Annual report 2012

LAŠKO GROUP

ANNUAL REPORT

ANNUAL REPORT OF THE LAŠKO GROUP

AND PIVOVARNA LAŠKO, D. D.

ANNUAL REPORT

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1. INTRODUCTION 4

1.1 Address by the Chairman of the Management Board 5

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

1.3 Data on the operations of the Laško Group 11

1.4 Data on the operations of the Pivovarna Laško, d. d. 17

1.5 Vision, mission, values and strategic goals 22

1.6 Presentation of the Laško Group 23

1.7 Presentation of the parent company Pivovarna Laško, d. d. 26

2. BUSINESS REPORT 28

2.1 Corporate governance 29

2.2 Statement on corporate governance and the compliance with the Corporate

Governance Code 46

2.3 Report of the Management Board of Pivovarna Laško, d. d. on the extent of

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

2.4 Shareholders 53

2.5 Sales and marketing 62

2.6 Supply flows 78

2.7 Quality and standards 81

2.8 Investments 86

2.9 Performance analysis 93

2.10 Risk management 98

2.11 Financing and sale of the investments 103

2.12 Overview of significant events in 2012 106

2.13 Events after the accounting period 112

2.14 Development landmarks 113

Contents

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3. SUSTAINABLE DEVELOPMENT 116

3.1 Human resources management in the Laško Group 117

3.2 Communications 121

3.3 Responsible attitude towards social environment 123

3.4 Environmental protection 124

4. FINANCIAL REPORT OF THE LAŠKO GROUP 132

5. FINANCIAL REPORT OF PIVOVARNA LAŠKO, D. D. 218

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Introduction

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GOOD UPDATED RESULTS DESPITE THE ECONOMIC CRISIS

Dear Shareholders, esteemed Business Partners and Colleagues,

2012 was yet another year that can mainly be characterised by the operations in extremely chal-

lenging economic conditions. The economic crisis in Slovenia further intensified and the purchasing

power of the population additionally decreased. The projections of the Management three years ago

when the objectives set in the business strategy were the sales growth on foreign markets and the

maintenance of the leading market shares on the domestic market have been confirmed as correct.

Despite extremely demanding economic environment, the Laško Group managed to achieve good

results. In accordance with the agreement reached with the creditor banks, a part of the principal was

paid back and interest on loans was regularly paid.

In the first half of 2012, we were able to reach an agreement with the creditor banks on rescheduling

the majority of loans; however, some of the creditor banks made it conditional on the cessation of the

activities concerning the establishment of the contractual concern that the shareholders of Pivovarna

Laško had confirmed at the general meeting in January. These requests resulted in the termination of

the controlling contracts between Pivovarna Laško and Pivovarna Union and Radenska.

In 2012, the Laško Group generated EUR 271.5 million of net sales revenues and EUR 22.2 million of

operating profit, which is by 39.5% more than in 2011. Similarly to recent years, high debt of the Group

considerably affected operating results.

In 2012, the Laško Group generated 88.6% of its net sales revenues from sales of products and ser-

vices on the domestic market and 11.4% on foreign markets. The sale of beer represents the greatest

THE OPERATING RESULTS OF THE

LAŠKO GROUP IN 2012 ARE YET

ANOTHER PROOF THAT THIS IS A

GROUP OF HEALTHY COMPANIES

THAT CREATE HIGH ADDED

VALUE AND HAVE OPERATED

WITH PROFITS; HOWEVER IN

THE FUTURE THEY WILL NOT

BE ABLE TO DEAL WITH THE

COMPETITION DUE TO THE

FINANCIAL BURDEN.

1.1

Address by the Chairman of the Management Board

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share in the sales structure with EUR 152.6 million and was followed by other beverages with EUR

59.4 million whereas the revenue resulting from the newspaper and publishing activities amounted

to EUR 50.1 million.

In 2012, the sale of beverages on the domestic market was anticipated to be lower than in the previ-

ous years and the sales on foreign markets increased in accordance with the business strategy. The

markets between Italy in the West and Macedonia in the East were the most important ones.

In 2012, the Group proved that environment that we co-created and with which we interfered was

one of the most important values of all the employees since we believe that such a vision reflects our

business responsibility and sustainability. And our products and the efforts to reduce the use of natu-

ral resources are adapted to this vision. New systematisation was also successfully introduced in the

Group companies.

The performance of the Laško Group in 2012 is further proof that this is a group of healthy com-

panies that creates high added value and generates profit; however, in the future, it will not be able to

contend with the competitors due to high financial burden. This is why the divestment of the assets

that do not represent the core activity remains one of the priorities. More fruitful cooperation with the

creditor banks with regard to long-term solution of the problem of indebtedness can enable our opera-

tions and business results that will be in the interest of the shareholders, creditors and employees.

Dušan Zorko, MSc

Chairman of the Management Board of Pivovarna Laško

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THE SUPERVISORY BOARD ASSESSES THAT THE OPERATIONS OF PIVOVARNA LAŠKO AND THE LAŠKO GROUP

AND THE WORK OF THE MANAGEMENT BOARD IN 2012 WERE IN ACCORDANCE WITH EXPECTATIONS IN

THE LIGHT OF THE GENERAL DETERIORATION OF THE ECONOMIC SITUATION AND CHANGED FINANCING

CONDITIONS.

SUPERVISORY BOARD COMPOSITION

The Supervisory Board of the Company was active with the following composition in the 2012 fi-

nancial year:

CAPITAL REPRESENTATIVES

Dr Vladimir Malenković, Chairman

Dr Peter Groznik, member

Dr Borut Bratina, member

Mr Borut Jamnik, member

EMPLOYEE REPRESENTATIVES

Mr Bojan Cizej, Deputy Chairman

Dragica Čepin, MSc, member

COMPOSITION OF THE SUPERVISORY BOARD COMMITTEES

The Audit and Human Resources Committees operated within the Supervisory Board in 2012 with

the following compositions:

AUDIT COMMITTEE

Dr Peter Groznik, Chairman

Mr Bojan Cizej, member

Mr Igor Teslić, external member

HUMAN RESOURCES COMMITTEE

Mr Borut Jamnik, Chairman

Dr Borut Bratina, member

Dragica Čepin, MSc, member

1.2

Report of the Supervisory Board on the verification of the annual report

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FUNCTIONING OF THE SUPERVISORY BOARD

The operations of Pivovarna Laško were monitored by the Supervisory Board of the Company in ac-

cordance with the statutory provisions and the Articles of Associations of the Company and it met at

14 regular sessions.

Throughout the year of 2012, the Supervisory Board continuously reviewed the work of the Manage-

ment Board. The Supervisory Board placed special attention to the key indicators of capital adequa-

cy and the solvency of Pivovarna Laško and the companies in the Group, the disposal of the invest-

ments of the Laško Group, activities connected to the rescheduling of financial liabilities of Pivovarna

Laško and the Laško Group companies, cost management, relevant legal issues and verification of the

achievement of business results. Due to the situation in the companies, the Supervisory Board con-

stantly dealt with the abovementioned issues that were regular items on the agenda of the Supervisory

Board meetings.

SIGNIFICANT RESOLUTIONS OF THE SUPERVISORY BOARD

In addition to the above, the Supervisory Board also dealt with other current matters and adopted

the following key resolutions:

• the Supervisory Board approved the business plan of the Laško Group and Pivovarna Laško for the

2012 financial year;

• the Supervisory Board was informed of the content of the contract on the sale of the shares of

Poslovni sistem Mercator and agreed that Pivovarna Laško should sell 317,498 ordinary registered

shares with the MELR ticker symbol issued by Poslovni sistem Mercator representing a 8.43%

stake to the Agrokor Company, namely at EUR 221.00 per share;

• the Supervisory Board was informed of the notification of the financial advisor from ING that the

Agrokor Company decided to withdraw from the sale process of Mercator shares and supported the

Management Board to continue the activities related to the sale of Mercator shares so as to protect

the interests of the Laško Group companies to the fullest extent possible;

• the Supervisory Board took note of the balance of financial liabilities to the banks and their matu-

rity as well as of the proposal of the Management Board and its activities concerning the reschedul-

ing and of the position of the banks with regard to the adopted resolution of the General Meeting.

The Supervisory Board invited the Management Board to protect the interests of Pivovarna Laško

and the Laško Group by reaching an agreement on the rescheduling of the financial liabilities to

the banks and thus reduces the high financial risk;

• the Supervisory Board approved the 2011 audited Annual Report of Pivovarna Laško and the Laško

Group;

• the Supervisory Board was informed of the condition of one of the creditor banks to conduct

the rescheduling of financial commitments of the companies: Pivovarna Laško, Pivovarna Union

and Radenska, namely that these companies terminate the contract-based group. The Supervisory

Board was also acquainted with the view of the Pivovarna Laško Management Board that wanted to

protect the interests of the Laško Group companies by implementing the procedures related to the

termination of the controlling contracts;

• the Supervisory Board got acquainted with the findings and recommendations of the research and

advisory study to support strategic decisions of the Laško Group;

• the Supervisory Board was acquainted with the roadmap of the activities to achieve long-term

rescheduling;

• the Supervisory Board got acquainted with the updated Plan of financial restructuring of Pivovarna

Laško and the Laško Group;

• the Supervisory Board confirmed the Business Plan of the Laško Group and Pivovarna Laško for

the 2013 financial year.

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FUNCTIONING OF THE AUDIT COMMITTEE

In 2012, the he Audit Committee met seven times. At its sessions, the Committee analysed major

transactions of the Laško Group in 2010 and 2011, individual transactions of the Laško Group as well

as it addressed the findings and recommendations of the external auditor on the basis of the previous

audit of the 2011 financial statements. The Committee adopted the Rules of procedure of the Audit

Committee and got acquainted with the work of a newly established Internal Audit Service. The Audit

Committee regularly reported on its findings to the Supervisory Board.

FUNCTIONING OF THE HUMAN RESOURCES COMMITTEE

In 2012, the Human Resources Committee met four times. At its session the Committee dealt with

the system of risk management related to the management of the Laško Group and it prepared recom-

mendations with regard to the management and the arrangement of remuneration of the manage-

ments in the Group companies and proposed the management employment contracts for the mem-

bers of the Management Board with a dual mandate. The HR Committee regularly reported on its

findings to the Supervisory Board.

ANNUAL REPORT VERIFICATION

The Supervisory Board reviewed the 2012 audited Annual Report of Pivovarna Laško and the Laško

Group at its session on 20 March 2013.

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

issued its positive opinion of the Annual Report with notes on 4 March 2013. The Supervisory Board

found no objections to the auditor’s report and approved it.

The Supervisory Board felt that the Annual Report of Pivovarna Laško and the Pivovarna Laško Group

for 2012 required no comment on its part and it unanimously confirmed it at its session on 20 March 2013.

PROPOSAL FOR COVERING NET LOSS

In addition to confirming the 2012 audited Annual Report of Pivovarna Laško and the Laško Group,

the Supervisory Board also confirmed the proposal of the Management Board for covering net loss of

Pivovarna Laško in 2012, namely that net loss amounting to EUR 18,510,265 be covered by profit from

the previous years in the amount of EUR 859,740, by other profit reserves in the amount of EUR

232,097 and by capital reserves in the amount of EUR 17,418,428. Distributable profit of Pivovarna

Laško in the 2012 financial year thus equals EUR 0.0.

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

work of the Management Board in 2012 were in accordance with expectations in the light of the general

deterioration of the economic situation and changed financing conditions.

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

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

Laško, 20 March 2013

Chairman of the Supervisory Board:

dr. Vladimir Malenković

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THE LAŠKO GROUP MANAGED TO REDUCE THE NUMBER OF THE EMPLOYEES, WHICH IS IN ACCORDANCE

WITH THE MULTI-ANNUAL RESTRICTIVE EMPLOYMENT POLICY. IN TERMS OF QUANTITIES, THE SALE ON

THE MARKETS OUTSIDE SLOVENIA INCREASED BY 12.2 PERCENT.

SALES REVENUES AND OPERATING PROFIT INCLUDING AMORTISATION (EBITDA)

0.0

in E

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mill

ion

Net sales revenue

EBITDA - normalised

2010 2011 2012

50.347.538.9

271.5323.4306.4

90.0

180.0

270.0

360.0

450.0

In 2012, sales revenues reduced by 16.0% while normalised operating profit including depreciation

(EBITDA) increased by 5.9%.

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

revenues from continuing 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.

1.3

Data on the operations of the Laško Group

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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.

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

0.0

in %

Return on equity (ROE)

Return on assets (ROA)

2010 2011 2012

2.2

0.60.7

11.2

2.92.9

6.0

3.0

9.0

12.0

15.0

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KEY DATA ON THE OPERATIONS OF THE LAŠKO GROUP

(in EUR) 2010 2011 2012

Net sales revenue 306,418,155 323,412,454 271,548,163

EBIT -9,886,015 9,887,269 21,766,861

EBIT - normalised 14,484,000 23,419,000 29,096,657

EBITDA 14,555,442 29,473,247 41,831,060

EBITDA - normalizsed 38,925,457 47,525,978 50,319,090

Net interest expense1 -20,177,735 -23,787,004 -21,446,176

Net profit or loss -25,818,805 -27,506,298 -32,938,018

Net profit or loss - normalised 4,455,000 3,962,000 12,313,600

Long-term assets 265,643,825 321,093,374 306,665,682

Tangible fixed assets 153,632,750 180,695,007 194,465,281

Short-term assets + Accruals +

Prepaid Expenditure (APE) 371,207,876 248,589,915 203,749,234

Equity 131,889,003 125,473,457 92,665,202

Long-term liabilities + long-term

Accruals + Deferred Income (ADI 89,069,856 47,605,283 32,998,565

Short-term liabilities + short-term ADE 415,892,842 396,604,549 384,751,149

Net short-term assets

and liabilities respectively2 -44,684,966 -148,014,634 -181,001,915

Net financial debt3 69,884,888 197,431,865 232,115,204

Net financial debt excluding

the investments into subsidiaries4 70,092,036 197,067,062 231,687,841

Cash flow from operations 53,706,564 34,206,702 42,134,920

Investing cash flows -8,024,980 38,385,907 -8,904,359

Financing cash flows -44,563,521 -53,198,567 -52,545,710

Net cash flows 1,118,063 19,394,042 -19,315,149

1Financial interest income - financial interest expense

2Short-term assets and accruals and prepaid expenditure; liabilities and accruals and deferred income

3(Short- and long-term financial liabilities) - (long- and short-term financial investments + cash)

4(Long- and short-term financial liabilities) - (long-term financial investments excluding the investments into subsidiaries+

short-term financial investments + cash)

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INDICATORS

2010 2011 2012

Share of normalised EBIT

in sales revenues 4.7% 7.2% 10.7%

Share of normalised

EBITDA in sales revenues 12.7% 14.7% 18.5%

Cover of interest5 0.718 0.985 1.357

Normalised net profit and/or loss

from revenues from sales 1.5% 1.2% 4.5%

Return on equity (ROE)6 2.9% 2.9% 11.2%

Return on assets (ROA)7 0.7% 0.6% 2.2%

Liabilities / Equity 3.829 3.540 4.508

5Normalised EBIT / net interest expense

6Normalised net profit or loss/ average balance of equity in the period

7Normalised net profit or loss/ average balance of assets in the period

NUMBER OF EMPLOYEES

(as of 31/12) 2010 2011 2012

Laško Group excluding Delo Group 1,422 1,392 1,180

In the Delo Group 445 428 412

Total 1,867 1,820 1,592

Average number of employees (based on hours) 1,886 1,838 1,607

Added value per employee8

(in EUR / employee) 55,761 60,188 64,658

Net sales revenues per employee9

(in EUR / employee) 162,470 175,959 168,978

8(Operating revenues - costs of goods, material and services - other operating expenses (entire operations)) / average number of

employees based on hours

9net sales revenues (entire operations) / average number of employees based on hours

The number of employees in the Delo Company, Ljubljana, is displayed separately as Delo does

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

Group are also included in the total employee figure for 2011 regardless of the fact that as of 12 Decem-

ber 2011, the Fructal Group is no longer a part of the Union Group or subsequently the Laško Group.

SHARE OF EXPORT IN TOTAL SALES OF BEVERAGES OF THE LAŠKO GROUP

(in hl) 2010 2011 2012

Total sales of beverages 4,225,503 3,918,939 3,788,929

Sales on markets outside Slovenia 938,089 1,089,013 1,221,596

Share (in %) 22.2 27.8 32.2

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To ensure comparability of data in 2011, the sales in terms of quantity in 2011 is presented excluding

the Fructal Group; however the volume of sales of Birra Peja from Kosovo is included.

SUMMARY OF THE 2013 BUSINESS PLAN

PLANS CONCERNING THE OPERATIONS OF THE LAŠKO GROUP

(in EUR) 2011 2012 Plans 2013

Net sales revenues from

continuing operations 264,737,273 271,386,948 269,585,102

EBIT 15,923,108 22,216,181 30,453,552

EBITDA 35,509,087 42,280,380 48,892,135

Net profit or loss from

continuing operations -20,801,140 -30,396,363 11,704,846

Sales (in hectolitres) 3,918,939 3,788,929 3,900,035


(in EUR / employee) 60,188 64,658 63,156

10(Operating revenues - costs of goods, material and services - other operating expenses (entire operations)) average number of

employees in terms of hours worked

The global and in particular European market has been changing irrepressibly due to the recession.

The continuation of strained economic conditions on the key markets of the Laško Group are reflected

in considerably reduced purchasing power and the redirection of buyers to smaller formats of shops

and the growth of discount store popularity.

The fundamental objective set for the Laško Group in 2013 is to increase the sales of beverages by

2.9%, which should be achieved by the growth on foreign markets and by the maintenance of the lead-

ing position on the domestic market.

EUR 269.6 million of net sales revenue the Group is planning to generate is comprised of EUR 30.5

million of operating profit, EUR 11.7 million of net profit and EUR 48.9 million EBITDA.

In 2013, the Group will, in accordance with the adopted business strategy, invest mainly into produc-

tion, equipment and technology and the achievement of optimum productivity, the balance between

adaptability and efficiency of individual parts of the production process, the achievement of synergy

effects among the Group companies, integration of information technology into the production pro-

cesses, possibilities of the expansion of certain production sets and as high as possible return on

investments.

Environmental protection activities in 2013 are still associated with the implementation of environ-

mental objectives geared towards reducing the environmental burden, quantities of waste water and

waste and towards the rational use of electricity and natural gas. The preservation of the water protec-

tion area, the vital resource of the Group, is the constant objective of the Laško Group.

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OUR SALES STRATEGY ON FOREIGN MARKETS IS SUCCESSFULLY IMPLEMENTED. IN 2012, THE SHARE OF

EXPORT IN THE ENTIRE SALE REACHED 35 PERCENT AND IS BY 23 PERCENT HIGHER THAN IN THE PREVIOUS

YEAR.

SALES REVENUES AND OPERATING PROFIT INCLUDING AMORTISATION (EBITDA)

0

in E

UR

mill

ion

Net sales revenue

EBITDA - normalised

2010 2011 2012

14.616.618.2

89.094.391.3

26.0

52.0

78.0

104.0

130.0

Sales revenues increased by 5.7% in 2011 compared to the previous year, while normalised operating

profit including amortisation (EBITDA) decreased by 12.0%.

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

Group on pages 11 through 13 of this Report.

1.4

Data on the operations of Pivovarna Laško, d. d.

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RETURN ON ASSETS (ROA) 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 %

2010 2011 2012

-0.7-0.1

0.6

-2.7-0.4

1.9

KEY DATA ON THE OPERATIONS OF PIVOVARNA LAŠKO

(in EUR) 2010 2011 2012

Net sales revenue 91,287,653 94,314,248 88,960,946

EBIT 11,223,795 10,502,062 8,690,491

EBIT - normalised 11,223,795 10,257,235 9,623,538

EBITDA 18,219,869 16,796,492 13,634,148

EBITDA - normalizsed 18,219,869 16,551,665 14,567,195

Net interest expense1 -12,231,427 -14,898,488 -13,741,037

Net profit or loss -6,292,260 -15,528,268 -18,510,265

Net profit or loss- normalised 2,439,500 -516,176 -2,750,328

Long-term assets 294,360,182 320,277,999 307,543,188

Tangible fixed assets 53,673,619 49,161,657 46,237,123

Short-term assets + Accruals +

Prepaid Expenditure (APE) 121,497,098 85,209,333 72,876,802

Equity 124,168,015 109,365,419 91,534,436

Long-term liabilities + long-term

Accruals + Deferred Income (ADI) 48,572,620 26,710,750 4,164,129

Short-term liabilities + short-term ADE 243,116,645 269,411,163 284,721,425

Net short-term assets

and liabilities respectively2 -121,619,547 -184,201,830 -211,844,623

Net financial debt3 -50,362,043 -28,693,317 -17,970,455

Net financial debt excluding

the investments into subsidiaries4 206,468,863 216,323,220 219,744,686

Cash flow from operations 19,921,166 12,929,274 15,407,650

Investing cash flows -3,296,553 522,577 5,033,916

Financing cash flows -16,657,096 -13,208,801 -20,485,951

Net cash flows -32,483 243,050 -44,385

1Financial interest income - financial interest expense

2Short-term assets and accruals and prepaid expenditure; liabilities and accruals and deferred income

3(Short- and long-term financial liabilities) - (long- and short-term financial investments + cash)

4(Long- and short-term financial liabilities) - (long-term financial investments excluding the investments

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INDICATORS

2010 2011 2012

Share of normalised EBIT in sales revenues 12.3% 10.9% 10.8%

Share of normalised EBITDA in sales revenues 20.0% 17.5% 16.4%

Cover of interest5 0.918 0.688 0.700

Normalised net profit and/or

loss from revenues from sales 2.7% -0.5% -3.1%

Return on equity (ROE)6 1.9% -0.4% -2.7%

Return on assets (ROA)7 0.6% -0.1% -0.7%

Liabilities / Equity 2.349 2.708 3.156

5Normalised EBIT / net interest expense

6Normalised net profit or loss / average balance of equity in the period

7Normalised net profit or loss / average balance of assets in the period

NUMBER OF EMPLOYEES

2010 2011 2012

Employees as of 31/12 318 329 324

Average number

of employees in terms of hours worked 319 322 330


(in EUR / employee) 90,267 91,258 77,511

Net sales revenue per employee9

(in EUR / employee) 286,168 292,901 269,579

8(Operating revenues - costs of goods, material and services - other operating expenses (entire operations)) / average number of

employees in terms of hours worked

9net sales revenues (entire operations) / average number of employees in terms of hours worked

SHARE OF EXPORT IN TOTAL SALES OF BEVERAGES PIVOVARNA LAŠKO, D. D.

(in hl) 2010 2011 2012

Total sales of beverages 968,697 975,838 942,183

Export 250,371 268,631 330,213

Share (in %) 25.8 27.5 35.0

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MARKET SHARE OF THE SALES OF BEER ON SLOVENIAN MARKET

(in %) 2010 2011 *2012

Pivovarna Laško 42.3 40.6 37.7

Pivovarna Union, brands 35.9 39.4 38.0

Pivovarna Union, trade names 6.4 6.9 8.2

Beer from import 15.4 13.1 16.1

Total 100.0 100.0 100.0

*data for the period I.-X./2012

DATA ON THE PILR SHARE

2010 2011 2012

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

Normalised net profit

or loss per share in EUR 0.28 -0.06 -0.31

Market value of the

share as of 31/12 in EUR 15.99 11.02 6.99

MV of a share / net profit

or loss per share -22.21 -6.19 -3.30

Book value of a share

as of 31/12 in EUR10 14.19 12.50 10.46

MV of a share / BV of a share 1.13 0.88 0.67

Market capitalisation in EUR 139,874,955 96,399,125 61,146,087

10Equity as of 31 December / total number of shares

SUMMARY OF THE 2013 BUSINESS PLAN

PLANS OF THE OPERATIONS OF THE COMPANY

(in EUR) 2011 2012 Plans 2013

Net sales revenues 94,314,248 88,960,946 89,282,586

EBIT 10,502,062 8,690,491 10,234,038

EBITDA 16,796,492 13,634,148 14,960,663

Net profit or loss -15,528,268 -18,510,265 1,526,704

Sales (in hectoliters) 975,838 942,183 968,493


(in EUR / employee) 91,258 77,511 79,098

11(Operating revenues - costs of goods, material and services - other operating expenses) / average number of employees in

terms of hours worked

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The objectives have been set for 2013 that can be identified as the 2.8% increase in the quantities

of the sales of beer and other beverages. The sales growth is planned for the foreign markets where

the quantities are to increase by more than 13%. At the same time, the shares on the domestic market

should be maintained. 968 thousand hl of all types of beverages are planned to be sold in 2013.

Total of EUR 89.3 million of net sales revenue is expected. 81.8% of all the revenue will be generated

on the domestic market and EUR 16.2 million on foreign markets. The funds amounting to EUR 4.1

million will mainly be invested into the renewal of the technological equipment and into IT as well as

into commercial activities.

Environmental protection activities in 2013 are still linked to the implementation of environmental

objectives geared towards reducing the environmental burden, quantities of waste water and waste and

towards the rational use of electricity and natural gas. The preservation of the water protection area, the

vital resource of the Company, is the constant objective of the Pivovarna Laško, d. d.

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TO BECOME THE FIRST CHOICE OF THE BUYERS OF QUALITY BRAND, THE 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, D. D.

VISION Becoming the first choice of the buyers Becoming the leading one in

of quality brand names in the industry the production and sale of

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

top class investment for our shareholders reputation, recognition and

an attractive employer for the employees market shares of our brand

who strive for excellence, development names on the domestic as

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 buyers and

value for our buyers and shareholders. shareholders.

By stressing social responsibility and Responsible and

motivating the employees we preserve environmentally friendly

the market position of the companies operations enable us to

in the Laško Group on all major achieve top results in

markets. a better world.

STRATEGIC GOALS The production and sale of innovative and trendy products, maintenance of the

market positions of own brand names on the domestic market, and recovery and

expansion of previously achieved positions on foreign markets. Planned cost ef-

fectiveness will be achieved through professionally qualified employees acting as

teams and in accordance with the policies of the Laško Group.

1.5

Vision, mission and strategic goals

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

DRINKS, SPIRITS AND OTHER ALCOHOLIC BEVERAGES AND SYRUPS FOR BEVERAGE PRODUCTION. IT ALSO

PERFORMS NEWSPAPER AND PUBLISHING ACTIVITIES AND RETAIL AND WHOLESALE TRADE ACTIVITIES.

Ownership and stakes as of 31 December 2012:

Parent company

PIVOVARNA LAŠKO, d. d., Slovenia

Associated companies

• RADENSKA, d. d., Radenci, Slovenia

82.058 % ownership stake

(An explanation of the ownership stakes and voting rights is given on page 56 of this Report)

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


• BIRRA PEJA, Sh. a. Peć, Kosovo

(57.627 % is owned by Pivovarna Union, d. d., Ljubljana)

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


• VITAL MESTINJE, d. o. o., Slovenia

96.92 % shareholding

• DELO, d. d., Ljubljana, Slovenia

100 % ownership stake – of which Pivovarna Laško 80.834% and Radenska 19.166%

1.6

Presentation of theLaško Group

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

100 % shareholding – of which 69.22% is owned by Pivovarna Laško, d. d.,

15.39 % by Radenska, d. d., and 15.39% by Pivovarna Union.

• 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 subsid-

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

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

Radenci, Radenska, d. o. o., Zagreb and Radenska, d. o. o., Belgrade.

Subsidiary companies

• THERMANA, d. d., Laško, Slovenia


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

29.22 % shareholding

In 2011, Pivovarna Union, d. d. was the 93.73 % owner of the Fructal Company which was the 83.39 %

owner of the company Fruktal Mak, a. d., Skopje until 16 December 2011. On 16 December 2011, the

Nectar Company from Bačka Palanka became the new owner of the Fructal Company in the same

proportion.

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

of the Laško Group since Pivovarna Union had become the 57.63 % owner of this company.

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PIVO

VARN

AU

NIO

N, d

. d.,

Ljub

ljana

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ners

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97.9

22%

No

of s

h: 4

41,74

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JAD

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lit, d

. d.

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ners

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o of

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32

RAD

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ners

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58%

No

of s

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644

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re: 9

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0%

BIRR

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, Sh.

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Kos

ovo

No

of s

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7.627

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o of

sh:

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0 BI

RRA

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A, S

h. p

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Subs

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LA

ŠKO

GR

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P

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ško

Ow

ners

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elu

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No

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39,5

36

Rade

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Ow

ners

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in D

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19.16

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o of

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28

Subs

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BERI

, d. o

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LAŠK

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FIRM

A D

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Pivo

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(Not

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aden

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of th

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port

.)

OR

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ATIO

N C

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RT

OF

THE

LA

ŠKO

GR

OU

P A

S O

F 31

/12/

2012

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

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

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

1.7.1 IDENTITY CARD

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

the decision No Srg 95/00673 and under the application No 1/00171/00 dating September 1995.

Abbreviated Company’s name: PIVOVARNA LAŠKO, d. d.

Organizational form: Joint-stock 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

Tycker symbol: PILR

Company registration number: 5049318

Tax ID number: SI90355580

Activity code: 11.050

Type of business and principal activity:

BEER PRODUCTION

1.7

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

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Management Board: Dušan Zorko, MSc, Chairman

Marjeta Zevnik

Mirjam Hočevar

Gorazd Lukman

Matej Oset

Supervisory Board: Dr Vladimir Malenković, Chairman

Dr Borut Bratina

Borut Jamnik

Dr Peter Groznik

Bojan Cizej

Dragica Čepin, MSc

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

Telephone: +386 3 734 80 00

Fax: +386 3 573 18 17

Electronic mail address: [email protected]

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

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Business report

12345

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IT 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 principles of management of Pivovarna Laško arise from valid legal norms in the Republic of

Slovenia, internal acts of the Company and established good work practices. Management 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 Gen-

eral Meeting of Shareholders, Supervisory Board and 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 su-

preme body of the Company. This is where the shareholders’ will is directly realised and they adopt funda-

mental and statutory decisions. One share represents one vote at the General Meeting. Pivovarna Laško, d. d.

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

The General Meeting of Shareholders is convened by the Management Board on 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 in the Act or Articles of Association. The decisions taken at the General Meeting by a

three-quarters majority mainly concern:

• amendments to the Articles of Association,

• decrease in share capital (including conditional increase),

• approved increase in share capital,

2.1

Corporate governance

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• 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.

The General Meeting takes decisions regarding the granting of discharges to the Management and

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

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

the Management and Supervisory Boards for the financial year. Discussions regarding the granting

of discharges are carried out in combination with discussions on the use of distributable profit. If the

General Meeting does not grant 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 used for

dividends, the dividends belong to the shareholders who as owners have been entered in the central

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

decided each time through a decision on the use of distributable profit.

ATTENDANCE AT GENERAL MEETINGS

The right to participate and vote at the General Meeting is held by those shareholders who have been

entered into the share register at the Central Securities Clearing Corporation by the end of the fourth

day prior to the convocation of a General Meeting (cut-off date) and who personally, or through a repre-

sentative 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.

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.

CONVOCATION AND IMPLEMENTATION OF THE GENERAL MEETING OF SHAREHOLDERS

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

it is necessary in accordance with law and the Articles of Association.

In 2012, there were two General Meetings of Shareholders. The 19th regular General Meeting of

Shareholders of Pivovarna Laško, d. d. was convened on 29 December 2011 and held on 30 January 2012

and the 20th General Meeting of Shareholders of Pivovarna Laško was convened on 26 July 2012 and

held on 28 August 2012.

RESOLUTIONS OF THE 19TH GENERAL MEETING OF SHAREHOLDERS OF PIVOVARNA LAŠKO

The following important decisions were adopted at the 19th regular General Meeting regarding the

items on the agenda:

ITEM 2: INCREASE IN SHARE CAPITAL BY CASH CONTRIBUTIONS (CAPITAL INJECTION)

Resolution to item 2 provided by the Management Board and Supervisory Board of the Company

was not adopted since only 1,808,249 or 36.01% votes cast supported the resolution. The adoption of

resolutions requires a three-fourths majority or 75% of the votes cast.

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The contrary proposal of a resolution to Item 2 of a shareholder of KS Naložbe was not adopted. The

resolution was not adopted since only 379,028 or 8.85% of the votes cast supported it. The adoption of

resolutions requires a three-fourths majority or 75% of the votes cast.

ITEM 3: APPROVAL OF THE GENERAL MEETING OF THE CONTROLLING CONTRACTS AND THE AMENDMENTS

TO THE ARTICLES OF ASSOCIATION (AUTHORISED CAPITAL)

RESOLUTIONS TO ITEM 3:

3.1. The General Meeting approves the controlling contract concluded on 27 December 2011 between

Pivovarna Laško, the parent company, and Pivovarna Union, the subsidiary.

The General Meeting approves the controlling contract concluded on 27 December 2011 between

Pivovarna Laško, the parent company, and Radenska, Radenci, the subsidiary.

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

3.2. The Articles of association is amended so that article 10.a follows Article 10 and reads as follows:

»Article 10.a

The Management Board of the Company is authorised to issue new, ordinary registered no par value

shares for a consideration other than in cash and thus increases the share capital by issuing new shares

by maximum 5 (five) % of the share capital (authorised capital) existing at the time of adopting amend-

ments to the Articles of Association within 1 (one) year after the entry of the amendment of the Articles

of Association into the Court register. Prior to the issue of new shares, the Management Board needs

to obtain the consent of the Supervisory Board.

On the basis of the previous paragraph the Management Board of the Company is entitled to take a

decision concerning the exclusion of subscriptions rights to purchase new shares when increasing the

share capital provided the Company’s Supervisory Board has given its agreement.

When increasing the share capital based on the first and second paragraph of this Article, the auditor

does not need to verify the issue of shares for a consideration other than in cash.

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 based on the

provisions on the authorised capital.«

The resolution was passed with 3,965,175 votes cast or with 79.28%.

ITEM 4: AMENDMENT TO THE ARTICLES OF ASSOCIATION OF THE COMPANY (AUTHORISED CAPITAL) –

REQUEST OF KAPITALSKA DRUŽBA OF 20 DECEMBER 2011

RESOLUTION TO ITEM 4:

The Articles of association is amended so that article 11.a follows Article 11 and reads as follows:

»The Management Board of the Company is authorised to increase the share capital of the Company

by 50% of the share capital existing at the time of adopting amendments to the Articles of Association,

which means maximum EUR 18,251,652.48, by issuing new shares for a consideration other than in cash

within 5 (five) years after the entry of the amendment of the Articles of Association into the Court register.

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The issue of new shares, the increase in share capital and the content of the rights arising from the

new shares as well as the conditions of the issue of shares are decided by the Management Board pro-

vided the Company’s Supervisory Board has given its agreement.

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 based on the

provisions on the authorised capital.«

The resolution was not passed since it was supported by only 1,858,354 or 37.01% of the votes cast.

The adoption requires a majority of three-quarters or 75% of the votes cast.

ITEM 5: RESCHEDULING OF FINANCIAL LIABILITIES


The General Meeting calls on the creditor banks to agree with Pivovarna Laško and the companies of

the Laško Group on a comprehensive long-term rescheduling of financial liabilities under favourable

market conditions by 30 March 2012. The rescheduling should contain moratorium on the repayment

obligations concerning the principals that should mature with the receipt of the purchase sum after

having sold the investment into Mercator or after the recapitalisation of the parent company but not

later than 30 June 2013. With the debt rescheduling all the Laško Group companies could reach the

sustainable level of debt in 10 years (2–3x EBITDA). The rescheduled dynamics of the payment obliga-

tions should be coordinated with the planned cash flows arising from the core activities of individual

companies in the Group. This rescheduling will result in the reduction of financial risks, which will

enable normal operations, development and long-term existence.


ITEM 6: INFORMATION OF THE GENERAL MEETING AND CONSENT GIVEN TO THE SALE/PURCHASE CON-

TRACT WITH REGARD TO THE SHARES OF POSLOVNI SISTEM MERCATOR, D. D.

No resolution was adopted by the General Meeting since the shareholders only got acquainted with

the sale/purchase contract with regard to the shares of Poslovni sistem Mercator.

ITEM 7: APPROVAL OF THE PERFORMANCE OF SUPERVISION IN SUBSIDIARY COMPANIES


In accordance with Article 41 of the Companies Act, the General Meeting gives consent to the ap-

pointment of the members of the Supervisory Board of Pivovarna Laško into the supervisory boards of

the subsidiary companies.


ITEM 8: AMENDMENTS TO THE ARTICLES OF ASSOCIATION OF THE COMPANY


8.1. The Articles of association is amended so that article 14.a follows Article 14 and reads as follows:

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»Article 14.a

Members of the Management Board of the Company can be appointed members of the manage-

ment boards and supervisory boards in subsidiary companies that are or could be in competitive rela-

tionship with the activity of the Company.«

The Articles of association is amended so that article 16.a follows Article 16 and reads as follows:

»Article 16.a

Members of the Supervisory Board of the Company can be appointed members of the supervisory

boards in subsidiary companies that are or could be in competitive relationship with the activity of the

Company.«

8.2. Article 23 of the Articles of association is amended and reads as follows:

»Article 23

For their work, the members of the Supervisory Board are entitled to the payment for the perfor-

mance of the function, attendance fees and reimbursement of travel cost and other eligible costs due

to the performance of a function.

The level of payment for the performance of the function, attendance fees and reimbursement of

travel cost and other eligible costs from the previous paragraph is defined by the General Meeting.

The payment to external members of the committees of the Supervisory Board is determined by the

Supervisory Board.«

Article 39 of the Articles of association is added a net third paragraph that reads as follows:

»The amendment of article 23 of the Articles of Association adopted at the General Meeting on 30

January 2012 enters into force on 1 January 2012.«


ITEM 9: DETERMINATION OF REMUNERATION OF THE MEMBERS OF THE SUPERVISORY BOARD


For the attendance at the session, a member of the Supervisory Board is entitled to the attendance

fee that amounts to EUR 275.00 (gross amount). A member of a committee of the Supervisory Board

is entitled to the attendance fee for the attendance at the session of the committee that equals 80% of

the attendance fee of the Supervisory Board member. In the case of a correspondence session the at-

tendance fee equals 80% of the ordinary attendance fee.

A member of the Supervisory Board is entitled to attendance fee irrespective of the number of ses-

sions the Supervisory Board member attends in an individual financial year until the total amount of

the attendance fees paid, for either the Supervisory Board sessions or the sessions of the committees

of the Supervisory Board, in an individual financial year reaches 50% of the remuneration for the per-

formance of the function of a member of the Supervisory Board.

In addition to the attendance fee, a member of the Supervisory Board is also entitled to the basic

remuneration for the performance of the function of a Supervisory Board member equalling EUR

12,000.00 gross annually. The chairman of the Supervisory Board is entitled to the additional payment

equalling 50% of the basic remuneration for the performance of the function of a Supervisory Board

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member whereas the deputy chairman is entitled to the additional payment equalling 10% of the basic

remuneration for the performance of the function of a Supervisory Board member. A member of a

committee of the Supervisory Board is entitled to the additional payment equalling 25% of the basic

remuneration for the performance of the function of a Supervisory Board member whereas the chair-

man of a committee of the Supervisory Board is entitled to the additional payment equalling 50% of the

basic remuneration for the performance of the function of a Supervisory Board member and the dep-

uty chairman of a committee of the Supervisory Board is entitled to the additional payment equalling

10% of the basic remuneration for the performance of the function of a Supervisory Board member.

Regardless of the number of committees the Supervisory Board member is a member of in the

individual financial year, the individual member of the Supervisory Board is entitled to the additional

payment for the performance of the functions of committees until the total amount of these addi-

tional payments in the financial year totals 50% of the basic remuneration for the performance of the

function of a Supervisory Board member. The members of the Supervisory Board receive the basic

remuneration and the additional payment for the performance of functions to which they are entitled

in proportionate monthly payments until they perform the functions. A monthly payment amounts to

one-twelfth of the above listed annual sums.

The members of the Supervisory Board are entitled to the reimbursement of travel cost, daily allow-

ances and accommodation costs resulting from their work in the Supervisory Board or in the Supervi-

sory Board committee up to the level defined in the regulations governing the reimbursement of costs

related to work and other revenues that are not included in the taxable amount. The accommodation

costs can be reimbursed when the place of the work of the Board is at least 100 km distance from the

permanent or temporary residence of the Supervisory Board member and the location of the work of

the Board is at least 100 kilometres and when the member cannot return the same day since according

to the timetable no ride was planned in public transport or for other objective reasons.

This resolution shall apply from 1 January 2012. From the date of entry into force of this resolution,

the resolution adopted by the General Meeting on 31 August 2009 shall expire.


PLANNED CHALLENGING ACTION

The KS Naložbe shareholder announced a challenging action regarding the adopted resolutions 3.1.

and 3.2.

The minutes of the General Meeting are available on the external websites of AJPES (Business reg-

ister of Slovenia).

RESOLUTIONS OF THE 20TH GENERAL MEETING OF SHAREHOLDERS OF PIVOVARNA LAŠKO

The 20th General Meeting of the shareholders of Pivovarna Laško adopted the following relevant decisions:

ITEM 2: ACQUAINTANCE OF THE GENERAL MEETING WITH THE REPORT OF THE SUPERVISORY BOARD ON

THE ADOPTION OF THE AUDITED ANNUAL REPORT FOR 2011, ACQUAINTANCE OF THE GENERAL MEETING

WITH THE COVER OF NET LOSS, ACQUAINTANCE OF THE GENERAL MEETING WITH 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

RESOLUTIONS TO ITEM 2:

2.1. The General Meeting is acquainted with the report of the Supervisory Board on the verification

and adoption of the audited Annual Report for financial year 2011.

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2.2. The General Meeting is informed that as of 31 December 2011 the net loss for the financial year

2011 totals EUR 15,528,268 EUR and that the Management in agreement with the Supervisory Board

covered it with other profit reserves in the amount of EUR 391,649 and capital reserves amounting to

EUR 15,136,619.

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 2011 financial year.

The resolutions 2.1. to 2.3. are informative and were not put to the vote.

2.4. The General Meeting grants the Management Board the discharge for the 2011 financial year.

The resolution was passed with 7,425,382 or 99.54% of the votes cast. The adoption requires a ma-

jority of the votes cast (simple majority).

2.5. The General Meeting grants the Supervisory Board the discharge for the 2011 financial year.

The resolution was passed with 7,454,151 or 99.93% of the votes cast. The adoption requires a major-

ity of the votes cast (simple majority).

ITEM 3: INCREASE IN SHARE CAPITAL PAID IN CASH (CAPITAL INJECTION)

Resolution to Item 3 proposed by the Management Board and Supervisory Board of the Company

was not passed since it was only supported by 1,853,463 or 25.38% of the votes cast. The adoption of a

resolution requires at least a three-quarter majority vote.

ITEM 4: ACQUAINTANCE OF THE GENERAL MEETING WITH THE TERMINATION OF THE CONTROLLING CON-

TRACTS AND WITH THE ORGANISATION OF A CONTRACT-BASED GROUP


The General Meeting is informed of the termination of the Controlling Contract and of the Organi-

sation of a Contract-based Group concluded on 27 December 2011 between Pivovarna Laško d. d., the

parent company, and Pivovarna Union d. d., the subsidiary company and of the termination of the Con-

trolling Contract and of the Organisation of a Contract-based Group concluded on 27 December 2011 be-

tween Pivovarna Laško d. d., the parent company, and Radenska d. d., Radenci, the subsidiary company.

The resolution is informative and was not put to the vote.

