)

AT 31 DECEMBER

(in EUR) 2013 2012

Financial liabilities 334,971,950 365,084,895

Cash 3,004,724 2,188,615

Net financial liabilities 331,967,226 362,896,280

Capital 58,213,883 87,978,879

Gearing ratio (in %) 570.25 412.48

The ratio between net financial liabilities and equity indicates that the Laško Group is over-indebted.



~ 217 ~

31. G. THE RISK OF CHANGES IN FAIR VALUE OF FINANCIAL INSTRUMENTS


ment property is undoubtedly also an important financial risk. Investments are increasingly more dif-

ficult to dispose of at desirable prices that would not be significantly lower than their historical costs.

The risk arises in relation to financial expenses for investments write-off and impairment, which in

2013 amounted to EUR 39,785,214. Due to increasingly difficult economic conditions there is a risk

that values of certain investments will decline further in 2014.

Difference - Difference - Difference - Fair value on impact on impact on surplus impact on liability (in EUR) 31 December 2013 investments from revaluation for deferred tax

Market value of MELR

at 31 December 2013 72,064,962

Price increase by 20% 86,477,954 14,412,992 11,962,784 2,450,209

Price decrease by 20% 57,651,970 (14,412,992) (11,962,784) (2,450,209)

Price increase by 5% 75,668,210 3,603,248 2,990,696 612,552

Price decrease by 5% 68,461,714 (3,603,248) (2,990,696) (612,552)



~ 218 ~

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~ 219 ~

The Group measures fair value of assets and liabilities in the statement of financial position accord-

ing to the following fair value hierarchy:

• level 1: assets and liabilities whose fair value is determined based on market inputs (without adjust-

ments) observed on active stock markets,

• level 2:assets and liabilities whose fair value is determined based on inputs other than quoted mar-

ket prices that are observable directly or indirectly,

• level 3: assets and liabilities whose fair value is determined based on valuation techniques using

unobservable inputs.

4.4.8 SEGMENT REPORTING

32. SEGMENT REPORTING

32. A. BUSINESS SEGMENTS

Business segments are divided into four parts and are presented separately for the segments of beer,

other drinks, newspaper and publishing activities and other activities.

The other segment contains the sale of services, by-products and merchandise. This segment in-

cludes all investments that fall outside the core business of the Group. The liabilities of the other seg-

ment include the value of financial liabilities as of 31 December 2012 that the Group assumed for the

financing of investments (including the loans granted to the companies Center Naložbe and Infond

Holding the value of which was completely impaired in 2009 following the non-settlement of financial

liabilities).



~ 220 ~

2013 (in EUR) Beer Other beverages Publishing Other Total

Net sales by segments 142,632,178 51,974,583 46,306,836 25,963,802 266,877,399

Net sales revenues 142,632,178 51,974,583 46,306,836 25,963,802 266,877,399

Profit or loss

from operations 31,736,179 (2,173,981) (4,629,216) (13,204,134) 11,728,848

Net financial expenses (51,145,804)

Profit or loss before tax (39,416,956)

Income tax (1,609,371)

Tax 11,321,979

Profit or loss for the year (29,704,349)

Assets by segment 177,643,154 77,750,558 17,857,133 112,831,963 386,082,808

Brands 46,461,058 - 4,750,048 - 51,211,106

Goodwill 17,197,380 - - - 17,197,380

Liabilities by segment 202,166,938 9,241,849 49,593,387 135,275,237 396,277,411

Investments 6,948,364 2,464,789 341,779 1,065,771 10,820,703

Costs not impacting

cash flows 9,965,654 4,997,039 1,892,982 763,753 17,619,428



~ 221 ~

2012 (in EUR) Beer Other beverages Publishing Other Total

Net sales by segments 152,634,930 59,427,001 50,082,894 9,242,123 271,386,948

Net sales revenues 152,634,930 59,427,001 50,082,894 9,242,123 271,386,948

Profit or loss

from operations 27,253,762 299,552 (7,839,801) 2,502,668 22,216,181

Net financial expenses (46,456,208)

Profit or loss before tax (24,240,027)

Income tax (2,204,512)

Tax 3,039,414

Profit or loss for the year (23,405,126)

Assets by segment 187,344,704 75,552,731 36,187,829 132,797,348 431,882,612

Brands 46,460,507 - 10,188,094 - 56,648,601

Goodwill 17,197,380 - - - 17,197,380

Liabilities by segment 212,678,767 45,133,683 52,487,125 107,450,139 417,749,714

Investments 5,009,862 4,394,560 1,020,743 772,992 11,198,157

Costs not impacting

cash flows 12,702,178 4,285,652 2,894,212 182,157 20,064,199

Sales by geographic segments are disclosed under Note 32. B.



~ 222 ~

32. B. GEOGRAPHICAL SEGMENTS

(in EUR) 2013 2012

Net sales

Slovenia 231,628,133 240,626,209

Foreign market 35,249,266 30,760,739

Total 266,877,399 271,386,948

Assets

Slovenia 348,128,253 392,976,853

Foreign market 37,954,556 43,592,083

Brand (Slovenia) 51,211,106 56,648,601

Goodwill (Slovenia) 17,197,380 17,197,380

Total 454,491,295 510,414,917

Investments

Slovenia 10,030,238 10,139,686

Foreign market 790,465 1,058,471

Total 10,820,703 11,198,157

Net sales revenues on foreign markets were mainly realised on the markets of former Yugoslavia

and the assets on foreign markets relate exclusively to the assets on the markets of former Yugoslavia.

4.4.9 RELATED PARTY TRANSACTIONS

33. RELATED PARTY TRANSACTIONS

33. A. SALE TO RELATED COMPANIES

(in EUR) 2013 2012

Subsidiaries 71,566 248,499

Other related parties 168,160 9,000

Total 239,726 257,499

33. B. PURCHASES FROM RELATED COMPANIES

(in EUR) 2013 2012


Associates 511,469 382,177


Total 1,113,691 1,013,540



~ 223 ~

33. C. OPERATING RECEIVABLES AND LIABILITIES – RELATED COMPANIES

(in EUR) 2013 2012

Trade receivables due from related companies

Subsidiaries 54,592 -

Associates 13,737 -

Total 68,329 -

Trade payables to related companies



Total 130,563 102,672

33. D. LOANS ACQUIRED FROM THE COMPANIES OF THE LAŠKO GROUP

(in EUR) 2013 2012


Total 13,255 50,977

33. E. FINANCIAL INCOME OF THE COMPANIES IN THE LAŠKO GROUP

(in EUR) 2013 2012

Other related parties 37,222 -

Total 37,222 -

33. F. FINANCIAL EXPENSES OF THE COMPANIES IN THE LAŠKO GROUP

(in EUR) 2013 2012

Other related parties - 1,451

Total - 1,451

33. G. GUARANTEES ISSUED TO THE RELATED COMPANIES

(in EUR) 2013 2012

Subsidiaries 871,921 2,000,000

Total 871,921 2,000,000



~ 224 ~

4.4.10 REMUNERATION OF MEMBERS OF THE MANAGEMENT AND SUPERVISORY BOARDS AND THE EMPLOYEES WITH INDIVIDUAL CONTRACT OF EMPLOYMENT

The Group is managed by the management boards and supervisory boards whose remuneration is

presented in the tables below:

(in EUR) 2013 2012

MANAGEMENT BOARD

Fixed remuneration 1,396,240 1,383,515

Other receipts (benefits) 58,945 66,132

Jubilee awards 1,536 ,060

Termination benefits - 142,841

Total 1,456,721 1,594,548

Others Fixed earnings Jubilee (in EUR) earnings (benefits) awards Total

MANAGEMENT BOARD

Dušan Zorko 197,932 9,403 - 207,335

Milan Hojnik 134,255 3,684 - 137,939

Mira Močnik 90,274 6,115 - 96,389

Sebastjan Gergeta 24,200 - - 24,200

Boris Matijaščić 79,635 - - 79,635

Zlatko Bebić 50,910 - - 50,910

Marjeta Zevnik 171,932 4,283 - 176,215

Irma Gubanec 123,600 3,914 - 127,514

Mirjam Hočevar 141,932 11,645 - 153,577

Gorazd Lukman 141,932 9,118 - 151,050

Nada Jakopec 32,000 937 - 32,937

Slavko Alojz Bogataj 61,114 4,566 - 65,680

Bogdan Romih 4,592 53 - 4,645

Matej Oset 141,932 5,227 1,536 148,695

Total 1,396,240 58,945 1,536 1,456,721

(in EUR) 2013 2012

INDIVIDUAL CONTRACTS OF EMPLOYMENT



Variable remuneration (incentive pay) 91,400 85,274

Jubilee awards 5,007 2,919

Termination benefits 20,492 36,321

Total 3,195,016 3,619,989



~ 225 ~

(in EUR) 2013 2012

SUPERVISORY BOARD‘S AUDIT COMMITTEE

Attendance fees 14,271 12,902

Total 14,271 12,902

(in EUR) 2013 2012


Peter Groznik 5,040 5,435

Bojan Cizej 4,760 3,770

Igor Teslić 4,921 3,697

Total 14,721 12,902

(in EUR) 2013 2012

SUPERVISORY BOARD‘S HR COMMITTEE


Total 8,320 13,965

(in EUR) 2013 2012


Borut Jamnik 3,440 5,655

Borut Bratina 2,440 4,155

Dragica Čepin 2,440 4,155

Total 8,320 13,965

(in EUR) 2013 2012

SUPERVISORY BOARD‘S COMMITTEE FOR MATERIAL REVIEW

Attendance fees 1,729 -

Total 1,729 -



~ 226 ~

(in EUR) 2013 2012


Peter Groznik 426 -

Bojan Cizej 426 -

Dragica Čepin 426 -

Jože Bajuk 451 -

Total 1,729 -

(in EUR) 2013 2012

MANAGEMENT BOARD OF BIRRA PEJA


Total 12,000 18,000

(in EUR) 2013 2012

MANAGEMENT BOARD OF BIRRA PEJA

Ekrem Lluka 3,500 6,000

Fatmir Gashi 3,500 6,000

Mirjam Hočevar 2,000 6,000

Ernest Jusufi 1,500 -

Virtyt Ibrahimaga 1,500 -

Total 12,000 18,000



~ 227 ~

(in EUR) 2013 2012

SUPERVISORY BOARD MEMBERS OF THE LAŠKO GROUP

Brigita Oplotnik Rajh 6,714 -





Mirjam Hočevar 11,150 13,925


Andrej Kebe - 1,500

Franko Lipičar 15,300 15,125

Goran Brankovič 6,062 -

Vladimir Malenković 30,201 44,539

Enzo Smrekar 4,658 -

Dominik Omar 14,200 13,925

Terezija Peterka 15,070 14,020

Primož Mlekuš 13,850 13,420

Jože Bajuk 5,670 -

Pavel Teršek 14,200 13,650

Marjeta Zevnik 10,114 5,866

Robert Šega 15,502 11,227

Branimir Piano 15,850 8,878

Jure Ferlin 15,850 8,878

Bojan Košak - 1,500

Marjan Mačkošek - 2,500

Total 338,730 331,060

4.4.11 CONTINGENT LIABILITIES AND ASSETS

The Management Boards of the Laško Group of companies do not expect any significant losses from

contingencies described below.

A LAWSUIT BROUGHT AGAINST PIVOVARNA LAŠKO BY MIP

On 21 March 2013 the Group received a lawsuit brought against the controlling company by MIP,

Gornji Vakuf, Uskoplje, which was lodged at the Celje District Court by the plaintiff’s attorney Matej

Erjavec, Ljubljana, demanding payment of damages amounting to EUR 1,135,481.43.

The damages relate to the loss of profits incurred by the plaintiff due to unjustified withdrawal from

the Sales contract worth EUR 1,085,481.43, and damages for the loss of reputation in the amount of

EUR 50,000.00.

On 22 April 2013 the Group issued a defence plea stating that the plaintiff’s claim was unfounded.

The court of first instance has not ruled on this matter yet.

LAWSUIT BROUGHT BY PERUTNINA PTUJ FOR PAYMENT OF EUR 10,116,488.71 PLUS COSTS AND INTEREST

The plaintiff filed a claim against Pivovarna Laško on 31 December 2010 at the District Court of Celje

demanding payment of EUR 10,116,488.71 inclusive of the legally prescribed default interest. The plain-



~ 228 ~

tiff justified its claim by stating that the legal representative of Pivovarna Laško signed a comfort letter

on 10 January 2009 and thus allegedly committing to fulfil the obligation of Perutnina Ptuj to Poslovni

sistem Mercator on account of loan contracts. This refers to two loan contracts which Perutnina Ptuj

signed with the Poslovni sistem Mercator: one on 24 January 2008 amounting to EUR 5,000,000.00

and the second one on 27 February 2008 for EUR 15,000,000. According to representations made by

the plaintiff, the disputed amount relates to a part of the loan which, as alleged by the plaintiff, should

be paid by Pivovarna Laško. The plaintiff further states that Pivovarna Laško has only partly fulfilled

its obligations referred to in the comfort letter; namely, through its business partners it secured cash

amounting to EUR 11,864,476.50 to Perutnina Ptuj as a settlement of the loan. The latter is allegedly

demonstrated by the account of payments made by Infond Holding and Center naložbe. Perutnina

Ptuj is also suing for the remaining amount. The defence statement was submitted within the set

deadlines. The court issued a ruling on 22 January 2011 allowing incidental intervention by Boško Šrot,

former director of Pivovarna Laško, for the defendant Pivovarna Laško. The court has so far not fixed

the date for hearing.

LAWSUIT BY NKBM CLAIMING PAYMENT OF EUR 6,570,542.25 INCLUSIVE OF THE LEGALLY PRESCRIBED DE-

FAULT INTEREST.

NKBM filed an application for enforcement against Pivovarna Laško on 1 April 2010 based on the

Contract No. 36/2009 for pledges of RARG shares concluded on 25 March 2009 between NKBM as

the creditor, Center naložbe as the debtor and Pivovarna Laško as the lienee. The Contract was signed

on behalf of Pivovarna Laško by its former director Boško Šrot. The application for enforcement relates

to recovery of EUR 6,570,542.25 inclusive of the legally prescribed default interests through the sale of

345,304 RARG shares, owned by Pivovarna Laško. These shares were pledged by Pivovarna Laško as

collateral for borrowings raised by Center naložbe from NKBM. The District Court issued a ruling on

6 April 2010 allowing the application for enforcement. Pursuant to timely filling of an appeal against

the ruling, the court issued a decision on 16 February 2011 annulling the ruling that allowed the en-

forcement and referred the case to be decided by the District Court of Maribor pursuant to the rules

applicable to legal procedures. The District Court in Maribor issued its decision on 14 June 2011 that

the application for enforcement by the creditor, currently the plaintiff NKBM of 1 April 2010 be deemed

withdrawn and the proceedings under reference II Pg 547/2011 to be closed. The decision closing the

proceedings became final on 2 July 2011. Based on the District Court of Maribor ruling, on 4 July 2011

the plaintiff refunded Pivovarna Laško the costs of proceedings amounting to EUR 10.208,00.

Further to the lawsuit by NKBM of 29 July 2011, the District Court of Maribor on 17 November 2011

issued a ruling allowing enforcement of the pledged 345,304 RARG shares of Radenska for repay-

ment of receivables totalling EUR 7,349,552.25 inclusive of the legally prescribed default interest. The

defendant, Pivovarna Laško must allow the sale of the aforementioned securities and settlement of

receivables from the proceeds of the sale. The judgement is final. Based on final and enforceable rul-

ing, the court at the application of NKBM against Pivovarna Laško allowed enforcement of the pledged

RARG shares. So far the RARG shares have not been sold in the enforcement procedure.

NKBM proposed deferred enforcement and accordingly on 28 October 2013 the court ruled for the

enforcement to be postponed until 1 October 2014.

LEGAL ACTION BY CEN ADRIA, D.O.O. - IN BANKRUPTCY, MATULJI (REPUBLIC OF CROATIA)

In 2006, Pivovarna Laško filed an application for enforcement against Cen Adria, demanding pay-

ment of outstanding invoices totalling Kn 857,292.53 (euro equivalent of 114,764.73) plus costs and

interest. Cen Adria appealed against the enforcement ruling and currently the case is proceeding in the

same way as in the case of an appeal against payment order in legal proceedings.



~ 229 ~

In 2006, during the above proceedings, Cen Adria filed a counter action against Pivovarna Laško

and Jadranska pivovara Split, Vranjic, demanding payment of damages totalling Kn 25,000,000.00

(euro equivalent of approx. 3,346,720.21), which Cen Adria allegedly incurred due to untimely termina-

tion of the Contract on Business Cooperation (Ugovor o poslovnoj suradnji). During the proceedings

and upon the appeal of Pivovarna Laško, the Commercial Court issued a decree on lack of jurisdiction

and referred the case to the Commercial Court in Split (the registered seat of the second defendant).

Cen Adria appealed against the decision of the Commercial Court in Rijeka. The High court in Zagreb

subsequently ruled the court in Rijeka as having territorial jurisdiction.

In 2012, bankruptcy proceedings were instigated against Cen Adria. The main hearing of both these

cases was held on 17 January 2013 at the Commercial Court in Rijeka.

Jadranska pivovara - Split and Pivovarna Laško both believe that Cen Adria’s claim for a counter

action is unfounded since Jadranska pivovara - Split terminated the disputed Contract on Business

Cooperation in compliance with the contractual terms and conditions.

In the case of Cen Adria against Pivovarna Laško and Jadranska pivovara - Split, the main hearing

was held on 24 April 2013, 26 September 2013, and 27 November 2013. The next hearing is scheduled

for 24 April 2014.

DENATIONALISATION REQUESTS IN RADENSKA, RADENCI

NATIONALISATION OF PROPERTY DENATIONALISATION ŠARIČ

The proceedings are taking place before the Gornja Radgona Administrative unit in accordance with

the Denationalisation Act and in non-contentious proceedings before the Novo mesto District Court

pursuant to the Enforcement and Criminal Actions Act. The beneficiaries are demanding restitution of

property, company, trademarks and mineral springs that were nationalised during the nationalisation

process, including payment of damages. The Administrative unit Gornja Radgona issued a decision on

27 June 2012, which rejected the request for the privatisation of the nationalised company Zdravilišče

Slatina Radenci, Höhn and Comp., public trading company in Radenci with a 48% stake owned by

Wilhelmina Höhn Šarič. With the supplementary decision issued on 31 August 2012 the Zdravilišče

Slatina Radenci, Höhn and Comp., public trading company is corrected and renamed Kuranstalt Sau-

erbrun Radein AG. The claim was lodged by the legal successor dr. Rudolf Höhn Šarič on 4 May 1993.

In the appeal proceedings, the Ministry of Economic Development and technology on 25 February 2013

rejected the appeal against the decision of the Administrative unit Gornja Radgona as being unjusti-

fied. The beneficiary lodged a lawsuit and the proceedings continue before the Administrative Court

of the Republic of Slovenia.

On 5 December 2012, the Administrative Unit in Gornja Radgona appointed the expert to produce

an expert opinion concerning the value of the company Zdravilišče Slatina Radenci, Hohn and Comp.,

inclusive of labels and brand wherever the word Radenska is a registered brand name and the three

hearts, two hearts and one heart are registered labels, as well as the movable property. Buildings and

land are not subject to the expert opinion.



cember 2010 for the benefit of beneficiaries, grandchildren of dr. Anton Šarič.

The beneficiaries carried out the entry into the land register in the form of a seal indicating a dispute

on all land parcels that are subject of the dispute; notices of dispute have also been placed on 13 brands

of Radenska at the Slovenian Intellectual Property Office.



~ 230 ~

The first main hearing was held at the District Court in Novo mesto on 25 March 2013. In addition to

the promoters, 11 members of the opposing party were also present, i.e. representatives of Terme Krka,

State Attorney, three municipalities, Slovenske železnice and others. After an additional naming of all

the proxies, the judge ended the trial. The District Court in Novo mesto issued an order, which was

received on 19 June 2012, dismissing the request for the return of nationalised property. The Court also

set the value of the subject matter of the dispute to EUR 34,200,000.00. The counter party appealed

to the Higher Court in Ljubljana against the decision. The Higher Court in Ljubljana rejected the ap-

peal (the decision was received by Radenska on 27 March 2014), and upheld the first instance decision

rejecting the claim for restitution of nationalised property. This makes the procedure final. There is a

possibility of beneficiaries lodging a request for a review at the Supreme Court.

The management of the controlling Company Pivovarna Laško expect the resolution process of the

aforementioned proceedings related to Radenska to be time consuming. Since the management of

the controlling company Pivovarna Laško expect no significant future losses from those proceedings,

it has assessed that as at 31 December 2013 Pivovarna Laško has no need to set aside any provisions in

this regard.

4.4.12 COSTS OF THE AUDITOR

The cost of the audit of the Laško Group performed by Ernst & Young, d. o. o. for the year 2013

amounted to EUR 93,600.


Events that occurred after the end of the financial year in the Laško Group are described in section









and consultants. The aim of this process was to define an agreement that will on the one hand ensure

financial stability of the Laško Group of companies through a long-term debt rescheduling and delev-

eraging of the Group’s debts to a sustainable level and, on the other hand, give the creditors an assur-

ance of expected repayments while maximising the value for the owners. This will ensure a sustainable

development of quality brands and preservation of jobs in the Laško Group.