ITEM 5: APPOINTMENT OF THE AUDITOR FOR THE 2012 FINANCIAL YEAR


The General Meeting appoints the audit firm Deloitte Revizija, d. o. o., Ljubljana for the purpose of

auditing the 2012 annual accounts.

The resolution was passed with 7,442,153 or 99.77% of the votes cast. The adoption requires a major-

ity of the votes cast (simple majority).

PLANNED CHALLENGING ACTION

No challenging action regarding the adopted resolutions was announced.

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2.1.2 SUPERVISORY BOARD

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

pany’s business operations. The Supervisory Board appoints and discharges the members and Chair-

man of the Management Board.

The composition of the Supervisory Board is defined in the Articles of Association of the Com-

pany. The Supervisory Board of Pivovarna Laško, d. d. has six members, each of whom has the same

rights and responsibilities unless otherwise stipulated by the 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 ap-

pointment is renewable following the expiry of their term of office. The Supervisory Board appoints the

Chairman and Deputy Chairman of the Supervisory Board from amongst their members.

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

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

sory Board represents the Company in disputes with the members of the Management Board and the

Supervisory Board represents the Company in disputes against other bodies of the Company and third

parties, unless otherwise specified in each particular case. The Chairman of the Supervisory Board is

always the representative of the shareholders. Sessions of the Supervisory Board are convened by the

Chairman on his own initiative, on the initiative of any member of the Supervisory Board, or on the

initiative of the Management Board. The Supervisory Board takes decisions at sessions.

Within one month from the submission of the annual report, the Supervisory Board must review the

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

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

the annual report, the annual report is adopted.

SUPERVISORY BOARD COMPOSITION SUPERVISORY BOARD COMPOSITION

AS OF 31 DECEMBER 2011 AS OF 31 DECEMBER 2012

Capital representatives: Capital representatives:

Dr Vladimir Malenković, Chairman Dr Vladimir Malenković, Chairman

Dr Borut Bratina Dr Borut Bratina

Borut Jamnik Borut Jamnik

Dr Peter Groznik Dr Peter Groznik

Employee representatives: Employee representatives:

Bojan Cizej, Deputy Chairman Bojan Cizej, Deputy Chairman

Dragica Čepin, MSc Dragica Čepin, MSc

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1. DR VLADIMIR MALENKOVIĆ

Vladimir Malenković has been the Supervisory Board member of Pivovarna Laško, d. d. since

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

Education: DSc in Strategic Management, the Faculty of Eco-

nomics in Ljubljana in 2005

He has been employed as a member of the Management

Board of Premogovnik Velenje, d. d.

2. DR BORUT BRATINA

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

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

of Maribor, 1997

He has been employed at the Faculty of Economics and Busi-

ness, University of Maribor as Associate Professor of Busi-

ness Law and the Chair of the Business and Corporate law.

3. BORUT JAMNIK

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

Education: BSc in mathematics Engineering.

He has been employed as the chairman of the Management

Board of the company Modra zavarovalnica, d. d.

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4. DR PETER GROZNIK

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

Education: DSc in Finance, Kelley School of Business, In-

diana University Bloomington (United States of America),

2003.

He has been employed as a member of the Management

Board of Gorenje, d. d.

5. BOJAN CIZEJ

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

Education: BSc in Food Technology, Biotechnical Faculty,

University of Ljubljana, 1993.

He has been employed at Pivovarna Laško, d. d. as the Direc-

tor of the Production-Technical Division.

6. DRAGICA ČEPIN, MSC

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

Education: MSc in Economics, Eonomics Business Faculty,

University of Maribor, 2001.

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

CHANGES IN THE COMPOSITION OF THE SUPERVISORY BOARD OF PIVOVARNA LAŠKO, D. D.

In 2012, the composition of the Supervisory Board of Pivovarna Laško, d. d. did not change.

AUDIT COMMITTEE OF THE SUPERVISORY BOARD OF PIVOVARNA LAŠKO, D. D.

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

ones comprising:

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

financial statements,

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

nual report,

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

report auditor,

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

• assessment of the drawn-up annual report including the formulation of proposal for the Supervi-

sory Board.

AUDIT COMMITTEE COMPOSITION AUDIT COMMITTEE COMPOSITION


Dr Peter Groznik – Chairman Dr Peter Groznik – Chairman

Bojan Cizej Bojan Cizej

Igor Teslić Igor Teslić

CHANGES IN THE COMPOSITION OF THE AUDIT COMMITTEE OF THE SUPERVISORY BOARD

In 2012, the composition of the Audit committee of the Supervisory Board of Pivovarna Laško, d. d.

did not change.

HUMAN RESOURCES COMMITTEE OF THE SUPERVISORY BOARD OF PIVOVARNA LAŠKO

The Companies Act does not define the tasks of the Human Resources committee. In compliance

with point B.2 Annex B to the Management code for publicly traded companies (Ljubljana, 8 Decem-

ber 2009) the Human Resource committee is mainly responsible for:

• provision of assistance to the Supervisory Boars and preparation of proposals on criteria and candi-

dates 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,

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

• provision of support in evaluating the work of the Management Board and the preparation of rea-

soned grounds for the recall of individual board members if required

• Provision of the support in the design and implementation of the remuneration system for the

Management Board.

HR COMMITTEE COMPOSITION HR COMMITTEE COMPOSITION


Borut Jamnik – Chairman Borut Jamnik – Chairman

Dr Borut Bratina Dr Borut Bratina

Dragica Čepin, MSc Dragica Čepin, MSc

CHANGES IN THE COMPOSITION OF THE HUMAN RESOURCES COMMITTEE OF THE SUPERVISORY BOARD

In 2012, the composition of the Human Resources committee of the Supervisory Board of Pivovarna

Laško, d. d. did not change.

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CHANGES IN THE SUPERVISORY BOARDS IN SUBSIDIARIES

In 2012, the composition of the supervisory boards in subsidiaries of Pivovarna Laško, d. d. did not

change.

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 Management Board is composed of five members, namely: Dušan Zorko, MSc – 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 technical sector.

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

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

Management Board’s recommendation. The term of office of the Chairman and members of the Man-

agement 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, D. D.

MANAGEMENT BOARD COMPOSITION MANAGEMENT BOARD COMPOSITION


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

Marjeta Zevnik Marjeta Zevnik

Mirjam Hočevar Mirjam Hočevar

Gorazd Lukman Gorazd Lukman

Matej Oset Matej Oset

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1. DUŠAN ZORKO, MSC

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

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

In 1988, Dušan Zorko began his professional career at Ko-

vinotehna and in 1990 became director of TOZD Zunanja

trgovina. Two years later, he assumed the management of the

company Kovintrade and in 2004 the management of Pivo-

varna Union. On 24 July 2009 he became the Chairman of

the Management Board of Pivovarna Laško, d. d.

2. MARJETA ZEVNIK

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

general affairs.

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

1986, bar exam in 1991.

She began working in 1986 as a legal clerk at Pivovarna Un-

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

2001, she was promoted to Director of General Administra-

tion. She became a member of the Management Board of

Pivovarna Laško, d. d. on 5 August 2011 and on 1 December

2012 she also became the Management Board member of

Pivovarna Union (in accordance with paragraph 2 Article 273

of the Companies Act this duty is provisionally exercised).

While chairing the Management Board of Delo d. d., her po

sition of the Supervisory Board Chair in this Company has

been frozen.

She is also a Supervisory Board member of Mercator, d. d.

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

She performs the function of Secretary General of the As-

sociation of Slovenian Breweries and is a member of the

administration committee of the Olimpija Academic Sports

Association.

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3. MIRJAM HOČEVAR

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

finance.

Education: BSc in Mathematics Engineering, Faculty of

Mathematics and Physics, University of Ljubljana, 1990

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

legal clerk, and in 1991 became head of information sys-

tems development and in 1994 was promoted to head of

the computer centre. In 2002, she became the assistant to

the CFO and in 2004 Finance Director of Pivovarna Union,

d. d. She became a member of the Management Board of Piv-

ovarna Laško, d. d. on 1 April 2011 and from 1 September 2011

onwards she has also been a member of the Management

Board of Pivovarna Union, d. d. responsible for finance.

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

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

tration committee of Birra Peja, Kosovo.

4. GORAZD LUKMAN

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

sales and commerce.

Education: Commercialist, Business Commercial College

Celje, obtained in 2004

His professional career began at Kovinotehna Celje. He relo-

cated to SCT Celje and became the head of the consignment

warehouse in the company Hmezad Export-Import, Žalec,

in 1989. He also tried his hand as a private caterer, until be-

coming the Director of Commerce at Engrotuš in 1993. He

has been a member of the Management Board of Pivovarna

Laško, d. d. since 1 November 2009.

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5. MATEJ OSET

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

production-technical sector and procurement.

Education: MBA at IEDC Bled, BSc in Food Technology, Bio-

technical Faculty, University of Ljubljana, 1992.

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

nologist in production and in 1997 he was promoted to the

position of the head of beer production. In 2004, he became

the head of the Production and Technical Sector and has been

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

d. since 5 August 2011. He is also the Chairman of the Assem-

bly GIZ of Slovenian breweries, board member of the Cham-

ber of Agricultural and Food Companies of Slovenia, a mem-

ber of the Supervisory Board of SLOPAK and representative

of the Assembly of the Association of Employers of Slove-

nia. He also cooperates with the Biotechnical Faculty in Lju-

bljana as an associate lecturer. He has been a Management

Board member of Pivovarna Union since 12 September 2012.

CHANGES IN THE COMPOSITION OF MANAGEMENT BOARDS OF SUBSIDIARIES

The changes in the composition of management boards of the subsidiaries in 2012 are described on

page 110 of this report.

2.1.4 MANAGEMENT IN THE LAŠKO GROUP

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

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

details on pages 23 through 25 of this Report).

Members of the management and administrative bodies of the subsidiaries as of 31 December 2012:

RADENSKA, D. D., RADENCI

Manag. Board Milan Hojnik

Superv. Board Capital representatives: Employee representatives:

Dragica Čepin, MSc – Franko Lipičar – Deputy

Chairwoman Chairman

Mirjam Hočevar Dominik Omar

Pavel Teršek

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

Manag. Board Milan Hojnik

Superv. Board The company does not have

a Supervisory Board.

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PIVOVARNA UNION, D. D., LJUBLJANA

Manag. Board Dušan Zorko, MSc – Chairman

Gorazd Lukman

Mirjam Hočevar

Marjeta Zevnik since 1 December 2012

Matej Oset since 1 December 2012


Dr Peter Groznik – Chairman Terezija Peterka – Deputy

Dr Vladimir Malenković Chairwoman

Bojan Cizej Primož Mlekuš

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

CEO Sebastjan Gergeta

Manag. Voard Dušan Zorko, MSc

Mirjam Hočevar

Gorazd Lukman

Ekrem Lluka

Fatmir Gashi

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

Manag. Board Korab Lluka

Superv. Board The Company does not have


JADRANSKA PIVOVARNA - SPLIT, D,D

Manag. Board Zlatko Bebić


Gorazd Lukman – Chairman Goran Domljanović

Pavel Teršek – Deputy

Chairman

VITAL MESTINJE, D. O. O.

Manag. Board Mira Močnik

Superv. Board The Company does not have


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DELO, D. D., LJUBLJANA

Manag. Board Jurij Giacomelli – Director until 12 September 2012

Marjeta Zevnik – Chairwoman since 12 September 2012

(deputises the misisng Management Board Chairman acc.to Article 273/2

of the Companies Act-1)

Irma Gubanec


Robert Šega – Chairman Branimir Piano

Marjeta Zevnik Jure Flerin

(while chairing the Management

Board frozen position)

Dragica Čepin, MSc

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

Manag. Board Bogdan Romih

Superv. Board The Company does not have a Supervisory Board.

LAŠKO GRUPA, D. O. O., SARAJEVO

Manag. Board Šerif Krajišnik, until 1 April 2012

Goran Hadžič, since 1 April 2012

Superv. Board As of 31 December 2012

the Company did not have


It was formed on 11 January 2013.

Capital representatives:

Matjaž Zupin – Chairman

Pavel Teršek – Deputy Chairman

Dragica Čepin, MSc

FIRMA DEL, D. O. O., LAŠKO

Manag. Board Dušan Zorko, MSc


LAŠKO GRUPA, D. O. O., ZAGREB

Manag. Board Boris Matijaščić


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

COMPANY COMPLIES WITH THE PROVISIONS OF THE MANAGEMENT CODE FOR PUBLICLY TRADED COMPANIES.

2.2.1 COMPLIANCE OF COMPANY MANAGEMENT WITH THE PROVISIONS OF THE MANAGEMENT CODE FOR PUBLICLY TRADED COMPANIES

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

Company observes the provisions of the Corporate Governance Code for Publicly Traded Companies

of 8 December 2009 that commenced use on 1 January 2010 (hereinafter: the Code), with several

exceptions that do not intervene in good management practices and in the cases denoted in this State-

ment. The Statement is a constituent part of the Annual Report for 2012 and is also available on the

Company’s website www.pivo-lasko.si.

The Statement refers to the 2012 financial year, i.e. from 1 January to 31 December 2012. No changes

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

up to the Statement’s publication.

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

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

Management and Supervisory Board of the Company in the continuation:

• Provision 1; The Company operates in accordance with its key objective, which is to maximize 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 basis of strategic growth and the new business model were approved by the Supervisory Board

of the Company at its session on 23 April 2010. The presentation of the strategy and new business

2.2

Statement on corporate gover-nance and compliance with the Corporate Governance Code

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model of the Group was published on the website SEOnet of the Ljubljana Stock Exchange on 14

May 2010. The special document Corporate Governance Policy of the Company was rejected by

both the Management and Supervisory Boards.

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

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

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

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

• Provision 8.7; The Rules of Procedure of the Supervisory Board do not contain 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 16.1; The remuneration of members of the Management Board is fixed. After adopting

the annual report, the Supervisory Board may at its own discretion based on the criteria defined in

an individual contract grant a member of the Management Board a reward for the previous year,

which may be paid out in cash or as shares in the Company (variable component);

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

the Management Policy. Expert services ensure Company communications and transparency of

operations;

• 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 ACCOUNTING REPORTING PROCEDURE

Pivovarna Laško d. d., 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 pro-

cesses 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 the 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 of the use and disposal of company assets, which would have a significant

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

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The internal control in the Company is carried out by the Finance, Accounting and Controlling De-

partment which is responsible for bookkeeping and the preparation of financial statements in accord-

ance 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 information system is

examined by the authorized external contractors on an annual basis.

2.2.3 EXTERNAL AUDIT

REGULAR EXTERNAL AUDIT

To ensure consolidation and standardisation within the Laško Group, the general meetings of Pivo-

varna Laško, Pivovarna Union, Ljubljana, Radenska and Delo, Ljubljana, appointed the auditing firm

Deloitte Revizija, Ljubljana, as the certified auditor which within the scope of auditing the financial

statements reports to the Management Board, Supervisory Board and Audit Committee of the Super-

visory Board on its findings.

2.2.4 DATA IN ACCORDANCE WITH PARAGRAPH 6 ARTICLE 70 OF THE COMPANIES ACT-1

3. The Data on significant direct ownership of the Company’s securities are given on page 55 of this

Annual Report. Direct ownership of the Management Board is disclosed on page 58 of the same an-

nual report.

4. The Company’s Articles of association does not contain any provisions granting holders of securi-

ties any special controlling rights.

6. The Articles of Association of the Company does not contain limitations regarding particular

shares or a defined number of votes. The Articles of Association of the Company prescribes that share-

holders intending to attend a General Meeting of Shareholders 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.

8. In accordance with the Articles of Association of the Company, the Company Management Board

may have a maximum of five members, one of whom shall be appointed the Chairman of the Manage-

ment Board. 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 Chairman of the Management Board. 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. The Company’s Articles of

Association defines that a three-quarter majority vote by the General Meeting is required for an amend-

ment of the Articles of Association.

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9. The General Meeting of Shareholders empowered the Management Board of Pivovarna Laško, d. d.

on 31 August 2009 to purchase own shares at a redemption price which could not be higher than the

share price valid on the regulated market with the aim of maximizing the intrinsic value of the Compa-

ny’s shares. The total number of shares obtained for the purpose described in the previous paragraph

could not, together with the other own shares of the Company, exceed 10% of the Company’s share

capital The authorisation of the Management Board for the purchase of the treasury shares remains

valid for 36 months from the receipt of the General Meeting decision and expired on 31 August 2012.

2.2.5 DATA ON THE FUNCTIONING OF THE GENERAL MEETING OF THE SHAREHOLDERS

The data on operations of the General Meeting of Shareholders and its key competences and a

description of shareholders’ rights and the method of their declaration are included in the chapter

Management on pages 29 to 35 of this Annual Report.

2.2.6 DATA ON THE MANAGEMENT BOARD AND SUPERVISORY BOARD

The data on the composition and operation of the management and control bodies and their com-

mittees are included in the Corporate Governance chapter on pages 36 to 43 of this Annual Report.

Laško, 28 February 2013

Dušan Zorko, MSc Dr Vladimir Malenković

Chairman of the Chairman of the

Management Board Supervisory Board

Marjeta Zevnik

Management Board member

Mirjam Hočevar


Gorazd Lukman


Matej Oset


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WITH THIS REPORT PIVOVARNA LAŠKO, D. D. INDICATES MEASURES TO COMPENSATE THE DAMAGE ARISING

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

As a subsidiary company within a multi-level actual concern Pivovarna Laško, d. d., concluded legal

transactions in 2008 and 2009 which were established as damaging. The loans given to the compa-

nies Center Naložbe and Infond Holding d. d. were never paid back. The purchase of shares of Ther-

mana d. d. – Zdravilišče Laško by Infond Holding, d. d., was implemented according to the acquisition

price that was higher than the assessed market value of the Thermana shares at that time. The parent

company in the multi-level going concern Atka-Prima did not compensate the loss at the latest by the

end of the year in which the dependent company suffered the loss.

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 on 29 March 2010 amounting to EUR 1,892,319.26 and submitted

a request for the establishment of a creditor’s meeting. Bankruptcy proceedings have been initiated.

• On 10 November 2011, it declared the outstanding receivables with default interest in the bankrupt-

cy proceedings against Center naložbe amounting to EUR 6,487,493.35 and submitted a request

for the establishment of a creditor’s meeting. Bankruptcy proceedings have been initiated.

• 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. The procedure is underway. The witnesses

were heard and then the expert in economics was appointed. The case is in the phase of providing

expert opinion.

• On 3 July 2012, the application for interim measures against the Atka-Prima Company and Boško

Šrot was lodged due to the prohibition of a disposition of securities, the prohibition of disposal

and burdening of property and other matters relating to the previous indent. The decision of the

Court of 13 July 2012 upheld the applicant’s claims in their entirety. The appeal of the defendants

was rejected on 26 October 2012. The case is in the phase of a decision concerning the appeal of

the defendants against the decision issued.

2.3Report of the ManagementBoard of Pivovarna Laško, d. d., on extent of influence in accordance with Article 545 of theCompanies Act (ZGD-1)

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• On 3 July 2012, the action was brought before the Court to challenge the debtor legal actions and

an application for an interim measure (together with the companies Pivovarna Union, Radenska,

Delo and Fructal) due to the prohibition of the alienation or disposal of the 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 the Atka-Prima Com-

pany and Boško Šrot to Anica Šrot Aužner. The result is the damage to creditors. With the decree

for interlocutory injunction that the Court passed on 11 July 2012 it upheld the plaintiff’s motion in

its entirety. And on 13 December 2012, the Court conducted a hearing to deal with the objections of

the defendants against the decree for interlocutory injunction.

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

the entire scope of damage suffered is not yet known. Two potential compensations for damages exist

according to 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 agreement on the

pledge of book-entry securities of 5 June 2009. The book value of the RARG pledged shares as of 31

December 2012 was EUR 3,637,650. On 22 November 2011, Pivovarna Laško received the judgment

of the District Court in Maribor, whereby the Court allowed the payment of claims from the value

of the pledged shares and authorized the enforcement on the pledged shares to repay the claim in

the amount of EUR 7,349,552.25 and legal default interest. On 11 January 2012, Pivovarna Laško

received the enforcement decision from the District Court in Maribor, whereby the court approved

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 to the creditor or NKBM

from the amount acquired from the sale. Once the shares are sold in the enforcement procedure

and NKBM paid from the resulting amount, Pivovarna Laško will experience loss or damage.

• Pivovarna Laško received a letter from Perutnina Ptuj on 23 November 2009 in which the latter in-

dicated 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 on behalf of Pivovarna Laško it had been paying the liabilities. Since the companies

had ceased repayment of the loans, Perutnina Ptuj demanded the payment in the approximate

amount of EUR 11 million from Pivovarna Laško based on the comfort letter. Pivovarna Laško did

not acknowledge the claim for it was not acquainted with the existence of the comfort letter of

31 December 2008 nor with the circumstances and business relationships among the legal per-

sons. Perutnina Ptuj, d. d. for the enforcement of the aforementioned claim filed a lawsuit which

Pivovarna Laško received on 15 February 2011 whereby Perutnina Ptuj demands a payment in the

amount of EUR 10,116,488.7 from the defendant, Pivovarna Laško. The plaintiff Perutnina Ptuj

stated in the lawsuit that it had suffered damages since the defendant had failed to fulfil the obli-

gations 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. The Court of first instance has not yet made a decision regarding the claim. If Perutnina Ptuj

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

At the 19th regular General Meeting of Pivovarna Laško held on 30 January a decision concerning

a contract-based group with Pivovarna Union and Radenska was adopted. The controlling contracts

concluded between Pivovarna Laško and Pivovarna Union and between Pivovarna Laško and Radenska

of 27 December 2012 were entered into the court register on 6 February 2012.

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On 26 April 2012, in accordance with paragraph 1 Article 539 of the Companies Act Pivovarna Laško

terminated (in writing) the Controlling Contract between Pivovarna Laško and Pivovarna Union and

the Controlling Contract between Pivovarna Laško and Radenska both concluded on 27 December

2012. The termination of the contracts entered into force with the receipt of the written notice of the

contract termination by the abovementioned subsidiaries, namely on 26 April 2012. The termination

of controlling contracts was the pre-condition that one of the banks imposed to the companies Pivo-

varna Laško, Pivovarna Union and Radenska in order to reschedule their financial obligations.


Dušan Zorko, MSc

Chairman of the Manag. Board

Marjeta Zevnik


Mirjam Hočevar


Gorazd Lukman


Matej Oset


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PIVOVARNA LAŠKO, A JOINT-STOCK COMPANY, OWNED BY MORE THAN 7,000 DOMESTIC AND FOREIGN

SHAREHOLDERS HAS BEEN TREADING DOWN THE PATH OF DEVELOPMENT WITH THE BASIC BUSINESS

ORIENTATION: TO OFFER THE CONSUMERS THE MOST QUALITY BEER AND ITS EXCELLENT SUPPLY.

Since 1995, Pivovarna Laško has been organised as a joint-stock company. At the end of the 2012

financial year, it had 7,209 shareholders, which is by 283 shareholders or 3.8% less than at the end of

2011.

NUMBER OF SHAREHOLDERS

2010 2011 2012

Shareholders as of 31/12 7,940 7,492 7,209

Chain index / 94.4 96.2

2.4.1 A PILR SHARE ON THE STOCK EXCHANGE

In 2012, there was no significant trading in the Pivovarna Laško (PILR) shares on the Ljubljana Stock

Exchange. Neither in 2011 nor in 2012 the PILR share was interesting to investor since the average val-

ue of the share at the end of 2012 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 and consequently also of

lower living standard of the population, which prevents from investments into securities.

2.4.2 OWNERSHIP STRUCTURE IN TERMS OF EQUITY

As of 31 December 2012, 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.

2.4

Shareholders

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OWNERSHIP STRUCTURE IN TERMS OF EQUITY - PIVOVARNA LAŠKO, D. D.

OWNERSHIP STRUCTURE IN TERMS OF EQUITY OF PIVOVARNA LAŠKO D. D. AS OF 31 DECEMBER 2012

NLB, d. d.

Hypo Alpe-Adria-Bank, AG

Kapitalska družba, d.d.

Probanka, d. d.

Other legal entities

Natural persons

Foreigners

15.3 %

13.7 %

26.3 %7.0 %

7.1 %

7.1 %

23.5 %

OWNERSHIP STRUCTURE IN TERMS OF EQUITY OF PIVOVARNA LAŠKO D. D. AS OF 31 DECEMBER 2011

NLB, d. d.

Kapitalska družba, d.d.

Hypo Alpe-Adria-Bank, AG

Probanka, d. d.

Other legal entities

Natural persons

Foreigners

15.1 %

13.6 %

26.6 %7.0 %

7.1 %

7.1 %

23.5 %

(in %) 2010 2011 2012

Legal entities 71.4 71.3 71.0

Natural persons 13.8 13.6 13.7

Foreigners 14.9 15.1 15.3

Total 100.0 100.0 100.0

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BIGGEST SHAREHOLDERS OF PIVOVARNA LAŠKO, D. D.

(31/12/2012) No. of shares in % place

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, equity sub-fund 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 biggest shareholders 6,154,377 70.355

Other small shareholders 2,593,275 29.645

Total - all shareholders 8,747,652 100.000

(31/12/2011) Number of shares in % place

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

Hypo Alpe-Adria-Bank, AG 618,202 7.067 2.

Kapitalska družba, d. d. 617,488 7.059 3.

Probanka, d. d. 614,911 7.029 4.

GB, d. d. Kranj 542,448 6.201 5.

Skagen Kon-tiki Verdipapirfond 499,286 5.708 6.

NFD1, equity sub-fund 443,557 5.071 7.

Abanka, d. d. 285,463 3.263 8.

Banka Celje, d. d. 252,500 2.886 9.

Banka Koper, d. d. 230,471 2.635 10.


Other small shareholders 2,586,588 29.569


As of 31 December 2012, ten of the biggest shareholders possessed a total of 6,154,377 shares or 70.4 %

of total share capital, which was 6,687 less than on 31 December 2011.

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EQUITY OWNERSHIP STRUCTURE OF SUBSIDIARIES

BIGGEST SHAREHOLDERS OF RADENSKA, D. D., RADENCI (ACCORDING TO AN 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.

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.


Other small shareholders 258,314 5.103


* The ownership stake of 11.85% in the shares of Radenska, Radenci by the DBS Company is also

entered at KDD. In substance, it regards a redemption right, whereby under the contract, the voting

rights due to ownership by the temporary seller, that is, Pivovarna Laško. More information is given in

the notes in the financial section of this Report, on pages 253 and 254.



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

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


Štern Blaž 4,666 0.092 5.

Slatnar Sonja 2,063 0.041 6.

Vrankar Anton 1,500 0.030 7.

Potočnik Marko 1,451 0.029 8.

4 F, d. o. o. 1,260 0.025 9.

Camlek Marija 1,164 0.023 10.




As of 31 December 2012, the ownership stake of the parent company, Pivovarna Laško, in Radenska

increased from 81.060% to 82.058%.

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BIGGEST SHAREHOLDERS OF PIVOVARNA UNION, D. D. LJUBLJANA


Pivovarna Laško, d. d. 441,740 97.922 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 biggest shareholders 446,353 98.945


Total - all shareholders 451,114 100.000



May Alexander 3,652 0.810 2.

Skandij, d. o. o 384 0.085 3.

Štern Blaž 120 0.027 4.

Potočnik Marko 118 0.026 5.

Pintar Nina 100 0.022 6.

Srakar Drago 86 0.019 7.

Pivovarna Union, d. d. 69 0.015 8.

MIF Invest, d. d. 50 0.011 9.

Slatnar Sonja 50 0.011 10.

Total - 10 biggest shareholders 446,246 98.921



As of 31 December 2012, the ownership stake of the parent company, Pivovarna Laško, in Pivovarna

Union increased from 97.895% to 97.922%.

OWNERSHIP INTERESTS IN JADRANSKA PIVOVARA – SPLIT, D. D.



Ostali small shareholders 29,365 0.541 2.


As of 31 December 2012, the business shares of the parent company Pivovarna Laško and of other

small shareholders in Jadranska pivovara – Split is the same as on the last day in 2011.

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BUSINESS SHARES IN VITAL MESTINJE, D. O. O.

(31/12/2012) in % place

Pivovarna Laško, d. d. 96.920 1.

Other partners 3.080 2.

Total - all partners 100.000


small shareholders in Vital Mestinje remain unchanged compared to the previous year.

OWNERSHIP INTERESTS IN DELO, D. D., LJUBLJANA






small shareholders in the Delo Company remain unchanged compared to the previous year.

BALANCE OF SHARES AND STAKES OF THE MANAGEMENT BOARD MEMBERS OF PIVOVARNA LAŠKO, IN SHARE

CAPITAL OF THE COMPANY AS OF 31 DECEMBER 2012

(shareholder) Membership Number of shares Participation in %

Dušan Zorko, MSc Mgt Brd - Chairman 3,019 0.0345

Marjeta Zevnik Management Board 2,247 0.0257

Mirjam Hočevar Management Board 2,244 0.0257

Gorazd Lukman Management Board 1,696 0.0194

Matej Oset Management Board 2,275 0.0260

Total 11,481 0.1312

SHARES AND STAKES OF THE MEMBERS OF THE SUPERVISORY BOARD OF PIVOVARNA LAŠKO IN THE COM-

PANY’S SHARE CAPITAL AS OF 31 DECEMBER 2012

(shareholder) Membership Number of shares Participation in %

Bojan Cizej Supervisory Board 3,180 0.0364

Dragica Čepin, MSc Supervisory Board 3,413 0.0390

Total 6,593 0.0754

The other members of the Supervisory Board were not holders of shares of Pivovarna Laško as of 31

December 2012.

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INCREASE IN THE SHARE CAPITAL

On 30 January 2012, the General Meeting of Pivovarna Laško decided to increase the share capital of

the Company by consideration in cash; however, the resolution was not passed. Also the General Meet-

ing held on 29 August 2012 decided to increase the share capital of the Company by consideration in

cash but the resolution was not adopted.

AUTHORISED AND CONDITIONAL CAPITAL

The General Meeting of Shareholders of the Company did not take any decisions regarding the con-

ditional increase in share capital or regarding authorised capital in 2012 except on a 5-percent increase

in share capital. There was no increase in share capital since the contract-based group was terminated

or cancelled.

AUTHORISATION TO THE MANAGEMENT BOARD TO ACQUIRE OWN SHARES

The authorisation to purchase own shares expired on 31 August 2012.

2.4.3 SHARES

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

curities market of the Ljubljana Stock Exchange since 1 February 2000 as ordinary shares. The share

capital of the Company as of 31 December 2012 amounted 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 of 31 December 2012.

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

tionalization beneficiaries. If a decision is issued in favour of the denationalization beneficiary, the

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

RESERVES FOR OWN SHARES

In 2012, the reserves for own shares decreased due to the sale of 4,190 lots as the severance pay to

an external shareholder and due to the revaluation to a lower stock market value totalling EUR 126,128.

In 2012, Pivovarna Union acquired 3,435 own shares from its subsidiary Radenska and together with

the initial 755 lots these were used to provide severance pay based on the control agreement. As of

31 December 2012, Pivovarna Laško did not possess any own shares, however, these are owned by

Radenska, namely 17,760 lots, and Pivovarna Union 2,131 lots. As of 31 December 2012, own shares

were translated into quoted price that equalled EUR 6.99. The decline in the value of shares resulted

in the financial statements of subsidiaries and was reflected in profit or loss whereas Pivovarna Laško

as the parent company established reserves for own shares for the total value of shares owned by com-

panies in the Laško Group.

BOOK VALUE AND MARKET VALUE OF THE SHARE

The audited book value of a PILR share as of 31 December 2012 totalled EUR 10.46. The market

value of the shares at the end of 2012 amounted to EUR 6.99 and was by 33.17% lower than its book

value. Each share gives its owner a voting right at the annual General Meeting of Shareholders and to

participate in profit.

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AVERAGE MARKET VALUE OF A PILR SHARE IN 2012

0

4

8

12

16

20

jan feb mar apr may 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 10.01 9.08 8.22 8.81 8.25 7.86 6.43 4.94 5.44 6.66 5.98 6.37

value of

a share

BOOK VALUE OF A PILR SHARE AS OF 31 DECEMBER 2012 FOR THE 2003–2012 PERIOD

0

8

16

24

32

40

200

3

200

4

*20

05

*20

06

*20

07

*20

08

*20

09

*20

10

*20

11

*20

12

in E

UR

(in EUR) 2003 2004 *2005 *2006 *2007 *2008 *2009 *2010 *2011 *2012

Book

value of 23.07 22.82 20.11 21.93 26.45 20.90 14.78 14.19 12.50 10.46

a share

* Acc. to IFRS; for all years since 2003 including 2006 conversion from SIT, 1 EUR = 239,640 SIT

In 2005, the book value of the shares changed from EUR 24.44 to EUR 20.11 due to the transition

to IFRV.

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2.4.4 FINANCIAL CALENDAR FOR 2013

General meeting of shareholders Foreseen in June 2013

Dividend entitlement If the General Meeting decides to pay out

dividends, the shareholders who have

been entered into the Central Securities

Depository on the reporting date, fixed in the

decision on the use of net profit, will be entitled

to dividends.

Dividend payment No later than 60 days after taking the decision 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.

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 as soon as possible and no later than

two months following the end of quarterly accounting period (31 May and 30 September)

Pivovarna Laško will not publish the unaudited unconsolidated financial statements for 2012 since

the audited Annual Report for 2012 will be published in this period. The publication of unaudited un-

consolidated and consolidated financial statements is not legally prescribed or mandatory.

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THE LAŠKO GROUP HANDLES THE SITUATION ON THE MARKET AND BY USING THE SYNERGIES OF THE

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

SHARES AND ACHIEVE AMBITIOUSLY SET SALES OBJECTIVES ON FOREIGN MARKETS.

2.5.1 SALES OF THE LAŠKO GROUP

2012 was marked by negative economic indicators, increasing unemployment and consequently

lower purchasing power on the domestic and foreign markets. The continuation of strained economic

conditions resulted in the rationalisation of consumption, reduced brand name loyalty and thus in-

creased sales of trade marks and this redirected buyers to smaller formats of shops and discount stores

gained in popularity. The Laško Group manages this market and 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.

In order to have a comparable basis, the data for 2011 do not include the sales of the Fructal Group

which was integrated into the Union Group in 2011. To ease comparability of 2012 we also included

the Birra Peja Company from Peć, Kosovo, that was not a subsidiary of Pivovarna Union in 2011, but

an associated company.

Sales of the Laško Group (Pivovarna Laško, Pivovarna Union, Radenska, Vital, Birra Peja) in 2012 to-

talled 3.789 million hl of beverages, which is by 3.3% less than in the previous year. The beer segment

sales reduced by 5.1% compared to the same period in 2011 whereas the sales of soft drinks increased

by 1.4%. The water segment sales decreased by 2.1%.

2.5

Sales and marketing

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SALES OF THE LAŠKO GROUP ON THE DOMESTIC MARKET AND ON MARKETS OUTSIDE SLOVENIA

Index Index

(in hl) Sales 2012 2012/2011 2012/plan 2012

Beer 2,108,255 94.9 90.0

Water 1,094,493 97.9 92.7

Non-alcoholic beverages 585,907 101.4 105.1

Other alcoholicbeverages 274 21.5 11.3

Total 3,788,929 96.7 92.8

SALES OF PIVOVARNA LAŠKO D.D. ON THE DOMESTIC MARKET AND ON MARKETS OUTSIDE SLOVENIA

Index Index

(in hl) Sales 2012 2012/2011 2012/plan 2012

Beer 893,026 95.1 89.5

Water 29,670 97.1 96.0



Total 942,183 96.6 90.5

2.5.2 MARKETING ACTIVITIES

Situation on the market and in particular the drop in purchasing power, decreased consumption, ra-

tional and mistrustful consumer and the growth of store brands dictated marketing activities focused

on the point of sale.

Similarly to previous years, the majority of marketing activities focused on foreign markets to sup-

port growth there and for this reason the marketing funds intended for the domestic market were used

extremely rationally aiming at the preservation of the position of the umbrella brands.

BEER BRAND GROUP

In compliance with the long-term project of promoting the use of returnable packing the Laško

Group was present in retail shops with the Returnable Packing project (Laško, Union and Radenska).

To this end, we agreed with the traders to perform special activities and expose special ECO-ISLANDS

with our main products: Laško Zlatorog, Union light and Radenska and to prepare promotional activi-

ties with added value linked to the loyalty programmes of individual retailers.

In response to an increasing share of store brands and decreasing purchasing power special cam-

paigns with lower prices were carried out that had not included umbrella brand before. In June, a

special limited set of promotional packaging was prepared for Laško Zlatorog and Union 6-pack (5+1

gratis) for all Slovene retailers in order to promote sales.

In 2012, a novelty – 0.55 litre can was introduced on the domestic market. The can was prepared

for the Laško Zlatorog and Union Light brands, each in a limited batch. To promote the sales in retail

shops, posters, leaflets, wobblers and stickers were prepared in a form of a palette.

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ACTIVITIES BY BRANDS:

LAŠKO ZLATOROG

LONDON 2012 PRIZE GAME – we used the sponsorship potential and prepared a national prize

game related to Laško Zlatorog returnable bottle of 0.5l and 0.33l. Together with the Slovene Olympic

Committee we awarded 3 prizes – a visit to the Olympic London for 2 persons. The Prize game started

on 1 June 2012 and ended on 27 July 2012. In communications terms, it was supported by a website, on

social networks and at the points of sale.

In 2012, the ZLATOROG LONG-DISTANCE MOUNTAIN TRAIL OF PRIDE was held for the third

year in a row. In addition to the 3 existing locations, 9 new ones were added. All these events brought

together a bit less than 6,500 mountaineers who were accompanied by 100 of the so called ambassa-

dors of the trail that conquered all 12 destinations. At all the events there were various games organised

as well as fun with good music. The Zlatorog long-distance trail of pride remains charity-oriented

since EUR 12,000 was provided to renew mountain huts. The project has gained in recognisability in

Slovenia thanks also to the Alpine Association of Slovenia.

LAŠKO MALT

The category of sweet beverages and the flavours of Laško Malt apple and peach was added a new fla-

vour, pineapple that was well received by the consumers. The launch of a new product was supported

by activities in shops, petrol stations where a prize game was also held and by promotion on the radio

(advertising traffic information). Throughout the year, Malt was present at various sports events as well

as safe driving projects.

LAŠKO LEMON-LIME AND ORANGE (RADLER)

In February, a new beverage – mixture of light beer and soft drink with the flavour of lemon and

lime and orange with the ratio of 40 : 60 was placed on the market, namely under the brand of Laško

Lemon-Lime and Laško Orange. Both flavours are representatives of Radler and were added to the

Laško line despite its unique retro image. Their placement on the market was accompanied by a broad

range of communication materials in both channels (retail and catering) and supported on Facebook.

In July, the returnable PET-plastic bottle of 0.5l was added a 0.5-litre can.

LAŠKO WHEAT BEER

In order to master all segments of beer and to support the umbrella brand, Laško Wheat Beer was

introduced in 0.5-litre returnable bottle. Based on the use of graphic elements it was classified into the

Laško line although architecturally it shows a deviation from complete monolithic. The introduction

was supported by intensive sales promotion in retail and catering (a broad range of printed materials,

tasting sessions and parties) and by specialised printed media buying whereas in December a new-year

prize game titled Good Advent Time on Facebook took place. The first responses were very promising.

LAŠKO CLUB

Laško Club is a representative of the premium segment of pale beer and 3 high-budget parties with

DJs were organised and called Laško Clubbing. This is how we wanted to present it to a very demand-

ing target group that expects such messages from such a product. In addition to parties, also smaller

activities of sales promotion were carried out and there were a couple of publications and reports from

the events in selected print media.

IC CIDER

IC Cider is a representative of a category of the same name for which it has been established that

there is insufficient market potential in Slovenia. Our desire was to bring it closer to Slovene consum-

ers and therefore the flavour was modified in March and differentiated from the traditional Cider.

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Despite all the sales promotion efforts (promotions, lower prices etc.) this type of beverages is not that

interesting to Slovene consumers. Being aware of the global trends, we believe in its long-term poten-

tial; however, temporarily this production has been discontinued.

ELIKSIR

In December, a special new-year sales promotion was held in retail using gift cardboard boxes (2

bottles + a glass).

UNION PALE LAGER

During the European Football Championship 2012 a special prize game was linked to the 0.5-litre

returnable bottles of Union pale lager with the slogan Collect sports equipment for the dragon using

the bottle neck PEEL OFF labels. This activity took place from 15 July 2012 to 15 September 2012. The

results of this game were very encouraging: 800,000 collected sports requisites and 600.000 codes

used. Compared to 2011, our base of loyal consumers increased by 40%. This activity was supported on

the website, Facebook and at the points of sale.

UNION RADLER

Non-alcoholic beer Radler citrus elder tree: in June 2012, a new concept of Non-alcoholic Radler was

presented on the market in a 0.5-litre can and a 0.5-litre returnable LN bottle. It is expected that the

sales results will follow in the next season. Support materials included posters, leaflets and wobblers

and a prize game on the Internet. The main support to the new product was provided by the prize

game Upload your video or a picture on Facebook from 15 August to 30 September 2012. The launch of

the new product was also supported at the points of sale.

BIRRA PEJA

In 2012, the beer market in Kosovo shrank by 10% yet we manage to slightly increase the market

share of the Birra Peja brand. This was achieved by directing marketing resources and activities mainly

to the points of sale and the final customers. Thus, more than 200 minor Horeca events and classi-

cal tasting sessions in retail were replaced by awarding coupons, high visibility prize games and co-

marketing with the mobile technology operator in Kosovo ...

EXPORT

LAŠKO ZLATOROG AND LAŠKO CLUB

Greater focus was given to strategic export markets – Croatia and BiH. A comprehensive media

campaign was designed to strengthen the profile of the Laško brand. TV commercial was made and

broadcast it intensively on both markets in May whereas in June the advertising activities and prize

games intensified on the Internet and Facebook. In July, we shifted again to TV advertising with an

SMS prize game. This involved all the products of Laško Zlatorog and Laško Club excluding the cans.

These activities were synchronous with the activities at the points of sale where prize games were

designed for retail and catering sector. In Croatia, an ECO-ISLAND was set up whose location in retail

was changed on a monthly basis. And in BiH a TV advertising-prize game rotated during the 2012

EURO football together with the retailers Konzum and Bingo.

The sales promotion activities were supported by special action packaging of Laško Zlatorog 3+1

can gratis and we also renewed the image of a PET-label Laško (2l) whereas a range of products was

extended with new products of Laško Lemon-Lime and Orange and with the Laško Malt line.

In BiH, intensive PR and promotion were also a part of our sponsorship of Sarajevo Film Festival.

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On other export markets the marketing activities concentrated on classical sales promotion, which

is a combination of special offer and furnishing of the points of sale.

UNION RADLER IN UNION PALE LAGER

In 2012, particular emphasis was placed on Radler grapefruit that was supported in media on the

markets of Croatia, Kosovo, Macedonia and Italy. An advertising campaign was prepared for Croatia.

We started in April when a tram dressed up in Radler was driving on the streets of Zagreb and bill-

boards were also out. In May, we started to sponsor a series Lara’s Choice and wrapped up the cam-

paign with posters and citylights along the Adriatic coast all the way to Dalmatia. At the same time,

the product was launched in shops and restaurants and bars. A special prize game was carried out in

Croatian tennis clubs.

In Bosnia, activities were conducted in retail and the Union product was advertised on the radio

whereas in Kosovo the month of April was marked by billboards (posters) and a Radler advertisement

on the radio as well as by activities in retail. The activities in Macedonia concentrated on shopping

centres.

A special promotional packaging of Radler grapefruit 3+1 gratis can was designed in a limited edition

for individual export markets. On the markets of Croatia and BiH, Radler grapefruit was also available

in 2-litre PET packaging.

NON-ALCOHOLIC BEVERAGE BRAND GROUP

The Laško Group provides a broad range of non-alcoholic beverages on the domestic market, a

market where the majority of sales are realised. The development of categories is focused on ice teas,

nectars, fruit drinks, sports and energy drinks and syrups. Focus throughout the year remained on the

iced tea segment, where the Sola brand remained the leading brand on the Slovenian market, and on

the development of carbonated non-alcoholic beverages where the Ora brand has the leading position.

The development of fruit drinks follows the global trends and provides new flavours within the Sola

category as well as the ACE category. In the future, greater emphasis will be placed on nectars that will

mainly be marketed at various events.

The category of soft drinks will remain an important part of the Laško Group’s offer. Playing the role

of a challenger in the market in the coming years, the Group will continue to ensure development and

focus efforts on increasing the sales in the domestic market as well as in those key markets where the

remainder of produced beverages are realised.

ICE TEAS

In the ice tea segment the Laško Group remains the leading producer in Slovenia despite all the mar-

ket challenges. The ice tea brand Sola, along with the Radenska and Vital ice teas also played a major

role in 2012 and together represented slightly less than half of the market share. The quality of the ice

tea line in Radenska was improved with a new composition without preservatives and sweeteners. The

base of ice teas from Radenska is natural mineral water.

NECTARS

In 2012, the nectars of the Frupi brand were renewed and further developed and added new tastes

that will be available at the beginning of next year.

In 2013, nectars in 1-litre packaging will be available in 4 flavours. With the renewed line of nectars

in a litre packaging the portfolio of the group for events and performances will be closed.

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FRUIT DRINKS

The consumption of fruit drinks in 2012 remained at the same level as in the previous year despite

the drops on the market and decreasing purchasing power. In this segment, the Laško Group offers the

brands Sola, Radenska ACE and Frupi.

SPORTS AND ENERGY DRINKS

The Laško Group possesses two products in this beverage segment: Sola Isošport and Radenska

Sprint. In 2012, Radenska provided new “dress” for Sprint, namely a new bottle and a label.

SYRUPS

In 2012, our 1-litre line of Frupi syrups was renewed and 2 premium flavours were added: blueberry

and strawberry. Both new flavours have a higher fruit share than competitive products and the entire

line meets the highest standards of a consumer since these syrups do not contain any preservatives,

artificial colourings or sweeteners.

CARBONATED DRINKS

The carbonated fruit drinks Style, Ora and licensed bottled Pepsi are also a part of the offer of the

Laško Group. In 2012, the Group supplemented the successful Ora line with the guava-orange flavour

called Ora pink. It is prepared on the basis of Radenska spring water and it contains a fruit share of

orange and guava and contains its own carbon dioxide.

MARKET COMMUNICATIONS

ORA

After the prepared brief and pitch a strategy of market communications was selected for Ora with a

slogan »Everything for Ora«. A smaller campaign was conducted on citylighs (shadow on the beach)

whereas the new Ora flavour was supported at the point of sale with tasting tests, rewarding purchase

and promoting with leaflets.

PEPSI COLA

With intensive sales and BTL-support the presence of Pepsi Cole has been strengthened. In 2012,

some ATL activities were implemented mainly in the print media, on the Internet and social networks.

We have been persistent in extending the base of active participants in our prize games and via web

applications.

Several activities were carried out at the points of sale: a national prize game What are you waiting

for!, the ICE AGE campaign in Interspar, special price offers with advertising on the leaflets of retail-

ers, Pepsi promotion packaging (5+1, 4+2, 4-pack, and 6-pack cans), numerous exposures on palettes,

corners with posters and leaflets. In December, Pepsi was advertised on sensormatics in Interspar.

SOLA ORANGOLA / SOLA GRINADA / SOLA LIMONADA

At the beginning of the year, the marketing activities related to the Sola brand were mainly focused

on the introduction of new fruit drink products Sola Orangola and Sola Grinada. Numerous promo-

tion sales and tasting sessions were prepared in bigger shopping centres. Our goal was to present new

flavours in the Sola family and especially their advantages. The content of the natural sweetener stevia

was emphasised when introducing Sola Orangola and the content of B vitamin in Sola Grinada.

In the beginning of spring a BB-advertising campaign was conducted for the Sola Orangola and Sola

Limonada brands. It was our wish to present the new flavour and strengthen the visibility of the Sola

Limonada brand. The slogans of the advertising campaign were “Less is just right” (Sola Orangola) and

»No more long faces« (Sola Limonada).

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Last year a fruit drink Sola Limonada was presented in PET 0.5l and 1.5l on the domestic market.

The drink turned to be a best seller right away. This drink achieved very good business results in 2012

also on our foreign markets. In spring it was also available in a bottle of 0.33l especially for the Horeca

segment.

Several attractive promotion activities with hostesses, a prize game for consumers and a competition

for the catering staff were carried out to present this product in Horeca. The winning teams taking part

in the sale of Sola Limonada in 0.33-litre bottles were taken sailing in the Adriatic Sea.

Because of good sales results the Sola Limonada range was added a 0.33-litre can that will be pre-

sented in March 2013.

After the promotion of Sola Limonada in 0.33-litre bottles we reactivated the Sola Facebook page.

Daily editing of the page was provided as well as a prize game that coincided with the promotion in

catering facilities.

MULTISOLA

Resources were planned for the implementation the successful promotional campaign “Sola Move

and Create” intended for the children aged 5-20. The campaign involves a range Sola for children and

a tasting session of the Sola products and a creative workshop. In the spring and summer months we

took part at numerous events for children and we organised activities at swimming pools in Slovenia.

SOLA ICE TEA

To promote the sales of Sola Ice Tea, special action packaging was prepared granting 2l gratis. The

campaign was held in biggest shops of Mercator and Tuš. Two smaller campaigns were also designed

for Horeca in October and November. They were aimed at the promotion of the sales of Sola Ice Tea

in bottles (tea + cake at a special price) and Sola Limonada in bottles of 0.33l (lemonade + coffee at a

special price).

RADENSKA ICE TEAS

The flavour of cactus fig was abandoned in the group of Radenska teas due to poor sales results. The

sales promotion activities were limited to the points of sale.

SYRUPS

The renewed line of Frupi syrups was supported in May by the communications and promotion

at the point of sale. At the same time there was advertising on, regional radio stations and we also

launched an application on Facebook titled »Mix your own one!« In only two months we doubled the

number of supporters on the Frupi profile whereas at the end of the year we approached the number

of 7,000.

Additional promotional activities at the points of sale continued in September in bigger shops of all

the retailers that resulted in very good response of the consumers and good direct sales results. Despite

strong competition especially of the brands in this area we managed to reach the index 124 in the seg-

ment of litre syrups in the first 11 months.

With such good results achieved in the past also 2013 will focus on the syrups, which means novel-

ties and marketing resources.

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WATER BRAND GROUP

The Laško Group is also one of the key players in the Slovenian market in the category of water.

Although it possesses a high market share, the harsh conditions and growing threat of the entry of

competition has led the Group to spread and balance its portfolio of water and water with additives.

Also in the category of water we constantly search for new opportunities for growth in a highly com-

petitive market.

CARBONATED WATERS

The protagonist among carbonated waters is Radenska Classic Kraljevi vrelec that remains the mar-

ket leader together with Radenska Light in Radenska Classic. Petanjski vrelec has more than 50-per-

cent market share and is a synonym of carbonated natural mineral water in Slovenia. Radenska Clas-

sic Kraljevi vrelec remains one and the only therefore only the diversity of packaging can be further

developed.

In 2012, we launched Radenska Classic and Radenska Naturelle in non-returnable 0.75-litre bottle.

This packaging was mainly intended for premium restaurants and bars and certain export (stress on

Kosovo). With 4-pack we wanted to acquire additional positions in retail and offer consumers some-

thing new with printed foil that served as the advertising space and bring the content with listed

competitive advantages closer to the consumers (results of a clinical trial). Radenska Light was given

»a new outfit« to boost the sales and promotional packaging 5+1 gratis was provided with the commu-

nication on the wrapping foil.

STILL WATERS

The segment of still waters comprises Radenska Naturelle, Zala, Akull and Oda waters with the

Group dominating the market segment in the upper, middle and lower price ranges due to its pricing

policy. To satisfy the demand for bigger packaging Radenska Still was launched in innovative packag-

ing of 10 litres BIB (bag in box) and thus we have been the only provider of such packaging on the

domestic market and the markets of former Yugoslavia.

Zala, Naturelle, Oda and Radenska Still together cover nearly a quarter of the Slovenian market. The

very nature of the products does not allow many opportunities for development, so the Group desires

brand movements and added value movement by optimizing the design and composition of packag-

ing. In 2012, Zala spring water obtained a new 1-litre plastic bottle that extended its portfolio on the

shelves. With a new 0.75-litre non-returnable bottle Radenska Naturelle reached a premium position

among non-carbonated waters. Oda with PP-label improved its image and the label design stressed the

purity of spring water.

The sales of Akull spring water increased by 41& compared to 2011 and thus the planned volume

was achieved. The growth of Akull water was enabled by active cooperation with the distributers and

constant marketing activities focusing on the biggest retailers such as Elkos, Interex, Viva …

A part of the 2012 marketing funds were intended for the Water Project aiming to bring to an end

the negative trend of the sale of non-carbonated waters of the Laško, Zala, Radenska Naturelle and

Oda and to become the first choice of the consumers among bottled waters in Slovenia. The project

involved sales promotion activities in a form of added value of the 1.5 litre plastic bottles (e.g. 4+2 gra-

tis), additional exposure – water islands with the messages for consumers: The thirsty drink water. The

emphasis was on the activities in the main season, namely from April to august. According to the data

of the consumer research panel (AC Nielsen) the market share of non-carbonated waters of the Laško

Group increased by 5.7% whereas the Zala brand was again ranked first in April.

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FLAVOURED WATERS AND FUNCTIONAL WATERS

The Laško Group is also the leading provider of flavoured waters on Slovenian market. The flavoured

water market had experienced a significant drop but the Laško group with Za, Oaza and Radenska Plus

brands won a market share of 63%. Flavoured waters are a story of success backed up by continuous

development in conjunction with marketing communications. The development and launch of new

interesting flavours are necessary in the beverage segment.

The objective is to meet the demand and needs of our consumers and to strengthen the position of

the leading brand therefore we introduced new smaller packaging for this season and included all the

ZA flavours 6 x 0.5l.

Oaza was supplemented by a new flavour of tangerine with white tea in 2012. The basic guideline

of Oaza waters is enjoyment; however, it was decided to also achieve the required added value of these

products, namely the functionality of the product, by adding healthy tea extracts of healthy teas

MARKETING COMMUNICATIONS

NATURAL MINERAL WATERS RADENSKA (RADENSKA CLASSIC, RADENSKA LIGHT AND RADENSKA NATURELLE)

AND THE RADENSKA STILL SPRING WATER

At the beginning of the year, there was a shorter TV campaign (PJ). Radenska Classic has a number

of clinically proven positive effects on our body due to its composition. The results of the last study

were really excellent since it was proven that we lose weight and fat tissue by drinking Radenska

Classic and on the other hand we encourage the growth of muscular tissue and increase the mass of

minerals in our body. The results of this Radenska Classic study were communicated at sports events,

in advertisements in newspapers and other materials that we prepared for all markets.

An example of good practice from 2012 can be exposed. It refers to the use of secondary packaging

on a 4-pack, namely the foil that can be utilised as advertising space that enabled the communication

of positive properties and the results of the study focusing on natural mineral waters. Co-marketing (a

gift in the pack) promoted the sale of Radenska Classic in Slovenia and abroad.

Motivated by the desire to attract younger target groups and to educate them on NMW we prepared

a Facebook application Our Radenska.

Young generation was encouraged to drink Radenska Naturelle, non-carbonated natural mineral

water, with a game Catching Minerals. At the same time they got acquainted with the advantages of

drinking natural mineral water (minerals).

Also with Naturelle the product and wrapping foil were used as advertising space. By using mobiles

we advertised the results confirming the absence of bisphenol A and Hormone Disrupting Chemicals

(plastics) in the product whereas on the wrapping foil we advertised the original purity of water proven

with the age of water Naturelle in the spring that is more than 12,000 years (belongs to the times of

unspoilt nature).

New packaging of the spring water Radenska Still – bag in box (BIB) – was only used as promotion

at various events at the points of sale because of a lack of resources.

ZALA

In June 2012, we started to fill Zala spring water in a 1-litre plastic bottle. With new litre plastic bottle

we wish to satisfy those consumers who drink bottled water at work, when doing sports, going out with

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friends and also at home and who cannot be satisfied with only half a litre of water. On the other hand,

a 1.5-litre bottle is less convenient to be used when performing daily activities.

In 2012, the Zala brand was introduced even higher environmental criteria and preserved its status

of the leading brand in terms of ecology and sustainable development. Since May this year, the spring

water Zala has been filled into new plastic bottles containing 20% of recycled PET material. Zala’s

main message “In the cycle of life” was linked to an ECO story. In addition, a new project Plastic bottle

for a plastic bottle was also started this year that tells consumers that every bottle that is correctly dis-

posed of can become a new bottle. For this purpose, a short educational animation was prepared that is

accessible on the website. The Plastic bottle for a plastic bottle Project is also implemented in practice

especially at events where Zala is present as a sponsor. Such activities will also be continued next year.

Zala changed its communication strategy and further strengthened its position with ECO topics.

According to the Panel Trade, Zala again became the leading one ain the segment of still waters thanks

to various sales activities in 2012.

Also in 2012, the Zala brand was awarded the Trusted Brand title – as non-carbonated bottled water

most trusted by Slovene consumers.

ODA

Oda, spring water from Pivovarna Laško that belongs to the stagnating category of spring waters

decisively defends its »best value« position. In spring 2012, its image was renewed for the first time

after 13 years, namely by shifting from a paper label to a PP-mobile label.

As the official water of the Team Slovenia during the Olympic year it used the joint communication

address of the sponsors and partners of the Olympic Committee of Slovenia »To London to win!« and

directed its communication charge to minimal purchase of the media space (print, digital, PR) sup-

ported by a prize game, activities at the points of sale, participation in the activities of other sponsors

and by being present at events. Oda’s media mix excellently intertwined with the umbrella communi-

cation campaign of the Team Slovenia and other sponsors of the OCS and this reflected in its power-

fulness. ODA’s activities at the points of sale during the Olympic Games (a prize game, promotional

smaller packaging 1/6) and their upgrading within the projects of the Laško group in the water brand

group additionally strengthened the position of the Oda spring water that increased its market share

in 2012.

ZA

The sales of the segment of flavoured waters have continued to decrease. Therefore, all the activities

were directed to the points of sale. Thus we wish to maintain the leading market share in this segment

and still be the first choice of consumers. In the summer months we carried out a national prize game

“Are you FOR discoveries?” on the bottle caps of ZA drinks. The response of consumers, the sales team

and customers were positive. In June we adjusted the transport packaging to new, smaller packaging of

6 x 0.5l and all further activities supported this. The objective in 2013 is to make a “six-pack” of 0.5-litre

ZA beverages a product that will sell well and will be placed on shelves.

OAZA

Smaller advertising on the radio and TV accompanied the launch of a new flavour. Other activities

were related to the points of sale and the promotion there (tasting sessions and exposures). The packs

of the product with the new flavour also contained a small gift and the activities were presented on the

wrapping foil. The new product was advertised in print media and supported by the activities in retail.

A game “catch the flavour of Oaza Tangerina” with a prize application was designed for Facebook.

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2.5.3 SALES OF THE LAŠKO GROUP AND PIVOVARNA LAŠKO ON THE DOMESTIC MARKET

LAŠKO GROUP

The sales in Slovenia is mainly organised at the level of the Laško Group and divided into the retail

channel and the Horeca channel. The heads of individual channels or key account managers from

individual members cover certain key accounts for all the members of the Group. This enabled the

rationalisation of the organisation and optimal utilisation of marketing resources. The sales promotion

and launch of new products are organised in cooperation with the marketing service of the Group.

A consumer has become more rational and mainly purchases products in special offer and store

brands and therefore also our activities are adapted to these changed shopping habits. In 2012, we

changed the allocation of marketing resources and perform agreed activities aiming to increase the

profitability of the products of the Laško Group, the profitability of retailers and the satisfaction of final

user in line with the annual contracts concluded with retailers. In view of the strategic orientation of

the brands we defined joint projects to increase the sales of brand groups: beer, non-alcoholic bever-

ages and waters. To be more effective in the implementation of these activities, the flow of informa-

tion between us, retailers and final users was upgraded and the stress was on the activities carried out

through loyalty cards.

Individual approach to retailers enables us to implement different and innovative activities adjusted

to the capacities of an individual retailer and the desires of consumers. The prize game was conducted

via direct mail in a form of cooperation among various providers (mobile telephony, picnic packages,

tied purchases of beer, non-alcoholic beverages and water), in a form of rewarding via coupons and

weekend special offers via SMS and e-mail.

Our key challenge is to connect various aspects of the management of brand groups (beer, non-al-

coholic beverages and water) from the marketing strategy to planograms and rearrangement of stores.

These activities are performed with a special emphasis on comprehensive solutions: price positioning,

consumer rewarding, labelling, promotion, equipment at the points of sale and the development of

individual categories of beverages as well as the insight of the customer into the sales channel.

In Slovenia the consumption of beverages is on the decrease in all segments. In 2012, the sales of

the Laško Group on the domestic market equalled 2,567 million hl of all beverages, which is 9.3% less

than in the same period in 2011. The sale of beer decreased by 11.9% compared to 2011. The sale of non-

alcoholic beverages decreased by 8.7% compared to the same period in 2011 whereas the sale of water

decreased by 5.4%.

The decline in the sales of the Laško Group brands is mainly the result of the drop on the market

beer. According to the data provided by the market research company Ac Nielsen that monitors the

sale in retail, the drop in the sales of beer in 2012 totalled 9.6% and the drop in the sales of brands

decreased by 13.4%. The value of the market shares of the Laško Group brands in the beer segment

dropped by 2.89 percentage points in the period from January to November 2012 compared to the aver-

age in retail in Slovenia in 2011. This is mainly at the expense of store brands and discount stores. The

average value market share of the Pivovarna Laško brands in 2012 was 1.3% lower than the average in

2011 and in the same period the value market share of the brands of Pivovarna Union was 1.6% lower

than the average in the same period. In the draught beer segment we have achieved growth of sales of

both brands, which is the consequence of decreasing the number of the points of sale and simultane-

ous emphasis on the beer quality at the existing points of sale.

The fall in sales volume can also be observed in the segment of waters and flavoured waters. The

drop is more significant in the segment of flavoured water due to a stronger position of store brands.

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The Water Project of the Laško Group managed to mitigate the drop in sales and the segment of still

waters restored its leading position after 2008. . According to the data provided by the market research

company Ac Nielsen that monitors the sale in retail, the drop in the sales in the segment of waters

dropped by 8.6% in 2012 whereas the drop in the sales ob brands amounted to 10.6%.

SALE OF THE BEVERAGES OF THE LAŠKO GROUP ON THE DOMESTIC MARKET

Index Index

(in hl) Sales 2012 2012/2011 2012/plan 2012

Beer 1,280,278 88.1 90.3

Water 873,038 94.6 92.9



Total 2,567,333 90.7 91.8

PIVOVARNA LAŠKO, D. D.

Sales of Pivovarna Laško on the domestic market in 2012 amounted to 612 thousand hl of beverages,

signifying a 14.5% decrease compared to the same period in 2011. The beer segment is the most impor-

tant where due to the biggest drop on the market and significant stocks of retailers in December 2011

we recorded the biggest loss on sales. Compared to 2011, the sales of beer dropped by 15.5% whereas

the sales of non-alcoholic beverages increased by 204.6%, which was the result of the introduction of

new flavour - Laško Malt pineapple. In the water segment the market share increased but due to the

drop on the market the sales of water decreased by 2.8.

SALES OF BEVERAGES OF PIVOVARNA LAŠKO, D. D., ON THE DOMESTIC MARKET

Index Index

(in hl) Sales 2012 2012/2011 2012/plan 2012

Beer 566,569 84.5 88.1

Water 29,648 97.2 95.9



Total 611,970 86.5 89.5

2.5.4 SALES OF THE LAŠKO GROUP AND PIVOVARNA LAŠKO, D. D., ON THE MARKETS OUTSIDE SLOVENIA

LAŠKO GROUP

On foreign markets, the Laško Group sold 1.221 million hl of beverages in 2012, which is 12% more

than in 2011 and 5% less than planned. Despite harsh economic crisis that also marked the countries

of export, the year of 2012 was very successful. More intensive work and the continuation of the new

strategy of fostering joint participation on the markets outside Slovenia increased sales in the beer seg-

ment as well as in the segments of water and non-alcoholic beverages.

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SALES OF BEVERAGES OF THE LAŠKO GROUP ON THE MARKETS OUTSIDE SLOVENIA

Index Indexs

(in hl) Sales 2012 2012/2011 2012/plan 2012

Beer 827,977 107.8 89.5

Water 221,455 113.1 91.6



Total 1,221,596 112.2 94.9

Similarly to the sales on the domestic market, also the export activities are organised at the Group

level so that the heads of markets from individual members of the Laško Group cover individual mar-

kets, which contributed to streamlining of the organisation. Sales promotion and the launch of new

products on foreign markets are performed in cooperation with the Group Marketing Service. In Croa-

tia, the Laško Group established its own company, Laško Grupa in Zagreb. The basic activity of this

company is intensive integration into the commercial activities together with the importers and cus-

tomers on this particular market. Also in Bosnia and Herzegovina the Group has its own company,

Laško Grupa in Sarajevo that coordinates the activities with the importers and principals; however, it

still does not have its team for sales promotion. In 2012, also the Birra Peja Company was a part of the

Laško Group.

The Group’s export strategy is to sell the products via importers with whom long-term business rela-

tions have been developed. This ensured minimised risk. We have been developing partnerships with

the key accounts and thus ensure the clear visibility of our brands. In addition to the production of own

brands, we also strive to provide additional quantities by producing store brands and to maximise the

utilisation of the production capacities and reduce fixed costs per a unit of product.

In 2012, the Laško group continued intensive sales approach and at the end of the year we recorded

growth on all key markets.


The sales of Pivovarna Laško on foreign markets increased by 23% compared to 2011 but were by 7%

lower that planned. The sale of beer is the most important and on the most foreign markets more beer

was sold than in 2011. The planned quantities were not achieved mainly due to the failure to achieve

a very ambitious goal in Croatia despite the export to this market that increased by 34%, which is very

successful since total consumption of beer in Croatia dropped.

SALES OF BEVERAGES OF PIVOVARNA LAŠKO, D. D. ON THE MARKETS OUTSIDE SLOVENIA

Index Index

(in hl) Sales 2012 2012/2011 2012/plan 2012

Beer 326,457 121.8 92.1

Water 22 41.5 /

Non-alcoholic beverages 3,604 / 180.2


Total 330,213 122.9 92.4

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1. ITALIAN MARKET

LAŠKO GROUP

Italy is the largest foreign market for Laško Group. In 2012, the Group sold 325.6 thousand hl of

drinks representing a 15-percent increase compared to the previous year and 12% more than planned.

The Group sold most beer, namely 272.7 thousand hl on the Italian market, which is by 15% more than

in 2011 and 12% more than planned. We also sold 51.9 thousand hl of water, which is 10% more than in

the previous year and 13% more than planned. Smaller quantities of other soft drinks were also sold.

Such increasing sales volume is the result of intensive work with importers, stronger presence in

trading and discount chains, investment into marketing, promotion and the sale of brands. A lot of

attention was placed on the recognisability of the Group brands. Increased sale of store brands is also

the consequence of improved production processes and a more flexible approach with regard to the

offer of products. Good results are achieved due to intensified activities, permanent presence on the

market and constant presence on the market as well as active cooperation with the importer and sub-

distributers.


In 2012, Pivovarna Laško sold 121.6 thousand hl of beer on the Italian market and thus the growth

of sales increased by 5% compared to 2011, which corresponds to the planned volume. The services of

production and filling are provided to the Danish brewery Royal Unibrew whose beer Ceres is sold in

Italy. In 2012, we sold 67 thousand hl of Ceres.

2. TRADE MARKET IN CROATIA

LAŠKO GROUP

In 2012, the Laško Group exported 207.2 thousand hl of beverages to the Croatian market, which is

14% more than in the previous year and 13% less than planned. We exported 165.8 thousand hl of beer

meaning 17% more than last year but 15% less than planned. Total export to Croatia also involves the

export of 30.7 thousand hl of beer in tanks. 38.4 thousand hl of water was sold, which means a 7% in-

crease compared to the previous year and equals the planned volume. We also sold smaller quantities

of non-alcoholic beverages (2.8 thousand hl).

In 2012, Pivovarna Laško and Pivovarna Union started to sell beer and Radler in tanks to Laško

Grupa, Croatia that organises filling of final products in 2-litre PET-plastic bottles (our brand and store

brands) in Croatia for the Croatian market (16.6 thousand hl) and for the market of Bosnia in Herze-

govina.

The performance of beer sales is heavily hit by the drop in the sales of beer by 5%, decline in the sales

of Radler beverages by 8% and new suppliers of Radler. In 2012, the quota for water import decreased

by 50% compared to the previous year so that the acquired quota only sufficed for the first half of the

year. Also this year, extremely aggressive approach of domestic water fillers can be identified as well

as enormous investments into marketing communications. In the field of non-alcoholic beverages we

still find it extremely difficult to follow domestic competitors as far as price positioning is concerned.

Adequate support activities focused on the biggest customers aimed at the promotion of our (cam-

paigns, publications in catalogues and on leaflets, palette exposure).

In Pivovarna Union we did not only concentrate on the products of the Group in 2012 but also filled

6.9 thousand hl of Bavaria for the Croatian market.

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In 2012, Pivovarna Laško exported 121.2 thousand hl of beer to Croatia in 2012 and increased the

export by 34% compared to 2011, which is 8% less than the planned volume. Pivovarna Laško exported

26.8 thousand hl of beer in tanks to Laško Grupa, Croatia that sold 13 thousand hl on the Croatian mar-

ket. A major shift took place in the area of store brands that Pivovarna Laško fills for the commercial

chains Konzum and Spar. Own brands sold at the level of the previous year, which is a very good result

taking into account the situation on the market.

3. TRADE MARKET IN BOSNIA AND HERZEGOVINA

LAŠKO GROUP

Together with Laško Grupa from Zagreb the Laško Group exported (11.8 thousand hl in 2-litre PET-

plastic bottles filled in Croatia) 134,1 thousand hl of beverages to Bosnia and Herzegovina, which is 39%

more than in 2011. The sales of beer increased by 61%; the sales of water dropped by 12% and the sales

of non-alcoholic beverages increased by 19%.

An important factor for the increase in the sales is a new concept of activities on the market started

in 2011. All the distributers sell the entire range of products of the Group and thus our coverage and

distribution have strengthened.

Radenska fills licensed ice teas at the importer Herzegovina and since the middle of 2012 also car-

bonated non-alcoholic programme Ora.


In 2012, Pivovarna Laško exported 44.5 thousand hl of beer to the market of Bosnia and Herzegovina

and increased the sales volume by 64% compared to 2011, which is 11% more than planned.

4. TRADE MARKET IN KOSOVO

LAŠKO GROUP

In 2012, the Laško Group exported 351.9 thousand hl of beverages to the market of Kosovo, which is

8% more than in the previous year and 2% more than planned. We exported 210.3 thousand hl of beer

meaning 6% less than last year and 13% less than planned. Total sales of water amounted to 34.9 thou-

sand hl, which is 41% more than last year: the sales of non-alcoholic beverages totalled 106.7 thousand

hl, which is 40% more than last year and 59% more than planned. Birra Peja fills Laško Zlatorog under

the licence to be sold on the markets of Kosovo, Macedonia and Montenegro. Birra Peja also imports

the products of Pivovarna Union to Kosovo. In 2012 it started the production of Sola ice teas under the

licence for the markets of Kosovo and Macedonia.

The reason for the drop in sales of beer in Kosovo is the drop in the entire market in general by

10% and the growth of competitive beer. Constant marketing activities were conducted in cooperation

with the biggest retailers so as to promote the sales. In 2012, most of the marketing resources focused

directly on the final user (happy hours in Horeca, rewarding purchases in stores, prize games and co-

marketing with the mobile telephony operator).

The reasons for the growth of the sales of water was binding the sale of water to beer at the dis-

tributers’, media campaigns on billboards, activities on the market and the offer of new products. We

managed to increase the market share of non-alcoholic beverages on shelves with the proper pricing

policy, new products, the lease of shelves and palette space. Aggressive advertising of the non-alcoholic

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programme on TV and billboards also added to this achievement. It is estimated that the Sola non-

alcoholic beverages have attained a 10-percent market share.


In 2012, the Pivovarna Laško exported 6.7 thousand hl of beer to the market of Kosovo and increased

the export by 70% compared to 2011 and 78% more than planned. Also a minor quantity of non-alco-

holic beverages was sold. Only a part of the product range of Pivovarna Laško is exported for Horeca

segment to Kosovo, other products are filled by Birra Peja under the licence.

5. OTHER TRADE MARKETS

LAŠKO GROUP

On other markets Laško Group sold 214,4 thousand hl of beverages in 2012, which is 5% more than

last year. Other markets represent 17% of the entire sales on foreign markets. The sale on the mar-

kets of Serbia, Hungary, Macedonia and Montenegro was actively promoted. Other markets where the

Laško Group also sold its products were also Malta, China, USA, Canada, Czech Republic, Sweden,

Slovakia, Albania, Greece, Austria, Germany, France, Great Britain, Chile, Latvia, Australia, Romania,

Poland, the Netherlands, Emirates and Libya.

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THE COMPANY IS CONTINUING JOINT PURCHASE WITH THE PROCUREMENT OFFICES IN THE LAŠKO GROUP,

WHICH ALREADY IN THE PAST PROVED TO BE GOOD AND GENERATED INCREASING SYNERGY EFFECTS. GOOD AND

CORRECT RELATIONS AMONG THE MEMBERS OF THE GROUP, COMMON AND UNIFIED APPROACH AND CONSTANT

COMMUNICATION WITH THE SUPPLIERS REPRESENT TH PATH WE PLAN TO TREAD DOWN ALSO IN THE FUTURE.

Also in 2012 we continued coordinated activities with the purchase offices of the Laško Group. With

such organisation we achieved great synergy effects. Good and correct relationships among the Group’s

members, a joint and unified approach and ongoing communication form a path the Company intends

to follow also in 2013. And to further improve the effects of joint purchase, the goal should be central-

ised purchase service for all the members of the Laško Group and a unified approach to our suppliers.

In 2012, the supply of all types of materials was good. In general, the supply in 2012 was better than

in last two or even three years.

The offer of all basic raw materials in 2012 was good and there were even some surpluses of indi-

vidual raw materials. Despite a large enough supply and peaks in the upstream market, the global

prices of raw materials for our products increased and the prices of some even decreased, which is

sometimes difficult to grasp. A very special situation pertains to hops. Since we exclusively use Slovene

hops we are dependent on the situation in Slovene hop growing that in recent years was based on

speculation and failure to comply with the contractual provisions. Traditionally, long-term contracts

were concluded based on the fact that hop production is a many-year process of investing into cultivar.

Slovenia mainly produces aromatic sorts of hops that gives specific flavour to beer. In 2012, we ere

faced with huge quantities of unsold hops from 2009, 2010 and 2011. This is the very reason why the

price of hops decreased in 2012. Already with the hops from 2012 the trend will reverse again. The

quantities of aromatic hops in Europe are smaller and therefore an increase in prices can be expected.

The annual harvest of agricultural products was relatively good so that the price of malt slightly

decreased. An interesting situation arose with regard to corn that is a product on the stock exchange.

When the first speculations appeared in the second quarter of 2012 on the American market the price

of corn started to increase sharply and it stabilised a bit in the fourth quarter in 2012. As concerns the

corn meal, the Group is 100% dependent on the Serbian market. Alongside very good quality and large

quantities, the price in this market is 10 - 20% lower than that in the EU. Our wish is to find a supplier

of comparable prices also in the EU.

Due to disastrous harvest of agricultural products in Central Europe, in terms of quantity and qual-

ity, some problems are to be expected in 2013.

2.6

Supply flows

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Sugar is an extremely important raw material for the Laško Group. For the second successive year,

we successfully purchased it through the purchase consortium run by Mercator. Thus we are provided

with the necessary quantities and required quality as well as timely delivery and suitable price. This

kind of purchase will also be continued in 2013.

The prices of packaging material were stable and based on contracts. More significant fluctuations

of prices were mainly limited to materials linked to petrochemical industry, the oil price and dollar

fluctuations. The prices of pre-forms, foils and PVC-stoppers were coordinated based on ICES or Plats

index for these materials on a monthly or quarterly basis.

The prices of labels, cardboard, glue and other strategic materials were agreed in contracts and stable

and at the annual level there were no increases compared to 2011.

Global trends on the market of PET-granulates were slightly more favourable in 2012. In individual

months we recorded a slight increase in the price of granulates at the beginning of the year and later

on the decrease. The average purchase price in 2012 was lower than the comparable price in 2011.

In 2012, there was an important shift on the energy market (electricity, gas). More savings are ex-

pected in 2013.

Despite general economic situation, deepening of the crisis in Slovenia and the continuation of

the problem resolution in the Laško Group we have succeeded in keeping the trust of our suppliers.

Worsening liquidity and constant late payments as well as uncertainty concerning our future raised

concerns among our suppliers. We are faced with the fact that more and more suppliers require some

instruments to secure receivables and set allowed debt limits. Thanks to good relationships with our

suppliers many of whom have developed a friendly attitude we have so far been able to ensure normal

supply. In 2012, we managed to additionally extend the payment deadlines with most of the suppliers.

Openness in discussions and constant contact with suppliers is of great importance. In 2012 we

managed to ensure normal supply to the companies in the Group despite the problematic situation. It

is interesting that new suppliers who would want to become our partners constantly appear.

The Company is continuing joint operations with the procurement offices in the Laško Group which

in past years generated goods results, bringing certain synergy effects. The benefits highlighted in past

years no longer apply due to events which are known to all. Good and correct relationships among the

Group’s members, a joint and unified approach and ongoing communications form a path the Com-

pany intends to follow also in 2013.

Friendly and correct attitude to every supplier enabled us to retain all the suppliers in 2012.

In 2012, the Company was successful in managing costs by reducing and optimizing inventories,

replacement of certain materials with alternative ones and longer payment deadlines. The Company

managed to retain the costs of supplied materials or to even slightly reduce them.

With regard to the activities to preserve human-friendly environment, the Company will make a lot

of efforts to use ecologically suitable materials which preserve the natural environment in its natural

state to the greatest extent possible. In the procurement processes this predominantly involves ma-

nipulation of various types of packaging comprised of a variety of materials and the collection and re-

cycling 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 the like. Raising environmental awareness is a constituent

part of the Company’s operations.

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2.7

Quality and standards

IN 2012, SAP QM MODULE FOR THE WORK OF THE QUALITY DEPARTMENTS WAS SUCCESSFULLY

IMPLEMENTED IN THREE COMPANIES OF THE LAŠKO GROUP.

In all companies, the internal quality and safety control in 2012 was implemented in accordance

with the legislation in force and with the internal acts. Identified deviations were followed by suitable

corrective actions that eliminated the risks of inadequacy or mitigated them to an acceptable level.

In 2012, the SAP QM Module for the work of Quality departments was successfully implemented in

three companies of the Laško Group. The Module enabled faster processing and analysis of the work

of our laboratories and it significantly strengthened traceability from raw materials to final products or

vice versa in the event of a complaint.

In the area of individual supplier control, the technologists and representatives of quality control and

purchase from both breweries performed the control of the suppliers of malt and grits.

In 2012, we started to jointly control the quality of our products in our distribution centres. These are

very important data on potential hidden errors that are not detected in the production. There were no

major problems, occasionally there was a problem with the handles of plastic bottles used in the non-

alcoholic programme and of the old intermediate goods and because of the wear and tear of returnable

bottles the problem of poorer image appeared.

2.7.1 PIVOVARNA LAŠKO, D. D.

CONTROL OF STARTING MATERIALS AND INTERMEDIATE MATERIALS

There were no relevant deviations identified with the control of malt. The exception was the autumn

when the Soufflet Sladovny supplied malt that contained too many red grains. Next year it will be nec-

essary to monitor malt quality even closely because during the harvest in certain parts in Europe the

conditions supported the development of moulds that can lead to increased content of mycotoxins in

the raw material and causes excessive foaming of the final product. This is why a decision was taken

to introduce a new method for determining the content of mycotoxins in input materials. This type of

information will be welcomed by both breweries.

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CONTROL OF INDIVIDUAL PHASES AND IN-PROCESS CONTROL

In 2012, we put increased emphasis on the control of the oxygen content in final products and the

control of the washing machine on the ST1 line. These are important aspects linked to safety, quality

and stability of beer when placed on the market.

With wheat beer the focus was mainly on the input control of beer coming to the factory in tanks,

and also on the control between the phases and in-process control.

Another segment that increased concerns and the frequency of sampling were the tanks of beer that

are filled in Pivovarna Laško and then transported to the filling plant Dines dou, d. o. o. in Zagreb.

Every year, the control between the phases and in-process control is strengthened on certain lines

and we increase not only the number of samples but also the sampling frequency as well as introduce

new methods of analysis that include microbiological and chemical parameters.

CONTROL OF FINISHED PRODUCTS

In the past year the number of complaints regarding the final products was insignificant and related

to individual items and not the whole batches. In most cases the reason for a complaint was inadequate

storage of beer on the market that causes the change in organoleptic properties of beer.

All products assessed as risky in particular from the standpoint of microbiological control are in

the SAP information system and in Q stock as long as the complete analysis of the final product is

completed. Such a case was the filling of wheat beer that was kept in Q stock since it was not suitable

in microbiological terms and the reason was inadequate quality of the beer sent by the supplier of

wheat beer. In general, the year of 2012 was marked by the concern for microbiological quality of the

beverages Malt and Radler. These products also experienced the problem of visual instability, since

after some time the fruit contents extracted and in the bottle it is noticed as flakes and sediment. This

causes discomfort of some consumers, therefore efforts will be made in the future to stabilise Radler

so that we limit the extraction of the fruit content.

CONTROL OF DRINKING WATER

Control of drinking water is performed according to the plans defined in internal and legislative

rules. In addition to the Laško water supply network for which Pivovarna Laško has a certificate on the

management of water resources, we also control 12 other water supply networks. In 2012, we recorded

no major problems with the drinking water quality except in two cases when the information on the

necessary preventive parboiling of water was provided. In both cases, correction and corrective meas-

ures were introduced and it is believed that also in the future adequate drinking water will be supplied

in this area. On the website of the municipality of Laško they started to publish information on the

quality of drinking water so that consumers can read and get acquainted with its status.

OTHER

The research work of our colleagues in Pivovarna Laško and in external institutions was presented

at two scientific conferences:

• CEFood congress, Novi Sad, Serbia,

• CEFORM (Central European Forum for Microbiology), Maribor.

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2.7.2 PIVOVARNA UNION, D. D., LJUBLJANA AND BIRRA PEJA, SH. A., PEĆ, KOSOVO

The internal control of quality and safety in both companies was performed in line with the require-

ments in the legislation in force and in internal regulations. When a deviation was identified, suitable

preventive and corrective measures were implemented that eliminated the risks and non-compliances

or reduced them to an acceptable level.

In 2012, the SAP QM module was implemented to support the work of the quality service of Pivo-

varna Union. The module enabled even faster processing and analysis of the work of our laboratories

and it facilitated traceability from raw materials to the final product and vice versa. The data in the

same system are now used in the production, purchase and in sales.

ISO 9001, ISO 14001, NSF AND IFS STANDARDS

At the beginning of year, we had an unannounced audit of the NSF standard that went well.

The assessment of the conformity with the ISO 9001, 14001 (re-certification) and IFS standards were

successfully completed in October and as regards the IFS standard, we ended up at a higher level.

The Birra Peja brewery has been certified according to two standards, namely ISO 9001 and HACCP

whose validity was successful proven last year and this year. Since this is a novelty in the management

of processes in the company, this is an important beginning that has to be upgraded every year.

INPUT, IN-PROCESS AND FINAL CONTROL

A lot of attention was placed on the control of the suppliers of basic raw materials. A lot of attention

was placed on the control of suppliers of basic raw materials. This year, we visited the suppliers of malt

in Germany, Czech Republic and Slovakia (colleagues from the control department together with the

technologists). These visits helped us gain a better understanding of our own needs with regard to the

quality of malt.

At the beginning of the year, we had problems with the suppliers of raw materials especially with

the raw materials used in non-alcoholic beverages. We also supplemented the method of work when

introducing new products.

With regard to the control between phases and the final control, potential deviations are tackled

promptly and it is also important to stress the cleanliness of the plants and the control of water quality

for beverage production. This is under constant supervision of the laboratory that ensures water qual-

ity. Constant laboratory controls also facilitate preventive maintenance.

In Birra Peja the production of beverages (started with the ice tea peach) successfully started. Since

from own experience we know that problems can only occur after some time we stress the importance

of a sufficient number of trained employees and technological discipline. This is of key importance for

the future work.

Process control means the control of the devices and processes in the production in energy area and

warehouses: especially the latter is important as the verification of the products prior to the sale to final

customer. This way, hidden errors can be identified not detected by previous control.

At the end of the summer some problems occurred linked to the non-alcoholic beverages on the

market in Kosovo. It was established that the products were stored in inappropriate conditions at the

buyer’s location – there were no complaints or comments with regard to the identical products on the

Slovene market. Two approaches were applied to tackle this problem: a change in the filling technology

and (in 2013) potential movement of the product filling to Birra Peja.

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FOOD SAFETY

Both companies follow the HACCP principles, which is also a legal requirement in Slovenia. In

Pivovarna Union a regular annual inspection was carried out by the Agricultural Inspectorate. Except

the requests to provide some additional explanation of our technological processes there were no other

comments.

Last year, we also dealt with the use of recyclate in plastic bottles. Detailed monitoring provided the

data based on which this recyclate was approved to be used.

There were no complaints because of the safety of products.

2.7.3 RADENSKA, D. D., RADENCI

ISO 9001 AND ISO 14001 STANDARDS

An integrated system of quality management has been introduced in the Radenska Company that

combines quality management, environmental and energy management, food (product) safety and

safety and health at work.

Compliance with the quality system and the provision of sanitary suitability of our products paid

off. In 2012, the number of complaints decreased and there was no case of a complaint due to a lack

of microbiological safety of a product, no recall or withdrawal of a product from the market because it

would present hazard to the health of the consumer.

Safety and health at work of all the employees is important. Our activities are in compliance with the

legislation in force, the requirements of the BS OHSAS 18001 standard and the annual plan of safety

and health at work that indirectly also includes also the promotion of health of all employees. It is es-

sential that the number of accidents at work decreases year by year.

The introduced system of innovation has already born fruits. In 2012, two innovative ideas were

presented to improve the production process that have already been put in place.

The findings of internal controls confirm the findings of the external audits of the integrated system

of quality management + HACCP and the system of environmental management by the certifying

body of SIQ and also by the assessments of our customers and partners (Hofer, Pepsi Co) who audited

us according to the requirements of the IFS standard.

ENTRY CONTROL, CONTROL BETWEEN PHASES, FINAL AND PROCESS CONTROL

There were no major complaints to our suppliers recorded in 2012. There were only some deviations

of which our suppliers were promptly informed. Most complaints referred to intermediate goods.