~ 231 ~












deleveraging milestones, will terminate the Agreement only, if so decided by the majority of creditors.

PUBLIC AUCTION FOR THE SALE OF ČZP VEČER SHARES

A public auction for the sale of shares of ČZP Večer was held on 28 February 2014 at 12 noon in the

premises of Delo. The Committee determined that the security required for participation in the auc-

tion had not been paid within the set deadlines. Consequently, the auction was unsuccessful.

The subject of the public auction was a block of 202,788 (79.24% interest) of ordinary nominal

shares of ČZP Večer (VEMG), held by the Delo publishers. The starting price at the auction was EUR

3,098,000.00.

The newspaper Delo will continue its efforts aimed at fulfilment of provisions of the Competition

Protection Office of the Republic of Slovenia, Ref. No. 306-195/2008-57 of 23 September 2009 order-

ing the disposal of 191,943 shares (75%) and successful completion of the sale of the ČZP Večer shares.


F I N A N C I A L R E P O R T O F P I V O V A R N A L A Š K O , D . D .

~ 232 ~

5FINANCIAL

REPORT

OF

PIVOVARNA

LAŠKO, D. D.



~ 233 ~

C O N T E N T S

5.1 Statement of management responsibilities 234

5.2 Independent auditor’s report 236

5.3 Audited financial statements of Pivovarna Laško 239

5.3.1 Statement of financial position 240

5.3.2 Income statement 242

5.3.3 Statement of other comprehensive income 243

5.3.4 Statement of changes in equity in 2013 244

5.3.5 Statement of changes in equity in 2012 246

5.3.6 Cash flow statement 248

5.3.7 Loss settlement of the financial year 249

5.4 Notes to separate financial statements 250

5.4.1 General data 250

5.4.2 Statement of compliance with IFRS 250

5.4.3 Use of new and amended IFRS and IFRIC interpretations 250

5.4.4 Significant accounting policies 253

5.4.5. Adjustment of the historical financial statements 263

5.4.6 Notes to individual items of the financial statements 265

5.4.7 Financial instruments and financial risks 303

5.4.8 Related party transactions 310

5.4.9 Remuneration of the members of the Management and Supervisory Boards

and employees with individual contracts of employment 314

5.4.10 Contingent liabilities and assets 316

5.4.11 Costs of the auditor 318

5.4.12 Subsequent events 318



~ 234 ~

5.1statement of compliance

The Management Board of Pivovarna Laško is responsible for the preparation of the Annual Report of

the Company as well as the financial statements, in a manner providing the public with a fair presenta-

tion of the Company’s financial position and the results of its operations in accordance with the Inter-

national Financial Reporting Standards as adopted by the European Union and with the Companies Act.

The Management Board of Pivovarna Laško, d. d., hereby gives its approval to the business report and

the financial statements for the year ended 31 December 2013 and confirms the following:

• the financial statements have been compiled under assumption of Pivovarna Laško being able to

continue its operations as a going concern,

• the appropriate accounting policies were consistently applied and any changes thereof have been

disclosed,

• the accounting estimates have been prepared in a fair and diligent manner and comply with the

principle of prudence and good management.

The Management Board is responsible for the implementation of measures to ensure the mainte-

nance of the value of the assets of the Company and for the prevention of fraud and other irregularities

and their detection.


mag. Dušan Zorko


Marjeta Zevnik


Mirjam Hočevar


Gorazd Lukman


Matej Oset




~ 236 ~

5.2independent auditor’s report



~ 237 ~



~ 238 ~



~ 239 ~

5.3audited financial statements of

pivovarna laško for the year ended 31

december 2013 compiled under ifrs



~ 240 ~

5.3.1 STATEMENT OF FINANCIAL POSITION OF PIVOVARNA LAŠKO AT 31 DECEMBER 2013



ASSETS

Non-current assets 301,383,218 312,412,713 324,155,648

Intangible assets 1 938,015 1,231,781 1,395,064

Property, plant and equipment 2 43,937,583 46,276,123 49,161,657

Investment property 3 4,315,710 5,652,938 6,538,066

Long-term investments

in the subsidiaries 4.A 224,526,224 237,715,141 245,016,537

Financial assets available for sale 4.C 241,655 241,655 241,655

Long-term loans 5 376 404 3,310

Long-term financial lease receivables 6 533,230 590,416 751,266

Long-term deferred tax assets 7 26,890,425 20,704,255 21,048,093

Short-term assets less short-term

deferred and accrued items 55,643,989 72,837,802 85,159,806

Non-current assets held for sale 8 - 4,408,589 4,408,589

Inventories 9 6,937,658 7,832,087 8,544,047

Short-term operating receivables 10.A 20,154,988 19,229,883 20,735,181

Financial assets available for sale 11 26,305,484 37,909,041 50,026,401

Short-term loans 12 1,888,641 3,162,738 1,105,738

Cash and cash equivalents 13 357,218 295,464 339,850

Short-term accruals

and prepaid expenditure 14 33,717 - 49,527

Total short-term assets 55,677,706 72,837,802 85,209,333

TOTAL ASSETS 357,060,924 385,250,515 409,364,981

*The values of certain items presented in these financial statements differ from those reported in the Annual Report 2012. The

adjustments of the historical financial statements are disclosed separately in Section 5.4.5 ADJUSTMENT OF THE HISTORI-

CAL FINANCIAL STATEMENTS.





~ 241 ~

5.3.1 STATEMENT OF FINANCIAL POSITION OF PIVOVARNA LAŠKO AS AT 31 DECEMBER 2013( c o n t i n u a t i o n )



EQUITY 68,078,212 96,364,961 113,243,068

Equity 15 68,078,212 96,364,961 113,243,068

Share capital 36,503,305 36,503,305 36,503,305

Share premium 24,760,570 52,087,131 64,675,034

Profit reserves 3,730,094 3,789,369 3,907,178

Revaluation reserve 3,084,243 3,985,156 4,279,902

Retained earnings - - 3,877,649

LIABILITIES 288,982,712 288,885,554 296,121,913

Provisions and long-term

accrued costs and deferred income 6,636,075 1,349,459 1,421,397

Provisions for retirement

grants and jubilee awards 16.A 1,333,160 1,259,169 1,088,909

Other provisions 16.A 5,253,988 - -

Long-term accrued costs

and deferred revenue 16.B 48,927 90,290 332,488

Long-term liabilities 2,377,590 2,814,670 25,289,353

Long-term financial liabilities 17 2,377,590 2,814,670 25,289,353

Short-term liabilities less

short-term accrued and deferred items 18 279,239,347 279,969,563 263,928,111

Short-term operating liabilities 18.A 24,101,331 20,840,233 21,177,290

Short-term financial liabilities 18.C 255,138,016 259,129,330 242,750,821

Short-term accrued costs

and deferred income 19 729,700 4,751,862 5,483,052

Total short-term liabilities 279,969,047 284,721,425 269,411,163

TOTAL EQUITY AND LIABILITIES 357,060,924 385,250,515 409,364,981








~ 242 ~

5.3.2 INCOME STATEMENT OF PIVOVARNA LAŠKO FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013

(adjusted)*


Net sales revenues 20.A, B. 90,161,103 88,960,946

Change in inventories

of products and work in progress 407,541 (542,453)

Other operating revenue 20.C 825,109 979,573

Costs of goods, materials and services 20.D (63,508,789) (61,972,847)

Employee benefit costs 20.D (10,453,650) (11,015,764)


and depreciation of property,

plant and equipment 20.D (4,760,999) (4,943,657)

Revaluation operating expense 20.D (1,624,784) (666,771)

Provisions 20.D (1,044,184) (262,006)

Other operating expenses 20.F (7,007,901) (1,846,530)

OPERATING PROFIT OR LOSS 2,993,446 8,690,491

Financial income 21 1,083,314 9,535,307

Financial expenses 21 (37,898,288) (34,009,554)

PROFIT OR LOSS BEFORE TAX (33,821,528) (15,783,756)

Tax 5,208,846 1,258,347


FROM CONTINUED OPERATIONS (28,612,682) (14,525,409)

Discontinued operation 699,996 (3,031,980)


FROM DISCONTINUED OPERATIONS 699,996 (3,031,980)

TOTAL PROFIT OR LOSS FOR THE YEAR (27,912,686) (17,557,389)

Net profit /loss per share from continued operations:



Net profit /loss per share from discontinued operations:

Net loss per share 0.0800 (0.3466)

Diluted net loss per share 0.0800 (0.3466)

Net loss per share:

Net loss per share 24 (3.1909) (2.0072)









~ 243 ~

5.3.3 STATEMENT OF OTHER COMPREHENSIVE INCOME OF PIVOVARNA LAŠKO FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013

(adjusted)*


Net profit or loss for the year (27,912,686) (17,557,389)

Other comprehensive income

Financial assets available for sale - (3,345)

Gains/losses from revaluation of property 25 (741,111) 201,543

Deferred tax on account of revaluation 25 71,638 366,796


THAT WILL BE RECLASSIFIED TO PROFIT

AND LOSS AT A FUTURE DATE (669,473) 564,994

Unrealised actuarial gains / losses from

post-employment benefits 25 1,622 -

Deferred tax on unrealised actuarial gains / losses 243 -


THAT WILL NEVER BE RECLASSIFIED

TO PROFIT OR LOSS 1,865 -

OTHER COMPREHENSIVE INCOME (667,608) 564,994

TOTAL COMPREHENSIVE INCOME FOR THE YEAR (28,580,294) (16,992,395)








~ 244 ~

5.3.

4 ST

ATE

ME

NT

OF

CH

AN

GE

S IN

EQ

UIT

Y O

F P

IVO

VAR

NA

LA

ŠKO

FO

R T

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PE

RIO

D F

RO

M 1

JAN

UA

RY T

O 3

1 DEC

EM

BE

R 2

013

O

ther

To

tal

Sh

are

Sh

are

Le

gal

Re

serv

es fo

r re

serv

es

profi

t Re

tain

ed

Net

Re

valu

atio

n

TOTA

L

(in E

UR)

ca

pita

l pr

emiu

m

rese

rves

tr

easu

ry sh

ares

fr

om p

rofit

re

serv

es

earn

ings

pr

ofit o

r los

s su

rplu

s C

API

TAL

OP

ENIN

G B

ALA

NC

E

AT

1 J

anua

ry 2

013

36,5

03,3

05

52,0

87,1

31

3,65

0,33

1

139,

038

-

3,78

9,36

9

- -

3,98

5,15

6

96,3

64,9

61

Tran

sact

ions

with

ow

ners

Oth

er c

hang

es

- -

- -

- -

293,

544

-

- 29

3,54

4

Tota

l tra

nsac

tions

with

ow

ners

-

- -

- -

- 29

3,54

4

- -

293,

544

Cha

nges

in c

ompr

ehen

sive

inco

me

Net

pro

fit o

r lo

ss fo

r th

e ye

ar

- -

- -

- -

- (2

7,91

2,68

5)

- (2

7,91

2,68

5)

Fixe

d as

sets

rev

alua

tion

rese

rve

- -

- -

- -

- -

(741

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41,1

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Tax

on in

divi

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item

s

of c

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me

-

- -

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- 71

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71

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- -

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1,62

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in 2

013

-

- -

- -

- -

(27,

912,

685)

(6

67,6

08)

(28,

580,

293)



~ 245 ~

5.3.

4 ST

ATE

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OF

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36

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tate

men

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houl

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rea

d in

con

junc

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with

them

.



~ 246 ~

5.3.

5 ST

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OF

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profi

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valu

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TOTA

L

(in E

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ca

pita

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rese

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tr

easu

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sh

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fr

om p

rofit

re

serv

es

earn

ings

or

loss

su

rplu

s C

API

TAL

Ope

ning

bal

ance

at 1

Jan

uary

201

2 /

repo

rted

36

,503

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64

,675

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3,

650,

331

26

5,16

6

(8,3

19)

- 3,

907,

178

-

- 4,

279,

902

109

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Ret

rosp

ectiv

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just

men

ts

- -

- -

- -

- 3,

877,

649

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877,

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OP

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G B

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at 1

Jan

uary

201

2 /

adju

sted

* 36

,503

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64

,675

,034

3,

650,

331

26

5,16

6

(8,3

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- 3,

907,

178

3,

877,

649

-

4,27

9,90

2 1

13,2

43,0

68

Tran

sact

ions

with

ow

ners

Rep

urch

ase

of tr

easu

ry s

hare

s (i

nter

ests

) -

- -

- (1

34,1

40)

- (1

34,1

40)

- -

- (1

34,1

40)

Fina

ncia

l ass

ets

avai

labl

e fo

r sa

le

- -

- -

142,

459

-

142,

459

-

- -

142,

459

Tota

l tra

nsac

tions

with

ow

ners

-

- -

- 8,

319

-

8,31

9

- -

- 8,

319

Cha

nges

in c

ompr

ehen

sive

inco

me

Net

pro

fit o

r lo

ss fo

r th

e ye

ar -

adju

sted

* -

- -

- -

- -

- (1

7,55

7,38

9)

- (1

7,55

7,38

9)

Fixe

d as

sess

rev

alua

tion

rese

rve

- -

- -

- -

- -

- 20

1,54

3

201,

543

Inve

stm

ent r

eval

uatio

n re

serv

e -

- -

- -

- -

- -

(3,3

45)

(3,3

45)

Tax

on in

divi

dual

item

s of

com

preh

ensi

ve in

com

e

- -

- -

- -

- -

- 36

6,79

6

366,

796

Tota

l cha

nges

in

com

preh

ensi

ve in

com

e in

201

2

- -

- -

- -

- -

(17,

557,

389)

56

4,99

4 (

16,9

92,3

95)



~ 247 ~

5.3.

5 ST

ATE

ME

NT

OF

CH

AN

GE

S IN

EQ

UIT

Y O

F P

IVO

VAR

NA

LA

ŠKO

(A

DJU

STE

D*)

FO

R T

HE

PE

RIO

D F

RO

M 1

JAN

UA

RY T

O 3

1 DEC

EM

BE

R 2

012

( c o

n t

i n u

a t

i o n

)

Oth

er

Tota

l

Net

Shar

e Sh

are

Le

gal

Rese

rves

for

Trea

sury

re

serv

es

profi

t R

etai

ned

profi

t Re

valu

atio

n

TOTA

L

(in E

UR)

ca

pita

l pr

emiu

m

rese

rves

tr

easu

ry sh

ares

sh

ares

fr

om p

rofit

re

serv

es

earn

ings

or

loss

su

rplu

s C

API

TAL

Cha

nges

in e

quity

Loss

set

tlem

ent

- (1

2,58

7,90

3)

- -

- (2

32,0

97)

(232

,097

) (4

,737

,389

) 17

,557

,389

-

-

Util

isat

ion

of r

eser

ves

for

trea

sury

sha

res

and

inte

rest

s -

- -

(126

,128

) -

232,

097

10

5,96

9

- -

- 10

5,96

9

Oth

er

- -

- -

- -

- 85

9,74

0

- (8

59,7

40)

-

Tota

l mov

emen

ts in

equ

ity

- (1

2,58

7,90

3)

- (1

26,1

28)

- -

(126

,128

) (3

,877

,649

) 17

,557

,389

(8

59,7

40)

105,

969

CLO

SIN

G B

ALA

NC

E

31 D

ecem

ber

2012

-

adju

sted

* 36

,503

,305

52

,087

,131

3,

650,

331

13

9,03

8

- -

3,78

9,36

9

- -

3,98

5,15

6

96,3

64,9

61

* The

val

ues

of c

erta

in it

ems

pres

ente

d in

thes

e fin

anci

al s

tate

men

ts d

iffer

from

thos

e re

port

ed in

the

Ann

ual R

epor

t 20

12. T

he a

djus

tmen

ts o

f the

his

tori

cal fi

nanc

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tate

men

ts a

re d

iscl

osed

sep

arat

ely

in S

ectio

n 5.

4.5

AD

JUST

MEN

T O

F

TH

E H

IST

OR

ICA

L FI

NA

NC

IAL

STA

TEM

ENT

S.

Acc

ount

ing

polic

ies

and

note

s fo

rm a

n in

tegr

al p

art o

f the

se fi

nanc

ial s

tate

men

ts a

nd s

houl

d be

rea

d in

con

junc

tion

with

them

.



~ 248 ~

5.3.6 CASH FLOW STATEMENT OF PIVOVARNA LAŠKO FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013


OPERATING PROFIT 2,993,447 8,690,491

Adjustments for:

Property impairment 20.D 1,161,834 -

Elimination of revaluation operating

expenses from fixed assets 20.D, 20.F 1,490,268 -

Depreciation of PPE and investment property 20.D 4,525,464 4,708,418

Amortisation of intangible assets 20.D 235,535 235,238

Long-term assets written-off - 525,788

Short-term assets written-off 20.D 312,825 420,028

Net movements in provisions 16.A 5,288,239 (71,938)

Total adjustments 13,014,165 5,817,534

MOVEMENTS IN WORKING CAPITAL

Inventories and non-current assets held for sale 8.9 894,429 725,148

Operating and other receivables 6.,10.A (1,214,462) 1,242,726

Operating and other liabilities 18.A,19 3,170,125 (1,068,249)

Total movements in working capital 2,850,092 899,625

NET CASH FLOWS FROM

OPERATING ACTIVITIES 18,857,704 15,407,650

Cash flows from investing activities

Acquisition of property, plant and equipment 2 (3,649,999) (1,225,613)

Gains /losses from disposal of PPE 2 (136,971) -

Acquisition of intangible assets 1 58,231 (71,956)

Acquisition / disposal of financial assets 4.A,11 1,057,890 (3,203,822)

Disposal of non-current assets

and liabilities held for sale 8 315,002 -

Interest income 21 225,823 157,354

Dividends and capital profits received 21 857,491 9,377,953

NET CASH FLOWS FROM INVESTING (1,272,533) 5,033,916

Cash flows from financing activity

Interest paid 21 (13,095,024) (14,536,832)

Purchase of treasury shares - 114,292

Increase / decrease in financial debt 17,18.C (4,428,393) (6,063,411)

NET CASH FLOWS FROM FINANCING (17,523,417) (20,485,951)





~ 249 ~

5.3.6 CASH FLOW STATEMENT OF PIVOVARNA LAŠKOFOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013( c o n t i n u a t i o n )

NET INCREASE / DECREASE IN

CASH AND CASH EQUIVALENTS 61,754 (44,385)

Cash and cash equivalents at the beginning of year 13 295,464 339,850

Cash and cash equivalents at the end of year 13 357,218 295,464



5.3.7 LOSS SETTLEMENT OF THE FINANCIAL YEAR

(in EUR) 2013

Net loss for the year (27,912,685)

Loss settlement:

Other profit reserves used to cover net loss 59,275

Loss settlement from retained earnings 526,849

Share premium used to cover net loss 27,326,561

ACCUMULATED LOSS AT 31 DECEMBER -

The net loss of 2013 in the amount of EUR 27,912,685 was covered by retained earnings amount-

ing to EUR 526,849, other profit reserves in the amount of EUR 59,275, and share premium in the

amount of EUR 27,326,561.



~ 250 ~

5.4

notes to separate financial statements

5.4.1 GENERAL DATA

Pivovarna Laško is a public limited company, registered with the District Court in Celje under the

decision No Srg 95/00673 and under the application No 1/00171/00. It is classified as a large company

and as such is subject to regular annual audit of its financial statements. The principal activity of the

Company is the production and sale of beer, malt and waters. The Company is also engaged in whole-

sale and retail trade.

Pivovarna Laško (hereinafter referred to as: the Company) is the parent company of the Laško Group

with its headquarters in Slovenia: Trubarjeva ulica 28, 3270 Laško, Slovenia.

The Company’s ordinary shares are quoted on the Ljubljana Stock Exchange under the “PILR” des-

ignation. The Company’s share capital totals EUR 36,503,304.96 and is represented with 8,747,652

ordinary freely negotiable registered no-par-value shares. There are no limitations on the payment of

dividends or other distributions of equity.

5.4.2 STATEMENT OF COMPLIANCE WITH IFRS

The separate financial statements have been drawn up in accordance with the International Finan-

cial Reporting Standards (IFRS) as adopted by the European Union and provisions of the Companies

Act.

5.4.3 USE OF NEW AND AMENDED IFRS AND IFRIC INTERPRETATIONS

A) STANDARDS AND INTERPRETATIONS THAT ENTERED INTO FORCE DURING THE REPORTING PERIOD

In the period under review, the following amendments to the existing standards issued by the Inter-

national Accounting Standards Board (IASB) were applicable as adopted by the EU:

• Amendments to IFRS 1 “First-time adoption of IFRS” – Severe hyperinflation and removal of fixed

dates for first-time adopters: the amended standard was adopted by the EU on 11 December 2012

(effective for annual periods beginning on or after 1 January 2013),



~ 251 ~

• Amendments to IFRS 1 “First-time adoption” – Government Grants; the amended standard was

adopted by the EU on 4 March 2013 and is effective for annual periods beginning on or after 1

January 2013,

• Amendments to IFRS 7 “Financial instruments: Disclosures” – Offsetting Financial Assets and



• Amendments to IAS 1 »Presentations of financial statements« – Presentation of items of other

comprehensive income; the amendment was adopted by the EU on 5 June 2012 and is effective for


• Amendments to IAS 12 “Income Taxes” – Deferred Tax: Recovery of Underlying Assets; the stand-

ard was adopted by the EU on 11 December 2012 and is effective for annual periods beginning on


• Amendments to IAS 19 »Employee benefits« – Post-employment Benefits were adopted by the EU

on 5 June 2012 and are effective for annual periods beginning on or after 1 January 2013,

• Amendments to a number of standards “IFRS Improvements over the period 2009 to 2011” , ac-

cording to the annual IFRS improvement project encompassing IFRS 1, IAS 1, IAS 16, IAS 32 and

IAS 34, which is aimed primarily at elimination of discrepancies and clarification of wording. The

amended standards were adopted by the EU on 27 March 2013 and are effective for periods begin-

ning on or after 1 January 2013,

• IFRIC 20 “Stripping Costs in Production Phase of a Surface Mine”. The standard was adopted by

the EU on 11 December 2012 and is effective for annual periods beginning on or after 1 January 2013.