These problems were dealt with already on the lines. In the field of raw materials that we control in

our laboratories we only rejected the consignments of solid sugar and fructose, namely because of the

impurities, colour and microbiology.

The cases of non-compliance identified on the lines during the filling stage showed some deviations

mainly related to the contents of some parameters measured during the production. These deviations

are eliminated on the basis of analysis already on the lines and have no impact on the final product.

In the current year, all the technological processes in production will need to be validated. This

means the examination of the stability of operation and will enable undisturbed work and fewer stand-

stills. Based on the results it is possible to improve certain processes and reduce costs.

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2.7.4 VITAL MESTINJE, D. O. O.

We successfully underwent the assessment of pre-packaged products and the assessment by Hofer.

Based on the deviations identified in 2012 (sediment in lemon ice tea, nonconforming glucose-

fructose syrup) the entry control will be further strengthened.

One of major problems in final products was mould in fruit drinks that dictated the destruction of

the product.

There were individual complaints at the beginning of the year mainly due to mechanical damage of

products in Pur Pac.

At the end of the year, the microbiological laboratory was renewed as a part of refurbishing the

production.

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2.8

Investments

THE OBJECTIVE OF THE INVESTMENT AND MAINTENANCE PROJECTS IS THE ACHIEVEMENT OF OPTIMAL

PERFORMANCE OF THE FILLING LINES AND EFFECTIVE CONTROL OF THE USE OF FUNDS IN MAINTENANCE.

Strategic orientation in the area of production, maintenance, investments , energy and ecology in the

Laško group are based on the achievement of optimal productivity, balance between adaptability and

performance 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, po-

tential 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 2012 as well as the sustainable development objectives

were also consistently achieved.

In 2012, 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 the Group’s production equipment and restricted investments

in technology in recent years, the Group met and even exceeded the ambitious target of maintaining

the same level of maintenance costs. We carried out all preventive maintenance works to ensure the

smooth operation of production capacities during the seasonal months.

In 2011, we tried to ensure improved utilization of capacities and at the same time merge production pro-

grammes 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, stocks and lo-

gistic processes, which is in accordance with the policy of optimising and rationalisation of production lines.

We continued with the optimisation of the use of materials and raw materials and strived for all sav-

ings defined in our five-year project 2010–2014.

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 Slovene institutes and well established providers of such services.

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2.8.1 INVESTMENTS IN PIVOVARNA LAŠKO, D. D.

Due to harsh economic conditions and the consequential decision of the Management Board in the

first quarter of 2012 to stop all the projects in the investment plan for 2012 that had not been activated

by then or bound any way by contractual commitments, we were quite active implementing invest-

ment projects despite financial restrictions. Therefore we managed to complete 12 planned projects

that had already started at the end of 2011 or right at the beginning of 2012 and also the »start up«

project Crate 10 x 0.5l. Throughout the year we implemented and also successfully completed the

investments in production, energy, ecology and infrastructure that had been defined in the 2012 plan.

With the newly developed products and filling into glass bottles of 0.33l, new designs and marketing

requirements in this programme also the need occurred to equip the 0.33-litre bottles with a NNL label.

By building in an additional NNL aggregate on the labelling machine of the ST3 filling line we were able

already in May 2012 to supply the market with the products in bottles equipped with the NNL labels.

Due to more frequent change of programmes of filling of water/beer on the PET filling line, short-

ening time of preparation of the filing line and less losses of the product, water, cleaning agents and

energy the optimisation of the control system in filtration was carried out in the first quarter of 2012.

In addition to the optimisation of the software, also the PLC S7 hardware was updated.

Already at the beginning of 2012, the software was finished for the system of automatic delivery of

Kieselguhr, the injection of the inert atmosphere CO2 into the suspension of filtration agents and the

displacement of beer with suspension of degasified water. Thus the technology of beer filtration was

set up that is in accordance with the latest standards of beer quality especially in the field of low content

of oxygen in filtered beer in production. At the same time we introduced the control of operation and

the improvement of the CIP cleaning in the beer filling plant that reduces the use of fresh water and

chemicals used for cleaning the equipment in this part of production.

The production of newly developed products Bandidos Sun and Malt of various flavours required the

conversion or separation of the technological equipment in the filling plant – pressure tanks. Separate

pipelines were installed with multi-way valves and changed programmes of the technological process

that enable production of smaller batches without increasing losses and with rational use of cleaning

agents and energy.

In March the activities started at the level of the Laško Group to introduce an advanced information

technology system in production. The users of this system are provided with: automatic capture of data

on the operation of lines, monitoring and management of disturbances, produced quantities and scrap

and monitoring of most production indicators. The project was completed and became operational at

the end of 2012.

Our employees successfully added the equipment for the filling line for PL2 cans for sales cam-

paigns and special occasions so that since spring 2012 the market can also be supplied with beverages

in 0.55-litre cans.

In the light of the trends in the countries with traditionally developed beer drinking culture where

phenomena such as a shift to smaller crates, growth in sales of returnable packaging to ease handling

took place we started to develop a completely new type of a crate that would be able to some extent to

redirect the sales from price – and ecologically less suitable can packaging to returnable e glass packag-

ing. Smaller packaging can help breweries to extend their market and the customer base. In December

2012, an advanced payment was made for the production of tools of a crate 10 x 0.5l and thus confirmed

the »start up« project that will be held in 2013.

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After several delays of the project we finally succeeded in replacing worn out plumbing fixtures and

main pipelines of the ammonia installations. Thus we managed to decrease energy losses and also

lower maintenance costs due to the necessary change of seals or disturbances in the technological

process and it is most important that the leakage of NH3 into the environment was prevented.

With the shift to a new SAP information system at the beginning of 2009 also new hardware was

installed in the data centre. During summer it was established that the existing installed equipment for

conditioning the place did not meet the required parameters and was no longer in compliance with the

standards and regulations governing the functioning of the installed hardware. This is why in the server

room mew hardware was installed in June 2012. This equipment and all the control sensors fully meet

the requirements of HP for such premises and ensure a high level of safety and reliability of operation.

Throughout the year of 2012 there was a research going on in cooperation with the Environmental

Institute IOS from Maribor and the Biotechnical Faculty in Ljubljana trying to establish the possibil-

ity of using waste brewer’s yeast to generate biogas during the anaerobic process of degradation. The

objective of this pilot project is to manage the degradation of 20t of yeast suspension per day and the

project confirmed this.

At the beginning of this year the pilot CNG/CBG filling station was started. It was first installed in

cooperation with EEA Laško and then the operation started. It uses compressed natural gas that ena-

bles filling of adjusted forklift and a personal vehicle with one or the other energy product. The vehicles

are in the phase of testing in the transport logistics.

The reorganisation of the sales and marketing sector at the level of the Group in September 2012

there was a need to rearrange the posts at the distribution centre location in Celje. Some construction

and other works (mechanical and electrical as well as ICT installations) were necessary to convert the

location into a place for 33 new working places in this facility. The office equipment (furniture) was

transferred from the distribution centre in Maribor where it had not been used.

Since the ventilation and heating system in the hall of the dry part of the ST2 filling line was obsolete and

no longer provided minimal conditions for safe performance of work, already before the start of the heat-

ing season this year we had to carry out the 1st phase of the reconstruction of the ventilation and heating

system. The works were conducted and the equipment became operational at the end of December 2012.

2.8.2 INVESTMENTS IN PIVOVARNA UNION, D. D., LJUBLJANA

Since the resources for investments and maintenance of equipment are limited, Pivovarna Union

places a lot of attention to efficient maintenance of the equipment that was mainly installed in the

nineties of the previous century. Although the equipment is already subject to wear, it is in a good state

because of good maintenance. Its shortcomings are obsolete electronics and control system for which

it is extremely difficult to obtain spare parts that are also very expensive. A lack of investments is in

particular obvious in the filling plant where great efforts and own knowledge are used to keep up with

the trends and the wishes of our customers in the fields of new packaging and the look of products.

The practice of the provision of the highest quality of our modern and trendy beverages is the key to

attract new consumers and retain the old lovers of the beverages produced by Pivovarna Union.

RENEWAL OF THE ENERGY SYSTEM

Already in 2011, the Company opted for an energy audit and tackled the renewal of the energy sys-

tem. The boilers are old, obsolete and ecologically unsuitable. Therefore they need to be replaced by

more ecologically suitable and also more energy efficient. In 2012, the design was made to start the

project of replacing boilers in the energy station.

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The energy audit provided us with the insight into the state of play in the field of energy and we

implemented some short-term measures to optimise energy consumption. The results can be seen in

lower consumption of gas and electricity. The CSRE project – targeted monitoring of the energy con-

sumption is a logical continuation of the energy audit. The project started at the beginning of 2012 and

the first results are expected at the end of this year.

The rationalisation of energy use continued with the project of waste water recovery. The existing

users of this water were added new ones and thus the consumption of fresh water decreased. Water is

reused for various cooling systems and it is also supplied to the towers.

PRODUCTION AND THE FILLING PLANT

In the production of beer it was urgent to replace two obsolete evaporative cooling towers for the

provision of the cooling energy in the beer production.

The biggest investment in the first half of the year was the replacement of the filling machine on

the line for aseptic filling of non-alcohol PET2. Despite the replacement and four-week loss of produc-

tion we managed to provide all the necessary quantities of products in all the sales channels together

with the introduction of two new products by with the timely planning and the increase in stocks. The

investment added to microbiological suitability of our products.

In Pivovarna Union we had problems because of a too small container of de-aired water (DAW) and

insufficient capacities of the pressure tanks that function as a suspension reservoir for filtrated beer

prior to filling. This is why we envisaged the installation of a DAW container and two pressure tanks

in addition to the already existing ones. The new DAW container is already operational and has a vol-

ume of 2,000 hl and is intended for storing de-aired water. This is technological water which in the

previous process of de-airation was taken oxygen and cooled water is then carbonated to approximately

4.5 g CO2/litre of water. Filling of the container is performed from the top or from the bottom. Filling

and emptying of the container is enabled vie the existing valves and pipelines. The atmosphere in the

container is of pure CO2 that is adequately isolated. It enables the measurement of pressure, level and

at two spots also of the temperature.

Logical continuation of the success of Radler is the development of a non-alcoholic Radler with the

flavour of citrus and elder tree. This is the segment of mixed beverages with the beer base where we

are overtaking our competitors also this year.

In packaging, the novelty is the special size of an ALU-can of 0.55l. Due to the new packaging also

the filling was adapted based on our knowledge and expertise. This packaging is intended for special

occasions. Our knowledge and innovation were also applied to prepare new packaging of the spring

water Zala in a 1-litre plastic bottle.

In the beer production, there were a couple of changes introduced because of the necessary diversi-

fication of the production and a broader range of products that require more flexibility. Pipe connec-

tions, added multi-way valves and changed programmes of the technological process enable produc-

tion of smaller batches without increasing losses and with rational use of labour force.

Aiming at cost reduction we also intensively examined all washing cycles to identify how to reduce

the use of chemicals, water and energy. We are introducing chemicals with better washing effects and

are constantly in contact with the suppliers to be updated on the most advanced technical novelties that

can assist us in the optimisation of processes.

In the first half of the year, a team of Pivovarna Union took part in the setting up of the production

of non-alcoholic beverages in the Birra Peja Company. In addition to the technological procedure, also

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the processing part of the line had to be prepared and software had to be adjusted. The guidance and

technical assistance will also be provided next year.

Because of filling Sola and Multisola ice tea the existing labelling machine in Birra Peja also had to

be replaced on the filling line for new also square plastic bottles. For the same reason we also built in

new moulds for 0.5- and 1.5-litre plastic bottles and purchased a new machine to control the fullness in

order to ensure adequate hardness of the cans.

Other investment in the Union Group focused on the purchase of returnable packaging, software

and the equipment for sales promotion.

2.8.3 INVESTMENTS IN RADENSKA, D. D., RADENCI

The 2012 investment plan and its implementation are adapted to the current situation and thus

rather limited. Because of the requests to change packaging, most of the investments are focused on

such projects (new bottle, new packaging units, new packaging).

The filling equipment on the TPO-1 and TPO-2 lines was adjusted to be used for filling the new

non-returnable bottle of 0.75l. To adapt to the different volume, new parts of the filling equipment and

a part of the conveying belts had to be purchased because this volume is filled on the TPO-1 line and

packed on the TPO-2 line.

The filling lines were adjusted to pack plastic bottles for carbonated drinks of 1.5l PET into the packs

of four. The requirements of the market have already been mentioned. Lately, there has been more

demand for smaller packs. For this reason, paletting machines on two filling lines were adjusted.

Equipment for filling spring water into new packaging, the so called “bag-in-box” or a bag in card-

board, was purchased, namely of 10-litre volume. And to this end also a new filling-closing device was

purchased and storage place was adjusted.

The equipment for the production of pre-forms with lower weight was adapted accordingly. We were

forced to do this by the market. This is the very area where costs can be reduced since PET-material is

one of the higher items in the structure of costs of filling of water and non-alcoholic beverages. There-

fore tools were prepared to inject lighter 0.5- and 1.5-litre pre-forms but also the shape of a plastic bottle

for non-carbonated products was adapted to lighter pre-forms.

Energy audit was carried out. The majority of the project was implemented in 2012 whereas the

final part with the report and proposals for improvement will be prepared in the first months of 2013.

The project of the computerization of production is in the final phase which means the establish-

ment of the control system of the production lines. The system will support the overview of the opera-

tion of the filling lines such as the standstills, efficiency and some other technological parameters. This

is a joint project of the Laško Group.

The NMW boreholes were remedied due to the leakage of CO2. CO2 leakage posed a potential threat

to the immediate vicinity of the borehole (settlement) that was not in use but with this measure the

threat of a potential accident was eliminated.

A contract was signed for the purchase of equipment for the preparation of natural mineral water

Naturelle. The equipment will be installed in April 2013 and the project was partly transferred from the

initial 2012 plan to the 2013 investment plan.

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We purchased an ion chromatography system, a device for performing a method to determine anions

and cations or for the analysis of natural mineral waters and other waters. This device replaced flame

photometry device that was already 35 years old. Thus we reduced time for the performance of analyses.

We moved and renewed a machine for placing and removing the bottles from the P-PET filling line

to the TPO-2 filling line. These two machines were dismantled on the P-PET line since on this line

glass bottles are no longer filled. The machines were they fully renewed and completely adapted to the

packaging on the TPO-2 filling line where the machines were installed again. This is an example of

rational renewal of a part of equipment.

The investment projects and the purchase of fixed assets in Radenska were allocated approximately

EUR 730,000 representing some 72% of the value of the annual plan of investments and the purchase

of fixed assets in the technical sector of Radenska. The annual plan of investments and the purchase

of fixed assets at the Group level was designed on the basis of the rule stating that the amount equals

50% of the value of depreciation costs in 2011.

2.8.4 INVESTMENTS IN VITAL MESTINJE, D. O. O.

Similarly to 2011 also in 2012 there were no investments. Only some minor purchases of fixed assets

were implemented.

For 2013, a renovation of the boiler house is planned together with the purchase of a new CIP station.

The boiler room renovation is dictated by our tendency to rationalise energy consumption and by the

fact that the heating system is obsolete. CIP station is necessary taking into account the fact that the

entire cleaning of the equipment is now conducted from one station. This situation is also the result of

constant changes of the product range that cannot be served by only using the existing station.

2.8.5 INVESTMENT INTO THE DELO GROUP

Total investments in the Delo Group amount to EUR 885 thousand EUR leg behind the planned

investments for 2012 by EUR 1.4 million. Most of the investments not implemented were transferred

to the 2013 plan.

The biggest share of investments in 2012 is related to IT and digital development. These areas were

allocated more than 80% of all the investments. This includes the renewal of obsolete hardware such

as the replacement of computers, monitors, servers and photographic equipment and upgrading and

development of new software. Investments into digital development are mainly linked to the develop-

ment of platforms of classifieds, iPad, Android, iPhone and Delo’s user account.

In the Printing Centre, investments were made into the machine for gluing and folding and the

purchase of a compressor.

In 2013, the Delo Group is planning investment projects totalling EUR 875 thousand. A smaller part,

EUR 43 thousand is linked to a daughter company Izberi. Basic orientation in investment planning is

the renewal and replacement of the most necessary and vital parts of the equipment.

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2.9

Performance analysis

TO THE LAŠKO GROUP THE 2012 FINANCIAL YEAR MEANS A YEAR OF SEARCHING FOR SOLUTIONS AND

TACKING THE LIQUIDITY PROBLEMS RESULTING FROM NON-STRATEGIC FINANCIAL INVESTMENTS IN THE

PAST. NEW FOUNDATIONS FOR FURTHER DEVELOPMENT WILL BE ACQUIRED WITH THE REORGANISATION,

DISINVESTMENT AND RESCHEDULING.

The joint stock company Pivovarna Laško successfully combines the majority of Slovenian beverage

producers into the Laško Group, which is complemented by the companies Jadranska pivovara – Split,

and the newspaper and publishing company Delo, Ljubljana.

Similarly to most economic entities also the operations of the companies in the Laško Group were

hit by the global economic situation, especially on the domestic market but also on foreign markets

where we appear as the sellers of our products and as buyers of raw materials and other materials.

Despite the expectations that the conditions for the operations in 2012 would start to improve, this

did not happen. On the contrary, the situation even worsened. The recurrence of the recession in

Slovenia is of course mirrored in the increasing number of the unemployed and consequently in the

standard of the population. Therefore we have been faced with decreasing consumption also of the

goods produced by the Laško Group companies. Such circumstances lead consumers to search for

cheaper products at acceptable prices. This is also reflected on the market where discount shops at-

tract more customers and on the other hand, there are additional requests of retailers to increase their

margins and bonuses.

The market position of the Laško Group in 2012 on the domestic market and in the segments of

beer, water and other non-alcoholic drinks remained stable although the conditions of sale further

complicated. The business policy set in the field of sales is adapting to the required conditions and it is

established that such orientation is correct. In accordance with the adopted sales strategy the sales on

foreign markets was increased in 2012.

The Laško group is still in a tough financial situation because of objective difficulties. In 2012 it was

not possible to considerably reduce the level of indebtedness. The maturity of financial liabilities pose

s high financial risk and for this reason there are constant talks with the creditor banks in order to find

comprehensive solutions in a form of rescheduling of all our liabilities in a long run.

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The investment portfolio, specificity of individual investments and especially lack of liquidity on the

capital market hindered the development and prevented the sale of unnecessary property at acceptable

prices. Thus, disinvestment as well as the decrease of the indebtedness of the Laško Group to an ac-

ceptable level were disabled.

In 2012, the Laško Group continued its attempts to optimise the cooperation of all production com-

panies in the Group in all the areas and especially in the field of sales and purchase. The results of

such cooperation are satisfactory in both these areas although more synergy effects can be expected in

a longer period of time.

2.9.1 PERFORMANCE OF THE LAŠKO GROUP

NOTES TO THE INCOME STATEMENT OF THE LAŠKO GROUP

In the 2012 financial year, the Laško Group generated EUR 271.3 million of net sales, which is 2.5%

more than in the previous year. The increase is the result of the integration of the Birra Peja Group

into the consolidation.

In the structure of sales revenues, the revenues generated in Slovenia account for 88.6% of all

revenues and compared to 2011 they increased by 2.9% whereas the revenues generated on foreign

markets represent 11.4% of all revenues. The Laško Group generates most revenues on foreign markets

of former Yugoslavia in particular in Croatia.

Operating expenses of the Laško Group equalling EUR 254.8 million are at the level of the previous

year. The costs of material and services slightly decreased and in the structure of costs they only repre-

sent 65.4% of all operating expenses.

Labour costs totalling EUR 50.9 million were by 3.2% higher than in 2011. Increased costs are the result

of newly employed staff during the year and severance grants paid to the employees who met the condi-

tions of early termination of service or early retirement according to the then applicable Retirement Act.

In 2012, depreciation costs amounted to EUR 20.1 million and increased by 2.4% or by EUR 0.48

million if compared to 2011.

In the 2012 financial year, the Laško Group generated EUR 22.2 million of positive operating profit

(EBIT), which is by EUR 6.3 million or 39.5% more than in 2011. In 2012, the Group disclosed certain

one-off transactions such as impairment of brands, unrealised depreciation due to discontinued opera-

tions, losses on the sales of investment property with negative effect on the current performance and

certain one-off transactions whose impact was positive. Normalised EBIT is adjusted to the effect of

these transactions in the amount of EUR 7.3 million and totals EUR 29.1 million, which is by EUR 5.7

million more than in 2011.

Operating cash flow (EBITDA) of EUR 41.8 million increased by EUR 12.4 million compared to a

year ago. Normalised EBITDA equals EUR 50.3 million and is EUR 2.8 million higher than in the

pervious year.

The Laško Group generated EUR 46.4 million of negative financial result in 2012. Financial rev-

enues amounting to EUR 7.4 million are mainly the dividends received based on the stakes in Poslovni

system Mercator. Financial expenses totalling EUR 53.9 million are the result of interest expenses

related to the loans and amount to EUR 20.8 million and to financial investment impairment. The

biggest share of impairment is related to impairment of the MELR shares (EUR 29.0 million).

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In 2012, the Laško Group disclosed net loss of EUR 32.9 million, which is by EUR 5.4 million more

than in 2011. If net profit or loss was adjusted taking into account all one-off transactions, the Company

would disclose net profit of EUR 12.3 million in 2012, which is by EUR 8.3 million more than in 2011.

NOTES TO THE STATEMENT OF FINANCIAL POSITION OF THE LAŠKO GROUP

At the end of 2012, the assets of the Laško Group amounted to EUR 510.4 million, which is by EUR

59.2 million less than at the end of 2011. Long-term assets reduced by EUR 14.5 million whereas short-

term assets decreased by EUR 44.7 million. The reduction of short-term assets was mainly the result

of reduced available-for-sale financial assets.

Compared to 2011, total capital of the Laško Group equalling EUR 92.6 million decreased by 26.1%.

Mainly capital reserves reduced whereas the loss increased.

On the last day of 2012, short- and long-term liabilities of the Laško Group amounted to EUR 417.7

million and compared to the previous year they reduced by EUR 26.5 million or by 6%.

As of 31 December 2012, the surplus of short-term liabilities over short-term assets of the Group

totalled EUR 181 million, which has resulted in a high degree of liquidity risk. Compared to 2011, the

surplus increased by EUR 33 million.

In the event of successfully concluded divestments, the Group will immensely decrease its indebt-

edness and consequently its exposure to liquidity risk. Within the Group, indebtedness of individual

companies will decrease at various levels. Uncertainty remains regarding the success of the divest-

ment of financial investments and unnecessary property, even alongside a successful disinvestment

the partner company Pivovarna Laško, d. d. will still remain over-indebted while individual subsidiary

companies will have an excess of freely liquid assets.

2.9.2 PERFORMANCE OF PIVOVARNA LAŠKO, D. D.

NOTES TO THE PROFIT OR LOSS ACCOUNT OF PIVOVARNA LAŠKO, D. D.

In 2012, Pivovarna Laško generated EUR 88.9 million of net sales revenues, which is 6% less than in

2011. The reason was the drop in sales on Slovene market and the change in the range of sold products.

A share of the products with lower added value has been increasing. The revenues on the domestic

market are thus 10% lower. Revenues forgone on the domestic market were replaced by increased

revenues on foreign markets where a 16% increase is recorded.

Operating expenses of Pivovarna Laško in 2012 were 7% lower than in 2011 and amounted to EUR

80.7 million. Lower costs of services and lower depreciation and lower write offs accounted for con-

tributed most to lower total costs. Labour costs are higher than in the previous year mainly because of

newly employed workers and paid severance grant for redundant workers.

The most important category of costs with a 31% share in operating expenses is the category of costs

of material amounting to EUR 24.9 million and being at the level of the previous year. Slightly lower

costs of material were eaten away by higher prices of energy and for this reason there were no positive

effects on material costs.

Nevertheless, better control enabled us to successfully reduce the costs of services being 14% lower

than a year ago. In terms of value, most significant progress was made in the costs of marketing mainly

through less advertising and smaller sponsorship amounts on the domestic market.

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Labour costs amounting to EUR 11.0 million are by 4% higher than in 2011. Increased labour costs

are the result of newly employed workers and paid severance grants at the end of the year to 10 workers

who meet the criteria of early termination of employment relationship or early retirement in accord-

ance with the then Pension and Disability Insurance Act.

Write-offs amounting to EUR 5.6 million are 31% lower than in 2011 mainly due to lower deprecia-

tion that is the consequence of lower level of investments in recent years and of already written-off

fixed assets. Revaluated operating expenses related to fixed assets are lower. In 2011, the assessment of

property was conducted that resulted in impairment of certain fixed assets.

Cost rationalisation and better control managed to slight reduction of costs but this decrease does

not cover the gap caused by lower revenues in full, which is also reflected in operating profit. Operating

profit (EBIT) equalling EUR 8.7 million is thus 17% lower than in 2011. In 2012, the Company disclosed

certain one-off transactions such as the loss from the sale of investment property, provisions, impair-

ments of investment property that had negative effect on the current performance and certain one-off

transactions whose impact was positive. Normalised EBIT is adjusted to the effect of these transactions

in the amount of EUR 0.9 million and totals EUR 9.6 million, which is by EUR 0.6 million less than

in 2011.

Operating cash flow (EBITDA) of EUR 13.6 million decreased by 19% compared to a year ago or

EUR 3.2 million. Normalised EBITDA equals EUR 14.6 million and is EUR 2 million lower than in

the pervious year.

Pivovarna Laško generated EUR 25.5 million of negative financial result in 2012. Financial revenues

amounting to EUR 9.5 million are mainly the dividends of the companies in the Group and of other

companies (Mercator). Financial expenses totalling EUR 35.1 million are the result of financial invest-

ment impairment, in particular impairment of the investment in Poslovni sistem Mercator in the

amount of EUR 12.1 million and the investment in Delo in the amount of EUR 7.4 million. Pivovarna

Laško used EUR 14.5 million to pay interest to the biggest banks and partly also to the companies of

the Group.

Due to negative financial result in 2012 and decreased long-term deferred tax receivables being the

consequence of the conversion to a new lower rate the Company generated net loss of EUR 18.5 mil-

lion. Loss disclosed in 2012 increased by EUR 3.0 million compared to the previous year. If net profit

was adjusted taking into account all one-off transactions, the Company would disclose net loss of EUR

2.75 million in 2012, which is by EUR 2.2 million more than in 2011.

NOTES TO THE STATEMENT OF FINANCIAL POSITION OF PIVOVARNA LAŠKO, D. D.,

At the end of 2012, assets of Pivovarna Laško amounted to EUR 380.4 million, which is 6.2% less

than at the end of 2011. Among long-term assets it was mainly minor long-term financial investments

into subsidiaries that amounted to EUR 7.3 million and tangible fixed assets totalling EUR 2.9 million

that contributed most to the decrease. The amount invested into fixed assets totalled less than their

depreciation.

Compared to the end of 2011, current assets totalling EUR 72.8 million decreased by 14.5% or by EUR

12.3 million. The biggest value among current assets is represented by available-for-sale financial assets

amounting to EUR 37.9 million that decreased by EUR 12.0 million or 24.8% compared to the previous

year. The decrease is mainly related to the revaluation of the shares of Mercator to a lower exchange

market value. Short-term loans increased by EUR 2.0 million while short-term operating receivables

decreased by EUR 1.4 million or 7.0%.

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Capital of the Company amounting to EUR 91.5 million decreased by 16.3% or EUR 17.9 million com-

pared to 2011. The main change of the capital is the loss of the current year totalling EUR 18.5 million.

As of 31 December 2012, total financial liabilities of Pivovarna Laško equalled EUR 261.9 million and

compared to 2011 they decreased by 2.3% or EUR 6.1 million.

The net indebtedness at the end of 2012 calculated as the difference between all debts and invest-

ments was negative totalling EUR 17.3 million and compared to the previous year, it decreased by EUR

12.1 million.

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2.10

Risk management

ACTIVE RISK MANAGEMENT IS ACCOMPANIED BY TIMELY RECOGNITION AND RESPONSE TO POTENTIAL

THREATS BY PREPARING ADEQUATE MEASURES TO PROTECT AGAINST THE IDENTIFIED RISKS. RISK

MANAGEMENT MEASURES ARE INTEGRATED INTO DAILY OPERATIONS.

The operations of the Laško Group are exposed to a variety of risks, both business and financial. It

cannot be protected against all risks; however, they can be mitigated through timely action. Therefore,

the Group endeavours to the greatest extent possible to identify and cope with risks through an active

approach.

Active risk management followed by the timely recognition and response to potential threats by

preparing appropriate measures protects against the identified risks and mitigates the exposure to

them. Risk management measures are incorporated into daily operations of all the Group companies.

One of the measures for ensuring comprehensive risk management is the set up of the internal

audit service that helps the organisation to achieve the objectives by introducing well designed and

professional approach to the assessment and improved performance of the management, risk man-

agement and the processes of control. The internal audit assists the management and the Supervisory

Board with its consultancy role to identify and assess the risks and to introduce the methodologies of

risk management and of control and also to identify the appropriate response. The key role of the in-

ternal audit is to provide assurance concerning risk management and the adequacy of the procedures

of risk assessment and management.

Risk management is the responsibility of the management and the authorised managers and all

other key employees in the Company. For the purposes of effective risk management, the management

of the company needs to set up a systematic process of the recognition, examination and assessment

of risks encountered on the path of the attainment ob objectives, their control and reporting on them.

In 2012, the Laško Group started the procedure for risk analysis and the preparation of a register on

risks that gives a systematic overview of identified and assessed risks in the company. The risk register

will be a tool for efficient risk management.

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KEY RISKS IN 2012

In 2012, the negative effects of the economic and financial crisis even strengthened. Financial risks

are still the most important in 2012 despite a slight improvement of macroeconomic conditions. Credit

risk and interest-rate risk are still referred to as moderate whereas the insolvency risk is high and its

management depends on the agreements with the creditor banks.

The most important risks of the operations in 2012 are price risks at the level of sales and purchase.

A very specific risk of (non)-implementation of the drawn-up strategy of Pivovarna Laško until 2014

should be mentioned among the operating risks.

2.10.1 BUSINESS RISKS

Business risk is associated with the overall business operations and core business of the Laško

Group. The most important among them in 2012 are market and procurement risk.

Market risks are reflected in the reduced level of demand for products or drop in purchasing power

in all markets and segments due to the financial crisis and decline in lending to households and firms

by banks. These risks have intensified due to the escalation of the situation sales markets, especially

due to the arrival of new competitors with cheaper products, closure of customs and other duties and

unilateral actions by countries to protect domestic production in markets outside of the EU. The Group

attempts to reduce these risks through partner relations with its customers, good quality, new prod-

ucts, efficient supply and partially also through production outside of Slovenia. The Group is protected

against the plagiarism and copying of its products through trade mark protection with the Office for

the Protection of Intellectual Property.

Procurement risks are important due to the exposure to prices of raw materials, which are depend-

ent on the harvest of individual crops (barley, corn) which slightly reduces the impact of globalization

and are assessed as moderate. The global inflationary pressures of oil, poor agricultural harvests, cli-

mate changes, currency fluctuations, etc. play an important role. The Laško Group increased its share

of purchases of raw materials on the commodities markets, which allows for forward purchases and

the fixing of purchase prices for a specified period. Selection of suppliers has been implemented on

the basis of organizational rules for quite some years so that they are assessed in accordance with

the international ISO 9001:2000 standard with transactions only carried out with suppliers who are

capable of quality control, follow the requirements of the clients and comply with delivery times. The

Group exploits synergies in the procurement area of identical and similar materials and raw materials

within the scope of joint purchases within the Laško Group

2.10.2 OPERATING RISKS

Operating risks are associated with the implementation and monitoring of business processes and ac-

tivities and the consumption and costs incurring during the implementation of the business processes.

Risks associated with the production process encompass the risk of disturbed processes in the pro-

duction capacities due to possible major breakdowns. This risk is estimated to be moderate; the pro-

duction is ensured through regular preventive routine maintenance, regular repairs and the replace-

ment of worn parts with the new ones. At any rate, it should be emphasised that the investments into

production are not optimal due to a lack of funding and therefore the risks associated with the so-called

“investment gaps” will be increased over the years. As a result of a lack of investment into new technol-

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ogy, the development of new products is only limited to the products that can be produced with the

existing production. These new products are subject to insufficient support of the marketing and sales

activities and inadequate launching generating a risk of weaker recognisability of these products.

In the absence of sufficient investment into new technology, risks related to the safety of employees

and the production of flawless products are managed with the aid of the ISO 9001, ISO 14001, NSF,

HACCP and IFS standards.

The following risks are among those that are placed considerable attention:

• property-legal risk, which is managed by the conclusion of relevant insurance transactions (fire,

machinery breakdowns, accident insurance, etc.);

• regulatory risks related to the changes to the regulations by the national and local regulators of

competition laws, legislation in the area of food production, consumer health protection, ecologi-

cal legislation that introduce environmental taxes (concessions for pumping water) or tax on non-

returnable containers, and tax and excise legislation that were managed primarily through the pre-

ventive actions of professional services, which follow changes in legislation in its areas of operation

in a variety of ways;

• information risks that may occur due to natural disasters, fire in the premises, a single component

failure, malfunction of the firmware or application software; they are managed through the set up

of updated backups of critical information systems and their segmentation and replication;

• environmental risks that may occur due to the ineffective use of all forms of energy, non-optimal

functioning of business processes and embedded technologies managed through austerity meas-

ures, ongoing maintenance and regular minor investments and

• HR risks in terms of a lack of adequate personnel and healthy staff that were managed by inform-

ing employees of healthy lifestyles, the cooperation with physicians, medical checks of the manag-

ers, etc.

2.10.3 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 activities of risk management in the Group focus on the unpredictability and illiquidity

of financial markets, that have increased under the conditions of the financial crisis, attempting to

minimize the potential negative effects on the financial stability and performance of the Group. The

Finance Department predominantly deals with financial risks while the sales departments are also

involved in credit risk management.

Long-term stability of the Group’s operations dictates concurrent and detailed monitoring and as-

sessment of financial risks. In 2012, the Company again worked on the objective of achieving stable

operations and reducing exposure to individual risks to an optimal level. Particularly significant among

financial risks faced with 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.

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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 disclosed an excess of current

liabilities over current assets, signifying the existence of a significant liquidity risk in particular in

the parent company. To avoid problems with the current liquidity, the Group companies manage the

liquidity risk, draft and implement a policy of regular liquidity management including the plans of

cash flow movements of inflows and outflows at the annual level, and also for each individual month.

In addition, the Group needs to monitor and ensure capital adequacy, which means that the Group

must always have sufficient long-term financial resources at its disposal with regard to the volume and

type of business it carries out. The Group must ensure an adequate ratio between short-term liabilities

and current assets. The Group disclosed an excess of current liabilities over current assets, signify-

ing the existence of significant liquidity risk. To avoid problems with the current liquidity, the Group

plans cash flow movements of inflows and outflows on the annual level, and also for each individual

month. Nevertheless, it is estimated that, with a view to the tightening of the situation on the financial

market and still ongoing financial crisis, the liquidity risk will be increasingly difficult to manage.

Nevertheless, the Group assesses that upon short-term loans with banks maturing it will be possible to

arrange renewals of the existing short-term funding resources or acquire new, more quality resources.

Discussions concerning comprehensive settlement of this problem in the form of rescheduling all

the Group’s liabilities for an extended period are carried out with creditor banks on an ongoing basis.

In addition, all loans from bank are appropriately secured with the assets of the Group, so should an

unfavourable situation in the financial market arise with banks requiring the repayment of loans at

maturity, the Group can repay the loans by selling a part of the Group’s property. When managing

liquidity risk it is extremely important and necessary to monitor basic indicators of the financing

situation and solvency in accordance with the Financial Operations, Insolvency Proceedings and Com-

pulsory Dissolution Act (ZFPPIPP) that specifies the criteria in Article 14 for establishing the state of

insolvency of a company. Also in 2012, the activities related to disinvestment of all our investments

that are not of crucial importance for the core activity continued to achieve a sustainable level of debt.

To the closure of the procedures of divestment, the Group will still be subject to difficult liquidity situ-

ation. Considering the aforementioned, the Group assesses that its exposure to liquidity risk is quite

high with regard to the situation on the financial market as well as in the entire economic space and

requires special attention.

The risk of changes in fair value of financial investments, tangible fixed assets and investment prop-

erty is undoubtedly also an important financial risk. In connection with the disinvestment described

under illiquidity risks it 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 such investments

were acquired. The risk can be observed in the segment of financial expenditure where financial ex-

penses from the impairment and write-offs of financial investments are presented. There is a consider-

able risk that also in 2013 impairments will be necessary as a result of the drop in stock exchange prices

in general and not only in Slovenia owing to the ongoing market turmoil and a lack of liquidity of the

entire economy. It is estimated that the biggest risk of impairment is attributable to our investment in

Mercator since the general financial and economic crises also affects the segment of population and

this is consequently reflected in the operations of the biggest trading company. In 2012, the Group

booked impairment and write-offs of investments totalling EUR 43.5 million of financial expenses.

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 (buyers) and failure to meet their contractual

obligations. To this end, the receivables from our business partners, the wholesalers and retailers, are

regularly monitored. The receivables from export buyers are secured with bank guarantees and partly

via the SID insurance company, and the Group only operates under the system of advance (prepay-

ment) payments with customers that are considered risky. Also on the domestic market the receivables

from final users are partly secured with bank guarantees, mortgage on immovable property and bonds.

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Business with customers that are considered risky with regard to deferred payments and that have a

lower credit rating is made on the basis of advance payments and immediate payments so that a risk of

risks of non-payment for the purchased goods can be avoided. Especially in the period of last months

less payment discipline can be observed among the customers, which results in constant problems

related to the provision of current daily liquidity of the Group. Late payments are also characteristics

for the biggest customers and that causes additional liquidity problems. It is estimated that there is a

considerable risk of late payment in 2013 in all segments of economy. The exposure to credit risk has

been increasing owing to worsening economic conditions.

Interest rate risk represents the possibility of a change in the reference interest rate on the financial

market, mainly due to long-term loans of the Group linked to a variable interest rate (EURIBOR).

Since the end of last year EURIBOR has tended to increase and in 2012 it had a positive effect on the

cost of financing loans with a variable interest rate. Financing under variable interest rate conditions

represents two thirds of all financing of the Group while the other third represents loans with a fixed

interest rate. Hedging of interest rates is undoubtedly a good idea in the case of long-term debt based

on variable interest rates; however, the majority of our loans mature in a period shorter than a year.

Events on the financial market are monitored since due to the high degree of indebtedness, the Group

will have to appropriately hedge interest-rate hedge when appropriate. The Group’s exposure to inter-

est rate risks is assessed as still high, but manageable.

The financial risks of the Laško Group are provided in more detail in the financial part of the Annual

Report on pages 204 to 209, namely in Note 31.

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2.11

Financing and the sale of investments

THE BUSINESS RESULTS ACHIEVED SO FAR IN THE COMPANIES IN THE GROUP CONFIRM THE CORRECT

BUSINESS-STRATEGIC ORIENTATION OF THE CORE ACTIVITY SINCE THE COMPANIES’ RESULTS ARE

COMPARABLE IN THE INDUSTRY AND IN 2012 THE REBOUND ON FOREIGN MARKETS PROVES THAT THE

GROUP IS ABLE TO IMPLEMENT THE REVENUE PART OF THE STRATEGY.

2.11.1 FINANCING IN THE LAŠKO GROUP

Universal financial and economic crisis which has long been present in the Slovenian business

environment since 2008 is also reflected in the constant difficulties in ensuring current liquidity, both

within the Laško Group and in even more in the parent company Pivovarna Laško.

We have had problems of managing current liquidity. As usual, the liquidity situation was the worst

in the first three months when our sale is lower since they are not seasonal. In this period, also the

payment culture of our buyers usually worsens. In addition, these months require the purchase of

the necessary raw materials, intermediate materials and advertising materials and carry out other ac-

tivities that are required to start-up production in the upcoming season. Throughout 2012, the Group

and especially both breweries strived to manage current liquidity mainly due to constant delays of the

payment by our biggest buyers representing more than 70% of the entire realisation of the Group and

due to contractual obligations of repaying short-term and long-term loans. In April 2012, reschedul-

ing of credit obligations of both breweries was agreed that had been contractually arranged until May.

The banks confirmed a new scale of repayments of short-term and long-term loans that in most cases

were prolonged until 29 March 2013 and the repayment totalling a bit more than EUR 21 million was

envisaged for both the breweries, of which Pivovarna Laško would repay EUR 8 million and Pivovarna

Union EUR 13 million. Both breweries had loans from Hypo Bank that matured on 30 September 2012

and that were prolonged for 6 months based on the agreement on the payment of a part of the amount

by Pivovarna Laško equalling EUR 766,000 in three instalments until 31 March 2013.

In 2012, the period also includes the time prior to the agreed rescheduling of both breweries; the

companies producing beverages within the Laško Group reduced the level of loans from banks by EUR

22 million. In the first three months of 2012, Pivovarna Laško contracted loans from banks amounting

to EUR 2.5 million and in the period from March to December it repaid EUR 8.2 million to banks,

mainly the principal, and thus decreased the exposure to banks arising from loans by EUR 5.7 million.

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Pivovarna Union reduced the exposure to banks arising from loans by EUR 14 million and Radenska

by EUR 2.3 million. The indebtedness within the Group remains at the level of the end of 2011, which

means that Pivovarna Laško owed Radenska and Pivovarna Union EUR 42.4 million.

The measures to reduce indebtedness were designed in the Strategy and confirmed in September

2010. The creditor banks of Pivovarna Laško clearly requested the divestment of the entire stake in the

Mercator Company in August 2010. The level of indebtedness of the Group was successfully reduced

by 40% with the procedures of divestment of financial investments that did not represent the core ac-

tivity and of investment property. However, the Group and in particular the parent company urgently

need long-term rescheduling of financial obligations since it is capable, and this has also been proven

by the results of operations, to repay the debt in a long run. This will also be the focus of the discus-

sions with the banks in 2013.

On the average, the Group used 42% of generated EBIDTA to pay interest whereas Pivovarna Laško

used 83% of EBIDTA generated at the annual level for the same purpose. In absolute terms, the inter-

est to banks amounted to EUR 21 million at the level of the Laško Group in 2012. In the same year,

Pivovarna Laško paid the banks EUR 12 million, Pivovarna Union EUR 6.5 million and Radenska EUR

0.9 million, the rest of the amount of interest was contributed by other members of the Laško Group.

The business results of the Laško group companies achieved so far prove the right strategic orienta-

tion of the core activity since the results are comparable to other companies in the industry and at the

same time the restored growth in sales on foreign markets is another proof that the Group is able to

implement the income part of the Strategy. The conditions for the realisation of the expenditure part

of the Strategy are not met. All the synergy effects outside the contractual-based group that the owners

do not want to confirm to protect the interests of the creditors cannot and must not be achieved by the

Group. The companies are burdened by the procedures of disinvestment and bank charges due to the

disinvestment procedures not yet completed as well as by the need of long-term rescheduling. This

prevents the companies to focus exclusively on the implementation of the Strategy of growth until

2014.

2.11.2 SALE OF THE INVESTMENTS OF THE LAŠKO GROUP

The Laško Group continued the activities related to the disinvestment of financial investments and

other assets not necessary for the operations.

Procedures for the sale of a 79.25% stake in the Večer Company continued in 2012. In February,

the deadline for the sale of the Company was prolonged until 31 December 2012 by the Competition

Protection Office. In March, a call for expression of interest was published. No non-binding offers were

provided by the potential interested parties, however, they asked for an extension of time limits. In Oc-

tober 2012 a non-binding offer was received by a potential buyer who had not participated in the sales

process before. This buyer carried out the due diligence exercise of the Večer Company and the nego-

tiations on the conclusion of the purchase contract that started in November 2012 have been underway.

Sale of the Delo Company has been suspended because no offer was received that would be consist-

ent with the tender. The Group will continue the procedures for the divestment of Delo.

In 2011, the Management Board investment maximum efforts to sell a 23.34% stake of the Group’s

investment in Mercator but due to objective reasons, the realization of the sale did not occur. The

Laško Group continued the sales process also in 2012. Negotiations were under way to reach a new

agreement on a joint sale of more than 50-percent share of Mercator that was concluded and signed in

October 2012. All the activities will continue also in 2013.

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Sale of Jadranska pivovara – Split was suspended at the end of 2011 since no offers were received

from potential buyers but due to renewed interest in the purchase, the sales process was reinitiated

in June 2012. The potential buyer also carried out the due diligence exercise but a non-binding offer

was not received and he withdrew from the sales process. Activities to streamline operations are being

implemented on a continuous basis. But also offers for the purchase of the production equipment are

searched for and negotiations with the potential buyer already started.

In 2012, the activities for the sale of a stake in Thermana Laško were implemented through the

sales intermediary, NLB, in order to find and contact potential buyers of the target company, but no

offers were received. The intermediary estimated that currently there is no interest to buy the majority

shareholding of Thermana.

In March 2012, with regard to the sales of non-stock exchange financial investment an offer for the

purchase of 540 shares in Etol, d. d. with the ETOG ticker symbol was received and the investment

was sold at EUR 141 per share. The shares in electricity distribution companies and in the Velenje Coal

Mine are still in the sale process.

In 2012, we continued the sale of the property not relevant to operations, namely:

for Pivovarna Laško: Hotel Hum in Laško, Tri lilije sports arena in Laško and warehouses at Letališka

32 in Ljubljana; in June the contract of sale was concluded for the sale of Hotel Savinja that was finan-

cially realised in July;

• For Pivovarna Union: land and the »Center Bellevue« project and the warehouse in Maribor;

• For Radenska: business building in Radenci;

• Both breweries also started the process to sell the holiday facilities.

The completion of the sale of Mercator can only be expected in June 2014 and therefore a more

significant decrease of the level of indebtedness can only be achieved after this date. But this does not

mean that the Group will not intensify all sales processes and therefore all the activities of disinvest-

ment continue also in 2013. It is expected that the Delo Company will be sold by the end of 2013 and

even prior sale of Večer. Also the activities linked to the sale of property that is not of strategic impor-

tance for the Group will continue.

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2.12

Overview of significant events in 2012

THE COMPANIES OF THE LAŠKO GROUP BROUGHT DAMAGES AGAINST THE COMPETITION PROTECTION

OFFICE DUE TO THEIR DECISION THAT PREVENTED THE DISPOSAL OF THE MERCATOR SHARES BY THE

COMPANIES OF THE LAŠKO GROUP

2.12.1 SIGNIFICANT BUSINESS EVENTS IN THE LAŠKO GROUP

PROCEDURES OF THE SALE OF SHARES OF ČZP VEČER, D. D.

On 13 December 2011, the Ministry of Culture issued a decision rejecting the application of the 3Lan

Company for the issue of consent to acquire more than a 20% ownership stake in the company ČZP

Večer. The acquisition of this consent by the buyer 3Lan was one of the deferred conditions for the

conclusion of the contract for the sale of 202,788 shares or a 79.24% stake in ČZP Večer that was

concluded on 23 June 2010 between Delo as the seller and the company 3Lan as the buyer. An admin-

istrative dispute was permitted against the aforementioned decision of the Ministry. The deadline for

lodging an appeal expired on 16 January 2012. An appeal was not filed so the decision became final and

the sale procedure with the 3LAN Company could not be implemented.

On 18 March 2012, the sales process of the ČZP Večer shares was published again. The interested

buyers asked for the extension of the deadlines in the sales process but a binding offer still has not

been received. Talks are also under way with potential buyers.

TERMINATION OF THE CONTRACTUAL CONCERN

On 26 April 2012, in accordance with paragraph 1 Article 539 of the Companies Act Pivovarna Laško

terminated (in writing) the Controlling Contract between Pivovarna Laško and Pivovarna Union and

the Controlling Contract between Pivovarna Laško and Radenska both concluded on 27 December

2012. The termination of the contracts entered into force with the receipt of the written notice of the

contract termination by the abovementioned subsidiaries, namely on 26 April 2012. T

The termination of controlling contracts was the pre-condition that one of the banks imposed to

the companies Pivovarna Laško, Pivovarna Union and Radenska in order to reschedule their financial

obligations.

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ACQUISITION OF MAJOR SHAREHOLDINGS IN BIRRA PEJA, SH. A., PEĆ

On 18 January 2012, the procedure of the exercise of the put option concerning an 18% stake in Birra

Peja was completed. On 29 November 2011, Factor banka, the 18% owner of Birra Pei at that time, on

the basis of the above option contracts requested Pivovarna Union to purchase its 18% stake in Birra

Peja. The process of enforcing the put options was concluded on 18 January 2012. As of that date, Pivo-

varna Union became the majority owner with a 57.6% stake of this company in Kosovo

EXTRAORDINARY GENERAL MEETING OF BIRRA PEJA, SH. A., PEĆ

The extraordinary General Meeting of the Birra Peja Company was held on 22 June 2012 and the

shareholders voted for the capital injection by converting the existing liabilities of the Company to the

owners to ownership stakes in total amount of EUR 2,360,000 (Pivovarna Union EUR 1,360,000 and

the other owner Ekrem Lluka EUR 1,000,000). Thus the ownership ratio will remain the same after

the capital injection. The capital injection was confirmed by the regular General Meeting on 3 August

2012.

EXCLUSION OF SMALL SHAREHOLDERS IN JADRANSKA PIVOVARA – SPLIT, D. D.

Pivovarna Laško ran a procedure to exclude small shareholders in Jadranska pivovara – Split, d. d.

Pivovarna Laško filed a claim and the court appointed a court expert who estimated the value of a share

at kn 14.79 and afterwards Pivovarna Laško defined suitable severance grant amounting to kn 16.5 kn.

At the extraordinary General Meeting of the shareholders of Jadranska pivovara on 24 February 2012

the decision on the exclusion of small shareholders was confirmed. Of 5,426,217 shares Pivovarna

Laško owns 5,396,932 shares that represent 99.46%. Small shareholders had 29,285 shares. After the

entry of the decision into the court register the shares will be transferred to Pivovarna Laško. Sever-

ance grant will be paid to the shareholders after the decision has been entered in the court register and

after the court decides on the action brought before the court by 28 small shareholders who decided

to challenge the decision of the General Meeting of Jadranska pivovara on the exclusion of the small

shareholders. The hearing was carried out on 17 October 2012 but the decision has not been taken yet.

CRIMINAL INVESTIGATION AGAINST PIVOVARNA LAŠKO DUE TO THE PURCHASE OF THE MELR SHARES IN 2005

On 9 March 2012, Pivovarna Laško received a decision from the Higher Court in Ljubljana whereby,

following an appeal of the District Attorney, allowed the criminal investigation which the District

Court in Ljubljana had already stopped on 3 June 2011. This regards a criminal investigation against

several suspects, including the former director of Pivovarna Laško, Boško Šrot, and two legal entities,

including Pivovarna Laško. Among other things, the two persons, one of whom is Boško Šrot, are

suspected of fraud under Article 217 of the Criminal Code in connection with Article 25 of the Crimi-

nal Code. The legal persons are suspected of the criminal act of fraud under Article 217 in respect to

Article 25 of the Criminal Code. The subject of the criminal proceedings in the case of Pivovarna Laško

was the purchase of Mercator shares from SOD on 30 August 2005, which SOD had sold to Pivovarna

Laško at a price of EUR 158.62 per share. Boško Šrot is accused of having participated in the execu-

tion of the transaction with the purpose of unlawfully acquiring proceeds for a third party, namely

Pivovarna Laško. By specifically deceiving certain natural persons, and consequently his omission of a

competitive bid in the amount of EUR 177.34 per share, Boško Šrot created an economic benefit of at

least EUR 8,279,124.39 for Pivovarna Laško. Pivovarna Laško as a legal entity is alleged to be responsi-

ble for the offense, which was committed in complicity with Boško Šrot, since the alleged offense was

committed in favour of Pivovarna Laško, which would henceforth also have at its disposal unlawful

proceeds of at least EUR 8.2 million. The investigation has not been completed.

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 regarding 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,

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and Radenska EUR 100,148.21) together with default interest. The defendant in its lawsuit asserts that

the rebate policy established by the Laško Group constitutes an abuse of its dominant position under

the Prevention of the Restriction of Competition Act (ZPOmK-1) that it is discriminatory. The rebate

policy of the Laško Group placed the defendant at a competitive disadvantage, causing damage to the

defendant. In this matter, the District court in Ljubljana issued a decision on 3 July 2012 by which the

Court dismissed the appellant’s action seeking damages. The applicant brought a complaint against

the decision to which all the defendants responded on 26 October 2012. The High Court has not yet

taken the decision.

AGREEMENT REACHED WITH THE BANKS TO RESCHEDULE THE LOANS

More information on the activities of the Laško Group with regard to the rescheduling of bank loans

is provided on pages 103 and 104 of this report.

ACTION BEFORE THE SUPREME COURT OF THE RS TO REMOVE THE DECISION TAKEN BY CPO NO. 306-

29/2011-4 OF 26 APRIL 2011

On 26 April 2011, the Competition Protection Office of the RS (CPO) issued a decision No 306-

29/2011-4 with which it prohibited the Central Securities Clearing Corporation to carry out the transfer

of ownership of the MELR shares whose owners are Pivovarna Laško, Pivovarna Union and Radenska.

We appealed against this decision and brought action before the Supreme Court of the RS; we also

filed an application for interim measures that the Court rejected in its decision No G 23/2011 of 29

April 2011. On 24 May 2011, preparatory application was filed. CPO issued a decision on 3 October 2011

with which the evaluation of the compatibility of the concentration with the rules No 306-29/2011 was

stopped on 3 October 2011.

In relation to the decision of the CPO on the prohibition posed to the Central Securities Clearing

Corporation to transfer the MELR shares whose owner is Pivovarna Laško we filed an application to

recognise a party in the procedure and a proposal to renew the procedure on 12 May 2012. CPO issued

a decision with regard to the application and a proposal on 12 August 2012 with which it rejected the

request of the companies Pivovarna Laško, Pivovarna Union and Radenska in the procedure of the

evaluation of the compatibility of the concentration and also rejected the proposal to renew the evalu-

ation of the compatibility of the concentration with the competition rules.

The Supreme Court issued a decision on 27 June 2012 with which it rejected the action of the plain-

tiffs, Pivovarna Laško, Pivovarna Union and Radenska to renew the evaluation of the compatibility of

the concentration with the competition rules.

On 27 June 2012, the Supreme Court issued a decision to upheld the plaintiffs, Pivovarna Laško,

Pivovarna Union in Radenska who are in the process of the recognition of a position of a secondary

participant in the procedure of the evaluation of the compatibility of the concentration and the Court

also terminated the decision of the Competition Protection Office No 306-29/2011-127 of 12 August

2012 and granted the plaintiffs the position of a secondary participant in the procedure of the evalua-

tion of the compatibility of the concentration.

THE REMAINING SALE OF THE SHARES OF MERCATOR, D. D.

The sale of the entire 23.34% stake in Mercator whose owners are the companies Pivovarna Laško

(8.43%), Pivovarna Union (12.33%) and Radenska (2.57%) (hereinafter referred to as: the Laško Group)

is one of the measures contained in the Strategy of the Laško Group until 2014 (hereinafter referred

to as: the Strategy) to exit the extremely difficult financial situation in the companies of the Laško

Group. The Strategy confirmed by the Supervisory Board of Pivovarna Laško in September 2010 and

the planned measure of selling all the shares of Mercator is in line with the position of all creditor

banks on the Strategy of the Laško Group companies as evident in the letter of the creditor banks.

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After the adoption of the Strategy and after the failure to sell the 23.34% stake of the the companies

of the Laško Group in Mercator, the Laško Group (more detailed information is provided in the 2011

Annual Report on pages 29 and 30) together with Nova Ljubljanska banka, Abanka Vipa, NFD Hold-

ing, NFD, Gorenjska banka, Nova kreditna banka Maribor, Hypo Alpe-Adria-bank and Banka Celje

concluded an agreement on a joint sale of the Mercator shares that entered into force on 15 June 2011.

In July 2011, also Banka Koper joined the agreement. The joint stake of the consortium of sellers in

Mercator thus equalled 52.10%. A financial adviser for the sale of the investment was selected, namely

the ING bank N. V. from London (hereinafter referred to as: ING bank).

The financial advisor ING bank presented the consortium of sellers with the received non-binding

offers in October 2011, namely four non-binding offers were submitted, one of them from a strategic

tenderer.

In November 2011, exclusive negotiations with the only strategic tenderer, the Agrokor Company

from Zagreb, started based on the agreement on exclusive treatment concluded between the consor-

tium of sellers and the Agrokor Company.

In December 2011, the purchase contract on the sale of shares of Poslovni sistem Mercator was en-

dorsed by all the sellers except by NLB and the Laško Group.

At its session on 27 January 2012, the Supervisory Board of Pivovarna Laško gave consent to the

sale of 317,498 shares or a 8.43% stake in Poslovni sistem Mercator owned by Pivovarna Laško to the

Agrokor Company at a price of EUR 221.00 per share that can be modified as envisaged the mecha-

nism defined in the purchase contract. The consent to the sale of 464,390 shares or a 12.33% stake in

Mercator owned by Pivovarna Union, to the Agrokor Company was also given by the General Meeting

of Pivovarna Union on 31 January 2012. In order to sell 96,952 shares or a 2.57% stake of the Mercator

Company owned by Radenska, the approval of the Supervisory Board of Radenska was not necessary.

On 7 February 2012, the members of the consortium of sellers were submitted the information by

the consultant, ING bank, that the Agrokor Company withdrew from the sales process.

Based on the adopted strategy for 2012, the companies of the Laško Group continued the activities to

sell the 23.34% stake in Mercator. Thus, the companies of the Laško Group and other parties interested

in the joint sale of the Mercator shares (hereinafter: the sellers) concluded a new agreement on a joint

sale at the end of October 2012. The agreement was signed by the sellers who are together the majority

owner of shares in Mercator.

In November 2012, ING bank as the intermediary started the sales process. In December 2012, the

sellers, ING bank and Mercator coordinated and signed adequate documents. The implementers of

the due diligence exercise were selected and the due diligence started. The publication of the teaser

indicated the start of the sale of Mercator. The continuation of the sales of the Mercator shares in 2013

is presented in this report, Chapter 2.13 – Events after the end of the accounting period.

INTERIM MEASURES IN FAVOUR OF THE COMPANIES OF THE LAŠKO GROUP

In July 2012, the Laško Group companies (Pivovarna Laško, Pivovarna Union, Radenska and Delo)

filed an application for interim measures and proposed to the Court to secure receivables from the

defendants Atka-Prima, d. o. o. and Boško Šrot. This is about the security of receivables arising from

the action for damages brought against both defendants by the companies of the Laško Group (the

plaintiffs) at the beginning of 2011.

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The courts prohibited to the defendants the disposal and burdening of the PILR shares and other

securities except in the case of Radenska and also prohibited the disposal and burdening of stakes in

certain property. The court prohibited to Pivovarna Laško to pay potential receivables arising from the

dividends for the PILR shares in favour of the plaintiffs. These matters are still in a phase of deciding

on the appeal of the defendants against the decision on interim measures except in the case of Pivo-

varna Laško where the decision of the Court was received on 5 November 2012 to reject the appeal of

the defendants in the entirety and therefore the decision on interim measure remained in force. In the

case of Radenska, the application for interim measures was rejected by the decision of 12 July 2012. The

case is in the phase of taking a decision on the appeal of the plaintiff.

ACTION FOR DAMAGES AGAINST CPO

On 14 September 2012, the companies Pivovarna Laško, d. d., Pivovarna Union, d. d., and Radenska,

d. d., Radenci (hereinafter referred to as: the companies of the Laško Group) brought action for dam-

ages against the Republic of Slovenia and the Competition Protection Office respectively (hereinafter

referred to as: CPO) and director of the CPO. In the opinion of the Laško Group companies, the reason

for the action was unlawful prevention of the sale of the shares of Mercator owned by the Laško Group

companies by 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 the Agrokor Company to purchase the shares

of Mercator owned by the Laško Group companies since the abovementioned decision prevented the

Laško Group companies to dispose of own shares of Mercator. The Laško Group companies believe

that CPO unlawfully prevented the conclusion of the before mentioned transaction with the Agrokor

Company and consequently damage, which gave rise to the damage occurred in the amount of EUR

59.2 million. The court of first instance has not ruled yet.

GENERAL MEETINGS OF SHAREHOLDERS OF PIVOVARNA UNION AND RADENSKA

The general meetings of shareholders of Pivovarna Union and of Radenska were held on 27 August

2012. The minutes of both general meetings are available on the website of AJPES (Business register

of Slovenia).

CHANGE IN THE MANAGEMENT BOARD OF THE DELO COMPANY

At the session of the Supervisory Board held on 12 September 2012 the Company mutually agreed

with the then Chairman of the Management Board Jurij Giacomelli on the change of the Chairman.

Temporarily, the Company was run by the Chairperson of the Supervisory Board, Marjeta Zevnik. In

accordance with the decision of the general meeting on the extension of the management Board, the

Supervisory Board also appointed another member of the Management Board Irma Gubanec, respon-

sible for finance.

On 29 September, the company published the vacancy notice concerning the Chairman of the Man-

agement Board with the deadline of 16 October 2012. The Supervisory Board also directly invited suit-

able candidates to submit the applications. On the basis of the received applications the Supervisory

Board had interviews with the candidates who in the opinion of the Supervisory Board met the condi-

tions for the Chairman of the Management Board and got acquainted with their work programmes.

The Supervisory Board has not appointed Chairman yet.

CHANGE IN THE MANAGEMENT BOARD OF ČZP VEČER

At its session held on 25 September 2012 the Supervisory Board of ČZP Večer removed the director

of the company Uroš Skuhalo and appointed new director of the company Jure Struc on the same day.

CHANGE IN THE MANAGEMENT BOARD OF PIVOVARNA UNION

At its regular 19th session held on 23 November 2012 the Supervisory Board of a subsidiary Pivo-

varna Union upon a proposal of the Chairman of the Management Board, Dušan Zorko, MSc, ap-

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pointed two additional members of the Management Board: Marjeta Zevnik responsible for legal, HR

and general matters and Matej Oset responsible for production-technical matters. Both were appointed

for a period from 1 December 2012 to 31 January 2016.

INTRODUCTION OF NEW SYSTEMATISATION IN THE LAŠKO GROUP COMPANIES

In the Laško Group companies, namely in Pivovarna Laško, Pivovarna Union and Radenska new

systematisation was introduced on 1 October 2012. Within the introduction of the new systematisa-

tion also a new company agreement was concluded with representative trade unions representing the

interests of the employees in the companies of the Laško Group.

New systematisation will unify the conditions of the employees and posts in the companies Pivo-

varna Laško, Pivovarna Union and Radenska and introduce a new, market-oriented system of reward-

ing which will serve as the base for further development of personnel and process optimisation.

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

GENERAL MEETINGS OF SHAREHOLDERS OF PIVOVARNA LAŠKO

The 19th General Meeting of shareholders of Pivovarna Laško was held on 30 January 2012. The

announcement of the resolutions of the General Meeting was published on 31 January 2012 on the

SEOnet portal and on the Company’s websites www.pivo-lasko.si. The minutes of the General Meet-

ing is available on the websites of AJPES (Business register of Slovenia). Detailed information on the

resolutions adopted by the General Meeting is given on pages 30 to 34 of this report.

The 20th General Meeting of shareholders of Pivovarna Laško was held on 29 August 2012. The

announcement of the resolutions of the General Meeting was published on 30 August 2012 on the

SEOnet portal and on the Company’s websites www.pivo-lasko.si. The minutes of the General Meet-

ing is available on the websites of AJPES (Business register of Slovenia). Detailed information on the

resolutions adopted by the General Meeting is given on pages 34 and 35 of this report.

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2.13

Events after the accounting period

SUBSIDIARY COMPANY, DELO, SIGNED A CONTRACT ON THE SALE OF 202,788 SHARES OF THE VEČER

COMPANY REPRESENTING A 79.24% STAKE.

2.13.1 SIGNIFICANT BUSINESS EVENTS IN THE LAŠKO GROUP

CONCLUSION OF A CONTRACT ON THE SALE OF THE ČZP VEČER SHARES

On 26 February 2012, the subsidiary, Delo, signed a contract with the investor on the sale of 202,788

ordinary transferable named no par value shares of the Večer Company representing a 79.24% stake.

The conclusion of a contract means the enforcement of the decision by Slovenian Competition Pro-

tection Office No. 306-195/2008-57 of 23 September 2009 dictating the Delo Company to sell at least

a 75-percent stake in the Večer Company due to the established excessive market concentration. The

contract the conclusion of which was previously agreed by the Supervisory Board of Delo has been

concluded under suspense conditions. After the buyer meets the conditions, Pivovarna Laško will

inform the shareholders and the Delo Company submitted the contract to the Slovenian Competition

Protection Office for the approval.

PROCESS OF A SALE OF THE MERCATOR SHARES IN 2013

In the second half of February 2013, the consortium of sellers received non-binding offers. Upon

a proposal from the financial consultant in the sales process the consortium invited 4 tenderers to

continue the process. The selected tenderers will be invited to conduct a due diligence exercise of the

company and submit binding offers.

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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 ginger-bread, 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 the last 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.

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1938

After many complications and severe opposition by the competition, they open the shareholders’

brewery Pivovarna Laško and present the new Laško beer under the trademark Zlatorog. Drinkers of

the beer 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. Particularly af-

ter 1960, the company recorded an extraordinary development in sales: from 60,000 hl to 1,300,000 hl.

1990

After harmonization with the provisions of the Companies Act, the organization of the socially

owned company is entered into the court register 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, it is transformed into a joint stock company

in mixed ownership. On 30 September 1991 the share capital and social capital of the company is as-

sessed 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 joint stock

company with more than 15,000 shareholders.

2000

Capital connections with Radenska Radenci, Jadranska Pivovara Split, and Vital Mestinje, represent

one of the most significant turning points in the company history. A new business strategy for develop-

ment begins.

2002

The company succeeds with a public takeover bid of Pivovarna Union, d. d., Ljubljana. It obtains

47.86% of all its shares.

2003

Continuation of capital investments. The company gains a 24.98% share in Delo, d. d., Ljubljana.

The company becomes its largest owner.

2004

In December, the company obtains additional 27,011 shares (5.98% of the assets) of the joint stock

company Union Ljubljana. Pivovarna Laško, d. d., becomes a 53.85% owner of all shares of the Union

Company.

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 Union.

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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 of entry, the joint stock

company 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, 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

At its 18th regular session on 23 April 2010, the Supervisory Board confirms the bases of the new

business model and reorganisation 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

and afterwards into a unified company.

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Sustainable development

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3.1

Human resourcesmanagement in theLaško Group

THE GROUP IS AWARE THAT THE EMPLOYEES ARE THE SOURCE OF OUR COMPETITIVE ADVANTAGE.

WITH THEIR KNOWLEDGE, EFFORTS AND COMPETENCE THEY CONTRIBUTE TO GOOD QUALITY AND

CONSEQUENTLY CUSTOMER SATISFACTION WITH OUR PRODUCTS

The leadership of successful teams that create leading brands with added value for customers and

shareholders requires the right people. The Group strives to attain superior results with responsible

and environmentally-friendly operations. In 2012, some major steps were taken in our human resourc-

es strategy. Its approach is to increase the knowledge and skills of employees through practical work,

training and a culture that rewards people for taking responsibility and achieving result. Being a part of

a large system such as the Laško Group provides employees with many opportunities for professional

and personal development.

3.1.1 EMPLOYMENT POLICY

Through the reorganization and optimization of business processes, improved technological eq-

uipage of the companies and improved educational structure, the Group has systematically reduced

the number of employees in recent years. The Group observes the strategies of individual companies

and the entire Group and individual work loads and complexity of the work process in this endeavour.

Good cooperation developed with the employees over the years and strict respect for the labour law is

of key importance.

3.1.2 HUMAN RESOURCES DEVELOPMENT

In 2012, the project of the introduction of systemisation was successfully completed in Pivovarna

Laško, Pivovarna Union, and Radenska. Thus, conditions for further intensive HR development have

been provided. The new systemisation that has been in place since October puts the employees in all

the companies on the same footing with:

• new uniform company agreement for all three companies,

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• new systemisation of working posts standardises the set and description of jobs and their classifica-

tion into pay grades,

• variable reward scheme taking into consideration the performance of an individual.

On the basis of the above, annual interviews with all the employees will be introduced in 2013 that

will serve as a basis for an individual’s rewarding, career planning, additional training and the develop-

ment of key competences important to the Group.

At the end of 2012, the Laško Group employed 1,592 people. The numbers of the employees in indi-

vidual companies of the Group are as follows:

NUMBER OF EMPLOYEES IN THE LAŠKO GROUP BY COMPANY AS AT 31 DECEMBER 2012

Number of employees Share in %

Pivovarna Laško, d. d. 324 20.3

Radenska, d. d., Radenci 210 13.2

Pivovarna Union, d. d., Ljubljana 367 23.1

Birra Peja, Sh. a., Kosovo 209 13.1

Birra Peja, Sh. p. k., Albania 1 0.1

Jadranska pivovara - Split, d. d. 18 1.1

Vital Mestinje, d. o. o. 36 2.3

Delo, d. d., Ljubljana 398 25.0

Izberi, d. o. o., Ljubljana 14 0.9

Laško Grupa, d. o. o., Hrvaška 15 0.9

Total 1,592 100.0

The total number of employees in 2012 compared to 2011 reduced by 228, which is the consequence

of the sale of Fructal. However, the Group annual report also covers the companies Birra Peja, Kosovo

and Birra Peja, Albania. In real terms, the number of the employees in the Group reduced by 41.

EMPLOYEES WITH FIXED-TERM EMPLOYMENT CONTRACTS AND THOSE ON CONTRACTS OF INDEFINITE DURATION

Difference

(number of employees) 2010 2011 2012 2012-2011

Indefinite duration 1,707 1,683 1,279 -404

Definite duration 135 114 288 174

Part-time 21 21 24 3

Trainees 4 2 1 -1

Total 1,867 1,820 1,592 -228

As at 31 December 2012, the total number of employees was 1,592 of which 1,303 had employment

contracts concluded for an indefinite period and 288 for a definite period. Also 1 trainee was employed.

In the continuation, the educational and age structure of the employees in the Group are presented.

The changes presented above, do not reflect realistic changes in the educational and age structure.

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In real terms, the number of employees with secondary and higher education as well as with the doc-

tor’s degree increased while the number of employees with vocational education reduced if compared

with 2011. This is a clear indication of improved educational structure of the Group.

Also the number of employees aged 40 to 50 and those over 60 years of age increased due to limit-

ing new employment and due to new pension legislation.

EDUCATIONAL STRUCTURE OF THE EMPLOYEE

As at 31 December 2012, the educational structure of the employees was as follows:

NUMBER OF EMPLOYEES BY LEVEL OF EDUCATION

Difference

(education) 2010 2011 2012 2012-2011

Primary school 299 286 201 -85

Vocational education 439 428 355 -73

Secondary school 571 553 515 -38

College 176 174 130 -44

University 347 342 351 9

Masters level 32 34 34 -

Doctor’s degree 3 3 6 3

Total 1,867 1,820 1,592 -228

AGE STRUCTURE OF THE EMPLOYEES

As at 31 December 2012, the age structure of the employees was as follows:

NUMBER OF EMPLOYEES BY AGE CATEGORY

Difference

(age) 2010 2011 2012 2012-2011

Less than 30 years old 130 135 101 -34

from 30 to 40 506 517 422 -95

from 41 to 50 740 718 606 -112

from 51 to 60 474 438 433 -5

above 60 17 12 30 18

Total 1,867 1,820 1,592 -228

3.1.3 EMPLOYEE SATISFACTION

In 2012, the employees of the Laško Group enjoyed further benefits such as:

• payment of contributions to the additional voluntary pension scheme for all the employees with

indefinite employment contracts,

• holiday accommodation at a reasonable price in our facilities located at the seaside, in the moun-

tains and thermal spas,

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• awareness raising and health and safety at work training, nice 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.

3.1.4 EDUCATION AND TRAINING

The education is aimed at acquiring specific competences of the staff that are relevant to successful

operations of our companies. Therefore, the available funds have been spent on targeted seminars,

courses and additional educational programmes. The courses of informatics, foreign languages, envi-

ronmental protection, legislation and other specific knowledge have been provided to our employees.

In view of the age structure of our employees, education and training were mainly focused on those

aged over 50.

As a socially responsible company and since we are aware of the importance of the development of

young potentials we selected 10 best students to provide them with scholarships. However, also social

scholarships are granted to 7 primary and secondary school pupils who we will help on the way to

necessary education.

3.1.5 SAFETY AND HEALTH AT WORK

The attention of the employees is regularly drawn to the importance of safe and healthy working

conditions that are provided to them. 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.

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PIVOVARNA LAŠKO CONTINUED THE COMMUNICATION STRATEGY OF SYSTEMATIC TWO-WAY

COMMUNICATION BETWEEN THE COMPANY AND ITS INTERNAL AND EXTERNAL ENVIRONMENT. MORE

EMPHASIS WAS PLACED ON THE COMMUNICATION THROUGH SOCIAL NETWORKS.

In 2012, 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 publics that impact the operations of the company. More emphasis has been placed on com-

munications through social networks.

3.2.1 COMMUNICATIONS WITH INVESTORS

In accordance with the law, Pivovarna Laško provides investors and potential investors with suf-

ficient, accurate and timely information. Information within the scope of the Company’s information

disclosure policy encompasses business performance in the past and strategic development of the

Company in the future.

Pivovarna Laško, the shares of which are quoted on the Ljubljana Stock Exchange, is pursuant to

law obliged to publish prescribed information on the website of the aforementioned stock exchange

(seonet.ljse.si), and to also publish this information on the website of the Company.

The activities of communication with investors and potential investors include regular general meet-

ings of shareholders, press conferences alongside 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

sites

3.2.2 COMMUNICATIONS WITH MEDIA

Pivovarna Laško regularly informs the media of the activities of the Company, its business opera-

tions, plans and strategic guidelines via press releases. Relations with the media are based on planned,

3.2

Communications

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two-way cooperation, timely and concurrent responses to the questions of journalists in accordance

with applicable standards of the public relations profession. To further improve communications, so-

cial networks were placed additional attention in 2012.

3.2.3 COMMUNICATIONS WITH BUYERS

In 2012, for the fourth year in a row, operators are available at the 080 1825 toll-free telephone num-

ber that accepts customer orders for all the Laško Group products. The call centre located in the Distri-

bution Centre of the Laško Group in Ljubljana takes orders for all distribution channels (trade, catering

and institutions). In its four years of operation, the call centre has established itself well among buyers

who see it as a key tool for ordering products which is now easier and more user friendly.

3.2.4 COMMUNICATIONS WITH THE EMPLOYEES

Healthy mutual relationships are one of the essential elements for attaining good business results of

the company. The proper implementation of internal communication plans provides for sufficient in-

formation, motivation and satisfaction of employees. Pivovarna Laško concurrently informs employees

of relevant information and of notifications for the public. At the highest frequency points in the Com-

pany, bulletin boards are available and in recent years the information provision via the Internet has

been gaining importance. The intranets 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 different organizational departments and mixed project teams. The

intranet enables interested persons joint access to specific documents. As a communication tool it has

significantly contributed to the increased effectiveness of business processes.

In four 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 publics. Employees receive the newsletter in electronic

form while the newsletter is also available in printed form at five locations in the Company and at two

points in subsidiaries. It is also received by retirees of Pivovarna Laško, journalists and representatives

of other important publics. The newsletter is also available as a file on the Pivovarna Laško website.

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DESPITE THE CHALLENGING ECONOMIC ENVIRONMENT IN WHICH THE COMPANIES OPERATED IN 2012,

WE CONTINUED WITH THE PROJECTS THAT REDUCE ENVIRONMENTAL FOOTPRINT OF THE COMPANIES,

NAMELY BY REDUCING AND STREAMLINING THE USE OF NATURAL RESOURCES AND ENERGY.

The promotion of social responsibility is one of the most important traditional values adopted in the

companies of the Laško Group. Despite extremely challenging economic environment where the com-

panies operated in 2012, we continued the projects that integrate the companies of the Laško Group

in the environments of their operations. We continued the projects aiming at the reduction of envi-

ronmental footprint of the companies by reducing and rationalising the use of natural resources and

energy. In the companies where drinks are produced, gramature of plastic bottles has been reduced

and thus the environmental burden has also been eased.

Pivovarna Laško was one of the most important Slovenian sponsors of top sports in 2012 and thus

contributed its piece in the puzzle of the achievements of Slovene Olympians, sports teams and indi-

vidual athletes at various competitions. Last year Pivovarna Laško actively supported the Football Club

Maribor, the organisation of the Hockey World Championship in Ljubljana, the Handball club Celje

Pivovarna Laško and many other projects.

In 2012, Pivovarna Laško also formally assumed responsibility for the organisation of 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. The Gold horn long-distance trail of pride has been well

accepted by hikers and for the first time Pivovarna Laško was the patron of Slovenian contemporary

music that received overwhelming response among the musicians since more than 180 responded to

the call for application.

The companies of the Laško Group continue to actively support civil society organisations at the local

or national level.

3.3

Responsible attitude to the social environment

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3.4

Environmental protection

THE PURPOSE OF ENVIRONMENTAL PROTECTION IS THE PROMOTION AND ORIENTATION OF SUCH SOCIAL

DEVELOPMENT THAT ENABLES LONG-TERM CONDITIONS FOR HUMAN HEALTH, WELFARE AND QUALITY OF

LIFE AS WELL AS THE PRESERVATION OF BIODIVERSITY

The state of the environment is a consequence of many environmental pressures being mainly the

result of human activity. Most often there are emissions of substances and energy into the environ-

ment (water, air, soil) and waste. The purpose of the environmental protection is to encourage and

shape social development that enables long-term conditions for human health, welfare and quality of

life as well as the preservation ob biodiversity.

Environmentally responsible companies reduce their environmental impact that is the result of their

operations. The sustainable development strategy in the field of eco-efficiency needs to be one of the

strategic orientations of the company strived for by all the employees. The Laško Group constantly

increases the yield of raw materials, reduces the wastage and scrap in the production and improve our

environmental impacts, which has been proven to generate better business results in a long run and

especially in strengthening the recognition of brands.

When investing into technology, the criteria based on which a supplier is selected are important and

should include energy and ecological characteristics. A certain share of revenue is used to cover direct

environmental costs of operations.

Increasing environmental awareness, the education of professional personnel and practical imple-

mentation of processes by all the employees form a path to establish en efficient system of environ-

mental management. The application of ECO-technological solutions is important for the entire busi-

ness process in the Company.

3.4.1 ECOLOGICAL REPORT OF PIVOVARNA LAŠKO, D. D.

The project of adding waste brewer’s yeast to waste technological water was successfully continued.

This year the added quantities of yeast were increased, some was even transported from Pivovarna

Union and thus maximum quantities of yeast were processed in the anaerobic reactor. As a source of

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heat energy for the production of steam in the boiler room, the biogas generated in the waste water

treatment plant amounted to 423,000 m3 or 16 % of the natural gas consumption.

The anaerobic waste water treatment plant of Pivovarna Laško continues its regular operation and

ensures adequate treatment of the entire quantities of waste technological water. The Institute of Pub-

lic Health Maribor regularly performs monitoring of influx and outflux of the treatment plant and

establishes a high level of purification.

The Slovenian Environment Agency (SEA) issued a decision to amend the environmental permit

with which the technological procedure of yeast drying is stopped and the increased discharge of

cooling waste water is allowed. All the required reports were submitted to the SEA within the set time

limits. In 2012, emissions into air were monitored and noise pollution was measured and it was es-

tablished that the emission values and environmental burden were in accordance with the prescribed

values and the environmental permit. In May, a regular annual environmental inspection was carried

out that confirmed very good environmental status and only one comment was made related to the

labelling of containers for separate waste collection.

The needs of the technological processes were completely met with the energy installations. We have

also been striving to reduce emissions generated as a result of energy transformation and have man-

aged to be within the framework stipulated by the law.

Specific electricity consumption was measured for the entire production and other functions equal-

ling 13.2 kWh/hl of beer. Specific consumption of natural totalled 2.9 Sm3/hl of sold beer and is thus

10% lower than in the previous year.

USE OF NATURAL RESOURCES IN PIVOVARNA LAŠKO, D. D (PUMPED AND CHANNELLED WATER)

Unit of measurement Cummulative 2012 Cummulative 2011 Index 12/11

Water - used m3 628,406 562,365 111.7

Water - channeled to WWTP m3 387,483 392,502 98.7

Electricity MWh 12,912 13,214 97.7

Gas Sm3 2,810,384 3,085,886 91.1

CO2 emissions t 5,296 5,807 91.2

Within the CIP-optimisation project in the bottling plant changes to the cleaning of the production

equipment were introduced emphasizing the improved efficiency of equipment cleaning and reduced

water consumption.

In the beer production and filling the use of fresh water is constantly reduced in accordance with

good practice, which is supported by adequate measurements. In the past year, specific fresh water

consumption equalled 6-68 hl/hl of sold beer and water. A slightly higher level of water consumption

is the result of the introduction of new, technologically advanced products on the market the conse-

quence of which is high water consumption in cleaning and production.

The system of separate waste collection in the area of the entire company works well in practice,

which can be proven by reduced quantity of directly disposed municipal waste. This was mainly

achieved with stricter separation of certain biodegradable waste, waste that can be incinerated and

mixed waste from the administrative building.

In August, a contract was concluded with the Dinos Company on the acceptance and processing of sepa-

rately collected fractions of waste packaging and other secondary raw materials collected in the Company.

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At the beginning of the year, the assessment of waste Kieselguhr was obtained that envisages a pos-

sibility of composting this waste and this had already been done prior to the closure of the Strensko

landfill. Now, this waste is temporarily stored until the environmental permit is acquired for the com-

posting facility owned by the Laško Municipal Utility Company. Then this waste will continue to be

composted together with biodegradable waste generated in the municipality.

In this period, most attention was placed on the maintenance works and the construction of a water

distribution system Vrh–Radoblje–Strensko. This is a water distribution system that is partly financed

from the European funds. The system includes the construction of 10 water reservoirs, the reconstruc-

tion of 2 water reservoirs, the construction of 3 pumping stations and 40 km of pipelines with other

necessary elements to enable smooth functioning of the system. The water distribution system is con-

nected to water systems of Trije studenci, Rimske Toplice and Laško and it would supply approximately

240 households.

Despite not very favourable hydro-meteorological conditions, we were able to ensure sufficient quan-

tities of water in the water supply systems during the summer months although there were some prob-

lems with the Trije studenci system. This is where a new borehole is planned that is to be prepared at

the beginning of 2013, which will add to the reliability of the water supply in dry periods.

Regular inspections of plumbing facilities were conducted within the scope of preventive measures

to ensure the health suitability of drinking water; remote control has also been set-up in certain facili-

ties. Regular cleaning and maintenance of water supply facilities is performed as a preventive measure

according to the HACCP plan and with the necessary records also kept.

In addition to regular maintenance in the past year, the Group also carried out the following major

maintenance works:

• draft design was prepared for the water distribution system Jepihovec–Rimske Toplice–Laško,

• further setting of the cadastre of the water distribution system with the Kaliopa Company,

• renovation of the water distribution system and the sewerage system in Podšmihel,

• presence during the construction of the water distribution system Trobni dol,

• preparations for the construction of a borehole Trije studenci TS2,

• works related to the construction of the water distribution system in the area of Majlande and the

freight terminal in Zidani Most,

• start of telemetry Pristava–Rudnik– Laško system,

• arrangement of harrows of the reservoir Trije studenci,

• renewal of water reservoirs Tovsto, Gozdec I. and Gozdec II.,

• setting sinks at the reservoirs Jožefa and Govce in Rudnik and

• the implementation of the section of the water distribution system in Šentrupert.

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3.4.2 ECOLOGICAL REPORT OF PIVOVARNA UNION, D. D., LJUBLJANA

In the course of its ordinary activities, Pivovarna Union places great attention to environmental con-

cerns. Its environmental policy is committed to constant improvement of environmental management

and prevention of pollution as well as compliance with statutory requirements related to environmen-

tal management.

The results of the regular annual environmental inspection were successful in 2012. It was estab-

lished that the plant that the plant operates in line with the environmental legislation. Only a request

was made with regard to the calculation of the environmental tax for packaging in 2013 and to the

calculation of the packaging fee to also take into consideration a secondary type of packaging material

of the export (over-pack and the cardboard in which cans and bottles are supplied) and the stoppers for

reusable containers. We also need to report returnable or refillable bottles and pallets placed on Slo-

vene market for the first time. The neutralising device functions adequately, the parameters of waste

water from the brewery meets the conditions in the environmental permit.

Also in 2012, we systematically dealt with the reduction of emissions into the environment. The pro-

jects implemented in 2012 were: the continuation of waste water energy recovery, optimisation of the

number of cleaning cycles in beer production and new technology in automated cleaning cycles and

regular monitoring of the concentrations of chemicals in automated cleaning cycles.

The project of Monitoring and Targeting Energy Consumption that will enable efficient monitoring

and optimisation of energy processes; technological changes in the beer production and the improve-

ments of the distribution of energy to the users resulted in reduced consumption of electricity and nat-

ural gas. Compared to 2011, the consumption of natural gas decreased by 15% and of electricity by 6 %.

Due to decreased consumption of natural gas also the carbon dioxide emissions dropped, which means

lower environmental tax. The system will support more quality monitoring of consumption since all

the data will be recorded in a single database.

Monitoring of gas emissions generated during the use of boilers showed that the parameters of

nitrogen oxides (NOx) and carbon oxides (COx) exceeded the upper limit still allowed in the environ-

mental permit (the prescribed values in the permit changed in 2012). In 2012, the activities for the

preparation of the schedule for a new boiler room continued. The new technology of the operation of

boilers will enable lower concentrations of gases emitted into the air; however, the boilers will also be

more energy efficient and the energy consumption will also decrease. All these arguments were sub-

mitted to the Environmental Agency of the Republic of Slovenia and the Environmental Inspectorate.

Their answer is expected in the first half of 2013.

The Environmental Agency of the Republic of Slovenia was also provided with the proposals for the

change of the valid environmental permit. Monitoring of the emissions of total organic carbon (TOC)

indicated that the emissions listed in the environmental permit have been exceeded. Our proposal was

to also include a parameter of mass flow (expressed quantity of emissions) and not the concentration.

In 2012, the administrative procedure was not completed; the response and the change of the environ-

mental permit are expected in the first half of 2013.

Regular noise monitoring was performed within which our authorised provider elaborated the so

called strategic maps of noise that served as the basis for determining the impacts of Pivovarna Union

on the environment. The noise emissions were not exceeded at any measuring location and thus no

remediation was required.

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In 2012, we notified the Slovenian Nuclear Safety Administration of a new radiation device on the

filling line for D2 cans and were issued the operating licence. The licences for other devices with radia-

tion sources were also renewed.