The adoption of these amendments to the existing standards led to no changes in the accounting

policies of the Group.

B) STANDARDS AND REPRESENTATIONS ISSUED BY THE IASB AND ADOPTED BY THE EU THAT HAVE NOT EN-

TERED INTO FORCE YET

On the date of the approval of these financial statements, the following standards, amendments and

interpretations were issued and adopted by the EU, but which are not yet effective:

• IFRS 10 “Consolidated financial statements”, adopted by the EU on 11 December 2012 and effective

for annual periods beginning on or after 1 January 2014,

• IFRS 11 “Joint arrangements”, adopted by the EU on 11 December 2012 and effective for annual

periods beginning on or after 1 January 2014,

• IFRS 12 “Disclosure of interests in other entities”, adopted by the EU on 11 December 2012 and ef-

fective for annual periods beginning on or after 1 January 2014,

• IAS 27 (amended in 2011) “Separate financial statements” was adopted by the EU on 11 December

2012 and is effective for annual periods beginning on or after 1 January 2014,



~ 252 ~

• IAS 28 (amended in 2011) “Investments in associates and joint ventures” was adopted by the EU on

11 December 2012 and is effective for annual periods beginning on or after 1 January 2014,

• Amendments to IFRS 10 “Consolidated financial statements”, IFRS 11 “Joint Arrangements” and

“IFRS 12 “Disclosure of Interests in Other Entities” – Transition Guidance, were adopted by the EU

on 4 April 2013 and are effective for annual periods beginning on or after 1 January 2014,

• Amendments to IFRS 10 “Consolidated financial statements”, IFRS 12 “Disclosure of Interests in

Other Entities” and IAS 27 (amended in 2011) “Separate Financial Statements” – Investment Enti-

ties, were adopted by the EU on 20 November 2013 and are effective for annual periods beginning

on or after 1 January 2014),

• Amendments to IAS 32 “Financial instruments: Presentation” – Offsetting Financial Assets and



• Amendments to IAS 36 “Impairment of Assets”- Recoverable Amount Disclosure for Non-Finan-

cial Assets, were adopted by the EU on 19 December 2013 and are effective for periods beginning

on or after 1 January 2014,

• Amendments to IAS 39 “Financial Instruments: Recognition and Measurement- Novation of De-

rivatives and Continuation of Hedge Accounting, were adopted by the EU on 19 December 2013

and are effective for periods beginning on or after 1 January 2014.

C) STANDARDS AND INTERPRETATIONS ISSUED BY IASB BUT WHICH HAVE NOT YET BEEN ADOPTED BY THE EU

Currently, the IFRS as adopted by the European Union do not considerably differ from those adopt-

ed by the International Accounting Standards Board (IASB) with the exception of the following stand-

ards, amendments to the existing standards and interpretations which were not confirmed for use on

30 April 2014.

• IFRS 9 “Financial Instruments” and subsequent amendments The effective date has so far not

been determined,

• Amendments to IAS 19 “Employee Benefits”- Defined Benefit Plans: Employee Contributions are

effective for annual periods beginning on or after 1 July 2014,


stemming from the annual IFRS improvements projects that encompass IFRS 2, IFRS 3, IFRS 8,

IFRS 13, IAS 16, IAS 24 and IAS 38, mainly in order to eliminate discrepancies and misinterpreta-

tions, are effective for annual periods beginning on or after 1 July 2014,


stemming from the annual IFRS improvements projects that encompass IFRS 1, IFRS 3, IFRS 13

and IAS 40, mainly in order to eliminate discrepancies and misinterpretations, are effective for


• IFRIC 21 “Levies” The interpretation sis effective for annual periods beginning on or after 1 Janu-

ary 2014.



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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 ap-

plication.

At the same time, the accounting for the hedging of risks associated with the portfolio of financial

assets and liabilities, the principles of which the EU has not yet adopted, still remains unregulated.

The Company has assessed that the accounting of risk hedging in connection with the portfolio of

financial assets and liabilities in accordance with the requirements of IAS 39: “Financial Instruments:

Recognition and Measurement” would not have a significant impact on the consolidated financial

statements of the Group, if applied as at the reporting date.

5.4.4 SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PREPARATIONS

The financial statements have been compiled under IFRS, the Companies Act, other acts and the

Accounting Manual of Pivovarna Laško, and are expressed in euro. When disclosing and measuring

the items, the provisions of the standards were directly applied, with the exception of the items where

standards provide a choice between several valuation methods.

The financial statements have been prepared taking into account historical costs except for the fi-

nancial assets, non-current assets held for sale (or assets and related liabilities of the disposal group),

property and investment property carried at revalued amount or fair value. The valuation of assets and

liabilities is presented in detail in individual sections below.

When selecting the accounting policies and when deciding on their use and in the compilation of

these financial statements, the Pivovarna Laško Management Board took into consideration the follow-

ing three requirements:

• Financial statements are understandable when they are easily understood by users,

• Information is relevant if it assists the user in making economic decisions,

• Information is essential if its omission or untrue statement could have an impact on economic

decisions of the users.

The accounting policies presented below were consistently applied in all of the periods presented.

GOING CONCERN ASSUMPTION

As at 31 December 2013, the Company’s short-term liabilities exceed the amount of its short-term

assets by EUR 224,291,341.







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deleveraging of the Group to the sustainable level of indebtedness; and on the other hand, to ensure

fulfilment of creditors’ expectations for rapid deleveraging and simultaneous maximising of the value




analysis from the financial, fiscal and legal points of view, the concept that provided the basis for the

signed Agreement, was dully selected.
















deleveraging milestones, will terminate the agreement only, if so decided by the majority of creditors.

The Management of the controlling company have assessed that the use of the going concern as-

sumption in the preparation of the financial statements for the period ended 31 December 2013 is

appropriate.

FOREIGN CURRENCIES

All the items presented in the financial statements of the Company are denoted in the currency of

the primary environment – the country where the Company operates (this currency is the so-called

“functional currency”). The financial statements are presented in euro, which is also the functional

and reporting currency of the Company.

Foreign currency transactions are converted into the reporting currency using the exchange rate

valid on the day of the transaction. Gains and losses arising from these transactions and from the con-

version of cash and liabilities, denominated in a foreign currency, are recognised in the profit or loss.

Exchange rate differences arising from debt securities and other monetary financial instruments are

recognised at fair value and are included in the profit or loss of transactions with foreign currencies.



~ 255 ~

Exchange rate differences from non-monetary items such as securities held for trading are reported

as an increase or decrease in fair value. Exchange rate differences from securities available-for-sale are

included in the revaluation surplus.

THE USE OF ESTIMATES AND JUDGEMENTS

The preparation of financial statements requires management to make judgements, estimates and

assumptions that affect the carrying amounts of assets and liabilities of the Company as well as the

reported income and expenses for the period.

Management estimates include among others: determination of the useful life and residual value

of property, plant and equipment, as well as intangible assets; allowances made for inventories and

receivables; assumptions material to the actuarial calculation of defined employee benefits; assump-

tions used in the calculation of potential provisions for lawsuits, as well as assumptions and estimates

relating to impairment of goodwill. Regardless of the fact that management duly considers all factors

that may impact the preparation of these assumptions, the actual consequences of business events

may differ from those estimates. In the process of making accounting estimates, management makes

judgements while considering potential changes in the business environment, new business events,

new and additional information that may be available, as well as experience.

Key estimates and assumptions as at the day of the statement of financial position that are associated

with future operations and which could result in significant adjustment of the book values of assets

and liabilities are presented below.

Information on significant estimates about uncertainty and critical judgements in applying account-

ing policies that have the most significant impact on the amounts recognised in the financial state-

ments is presented in the following notes:

• The Company assesses on an annual basis whether there are any indications of impairment of

an individual cash-generating unit. If any such indications exist, the recoverable amount of non-

financial assets is determined as the present value of future cash flows, based on the estimate

of expected future cash flows from the cash-generating unit and determination of the relevant

discount rate.

• Defined benefit obligations include the present value of termination benefits on retirement and ju-

bilee awards. They are recognised on the basis of the actuarial calculation approved by the manage-

ment. The actuarial calculation is made by using assumptions and estimates effective at the time

of the calculation, and may, as a result of future changes, differ from actual assumptions applicable

at that future time. This applies primarily to determination of the discount rate, assessment of

employee turnover, mortality assessment, as well as assessment of the increase in salaries. Due

to the complexity of the actuarial calculation and the long-term nature of the item, defined benefit

obligations are sensitive to changes in the above estimates and assessments.

• A provision is recognised when the Company has present obligations (legal or constructive) as a

result of past events, a reliable estimate can be made of the amount of obligation, and it is probable

that an outflow of resources embodying economic benefits will be required to settle the obligation.

Contingent liabilities are not recognised in the financial statements as their actual existence will be

confirmed only upon the occurrence or non-occurrence of one or more uncertain future events not

entirely within the control of the Group. The management of the Company continually assess con-

tingent liabilities to determine whether an outflow of resources embodying economic benefits has



~ 256 ~

become probable. In this case, a provision is recognised in the financial statements of the period in

which the change in probability occurs.

RECOGNITION OF REVENUE

Revenue is measured at the fair value of the consideration received or receivables for the sale of prod-

ucts, goods, or services rendered during the ordinary operations of the Company. Revenue is presented

exclusive of value added tax and excise duties, rebates and reimbursements.

Revenue from the sale of products, merchandise and materials is recognised if all of the following

conditions are fulfilled:

• All the significant risks and rewards of ownership of the object of sale are transferred to the buyer;

• The seller loses the management and control over what is covered by the sale;

• Amount of revenue can be reliably measured;

• A high degree of certainty is attached to the flow of economic benefits related to the transaction;

• The expenses incurred with respect to transaction can be reliably measured.

Other categories of revenue are recognised based on the following basis:

• Interest income is recognised as the income of the period to which they pertain, in accordance

with the applicable interest rate and when the degree of certainty attached to the flow of economic

benefits is high;

• Dividend income is recognised when the right to receive payment is established;

• Revenue from royalties is recognised on the basis of the provisions of the licence agreements.

INVESTMENTS INTO THE SUBSIDIARIES

A subsidiary company is a company where Pivovarna Laško, the controlling company, has the power

to govern the subsidiary’s financial and operating policies.

In separate financial statements of Pivovarna Laško, the investments into subsidiaries are measured

at their cost in compliance with IAS 27 (except when classified as non-current assets and related li-

abilities) held for sale in compliance with IFRS 5).

When establishing whether in the financial statements of Pivovarna Laško any loss due to impair-

ment of the investment into the subsidiary should be recognised, the provisions of IAS 27 are consid-

ered. Furthermore, the entire carrying amount of the investment is tested as an asset in accordance

with IAS 36; its carrying amount is compared to the recoverable amount (the higher of its fair value

less costs to sell or value in use).



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INVESTMENTS INTO THE ASSOCIATED COMPANIES

An associate is an entity in which the Company has a significant influence and which is neither a

subsidiary nor a jointly controlled entity. Significant influence is the power to participate in the finan-

cial and operating policy decisions of the investee but is not control or joint control over those policies.

In separate financial statements of Pivovarna Laško, the investments into the associated companies

are measured at cost in accordance with IAS 28.

INTANGIBLE ASSETS

Intangible assets with a finite useful life acquired individually (not within a business combination)

and not generated within the Company are measured after recognition using the cost model or are

disclosed at cost less any accumulated depreciation and any accumulated impairment. They are de-

preciated according to the straight-line method in the period of their estimated expected functional

life periods of individual items of intangible assets or their components. Amortisation of an item of

intangible assets begins when the asset is made available for its use (patents, brands, licences 5 years;

software application 3 years). Estimates of expected functional life periods and the amortisation meth-

od are checked on the preparation of financial statements; any changes of estimates of the categories

mentioned are considered in the future periods rather than retrospectively.

Intangible assets with indefinite useful life are not amortised; instead, their recoverable amount is

tested regularly by the Company. When the asset’s assessed recoverable amount is lower than its car-

rying amount, the asset is impaired in accordance with provisions of IAS 36, and the resulting impair-

ment loss is recognised in the profit or loss.

Intangible assets are derecognised upon their disposal or when no future economic benefits are

expected from their further use. Gains or losses arising from derecognition of an item of intangible

assets are recognised in the profit or loss of the period of derecognition.

Amortisation rates are as follows:

Investment into leasehold assets 10 – 33.3 %

Other intangible assets 33.3 %

Application software 10 %

Concession 33.3 %

Licences, patents 10 %

PROPERTY, PLANT AND EQUIPMENT

Land and buildings in use are accounted for using the revaluation models and are disclosed at reval-

ued amount at the date of the revaluation, less any subsequent accumulated depreciation or impair-

ment losses. The revaluation is made with sufficient regularity to ensure that the carrying amount of

the assets does not differ materially from their fair value at the reporting date.

The revaluation of land and buildings is recognised or accumulated as the revaluation surplus in

other comprehensive income except when the previous impairment of the same land and buildings is

reversed and recognised in profit or loss; in this case the revaluation to the value of the prior impair-

ment is recognised in profit or loss. The revaluation of land and buildings in excess of the previously

appreciated amount recognised in the revaluation surplus of the same land and buildings is recog-

nised in profit or loss.



~ 258 ~

Production facilities, machinery, all types of equipment, reusable packaging and small tools are

recognised under the cost model and are disclosed at their cost less accumulated depreciation and ac-

cumulated impairment losses.

The items of property, plant and equipment being acquired are measured at cost less any impair-

ment loss. The cost of an item of property, plant and equipment includes the relevant borrowing costs

in accordance with the adopted accounting policy. They are classified under the relevant categories of

property, plant and equipment, to which they will belong when completed and made available for use.

Depreciation of the items of property, plant and equipment begins in the month following the month

when the assets are made available for their use.

Land is not depreciated.

The depreciation of buildings is recognised in profit or loss, while the reversal of the relevant revalu-

ation surplus is simultaneously recognised in retained earnings. On derecognition of buildings, the

attributable amount of revaluation surplus is reclassified directly to retained earnings.

Depreciation is calculated using the straight-line method (except for land and property, plant and

equipment being acquired, which are not depreciated) and is recognised so that the cost or the reval-

ued amount of the property, plant and equipment less any residual value is written-off in the period of

its estimated functional life period. The estimates of expected functional life period, their residual val-

ues and the depreciation method are checked on the preparation of financial statements; any changes

in estimates of those categories are accounted for in future periods rather than retrospectively. The

expected functional life periods of individual groups of assets are as follows:

Buildings 10 – 66 years

Plant and machinery 5 – 14 years

Hardware and software 3 years

Motor vehicles 3 – 9 years

Other equipment 3 – 20 years

Reusable packaging (barrels, bottles, crates) 4 – 5 years

Borrowing costs related to financing the purchase of land, the construction of buildings and the

purchase of equipment are attributed to the value of the fixed asset from the day of bringing the asset

to its working condition. Costs incurred in relation to property, plant and equipment increase their

cost providing they increase future benefits arising from the assets in excess of the originally assessed

benefits; however costs that allow the extension of the useful life of the assets initially decrease their

accumulated depreciation. The extension of the useful life of an asset of property, plant and equipment

relates to the extension of its originally determined useful life during which the asset is depreciated.

All other repair and maintenance costs are included in profit or loss of the financial year when they

are incurred.

The items of property, plant and equipment are derecognised upon their disposal or when no future

economic benefits are expected from their further use. Gains or losses arising from derecognition of an

item of property, plant and equipment are recognised in the profit or loss of the period of derecognition.

INVESTMENT PROPERTY

Investment property is property owned by the Company for the purpose of earning rent or increas-

ing the value of the property in the long-term. On recognition, they are measured at cost whereas



~ 259 ~

subsequently they are measured using the so-called fair value model (depreciation is not calculated),

which means that the increase or decrease in their fair value affects profit or loss of the period in which

it is effected.

An investment property is derecognised on its disposal or final termination of its use, when no fu-

ture economic benefits are expected from the asset on its disposal. Gains and losses on disposal of in-

vestment property are recognised in the profit or loss of the period in which the asset is derecognised.

IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT, AND INTANGIBLE ASSETS

On preparation of the financial statements, all items of property, plant and equipment, and intan-

gible assets are checked for any signs of impairment. If there are indications of impairment, the as-

set’s recoverable amount is assessed. When the recoverable amount of an individual asset cannot be

established, the recoverable amount of a cash-generating unit to which the asset belongs is assessed.

The recoverable amount of the asset is the higher of its fair value decreased by the costs to sell or its

value in use. The latter is assessed as the present value of discounted future cash flows associated with

the asset taking into account the pre-tax discount rate that reflects the current market estimate of the

time value of money and specific risks related to the assets that were not considered in the assessment

of future cash flows.

The asset (or a cash-generating unit) is impaired to its recoverable amount if its value in use is lower

than its carrying amount. Impairment is immediately recognised in profit or loss except when the as-

set is carried under the revaluation model; in this case the impairment is disclosed as a decrease in the

revaluation surplus.

LOANS AND DEPOSITS ISSUED, MONETARY ITEMS

Financial assets such as loans and deposits issued and monetary items are initially measured at fair

value on the date of their issue or placement.

After initial measurement they are disclosed at amortised cost using the effective interest method

less any impairment losses.

FINANCIAL ASSETS AVAILABLE FOR SALE

Available-for-sale financial assets are initially measured at their fair value on the date of acquisition.

This fair value is usually equal to the asset’s cost; however, sometimes adjustments are needed.

After the initial recognition, the financial assets available for sale are measured at fair value in the

statement of financial position, whereas changes in fair value are recognised under other comprehen-

sive income excluding the assets’ impairments and interest that are recognised by using the effective

interest rate and exchange rate differences.

The best evidence of an asset’s fair value is normally its quoted prices on an active market. If these

are not available, valuation techniques are applied that as far as possible take account of market inputs

including the most recent arm’s length market transactions, reference to the current fair value of

another instrument that has substantially similar characteristics, and discounted cash flow analysis.



~ 260 ~

If the fair value of a financial asset available for sale cannot be reliably measured, the asset is carried

at its cost taking into consideration any impairment losses.

On derecognition of an available-for-sale financial asset or its permanent impairment, the cumula-

tive other comprehensive income is reclassified to the profit or loss of the period in which the asset is

derecognised or permanently impaired.

DERIVATIVES

Derivative financial instruments are applied in interest rate hedging. They comprise interest options

and interest swaps.

Derivative financial instruments are initially recognised at cost on the day of the contract; subse-

quently, they are measured at fair value on the reporting date. Gains and losses arising from changes in

fair value are immediately recognised in profit and loss unless they are applied in the hedging of risks.

NON-CURRENT ASSETS HELD FOR SALE OR ASSETS OF DISPOSAL GROUPS (AND RELATED LIABILITIES)

Non-current assets held for sale or assets of disposal groups (and liabilities associated with the non-

current assets) are those non-current assets or liabilities for which it is reasonably assumed that their

carrying amount will be settled predominantly through their sale rather than their further use. This

condition is deemed to have been complied with only if the sale is highly probable and if the assets

or group of assets (and liabilities associated with them) are in the condition that makes the sale pos-

sible. The management needs to be committed to the closing of the sale process within a year from

the asset’s reclassification to non-current assets held for sale or to the assets of disposal group (and the

associated liabilities).

The assets (and associated liabilities) related to the subsidiary for which it is planned that the control-

ling influence will be lost, are reclassified to the disposal group of assets (and associated liabilities) irre-

spective of whether the controlling company is planning to keep the minority stake after the sale or not.

Non-current assets held for sale and assets of disposal groups are measured at the lower of carrying

amount or fair value less costs to sell.

INVENTORIES

Inventories of raw materials and consumables are disclosed at the lower of cost and net realisable

value; declining values of inventories are accounted for using the weighted average cost method. Net

realisable value is the estimated selling price less the estimated costs of completion and the estimated

costs necessary to make the sale.

Inventories of finished products, semi-finished products and work in progress are valued at their

production costs. Production costs are direct costs of materials and raw materials, labour, production

services, depreciation, and indirect costs of production (costs of materials and raw materials, labour,

services and depreciation that are accounted for in the production process but cannot be directly linked

to emerging production effects).



~ 261 ~

Inventories of raw materials, materials, spare parts, products and merchandise are written-off on the

basis of inventory records, customer complaints and returns and other records or upon a proposal of

a responsible person (also damaged products, ullage and breakages) that requires the decision of the

Management Board of the company. The inventories are written-off in full if the sale is permanently

discontinued or their use is forbidden. The Group examines the usefulness of the stocks of materials

and spare parts with less than 5 years of movement and if necessary, their value is 100% impaired.