2012 was the year we started the preparatory work and data collection for the elaboration of a new

internal plan (period from 2013 to 2017) on waste management at the entire location of Pivovarna Un-

ion. The main objective is to set up a more efficient system that will reduce the volume of generated

mixed waste. This is why a system of separate collection of mixed waste packaging generated at various

locations of the administrative building will be introduced. In the same year we also purchased a new

press for waste fractions. We strictly observed the requirements defined in the Rules on management

of packaging and packaging waste. All waste packaging supplied by domestic suppliers was submitted

to them. This measure resulted in reduced quantity of waste fractions (mixed plastic) and lower costs.

USE OF NATURAL RESOURCES IN PIVOVARNA UNION, D. D. (PUMPED AND CHANNELLED WATER)

Unit of Cummulative Cummulative

measurement 2012 2011 Indeks 12/11

Pumped water m3 598,902 668,108 89.6Use of water from the energy recovery m3 28,127 29,064 96.8Channeled water - Merski Dam m3 498,057 552,203 90.2Quantity of precipitation per surface pf PU m3 49,525 36,922 134.1Electricity consumption MWh 18,092 19,186 94.3Natural gas consumption Sm3 3,561,431 4,202,312 84.7Generated quantity of CO2 from the operations of combustion plants t 6,767 7,984 84.8

The trend of decreasing consumption of energy and water resources can also be observed in 2012.

This is largely dependent on the optimisation of processes and the introduction of the so called “green

light” technology (energy-saving light bulbs, sensors) in the supply of electricity.

In recent years, the trend of reducing specific water consumption in beer production has contin-

ued. In 2012 it remained at the level of 2011. Because of higher quantities of precipitation especially

the above the average quantities in September, October and November, the specific consumption was

higher than expected. The consumption of water from the energy recovery process is slightly lower

than in 2011. Despite new users of this water in energy field the quantities will not increase especially

due to reduced removal of excess heat. In 2013, changes in the automated cleaning of the facilities in

the welding plant and less hot water will be needed as well as lower consumption of liquors and energy.

In 2012, we succeeded in decreasing the use of chemicals by 3 to 20%

3.4.3 ENVIRONMENTAL REPORT OF RADENSKA, D. D., RADENCI

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 wa-

ters. Our mission reflects our interaction with the environment and nature. With the Radenska brand

we transform the natural wealth of this environment, natural mineral waters to marketable, attractive,

quality and successful products.

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The projects, covering environmental protection activities in 2012 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 - in accordance with the law;

• regulation of labelling water protection zones in accordance with the law and the proposed arrange-

ment;

• rehabilitation of the borehole V-D – Zemljič borehole;

• rehabilitation and the abandonment of the borehole V-28 due to wear and tear;

• activities to obtain concessions for the extraction of natural mineral, spring and tap water;

• optimisation of the weight of plastic bottles and pre-forms,

• use of recycled PET materials;

• reduction and optimisation of packaging materials,

• monitoring and optimisation of energy and energy audit;

• monitoring of natural mineral water, drinking and technological waters and wastewater;

• renovation/replacement of the worn out doors at the filling facilities;

• inspection and replacement of worn out parts of the compressed air and CO2 networks;

• records of the quantities of pumped water and the use of CO2;

• new technological solutions to reduce waste quantities;

• measurements and, if necessary, remediation of noise in the production area.

Also in 2012, the regular annual environmental inspection was successfully conducted. It was es-

tablished that the plant operates in line with the prescribed environmental legislation and the issued

environmental permit. Only two comments were made.

Due to the comment of the environmental inspector that the measuring points on two gas boilers

were not in accordance with the SIST EN 15259 standard (due to the size of the chimney) an application

to change the environmental permit will be sent to the Environmental Agency of the Republic of Slo-

venia. This error is not relevant since the monitoring of gas emissions generated during the operation

of boilers indicated that all the parameters are considerably below limit values.

When examining the data on the packaging placed on the market, some minor deviations were iden-

tified concerning the quantities submitted to the Packaging Waste Management Company and CURS.

The difference is minimal and due to the effects of rounding and providing data in kilos or tonnes. The

data was coordinated and the inspectorate was notified.

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The measurements of noise in the environment were conducted in November 2012. Thus we veri-

fied the impact of Radenska on noise pollution. The measurements showed that Radenska does not

pollute the environment with noise or the parameters are within the limits.

The Licence to perform radiation activities was renewed in 2012 and now its validity expires on 15

October 2017. The Licence to use radiation sources is valid until 14 September 2014. The licence was

issued by the Slovenian Nuclear Safety Administration.

In 2012, ownership of two devices was transferred to ARAO - Slovenian Agency for Radioactive

Waste (No. 04-04-026-000/00235) in accordance with Article 14 of the Rules on radioactive waste and

spent fuel (Official Journal of the RS No 49/2006).

The Institute of Occupational Safety verified the sources of radiation and issued a report on the in-

spection of two closed radiation sources, a report on the inspection of an x-ray device and a report on

a written-off radiation source.

The environmental protection activities are associated with the implementation of environmental

objectives from previous years and current objectives for 2012. The objectives were geared towards

reducing the environmental burden of waste water and waste and streamlining energy consumption.

Some programmes to achieve the objectives (especially those related to investments) will be slightly

reduced or transferred to next business or investment periods.

Traditionally, the environmental objectives are geared towards the protection of water resources,

reduction of environmental burden related to wastewater, good waste management and reduction of

emissions to the air and streamlining of energy consumption.

We also started the energy audit of the processes in the Company. The energy audit is expected to be

completed in the middle of March 2013. Also the final report will be elaborated with the proposals for

improvements in the field of energy efficiency and the optimisation of energy processes. The energy

consumption decreased by 3% compared to 2011 and the specific use per unit decreased by 4%. Natural

gas consumption decreased by 7% and specific use per unit by 6%.

This trend of decreasing energy consumption can be observed also in 2012. To a great extent, this

is the consequence of process optimisation and a smaller share can be attributed to reduced scope of

production. The specific use of water also lowered and consequently also the sewerage collection fee.

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 the production is recycled by us. All waste plastic is sold to

companies 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. This way the volume of municipal

waste has reduced. In 2012, the municipal waste volume decreased by 16%.

The majority of waste packaging supplied by Slovene producers is returned to them. In our coopera-

tion with foreign suppliers we shifted from non-returnable to returnable packaging in 2012.

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3.4.4 ENVIRONMENTAL PROTECTION IN VITAL MESTINJE

In the area of environmental protection, the company ensures the enforcement of the requirements

defined in the environmental permit at all times. This essentially means the implementation of the

prescribed number of monitorings of waste and cooling water, careful management of other types of

waste and appropriate record keeping.

3.4.5 ECOLOGY IN DELO, d. d., LJUBLJANA

The Delo Company has elaborated a waste management plan that is constantly supplemented and

upgrades in compliance with the permanent policy of providing conditions to meet the requirements

of the environmental legislation and to satisfy the regulations governing waste water, waste and clean

air. Waste materials are subject to recycling. Only materials that are harmless to the environment and

people are used in the 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 effect on the environment has

decreased by 10dB.

The Printing Centre also shifted to the system of renting cleaning clothes that are washed and re-

used. As a result, the quantity of waste cloths decreased 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 still been 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 work to enable this phase without the application of these chemicals. Plates

without chemicals are to replace the old ones in one or two years.

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Financial report of theLaško Group

12345

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4.1 Statement of the Management 134

4.2 Auditor’s report 136

4.3 Audited consolidated Financial Statements of the Laško Group 139

4.3.1 Consolidated statement of financial position 139

4.3.2 Consolidated profit or loss account 141

4.3.3 Consolidated statement of other comprehensive income 142

4.3.4 Consolidated statement of changes in equity in 2012 143

4.3.5 Consolidated statement of changes in equity in 2011 145

4.3.6 Consolidated statement of cash flows 147

4.4 Notes to consolidated Financial Statements 149

4.4.1 General data 149

4.4.2 Disclosure of compliance with IFRS 149

4.4.3 Use of new and renewed IFRS and explanatory notes of OPIFRS 149

4.4.4 Significant accounting policies 151

4.4.5 Notes to individual items of the financial statements 162

4.4.6 Financial instruments and risks 204

4.4.7 Reporting by segments 209

4.4.8 Relations with the related parties 211

4.4.9 Remuneration of the members of the Management Board and Supervisory

Board and those with individual employment contracts 213

4.4.10 Potential liabilities and potential assets 215

4.4.11 Costs of the auditor 217

4.4.12 Underlying transactions after the reporting date 217

Contents

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4.1

Statement of the Management

The 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 for 2012, in a man-

ner providing the public with a fair presentation of the financial position and the results of operations

of the Group and the Company in accordance with the International Financial Reporting Standards

adopted by the European Union and the Companies Act.

The Management Board of Pivovarna Laško confirms the Business Report and Financial Statements

with explanatory notes for the year ended 31 December 2012 and declares:

• that the financial statements have been prepared under the assumption that Pivovarna Laško is a

going concern;

• that appropriate accounting policies were consistently applied and that any changes thereof have

been disclosed;

• that the accounting estimates have been prepared in a fair and diligent manner and are in accord-

ance 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


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4.2

Auditor’s report

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4.3.1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF THE LAŠKO GROUP AS OF 31 DECEMBER 2012

(in EUR) Note 2012 2011

ASSETS

Non-current assets 306,665,682 321,093,374

Intangible fixed assets 1 78,549,980 87,017,785

Tangible fixed assets 2 194,465,281 180,695,007

Investment property 3 7,199,033 9,117,703

Long-term financial investments in the subsidiaries 4.A 427,413 364,803

Available-for-sale financial assets 4.C 1,249,643 1,239,563

Long-term loans 5 436,335 11,079,110

Long-term finance lease receivable 6 421,340 751,266

Long-term operating receivables 13,198 125,880

Long-term deferred tax receivables 7 23,903,459 30,702,257

Short-term assets excluding short-term

accruals and prepaid expenditure 203,370,586 248,064,577

Non-current assets held for sale 8 6,570,939 8,960,939

Inventories 9 24,287,198 22,079,914

Short-term operating receivables 10.A 46,897,886 46,730,029

Short-term receivables for excessive paid corporate tax 10.B 1,329,252 407,636

Financial assets available for sale 11 112,630,152 143,271,798

Short-term loans 12 9,466,544 5,110,497

Cash and cash equivalents 13 2,188,615 21,503,764

Short-term accruals and prepaid expenditure 14 378,648 525,338

Total short-term assets 203,749,234 248,589,915

TOTAL ASSETS 510,414,916 569,683,289

4.3

Audited consolidated financial statements of the Laško Group for the 2012 financial year in compliance with IFRS

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4.3.1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF THE LAŠKO GROUP AS OF 31 DECEMBER 2012( c o n t i n u a t i o n )

(in EUR) Note 2012 2011

CAPITAL 92,665,202 125,473,457

Equity of the owners of non-controliling stake 16 7,571,555 7,647,527

Equity of the owners of controliling stake 15 85,093,647 117,825,930

Share capital 36,503,305 36,503,305

Capital reserves 66,744,172 78,908,924

Profit reserves 3,650,331 3,650,331

Revaluation surplus 9,655,319 10,907,339

Net profit or loss from previous years 875,016 15,504,846

Net profit or loss (32,346,133) (27,669,598)

Translation reserves 11,637 20,783

LIABILITIES 417,749,714 444,209,832

Provisions and long-term accruals and deferred income 17 6,904,389 7,068,763

Provisions for severance payments and jubilee awards 17.A 4,904,442 5,083,064

Other provisions 17.B 1,898,251 -

Long-term accruals and deferred income 1 7.B 101,696 1,985,699

Long-term liabilities 26,094,176 40,536,520

Long-term financial liabilities 18 26,093,882 40,532,009

Long-term operating liabilities 294 4,511

Short-term liabilities 377,287,617 388,171,257

Short-term operating liabilities 19 37,943,110 36,777,184

Short-term tax liabilities 20 353,494 2,963,742

Short-term financial liabilities 21 338,991,013 348,430,331

Short-term accruals and deferred income 22 7,463,532 8,433,292

Total short-term liabilities 384,751,149 396,604,549

TOTAL LIABILITIES 510,414,916 569,683,289

Accounting policies and explanatory notes form an integral part of these financial statements and

should be read in accordance with them.

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4.3.2 CONSOLIDATED PROFIT OR LOSS ACCOUNT OF THE LAŠKO GROUP FOR THE PERIOD 1. JANUARY – 31. DECEMBER 2012

(in EUR) Note 2012 2011

Continuing operations

Net sales revenue 23.A 271,386,948 264,737,273

Changes in inventories of products

and work in progresse (152,370) 467,270

Capitalised own products and services 211,714 197,804

Other operating revenue 23.B,C 5,644,089 5,498,458

Costs of goods, materials and services 23.D (166,811,670) (168,051,199)

Labour costs 23.D (50,887,703) (49,303,255)

Depreciation of intangible fixed

assets and property, plant and equipment 23.D (20,064,199) (19,585,979)

Operating expenses from revaluation 23.D (9,718,509) (11,820,395)

Long-term provisions 23.D (801,307) (298,655)

Other operating expense 23.D (6,590,812) (5,918,214)

OPERATING PROFIT 22,216,181 15,923,108

Financial revenues 23.F 7,473,277 9,548,495

Financial expenses 23.F (53,929,485) (49,705,487)

OPERATING PROFIT BEFORE TAXES (24,240,027) (24,233,884)

Taxes 24 (6,156,336) 3,432,744

NET PROFIT/LOSS FOR THE ACCOUNTING

PERIOD FROM RETAINED OPERATING PROFIT (30,396,363) (20,801,140)

Discontinued operations - Jadranska pivovarna Split (2,541,655) (3,610,790)

Discontinued operations - Fructal - (3,094,368)

NET PROFIT OR LOSS OF THE ACCOUNTING

PERIOD FROM DISCONTINUED OPERATIONS 25 (2,541,655) (6,705,158)

TOTAL NET PROFIT/LOSS FOR

THE ACCOUNTING PERIOD (32,938,018) (27,506,298)

Minority owners’ share of net profit/loss (591,885) 163,300

Majority owners’ share of net profit/loss (32,346,133) (27,669,598)

Total net profit/loss per share of

the majority owners’ share

Net profit / loss per share 26 (3.71) (3.18)

Adjusted net profit/loss per share (3.71) (3.18)

Total net profit/loss per share of

the minority owners’ share

Net profit / loss per share (0.07) 0.02

Adjusted net profit/loss per share (0.07) 0.02

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4.3.2 CONSOLIDATED PROFIT OR LOSS ACCOUNT OF THE LAŠKO GROUP FOR THE PERIOD 1. JANUARY – 31. DECEMBER 2012( c o n t i n u a t i o n )

(in EUR) Note 2012 2011

Net profit/loss per share from discontinued operations

Net profit / loss per share (0.29) (0.77)


Net profit / loss per share from continuing operations

Net profit / loss per share (3.48) (2.39)




4.3.3 CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME OF THELAŠKO GROUP FOR THE PERIOD 1 JANUARY – 31 DECEMBER 2012

(in EUR) 2012 2011

Net profit/loss for the accounting period (32,938,018) (27,506,298)

OTHER COMPREHENSIVE INCOME

Financial assets available-for-sale 10,431 (1,521,580)

Profit/loss from property revaluation 305,678 6,226,259

Deferred taxes from revaluatioN (1,292,900) (461,873)

Other comprehensive income- cap.

Metoda Mercator (transfer to IPI) - 15,882,356

Final consolidation FRAG 474,983 1,335,234

OTHER COMPREHENSIVE INCOME (501,808) 21,460,396

TOTAL COMPREHENSIVE INCOME (33,439,826) (6,045,902)

Other comprehensive income (501,808) 21,460,396

Minority owners’ share of net profit/loss (115,670) (1,812,706)

Majority owners’ share of net profit/loss (386,138) 23,273,102

Total comprehensive income (33,439,826) (6,045,902)

Minority owners’ share of net profit/loss (707,555) (1,649,406)

Majority owners’ share of net profit/loss (32,732,271) (4,396,496)

»Total comprehensive income

of majority owners’ share per share« (3.75) (0.50)

»Adjusted total comprehensive income

of majority owners’ share per share« (3.75) (0.50)



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min

ority

stak

e

TOTA

L

(in E

UR)

ca

pita

l re

serv

es

rese

rves

tr

easu

ry st

ock

sh

ares

fr

om p

rofit

pr

evio

us y

ears

pr

ofit o

r los

s su

rplu

s re

serv

e

stak

e ow

ners

ow

ners

C

API

TAL

Abs

orpt

ion

of r

eser

ves

for

own

shar

es (s

take

s)

- -

- (1

26,3

34)

- (1

26,3

34)

- -

-

(126

,334

) -

(126

,334

)

Oth

er

- -

- -

- -

863,

222

-

(863

,222

) -

- -

-

Tota

l cha

nges

in c

apita

l -

(12,

164,

752)

-

(126

,334

) -

(126

,334

) (1

4,64

1,62

4)

27,6

69,5

98

(863

,222

) -

(126

,334

) -

(126

,334

)

CLO

SIN

G B

ALA

NC

E

as o

f 31

Dec

embe

r 20

12

36,5

03,3

05

66,7

44,1

72

3,65

0,33

1

341,

170

(3

41,1

70)

3,65

0,33

1

875,

016

(3

2,34

6,13

3)

9,65

5,31

9

11,6

37

85,0

93,6

47

7,57

1,55

5

92,6

65,2

02

Acc

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ing

polic

ies

and

expl

anat

ory

note

s fo

rm a

n in

tegr

al p

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f the

se fi

nanc

ial s

tate

men

ts a

nd s

houl

d be

rea

d in

acc

orda

nce

with

them

.

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A

NN

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L R

EP

OR

T 2

012

145

Fin

an

cia

l r

ep

or

t o

f t

he

La

šk

o g

ro

up

4.3.

5 C

ON

SOLI

DAT

ED

STA

TEM

EN

T O

F C

HA

NG

ES

IN E

QU

ITY

OF

THE

LA

ŠKO

GR

OU

P F

OR

TH

E P

ER

IOD

1 JA

NU

ARY

– 3

1 DEC

EM

BE

R 2

011

Tota

l N

et p

rofit

or

To

tal c

apit

al

Cap

ital

of t

he

Sh

are

C

apit

al

Lega

l Re

serv

es fo

r O

wn

re

serv

es

loss

from

N

et

Reva

luat

ion

Tr

ansl

atio

n

of m

ajor

ity

min

ority

stak

e

TOTA

L

(in E

UR)

ca

pita

l re

serv

es

rese

rves

tr

easu

ry st

ock

sh

ares

fr

om p

rofit

pr

evio

us y

ears

pr

ofit o

r los

s su

rplu

s re

serv

e

stak

e ow

ners

ow

ners

C

API

TAL

OP

ENIN

G B

ALA

NC

E

as o

f 1 ja

nuar

y 20

11

36,5

03,3

05

78,9

08,9

24

3,65

0,33

1

812,

304

(8

12,3

04)

3,65

0,33

1

110,

742

(25

,574

,602

) 42

,217

,835

(13

,485

,165

) 12

2,33

1,37

0

9,55

7,63

3 1

31,8

89,0

03

Tran

sact

ions

with

ow

ners

Incr

ease

in o

wn

shar

es (s

take

s)

- -

- -

(60,

420)

(6

0,42

0)

- -

-

(60,

420)

-

(60,

420)

Fina

ncia

l ass

ets

avai

labl

e-fo

r-sa

le

- -

- -

154,

041

15

4,04

1

- -

- -

154,

041

-

154,

041

Div

iden

d pa

ymen

t -

- -

- -

- -

- -

-

(64,

835)

(6

4,83

5)

Oth

er c

hang

es

- -

- -

251,

179

25

1,17

9

- -

- -

251,

179

(1

48,0

84)

103,

095

Tota

l tra

nsac

tions

with

ow

ners

-

- -

- 34

4,80

0

344,

800

-

- -

- 34

4,80

0

(212

,919

) 13

1,88

1

Cha

nges

in c

ompr

eh. i

ncom

e

Net

pro

fit o

r lo

ss o

f the

finn

acia

l yea

r -

- -

- -

- -

(27,

669,

598)

-

- (2

7,66

9,59

8)

163,

300

(27,

506,

298)

Rev

alua

tion

surp

lus

from

prop

erty

, pla

nt a

nd e

quip

men

t -

- -

- -

- -

- 6,

108,

231

-

6,10

8,23

1

118,

028

6,

226,

259

Rev

alua

tion

surp

lus

from

finan

cial

inve

stm

ents

-

- -

- -

- -

- (1

,514

,872

) -

(1,5

14,8

72)

(6,7

08)

(1,5

21,5

80)

Taxe

s re

late

d to

ind.

item

s

of c

ompr

ehen

sive

inco

me

- -

- -

- -

- -

(395

,105

) -

(395

,105

) (6

6,76

8)

(461

,873

)

Oth

er c

ompr

ehen

sive

inco

me

- cap

ital

met

hod

Mer

cato

r (r

eval

. of T

FA)

- -

- -

- -

37,9

76,7

94

- (37

,976

,794

) -

- -

-

Oth

er c

ompr

ehen

sive

inco

me

- cap

ital

met

hod

Mer

cato

r (t

rans

fer

to I

PI)

-

- -

- -

- -

- 4,

185,

142

13

,554

,472

17

,739

,614

-

17,7

39,6

14

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Fin

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f t

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La

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o g

ro

up

146

4.3.

5 C

ON

SOLI

DAT

ED

STA

TEM

EN

T O

F C

HA

NG

ES

IN E

QU

ITY

OF

THE

LA

ŠKO

GR

OU

P F

OR

TH

E P

ER

IOD

1 JA

NU

ARY

– 3

1 DEC

EM

BE

R 2

011

( c o

n t

i n u

a t

i o n

)

Tota

l N

et p

rofit

or

To

tal c

apit

al

Cap

ital

of t

he

Sh

are

C

apit

al

Lega

l Re

serv

es fo

r O

wn

re

serv

es

loss

from

N

et

Reva

luat

ion

Tr

ansl

atio

n

of m

ajor

ity

min

ority

stak

e

TOTA

L

(in E

UR)

ca

pita

l re

serv

es

rese

rves

tr

easu

ry st

ock

sh

ares

fr

om p

rofit

pr

evio

us y

ears

pr

ofit o

r los

s su

rplu

s re

serv

e

stak

e ow

ners

ow

ners

C

API

TAL

Fina

l con

solid

atio

n FR

AG

-

- -

- -

- 3,

189,

158

-

(1,8

53,9

24)

- 1,

335,

234

(1

,857

,258

) (5

22,0

24)

Tota

l cha

nges

in c

ompr

ehen

sive

inco

me

in 2

011

- -

- -

- -

41,1

65,9

52

(27,

669,

598)

(3

1,44

7,32

2)

13,5

54,4

72

(4,3

96,4

96)

(1,6

49,4

06)

(6,0

45,9

02)

Cha

nges

in c

apita

l

Allo

catio

n of

rem

aini

ng p

art

of n

et p

rofit

acc

. to

the

GM

dec

isio

n -

- -

- -

- (2

5,57

4,60

2)

25,5

74,6

02

-

- -

-

Form

ing

rese

rves

for

own

shar

es (s

take

s)

- -

- (1

90,7

59)

- (1

90,7

59)

(60,

420)

-

- -

(251

,179

) -

(251

,179

)

Abs

orpt

ion

of r

eser

ves

for

own

shar

es (s

take

s)

- -

- (1

54,0

41)

- (1

54,0

41)

- -

-

(154

,041

) -

(154

,041

)

Oth

er

- -

- -

- -

(136

,826

) -

136,

826

(4

8,52

4)

(48,

524)

(4

7,78

1)

(96,

305)

Tota

l cha

nges

in c

apita

l -

- -

(344

,800

) -

(344

,800

) (2

5,77

1,84

8)

25,5

74,6

02

136,

826

(4

8,52

4)

(453

,744

) (4

7,78

1)

(501

,525

)

CLO

SIN

G B

ALA

NC

E

as o

f 31

Dec

embe

r 20

11

36,5

03,3

05

78,9

08,9

24

3,65

0,33

1

467,

504

(46

7,50

4)

3,65

0,33

1

15,5

04,8

46

(27,

669,

598)

10

,907

,339

20

,783

11

7,82

5,93

0

7,64

7,52

7 1

25,4

73,4

57

Acc

ount

ing

polic

ies

and

expl

anat

ory

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

acc

orda

nce

with

them

.

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L R

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OR

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012

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an

cia

l r

ep

or

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La

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ro

up

4.3.6 CONSOLIDATED STATEMENT OF CASH FLOWS OF THE LAŠKO GROUP FOR THE PERIOD 1 JANUARY–31 DECEMBER 2012

(in EUR) Note 2012 2011

OPERATING PROFIT IN THE PERIOD 23 22,216,180 9,887,269

Adjustments for:

Exclusion of other operating revenues 23.B,C (2,515,861) -

Depreciation of tangible fixed

assets and investment property 23.D 19,118,592 18,802,472

Depreciation of intangible assets 23.D 778,868 783,506

Write off of long-term assets 23.D 10,045,492 19,435,782

Write off of short-term assets 23.D 448,009 680,023

Net movement of provisions 17 (77,244) 153,486

Translation reserves 15 (15,871) 153,486

Exchange differences from operations 26 37 354,734

Total adjustments 27,782,022 40,363,489

CHANGES IN OPERATING CAPITAL

Inventories and non-current assets held for sale 9 970,877 (6,158,966)

Operating and other receivables 10 (688,278) (16,536,979)

Operating and other liabilities 19,20,22 (2,010,048) 5,396,313

Total changes in operating capital (1,727,449) (17,299,632)

NET CASH FLOW FROM OPERATING ACTIVITIES 48,270,753 32,951,126

Cash flow from operating activities

Cash from operating activities 48,270,753 32,797,639

Tax expenditure 10.B,20 (6,135,833) 699,747

Paid interest - 709,316

OFFSET CASH FROM OPERATING ACTIVITIES 42,134,920 34,206,702

Investment cash flows

Takeover of subsidiaries,

netexpenditure for the takeover - (286,000)

Purchase of tangible fixed assets 2 (9,601,663) (10,255,894)

Profit / loss from the disposal

of tangible fixed assets 2 4,211 119,014

Purchase of intangible long-term assets 1 (689,469) (816,716)

Purchase / sale of financial assets 4.C,5,11,12 (5,114,019) 6,154,364

Sale of non-current assets

and liabilities available for sale - 35,300,000

Interest received 23.F 702,086 759,304

Dividends and capital gains received 23.F 5,794,495 7,411,835

NET INVESTMENT CASH FLOWS (8,904,359) 38,385,907

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4.3.6 CONSOLIDATED STATEMENT OF CASH FLOWS OF THE LAŠKO GROUP FOR THE PERIOD 1 JANUARY–31 DECEMBER 2012( c o n t i n u a t i o n )

(in EUR) Note 2012 2011

Cash flow from financing

Interest paid 23.F (20,749,463) (23,094,295)

Purchase of own shares 15 114,292 90,616

Increase in capital 16 1,000,000 -

Increase / decrease in financial debts 18.21 (32,604,397) (30,129,819)

Dividends paid out to owners (306,142) (65,069)

NET CASH FLOW FROM FINANCING (52,545,710) (53,198,567)

NET INCREASE / DECREASE IN CASH

AND CASH EQUIVALENTS (19,315,149) 19,394,042

Cash and cash equivalents - at the beginning

of the year 13 21,503,764 2,109,720

Cash and cash equivalents - at the end of the year 13 2,188,615 21,503,762



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4.4.1 GENERAL DATA

Pivovarna Laško is a public limited company, registered with the District Court in Celje under the de-

cision No Srg 95/00673 and under the application No 1/00171/00. It is classified as a large company and

is obliged to perform a regular annual audit of its operations. The main activity of the Company is the

production and sale of beer, malt and waters. It also performs other wholesale and retail trade activities

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 with 8,747,652 ordinary freely nego-

tiable registered no-par-value shares. There are no limitations on the payment of dividends and other

distributions of equity.

4.4.2 DISCLOSURE OF COMPLIANCE WITH IFRS

The financial statements have been drawn up in accordance with the International Financial Report-

ing Standards (IFRS) as adopted by the European Union.

4.4.3 USE OF NEW AND RENEWED IFRS AND EXPLANATORY NOTES OF OPIFRS

A) STANDARDS AND EXPLANATORY NOTES THAT ENETERD INTO FORCE IN THE REPORTING PERIOD

In the current period, the following amendments to the existing standards issued by the Interna-

tional Accounting Standards Board (IASB) and adopted by the EU are valid:

• Amendments to IFRS 7 »Financial instruments: Disclosures« – Transfers of financial assets that

the EU adopted on 22 November 2011 (effective for annual periods beginning on or after 1 July 2011).

4.4

Notes to consolidated financial statements

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150

The adoption of these amendments to the existing standards led to no changes in the accounting

policies of the Group.

B) STANDARDS AND EXPLANATORY NOTES ISUED BY THE IASB AND ADOPTED BY THE EU NOT YET IN FORCE

On the date of the approval of these financial statements, the following standards, amendments and

interpretations were issued that the EU approved but did not yet enter into force:

• IFRS 10 »Consolidated financial statements« that the EU adopted on 11 December 2012 (effective

for annual periods beginning on or after 1 January 2014),

• IFRS 11 »Joint arrangements« that the EU adopted on 11 December 2012 (effective for annual peri-

ods beginning on or after 1 January 2014),

• IFRS 12 »Disclosure of interests in other entities« that the EU adopted on 11 December 2012 (effec-

tive for annual periods beginning on or after 1 January 2014),

• IFRS 13 »Fair value measurement« that the EU adopted on 11 December 2012 (effective for annual

periods beginning on or after 1 January 2013),

• IAS 27 (amended in 2011) »Separate financial statements« that the EU adopted on 11 December

2012 (effective for annual periods beginning on or after 1 January 2014),

• IAS 28 (amended in 2011) »Investments in associates and joint ventures« that the EU adopted on 11

December 2012 (effective for annual periods beginning on or after 1 January 2014),

• Amendments to IFRS 1 »First-time adoption of IFRS« – Severe hyperinflation and removal of fixed

dates for first-time adopters that the EU adopted on 11 December 2012 (effective for annual periods

beginning on or after 1 January 2013),

• Amendments to IFRS 7 »Financial instruments: disclosures« – Offsetting Financial Assets and

Financial Liabilities that the EU adopted on 13 December 2012 (effective for annual periods begin-

ning on or after 1 January 2013),

• Amendments to IAS 1 »Presentations of financial statements« – Presentation of items of other

comprehensive income that the EU adopted on 5 June 2012 (effective for annual periods beginning

on or after 1 July 2012),

• Amendments to IAS 12 »Income Taxes« – Deferred Tax: Recovery of Underlying Assets that the EU

adopted on 11 December 2012 (effective for annual periods beginning on or after 1 January 2013),

• Amendments to IAS 19 »Employee benefits« – Post-employment Benefits that the EU adopted on

5 June 2012 (effective for annual periods beginning on or after 1 January 2013),

• Amendments to IAS 32 »Financial instruments: Presentation« – Offsetting Financial Assets and



• IFRIC 20 “Stripping Costs in Production Phase of a Surface Mine« that the EU adopted on 11 De-

cember 2012 (effective for annual periods beginning on or after 1 January 2013).

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C) STANDARDS AND EXPLANATORY NOTES ISSUED BY THE IASB AND NOT YET ADOPTED BY THE EU

Currently, IFRS as adopted by the EU do not considerably differ from those issued by the Internation-

al Accounting Standards Board (IASB) with the exception of the following existing standards and ex-

planatory notes that on the date (date of financial statement publication) were not approved to be used:

• IFRS 9 »Financial instruments« (effective for annual periods beginning on or after 1 January),

• Amendments to IFRS 1 »First-time adoption IFRS« – Government loans (effective for annual peri-

ods beginning on or after 1. January 2013),

• Amendments to IFRS 9 »Financial instruments« and IFRS 7 »Financial instruments: Disclosures«

– Mandatory Effective Date and Transition Disclosures,

• Amendments to IFRS 10 »Consolidated financial statements« IFRS 11 »Joint Arrangements« in

IFRS 12 »Disclosure of Interests in Other Entities« – Transition Guidance (effective for annual


• Amendments to IFRS 10 »Consolidated financial statements«, IFRS 12 »Disclosure of Interests in

Other Entities« and IAS 27 »Separate Financial Statements« – Investment Entities (effective for

annual periods beginning on or after 1 January 2014),

• Amendments to various standards »Improvements of IFRS (2012)« arising from the annual project

for the IFRS improvement published on 17 May 2012 (IFRS 1, IAS 1, IAS 16, IAS 32, IAS 34) mainly

in order to eliminate discrepancies and misinterpretations of the text (effective for annual periods

beginning on or after 1 January 2013).

The Group estimates that the adoption of these standards, amendments and interpretations will not

have a significant impact on the Company’s financial statements during the period of initial application.

At the same time, the accounting for the hedging of risks connected to the portfolio of financial

assets and liabilities, the principles of which the EU has not yet adopted, still remains unregulated.

The Group assesses that the accounting of risk hedging connected to the portfolio of financial assets

and liabilities to be in accordance with the requirements of IAS 39: “Financial Instruments: Recogni-

tion and Measurement” will not have a significant impact on the Company’s financial statements if

used on the date of the statement of financial position.

4.4.4 SIGNIFICANT ACCOUNTING POLICIES

BASIS FOR DRAWING UP THE ANNUAL REPORT

The financial statements have been drawn up in accordance with IFRS, the Companies Act, other

acts and the Rules on Accounting and are presented in EUR. When disclosing and valuating the items,

the provisions of the standards were directly applied with the exception of only the items where stand-

ards 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 disclosed at revalued amount or fair value. The valuation of assets

and liabilities is presented in detail in individual sections below.

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152

When selecting the accounting policies and when deciding on their use and drawing up these finan-

cial statements, the Pivovarna Laško Management Board took into consideration the following three

requirements:

• Financial statements are understandable when understood by users without any problems,

• Information is relevant if it helps the user to make 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 in the continuation were consistently applied in all the periods

presented.

CONSOLIDATION

Subsidiary companies in which the Group’s indirect or direct equity is larger than half of voting

rights or can in any other way influence operation are considered consolidated. They are consolidated

in the Group’s statements from the day when the Group took over their controlling interest and their

consolidation ends when the Group has no controlling interest in them anymore. All transactions and

receivables and liabilities among the Group’s companies are eliminated for the purpose of consolida-

tion. Impairments of the long-term investments in Delo have also been excluded. Its reduction to the

assessed value is reflected in the consolidation as impairment of the brands which had enjoyed brand

recognition upon acquisition. Impairment of dividends received from subsidiaries was also eliminat-

ed. For the purpose of ensuring consistent and correct data for the needs of the Group’s consolidation

and financial reporting, accounting policies in subsidiaries needed to be harmonized with the control-

ling company’s policies.

The Group uses the purchase method for the accounting of takeovers. The acquisition cost of the

takeover is assessed as the fair value of assets and capital instruments given and assumed liabilities on

the day of transaction, together with the expenses directly attributable to the takeover. Assumed assets,

liabilities and conditional liabilities attached to a takeover are initially recorded at fair value on the day

of the takeover 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 acquired undertaking is recorded as

positive goodwill. If the cost is lower than the fair value of the net value of the assets of the acquired

company, the difference is directly recognised through profit or loss as impairment loss.

The Group treats transactions with the owners of the non-controlling interest the same as transac-

tions with external partners. Profits and losses of minority holders are disclosed in the Group’s income

statement.

REPORTING CURRENCY

A) FUNCTIONAL AND REPORTING CURRENCY

The items presented in the financial statements of individual companies of the Group are denoted

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 EUR, which is also the functional and reporting currency of the parent company (Pivovarna Laško).

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B) TRANSACTIONS AND BALANCES

Foreign currency transactions are converted into the reporting currency using the exchange rate

valid on the day of the transaction. Profits and losses arising from these transactions and from the

conversion of cash and liabilities, denominated in a foreign currency, are recognised in the Income

Statement.

Exchange rate differences arising from debt securities and other financial instruments are recog-

nised at fair value and are included in the profit or loss of transactions with foreign currencies. Ex-

change rate differences in non-monetary items such as securities kept for trading are shown as a

portion of the increase or decrease of fair value. Currency differences in securities available-for-sale are

included in the revaluation reserves on equity.

C) COMPANIES IN THE GROUP

Income statements and cash flow statements of subsidiary companies abroad are converted into the

reporting currency of the controlling company on the basis of the average foreign currency rate, and

balance sheets are converted into the reporting currency with the use of the exchange rate valid at 31

December. If a company is sold abroad, the currency differences realized at the sale are recognized in

the profit or loss statement as a part of the profit/loss of the sale.

RECOGNITION OF REVENUE

Revenue is measured at the fair value of the consideration received or receivables for the sale of

products, goods or services within the regular operations of the Group. Revenue is presented exclusive

of value added tax and excise duties, rebates and reimbursements.

Revenue from the sale of products, goods and materials is recognised in case of compliance with all

the conditions:

• 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 attaching 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 attaching 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 in the licence agreement.

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INTANGIBLE ASSETS

Intangible assets with a finite useful life acquired individually (not within a business combination)

and not created within the Group are measured after recognition using the cost model or are disclosed

at cost less any accumulated depreciation and any accumulated impairment. They are depreciated

according to the straight-line method in the period of their estimated expected functional life periods

(patents, brands, licences 5 years; software 3 years). Estimates of expected functional life periods and

the depreciation method are checked with every preparation of financial statements; potential changes

of estimates of the categories mentioned are considered for the future periods and not retroactively.

Intangible assets with indefinite useful lives acquired individually (not within a business combina-

tion) and not created within the Group are disclosed at cost less potential impairment.

Intangible asset is recognised as an asset only when it is possible that future economic benefits will

be generated to the Group and when the purchase price can be reliably measured.

Intangible asset is derecognised upon disposal or when no future economic benefits are expected

from further use. The gain or loss arising from derecognition of an intangible asset affects profit or

loss of the period of derecognition.

A) GOODWILL

Goodwill represents a surplus in the cost of an acquired company over the fair value of the net asset

share of the acquired company on the day of the acquisition. Goodwill arising upon the acquisition of

subsidiary companies is recognized in intangible fixed assets. Goodwill is checked, tested for impair-

ments and measured at the initial value decreased by cumulated impairments on an annual basis.

Profits or losses at the sale of a company include the current value of positive goodwill referring to the

company sold. A test of the impairment of the goodwill of the investment into the Union Group was

made on 31 December 2012, which showed that the value thereof had not changed from the previous

year.

B) PATENTS, BRANDS AND LICENCES

Expenditure related to the acquisition of patents, brands and licences are capitalised and depreciated

using the straight-line method during their “useful periods of life” (amortisation period). If the useful

period of life cannot be determined, such assets are not depreciated and only a test of impairment is

performed on an annual basis.

If revaluation is required, the value of intangible fixed assets needs to be estimated and written-off

up to the amount of their replacement values. With brands the useful life is not defined and therefore

the impairment test has to be conducted every year.

The valuations by certified business valuators or by the management are the basis of impairment.

The useful life of other intangible assets is defined from 3 to 10 years.

C) OTHER INTANGIBLE ASSETS

Whenever computer software is not considered a constituent part of the appropriate computer hard-

ware, they are treated as intangible assets. Other intangible assets are disclosed at cost less any amor-

tisation and impairment losses and collective losses due to impairment. The useful period for other

intangible assets is 10 years.

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TANGIBLE FIXED ASSETS

The land and buildings that are used are accounted for using the revaluation models and are disclosed

at revalued amount at the date of the revaluation less any subsequent accumulated amortisation or im-

pairment. Revaluations are made with sufficient regularity to ensure that the carrying amount does

not differ materially from that which would be determined using fair value at the balance sheet date.

Upward revaluation of land and buildings is recognised or accumulated as the revaluation surplus

in other comprehensive income except when the previous downward revaluation of the same land and

buildings is abolished and recognised in profit or loss; in this case upward revaluation to the value

of the prior downward revaluation is recognised in profit or loss. Downward revaluation of land and

buildings that exceeds potential previously recognised revaluation surplus of the same land and build-

ings is recognised in profit or loss.

Production facilities, machinery, all types of equipment, reusable packaging and small tools are

recognised using the model of purchase price or are disclosed at purchase price less cumulative depre-

ciation and potential impairment.

Tangible fixed assets in acquisition are measured at purchase price less potential impairment. Pur-

chase price also includes borrowing costs in accordance with the accounting policy. They are classified

under tangible fixed assets that will be owned when finished and available for use. Depreciation of

tangible fixed assets starts in the month following the month of the beginning of their use.

Land is not depreciated.

Building depreciation is recognised in profit or loss and the decrease of revaluation surplus is simul-

taneously recognised in retained profit. When buildings are derecognised, their potential revaluation

surplus is transferred directly to retained profit.

Depreciation is calculated using the straight line method and (except for land and tangible fixed as-

sets in acquisition that are not depreciated) and is recognised so that the purchase value or revalued

amount of the intangible fixed assets less potential residual value is written off in the period of its esti-

mated functional life time. The estimates of expected functional life time and residual values and the

depreciation method are checked with every preparation of financial statements; potential changes in

estimates of the categories mentioned are used for future periods and not retrospectively. The expected

functional life time of individual groups of assets is the following:

Buildings 10 – 66 years

Plant and machines 5 – 14 years

Hardware and software 3 years

Vehicles 3 – 9 years

Other equipment 3 – 20 years

Reusable container (barrels, bottles, crates) 4 – 5 years

Credit 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 generated with regard to the tangible fixed asset increase its purchase value

if its future benefits are increased compared to the originally estimated benefits; in this case the costs

that allow the extension of the useful life of the asset initially decrease the accumulated depreciation

calculated till then. The extension of the useful life of a tangible fixed asset means the extension of

originally determined useful life in which the asset is depreciated. All other repairs and maintenance

are included in profit or loss of the financial year when they occurred.

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Tangible fixed asset is derecognised on its disposal or when no economic benefits might be expected

to be available from the asset when it is disposed. Profit or loss on disposal affect the profit or loss of

the period in which asset is derecognised.

INVESTMENT PROPERTY

Investment property is property owned by the Company or under financial lease for the purpose of

earning rent or increasing the value of the property. After recognition, they are measured at purchase

value whereas later on they are measured using the so called fair value model (depreciation is not cal-

culated, which means that the increase or decrease in their fair value affects profit or loss of the period

in which it is effected.

Investment property is derecognised on its disposal or final interruption of its use and no economic

benefits might be expected to be available from the asset when it is disposed. Profit or loss on disposal

affect the profit or loss of the period in which asset is derecognised.

IMPAIRMENT OF TANGIBLE FIXED ASSETS AND INTANGIBLE (EXCLUDING GOOD WILL)

When financial statements are drawn, all tangible fixed assets and intangible assets (excluding good-

will) are checked whether there are any potential indications of impairment. In the event of such

indications of impairment, their recoverable amount is estimated. If the recoverable amount of an

individual asset cannot be established, the recoverable amount of a cash-generating unit is estimated

that the asset concerned belongs to.

The recoverable amount of the asset is the larger of the following: its fair value decreased by sale

expenses, or its value in use. The latter is estimated as the current value of discounted future cash flows

associated with the financial asset taking into account the discount rate before taxation that reflects the

current market estimate of the time value of the money and specific risks related to the assets that were

not considered in the estimate of future cash flows.

The asset (or a cash-generating unit) is impaired to its recoverable amount if the latter is lower than

its book value. Impairment is immediately recognised in profit or loss except when the asset concerned

is carried using revaluation model; in this case the impairment is disclosed as the decrease in revalu-

ation surplus.