OPERATING RECEIVABLES

On initial recognition, operating receivables are recognised at fair value; subsequently they are

measured at amortised cost using the effective interest rate method less any impairment loss.

Impairments of individual operating receivables are made when there is objective evidence that the

recovery of the full amount due is impossible. The impairment loss is the difference between the car-

rying amount and the present value of estimated future cash flows discounted at the effective interest

rate. The impairment loss is recognised in profit or loss.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents reported in the cash flow statement comprise cash on hand, sight de-

posits at banks and investments into the money market instruments without bank overdrafts. Bank

overdrafts are included under short-term financial liabilities in the statement of financial position.

SHARE CAPITAL

Ordinary shares are classified as capital. Transaction costs directly associated with the issue of new

shares which are not associated to the acquisition of a company are reported as a decrease in capital.

Any surpluses over the fair value of received paid-in amounts in excess of the book value of newly is-

sued shares are recognised as a paid-in capital surplus.

TREASURY SHARES

If the company repurchases treasury shares in the financial year, the paid amount inclusive of trans-

action costs and exclusive of tax is deducted from total capital as treasury shares until these shares are

removed, reissued or sold. The Company must create reserves for own shares in the identical amount

for that financial year. At the same time, it must also form provisions for PILR shares owned by the

subsidiaries. Reserves for treasury shares are released when the Company disposes of or removes its

treasury shares, crediting the source from which they were created. Upon the sale of treasury shares,

the difference between their selling price and carrying amount is accounted for in equity with no

impact on the profit or loss. Treasury shares are used for the purposes defined in Article 247 of the

Companies Act.

DIVIDENDS

Until approved by the General Meeting of shareholders, proposed dividends are accounted for as

retained earnings.



~ 262 ~

PROVISIONS

Provisions are recognised when the Company has a present legal or constructive obligation as a

result of a past event and it is probable that an outflow of resources will be required in the future to

settle the liability and when a reliable estimate of the obligation can be made. Provisions may not be

set aside to cover future losses from operations.

The amount of provisions is the best estimate of the outflows expected to be required to settle the

present obligation at the reporting date taking into account the related risks and uncertainties. If the

provisions are measured at the amounts of future cash flows required for the settlement of present

obligations, and the time value of money is important, provisions are discounted to their present value.

The net liabilities of the Company associated with long-term employee benefits for years of service,

except for pension schemes, are equal to the earnings which employees have obtained in exchange for

their service during current and previous periods. Such liabilities are calculated using the projected

unit method and are discounted to their present values.

OPERATING LIABILITIES

Operating liabilities comprise suppliers credits for purchased merchandise or services and liabilities

to employees, the state, owners or others. Liabilities are recognised in books of account if it is likely

that economic benefits will decrease due to their settlement and the amount required for their set-

tlement can reliably be measured. They are initially recognised at fair value; subsequently they are

measured at amortised cost using the effective interest rate method.

FINANCIAL LIABILITIES

Initially, financial liabilities are recognised at fair value exclusive of any attributed transaction costs.

Financial liabilities are reduced by debt restructuring costs. In subsequent periods, financial liabilities

are measured at amortised cost using the effective interest rate method. Any differences between

receipts (exclusive of transaction costs) and liabilities are recognised in profit or loss over the entire

period of the financial liability.

DISCONTINUED OPERATION

A discontinued operation is a component of an entity that either has been disposed of, or is classified

as held for sale (disposal group) and:

• represents a separate major line of business or geographical area of operation;

• is part of a single coordinated plan to dispose of a separate major lines of business or geographical

areas of operations or

• is a subsidiary acquired exclusively with a view to resale.



~ 263 ~

CORPORATE INCOME TAX

The amount of corporate income tax reported in the statement of comprehensive income is the sum

total of current and deferred tax.

Current tax is accounted for on the basis of taxable profit of the current year. In the statement of

comprehensive income, the amount of taxable profit can differ from pre-tax profit on account of in-

come and expenses taxed or fiscally recognised in other taxable periods or on account of income and

expenses that will never be taxed or fiscally recognised. Current amounts of corporate income tax is

accounted for at the tax rate of 17% applicable to all commercial companies registered in Slovenia. In

Croatia, the registered seat of Laško Grupa, d.o.o. Zagreb, the applicable corporate income tax rate is

20%. In Kosovo, the registered seat of Birra Peja, the applicable corporate income tax rate is 10%.

DEFERRED TAX RECEIVABLES AND DEFERRED TAX LIABILITIES

Deferred taxes are shown in their entirety while observing the liability method based on tempo-

rary differences between carrying amounts of assets and liabilities and disclosed tax amounts in the

financial statements. In principle, deferred tax liabilities are recognised on the basis of all temporary

differences whereas deferred tax assets are only recognised to the amount of temporary differences for

which taxable profits will be available in the future against which these temporary differences can be

utilised. Deferred tax assets and liabilities are calculated using the tax rate (and legislation) applicable

on the reporting date which is expected to be effective at the time the deferred tax is realised or liability

for deferred tax settled.

Deferred tax assets are verified when annual accounts are drawn up and are recognised to the extent

that it is probable that taxable profits will be available against which the deductible temporary differ-

ence can be utilised.

Current and deferred taxes are recognised in profit or loss except when they refer to the items

recognised in other comprehensive income or equity; in such cases the current and deferred tax are

recognised in other comprehensive income or directly in equity.

5.4.5 ADJUSTMENT OF THE HISTORICAL FINANCIAL STATEMENTS

A) ADJUSTMENTS TO THE STATEMENT OF FINANCIAL POSITION OF PIVOVARNA LAŠKO AT 1 JANUARY 2012


(in EUR) 1 January 2012 Impairment 1 January 2012

Assets

Deferred tax assets 17,170,444 3,877,649 21,048,093

Equity

Retained earnings - 3,877,649 3,877,649



~ 264 ~

B) ADJUSTMENTS TO THE STATEMENT OF FINANCIAL POSITION OF PIVOVARNA LAŠKO AT 1 JANUARY 2012



Assets

Deferred tax assets 15,873,730 4,830,525 20,704,255

Equity

Share premium 47,256,606 4,830,525 52,087,131

ADJUSTMENTS TO THE INCOME STATEMENT OF PIVOVARNA LAŠKO FOR THE PERIOD FROM 1 JANUARY TO 31

DECEMBER 2013



Deferred tax (1,663,509) 952,876 (710,633)

Net profit or loss for the year (18,510,265) 952,876 (17,557,389)

Total comprehensive income for the year (17,945,271) 952,876 (16,992,395)

Pivovarna Laško adjusted its historical financial statements on account of the following:

• deferred tax assets were decreased on account of impairment of loans issued to Center naložbe and

Infond Holding in total EUR 1,539,255 as at 1 January 2012

• pursuant to the opinion of the Tax Authorities, deferred tax assets were increased by EUR 5,416,904

on account of impairment of investments in companies in which the controlling company holds

more than 8% interest as at 1 January 2012.

The effect of aforementioned retrospective adjustments is reported in table format in relation to the

statements of financial position as at 1 January 2012 and 31 December 2012, and as at 31 December 2012

in relation to the income statement and statement of other comprehensive income.

Deferred tax assets on account of impairment of loans issued to Center naložbe and Infond Holding

were reduced under the principle of due diligence, prudence and conservative approach to disclosure

of deferred tax assets and final tax recognition by the tax authorities of expenditure resulting from

impairment losses. In any case, the Company management will use all legally available means to dem-

onstrate that expenditure on account of impairment losses should be recognised for tax purposes as it

is assessed that justifiable reasons exist for such treatment.



~ 265 ~

5.4.6 NOTES TO INDIVIDUAL ITEMS IN THE FINANCIAL STATEMENTS

1 INTANGIBLE ASSETS

2013 Licences

(in EUR) other intangible assets Total

COST

1 January 2013 3,424,590 3,424,590

Direct acquisitions 13,725 13,725

Disposals, reductions (71,956) (71,956)

31 December 2013 3,366,359 3,366,359

ACCUMULATED AMORTISATION

1 January 2013 2,192,809 2,192,809

Amortisation 235,535 235,535

31 December 2013 2,428,344 2,428,344

CARRYING AMOUNT

31 December 2013 938,015 938,015

1 January 2013 1,231,781 1,231,781

2012 Licences

(in EUR) other intangible assets Total

COST

1 January 2012 3,354,786 3,354,786

Direct acquisitions 71,956 71,956

Disposals (2,152) (2,152)

31 December 2012 3,424,590 3,424,590

ACCUMULATED AMORTISATION

1 January 2012 1,959,722 1,959,722

Amortisation 235,239 235,239

Disposals (2,152) (2,152)

31 December 2012 2,192,809 2,192,809

CARRYING AMOUNT

31 December 2012 1,231,781 1,231,781

1 January 2012 1,395,064 1,395,064

As at 31 December 2013, the items of intangible assets mostly comprise software licences and costs of

investments in leasehold assets. There were no intangible assets pledged as of 31 December 2013. The

Company pledged a part of the brand names in the amount of EUR 50 million as security for short-

term borrowings from banks which are a constituent part of the Company’s assets. In accordance

with the accounting standards, the Company’s own brand names are not disclosed in the financial

statements.



~ 266 ~

2. P

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~ 268 ~

As at 31 December 2013, the value of property was assessed by the certified property appraiser. Im-

pairment loss amounting to EUR 823,509 is recognised in other revaluation operating expenses; the

impairment loss decreases the amount of equity (revaluation surplus) by EUR 741,111. The carrying

amount of intangible fixed assets reflects their fair value.

The disposal of property, plant and equipment relates to the sale and write-off of such assets. Prop-

erty, plant and equipment amounting to EUR 38,239 have been acquired under finance lease.

Gains in the amount of EUR 13.154, which the Company realised on disposal of property, plant and

equipment is reported as an item of revaluation operating expenses, whereas EUR 150,125 of losses

realised on disposal of those assets is reported as the revaluation operating expense.

The Company pledged property, plant and equipment whose carrying amount as at 31 December

2013 amounted to EUR 28,125,124, as collateral for short-term and long-term borrowings. The carrying

amount of pledged property totals EUR 24,422,487 and the carrying amount of pledged equipment

equals EUR 3,702,637. As at 31 December 2013 the Company reports commitments for the acquisition

of property, plant and equipment in the amount of EUR 230,415.

3. INVESTMENT PROPERTY

2013


COST

1 January 2013 (56,074) 5,709,012 5,652,938

Revaluation - appreciation / impairment (697,246) (639,982) (1,337,228)

Reclassifications 1,221,666 (1,221,666) -

31 December 2013 468,346 3,847,364 4,315,710

CARRYING AMOUNT

31 December 2013 468,346 3,847,364 4,315,710

1 January 2013 (56,074) 5,709,012 5,652,938

2012


COST

1 January 2012 134,905 6,403,161 6,538,066

Revaluation - appreciation / impairment (2,414) (115,060) (117,474)

Disposals (188,565) (579,089) (767,654)

31 December 2012 (56,074) 5,709,012 5,652,938

CARRYING AMOUNT

31 December 2012 (56,074) 5,709,012 5,652,938

1 January 2012 134,905 6,403,161 6,538,066



~ 269 ~

Investment property also includes property which is not used for carrying out the basic activity but

is leased out by the Company. As at the last day of 2013, the “Tri lilije” sports arena, catering facility

Hotel Hum and holiday facilities are also included in the Company’s investment property. During the

process of ownership transformation into the property of Pivovarna Laško, holiday facilities in Croa-

tia which include holiday home at “Ičići” and holiday facilities in Barbariga, were recognised at the

amount of EUR 0 i.e. the ownership transformation was not successful. Accordingly, in 2013 Pivovarna

Laško and DSU signed an Agreement on regulation of mutual relationships, that specifies ownership

share in the aforementioned investment property. The certified appraiser of property on 1 May 2013 as-

sessed the market value of full ownership rights to the above property. Pivovarna Laško’s investments

in the renovation of the above property were assessed at EUR 530,100. The property held in Croatia is

in the process of disposal.

Pursuant to the valuation report prepared by a certified appraiser of property, in 2013 the Company

recognised revaluation operating expenses in the amount of EUR 1,340,143 and revaluation operating

revenue amounting to EUR 4,183, as the difference between the assessed value of investment property

and their carrying amount.

The Company incurred EUR 333,718 of expenses from investment property primarily relating to

maintenance and facility management, and EUR 88,657 of rental income and payments received for

the use of holiday facilities.

In 2013 procedures aimed at the sale of Hotel Hum catering facility and the “Tri lilije” sports arena

continued.

Investment property in the amount of EUR 3,450,544 has been pledged as collateral for long-term

and short-term borrowings raised from banks.

4. LONG-TERM INVESTMENTS

4. A. LONG-TERM INVESTMENTS IN THE SUBSIDIARIES

(in EUR) 2013 2012

INTERESTS IN GROUP COMPANIES

In Slovenia:

Firma Del, d. o. o., Laško 7,427 7,427

Pivovarna Union, d. d., Ljubljana 162,127,755 169,327,822

Vital Mestinje, d. o. o. 1,457,761 1,457,761

Radenska, d. d., Radenci 46,472,460 46,472,460

Delo, d. d., Ljubljana 14,297,704 20,286,554

224,363,107 237,552,024

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 224,526,224 237,715,141



~ 270 ~

DATA ON THE SUBSIDIARIES

Percentage Total value Profit/ holding of equity loss (in EUR) Activity Country in equity 31 Dec 2013 2013

Subsidiaries

Radenska, d. d., beverage

Radenci production Slovenia 87.090 % 62,454,656 (3,685,486)

Union Group beer production and Slovenia 97.928 % 73,986,221 (5,948,512)

beverages production

Vital Mestinje, beverage Slovenia 96.920 % 3,508,710 51,295

d. o. o. production

Delo Group newspaper and Slovenia 80.834 % 13,821,643 (1,218,518)

publishing

Firma Del, beer Slovenia 100.000 % 15,254 (104)

d. o. o., Laško production

Jadranska Pivovara beer Croatia 99.460 % (2,033,796) (1,355,943)-

Split, d. d. production

Laško Grupa, trade Croatia 100.000 % (102,111) (130,143)

d. o. o., Zagreb intermediation

Laško Grupa, trade Bosnia and 69.220 % 163,603 6,724

d. o. o., Sarajevo intermediation Herzegovina

In accordance with IAS 27, the Company values long-term financial investments in the subsidiaries

according to the cost model.

The Company possesses 441,765 shares of the subsidiary Pivovarna Union or a 97,928% stake;

539,536 shares in the subsidiary Delo or an 80.834% stake, 5,396,932 shares in the subsidiary Jadran-

ska pivovara – Split or a 99.460% ownership stake and 4,408,340 shares in the subsidiary Radenska

or a 87.09% ownership stake.

In addition, 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 %), Laško Grupa, d. o. o., Sarajevo

(69,22 %) and Firma Del, d. o. o. (100%).

Long-term investments in subsidiaries increased in 2013 on account of additional acquisitions to-

talling EUR 10,790. As a result of new acquisitions, Pivovarna Laško increased its stake in Pivovarna

Union.

For the purpose of impairment testing, the certified appraiser of companies assessed the value of

the following investments as at 31 December 2013: investment in Pivovarna Union, Radenska and Delo

inclusive of the investment in Večer.



~ 271 ~

The estimated recoverable amount of the investments on the last day of 2013 amounted to EUR

162,127,755 or EUR 367 per share, reflecting a decrease of EUR 7,210,857 over the stated carrying

amount. The negative difference is recognised as an impairment loss in financial expenses. The differ-

ence between the carrying amount and the assessed value of the investment in Delo is also recognised

as an impairment loss in the financial expenses. As at 31 December 2013 the investment’s value was as-

sessed at EUR 14,297,704, which is EUR 5,988,850 less than its carrying amount. The assessed share

value as at 31 December 2013 equals EUR 26.5.

1 INVESTMENT IN SUBSIDIARY PIVOVARNA UNION, LJUBLJANA

As at 31 December 2013, Pivovarna Laško holds 441,765 shares of its subsidiary Pivovarna Union or

97.93% stake amounting to EUR 162,127,755.

A) VALUATION OF PIVOVARNA UNION, LJUBLJANA

Valuation of the investment in Pivovarna Union as at 31 December 2013, was made by a certified

business appraiser, registered with the Slovenian Institute of Auditors.


• The subject of the valuation was assessment of the recoverable amount of the investments in a

97.93% equity interest in Pivovarna Union as at 31 December 2013, for the purpose of reporting re-

quired under IAS 36 i.e. verification of potential investment impairment. The assessed investment

in the subsidiary is measured at cost.

• The present value of future cash flows expected to be derived from the asset’s continued use (in

this case investment into a subsidiary) and its disposal at the end of its useful life, was used in the

valuation performed in compliance with the requirements of IAS 36.

• The company as a whole was identified as the asset with indefinite useful life, while taking into

account the relevant equity interest.

• Pursuant to provisions of IAS 36, the projected cash flow method was used for the investment

assessment:

- based on reasonable and acceptable assumptions that provide the management’s best estimate

of the circumstances prevailing in the remaining useful life of the asset, while primary emphasis

should be devoted to external sources;

- based on the most recent financial projections adopted by the management, exclusive of the as-

sessed future cash flows expected from future restructuring of the asset, improvements to or the as-

set’s enhanced performance. The projections based on these assumptions should cover the period

of no more than five years unless a prolonged period is justified;

- assessed for a longer period than the one covered by the most recent forecasts, through extrapola-

tion of projections based on those forecasts using the stable or declining growth rate for future pe-

riods unless an increasing percentage is justified. The rate of growth should not exceed the average

long-term percentage growth of products in the sector or the country (countries) where the entity

operates or the markets in which the asset is used, unless a higher percentage is justified.



~ 272 ~

- Variability of assumptions used in cash flow projection is assessed through the verification of the

reasons for differences between past cash flow projections and the actual cash flows, and the actual

past profit or loss.

• The appraiser based its projections on the 2014 plan of projections for the period 2015-2018, while

taking into account the business cycle, macroeconomic circumstances and circumstances prevail-

ing in the industry sector.

• The appraiser based its assessment of future cash flows on assumptions used in the assessment

of the market value of the majority equity interest for reporting purposes that complies with all the

requirements of IAS 36.

• The appraiser based its assessment of the required rate of return on assumptions used in the as-

sessment of the market value of the majority equity interest for reporting purposes that complies

with all the requirements of IAS 36.

• The assessment of investments including the investment in the capital of Pivovarna Union, took

into account the market value of investments in 57.63% equity interest in Birra Peja, and 100%

ownership of Birra Peja and Akull brands since these assets are currently actively sold by the com-

pany. Costs of disposal were also taken into account.

The recoverable amount of the investment in Pivovarna Union was considered its value in use. The

value in use was assessed as the present value of the future cash flows expected to be derived from

the assets, while not considering the indebtedness. Detailed projections of future free cash flows were

made for the 2014-2019 period (the usual 5-year period was extended due to utilisation of tax losses),

whereas the residual amount was based on the perpetuity growth model with cash flows growing at an

assumed constant rate i.e. average 2% annual growth rate. The residual value accounts for 64% of the

total equity amount. The weighted average cost of capital (WACC) in the 2014-2019 period of 9.0% was

taken into account, with effective tax rate of 8.5%, whereas the WACC of 8.8% was taken into account

in the residual value (effective tax rate of 17%). The pre-tax weighted average cost of capital of 10.0%

was applied in the assessment of the recoverable value. Based on the sensitivity analysis, a 1 percentage

point increase of the weighted average cost of capital or a 1 percentage point decrease in the residual’s

growth would result in a 20.4% decrease of the assessed value in use of the investment in Pivovarna

Union, and consequently also its carrying amount.

The assessed value in use of the investment in 97.92% equity investment in Pivovarna Union, using

the above assumptions as at 31 December 2013 for the purpose of impairment testing in accordance

with IAS 36 requirements, is equal to the value in use i.e. EUR 162,127,755, which corresponds to EUR

367 per share.

2. FINANCIAL INVESTMENT IN THE SUBSIDIARY RADENSKA, RADENCI

As at 31 December 2013, Pivovarna Laško reports an equity investment in Radenska in the amount

of EUR 46,472,460 or 87.09-percent stake in the subsidiary. On the last day of 2013, Pivovarna Laško

is registered in the Radenska’s share register as the undisputed holder of 75.24% shares of Radenska.

Despite the final enforcement judgement for the benefit of NKBM which has not been exercised by the

day of the financial statements approval, Pivovarna Laško is reported as the owner of 345,305 RARG

shares (6.82% stake), which the former Management Board pledged for the benefit of Center naložbe

for borrowings raised from NKBM. On the basis of the final judgement in the dispute between Nova

Kreditna banka Maribor as the plaintiff and lienor, and Pivovarna Laško as the defendant and lienee,



~ 273 ~

in 2011 the investment in Radenska was impaired by EUR 3,637,650, which corresponds to the aver-

age cost and carrying amount of 345,304 RARG shares. The investment was reclassified to assets of

disposal groups. 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. In 2013 the asset as

well as the relevant accrued costs and deferred revenue were derecognised from the Company’s books

of account.

The ownership of 600,000 RARG shares (11.85%), which Pivovarna Laško temporarily sold to

Deželna banka Slovenije in 2011, is not registered in the Radenska share register. Pursuant to the con-

tract and despite temporary transfer of the ownership, the seller, Pivovarna Laško retained the right to

the shares and therefore, the investment was not derecognised.

Based on the above facts the official ownership as reported in the Radenska share register (82.06%)

differs from the actual ownership on the basis of which the controlling company exercises its manage-

ment rights (93.911%) and from its share of equity investment in Radenska (87.09%).

A) PROCEDURES IN THE CASE OF THE SALE OF THE STAKE IN RADENSKA

Pursuant to the operational and financial restructuring of the Laško Group, UniCredit CAIB as the

sale consultant, on 1 September 2013 began procedures for the sale of the stake in Radenska by sending

a teaser to all potential investors. Potential investors who signed the NDA received the IM in October.

The non-binding bids were received in November and in December 2013 Management pitches were

held at the company’s headquarters. We expect to receive binding bids in 2014 and to begin discus-

sions with investors regarding transaction structure.

DENATIONALISATION REQUESTS IN RADENSKA, RADENCI

NATIONALISATION OF PROPERTY DENATIONALISATION ŠARIČ

The proceedings are taking place before the Gornja Radgona Administrative unit in accordance with

the Denationalisation Act and in non-contentious proceedings before the Novo mesto District Court

pursuant to the Enforcement and Criminal Actions Act. The beneficiaries are demanding restitution of

property, company, trademarks and mineral springs that were nationalised during the nationalisation

process, and the payment of damages. The Administrative unit Gornja Radgona issued a decision on

27 June 2012, which rejected the request for the privatisation of the nationalised company Zdravilišče

Slatina Radenci, Höhn and Comp., public trading company in Radenci with a 48% stake owned by

Wilhelmina Höhn Šarič. With the supplementary decision issued on 31 August 2012 the Zdravilišče

Slatina Radenci, Höhn and Comp., public trading company is corrected and renamed Kuranstalt Sau-

erbrun Radein AG. The claim was lodged by the legal successor dr. Rudolf Höhn Šarič on 4 May 1993.

In the appeal proceedings, the Ministry of Economic Development and technology on 25 February 2013

rejected the appeal against the decision of the Administrative unit Gornja Radgona as being unjusti-

fied. The beneficiary lodged a lawsuit and the proceedings continue before the Administrative Court

of the Republic of Slovenia.

On 5 December 2012, the Administrative Unit in Gornja Radgona appointed the expert to produce

an expert opinion concerning the value of the company Zdravilišče Slatina Radenci, Hohn and Comp.,

inclusive of labels and brand wherever the word Radenska is a registered brand name and the three

hearts, two hearts and one heart are registered labels, as well as the movable property. Buildings and

land are not subject to the expert opinion.



~ 274 ~



cember 2010 for the benefit of beneficiaries, grandchildren of dr. Anton Šarič.

The beneficiaries carried out the entry into the land register in the form of a seal indicating a dispute

on all land parcels that are subject of the dispute; notices of dispute have also been placed on 13 brands

of Radenska at the Slovenian Intellectual Property Office.

The first main hearing was held at the District Court in Novo mesto on 25 March 2013. In addition to

the promoters, 11 members of the opposing party were also present, i.e. representatives of Terme Krka,

State Attorney, three municipalities, Slovenske železnice and others. After an additional naming of all

the proxies, the judge ended the trial. The District Court in Novo mesto issued an order, which was

received on 19 June 2012, dismissing the request for the return of nationalised property. The Court also

set the value of the subject matter of the dispute to EUR 34,200,000.00. The counter party appealed

to the Higher Court in Ljubljana against the decision. The Higher Court in Ljubljana rejected the ap-

peal (the decision was received by Radenska on 27 March 2014), and upheld the first instance decision

rejecting the claim for restitution of nationalised property. This makes the procedure final. There is a

possibility of beneficiaries lodging a request for a review at the Supreme Court.

The management of Pivovarna Laško expect the resolution process of the aforementioned proceed-

ings related to Radenska to be time consuming. Since the management of Pivovarna Laško expect no

significant future losses to arise to its subsidiary Radenska from those proceedings, it has assessed

that as at 31 December 2013, Pivovarna Laško has no need to impair the investment in the subsidiary

Radenska or set aside any provisions as at 31 December 2013 in this regard.

B) ESTIMATED VALUE OF RADENSKA

Valuation of the investment in Radenska, as at 31 December 2013, was made by a certified business

appraiser, registered with the Slovenian Institute of Auditors.


• The subject of the valuation was the majority stake of the company enabling the majority owner

to influence the process of adopting decisions by management bodies as well as to influence the

formation of strategy and business decisions concerning investments, borrowings and similar.





• The value in use was assessed as the present value of the future cash flows expected to be derived

from the assets, while not considering the indebtedness. The appraiser assessed the present value

of free cash flows without repayment of interest and principal amounts (the value of total equity)

and deducted total amount of the company’s liabilities to arrive to the value of the equity. The re-

sulting value was additionally adjusted for any contingencies, premiums or discounts.

• The assessment of future returns takes into account the 2014 plan and potential of the company,

based on its performance to date and results of the sector’s analysis. The appraiser has assessed

the 2014 business plan as viable although rather optimistic and has considered it in the valuation.



~ 275 ~

• In drafting business projections for 2015/2018, the appraiser to large extent considered results of

the sector analysis, competitors, and future potential of the company. Furthermore, the appraiser

assumed that the company will maintain existing business relations within the Laško Group (above

all joint market presence, horeca).


amount of EUR 47.7 million. The cost of disposal of the investments (2% market price relating to

investment in Mercator and Delo) were also taken into account. Accordingly:

- the quoted price of Mercator shares as at 31 December 2013 (EUR 82.0 per share) was considered as

the market value of the investment in the Mercator shares as the appraiser felt that the quoted price

on the valuation date is the best indication of the probable sale of Mercator to Agrokor;

- the market value of a 19.17% investment in Delo was assessed under the present value of future

cash flows to EUR 3.46 million (EUR 27,1 per share) in a separate valuation report. The assessed

market value for the majority owner (joint 100% control of the company by the Laško Group and

planned joint disposal) was also taken into account;

- The market value of the investment in shares of Premogovnik Velenje (7.1% stake) was assessed at

the average price of EUR 4.76 per share at EUR 920 thousand.

The investment property was accounted for as surplus assets. The value of these assets was assessed

by the certified appraiser of property. Under both scenarios, the market value of superfluous property

was assessed at EUR 1.041 million. The costs of disposal in the amount of 7-20% and shift in the sale

were also considered.

• In addition to financial liabilities amounting to EUR 8.4 million, contingencies in the amount

of EUR 4.2 million were also taken into account, based on the carrying amount of provisions set

aside for disputes and the related costs. The appraiser pointed out that those carrying amounts do

not reflect all contingencies arising from denationalisation proceedings which, as at the valuation

date, are difficult to assess due to lack of data and as such were not considered in the valuation

assessment.






was reduced by the costs of sale. In view of the subject matter and purpose of the valuation, the

appraiser took into account costs of disposal, which comprise direct selling (disposal) expenses

that may be attributed directly to the asset’s disposal, not considering the costs of financing and

corporate income tax, in accordance with the provisions of IAS 36. Based on the market inputs,

the cost of disposal of the company accounts for approx. 2% of the value of equity interest i.e. the

market value.

In view of the anticipated sale of the investment in Radenska, the investment’s recoverable value is







~ 276 ~






value in the equity stake in Radenska, which is higher than its carrying amount.


vestment in Radenska as at 31 December 2013 for the reporting purposes in compliance with IAS 36,

equals EUR 55,985,918 or EUR 12.7 per share, which is more than the carrying amount of one share

as at 31 December 2013.

3. INVESTMENT IN SUBSIDIARY DELO, LJUBLJANA

As at 31 December 2013, the investment in Delo amounts to EUR 14,297,704, which is a reduction of

EUR 5,988,850 compared to its value on the last day of 2012.

A) PROCEDURES IN THE CASE OF A SALE OF A 100-PERCENT STAKE IN THE NEWSPAPER DELO, LJUBLJANA

The Laško Group is selling its entire stake in the newspaper Delo. In addition to Pivovarna Laško,

holder of an 80.834% stake in the company, the subsidiary Radenska holds a 19.17% stake in Delo.

In June 2013 UniCredit CAIB were selected as M&A consultants for the sale of Delo, as part of the

Laško Group restructuring. As part of the operational and financial restructuring of the Laško Group,

a teaser was sent to potential buyers of Delo in September 2013, followed by harmonisation of NDA

with potential investors. Potential investors who signed the NDA received the IM in December. The

non-binding proposals arrived in March 2014.

B) ESTIMATED VALUE OF DELO, LJUBLJANA

Valuation of the investment in Delo, as at 31 December 2013, was made by a certified business ap-

praiser, registered with the Slovenian Institute of Auditors.


• The subject of the valuation was the majority stake of the company (80.83%) enabling the majority

owner to influence the process of adopting decisions by management bodies as well as to influence

the formation of strategy and business decisions concerning investments, borrowings and similar.





• The value in use was assessed as the present value of the future cash flows expected to be derived

from the assets, while not considering the indebtedness. The appraiser assessed the present value

of free cash flows without repayment of interest and principal amounts (the value of total equity)

and deducted total amount of the company’s liabilities to arrive to the value of the equity. The re-

sulting value is additionally adjusted for any contingencies, premiums or discounts.

• The assessment of future returns takes into account the 2014-2016 strategic plan and future po-

tential of the company, based on its performance to date and results of the sector’s analysis. As



~ 277 ~

the 2014-2019 strategic plan was assessed as being optimistic, it was considered as such in the

valuation.


amount of EUR 4.0 million. Costs of investment disposal (2% of the market value of the invest-

ment in Večer) were also taken into account. Accordingly:

- the market value of the investment in 79.24% equity share in Večer was assessed using the liquida-

tion method, assuming disposal of the brand and activity as at 30 September 2013 in the amount

of EUR 3,100 thousand

- the market value of a 100% equity investment in Izberi was assessed under the present value of

future cash flows to EUR 475 thousand.

• The investment in property, apartments and holiday facilities was accounted for as surplus assets.

The value of these assets was assessed by the certified appraiser of property to EUR 267 thousand.

The costs of disposal in the amount of 5% and shift in the sale were also considered.






was reduced by the costs of sale equal to approx. 2% of the value of equity interest i.e. the market

value).

In view of the anticipated sale of the investment in Delo, the investment’s recoverable amount is










fair value less costs to sell of the investment in Delo, and consequently also its carrying amount.


vestment in Delo as at 31 December 2013 for the reporting purposes in compliance with IAS 36, equals

EUR 14,297,704 or EUR 26.50 per share.

4. FINANCIAL INVESTMENT INTO JADRANSKA PIVOVARA – SPLIT

A) PROCEDURES IN THE CASE OF THE SALE OF THE 99.11% STAKE IN JADRANSKA PIVOVARA – SPLIT

After several years of unsuccessful attempts to sell the entire company as the public limited compa-

ny and the asset deal, the Management Board decided in the second half of 2012 to sell the production-

technical equipment of Jadranska pivovara.



~ 278 ~

An agreement on representation in the sale of equipment including specific determination of sale

procedures and prices of individual groups of production equipment was signed in February 2013. The

device for CO2 recycling was disposed of in June, followed in September by the sale of the major group

of technical equipment to the Norwegian brewery Aas. The consideration is to be settled in successive

payments by 31 May 2014 in line with the equipment dismantling. Due to the fact that since September

2013, the broker Wallart is no longer subject to the exclusivity agreement, we are continuing disposals

of the remaining equipment to various potential buyers.

B) VALUATION OF JADRANSKA PIVOVARA – SPLIT

The long-term investment in Jadranska pivovara - Split was fully impaired already in 2009. As a

result its value as at 31 December 2013 amounts to EUR nil.

The fair value of property was verified as at 31 December 2013 by the certified appraiser. The as-

sessed liquidation market value of property is EUR 4,293,248, which is included in the consolidation,

whereas the equipment is revalued to its contractual value amounting to EUR 1,667,000.

MOVEMENTS IN LONG-TERM INVESTMENTS – SUBSIDIARIES

(in EUR) 2013 2012

At 1 January 237,715,141 245,016,537


Acquisition of RARG - 85,378

Acquisition of PULG 10,790 58,822

Acquisition of Delo - 406

Impairment of PULG (7,210,857) -

Impairment of Delo (5,988,850) (7,446,002)

At 31 December 224,526,224 237,715,141

4. B. LONG-TERM INVESTMENTS INTO ASSOCIATED COMPANIES

DATA ON THE ASSOCIATED COMPANIES

Percentage Total Value Profit/

holding of equity loss

(in EUR) Activity Country in equity 31 Dec 2013 2013

associated companies

Thermana, d. d., health resorts Slovenia 20.630 % 26,208,534 (1,209,934)

Laško hotels and similar

accommodation

Slopak, d. o. o., waste packaging Slovenia 29.220 % 818,374 366,486

Ljubljana handling

As at 31 December 2013, Pivovarna Laško holds 645,003 shares of Thermana accounting for a

20.63% stake in the company. The original purchase value of the investment equalled EUR 6,897,921.

In 2010, the investment was impaired to zero value.



~ 279 ~

The investment is undergoing a sales procedure. The Management gave the mandate for the or-

ganisation of the sale to NLB, Ljubljana. An agreement on the implementation of the sale had been

prepared in 2010 and forwarded to the owners of more than 50% of the investment. The process for

acquiring consent of subscribers was carried out in February 2011. On 28 February 2011, the agreement

was signed and harmonised between NLB, Pivovarna Laško and Zavarovalnica Triglav which together

represent 44.85% ownership stake in Thermana. Coordinating activities with the remaining potential

signatories to the agreement on the implementation of the sale of shares continued in 2011.

Pivovarna Laško signed the Agreement on the joint sale of the Thermana shares (a 51.96% stake)

on 10 October 2011. NLB as the sales broker commenced sales 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.

In 2013, NLB as the broker assessed that there is no interest in the market to purchase a majority

holding of Thermana. As a result, a new Agreement on the joint sale of shares was discussed with NLB

as the main broker and Omegainvest, Domžale, as the intermediary searching for potential buyers

from the Middle East. Since no new agreement was concluded, the sale of the holding in Thermana

has been put on hold.

4. C. AVAILABLE-FOR-SALE FINANCIAL ASSETS

(in EUR) 2013 2012

Other investments in shares and interests at cost 241,655 241,655

Total 241,655 241,655

Compared to the previous year, the value of available-for-sale financial assets did not decrease.

5. LONG-TERM LOANS ISSUED

(in EUR) 2013 2012

Other long-term loans 376 404

Total 376 404

Long-term loans refer to housing loans granted by the Company to its employees or the purposes of

solving their housing-related issues.



~ 280 ~

6. LONG-TERM FINANCIAL LEASE RECEIVABLES

(in EUR) 2013 2012

Long-term financial lease receivables 533,230 590,416

Total 533,230 590,416

(in EUR) 2013 2012


Other companies 287,276 421,340

Total 533,230 590,416

Long-term financial lease receivables refer to the production equipment for the Bandidos brand

which was leased under a finance lease to a business partner from Belarus, and packaging leased

under finance lease to Birra Peja. The receivable due from the Belarus business partner as at 2013

year-end amounts to EUR 287,276, while the receivable due from Birra Peja amounts to EUR 245,954.

7. NET DEFERRED TAX ASSETS

(adjusted)*

(in EUR) 2013 2012

Long-term deferred tax assets 27,521,805 16,576,992

Adjustment of the opening balance - 3,877,649

Current year adjustments - 952,876

Long-term deferred tax liabilities (631,380) (703,262)

Net Long-term deferred tax assets 26,890,425 20,704,255




Deferred tax assets and liabilities are calculated on the basis of temporary differences, using the li-

ability method and by applying the 17% tax rate.



~ 281 ~

MOVEMENT OF DEFERRED TAX ASSETS

Liabilities to Fair value (in EUR) employees (financial assets) Other Total

DEFERRED TAX ASSETS

1 January 2012 - reported 318,630 16,916,686 1,005,186 18,240,502

Retrospective adjustments - 3,877,649 - 3,877,649

1 January 2012 - adjusted* 318,630 20,794,335 1,005,186 22,118,151

Changes in the

income statement (52,470) (884,657) 226,493 (710,634)

31 December 2012 - adjusted* 266,160 19,909,678 1,231,679 21,407,517

Changes in the

income statement (136,011) 3,398,556 2,851,743 6,114,288

31 December 2013 130,149 23,308,234 4,083,422 27,521,805




Deferred tax assets that impact the profit or loss increased by EUR 6,114,288 compared to the previ-

ous year. Deferred tax assets fell as a result of liabilities due to employees of EUR 136,011, while they

increased on account of the tax loss amounting to EUR 2,851,743 and impairments of investments in

the amount of EUR 3,398,556.

MOVEMENT OF DEFERRED TAX LIABILITIES

Fair value Fair value

(in EUR) (land. buildings) (brands) Total

DEFERRED TAX LIABILITIES

1 January 2012 1,069,320 738 1,070,058

Changes in the income statement - (738) (738)

Changes in the statement of other

comprehensive income (366,058) - (366,058)

31 December 2012 703,262 - 703,262

Changes in the statement of other

comprehensive income (71,882) - (71,882)

31 December 2013 631,380 - 631,380

Deferred tax liabilities were recognised on account of property revaluation to the fair value and

which is reported in the revaluation surplus. In 2012 and 2013, the value of deferred tax liabilities de-

creased by EUR 438,678, which is partly the consequence of the deferred tax liability restatement to a



~ 282 ~

new higher rate and partly as the result of the property revaluation. As at 31 December 2013, deferred

tax liabilities amount to EUR 631,380, accounted at the tax rate of 17%.

8. NON-CURRENT ASSETS HELD FOR SALE

(in EUR) 2013 2012

Property held for sale - 770,939

Other non-current assets held for sale - 3,637,650

Total - 4,408,589

The Company reports no assets under the item of non-current assets held for disposal. In 2013 the

office and warehouse facility in Ljubljana (including the land) were sold. At the same time an impair-

ment was made of Radenska shares pledged for the benefit of Nova Kreditna banka Maribor as the

lienor (345,304 RARG shares or 6,82% stake) in accordance with the enforcement judgement issued

at the end of 2011.

9. INVENTORIES

(in EUR) 2013 2012

Material and raw materials 3,926,609 5,253,746

Work in progress 1,076,418 811,208

Products 1,515,665 1,367,662

Merchandise 382,936 386,283

Advances for inventories 36,030 13,188

Total 6,937,658 7,832,087

MOVEMENT OF INVENTORY ALLOWANCES

(in EUR) 2013 2012

Formation 67,659 40,373

Balance at the end of period 67,659 40,373

The value of inventories decreased by EUR 894,429 or 11.4% compared to the previous year. The

largest decrease in value (25.2%) was recorded in terms of inventory of materials and raw materials. As

at 31 December 2013, inventories amounting to EUR 2 million were pledged. The carrying amount of

inventories does not exceed their realisable value.

In 2013, the inventory allowances were recognised equalling EUR 67,659 due to a write-off of obso-

lete inventory.



~ 283 ~

INVENTORY SURPLUSES AND DEFICITS

(in EUR) 2013 2012

Inventory surplus 4,329 14,212

Inventory deficit (16,769) (11,423)

Inventory deficit amounting to EUR 16,769 and inventory surplus in the amount of EUR 4,329 were

determined as a result of the annual stock count of materials, work in progress, semi-finished products

and products.

10. A. SHORT-TERM OPERATING RECEIVABLES

(in EUR) 2013 2012

Short-term trade receivables:

on domestic market 18,428,046 18,931,751

on foreign markets 6,110,846 4,829,688


Total 19,708,423 18,747,884

Short-term trade receivables due from others 1,220,441 1,894,574

Advances (159,517) (98,206)

Less impairments (614,359) (1,314,369)

At 31 December 20,154,988 19,229,883

As at 31 December 2013, the Company reports short-term operating receivables amounting to EUR

20,154,988, which is an increase of EUR 925,105 compared to the last day of the previous year. Re-

ceivables due from foreign customers increased by EUR 1,281,158 (of that, an increase of EUR 949,532

relates to receivables due from Laško Grupa, and EUR 437,402 due from Hermo), whereas receivables

due from domestic customers decreased by EUR 503,705.

The reported value of short-term operating and other receivables reflects their fair value.



~ 284 ~

ALLOWANCES FOR SHORT-TERM OPERATING RECEIVABLES

(in EUR) 2013 2012

At 1 January 5,013,555 4,782,053

Written-off receivables recovered (241,185) (104,183)

Final write-off of receivables (179,762) (80,931)

Allowances made during the year 43,992 -

Increase in allowances for disputed 189,567 411,677

Interest transfer to disputed 4,302 4,939

At 31 December 4,830,469 5,013,555

The accounts receivable allowances increased on account of disputes by EUR 189,567, additional

allowances in the amount of EUR 43,992, and by EUR 4,302 of interest. On the other hand they de-

creased on account of receivable write-offs in the amount of EUR 179,762 and by the amounts recov-

ered based on legal action in the amount of EUR 241,185.

Trade receivables in the amount of EUR 5,422,805 are collateralised by the guarantees and sureties

received in the amount of EUR 5,044,000.