In the case of reversal of impairment the value of asset (a cash generating unit) is increased to the

new estimated recoverable value but only to the extent that the new recoverable value does not exceed

the value according to which the assets would be valued if there was no impairment of the asset (or a

cash generating unit). Reversal of impairment is immediately recognised in profit or loss except when

the asset concerned is carried using revaluation model; in this case the impairment is disclosed as the

increase in revaluation surplus.

INVESTMENTS INTO THE SUBSIDIARIES

A consolidated subsidiary is a company where the controlling company has the controlling capital

share or controlling influence due to other reasons which enters into a group for which consolidated

financial statements are prepared.

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In the legal parent’s separate financial statements, the investment in the legal subsidiary is ac-

counted for in accordance with the requirements in IFRS 27 (unless classified among non-current

assets (and related liabilities) available-for-sale in accordance with IFRS 5). Revenues arising from

profit sharing are recognised as financial revenues when they are paid or when the general meetings of

these companies adopt a resolution on profit sharing and dividend payment. Investments are impaired

when the recoverable value is lower than its book value. Impairment loss is immediately recognised

in profit or loss.

INVESTMENTS INTO ASSOCIATED COMPANIES

Associated companies are companies in which the Company has between 20% and 50% of the vot-

ing rights, and which have a significant impact on business, but are not controlled. Significant influ-

ence is the power to participate in the financial and operating policy decisions of the investee but is not

control or joint control over those policies.

In consolidated financial assets, business results and assets and liabilities in associated companies

are included by using the equity method unless the investment into the associated company is classi-

fied as non-current asset available-for-sale according to IFRS 5. Under the equity method, the invest-

ment in an associate is initially recognised in consolidated financial statement at cost; however, its later

measurement depends on related interests of the investor in profit, losses and other comprehensive

income of the associated company arising after the date of acquisition.

If the investor’s share in losses or negative other comprehensive income of the associated company

is higher than the value of its stake in the associated company (book value of the financial investment

into the associated company including potential 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 share of the investor decreases to zero, further losses are defined and the li-

ability recognised only to the extent that the investor has incurred a legal or constructive obligation or

made payments on behalf of the associate company.

From the acquisition of financial investment, the potential difference between the purchase value of

the financial investment and the investor’s stake at net fair value of the identifiable assets, liabilities or

contingent liabilities in consolidated financial statements of the investor are treated as goodwill and is

contained in the book value of the financial investment in accordance with IFRS3. The amortisation

of that goodwill 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 relation to the determination whether it is necessary to recognise any additional impairment loss

with respect to the investor’s net investment in the associate company, the provisions of IAS 39 or IAS

28 are taken into account. In accordance with IAS 36, the entire carrying amount of the investment is

tested as one asset; the carrying amount is then compared with the recoverable amount (at the higher

of the fair value less the costs of sales and the value in use).

Gains and losses arising from transactions between the investor (and its consolidated subsidiary com-

panies) and the associated company are recognised in the consolidated financial statements of the in-

vestor only to the level of shares of non-related investors in the associated company. The investor’s share

of the associate’s profits or losses is excluded in the consolidated financial statements of the investor.

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LOANS GIVEN, DEPOSITS, MONETARY ITEMS

As financial assets, loans given, deposits and monetary items are initially measured at fair value at

the date of their issue or placement.

After initial measurement they are disclosed at amortised cost using the effective interest method

reduced by potential impairment.

AVAILABLE-FOR-SALE ASSETS

Available-for-sale financial assets are measured on initial recognition at their fair value. Such fair

value is usually equal the purchase price, however, some corrections need to be made.

After the initial recognition, the available-for-sale financial assets designated at fair value through profit

or loss but the changes in fair value are recognised in other comprehensive income with the exception

of their impairments and interest recognised using the effective interest rate and exchange differences.

The best evidence of fair value is quoted prices in an active market. If these are not available, the

valuation models are used. These include the use of recent arm’s length transactions, reference to

other instruments that are substantially the same and discounted cash flow analysis.

If the asset’s fair value cannot be reliably measured, it is disclosed at purchase value taking into

consideration potential impairments.

Upon derecognition of an available-for-sale financial asset or its permanent impairment, the cumu-

lative other comprehensive income is transferred to the profit or loss of the period in which the asset

has been derecognised or has been permanently impaired.

DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments are used for managing interest rate risks. They comprise interest

options and interest swaps.

Derivative financial instruments are first recognised at cost on the day a contract is concluded and

later revalued to the fair value on the reporting date. Profits and losses connected to changes in fair

value are immediately recognised in profit and loss unless they are used as protection against risks.

NON-CURRENT ASSETS HELD FOR SALE OR THE GROUP FOR DISPOSAL

(AND RELATED LIABILITIES)

Non-current assets held for sale (and liabilities associated with the non-current assets) are those non-

current assets or liabilities for whose book value it is reasonable to assume it will be settled mainly with

the sale and not with further use. This condition is deemed to have been complied with only if its sale

is highly probable and if the assets or their group (and liabilities associated with them) are in the state

in which the sale is possible. The management needs to be committed to the closing of the sale process

within a year from the reclassification to this item of assets or their group (and the associated liabilities).

The assets (and associated liabilities) related to the subsidiary where it is planned that the dominant

influence will be lost, they need to be classified under a group of assets (and associated liabilities) for

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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 a disposal group are measured at the lower of book value or fair

value less costs to sell.

INVENTORIES

Inventories of raw materials and consumable are disclosed at the lower of cost and net realisable

value and are used according to the weighted average cost formula. 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 goods and partly-finished goods 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).

Inventories of raw materials, materials, spare parts, products and merchandise are written off on

the basis of inventory records, complaint and commission records or upon a proposal of a responsible

person (also damaged products, ullage and fracture) that requires the decision of the management of

the company. The inventories need to be written off in full if the sale is discontinued for ever or its 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

At initial recognition, operating receivables are recognised at fair value and are later measured on the

basis of amortised cost using the effective interest rate method less impairment.

Impairment of an individual receivable is formed when there is objective evidence that the entire

amount cannot be recovered. The impairment amount represents the difference between the book

value and the current value of (expected) estimated future cash flows discounted by the effective inter-

est rate. The impairment amount is immediately recognised in profit or loss.

CASH AND CASH EQUIVALENTS

For the cash flow statement, cash and cash equivalents comprise cash on hand, sight deposits at

banks and investments into the money market instruments without bank overdrafts. Bank overdrafts

are included under short-term financial liabilities in the balance sheet.

SHARE CAPITAL

Ordinary shares are classified under capital. Transaction costs directly associated with the issue of

new shares which are not connected to the acquisition of a company are shown as a decrease in capital.

Any 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.

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OWN SHARES

If the Group reacquired its own shares in the financial, the paid amount inclusive of transaction

costs and exclusive of tax is deducted from total capital as own shares (treasury shares) until these

shares are removed, reissued or sold. The Group needs to form reserves for own shares in the identical

amount for that financial year. Reserves for own shares are released when the Company disposes of

its own shares or removes them, crediting the source from which they were formed. Upon the sale of

such shares, the difference between the sale and book value of own shares is directly calculated into

equity capital and has no effect on profit or loss. Own shares is used for the purposes defined in Article

247 of the Companies Act.

DIVIDENDS

Foreseen dividends are treated as retained earnings until approved by the General Meeting of Share-

holders.

PROVISIONS

Provisions are recognised when the Group shows a legal obligation as a result of past transactions for

which a probable likelihood exists in the future that it will have to settle the liability and when a reliable

estimate of the liability can be made. Provisions may not be formed to cover future losses from operations.

The amount of the provision recognised 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 uncer-

tainties. If the provision is measured at the level of future cash flows and the time value of money is

important, the amount is discounted to the current value

The net liabilities of the Group in connection to long-term benefits for years of service, except for

pension schemes, are the earnings which employees obtain in exchange for their service during cur-

rent and previous periods. Such liabilities are calculated using the method of foreseen significance of

units and are discounted to their current values.

OPERATING LIABILITIES

Operating liabilities comprise credit to suppliers for purchased merchandise or services and liabili-

ties to employees, the state, owners or others. Liabilities are recognised if it is likely that due to their

settlement the factors enabling economic benefit will decrease and the amount for settlement can reli-

ably be measured. They are initially recognised at fair value, and later measured according to realised

payments using effective interest rates.

FINANCIAL LIABILITIES

Financial liabilities are recognised at fair value upon their arising, exclusive of any arising transac-

tion costs. In subsequent periods, financial liabilities are measured according to their realised payment

using effective interest rates. Any difference between receipts (exclusive of transaction costs) and li-

abilities are recognised in profit or loss throughout the entire period of the financial liability.

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DISCONTINUED OPERATIONS

A discontinued operation is a component of a group 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 co-ordinated plan to dispose of a separate major line of business or geographical

area of operations or

• is a subsidiary acquired exclusively with a view to resale.

CORPORATE TAX

The amount of corporate tax in the statement of comprehensive income represents the amount of

current and deferred tax.

Current tax is calculated on the basis of taxable profit of the current year. In the statement of compre-

hensive income, taxable profit can differ from profit before taxes by income and expense items taxed

or fiscally recognised in other taxable periods or income and expense items that will never be taxed or

fiscally recognised. Current corporate tax is calculated using the 18-percent tax rate in 2012, 17-percent

tax rate in 2013, 16-percent in 2014 and 15-percent from 2015 on for companies with the registered office

in Slovenia. The tax rate in Croatia where the registered office of Laško Grupa, Zagreb, is located equals

20 % whereas in Kosovo (registered office of the Birra Peja Company) the tax rate of the corporate tax

equals 10 %.

DEFERRED TAX RECEIVABLES AND LIABILITIES

Deferred taxes are shown in their entirety while observing liability methods based on temporary dif-

ferences between taxes associated with 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 level of such temporary differences that are ex-

pected to be used based on sufficient taxable profits. Deferred tax is calculated using the tax rate (and

legislation) as prescribed by law in force on the balance sheet date which is expected to be used at the

time the deferred tax is realised or liability for deferred tax settled.

Deferred tax receivables are verified when annual accounts are drawn up and are recognised to the

extent that it is probable that taxable profit will be available against which the deductible temporary

difference can be utilised.

Current and deferred taxes are recognised in profit or loss except when they refer to the items rec-

ognised in other comprehensive income or directly in equity; in such cases the current and deferred

taxes are recognised in other comprehensive income or directly in equity.

SEGMENT REPORTING

Business segments are products or services which on the basis of risk and benefits, differ from the

products and services of other segments. Regional (geographic) segments comprise products or ser-

vices within a specific economic environment which are exposed to risk and benefits which differ from

risk and benefits in other economic environments.

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4.4.

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Fin

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All intangible assets are measured according to the cost model. The brand names and goodwill items

represent the largest value amongst long-term intangible fixed assets; the value of each is every year

assessed and the possible need for impairment determined.

Verification of the fair values of the brands was performed on 31 December 2012. Verification of the

fair value of the Delo brands was performed by a certified business appraiser registered with the Slove-

nian Institute of Auditors. The method of the current value of expected free cash flows excluding debt

was used in assessing the value of the company.

Based on the valuation of the Delo Company in 2012, the Group disclosed impairment of the Delo

brands amounting to EUR 8,489,280 in its consolidated financial statements. As at 31 December 2012,

the value of Delo brands amounted to EUR 10,188,094.

The basis for verifying the need for impairment of the value of the brands and goodwill of Pivovarna

Union was the management’s assessment based on the assessment of the company’s value performed

by a certified business appraiser in 2010 and the business results in 2012 and envisaged projections of

the value of the Company in the coming years. As at 31 December 2012, the value of Pivovarna Union

brands amounted to EUR 46,461,058 and value of its goodwill EUR 17,197,380.

BRAND PLEDGING

In order to secure its loan with banks, the controlling company, Pivovarna Laško, pledged a part

of its brands in the amount of EUR 50,000,000 that are a portion of the assets of the Group and in

accordance with the accounting standards, own brands are not disclosed in the financial statements.

The brands of the parent company Pivovarna Laško were appraised by a certified business appraiser

in 2010. The brands of the Pivovarna Union and Delo subsidiaries have been pledged also within the

scope of pledges on the investments in these companies.

ESTIMATED VALUE OF DELO, D. D., LJUBLJANA

The valuation of Delo which also included the assessment of its brand value was carried out by a

certified business valuator registered with the Slovenian Institute of Auditing.

The most important elements and findings during the valuation procedure are:

• The subject of the valuation was the majority stake of the company (80.83%) enabling the majority

owner to impact the process of adopting decisions by the management bodies as well as to impact

the formulation of strategy and business decisions (on investments, borrowing and so on). The

majority owner may also implement status changes;

• The company’s market value equals the current value of expected free cash flows since in accord-

ance with a general financial assumption the company’s value equals the sum of all future benefits

which it brings to its owner(s);

• The »method of the current value of expected free cash flows excluding debt« was used in assessing

the value of the company. With this method, the current value of expected free cash flows without

payment of interest and principal (value of total capital) is assessed first; afterwards all financial li-

abilities of the company are deducted due to revaluation of the subject, i.e. the equity capital of the

company. The value obtained in this way is additionally adjusted for possible potential liabilities,

premiums and discounts;

• The valuator also attempted to use the method of comparable companies and comparable trans-

actions. The companies and transactions used are not comparable enough in terms of size (the

LA

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166

benchmark company is significantly larger) and scope of activities (in addition to the publication of

newspapers, the company is also involved in publishing and other media) which consequently has

an affect on both the profitability and financial position of the company. As a result, this method

was merely used as a control method.

• The valuator used assessments of operations in 2012 and the 2013 Business Plan of Delo. In esti-

mating future returns, the valuator took the company’s potential into account, determined on the

basis of past operations of the company and analyses of its activities. The appraisal envisaged two

scenarios of company operations in the future (optimistic and pessimistic) which differ in terms

of envisaged net sales revenues and operating costs, and consequently the EBIT and EBIT margin.

Based on all the said assumptions, the recoverable value of the 80.83% equity stake in Delo on 31 De-

cember 2012 was assessed for the purpose of verifying impairment in accordance with IAS 36, which

is identical to the value if used, namely: EUR 20,286,554 or EUR 37.60 per share.

LA

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31 D

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2 34

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31 D

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52

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8 43

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26,6

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52

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82

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45

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Compared to the last day of 2011, the value of tangible fixed assets of the Group increased by EUR

13,770,274, which is mainly the consequence of the integration of the Birra Peja Group in consolida-

tion. The value of tangible fixed assets of the Birra Peja Group included into the consolidation as of 1

January 2012 amounts to EUR 23,388,835. In 2012, the Group spent EUR 10,400,442 on investments,

which is by EUR 8,887,207 or 46% less than depreciation made.

Disposals of items of property, plant and equipment are represented by the sales and write-offs of

tangible fixed assets. The Group holds fixed assets under a finance lease amounting to EUR 239,341.

The Group uses revaluation model to value property whereas equipment and small tools are valued

using the purchase value model. As of 31 December 2012, the property was not assessed.

The sales of tangible fixed assets generated profit of EUR 57,497 to the Group that is disclosed as

revalued operating revenues and loss of EUR 161,523 disclosed as revalued operating expenses.

To secure long-term and short-term loans, the Group pledged tangible fixed assets whose current

value as of 31 December 2012 amounts to EUR 127,483,909. The book value of pledged property totals

EUR 106,678,853 and the book value of pledged equipment equals EUR 20,805,056. As of 31 Decem-

ber 2012, the Group discloses liabilities for the purchase of tangible fixed assets in the amount of EUR

1,026,353.

3. INVESTMENT PROPERTY

Year 2012

(in EUR) Land Buildings Total

PURCHASE VALUE

1 January 2012 1,214,099 8,861,531 10,075,630

Transfer from tangible

fixed assets 36,335 592,821 629,156

Revaluation - reinforcement /

impairment (90,145) (115,060) (205,205)

Disposal (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

NABRANI POPRAVEK VREDNOSTI

1 January 2012 - 957,927 957,927

Depreciation - 408 408

Disposal - (310,715) (310,715)

Transfer from tangible fixed assets - 243,220 243,220

31 December 2012 - 890,840 890,840

CURRENT VALUE

31 December 2012 776,343 6,422,690 7,199,033

1 January 2012 1,214,099 7,903,604 9,117,703

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Year 2011


PURCHASE VALUE

1 January 2012 1,090,980 4,494,245 5,585,225

Revaluation - reinforcement

/ impairment 123,119 1,635,281 1,758,400

Transfer of equipment froma 2010 - (414,962) (414,962)

Adjustment of transfer

from TFA from 2010 - 123,484 123,484

Requalification - transfer

from assets held for sale) - 2,943,324 2,943,324

Transfer from/to non-

current assets held for sale - DELO - 80,159 80,159

31 December 2011 1,214,099 8,861,531 10,075,630

CUMMULATIVE VALUE ADJUSTMENT

1 January 2011 - 928,741 928,741

Depreciation - 404 404

Transfer of adjustments

of equipment value - (213,313) (213,313)

Requalification

(transfer from assets held for sale) - 240,613 240,613

Transfer from/tp non-current

assets held for sale - DELO - 1,482 1,482

31 December 2011 - 957,927 957,927

CURRENT VALUE

31 December 2011 1,214,099 7,903,604 9,117,703

1 January 2011 1,090,980 3,565,504 4,656,484

Investment property also includes property which is not used for carrying out the basic activity but

leased out by the Group. The Tri Lilije sports arena and catering facility (Hotel Hume), holiday facilities

and the office building in Radenci and premises in Boračeva, Petanjci and Sarajevo are all recorded as

investment property.

Investment property is measured at fair value. As of 31 December 2012, the office building in Raden-

ci was assessed by the certified business valuator and the assessed value equals EUR 911,253. The fair

value of other investment property was verified by the management of the Group.

Based on investment property the Group generated EUR 205,048 of revenues and EUR 1,030,312

of expenses.

With regard to the holiday accommodation capacities in Croatia (holiday Centre in Ičići and holiday

apartments in Barbariga) the activities for their entry into the land registry are in progress. This is

presented in more detail in Chapter 4.4.10 (Potential liabilities)

In 2012, the sales processes of the following property continued: the Tri Lilije sports arena and ca-

tering facilities (Hotel Hum and Hotel Savinja), holiday facilities and the office building in Radenci

and property in Boračeva. The sale of Hotel Savinja and the property in Beračeva were successful. The

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result of the sale of Hotel Savinja was loss amounting to EUR 176,653 and of the sale of the property

in Boračeva loss equalling EUR 631,339. The activities of the sale of investment property continue. The

companies will be selling the property not critical for the operations to ensure the solvency.

The investment property totalling EUR 5,588,351 are pledged to secure long- and short-term loans

from the banks.

4. LONG-TERM FINANCIAL INVESTMENT

4. A. LONG-TERM FINANCIAL INVESTMENTS INTO SUBSIDIARIES

Stake

(in EUR) in capital 2012 2011

STAKES IN THE COMPANIES IN THE GROUP

In Slovenia:

Radenska Miral, d. o. o., Radenci 100.00% 182,589 160,363

Firma Del, d. o. o., Laško 100.00% 7,427 7,427

190,016 167,790

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% 232,240 191,856

237,397 197,013

Total 427,413 364,803

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DATA ON THE SUBSIDIARY COMPANIES

Percentage Value profit/ Activity Country of participation of total loss (in EUR) of the Company of the company in capital capital in 2012

Subsidiaries

Radenska, d. d., beverage

Radenci production Slovenia 82.058% 71,009,842 (3,984,133)

Union Group production of beer Slovenia 97.922% 87,254,129 (3,640,467)

and beverages

Vital Mestinje, d. o. o. beverage

production Slovenia 96.920% 3,457,414 91,199

Delo Group newspaper and Slovenia 80.834% 15,672,659 (2,089,603)

publishing activities

Firma Del, d. o. o.,

Laško beer production Slovenia 100.000% 35,280 961

Jadranska Pivovara

- Split, d. d. beer production Croatia 99.460% (4,873,317) (3,764,764)

Laško Grupa, d. o. o., trade

Zagreb intermediary Croatia 100.000% 25,097 32,200

Laško Grupa, d. o. o., trade

Sarajevo intermediary BiH 100.000% 312,997 24,333

In accordance with IAS 27, the Group valuates long-term financial investments in the subsidiaries

according to the cost model

Due to insignificance and because the costs of the consolidation process would exceed the benefits,

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 consolidated using the full consolidation method.

Long-term financial investments into subsidiaries increased by EUR 62,610 in 2012 due to the rever-

sal of impairment of the company Radenska Miral, Radenci and due to the purchase of a 17.32% stake

of the Fructal Group in the company Laško Grupa, d. o. o., Sarajevo, that after the purchase is 100%

owned by the Laško group.

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4. B. LONG-TERM FINANCIAL INVESTMENTS INTO ASSOCIATED COMPANIES

DATA ON THE ASSOCIATED COMPANIES

Percentage Value profit/ Activity Country of participation of total loss (in EUR) of the Company of the company in capital capital in 2012

Associate company

Thermana, d. d., spa and hotel

Laško activities and of simlar Slovenia 20.630% 27,519,581 (1,051,155)

accomodation facilities

Investments into associated companies are measured according to the equity method. The value of

investments either increases or decreases depending on the profit or loss. Revaluation to higher fair

value in accordance with IFRS is not recognised. Fair value of the investments traded in on a regulated

market is established on the basis of the share prices at the Ljubljana Stock Exchange whereas with

other investments the fair value is established based on assessments.

As of 31 December 2012, the Group discloses the investment into a 20.63% stake in the Thermana

Company (645,003 shares) and into a 29.22% stake in Slopak, d.o.o, Ljubljana, under long-term in-

vestments into associated companies. Based on the assessments performed in the previous years, the

value of both investments on 31 December 2012 amounts to zero. On 31 December 2012, the assess-

ment was not conducted because the assumptions that were the basis of the assessment in previous

years did not change in 2012.

INVESTMENT INTO AN ASSOCIATED COMPANY, THERMANA, D. D.

On 31 December 2012, the Group owned 645,003 shares of Thermana representing a 20.63% owner-

ship stake in the aforementioned company. The original purchase value of the investment amounted

to EUR 6,897,921. Based on the assessment, the Group impaired the investment in 2009 totalling

EUR 5,303,921 and in 2010 the investment was further impaired totalling EUR 1,594,000. The impair-

ment was recognised in 2009. At the same time, Thermana contracted additional debts in 2010 that

negatively affected cash flows in the years that followed. In 2012, Thermana generated net loss of EUR

1,051,155. As of 31 December 2012, total assets of Thermana amount to EUR 78,498,227 and total liabili-

ties equal EUR 50,830,278. The ration between foreign and own assets equals 65 : 35.

In 2010, the Management issued a mandate for the organisation of 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 procedure for acquiring the consent of subscribers was carried out

in February 2011. On 28 February 2011, the agreement was signed and coordinated by NLB, Pivovarna

Laško, and Zavarovalnica Triglav that together represent a 44.85% ownership stake in Thermana. Co-

ordinating activities with the remaining potential signers of the agreement on the implementation of

sales of shares continued in 2011.

Pivovarna Laško signed the Agreement on the joint sale of shares of the Thermana Company (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 De-

cember, a public invitation together with a teaser was sent to over 100 funds and 100 companies from

the sector.

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Further discussions were held with potential buyers in 2012. Nobody expressed the intention to buy

and this is why 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, D. O. O., LJUBLJANA

As of 31 December 2012, the Group owns 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. FINANCIAL ASSETS AVAILABLE FOR SALE

(in EUR) 2012 2011

Other investments inshares and stakes at purchase value 773,181 796,053

Other investments inshares and stakes at fair value 476,462 443,510

Total 1,249,643 1,239,563

MOVEMENT OF FINANCIAL ASSETS AVAILABLE FOR SALE

(in EUR) 2012 2011

Balance 1 January 1,239,563 718,449

Changes during the year:

Acquisition - 195,167

Revaluation 31,150 (250,896)

Sale (21,070) (189)

Transfer to non-current assets held for sale - DELO - 577,032

Balance 31 December 1,249,643 1,239,563

Compared to the previous year, the value of financial assets available for sale increased by EUR 31.150

due to revaluations and decreased by EUR 21,o7o due to sold financial assets.

5. LONG-TERM LOANS GRANTED

(in EUR) 2012 2011

Long-term loans to associated companies - 10,554,498

Other long-term loans 436,335 524,612

Long-term loans to Infond Holding and Center naložbe 17,100,000 17,100,000

Less value adjustment (17,100,000) (17,100,000)

Total 436,335 11,079,110

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Compared to the previous year, long-term loans granted decreased by EUR 10,642,775 mainly due

to the integration of the Birra Peja Group into consolidation. In 2011, the Birra Peja Company was

regarded as an associated company.

Other long-terms loans primarily refer to long-term housing loans granted by the Group to its em-

ployees. The interest rate on average equals a 6-month EURIBOR + 1%. The repayment period is 20

years. In 2012, the Group did not grant any new loans.

Also the loans granted by Radenska and Pivovarna Union to the Center naložbe Company in the

past amounting to EUR 17,000,000 are disclosed under long-term loans. These were fully impaired

in 2009.

6. LONG-TERM FINANCIAL LEASE RECEIVABLES

(in EUR) 2012 2011

Long-term financial lease receivables 421,340 751,266

Total 421,340 751,266

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 2012 amounted to EUR 421,340. The financial lease receivables

mature on 15 October 2015.

7. LONG-TERM DEFERRED TAX RECEIVABLES

(in EUR) 2012 2011

Long-term deferred tax receivables 39,375,942 46,472,483

Long-term deferred tax liabilities (15,472,483) (15,770,226)

Net long-term deferred tax receivables 23,903,459 30,702,257

Long-term deferred tax receivables and liabilities are calculated on the basis of temporary differences

by using the liability method and by applying the tax rates from 17% to 15%.

As of 31 December 2012, the Group discloses long-term deferred tax liability amounting to EUR

23,903,459, which is by EUR 6,798,798 less than in the previous year. Long-term deferred tax re-

ceivables decreased mainly because of recalculation of receivables due to the conversion to new, lower

corporate tax rates, namely from 20% in 2011 gradually to 15% in 2015.

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MOVEMENT OF LONG-TERM DEFERRED TAX RECEIVABLES

Fair valuet

Liabilities to (financial

(in EUR) Provisions the employees assets) Other Total

DEFERRED TAX RECEIVABLES

1 January 2011 32,458 996,529 41,101,565 981,193 43,111,745

Change in profit or loss (38,391) (13,295) 3,246,240 706,435 3,900,989

Change in statement

of comprehensive income - - (858,381) - (858,381)

Changes in capital - - (53,445) - (53,445)

Adjustment with the exclusion

due to the sale of FRAG 95,576 21,950 - 254,049 371,575

31 December 2011 89,643 1,005,184 43,435,979 1,941,677 46,472,483

Change in profit or loss (39,665) (238,907) (6,485,745) (282,110) (7,046,427)

Change in statement of

comprehensive income - - (50,114) - (50,114)

31 December 2012 49,978 766,277 36,900,120 1,659,567 39,375,942

As of 31 December 2012, deferred tax liabilities are disclosed related to financial investment impair-

ment amounting to EUR 36,900,120, related to the employees, severance grants, jubilee awards and

untaken leave in the amount of EUR 766, 277 and related to provisions in the amount of EUR 49,978

and other liabilities of EUR 1,659,567.

The tax loss receivable from Jadranska Pivovara amounting to EUR 32,009,171 was not disclosed

under long-term deferred tax receivables since the subsidiary does not expect and taxable revenues

in this respect. Taking into account the 20% tax rate, the deferred tax receivable would amount EUR

6,401,834.

Long-term deferred tax receivables reflected in profit or loss decreased by EUR 7,046,427 compared

to the previous year. Deferred tax receivables related to the financial investment impairment disclosed

in 2012 increased by EUR 12,639,399 whereas due to the conversion to lower tax rates they decreased

by EUR 19,125,144.

Also deferred tax receivables related to the liabilities to the employees reduced by EUR 238,907 as

well as provisions that decreased by EUR 30,665 and formed tax losses in the amount of EUR 282,110.

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MOVEMENT OF LONG-TERM DEFERRED TAX LIABILITIES

Fair value Fair value Fair value

(land, (financial (brand

(in EUR) buildings) assets) names) Other Total

DEFERRED TAX LIABILITIES

1 January 2011 3,473,868 71,464 9,292,212 154,923 12,992,467

Change in profit or loss 20,100 - (4,685,069) 272,715 (4,392,254)

Change in statement

of comprehensive income 703,189 (73,012) - - 630,177

Changes in capital (34,248) - - - (34,248)

Transfer from non-current

assets held for sale - DELO - - 4,085,836 - 4,085,836

Adjustment with the exclusion

due to the sale of FRAG 18,992 2,285 2,466,967 - 2,488,244

31 December 2011 4,181,901 737 11,159,946 427,638 15,770,222

Change in profit or loss (62,718) - (1,103,630) 40,725 (1,125,623)

Change in statement

of comprehensive income 828,662 (737) - - 827,925

Change in capital (41) - - - (41)

31 December 2012 4,947,804 - 10,056,316 468,363 15,472,483

As of 31 December 2012, long-term deferred tax liability totals EUR 15,472,483 and refers to the

revaluation of the brands of Pivovarna Union in the amount of EUR 9,292,212 and of the Delo Com-

pany equalling EUR 764,104, and to the revaluation of the property of the Group amounting to EUR

4,947,804. In the statement of financial position, long-term deferred tax liabilities are decreased by

long-term deferred tax receivables.

8. NON-CURRENT ASSETS HELD FOR SALE

(in EUR) 2012 2011

Property held for sale 770,939 770,939

Other non-current assets held for sale 5,800,000 8,190,000

Total 6,570,939 8,960,939

As of 31 December 2012, the value of non-current assets held for sale equals EUR 6,570,939. The

disclosed investments into ČZP Večer amounting to EUR 5,800,000 and into the business-storage

premises in Ljubljana equalling EUR 770.939 are also included under non-current assets held for sale

due to the planned sale in 2013.

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FINANCIAL INVESTMENT INTO VEČER, D. D., MARIBOR

A) PROCESS OF A SALE OF A 79.243% STAKE IN VEČER, D. D., MARIBOR

The Delo Company acquired a 59.25% stake in the company ČZP Večer in 2008, thus becoming the

79.237% owner of the aforementioned company. Delo does not have voting rights from the ownership

of ČZP Večer shares surpassing 19.9% due to Article 44 of the Prevention of Money Laundering Act

therefore this investment is not included in the consolidation.

With the decision of 23 September 2009, the Competition Protection Office requested from the Delo

Company to finally dispose of the shares of the Večer Company to eliminate the effects of the prohib-

ited concentration. Initially, the deadline for the enforcement of the decision was one year; however, it

can be extended upon a written request by the Delo Company.

On 16 December 2012, the buyer, 3Lan informed the seller, Delo prior to the completion of the

transaction that 3Lan withdrew from the contract. After the failure to continue the sale process, the

Committee for the sale of the Večer Company, adopted a decision on 24 January 2012 that the sale

process including 3Lan had failed. The Competition Protection Office was notified and asked in writ-

ing to extend the deadline for the sale of shares and at the same time the Delo Company committed to

publish an international tender for the sale of the shares not later than 15 March 2013. The Competition

Protection Office adopted a decision on 27 February 2012 to extend the deadline for the disposal of the

shares of Večer up and including 31 December 2012.

On 15 March 2012, the newspapers, 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 offer to purchase the shares of the Večer Company had been received until the deadline

(7 May 2012).

In October 2012, a due diligence exercise of the Večer Company was carried by one of the potential

buyers and the presentation of the management. The negotiations are under the way to conclude a

sales contract with one of the buyers. Since it was not possible to sell the shares of Večer until 31 De-

cember 2012, we asked the Competition Protection Agency to extend the deadline. It was extended to

31 March 2013.

B) ASSESSMENT OF THE VALUE OF INVESTMENT INTO THE SHARES OF ČZP VEČER, D. D.

The assessment of the investment into ČZP Večer was conducted by a certified property valuator

registered with the Slovenian Institute of Auditing from the P&S Company.

The most important elements and findings during the valuation procedure are:

• The company’s market value equals the current value of expected free cash flows since from financial

perspective the company’s value equals the sum of all future benefits which it brings to its owner(s);







• When making projections, the valuator used assessments of operations of ČZP Večer for 2012. In

estimating future returns, the appraiser took the company’s potential into account, determined on

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the basis of past operations of the company and analyses of its activities. The appraisal envisaged

two scenarios of company operations in the future (optimistic and pessimistic) which differ in terms


Based on the method of expected free cash flows and all the listed assumptions, the fair value is

reduced by the cost of sale. Thus the value of 79.24% stake as at 31 December 2012 in the ČZP Večer

Company amounts to EUR 5,800,000 or EUR 28.60 per share.

Based on the valuation, impairment of EUR 2,390,000 was disclosed.

9. INVENTORIES

(in EUR) 2012 2011

Materials and raw materials 14,975,622 13,600,208

Work in progress 2,457,754 2,232,780

Products 6,358,201 5,783,876

Merchandise 495,621 463,050

Total 24,287,198 22,079,914

The value of inventories increased by EUR 2,207,284 or 20% compared to the previous year, which

is the result of the integration of the Birra Peja group into consolidation. The book value does not ex-

ceed the realisable value of the inventories.

In 2012, inventory value adjustment was formed totalling EUR 40,373 due to the write-off of obsolete

inventories.

INVENTORY SURPLUSES AND DEFICITS

(in EUR) 2012 2011

Inventory surpluses 29,705 93,904

Inventory deficits 84,583 90,089

The regular inventory taking establishes inventory surpluses amounting to EUR 29,705 and deficits

amounting to EUR 84,583.

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10. A. SHORT-TERM OPERATING RECEIVABLES

(in EUR) 2012 2011

Short-term trade receivables:

on domestic market 46,453,732 44,186,763

on foreign market 3,391,475 5,693,121


Total 43,607,075 43,591,523

Short-term operating receivables to others 5,832,023 3,984,057

Advances 454,124 984,265


Balance of receivables as of 31.12.2012 46,897,886 46,730,029

As of 31 December 2012, the Group discloses short-term operating receivables of EUR 46,897,886,

which is approximately at the same level as in the previous year.

Disclosed value of all short-term operating and other liabilities reflects fair value.

SHORT-TERM OPERATING VALUE ADJUSTMENT

(in EUR) 2012 2011

Balance as of 1 January 6,288,361 5,109,114

Recovered written-off receivables (148,748) (332,812)

Final write-off of receivables (529,577) (620,985)

Value adjustments during the year 647,639 664,199

Increased value adjustment during the year (38,960) -

Trensfer to financing receivables - (476,678)

Other 19,417 -

Total 6,238,132 4,342,838

Transfer from / to non-current assets held for sale - SPLIT - 1,125,738

PTransfer from / to non-current assets held for sale - DELO - 819,785

Balance as of 31 December 6,238,132 6,288,361

Compared to the last day in 2011, value adjustments of operating receivables from trade customers

in 2012 did not change considerably. They increased due to new adjustments in the amount of EUR

647,639 and decreased on account of write-offs in the amount of EUR 529,577 and the amounts recov-

ered based on legal action in the amount of 148,748.

Trade receivables are secured by the guarantees, sureties and mortgages received equalling EUR

9,592,500.

As of 31 December 2012, the loans received by the Group are secured by trade receivables in the

amount of EUR 20,303,000.

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10. B. SHORT-TERM RECEIVABLES FOR EXCESS CORPORATE TAX PAYMENT

(in EUR) 2012 2011

Receivables for excess corporate tax payment 1,329,252 407,636

Total 1,329,252 407,636

Short-term receivables for excess corporate tax payment refer mainly to overpaid tax advance pay-

ment calculated on the basis of the liabilities of the Union Group for 2011. As of 31 December 2011,

the liabilities of the Union Group concerning tax payment amounted to EUR 2,956,693 and as of 31

December 2012 EUR 1,319,252.

11. SHORT-TERM FINANCIAL ASSETS AVAILABLE FOR SALE

(in EUR) 2012 2011

Short-term finnacial assets available for sale - fair value 100,954,761 129,248,379

Short-term finnacial assets available for sale - purchase value 11,675,391 14,023,419

Total 112,630,152 143,271,798

On the last day of 2012, the value of short-term financial assets available for sale equals EUR

112,630,152. These assets decreased by EUR 30,641,646 compared to the previous year. The decrease is

the result of investment impairment.

The Group discloses the following investments under financial assets available for sale: investment

into Poslovni sistem Mercator (23.34%) amounting to EUR 100,187,760 (stock exchange price as of

31 December 2012 was EUR 114.00), investment into shares of Elektro Maribor amounting to EUR

6,728,124 (5.74 %), investment into shares of Probanka amounting to EUR 767,001 (6.27%), invest-

ment into shares of Premogovnik Velenje amounting to EUR 4,000,000 (7.09%), investment into

shares of Elektro Gorenjska amounting to EUR 947,268 EUR (1.6%) and the investment into shares of

Ceste mostovi Celje (5.49%) whose value equalled zero on the date of impairment – 31 December 2012.

In the Ceste mostovi Celje Company the bankruptcy procedure was initiated last year.

1. FINANCIAL INVESTMENT INTO POSLOVNI SISTEM MERCATOR, D. D., LJUBLJANA

As at 31 December 2012, the Group was the owner of 878,840 MELR shares or 23.34% 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 114 per share on 31 December 2012, amounts to EUR 100,187,760.

The management estimates that it does not have significant influence in Poslovni sistem Mercator and

for this reason this investment is no longer valued with the equity method of accounting.

Fair value of this investment as of 31 December 2012 was by EUR 46,069,144 lower compared to the

purchase value of EUR 146,256,904 or EUR 166.42 per share. According to the unsuccessful attempt

to sell the MELR shares the Management estimates that the decrease in the stock exchange price indi-

cates permanent impairment and therefore a decision was made to disclose them as financial expense.

In 2012, the impairment of the MELR shares is disclosed as financial expense in the amount of EUR

29,001,753.

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PROCEDURES IN A SALE OF A 23.43% STAKE IN PS MERCATOR, D. D., LJUBLJANA

Following unsuccessful discussions with banks, the Supervisory Board of Pivovarna Laško instruct-

ed the Management Board to implement the public sale of the MELR shares. A contract on consulta-

tion for the sale was signed with NLB on 3 February 20111. A call for tender for the sale of the 23.43%

stake in PS Mercator owned by the Laško Group was published on 4 February 2011. The tender fixed

the deadline for the submission of binding offers, namely 9 March 2011.

In parallel with the public offering, negotiations with the financial fund, Mid Europa Partners Ltd,

United Kingdom were held in February. Three offers were received by 9 March 2011 from: Mid Eura

UK, Agrokor HR and Warburg Pincus US. The deadline for a decision on the sale of the Mercator

Company was specified as 15 April 2011, which was later extended to 30 April 2011. The offer for the

purchase of a 23.34% stake of MELR was extended by Agrokor to 4 May 2011. On 26 April 2011, the

Company received the decision of the Competition Protection Office no. 306-29/2011-4, which prohib-

its companies from the Laško Group from disposing of MELR shares without the prior approval of the

CPO. The very same day, an action by the companies Pivovarna Laško, Pivovarna Union and Radenska,

Radenci was brought before the Supreme Court against the CPO decision and an application for sus-

pension of the operation of the contested decision was lodged. On 29 April 2011, the Supreme Court of

the Republic of Slovenia in its decision N. G 23/2011-11 rejected the proposal for the issue of a tempo-

rary order to postpone the enforcement of the contested CPO decision.

The Supervisory Board of Pivovarna Laško held on 4 May 2011 adopted the decision: »The Supervi-

sory Board agrees that the offer of the Agrokor Company cannot be accepted because due to the deci-

sion of the Competition Protection Office of 26 April 2011 No 306-29/2011-4 in the case related to the

evaluation of the compatibility of the concentration and the decision on the rejection of the temporary

order of the Supreme Court of 29 April 2011 (reg. No. G 23/2011-11) due to the annulment of the deci-

sion of the defendant No 306-29/2011-4 dating 26 April 2011 with regard to the issue of the interim

measure, the Laško Group cannot dispose of the MELR shares.«

Procedures related to the signing of the Agreement on the Joint Sale of Mercator were carried out

in June 2011. The agreement of the companies in the Laško Group was signed on 8 June 2011. The

companies of the Laško Group, Pivovarna Laško, Pivovarna Union, and Radenska together with Nova

Ljubljanska banka, Abanka Vipa, NFD Holding, NFD, Gorenjska banka, Nova kreditna banka Maribor,

Hypo Alpe-Adria-bank and Banka Celje concluded an agreement on a joint sale of the Mercator shares

that entered into force on 15 June 2011. These contractual parties or the signatories of the agreement

are the owner of 1,883,826 MELR shares of the Mercator Company representing a 50.03% stake in

the share capital of Mercator. The agreement on a joint sale of shares was concluded for a period of

12 months and involves a possibility of its renewal. In the Agreement, the sellers agreed that the sales

procedure of the 50.03% stake in Mercator would be conducted in cooperation with a financial advisor

who will be specified by the contractual parties in accordance with the agreement. In July, a financial

adviser for the sale of the investment was selected, namely the ING Company from London and Banka

Koper also entered the agreement. Thus the stake increased to 52.10%.

At the extraordinary General Meeting of Shareholders of Pivovarna Laško held on 30 July 2011, a

consent was given to enter into a contract of agency in accordance with Article 47 of the Takeovers Act,

namely due to the acquisition intention published by the KS Naložbe Company. The financial advisor

presented the consortium of sellers with the received offers on 19 October 2011. Four non-binding of-

fers were presented, one of them from a strategic tenderer. The consortium of sellers signed a contract

with the only strategic bidder on 7 November 2011, which gives the bidder exclusive treatment for a

contractually specified period. On 16 December 2011, the SPA was approved by all members of the

consortium except by the companies of the Laško Group and NLB. The Supervisory Board of Pivovarna

Laško postponed the decision on the SPA due to the acquisition intention concerning Pivovarna Laško

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by the American company Eatons Capital from Las Vegas. On 22 December 2011, the Securities Market

Agency took the view that the acquisition intention of Eatons Capital was invalid. On the same day, the

acquisition intention concerning Pivovarna Laško was published by Poslovni sistem Mercator.

On 27 December 2011, the Supervisory Board of Pivovarna Laško took note of the acquisition inten-

tion of the Mercator Company and took a decision to further support the continuation of the procedure

of a sale of the Mercator shares and to put the topic of a consent to the procedure of a sale on the

agenda of the General Meeting in accordance with Article 47 of the Companies Act. On 29 December

2011, the convocation of a general meeting was published. The date was 30 January 2012. Based on

Article 47 of the Takeover Act the decision concerning the consent to the sale of the shares of Merca-

tor to Agrokor was on the agenda. The exclusive treatment of Agrokor in the negotiations was also

prolonged. At its meeting of 27 January 2012, the Supervisory Board took note of the content of the

contract of sale of the shares of Poslovni sistem Mercator and agreed with the sale contract and invited

the Management Board to reduce risks related to the non-implementation of the contract in the con-

tinuation of the negotiations.

At its meeting on 27 January 2012, the Supervisory Board of Pivovarna Laško gave its approval to the


Agrokor Company at a price of EUR 221 that can be changed as envisaged by the sales mechanism de-

fined in the sales contract. The approval to the sale of 464,390 shares or a 12.33% stake of the Mercator

Company owned by Pivovarna Union to the Agrokor Company was also given by the General Meeting

of shareholders of Pivovarna Union on 31 January 2012. In order to sell 96,952 shares or a 2.57% stake

of the Mercator Company owned by Radenska, the approval of the Supervisory Board of Radenska was

not necessary.