Maturity structure of receivables is disclosed in section 5.4.7 FINANCIAL INSTRUMENTS AND

RISK– Note 27. A. Credit risk

As at 31 December 2013, the borrowings raised by the Company are collateralised by trade receivables

in the amount of EUR 10,000,000.

10. B. SHORT-TERM RECEIVABLES FOR EXCESS PAYMENT OF CORPORATE INCOME TAX

In the 2013 tax return the Company reported tax loss in the amount of EUR 15,778,039. As at 31 De-

cember 2013, total unsettled tax loss amounts to EUR 23,467,051, and includes accumulated tax losses

brought forward from previous periods and the net loss of the financial year. In 2012, the Company

reported no tax base and thus in 2013 it did not make any prepayments of corporate income tax.

11. SHORT-TERM AVAILABLE-FOR-SALE FINANCIAL ASSETS

(in EUR) 2013 2012

Short-term available-for-sale financial assets - at fair value 26,305,484 37,909,041

Total 26,305,484 37,909,041

As at the last day of 2013, short-term available-for-sale financial assets amount to EUR 26,305,484,

which is a reduction of EUR 11,603,557 compared to the previous year.



~ 285 ~

MOVEMENT OF SHORT-TERM FINANCIAL ASSETS AVAILABLE-FOR-SALE

(in EUR) 2013 2012

At 1 January 37,909,041 50,026,401


Impairment (11,603,557) (12,058,462)

Disposal (Etol) - (58,898)

At 31 December 26,305,484 37,909,041

Total impairment loss of EUR 11,603,557 relates to impairment of the investment in Mercator in the

amount of EUR 10,159,936, impairment of Probanka shares amounting to EUR 767,001, and impair-

ment of Elektro Gorenjska shares of total EUR 676,620.

1 INVESTMENT IN POSLOVNI SISTEM MERCATOR, LJUBLJANA

At 31 December the Company holds 317,498 MELR shares (8.43%) which considering the market

value of EUR 82 per one MELR share as at 31 December 2013 amounts to EUR 26,034,836. The fair

value of the investment as at 31 December 2013 is by EUR 24,943,002 lower than the investment’s

original value of EUR 50,977,838 or EUR 160.56 per share. The management has assessed that due to

unsuccessful sale of MELR shares, a drop in the quoted price represents a permanent impairment and

has decided to recognise it as a financial expense.

PROCEDURES IN THE SALE OF A 23.43% STAKE IN PS MERCATOR, LJUBLJANA

In line with the strategy adopted in 2012 the companies in the Laško Group continued to pursue

activities aimed at a sale of the Group’s 23.34% stake in Mercator. Consequently, at the end of October

2012 a new Contract for the joint sale of shares of Poslovni sistem Mercator was agreed between the

companies of the Laško Group and other entities interested in the sale of Poslovni Mercator shares

(hereinafter: sellers). The agreement was signed by the sellers who are together the majority owner of

shares in Mercator. In January 2013, a teaser was issued on the basis of which procedures for direct

sale of shares began. The non-binding proposals arrived in February. On a proposal from the financial

consultant in the sales process the consortium invited 4 bidders to continue the process. The selected

bidders were invited to conduct a due diligence of the company and submit binding offers by the

deadline set for May 2013. Following completion of due diligence of Mercator, binding proposals were

issued by two potential investors. While a financial investor proposed only capital increase of Mercator,

Agrokor offered to pay EUR 106 per one MELR share.

A contract for sale and acquisition of a joint 53% stake in Mercator was signed on 14 June 2013

between the consortium of sellers and the buyer Agrokor who paid EUR 120 per one MELR share.

The signing of the sale agreement is a result of an extensive procedure led by the London team of

international investment bank ING Bank N.V. The process was performed in compliance with inter-


well as maximising benefits for all Mercator’s stakeholders were ensured. The buyer provided bank

guarantees to the amount of 7.5% of total consideration. The Escrow Agreement for release of collateral

was signed on 29 July 2013 by the creditor banks, lienors of the Mercator shares. Bilateral agreement

signed on 20 July 2013 specify maturity date of the majority of borrowings on 30 April 2014 as well as

milestones set for the implementation of the restructuring project. The transactions is expected to be

completed by no later than the end of March 2014.



~ 286 ~

On 30 December 2013 the buyer informed the sellers that he had successfully obtained consent of

the regulator in Serbia and that he was waiving the competition condition of obtaining regulators’

consents in Croatia and Bosnia and Herzegovina, since at the time their consents had not been issued.

Thus the suspensive conditions other than the condition of rescheduling Mercator’s debts had been

fulfilled.

The restructuring of the Mercator debt condition should in accordance with SPA be fulfilled by no

later than 31 January 2014. If the condition is not met and the buyer does not waive the said condi-

tion or there is no other agreement between the parties, the SPA is terminated automatically and the

transaction will not take place. Since by 31 January 2014 the condition was not fulfilled, the buyer on

the eve of 31 January 2014 issued a statement to the consortium of sellers extending the joint debt re-

structuring condition and thus the validity of SPA until 4 February 2014. On 3 February 2014 the buyer

issued another statement regarding a change in joint debt restructuring condition and extended the

deadline and thus validity of the SAP until 28 February 2014. The statement was valid if confirmed by

the consortium of sellers by 2 p.m. on 5 February 2014. The consortium of sellers approved the state-

ment within the set deadline.

Since October 2013, negotiations had been ongoing between the buyer and major creditors of Merca-

tor (CoCom banks) regarding joint debt restructuring and conditions for the change in the ownership

of Mercator, that would be acceptable to the CoCom banks.

The CoCom banks asked the buyer to secure EUR 250 million of additional funds to Mercator; of

that EUR 200 million to be allocated for repayment of creditors and EUR 50 million for working capi-

tal. To secure the funding of Mercator as required by the CoCom banks and the time needed to sign the

documentation for joint debt restructuring, the buyer proposed a reduction in the price and extension

of the long stop date (LST).

As a result of negotiations between the buyer, sellers and creditor banks, Agrokor proposed an An-

nex to the Sale contract of 14 June 2013, amending some of the core elements of the original contract,

namely: the bid price for one MELR share is fixed at EUR 86; transaction completion date is set as 30

June 2014 under condition that Mercator and its creditors bank reach an agreement on long-term joint

debt restructuring by 31 May 2014, taking into account the fact that the buyer will assume part owner-

ship of Mercator.

Members of the management boards of the consortium signed an appendix to the sale contract

for the price of EUR 86 per MELR share inclusive of a suspensive condition relating to consent to

be obtained from the relevant supervisory boards and the annual General Meeting of shareholders of

Pivovarna Union. Another suspensive condition is also signing of a new Escrow Agreement.

2. OTHER FINANCIAL INVESTMENTS AVAILABLE FOR SALE

Investment in the shares of Elektro Gorenjska totalling EUR 270,648 (1.6%) are also included in

the available-for-sale financial assets. Pursuant to the Bank of Slovenia decision of 17 December 2013

on extraordinary measures for termination of all qualified liabilities of Probanka in order to cover the

bank’s losses, in December the Company deleted its ownership of Probanka shares and at the same

time derecognised its investment in Probanka from the books of accounts of Pivovarna Laško.



~ 287 ~

12. SHORT-TERM LOANS ISSUED

(in EUR) 2013 2012

Short-term deposits 1,770,902 2,985,000

Short-term loans 7,564,745 16,889,015


At 31 December 1,888,641 3,162,738

On the last day of 2013, majority of short-term loans issued amounting to EUR 1,888,641 represents

deposits at banks. In 2013 the Company issued a loan of total EUR 205,445 to subsidiary Jadranska

pivovara - Split to help solve liquidity issues stemming from severance payments to redundant work-

force. The total amount of the short-term loan was impaired and financial expense was recognised

since it is highly likely that the loan will not be repaid. On account of impairment of total amount of

two other loans issued in the past, in 2013 the Company converted the whole amount of loans issued

into share premium of Jadranska pivovara in total amount of EUR 9,062,000. In 2013 the Company

received EUR 40,317 on account of repayment of a loan from the bankruptcy estate of Infond Holding,

and EUR 330,901 from the bankruptcy estate of Center Naložbe.

Short-term loans issued to others decreased in 2013 by EUR 60,000, and bank deposits by EUR

1,214,098.



~ 288 ~

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~ 289 ~

13. CASH AND CASH EQUIVALENTS

(in EUR) 2013 2012

Cash at bank 255,519 192,036

Cash in hand and cheques 41,967 21,792

Cash in transit 59,732 81,636

Total 357,218 295,464

14. SHORT-TERM ACCRUALS AND PREPAID EXPENDITURE

(in EUR) 2013 2012

Deferred cost and accrued income 33,717 -

Total 33,717 -

As at 31 December 2013 the Company reports EUR 33,717 of short-term accruals and prepaid expendi-

ture.

15. EQUITY

The capital of Pivovarna Laško consists of called-up capital, share premium, profit reserves, retained

earnings or accumulated loss, surpluses from the revaluation of financial investments classified as

held for sale and also not yet distributed profit for the financial year or the outstanding loss for the

financial year.

Share capital is shown as shareholders’ equity (capital from stakes or capital contribution). Share

capital is divided into called-up share capital and uncalled share capital. Uncalled share capital is de-

ductible from share capital.

Called-up capital of Pivovarna Laško is defined in the Articles of Association and equals EUR

36,503,304.96. It is divided into 8,747,652 ordinary transferable nominal no-par-value shares. Each

share gives its owner a voting right at the annual General Meeting of Shareholders and participation in

profits. The nominal value of called-up capital amounted to EUR 36,503,304.96.

In 2013 share premium was reduced by EUR 27,326,561 to cover losses and as a result of prop-

erty impairment to lower fair value. As at 31 December 2013 share premium in the amount of EUR

24,760,570 was derived from capital injections made in the past periods.

Reserves comprise legal reserves amounting to EUR 3,650,331 and reserves for treasury shares

equalling EUR 79,763.

In 2013, reserves for treasury shares decreased due to the revaluation to a lower quoted price totalling

EUR 59,275.



~ 290 ~

As at 31 December 2013 Pivovarna Laško holds no treasury shares; however, its subsidiary Radenska

holds 17,760 share lots and Pivovarna Union 2,131 share lots. As at 31 December 2013, treasury shares

were restated to the quoted price amounting to EUR 4.01. The controlling entity Pivovarna Laško has

created treasury shares reserves for the total amount of treasury shares held by the Group.

Statutory reserves can exclusively be used for covering loss.

The revaluation surplus was recognised on account of property revaluation and actuarial gains. On

the last day of the year the Company revalued its property to lower fair value in the amount of EUR

741,111 based on the valuations made by the certified appraiser of property. Revaluation surplus in-

creased on account of the deferred tax impact from revaluation of property amounting to EUR 71,881

and actuarial gains in the amount of EUR 1,622, and decreased by EUR 233,305 of depreciation on

account of revaluations made in the past. As at 31 December 2013, the revaluation surplus amounts to

EUR 3,084,241.

According to provisions of IFRS; as at 31 December 2013 the carrying amount of one share equals

EUR 7.78. The market value of one share at the end of 2013 amounted to EUR 4.01, and is 48.5% lower

than its carrying amount.

16. PROVISIONS AND LONG-TERM ACCRUED COSTS AND DEFERRED INCOME

(in EUR) 2013 2012

Other provisions 5,253,988 -

Provisions for retirement grants and jubilee awards 1,333,160 1,259,169

Provisions for the disabled above the quota 48,927 90,290

Total 6,636,075 1,349,459

As at 31 December 2013 provisions discounted to their present value of expected termination ben-

efits and jubilee awards for long years of service amount to EUR 1,333,160, provisions for the disabled

employees above the quota amount to EUR 48,927, whereas other provisions total EUR 5,253,988.

As at 31 December 2013 Pivovarna Laško reports additional provisions set aside for water concession

fee payable for the period 2005 to 2013 amounting to EUR 4,209,805 and provisions for contingencies

to Radenska on account of a settlement claim for losses incurred over the period of contractual concern

pursuant to Article 542 of the Companies Act. Current amount of the contingency (EUR 1,044,183) is

based on the management’s best estimate of cash outflows required to settle the obligation, however

the amount may subsequently change since it has not been audited.

When calculating potential liabilities with regard to the retirement benefits the provisions of the De-

cree on the levels of reimbursed work-related expenses and of certain income not to be included in the

tax base are taken into consideration. If the amount of the retirement benefit exceeds the amount from

the Decree on the levels of reimbursed work-related expenses and of certain income not to be included

in the tax base, the employer needs to pay the 16.1% contributions on the excess amount.



~ 291 ~

Overview of additional assumptions:

• Growth of average wages in the Republic of Slovenia is assumed to be 0.5% annually in 2014, 1% in

2015 and 3.0% in further years, which represents the estimated long-term growth of wages;

• The calculation takes into consideration the growth of amounts of the retirement benefits and jubi-

lee awards in the Decree on the levels of reimbursed work-related expenses and of certain income

not to be included in the tax base as assumed in the previous indent for the growth of the average

wage in the Republic of Slovenia (it is an assumption that the bases will be changing in accordance

with the growth of the average wage in the Republic of Slovenia since we are not aware of the actual

intention of the legislator concerning the amounts in the Decree on the levels of reimbursed work-

related expenses and of certain income not to be included in the tax base);

• The calculation of liabilities from severance payments is tied to the years of pensionable service of

each individual employee.

Assumption regarding staff turnover and the relevant obligations of the Company:

• employee turnover depending in particular upon the employees’ age;

• employees’ death rate was considered using mortality tables of Slovenian population in 2007;

• allocation of workers as permanently redundant workforce results in other liabilities of the Com-

pany and therefore it is assumed that the present value of the employer’s liabilities relating to

classification of an employee as a redundant worker equals the present value of the liabilities for

severance payments;

• cases where the reason is regular retirement are accounted for in the calculation by considering the

accumulated and future years of service, taking into account the conditions for old-age pension;

• it is assumed that the employees will utilise their right to the old-age pension and therefore, the

obligation to pay jubilee awards to an employee subsequently according to the projection, will not

arise.

The selected discounted interest rate is 4.10% annually, which equals the return on 10-year corpo-

rate bonds with high credit rating in the Eurozone at the end of November 2013 increased by add-on

concerning the local risk.

MOVEMENTS IN PROVISIONS

Termination Disabled benefits Jubilee above (in EUR) on retirement awards the quota Other Total

At 1 January 2013 730,923 528,246 90,290 - 1,349,459

Increase - formation 61,009 43,075 62,453 5,253,988 5,420,525

Decrease - utilisation (7,246) (22,847) (103,816) - (133,909)

At 31 December 2013 784,686 548,474 48,927 5,253,988 6,636,075



~ 292 ~

In 2013, additional provisions were set aside for the payment of water concession fee for the period

2005-2013 in the amount of EUR 4,209,805, and provisions amounting to EUR 1,044,184 on account

of the settlement claim of Radenska, for the settlement of losses that arose during the validity of the

contractual group in accordance with Article 542 of the Companies Act. Compared to 2012,provisions

increased for additional amount of provisions set aside for termination benefits and jubilee awards

amounting to EUR 104,084, as a consequence of changes in the employee structure and changed

retirement conditions, whereas they decreased by EUR 30,093 on account of actual retirements and

payment of jubilee awards.

Provisions for the disabled above the quota decreased in 2013 by EUR 103,816 due to the utilisation of

the exempt contribution for the disabled above the quota, and increased on account of new provisions

for disability and retirement insurance of the disabled in the amount of EUR 62,453.

17. LONG-TERM FINANCIAL LIABILITIES

(in EUR) 2013 2012

Long-term bank borrowings 3,007,500 3,447,498

Long-term borrowings from other companies 30,090 27,172

Total 3,037,590 3,474,670

Transfer to short-term financial liabilities (660,000) (660,000)

Total 2,377,590 2,814,670

Long-term financial liabilities relate to the long-term borrowings from banks and finance lease li-

abilities.

On average, the interest rate for long-term borrowings in 2013 amounted to 4.72%. The disclosed

value of long-term financial liabilities reflects their fair value.

MATURITY OF LONG-TERM BORROWINGS FROM BANKS

(in EUR) 2013 2012


Maturity from 1 to 2 years 2,347,500 660,000

Short-term amounts of long-term financial liabilities 660,000 660,000

Total 3,007,500 3,447,498



~ 293 ~

MOVEMENTS IN THE LONG-TERM BORROWINGS FROM THE BANKS AND OTHER COMPANIES

Principal New Amounts amount at loans Repayments Balance at maturing (in EUR) 1 Jan 2013 2013 2013 31 Dec 2013 in 2014

Total banks 3,447,498 - 439,995 3,007,503 660,000

Long-term borrowings

from other companies 27,172 14,462 11,544 30,090 -

Total 3,474,670 14,462 451,539 3,037,593 660,000

Long-term borrowings are fully collateralised by securities, mortgages and pledged property (de-

tailed notes under Short-term financial liabilities).

18. SHORT-TERM LIABILITIES

18. A. SHORT-TERM OPERATING LIABILITIES

(in EUR) 2013 2012

Short-term liabilities to suppliers within the Group 10,288,710 8,332,777

Short-term liabilities to other suppliers 7,828,595 6,946,283

Short-term operating liabilities to others:

to employees 603,544 613,052

to the state 3,996,088 3,311,752

Short-term liabilities from advances 126,114 122,485

Other short-term liabilities 1,258,280 1,513,884

Total 24,101,331 20,840,233

Compared to the previous year, short-term operating liabilities increased by EUR 3,261,098. Major

share of trade liabilities represent supplier payables in the amount of EUR 18,117,305; compared to

the previous year they increased by EUR 2,838,245. Liabilities to the Group companies amounting to

EUR 10,288,710 account for 56.7% of total supplier payables. In 2013, payables to the companies in the

Group increased by EUR 1,955,933, whereas other supplier payables rose by EUR 882,312. Majority of

liabilities to the Group companies amounting to EUR 7,489,997 have matured and account for 41.34%

of all short-term operating liabilities.

Compared to the last day of the previous year payables to the state increased by EUR 684,336, pri-

marily on account of excise duty payable.

18. B. SHORT-TERM CORPORATE INCOME TAX PAYABLE

As at the last day of 2013 and 2012, the Company reported no corporate income tax liabilities. In 2013

the Company reported surplus of tax expense over tax revenue in the amount of EUR 15,241,967. In

2013, tax loss amounting to EUR 15,778,039 was reported in the tax return. The value of the unsettled

tax losses on the last day of 2013 amounted to EUR 23,467,051.



~ 294 ~

18. C. SHORT-TERM FINANCIAL LIABILITIES

(in EUR) 2013 2012

Short-term amounts of long-term financial liabilities 660,000 660,000

Interest payable on borrowings 1,958,231 1,807,753

Short-term borrowings from the Group 42,413,255 42,450,977

Short-term bank borrowings 210,908,939 213,433,218

Other short-term financial liabilities (802,409) 777,382

Total 255,138,016 259,129,330

As at 31 December short-term financial liabilities amount to EUR 255,138,016. Short-term borrow-

ings from banks amount to EUR 210.908.939, whereas EUR 42,413,255 of borrowings was raised from

companies in the Group.

MOVEMENTS IN SHORT-TERM BORROWINGS FROM THE BANKS AND OTHER LENDERS

Principal

amount at Repayments Balance at

(in EUR) 1 Jan 2013 2013 31 Dec 2013

Total banks 214,093,218 2,524,279 211,568,939

Total other lenders 42,450,978 37,723 42,413,255

Total short-term borrowings 256,544,196 2,562,002 253,982,194

As at the last day of 2013, short-term financial liabilities amount to EUR 255,138,016, which is a re-

duction of EUR 3,991,314 compared to the previous year. Short-term borrowings from banks decreased

by EUR 2,524,279 on account of repaid amounts. Short-term borrowings from the group companies

decreased by EUR 37,723 on account of the profit paid by the subsidiary Firma DEL.

In 2013 the average interest rate on short-term borrowings from banks was 4.97%, whereas the

average interest rate on borrowings raised from group companies was 5.26%. The disclosed value of

short-term financial liabilities reflects their fair value.

The Company pledged 539,516 shares (80.83%) of the Delo publishers, 4,745,107 shares (93.74%)

of Radenska, 440,295 shares (97.60%) of Pivovarna Union, 317,498 shares (8.43%) of Poslovni sistem

Mercator, 645,003 shares (20.63%) of Thermana, and 270,648 shares (1.6 %) of Elektro Gorenjska.

The carrying amount of pledged shares as at 31 December 2013 amounts to EUR 246,907,229. A

portion of the short-term borrowings are additionally insured with a mortgage and a lien on movable

assets and investment property. The carrying amount of pledged immovable and movable property

and investment property as at 31 December 2013 amounts to EUR 31,575,667. Short-term borrowings

are additionally collateralised with receivables whose value at 31 December 2013 amounted to EUR

10,000,000 and by pledges of brands amounting to EUR 50,000,000. As at 31 December 2013, the

total value of outstanding short-term borrowings from banks collateralised with shares, mortgage,

pledges of movable property, investment property and receivables, equals EUR 213,916,437. Short-term

borrowings in the amount of EUR 42,631,859 that the Company obtained from its subsidiaries are

secured by bills of exchange.



~ 295 ~


tailed information is included in Section 5.4.12 SUBSEQUENT EVENTS.

19. SHORT-TERM ACCRUALS AND DEFERRED INCOME

(in EUR) 2013 2012

Short-term accrued costs and deferred income 729,700 4,751,862

Total 729,700 4,751,862

Short-term accruals include costs of holiday entitlement not utilised in the amount of EUR 376,167

and accrued expenses amounting to EUR 288,667, while deferred income amounting to EUR 64,866

relates to other deferred revenue.

Accruals and deferred revenue were decreased on account of liquidation of guarantees for borrow-

ings of Jadranska pivovara - Split amounting to EUR 510,643. Due to its poor financial position, Jadran-

ska pivovara was unable to settle the outstanding loan instalments therefore Pivovarna Laško settled

them on the basis of the guarantees signed in 2005, 2007 and 2008. (RARG, JP).

The value of guarantees issued for borrowings raised by Jadranska pivovara Split, amounted to EUR

5,110,524 at the end of 2009; financial expense was recognised in 2009 for the entire value of these

guarantees. The obligation was settled in full in 2013.

In the financial year under review, the Company reported accrued costs of guarantees issued to Nova

Kreditna banka Maribor relating to the financial year 2009 when the previous Management Board of

Pivovarna Laško pledged 345,304 shares of Radenska for borrowings in the amount of EUR 6,250,000

which had been raised with the Nova kreditna banka Maribor by its controlling company at that time,

Center naložbe. Since Center naložbe failed to repay the borrowings upon maturity, the creditor Nova

kreditna banka Maribor based on the contract on the lien of securities, filed an application for the

enforcement. The Company filed an appeal against the enforcement decision. The Maribor District

Court ruled for the benefit of the plaintiff. The decision became final on 8 December 2011. The creditor

NKBM submitted an application 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. On the basis of the final judgement in

the dispute between Nova Kreditna banka Maribor as the plaintiff and lienor, and Pivovarna Laško as

the defendant and lienee, in 2011 the investment in Radenska was impaired by EUR 3,637,650. Even

though the enforcement proceedings had not yet been implemented by the date of the confirmation of

the Annual Report, the Company derecognised assets available for sale and accrued costs of total EUR

3,637,650 as at 31 December 2013.



~ 296 ~

20. OPERATING REVENUES AND EXPENSE

20. A. ANALYSIS OF SALES REVENUES BY MARKET

(in EUR) 2013 2012

Revenue from the sale of products and services in Slovenia 56,733,294 56,897,415


and services on foreign markets 15,319,217 13,338,199


and merchandise in Slovenia 17,942,307 18,641,738


and merchandise on foreign markets 166,285 83,594

Total 90,161,103 88,960,946

20. B. ANALYSIS OF SALES REVENUES BY TYPES OF PRODUCTS

(in EUR) 2013 2012

Revenue from sale of beer 68,112,628 66,586,303

Revenue from sale of other beverages 2,536,125 2,882,966

Revenue from sale of other products 19,512,350 19,491,677

Total 90,161,103 88,960,946

Compared to the previous year, net sales revenues increased by 1.35%. On the domestic market, rev-

enue from the sale of services declined by EUR 164,121, whereas on foreign markets the sales revenue

increased by EUR 1,981,018.

The biggest share of revenues on foreign markets is generated on the markets of former Yugoslavia

in particular in Croatia, whereas the share of sales on the EU markets has remained unchanged com-

pared to 2012.

The sales of beer increased by 2.29%, whereas the sales of other beverages dropped by 12.0%. The

net turnover relating to the sale of merchandise remained at the same level as in the previous year.

20. C. OTHER OPERATING REVENUES (INCLUDING REVALUATION OPERATING REVENUES)

(in EUR) 2013 2012

Revenue from reversal of provisions 81,941 76,970

Other operating revenue 436,166 727,779

Revaluation operating revenue from current assets 286,008 154,992

Revaluation operating revenue from non-current assets 20,994 19,832

Total 825,109 979,573



~ 297 ~

20. D. OPERATING COSTS AND EXPENSES

(in EUR) 2013 2012

Costs of merchandise sold (Horeca) 18,034,975 18,441,351

Costs of materials, raw materials and merchandise 26,244,579 24,950,863

Costs of services 19,229,235 18,580,633

Amortisation and depreciation 4,760,999 4,943,657

Revaluation operating expense from current assets 1,311,959 209,782

Revaluation operating expense from non-current assets 312,825 456,989

Employee benefit costs 7,683,346 8,030,817

Social security contributions on salaries 1,645,252 1,629,176

Other labour costs 1,125,052 1,355,771

Costs of provisions 1,044,184 262,006

Other operating expenses 7,007,901 1,846,530

Total 88,400,307 80,707,575

Compared to the previous year, operating expenses increased by EUR 7,692,732 or 9.5%. The cost of

the merchandise sold decreased by 2.2% but costs of raw materials and materials increased by 5.2%.

Costs of services also increased, namely by 3.5%. The costs of services incurred in 2013 are not inclu-

sive of costs of consultants regarding financial debt restructuring (legal and financial consultations)

amounting to EUR 802,409. The reason for this is the fact that these costs are tied to the total amount

of borrowings to be repaid in accordance with debt rescheduling. In 2013, the costs incurred are recog-

nised as a reduction in financial liabilities measured at amortised cost. Subsequently they will be recog-

nised in profit or loss in line with the repayments of the total amount of relevant borrowings in 2014

and 2015. The revaluation operating expenses increased as a result of valuation assessment of property

and investment property in 2013. Due to restrictive investment policy in recent years, the depreciation

expense decreased in 2013 compared to the previous year. Employee benefit costs are lower than in

the previous year due to reassignment of the Members of the Management Board as from 1 March

2013 to part-time employment in Pivovarna Union, reduced wages of newly employed workforce, and

reduction in the number of termination benefits paid compared to 2012. Costs of provisions increased

due to the settlement claim of Radenska for the duration of the contractual group in accordance with

Article 542 of the Companies Act. A significant increase in other operating expenses is due primarily

to the water concession fee for the past years amounting to EUR 4.2 million, and impairment losses

from investment property.



~ 298 ~

20. E. COSTS BY FUNCTIONAL GROUPS

Production Costs of Costs 2013 products and Costs general (in EUR) merchandise sold selling activity Total

Costs of merchandise sold (Horeca) - 18,034,975 - 18,034,975

Costs of materials, raw materials

and merchandise 25,370,205 567,533 306,841 26,244,579

Costs of services 2,007,198 12,778,704 4,443,333 19,229,235

Amortisation and depreciation 3,417,612 508,854 834,533 4,760,999

Revaluation operating expense

from current assets 240,139 187,626 884,194 1,311,959


from non-current assets 2,285 235,575 74,965 312,825


Costs of provisions - - 1,044,184 1,044,184

Other operating expenses 255,979 123,715 6,628,207 7,007,901

Total 36,155,138 35,323,983 16,921,186 88,400,307

Production Costs of Costs 2012 products and Costs general (in EUR) merchandise sold selling activity Total

Costs of merchandise sold (Horeca) - 18,441,351 - 18,441,351

Costs of materials, raw materials

and merchandise 24,104,299 515,365 331,199 24,950,863

Costs of services 2,070,565 12,431,813 4,078,255 18,580,633

Amortisation and depreciation 3,590,392 546,819 806,446 4,943,657


from current assets 4,858 4,037 200,887 209,782


from non-current assets - 416,616 40,373 456,989


Costs of provisions 120,724 61,563 79,719 262,006

Other operating expenses 221,843 383,454 1,241,233 1,846,530

Total 34,819,825 35,797,250 10,090,500 80,707,575

Production costs increased by EUR 1,361,709 in 2013, general and administrative expenses rose by

7,033,609, whereas selling expenses decreased by EUR 702,586.



~ 299 ~

20. F. OTHER OPERATING EXPENSES

(in EUR) 2013 2012

Taxes and other levies 6,177 2,733

Water fee and environmental charges 230,972 212,948

Student grants and awards to students

on work-experience placement 17,335 3,812

Land charge 139,310 144,089

Membership fees 49,982 27,886

Other costs (donations, enforcement) 303,447 403,086

Default interest paid 380,943 343,508

Impairment loss on investment property 1,340,143 312,284

Other operating expenses 4,539,592 396,184

Total 7,007,901 1,846,530

21. FINANCIAL INCOME AND EXPENSE

(in EUR) 2013 2012

FINANCIAL INCOME less foreign exchange differences 1,083,272 9,535,152

Financial income from shares in the profits 359,688 9,377,953

Financial income from loans issued 29,923 31,617

Financial income from operating receivables 225,781 125,582

Financial income from reversal

of investment impairment in a subsidiary 467,880 -

FINANCIAL EXPENSE less foreign exchange differences (37,896,548) (34,008,618)

Financial expense for investment impairment and write-offs (24,803,264) (19,505,485)

Financial expense from financial liabilities (13,035,938) (14,503,133)

Financial expense from operating liabilities (57,346) -

FOREIGN EXCHANGE RATE DIFFERENCES on financing (1,698) (781)

Foreign exchange losses (1,740) (936)

Foreign exchange gains 42 155

Net financial expenses (36,814,974) (24,474,247)

Financial expenses exceed financial revenues by EUR 37,018,721. Financial expenses for interest

from bank borrowings amounted to EUR 13,035,938, while financial expenses from impairment of

investments amounted to EUR 25,008,709. Financial expenses for borrowings raised from banks

amount to EUR 10,779,966, whereas EUR 2,255,971 of financial expenses were incurred on borrow-

ings raised from companies in the Group.

Financial expenses include impairment losses from investment in subsidiary Pivovarna Union

amounting to EUR 7,210,857; in subsidiary Delo in the amount of EUR 5.988.850; into shares of

the Poslovni sistem Mercator amounting to EUR 10,159,936 (based on their revaluation to the fair

quoted price); in the Probanka shares amounting to EUR 767,001 following their revaluation to EUR

nil pursuant to the Bank of Slovenia measures on orderly wind down of Probanka; and in the Elektro

Gorenjska shares in the amount of EUR 676,620.



~ 300 ~

21. A. DISCONTINUED OPERATION

(in EUR) 2013 2012

Financial expense for investment impairment and write-offs (205,445) (1,063,000)

Total (205,445) (1,063,000)

In compliance with IFRS 5, following discontinuation of operations of Jadranska pivovara - Split, in

the separate financial statements of the controlling company, all the transactions with the subsidiary

are reported as the costs of discontinued operations.

22. TAX ON CONTINUED OPERATIONS

(adjusted)*

(in EUR) 2013 2012

Deferred tax from continued operations 5,208,846 1,258,347

Total 5,208,846 1,258,347




The Company reports deferred tax from continued operations amounting to EUR 5,208,846, which

is the deferred tax reported in the profit or loss for the financial year 2013, less deferred tax from dis-

continued operations.

22. A. TAX ON DISCONTINUED OPERATIONS

(in EUR) 2013 2012

Deferred tax from discontinued operations 905,442 (1,968,980)

Total 905,442 (1,968,980)

In compliance with IFRS 5, following discontinuation of operations of Jadranska pivovara - Split, in

the separate financial statements of the controlling company, all the transactions with the subsidiary

are reported as the costs of discontinued operations, inclusive of deferred tax relating to the subsidiary.



~ 301 ~

22. B. TAX FROM CONTINUED AND DISCONTINUED OPERATIONS

(adjusted)*

(in EUR) 2013 2012

Deferred tax 6,114,288 (710,633)

Total 6,114,288 (710,633)




The Company reports no taxable profit in 2013 as it reports unsettled tax losses brought forward

from previous periods; therefore the Company has no current tax liabilities. Detailed explanation of the

deferred tax amounts is provided in Note 7 Long-term net deferred tax assets.

22. C. CALCULATION OF CORPORATE INCOME TAX

(in EUR) 2013 2012

Profit or loss before tax (34,026,973) (16,846,756)

Tax at applicable tax rate:

Revenue adjustment to tax-recognised level (566,987) (8,967,536)

Expense not recognised for tax purposes 19,351,993 21,325,148

Tax basis I (15,241,967) (4,489,144)

Change in the tax basis (536,072) 1,303,871

Tax basis II (15,778,039) (3,185,273)

Tax relief - -

Tax basis III (15,778,039) (3,185,273)

Tax loss (15,778,039) (3,185,273)

Tax payable - -

In 2013, tax loss amounting to EUR 15,778,039 was incurred. Due to this loss, tax relief that could

be brought forward to the next year was not established. On the last day of 2013, the Company reports

unsettled tax loss amounting to EUR 23,467,051, of which deferred tax assets in the amount of EUR

3,989,439 were recognised using the tax rate of 17%. The loss will be utilised in future periods against

taxable profits.

The tax authorities may, at any time within a period of five years after the end of the year for which

a tax assessment was due, carry out an inspection of the company’s operations, which may lead to as-

sessment of additional tax liabilities, default interest and penalties regarding corporate income tax or

other taxes and levies. The management of the company is not aware of any circumstances that could

result in a significant tax liability.



~ 302 ~

23. EXCHANGE RATE DIFFERENCES

Exchange rate differences from operations and financing considered in the profit or loss are as follows:

(in EUR) 2013 2012

Foreign exchange differences from financing (1,698) (781)

Total (1,698) (781)

24. LOSS PER SHARE

(adjusted)*

(in EUR) 2013 2012

Total loss (27,912,685) (17,557,389)

Number of ordinary shares issued 8,747,652 8,747,652

Number of treasury shares - 454

Weighted number of ordinary shares issued 8,747,652 8,747,198






Net loss per share is calculated by dividing net revenue which belongs to the shareholders by the

weighted average number of shares on the market during the year, with the exception of the average

number of treasury shares.

25. CHANGES IN OTHER COMPREHENSIVE INCOME

(in EUR) 2013 2012

Financial assets available for sale - (3,345)

Gains/losses from revaluation of property (741,111) 201,543

Deferred tax on account of revaluation 71,881 366,796

Other 1,622 -

Other comprehensive income (667,608) 564,994

26. DIVIDENDS PER SHARE

The Company paid no dividends in 2013.



~ 303 ~

5.4.7 FINANCIAL INSTRUMENTS AND RISKS

27. FINANCIAL RISK

27. A. CREDIT RISK

The carrying amount of financial assets represents exposure to credit risk.

CREDIT RISK EXPOSURE

(in EUR) 2013 2012

Issued loans 1,889,017 3,163,142

Investments 533,230 590,416

Receivables less amounts due from the state and advances given 19,817,125 18,801,310

thereof trade receivables 19,708,423 18,747,884

Cash and cash equivalents 357,218 295,464

Total 22,596,590 22,850,332

Investments disclosed in the table comprise only financial lease receivables.

Credit risks include all those risks resulting in the decline of the company’s economic benefits due

to insolvency of the company’s business partners, namely the buyers, and failure to meet their contrac-

tual obligations. To this end, the receivables from our business partners, the wholesalers and retailers,

are regularly monitored. In addition, we actively manage receivables, rapidly implement collection

procedures by reminding them, collecting receivables via telephone or in the field, as well as debt re-

covery through an external agent as well as through the courts. The receivables from export buyers are

secured with bank guarantees and partly via the SID insurance company, and we only operate under

the system of advance payments with some customers. Also on the domestic market the receivables

from final users are partly secured with bank guarantees, mortgage on immovable property and bills

of exchange. Business with less credit-worthy customers is made on the basis of advance payments

and immediate payments so that the risk of non-payment for the purchased goods is avoided to some

extent.


subsequently, there is a large credit risk exposure to this particular segment. Over the entire 2013

financial year the payment discipline of our major buyers worsened, which caused constant and daily

liquidity problems. Our greatest customers are especially prone to payment delays, generating addi-

tional liquidity difficulties for our companies. It is believed that there is a considerable risk of spread-

ing late-payment culture also in 2014, which is the result of the financial crisis in all the segments

of the economy. The management believes that the credit risk is increasing due to fierce economic

conditions.



~ 304 ~

MATURITY OF ACCOUNTS RECEIVABLE (NET)

(in EUR) 2013 2012

Not past due 13,070,493 13,969,639

Up to 30 days 4,497,695 3,718,455

From 31 to 60 days past due 607,133 299,262

From 61 to 90 days past due 315,258 362,206

Maturity more than 90 days 6,048,313 5,411,877

At 31 December 24,538,892 23,761,439

Compared to 2012, accounts receivable increased by 3.2% in 2013. As at 31 December 2013, the major-

ity of receivables had not matured or are due and outstanding up to 30 days. Allowances in the amount

of EUR 4,830,469 were recognised for receivables due and outstanding more than 90 days amount-

ing to EUR 6,048,313. Detailed monitoring of receivables that have matured and appropriate response

ensure efficient credit risk management.

The Company received guarantees amounting to EUR 0.889 million from the domestic customers,

EUR 2.155 million from foreign customers, and mortgages and sureties amounting to EUR 2 million.

27. B. LIQUIDITY RISK

With regard to financial risks, monitoring liquidity risk which means the risk of loss due to short-

term and long-term insolvency is of particular significance. The Company disclosed a significant ex-

cess of short-term liabilities over short-term assets, signifying the existence of a material liquidity risk

in particular in the parent company. To avoid problems with the short-term liquidity, the Company

manages the liquidity risk, drafts and implements a policy of regular liquidity management including

the planning of cash outflows and sufficient inflows.

By securing relevant credit lines for short-term cash flow balancing in the form of revolving credits

and agreed overdraft facilities, the Company has so far successfully managed to secure coverage of

potential daily liquidity shortcomes. However, in view of deteriorating conditions on financial markets

and continuing financial crisis, it will become progressively more difficult to successfully manage the

liquidity risk. On 29 July 2013 the Company signed a debt rescheduling agreement with all creditor

banks extending maturity of all borrowings until 30 April 2014 at the earliest. Subsequently, A contract

for long-term debt restructuring until 31 December 2016 was signed. Currently procedures for secur-

ing the disposal of investments are pursued actively as part of the companies’ restructuring which is

expected to be completed by 2016.

Monitoring of fundamental financing and liquidity ratios pursuant to Article 14 of the Financial Op-

erations, Insolvency Proceedings and Compulsory Dissolution Act, prescribing criteria under which

an entity is deemed solvent, is particularly important and necessary to ensure effective liquidity risk

management. Regular monitoring of an entity’s liquidity position is of particular importance as it en-

sures timely response and helps to avoid unfavourable consequences of an emerging liquidity crisis.

Debt rescheduling and deleveraging of all of the remaining investments that are not crucial for the

performance of our core activities continued over the entire 2013 year aimed at achieving a sustainable

level of financial debt. Until the debt restructuring process is completed, the controlling company will



~ 305 ~

continue to experience a rather difficult liquidity situation. In view of the aforementioned and difficult

situation on financial markets and the entire economic environment, we have assessed the Group’s

exposure to liquidity risk as very high and requiring special attention.

The results of the Company’s operations are good and positive; however, due to negative financing

cash flow being the result of high interest expenses and the impairment of financial investments the

Company has been disclosing loss for several successive years.

MATURITY STRUCTURE OF SUPPLIER PAYABLES

(in EUR) 2013 2012

Not past due 9,403,048 9,106,876




From 91 to 180 days past due 2,518,489 817,270

From 181 to 360 days past due 662 (11)

Maturity more than 360 days 35,272 12,971

Total 18,117,305 15,279,060

As at 31 December 2013, the Company reports EUR 8,714,257 of supplier payables that have matured

and mostly relate to liabilities to Pivovarna Union. Other supplier payables are settled on average with

a delay of up to 20 days compared to delays in settlements from our largest customers.

MATURITY OF SHORT-TERM FINANCIAL LIABILITIES TO BANKS AND CONTRACTUALLY AGREED INTEREST

2014 2014

(in EUR) Principal amount Interest Total

January - March 322,529 2,655,304 2,977,833

April - June 210,916,410 934,700 211,851,110

July - September 165,000 33,602 198,602

October - December 165,000 33,602 198,602

Total 211,568,939 3,657,208 215,226,147

MATURITY OF LONG-TERM FINANCIAL LIABILITIES TO BANKS

(in EUR) 2013 2012


Maturity from 1 to 2 years 2,347,500 660,000

Total 2,347,500 2,787,500



~ 306 ~


tailed information is included in Section 5.4.12SUBSEQUENT EVENTS

27. C. INTEREST RATE RISK

Interest rate risk is the risk of a possible change in the reference interest rate on the financial market,

mainly due to borrowings linked to a variable interest rate (EURIBOR). In 2013 a decreasing tendency

of EURIBOR has continued, which had a positive impact on borrowing costs linked to a variable inter-

est rate (EURIBOR). Towards the end of the year the reference interest rate rose slightly, however this

had no major impact on interest rates. Financing under variable interest rate conditions represents

two-thirds of all the Group’s financing while the other one-third represent borrowings with a fixed in-

terest rate. Interest rate hedging of long-term debt at variable interest rate is doubtlessly sensible how-

ever, majority of the Company’s borrowings mature within a period of 12 months. The Company has

already agreed and signed a contract for long-term financial debt rescheduling until 31 December 2016,

and hence we will monitor developments on financial markets and take appropriate action at the right

time. The management have assessed the Company’s interest rate risk as rather high but manageable.

Average interest Difference (in EUR) Interest rate in % Interest

Actual financial expense for interest paid 13,013,363 4.97 -

Expenses resulting from 1% increase


Expenses resulting from 1% decrease


Expenses resulting from 1.5% increase


Expenses resulting from 1.5% decrease


If the average interest rate increased by 1%, and the indebtedness remained at the same level, ex-

penses would increase by EUR 2,618,383 and in the case of 1.5% increase in the average interest rate,

expenses would increase by EUR 3,927,574.

If the interest rate dropped by 1 or 1.5%, financial expense would decrease by EUR 2,618,383 or EUR

3,927,574 respectively.

Loans and deposits are issued at fixed rates of interest, and their amount is insignificant.

27. D. PRICE RISK

The Company is exposed to price risks on the downstream side and on the upstream side.

On the downstream side, a risk is the increase of retail prices compared to the declining purchasing

power of the population. The retail prices are also affected by the trade margin, the level of excise duty

and value added tax. With regard to the situation in the country, there is a potential risk of increasing

excise duty on alcohol and alcoholic beverages – beer, and increased rate of value added tax. All these

risks can result in increased retail prices. This increase can cause a shift of focus of consumers to



~ 307 ~

cheaper products, the substitutes of our products (e.g.: shift from beer to wine since there is no excise

duty on wine and is thus relatively cheaper) or a shift to shopping abroad where these duties are lower.

Each drop in sales of the beer on the domestic market by 1% represents the decrease in revenues by

EUR 560,000 compared to the revenues in 2013. The Company has no influence on this risk, which

is assessed as significant.

Risks on the upstream side due to the exposure to the prices of input materials that depend on the

individual harvest of barley, maize and hops are assessed as moderate since the impact is slightly

reduced by globalisation. However, global inflation pressures of oil, poor harvests, climate changes,

currency fluctuations and similar could gain in importance. The risks are minimised by including all

the adequate suppliers into the supply chains within the Laško Group and thus ensure optimal prices

and smooth supply.

27. E. FOREIGN EXCHANGE RISK

Although the Company operates in an international environment, the currency risk is insignificant

since majority of supplier contracts are agreed in the euro and foreign currency fluctuations have no

direct impact on prices. The same applies to our products that are invoiced in EUR.

27. F. CAPITAL MANAGEMENT

The main purpose of the management of the Company’s equity is to ensure, as far as possible, credit

rating and capital adequacy to finance the operations and to maximise the value for the owners.

CALCULATION OF THE RATIO BETWEEN NET FINANCIAL LIABILITIES AND EQUITY (GEARING RATIO)

AT 31 DECEMBER

(adjusted)*

(in EUR) 2013 2012

Financial liabilities 257,515,606 261,943,999

Cash 357,218 295,464

Net financial liabilities 257,158,388 261,648,535

Equity 68,078,212 96,364,961

Gearing ratio (in %) 377.74 271.52




The ratio between net financial liabilities and equity indicates that Pivovarna Laško is over-indebted.

27. G. THE RISK OF CHANGES IN FAIR VALUE


ment property is undoubtedly also an important financial risk. In should be highlighted that financial

investments are increasingly difficult to sell at desirable prices compared to the purchase price a few



~ 308 ~

years ago when most of them were acquired. The risk can be observed in the segment of financial

expenses where financial expenses from the impairment and write-offs are disclosed. In 2013 Pivo-

varna Laško recognised an impairment loss amounting to EUR 25.0 million on account of investment

impairment. Impairments are predominantly the result of a drop in the value of strategically most im-

portant investments such as Mercator and Probanka, as well as due to impairments of the companies

in the Group and Pivovarna Union amounting to EUR 7.2 million, which is again largely due to the

impairment of the investment in Mercator and Delo in the amount of EUR 6 million.

Difference- Difference- Difference- Difference- impact on impact on impact on impact on Fair value at long-term revaluation profit deferred tax (in EUR) 31 Dec 2013 investiments surplus or loss liabilities

Market value of MELR

at 31 December 2013 26,034,836

Price increase by 20% 31,241,803 5,206,967 4,321,783 - 885,184

Price decrease by 20% 20,827,869 (5,206,967) - (4,321,783) (885,184)

Price increase by 5% 27,336,578 1,301,742 1,080,446 - 221,296

Price decrease by 5% 24,733,094 (1,301,742) - (1,080,446) (221,296)



~ 309 ~

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~ 310 ~

The Company measures the fair value of assets and liabilities in the statement of financial position

according to the following fair value hierarchy:

• level 1: assets and liabilities whose fair value is determined based on market inputs (without adjust-

ments) observed on active stock markets,

• level 2: assets and liabilities whose fair value is determined based on inputs other than quoted

market prices that are observable directly or indirectly,

• level 3: assets and liabilities whose fair value is determined based on valuation techniques using

unobservable inputs.

5.4.8 RELATED PARTY TRANSACTIONS

28. RELATED PARTY TRANSACTIONS

28. A. SALES TO COMPANIES IN THE LAŠKO GROUP

(in EUR) 2013 2012

Radenska, d. d. Radenci 2,244,942 2,079,928

Vital Mestinje, d. o. o. 28,252 38,332

Union Group 12,109,414 12,370,260

Delo Group 9,680 -


Laško Grupa, d. o. o., Zagreb 1,282,909 274,000

Total 15,732,363 15,011,019

28. B. PURCHASES FROM COMPANIES IN THE LAŠKO GROUP

(in EUR) 2013 2012

Radenska, d. d. Radenci 3,373,087 3,225,305


Union Group 18,118,601 18,652,101

Delo Group 31,137 15,688

Jadranska pivovara - Split, d. d. 89,909 114,245


Laško Grupa, d. o. o., Zagreb 992,986 883,936

Total 23,301,915 23,819,794

Data is expressed in gross amounts inclusive of value added tax. The purchase by related companies

mainly relate to the purchase of commercial goods in Horeca.



~ 311 ~

28. C. RECEIVABLES FROM AND PAYABLES TO THE COMPANIES IN THE LAŠKO GROUP

(in EUR) 2013 2012

Operating receivables due from the companies in the Laško Group

Radenska, d. d. Radenci 413,301 376,912


Union Group 1,607,220 2,016,950

Delo Group 5,319 -

Jadranska pivovara - Split, d. d. 2,590,857 2,590,857

Laško Grupa, d. o. o., Sarajevo 52,933 -

Laško Grupa, d. o. o., Zagreb 1,177,633 336,735

Total 5,855,732 5,337,999

Operating liabilities to the companies in the Laško Group

Radenska, d. d. Radenci 318,812 312,500

Vital Mestinje, d. o. o. 1,029 -

Union Group 9,900,000 7,869,189

Delo Group 3,654 -

Jadranska pivovara - Split, d. d. 4,550 4,550


Laško Grupa, d. o. o., Zagreb 40,000 -

Total 10,288,710 8,219,625

28. D. BORROWINGS FROM THE COMPANIES OF THE LAŠKO GROUP

(in EUR) 2013 2012


Union Group 9,300,000 9,300,000

Firma Del, d. o. o., Laško 13,255 50,977

Total 42,413,255 42,450,977

Liabilities for borrowings decreased in 2013 only on account of the payment of the 2012 distributable

profits of subsidiary Firma Del.

As at 31 December 2013, interest payable on borrowings to Radenska amount to EUR 173,581, while

EUR 45,022 of interest is payable to Pivovarna Union.



~ 312 ~

28. E. LOANS ISSUED TO THE COMPANIES OF THE LAŠKO GROUP

(in EUR) 2013 2012

Subsidiaries

Jadranska pivovara - Split, d. d. (long-term loans) (8,856,555) 9,062,000

Impairment of loans issued to Jadranska pivovara - Split, d.d. 8,856,555 (9,062,000)

Total subsidiaries - -

Other associated companies

Infond Holding, d. d., Maribor - 1,699,613

Center naložbe, d. d., Maribor - 5,900,000

Impairment of loans issued - (7,599,613)

Total other associated companies - -

Total - -

In 2013, the Company granted short-term loans to the subsidiary Jadranska pivovara – Split totalling

EUR 205,445 for severance payments. Impairment loss on these loans was recognised and charged to

the current profit or loss.

28. F. FINANCIAL INCOME OF THE COMPANIES IN THE LAŠKO GROUP

(in EUR) 2013 2012

Subsidiaries

Radenska, d. d., Radenci 340,056 4,822,565

Union Group 34,430 2,697,826

Total 374,486 7,520,391


Firma Del, d. o. o., Laško 37,722 -

Total other associated companies 37,722 -

Total 412,208 7,520,391

Financial income from group companies decreased in 2013 compared to the previous year by EUR

7,145,905 since dividends were not paid by the subsidiary Pivovarna Union and as a result of a signifi-

cantly reduced dividend payment by Radenska.



~ 313 ~

28. G. FINANCIAL EXPENSES OF THE COMPANIES IN THE LAŠKO GROUP

(in EUR) 2013 2012

Subsidiaries


Union Group 525,616 525,374

Firma Del, d. o. o., Laško - 1,451

Total 2,234,616 2,455,249

28. H. INTEREST DUE FROM THE COMPANIES IN THE LAŠKO GROUP

(in EUR) 2013 2012

Subsidiaries

Jadranska pivovara - Split, d. d., impairment of loans and interest 523,048 523,048

Total 523,048 523,048

28. I. INTEREST PAYABLE TO THE COMPANIES IN THE LAŠKO GROUP

(in EUR) 2013 2012

Subsidiaries

Radenska, d. d., Radenci 173,581 146,962

Union Group 45,022 43,324

Total 218,603 190,286

28. J. GUARANTEES GIVEN TO THE ASSOCIATED COMPANIES IN THE LAŠKO GROUP

(in EUR) 2013 2012

Subsidiaries

Jadranska pivovara - Split, d. d. (for bank borrowings) - 510,463

Jadranska pivovara - Split, d. d. (paid instalments for guarantees) 2,605,523 2,107,305

Jadranska pivovara - Split, d. d. (interest not recorded) 1,051,317 999,482

Radenska, d. d., Radenci (for bank loans) 2,300,000 4,100,000

Pivovarna Union, d. d., Ljubljana (for bank loans) 1,230,258 1,890,354

Total 7,187,098 9,607,604


Birra Peja, Sh. a., Peć 871,921 2,000,000

Total other associated companies 871,921 2,000,000

Total 8,059,019 11,607,604



~ 314 ~

Sureties and the relevant impairment loss relating to Jadranska pivovara - Split were derecognised

from the off balance sheet assets in their total amount since in 2013 Pivovarna Laško repaid the total

amount of borrowings raised by Jadranska pivovara.

As at 31 December 2013, the Company reports EUR 7,187,098 of guarantees issued to the companies

in the Laško Group. Compared to the previous year, they decreased by EUR 2,420,506.

The receivables arising in financial years 2011 and 2012, which do not qualify for recognition as

assets (repayments of guarantees issued in the amount of EUR 2,605,523) and interest receivables

amounting to EUR 1,051,317, are recognised in the off balance sheet records.

28. K. PROVISIONS FOR COMPANIES IN THE LAŠKO GROUP

(in EUR) 2013 2012

Subsidiaries

Radenska, d. d., Radenci (regulatory requirement) 1,044,184 -

Total subsidiaries 1,044,184 -

5.4.9 REMUNERATION OF MEMBERS OF THE MANAGEMENT AND SUPERVISORY BO-ARDS AND THE EMPLOYEES WITH INDIVIDUAL CONTRACT OF EMPLOYMENT

The Company is managed by the Management Board and the Supervisory Board and their remu-

neration (gross earnings) is presented in the table below:

(in EUR) 2013 2012

MANAGEMENT BOARD

Fixed remuneration 419,500 672,000



Total 435,381 691,351

Other Fixed receipts Jubilee (in EUR) earnings (benefits) awards Total

MANAGEMENT BOARD - IN 2013 Dušan Zorko 109,500 - - 109,500Marjeta Zevnik 77,500 - - 77,500Matej Oset 77,500 5,227 1,536 84,263Mirjam Hočevar 77,500 - - 77,500Gorazd Lukman 77,500 9,118 - 86,618 Total 419,500 14,345 1,536 435,381

As at 31 March 2013, the Management Board of Pivovarna Laško was re-assigned to Pivovarna Union

on a part-time basis.



~ 315 ~

Earnings received by the employees on the basis of individual contracts in 2013 are shown in the

table below:

(in EUR) 2013 2012

INDIVIDUAL CONTRACTS OF EMPLOYMENT




Total 1,076,985 1,143,858

Pursuant to Article 30 of the Articles of Association and resolution of the most recent Annual Gen-

eral Meeting of shareholders, Members of the Supervisory Board of Pivovarna Laško received meeting

fees totalling EUR 133,363 in 2013.

(in EUR) 2013 2012

SUPERVISORY BOARD

Vladimir Malenković 15,331 31,119


Bojan Košak - 1,500

Andrej Kebe - 1,500





Marjan Mačkošek - 2,500

Goran Brankovič 6,062 -

Enzo Smrekar 4,658 -

Jože Bajuk 5,670 -

Total 108,593 137,583

(in EUR) 2013 2012




Igor Teslić 4,921 3,697

Total 14,721 12,902



~ 316 ~

(in EUR) 2013 2012





Total 8,320 13,965

(in EUR) 2013 2012


Peter Groznik 426 -

Bojan Cizej 426 -

Dragica Čepin 426 -

Jože Bajuk 451 -

Total 1,729 -

5.4.10 CONTINGENT LIABILITIES AND ASSETS

The Management Board expects no significant losses from contingencies described below.

A LAWSUIT BROUGHT AGAINST PIVOVARNA LAŠKO BY MIP

On 21 March 2013 the Group received a lawsuit brought against the controlling company by MIP,

Gornji Vakuf, Uskoplje, which was lodged at the District Curt of Celje by the plaintiff’s attorney Matej

Erjavec, Ljubljana, demanding payment of damages amounting to EUR 1,135,481.43.

The damages relate to the loss of profits incurred by the plaintiff due to unjustified withdrawal from

the Sale contract worth EUR 1,085,481.43, and damages for the loss of reputation in the amount of

EUR 50,000.00.

On 22 April 2013 the Group issued a defence plea stating that the plaintiff’s claim was unfounded.

The court of first instance has not ruled on this matter yet.

LAWSUIT BROUGHT BY PERUTNINA PTUJ FOR PAYMENT OF EUR 10,116,488.71 PLUS COSTS AND INTEREST

The plaintiff filed a claim against Pivovarna Laško on 31 December 2010 at the District Court of

Celje demanding payment of EUR 10,116,488.71 inclusive of the legally prescribed default interest.

The plaintiff justified its claim by stating that the legal representative of Pivovarna Laško signed a

comfort letter on 10 January 2009 and thus allegedly committing to fulfil the obligation of Perutnina

Ptuj to Poslovni sistem Mercator on account of loan contracts. This refers to two loan contracts which

Perutnina Ptuj signed with the Poslovni sistem Mercator: one on 24 January 2008 amounting to EUR

5,000,000.00 and the second one on 27 February 2008 for EUR 15,000,000.00. According to rep-

resentations made by the plaintiff, the disputed amount relates to a part of the loan which, as alleged

by the plaintiff, should be paid by Pivovarna Laško. The plaintiff further states that Pivovarna Laško

has only partly fulfilled its obligations referred to in the comfort letter; namely, through its business

partners it secured cash amounting to EUR 11,864,476.50 to Perutnina Ptuj as a settlement of the loan.

The latter is allegedly demonstrated by the account of payments made by Infond Holding and Center

naložbe. Perutnina Ptuj is also suing for the remaining amount. The defence statement was submitted



~ 317 ~

within the set deadlines. The court issued a ruling on 22 January 2011 allowing incidental intervention

by Boško Šrot, former director of Pivovarna Laško, for the defendant Pivovarna Laško. The court has

so far not fixed the date for hearing.

LAWSUIT BY NKBM CLAIMING PAYMENT OF EUR 6,570,542.25 PLUS COSTS AND INTEREST

NKBM filed an application for enforcement against Pivovarna Laško on 1 April 2010 based on the

Contract No. 36/2009 for pledges of RARG shares concluded on 25 March 2009 between NKBM as

the creditor, Center naložbe as the debtor and Pivovarna Laško as the lienee. The Contract was signed

on behalf of Pivovarna Laško by its former director Boško Šrot. The application for enforcement relates

to recovery of EUR 6,570,542.25 inclusive of the legally prescribed default interests through the sale of

345,304 RARG shares, owned by Pivovarna Laško. These shares were pledged by Pivovarna Laško as

collateral for borrowings raised by Center naložbe from NKBM. The District Court issued a ruling on

6 April 2010 allowing the application for enforcement. Pursuant to timely filling of an appeal against

the ruling, the court issued a decision on 16 February 2011 annulling the ruling that allowed the en-

forcement and referred the case to be decided by the District Court of Maribor pursuant to the rules

applicable to legal procedures. The District Court in Maribor issued its decision on 14 June 2011 that

the application for enforcement by the creditor, currently the plaintiff NKBM of 1 April 2010 be deemed

withdrawn and the proceedings under reference II Pg 547/2011 to be closed. The decision closing the

proceedings became final on 2 July 2011. Based on the District Court of Maribor ruling, on 4 July 2011

the plaintiff refunded Pivovarna Laško the costs of proceedings amounting to EUR 10.208,00.

Further to the lawsuit by NKBM of 29 July 2011, the District Court of Maribor on 17 November 2011

issued a ruling allowing enforcement of the pledged 345,304 RARG shares of Radenska for repay-

ment of receivables totalling EUR 7,349,552.25 inclusive of the legally prescribed default interest. The

defendant, Pivovarna Laško must allow the sale of the aforementioned securities and settlement of

receivables from the proceeds of the sale. The judgement is final. Based on final and enforceable rul-

ing, the court at the application of NKBM against Pivovarna Laško allowed enforcement of the pledged

RARG shares. So far the RARG shares have not been sold in the enforcement procedure.

NKBM proposed deferred enforcement and accordingly on 28 October 2013 the court ruled for the

enforcement to be postponed until 1 October 2014.

LEGAL ACTION BY CEN ADRIA, D.O.O. - IN BANKRUPTCY, MATULJI (REPUBLIC OF CROATIA)

In 2006, Pivovarna Laško filed an application for enforcement against Cen Adria, demanding pay-

ment of outstanding invoices totalling Kn 857,292.53 (euro equivalent of 114,764.73) plus costs and

interest. Cen Adria appealed against the enforcement ruling and currently the case is proceeding in the

same way as in the case of an appeal against payment order in legal proceedings.

In 2006, during the above proceedings, Cen Adria filed a counter action against Pivovarna Laško

and Jadranska pivovara Split, Vranjic, demanding payment of damages totalling Kn 25,000,000.00

(euro equivalent of approx. 3,346,720.21), which Cen Adria allegedly incurred due to untimely termina-

tion of the Contract on Business Cooperation (Ugovor o poslovnoj suradnji). During the proceedings

and upon the appeal of Pivovarna Laško, the Commercial Court issued a decree on lack of jurisdiction

and referred the case to the Commercial Court in Split (the registered seat of the second defendant).

Cen Adria appealed against the decision of the Commercial Court in Rijeka. The High court in Zagreb

subsequently ruled the court in Rijeka as having territorial jurisdiction.

In 2012, bankruptcy proceedings were instigated against Cen Adria. The main hearing of both these

cases was held on 17 January 2013 at the Commercial Court in Rijeka.



~ 318 ~

Jadranska pivovara - Split and Pivovarna Laško both believe that Cen Adria’s claim for a counter

action is unfounded since Jadranska pivovara - Split terminated the disputed Contract on Business

Cooperation in compliance with the contractual terms and conditions.

In the case of Cen Adria against Pivovarna Laško and Jadranska pivovara - Split, the main hearing

was held on 24 April 2013, 26 September 2013, and 27 November 2013. The next hearing is scheduled

for 24 April 2014.

5.4.11 COSTS OF THE AUDITOR

The cost of the audit performed by Ernst & Young, d. o. o. for the year 2013 amounted to EUR 33,800.


Events that occurred after the end of the financial year in Pivovarna Laško are described in section


SETTLEMENT CLAIMS OF PIVOVARNA UNION AND RADENSKA IN ACCORDANCE WITH ARTICLE 542 OF THE

COMPANIES ACT (ZGD-1)

On 23 April 2012, Pivovarna Laško, received the letters entitled “Settlement claim pursuant to para-








On 23 April 2014, Pivovarna Laško replied to the letters of Pivovarna Union and Radenska inform-






At the end of April 2014, Pivovarna Laško, Pivovarna Union and Radenska, signed a Debt Resched-

uling and Standstill Agreement with all of the 18 creditor banks. The Agreement defines important

financial restructuring milestones, whereas final maturity of the majority of the company’s borrowings






deleveraging of the Group to the sustainable level of indebtedness; and, on the other hand, to ensure

fulfilment of creditors› expectations for rapid deleveraging and simultaneous maximising of the value





~ 319 ~



















deleveraging milestones, will terminate the agreement only, if so decided by the majority of creditors.

~ 320 ~

C O L O P H O N

Publisher: Pivovarna Laško, d. d., Trubarjeva 28, 3270 Laško

Design: atelje.Balant, Ljubljana

Photograps: Arne Hodalič, Primož Korošec

Text: Pivovarna Laško, d. d.

Translating: Prevajalska agencija GORR, d. o. o.

Printed by: Tiskarna Formatisk, d. o. o.

Edition: 50

June, 2014

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Annual report 2013 lasko group

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