On 7 February 2012, the members of the consortium of sellers were submitted the information by

the consultant, ING bank, that the Agrokor Company withdrew from the sales process.

Based on the adopted strategy for 2012, the companies of the Laško Group continued the activities

to sell the 23.34% stake in Mercator. Thus, the companies of the Laško Group and other parties in-

terested in the joint sale of the Mercator shares (hereinafter: the sellers) concluded a new agreement

on a joint sale at the end of October 2012. The agreement was signed by the sellers who are together

the majority owner of shares in Mercator. In November 2012, ING bank as the intermediary started

the sales process. In December 2012, the sellers, ING bank and Mercator coordinated and signed ad-

equate documents. The implementers of the due diligence exercise were selected and the due diligence

started. The publication of the teaser indicated the start of the sale of Mercator. The continuation of

the sales of the Mercator shares in 2013 is presented in this report, chapter 2.13 – Events after the end

of the accounting period.

2. IMPAIRMENTS OF THE AVAILABLE-FOR-SALE FINANCIAL ASSETS

In 2012, impairment of the shares of Poslovni system Mercator (MELR) is disclosed as financial ex-

pense totalling EUR 29,001,753; impairment of the shares of Probanka (PRBR) totalling EUR 1.342.624

and of the shares of Ceste mostovi Celje (CEMG) totalling EUR 238,355.

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MOVEMENT OF SHORT-TERM FINANCIAL ASSETS AVAILABLE FOR SALE

(in EUR) 2012 2011



Transfer from non-current assets held for sale (MELR) - 132,934,216

Impairment (30,532,516) (6,910,838)

Loss from sale (22,065) -

Sale (Etol) (87,065) (7,306,150)


To secure long-term and short-term loans from banks, the Group pledged: 878.840 shares (23.34%)

of Poslovni sistem Mercator (MELR), 1,922,321 shares (5.74%) of the Elektro Maribor Company, 213,115

shares (6.27%) of shares of Probanka, 1,922,321 shares and 270,648 shares of Elektro Gorenjska or

1.6% of all the shares totalling EUR 108,630,153.

12. SHORT-TERM LOANS GRANTED

(in EUR) 2012 2011

Short-term deposits 9,054,667 3,275,000

Interest on loans to others 221,639 58,106

Short-term loans 83,239,515 84,744,473


Other short-term receivables from financing - 663,731

Balance as of 31/12/2012 9,466,544 5,110,497

As of 31 December 2012, the Group discloses short-term loans of EUR 190,238 and short-term de-

posits of EUR 9,054,667.

On the last day of 2012, the Group discloses value adjustment of loans granted amounting to EUR

83,630,813. In 2009, the Laško Group (the Fructal Group was still included – the value of the loan

granted was EUR 9,400,000) granted loans to companies that were then its parent companies), name-

ly the loan totalled EUR 92,050,000 of which EUR 54,250,000 was granted to Holding and EUR

37,800,000 to Center naložbe. In 2009, the Group formed value adjustments of loans and disclosed

financial expenses because of the publication of insolvency and the introduction of bankruptcy pro-

ceedings. As of 31 December 2012, the Group discloses the value of loans and value adjustment of the

loans given in the amount of EUR 83,100,000 (due to the sale of Fructal in 2011 both items concerning

the original value decreased by EUR 9,400,000).

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13. CASH AND CASH EQUIVALENTS

(in EUR) 2012 2011

Credit with banks 2,012,931 21,356,755

Cash in hand and cheques received 29,740 41,226

Cash in foreign currency 61,523 57,453

Cash items in the process of collection 84,421 48,330

Total 2,188,615 21,503,764

Cash and cash equivalents – prepayments and accrued income reflect fair value. Compared to the

last day of 2011, cash significantly decreased mainly due to decreased cash of the Union Group that

used it to settle its financial liabilities in 2012. Most of prepayments and accrued income as of 31 De-

cember 2012 represent the residual value of the sale of the Fructal Group (FRAG shares).

14. SHORT-TERM ACCRUALS AND PREPAID EXPENDITURE

(in EUR) 2012 2011

Accruals and prepaid expenditure 378,648 525,338

Total 378,648 525,338

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, capital reserves, profit reserves, revenue re-

serves, retained profit or loss from previous years, surpluses from the revaluation of financial invest-

ments classified as assets-for-sale and also not-yet distributed profit for the financial year or the out-

standing 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 named no par value shares. Each share gives its owner

a voting right at the annual General Meeting of Shareholders and participation in profits.

As of 31 December 2012, capital reserves amount to EUR 66,744,172. In the past, capital reserves

were formed on the basis of share premium generated with two capital injections that exceeded the

nominal value of paid-in shares and on the basis of revaluation adjustments of capital. The value of

share premium amounted to EUR 79,231,564 and the value of general revaluation adjustments of

capital EUR 23,146,157. In the past, capital reserves were used to cover losses totalling EUR 35,633,549.

Thus their value as of 31 December 2012 amounts to EUR 66,744,172.

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The reserves include statutory reserves of EUR 3,650,331, reserves for own shares of EUR 341,170

and own shares as deductible amounting to EUR 341,170. Statutory reserves may be used for cover-

ing losses and for capital injections. In 2012, the value of reserves remains unchanged. Disclosed

own shares are the PILR, RARG and PULG shares. On the last day of 2011, the Group owned 19,891

own PILR shares, 85 PULG shares and 19,236 RARG shares. The value of shares as of 12 December

2012 amounts to EUR 139,038 and the value of the shares owned by the subsidiaries amounts to EUR

202,132. Pivovarna Laško possesses no own shares on 31 December 2012.

In 2012, reserves for own shares decreased due to the revaluation totalling EUR 126,128. In the same

year, the Laško Group disposed of 4,190 own PILR shares in order to pay severance grant to the owner

of non-controlling stake on the basis of the controlling contract. On 31 December 2012, own shares

were converted to the stock exchange value equalling EUR 6.99. Revaluation of own shares to lower

stock exchange price is directly reflected in the capital – change in the reserves of own shares.

Net profit or loss from previous years amounting to EUR 15,504,846 on 31 December 2011 was used

in 2012 to cover losses of 2011. It increased by depreciation related to property revaluation that resulted

in decreased revaluation surplus in the amount of EUR 863,222.

Revaluation surplus decreased by depreciation related to property revaluation amounting to EUR

863,222 and by negative change in comprehensive income of 388,797. Changes in comprehensive

income relate mainly to formation and revaluation of deferred tax liabilities.

The capital of the Group in 2012 decreased by translation reserves and reserves related to exchange

rate differences when translating foreign companies in the amount of EUR 9,146 EUR.

16. CAPITAL OF THE OWNERS OF NON-CONTROLLING STAKE

On the last day of 2012, the capital of the owners of non-controlling stake amounts to EUR 7,571,554

and compared to 2011 it decreased by EUR 75,972. In 2012, the capital of the owners of non-controlling

stake increased due to the capital injection of the minority owner of the Birra Peja Company equalling

EUR 1,000,000 and decreased by the paid dividends in the amount of EUR 368,429, established net

loss of the current year totalling EUR 591,884 and the change in other comprehensive income in the

amount of EUR 115,660.

17. PROVISIONS AND LONG-TERM ACCRUALS AND DEFERRED INCOME

17. A. PROVISIONS FOR RETIREMENT GRANTS AND JUBILEE AWARDS

(in EUR) 2012 2011

Provisions for severance grants and jubilee awards 4,904,442 4,785,771

Total 4,904,442 4,785,771

Provisions are established for estimated liabilities with regard to the payment of severance grants

and jubilee awards such as long-term benefits for years of service at the date of that statement of finan-

cial position and discounted to current value. Provision was made for planned payments.

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190

When calculating potential liabilities with regard to the retirement grant, 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 grant 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 for the excess amount.

Overview of additional assumptions:

• Growth of average wages in the Republic of Slovenia is assumed to be o.9% annually in 2013, 1.7%

in 2014 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 grants 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 o the years of pensionable ser-

vice of each individual employee.

The selected discounted interest rate is 4.60% annually, which equals the return on 10-year cor-

porate bonds with high credit rating in Euro zone at the end of November 2012 increased by add-on

concerning the local risk.

17. B. PROVISIONS AND LONG-TERM ACCRUALS AND DEFERRED INCOME

(in EUR) 2012 2011

Other provisions 1,898,251 1,985,699

Long-term accruals and deferred income 101,696 297,293

Total 1,999,947 2,282,992

Provisions refer to all pending legal actions in subsidiaries and are made based on the opinions

and evaluation of lawyers. Long-term accruals and deferred income mainly refer to the exemptions in

respect of the payment of contributions for the disabled above the quota.

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MOVEMENT OF LONG-TERM PROVISIONS AND ACCRUALS AND DEFERRED INCOME

Severance

benefits paid upon Jubilee Long-term

(in EUR) retirement awards ADE Provisions Total

Balance as of 1/1/2012 3,602,661 1,183,110 297,293 1,985,699 7,068,763 First consolidation of Birra P. - - 28,515 - 28,515Increase 109,050 690,422 63,453 214,226 1,077,151Reduction - absorption (315,002) (184,008) (287,565) - (786,575)Reduction - removed (165,992) (15,799) - (301,674) (483,465) Balance as of 31/12/2012 3,230,717 1,673,725 101,696 1,898,251 6,904,389

In 2012, the Group additionally made long-term provisions for severance grants upon retirement

and jubilee awards totalling EUR 799,472 and derecognised them in the amount of EUR 680,801.

Other provisions and long-term accruals and deferred income decreased in 2012 by EUR 437,727.

Long-term accruals and deferred income in 2012 decreased by EUR 195,597 mainly due to the utilisa-

tion of the exemptions in respect of the payment of contributions for the disabled above the quota.

Other provisions in 2012 increased by newly established provisions for lawsuits amounting to EUR

214,226 and decreased by the derecognised provisions due to lawsuits in the amount of EUR 301,674.

18. LONG-TERM FINANCIAL LIABILITIES

(in EUR) 2012 2011

Long-term loans from banks 80,907,079 142,835,017

Other long-term financial liabilities 126,592 39,810

Long-term loans from other companies 27,172 -

Total 81,060,843 142,874,827

Transfer to short-term financial liabilities (54,966,961) (102,342,818)

Total 26,093,882 40,532,009

Long-term financial liabilities relate to the long-term loans received from banks. In September 2012,

it was agreed with the creditor banks on the rescheduling of the financial liabilities of the controlling

company, Pivovarna Laško, and the subsidiary, Pivovarna Union. Based on this agreement most of

long-term loans of both companies mature on 30 March 2013.

MATURITY OF LONG-TERM LOANS FROM BANKS

(in EUR) 2012 2011

Maturity from 4 to 6 years 2,727,869 4,323,172



Short-term part of long-term financial liabilitties 54,966,961 102,342,818

Total 80,907,079 142,835,017

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In 202, the group contracted new long-tern loans totalling EUR 7,137,000 and reached an agreement

with the banks on rescheduling of short-term loans amounting to EUR 11,487,500 into long-term ones.

And long-term loans of EUR 8,761,459 were paid off. In 2013, long-term loans amounting to EUR

54,966,961 that are disclosed as short-term loans become due.

To secure long-term loans from banks, the group pledged 707,321 shares (2.11%) of Elektro Maribor

and 350 shares (19.77%) of Birra Peja, Peć. As of 31 December 2012, book value of pledged shares

amounts to EUR 2,508,182. Long-term financial liabilities of the Group are also pledged by movable

and immovable property whose book value as of 31 December 2012 amounts to EUR 34,576,969 and

by pledged receivables amounting to EUR 7,420,000.

Disclosed value of long-term financial liabilities reflects fair value.

On average, interest rate for long-term loans in 2012 amounted from 4.45% to 5.07% fixed or

6-month EURIBOR increased by 3.5 to 4.8 percentage points.

Disclosed value of long-term financial liabilities reflects fair value.

Long-term loans are secured in their entirety by securities, mortgages and pledged property (more

detailed information in Short-term financial liabilities).

19. SHORT-TERM OPERATING LIABILITIES

(in EUR) 2012 2011

Short-term liabilities to companies

in the Group as suppliers 89,693 518,209

Short-term liabilities to other suppliers 21,231,236 19,907,908

Short-term liabilities to others:

to employees 3,470,349 4,347,753

to state 8,980,742 9,985,476

Short-term liabilities for advances 485,472 657,435

Other short-term liabilities 3,685,618 1,360,403

Total 37,943,110 36,777,184

As of 31 December 2012, short-term operating liabilities amount to EUR 37,943.110, which is by EUR

1,165,926 more than on the last day of the previous year. Short-term liabilities to the Birra Peja Com-

pany as of 31 December 2012 total EUR 5,655,042.

Trade liabilities equalling EUR 21,231,236 represent the biggest share (55.69%) among short-term

operating liabilities and compared to 2011, trade liabilities increased by EUR 1,323,328.

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AGE STRUCTURE OF TRADE LIABILITIES

(in EUR) 2012 2011

Non-mature 7,139,418 11,436,052

Maturity from 1 to 30 days 2,683,517 1,134,985



Maturity above 90 days 7,689,057 4,495,078

Total 21,320,929 20,426,117

20. SHORT-TERM CORPORATE TAX LIABILITIES

(in EUR) 2012 2011

Short-term income tax liabilities 353,494 2,963,742

Totalj 353,494 2,963,742

Short-term corporate liabilities of the Group in 2012 amount to EUR 353,494 and is disclosed by

the subsidiaries: Radenska in the amount of EUR 320,848 EUR, Izberi, d. o.o in the amount of EUR

16,085 and Laško Grupa, d. o. o. in the amount of EUR 16,561.

21. SHORT-TERM FINANCIAL LIABILITIES

(in EUR) 2012 2011

Short-term part of long-term financial liabilities 54,966,961 102,342,819

Short-term loans obtained from Group companies 2,634,838 2,919,248

Short-term loans obtained from Group companies 1,074 -

Short-term loans obtained from banks 280,066,666 236,696,177

Other long-term liabilities from financing 1,321,474 6,472,087

Total 338,991,013 348,430,331

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Short-term financial liabilities of the Group on the last day of 2012 amounted to EUR 338,991,013

of which the loans from banks represent EUR 335,033,627. Short-term loans from banks decreased by

EUR 4,005,369 compared to the previous year. In 2012, the Group acquired new loans from banks in

the amount of EUR 7,602,219 and repaid loans totalling EUR 25,792,556. On the basis of the agree-

ment with the banks reached in March 2012 with regard to the rescheduling of loans given to Pivovarna

Laško and Pivovarna Union most of short-term loans of these two companies mature on 30 March

2013.

To secure short-term loans from banks the Group pledged 667,444 shares (100%) of the Delo

Company, 4,399,803 shares (86.92%) of Radenska, 440,295 shares (97.60%) of Pivovarna Union,

878,840 shares (23,34%) of Poslovni sistem Mercator, 213,115 shares (6.27%) of Probanka, Maribor,

1,215,000 shares (3.63 %) of Elektro Maribor, 270,648 shares of (1.6 %) Elektro Gorenjska, 645,003

shares (20.6%) of Thermana, Laško and 202,788 shares (79.24 %) of ČZP Večer. Based on the data

from individual financial statements where certain shares are valuated according to the historical cost,

the book value of the pledged shares as of 31 December 2012 amounts to EUR 354,456,218. A part of the

short-term loans is additionally secured by a mortgage and immoveable property and by investment

property. As of 31 December 2012, the book value of the pledged immovable and moveable property and

investment property amounts to EUR 85,694,943. The loans from the banks are additionally secured

by accounts receivable whose value amounted to EUR 12,883,000 and by pledged brands of Pivovarna

Union totalling EUR 50,000,000. The value of all unpaid short-term loans secured by shares, a mort-

gage, and liens on moveable assets, investment property and accounts receivable amounted to EUR

335,033,627 as of 31 December 2012. The Group has no unsecured loans from the banks.

The average effective interest rate for the short-term loans ranges as fixed from 4.85 to 6.95% or as

variable 1- to 6-month EURIBOR increased by 3.5 to 4.5 percentage points.

The disclosed value of short-term financial liabilities reflects fair value.

22. SHORT-TERM ACCRUALS AND DEFERRED INCOME

(In EUR) 2012 2011

Short-term accruals and deferred income 7,463,532 8,433,292

Total 7,463,532 8,433,292

The liabilities related to the guarantee to Nova kreditna banka Maribor amounting to EUR 3,637,650

and the liabilities related to untaken leave equalling EUR 1,739,994 and other short- term deferred

revenues of EUR 2,085,888 are disclosed under short-term accruals and deferred income.

The liability arising from the guarantee to Nova kreditna banka Maribor is presented in more detail

in the financial report of Pivovarna Laško in Note 19 on pages 256 and 257.

23. OPERATING REVENUES AND EXPENSES

Operating revenues and expenses relate to continuing operations, therefore to the companies of the

Laško Group excluding Jadranska pivovara in 2012 and excluding the Fructal Group and Jadranska

pivovara in 2011. Due to the integration of the Birra Peja group into consolidation, the data of both years

cannot be fully comparable.

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23. A. NET SALES REVENUES

(in EUR) 2012 2011

Revenues from sale of products

and services on domestic market 235,462,588 232,246,501

Revenues from sale of products

and services on foreign market 30,696,525 30,331,941

Revenues from sale of materials

and merchandise on domestic mark. 5,163,620 1,453,408


and merchandise on foreign market 64,215 705,423

Total 271,386,948 264,737,273

(in EUR) 2012 2011

Revenues from sale on domestic market 240,626,208 233,699,909

Revenues from sale on foreign market 30,760,740 31,037,364

Total 271,386,948 264,737,273

Compared to the previous year, net sales revenues increased by EUR 6,649,675 or 2.5%, which is

mainly the result of the integration of the Birra Peja group into consolidation. In 2012, the Birra Peja

Group generated net sales revenues of EUR 20,353,271.

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 OPERATING REVENUES FROM REVALUATION)

Other operating revenues amount to EUR 3,109,745 and compared to the previous year they de-

creased by EUR 2,388,713. This includes revenues related to the sales of fixed assets, recovery of re-

ceivables for which receivable value adjustment was made in previous years, revenues from reversal of

long-term provisions and received subsidies.

23. C. OTHER OPERATING REVENUES RELATED TO THE POSITIVE EFFECT OF THE BUSINESS COMBINATION

Upon the integration of the Birra Peja Group into consolidation, positive effect or goodwill was rec-

ognised in consolidated profit or loss amounting to EUR 2,534,344.

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23. D. COSTS AND OTHER OPERATING EXPENSES

(in EUR) 2012 2011

Costs of sold merchandise (Horeca) 2,066,300 -

Costs of materials, raw materials and merchandise 95,385,012 93,299,604

Costs of services 69,360,358 74,751,595

Depreciation 20,064,199 19,585,979

Revaluation from operating expenses - long-term assets 8,982,599 11,253,951

Revaluation from operating expenses - short-term assets 735,910 566,444

Costs of salaries 37,238,547 36,545,742

Contributions for social security 6,955,433 6,994,618

Other labour costs 6,693,723 5,762,895

Costs of provisions 801,307 298,655

Other operating expenses 6,590,812 5,918,214

Total 254,874,200 254,977,697

Despite the inclusion of the Birra Peja Group whose operating expenses amount to EUR 20,608,884

the operating expenses in 2012 remain at the level of the previous year. The costs of services and operat-

ing expenses from revaluation of long-term assets decreased. Individual categories of costs cannot be

compared with the ones in 2011 because of the changed composition.

23. E. COSTS BY FUNCTIONAL GROUP

Production Costs of

Year 2012 costs of products Sales general

(in EUR) and goods sold costs activities Total

Costs of merchandise sold (Horeca) - 2,066,300 - 2,066,300Costs of materials, raw materials and merchandise 90,443,393 3,234,689 1,706,930 95,385,012Stroški storitev 22,701,614 36,139,425 10,519,319 69,360,358Depreciation 15,647,954 2,005,173 2,411,072 20,064,199Operating expenses from revaluation of long-term assets 130,257 16,005 8,836,337 8,982,599Operating expenses from revaluation of short-term assets 3,462 442,994 289,454 735,910Labour costs 31,951,883 8,157,408 10,778,412 50,887,703Costs of provisions 142,151 64,474 594,682 801,307Other costs 2,436,463 552,754 3,601,595 6,590,812

Total 163,457,177 52,679,222 38,737,801 254,874,200

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Production Costs of



Costs of merchandise sold (Horeca) - 746,537 - 746,537Costs of materials, raw materials and merchandise 82,468,327 8,946,235 1,138,507 92,553,069Stroški storitev 23,131,801 40,775,978 10,843,814 74,751,593Depreciation 15,457,275 2,051,256 2,077,448 19,585,979Operating expenses from revaluation of long-term assets 1,838,856 973,817 8,441,278 11,253,951Operating expenses from revaluation of short-term assets 4,936 194,721 366,787 566,444Labour costs 32,169,033 7,656,702 9,477,521 49,303,256Costs of provisions 74,497 17,431 206,727 298,655Other costs 2,512,264 627,289 2,778,660 5,918,213

Total 157,656,989 61,989,966 35,330,742 254,977,697

23. F. FINANCIAL REVENUES AND EXPENSES

(in EUR) 2012 2011

FINANCIAL REVENUES excluding

excghange rate differences 7,470,518 9,547,842

Financial revenues from profit participation 6,712,171 7,373,270

Financial revenues from loans given 480,204 671,111

Financial revenues from operating receivables 255,706 341,183

Financial revenues from the sale of securities 211 1,162,278

Financial revenues from reversal

of impairment of inv. into a subsidiary 22,226 -

FINANCIAL EXPENSES excluding

excghange rate differences (53,914,548) (49,703,678)

Financial expenses from impairment

and write offs of financial investments (33,067,019) (26,071,300)

Financial expenses from financial liabilities (20,821,180) (23,370,461)

Financial expenses from operating liabilities (26,349) (261,917)

EXCHANGE RATE differences from financing (12,178) (1,156)

Negative exchange rate differences (14,937) (1,809)

Positive exchange rate differences 2,759 653

Net financial revenues (46,456,208) (40,156,992)

Financial expenses exceed financial revenue by EUR 46,456,208. Financial expenses for interest

from bank loans amounted to EUR 20,821,180 while financial expenses from impairment of financial

investments amounted to EUR 33,067,019.

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Financial expenses resulting from the impairment of financial investments relate mainly, namely

in the amount of EUR 29,001,639, to MELR share impairment. Among other impairments the big-

gest amount is attributed to the impairment of the Probanka shares equalling EUR 1,342,624 and the

impairment of the investment into the Večer Company amounting to EUR 2,390,000 and the impair-

ment of Ceste mostovi Celje totalling EUR 238,355.

24. CORPORATE TAX

(In EUR) 2012 2011

Current tax 2,204,513 1,697,944

Deferred tax 3,951,823 (5,130,688)

Total 6,156,336 (3,432,744)

From continuing operations the Group discloses corporate tax expense amounting to EUR 2,204,513

and deferred tax totalling EUR 3,951,823. From discontinued operations (Jadranska pivovara – Split)

deferred tax amounts to EUR 1,968,980 and relates mainly to the conversion of deferred tax receiva-

bles formed in previous years due to the impairment to new tax rates.

In 2012, positive tax base and consequently tax liabilities are disclosed by the companies: Pivovarna

Union, Radenska, Izberi, d. o. o. and Laško Grupa, Zagreb. The tax base of these companies amounts

to EUR 12,060,831 and the corporate tax expenses equal EUR 2,204,512.

The income tax of the Group differs from the theoretical tax amount which would arise if the basic

tax rates of the domestic country were used. The tax base is calculated as a difference between taxable

revenues and taxable expenses at the level of each individual company in the Group. If taxable expenses

exceeds taxable revenues, the company will show a tax loss which can be covered by future taxable rev-

enues. The following companies in the Laško Group generated uncovered tax loss as of 31 December

2012 that will be covered by future taxable income: Pivovarna Laško in the amount of EUR 7,658,340,

Jadranska pivovara – Split in the amount of EUR 32,009,171 and Birra Peja in the amount of EUR 4,926,940.

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 authorities can check the operations of a business and require the payment of additional tax as

a result along with past interest or penalties which have to do with the revenue tax or other taxes and

contributions, anytime within a maximum period of five years after the year the tax is levied. The Man-

agement Board of the Company is not aware of any circumstances which could represent significant

liabilities under this heading.

Deferred tax which affects profit or loss is shown in the table titled Trends of long-term receivables

for deferred tax (Note 7) and in the table titled Trends of long-term liabilities for deferred tax (Note 7).

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25. DISCONTINUED OPERATION

PROFIT OR LOSS ACCOUNT FROM DISCONTINUED OPERATIONS

(in EUR) 2012 2011

Discontinued operations

Net sales revenues 161,215 58,675,181

Changes in inventories of products and work in progress - 1,050,201

Capitalised own products and services - 20,730

Other operating revenues 1,312,310 1,115,289

Costs of goods, materials and services (785,060) (46,477,435)

Labour costs (422,353) (9,516,038)

Depreciation of intangible

long-term and and tangible fixed assets - (10,128,560)

Costs of provisions (196,366) (84,745)

Erite offs of values (47,680) -

Other operating expenses (471,385) (690,462)

OPERATING PROFIT OR LOSS (449,319) (6,035,839)

Financial revenues 7,915 202,074

Financial expenses (131,271) (1,203,069)

PROFIT OR LOSS BEFORE TAX (572,675) (7,036,834)

Income tax - (1,777,821)

Deferred tax (1,968,980) 2,109,497

NET PROFIT/LOSS FOR THE ACCOUNTING

PERIOD FROM RETAINED OPERATING PROFIT (2,541,655) (6,705,158)

Generated profit/loss per share

for majority stake from operations

Net prifit / loss per share (0.29) (0.77)

Adjusted net profit / loss per share (0.29) (0.77)

CASH FLOW FROM DISCONTINUED OPERATIONS

(in EUR) 2012 2011

Net cash flow from operations (383,751) (182,087)

Net cash flow from investment 480,037 35,171,405

Net cash flow from financing (295,359) (23,538,490)

Total net cash flow (199,073) 11,450,828

In 2011, the Group disclosed the effects of the discontinued operations of the Fructal Group (due to

the sales in 2011) and Jadranska pivovara – Split (due to the discontinuance of an operation in accord-

ance with IFRS 5). In 20112, the profit or loss of Jadranska Pivovara is disclosed under the discontinued

operations.

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26. EXCHANGE RATE DIFFERENCES

Exchange rate differences from operations and financing considered in the Income Statement are

as follows:

(in EUR) 2012 2011

Exchange rate differences from operations (1,257) 78,618

Exchange rate differences from financing (166) (22,148)

Total net cash flow (1,423) 56,470

27. NET LOSS PER SHARE

(in EUR) 2012 2011

Total loss of the owners of the majority stake (32,346,133) (27,669,598)

Number of all ordinary shares issued 8,747,652 8,747,652

Own shares 19,891 38,079

Weighted number of issued ordinary shares 8,727,761 8,709,573

Net loss per share (3.71) (3.18)

Adjusted net loss per share (3.71) (3.18)

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 own shares.

28. CHANGES IN OTHER COMPREHENSIVE INCOME

(in EUR) 2012 2011

Financial assets available for sale 10,431 (1,521,580)

Profit / loss from property revaluation 305,678 6,226,259

Deferred taxes from revaluiation (1,292,900) (461,873)

Other comprehensive income - capital

method Mercator (Transfer to IPI) - 15,882,356

Final consolidation FRAG 474,983 1,335,234

OTHER COMPREHENSIVE INCOME (501,808) 21,460,396

29. DIVIDEND PER SHARE

The controlling company Pivovarna Laško did not pay out the dividends in 2012 similarly to 2011.

The dividends were paid out by the subsidiaries Radenska and Pivovarna Union, The owners of non-

controlling interest of both companies received dividends totalling EUR 368,429.

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30. BUSINESS COMBINATIONS – ACQUISITION OF DOMINANT INFLUENCE

On 9 January 2012, the General Meeting of shareholders of the Birra Peja Company voted for the

change of the Articles of Association with new equity structure. The procedure of ownership transfer

was completed with the entry of the Articles into the public register in Kosovo on 18 January 2012 and

subsequent transfer of the purchase price from the fiduciary account with Factor banka.

With this purchase the ownership share of Pivovarna Union in the Birra Peja Company increased by

39.55% to 57.63% and thus Pivovarna Union became the dominant owner of the subsidiary Birra Peja.

Financial statements of the Birra Peja Group are consolidated in the financial statements of the Union

Group and consequently in the statements of the Laško Group from 1 January 2012.

STATEMENT OF FINANCIAL POSITION OF THE BIRRA PEJA GROUP AT FAIR VALUE AND AT BOOK VALUE ON

THE DAY OB BUSINESS COMBINATION (1 JANUARY 2012)

Fair Book

(in EUR) value value

ASSETS

Long-term assets 24,718,618 24,718,618

Intangible assets 49,568 49,568

Tangible fixed assets 23,388,835 23,388,835

Long-term financial investments 1,280,215 1,280,215

Short-term assets 5,551,806 5,551,806

Inventories 3,057,992 3,057,992

Short-term financial investments 398,000 398,000

Short-term operating receivables 1,931,474 1,931,474

Cash and cash equivalents 164,340 164,340

Short-termaccruals and prepaid expenditure 17,165 17,165

TOTAL ASSETS 30,287,589 30,287,589

LIABILITIES

Provisions and long-term accruals and deferred income 254,872 254,872

Long-term liabilities 5,342,303 5,342,303


Short-term financial liabilities 16,267,510 16,267,510

Short-term operating liabilities 5,830,043 5,830,043

Short-term accruals and deferred income 58,517 58,517

Net assets 2,534,344 2,534,344

Net assets of takeover 2,534,344 -


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Accounting for the business combination as of 1 January 2012 is presented in the continuation:

Fair

(in EUR ) value

Fair value of the purchase price to acquire

the majority influence (fair value of the option) -

Fair value of minority stake (42.37%) of Ekrema

Lluka in the Birra Peja Group -

Fair value of till then (39.55%) share

of Pivovarna Unionin the Birra Peja Group -

Fair value of net assets in the Birra Peja Group 2,534,344

Positive effect from a business combination 2,534,344

Positive effect from a business combination was recognised under other operating revenues of the

Union Group for 2012.

Fair value of the non-controlling interest of Ekrema Lluka in the Birra Peja Group was determined

on the basis of the assessment by a certified business valuator conducted for the purpose of financial

reporting. The assessment provided with the market value of the owner of the controlling interest and

the owner of the non-controlling interest. Discounted cash flow method was applied decreased by net

financial debt and increased by potential assets not relevant for the operations.

As the purchase price of the business combination, the call option for the purchase of an 18.08%

stake then owned by Factor banka is considered. On the day of business combination, the fair value of

the option equalled zero and consequently it means that the fair value of the purchase price is treated

the same way.

The sales revenues of the Union Group in 2012 include the sales revenues related to the sale of the

Birra Peja Group amounting to EUR 20,143,899. And the effect of the Birra Peja group in net profit or

loss of the Union Group in 2012 amounts to EUR 1,881,503, which can be divided to EUR -652,841 of

net loss of the Birra Peja Group in 2012 and EUR 2,534,344 of positive effect as a result of the business

combination.

4.4.6 FINANCIAL INSTRUMENTS AND RISKS

31. FINANCIAL RISKS

31. A. CREDIT RISK

Credit risk comprises all risks having an effect on decreasing the economic benefits of the Group due

to the insolvency of business partners (buyers) and non-fulfilment of contractual liabilities. Therefore,

we constantly monitor receivables by business partner and maturity and with collection, reminders

and charging interest on arrears and also with the recovery through enforcement of judicial decisions

we contribute to better payment discipline of our buyers. The Laško Group manages the credit risk also

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by securing receivables on foreign markets. Receivables from more risky partners on the domestic and

foreign markets are additionally secured by bank guarantees and mortgages. When such security can

not be provided with certainty, business is conducted on the basis of advances. In 2012, the credit risk

increased and increased risk is also expected in 2013.

At the end of 2012, even the payment discipline of our major buyers worsened, which caused ad-

ditional liquidity problems. It is believed that there is a considerable risk of spreading late-payment

culture also in 2013, which is the result of the financial crisis in all the segments of the economy.

MATURITY OF TRADE RECEIVABLES

(in EUR) 2012 2011

Non-maturity 25,474,299 35,795,134




Maturity over 90 days 7,850,076 6,475,333


Compared to the last day of 2011, the balance of trade receivables did not change considerably despite

the integration of the Birra Peja Group into consolidation. Receivables of the Birra Peja Group as of

31 December 2012 amount to EUR 1,811,036. As concerns their maturity, 51.1% of all these receivables

have not matured yet. Most of matured receivables are in the group of maturity up to 30 days, namely

21.9% of all of them. A legal action was started against most of receivables with maturity exceeding 90

days and value adjustments were formed charged to profit or loss. Detailed monitoring of receivables

that have matured still enables credit risk management.

The Group received guarantees amounting to EUR 7,792,500 for trade receivables.

31. B. LIQUIDITY RISK


term and long-term insolvency is of particular significance. To avoid problems with the current li-

quidity, the Company manages the liquidity risk, drafts and implements a policy of regular liquidity

management including the plans of cash outflows and sufficient inflows. It is difficult for the Group to

manage the liquidity risks through suitable credit lines for the short-term management of cash flows

in the form of revolving credits and the allowable transaction account limits. Nevertheless, the Group

assesses that upon short-term loans with banks maturing it will be possible to arrange renewals of the

existing short-term funding resources. In addition, all loans from the banks are appropriately secured

with the assets of the Group, so should an unfavourable situation in the financial market arise with

banks requiring the repayment of loans at maturity, the Group can repay the loans by selling the assets

of the Group.

On the last day of 2012, the Group disclosed a surplus of short-term liabilities over short-term assets

amounting to EUR 181,001,915. The coefficient calculated as the ratio between the short-term assets

and short-term liabilities equals 0.53, which results in a high degree of liquidity risk.

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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, an 80.83% stake in the Delo Company and a 23.34%

stake in Poslovni sistem Mercator, and all other investments and property not required for business

were implemented in 2012. At the same time, the management discusses comprehensive solutions

with the creditor banks with regard to long-term rescheduling of all our liabilities.

Until the sales of individual investments are successfully completed, the Laško will have serious

liquidity problems that can only be solved by an agreement with the banks (acting as creditors and also

as important owners of the Company). If the sale of property fails, the only possible solution to the li-

quidity problem is to acquire new sustainable sources (capital injection). Within the strategic measures

of financial restructuring there will be negotiations held with the banks concerning the rescheduling of

loans in the long run. The one-year agreement on the rescheduling of loans concluded with the banks

in May 2012 expires on 31 March 2013. More detailed information is provided in the business report on

page 99. The activities aiming at the agreement on debt rescheduling are performed on a daily basis

whereas no agreements have been reached concerning the acquisition of new sustainable resources.

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.

AGE STRUCTURE OF TRADE PAYABLES

(in EUR) 2012 2011

Non-maturity 7,139,418 11,436,052





Total 21,320,929 20,426,117

MATURITY OF SHORT-TERM FINANCIAL LIABILITIES TO THE BANKS

(in EUR) 2013

January- March 283,832,002

April - June 26,007,577

July - September 9,830,798

October - December 14,612,622

Total 334,282,999

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MATURITY OF LONG-TERM FINANCIAL LIABILITIES TO THE BANKS

(in EUR) 2012 2011




Short-term part of long-term financial liabilities 51,018,746 102,342,818

Total 77,023,189 142,835,017

31. C. INTEREST RATE RISK

Interest rate risk of the Company arises from long-term and short-term financial obligations. Due to

financial obligations, the Group is exposed to interest rate risk of cash flow. Interest rate risk represents

a possible change in the interest rate on the financial market, mainly due to taking out loans linked to

a variable interest rate (EURIBOR). From the end of 2011, a decreasing tendency of EURIBOR can be

observed, which had a positive impact on loan charges linked to a variable interest rate (EURIBOR).

Financing under variable interest rate conditions represents one third of all Company financing while

the other two thirds represents loans with a fixed interest rate. It is estimated that the Company’s ex-

posure to interest rate risk in 2012 is (like in 2011) still moderate and manageable.

Average

interest Difference

(in EUR) Interese level rate in % in interest

Actual interest expenses 20,821,180 5.52 -Expenses in the case of increase in int. rate by 1% 24,593,133 6.52 3,771,953Expenses in the case of decrease in int. rate by 1 % 17,049,227 4.52 (3,771,953)Expenses in the case of increase in int. rate by 1,5 % 26,479,109 7.02 5,657,929Expenses in the case of decrease in int. rate by 1,5 % 15,163,251 4.02 (5,657,929)

If the average interest rate increased by 1%, and the indebtedness remained at the same level, ex-

penses would increase by EUR 3,717,953 and in the case of 1.5% increase in the average interest rate,

expenses would increase by EUR 5,657,929.

If the average interest rate decreased by 1%, and the indebtedness remained at the same level, fi-

nance expenses would decrease by EUR 3,717,953 and in the case of 1.5% decrease in the average inter-

est rate, finance expenses would increase by EUR 5,657,929.

31. D. PRICE RISK

The Company is exposed to price risks on the downstream and on the upstream side.

On the downstream side, a risk is the increase of retail prices compared to the dropping 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

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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

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 2012. The Company

has no influence on this risk regarded as relevant.

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 undisturbed supply.

31. E. FOREIGN EXCHANGE RISK

Foreign exchange risk is insignificant since the majority of contracts concluded by the Company

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. EQUITY MANAGEMENT

The main purpose of the management of the Group’s equity is to 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):

(in EUR) 2012 2011

Financial liabilities 365,084,895 388,962,339

Cash 2,188,615 21,503,764

Net financial liabilities 362,896,280 367,458,575

Capital 92,665,202 125,473,457

Gearing ratio (in %) 391.62 292.86

The ratio between net financial liabilities and equity indicates that the Group is overindebted.

31. G. RISK OF A CHANGE IN FAIR VALUE OF THE FINANCIAL INSTRUMENTS


erty is undoubtedly also an important financial risk. In should be highlighted that financial invest-

ments 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 the impairment and write-offs of financial investments are presented.

There is a considerable risk that also in 2013 impairments will be necessary as a result of the drop in

stock exchange prices in general and not only in Slovenia owing to the ongoing market turmoil and a

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lack of liquidity of the entire economy. It is estimated that the biggest risk of impairment is attributable

to our investment in Mercator since the general financial and economic crises also affects the segment

of population and this is consequently reflected in the operations of the biggest trading company. In

2012, the Group booked impairment and write-offs of investments totalling EUR 33.1 million of finan-

cial expenses.

Fair value Differ.-impact on Differ.-impact on

as of Differ.-impact on Revaluation deferred tax

(in EUR) 31/12/2012 value DFN surplus liability

Market value of MELR as

of 31/12/2012 100,187,760 - - -

Increase in price by 20 % 120,225,312 20,037,552 16,030,042 4,007,510

Decrease in price by 20 % 80,150,208 (20,037,552) (16,030,042) (4,007,510)



FINANCIAL ASSETS AVAILABLE FOR SALE AND MEASURED AT FAIR VALUE AS OF 31 DECEMBER

(in EUR) 2012 2011

Level 1 100,187,760 129,487,600

Level 2 8,442,392 9,785,017

Level 3 9,800,000 8,190,000

Total 118,430,152 147,462,617

4.4.7 REPORTING BY SEGMENTS

32. REPORTING BY SEGMENTS

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

segment include the value of financial liabilities as of 31 December 2012 that the Group assumed for

the financing of investments (also 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).

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Newspaper & Year 2012 Other publishing (in EUR) Beer beverages activity Other Total

Net sales revenues

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

Operating profit /loss 27,253,762 299,552 (7,839,801) 2,502,668 22,216,181

Financial expenses (net) (46,456,208)

Profit / loss before taxes (24,240,027)

Tax (6,156,336)

Profit or loss

of the accounting period (30,396,363)

Assets by segments 187,344,704 75,552,731 36,187,829 137,483,672 436,568,936

Brands 46,460,507 - 10,188,094 - 56,648,601

Good will 17,197,380 - - - 17,197,380

Liabilities by segments 212,678,767 45,133,683 52,487,125 117,506,455 427,806,030

Investments 5,009,862 4,394,560 1,020,743 772,992 11,198,157

Depreciation 12,702,178 4,285,652 2,894,212 182,157 20,064,199

Newspaper & Year 2011 Other publishing (in EUR) Beer beverages activity Other Total

Net sales revenues

by segments 147,610,795 55,274,902 54,601,594 7,249,982 264,737,273

Net sales revenues 147,610,795 55,274,902 54,601,594 7,249,982 264,737,273

Operating profit /loss 26,707,281 (5,115,419) (5,540,059) (128,695) 15,923,108

Financial expenses (net) (40,156,994)

Profit / loss before taxes (24,233,886)

Tax 3,432,744

Profit or loss

of the accounting period (20,801,142)

Assets by segments 199,351,784 99,113,802 42,251,029 146,630,862 487,347,477

Brands 46,461,058 - 18,677,374 - 65,138,432

Good will 17,197,380 - - - 17,197,380

Liabilities by segments 267,120,802 48,895,502 54,709,064 73,484,463 444,209,831

Investments 5,527,440 4,247,528 1,165,827 278,462 11,219,257

Depreciation 11,438,609 5,038,461 3,025,250 83,658 19,585,978

Revaluation from operating

expenses and provisions 5,480,557 265,288 6,074,550 298,655 12,119,050

Sales by geographic segments are disclosed under Note 32. B.

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32. B. GEOGRAPHICAL SEGMENTS

(in EUR) 2012 2011

Net sales revenues

Slovenia 240,626,209 233,699,908

Foreign market 30,760,739 31,037,365

Total 271,386,948 264,737,273

Assets

Slovenia 392,976,853 460,740,784

Foreign market 43,592,083 26,606,693

Brands (Slovenia) 56,648,601 65,138,432

Good will (Slovenia) 17,197,380 17,197,380

Total 510,414,917 569,683,289

Investments

Slovenia 10,139,686 11,219,257

Foreign market 1,058,471 -

Total 11,198,157 11,219,257

Net sales revenues on foreign markets were mainly realised on the markets of former Yugoslavia and

the assets on foreign markets mainly relate to the assets on the markets of former Yugoslavia.

4.4.8 RELATIONS WITH THE RELATED PARTIES

33. TRANSACTIONS WITH THE RELATED PARTIES

33. A. SALE TO THE ASSOCIATED COMPANIES

(in EUR) 2012 2011

Subsidiary companies 248,499 5,228

Other related parties 9,000 4,206,468

Total 257,499 4,211,696

33. B. PURCHASE FROM THE RELATED COMPANIES

(in EUR) 2012 2011


Other related parties 446,727 1,392,507

Total 1,013,540 1,719,668

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33. C. OPERATING RECEIVABLES AND LIABILITIES – RELATED COMPANIES

(in EUR) 2012 2011

Operating receivables from related companies

Subsidiary companies - 200

Other related parties - 1,822,348

Total - 1,822,548

Operating liabilities to related companies


Other related parties 39,045 76,215

Total 102,672 99,637

33. D. LOANS RECEIVED FROM THE COMPANIES OF THE LAŠKO GROUP

(in EUR) 2012 2011


Total 50,977 49,526

33. E. FINANCIAL REVENUES OF THE COMPANIES IN THE LAŠKO GROUP

(in EUR) 2012 2011

Subsidiary companies - 13,118

Total - 13,118

33. F. FINANCIAL EXPENSES FOR THE COMPANIES OF THE LAŠKO GROUP

(in EUR) 2012 2011


Total 1,451 4,091

33. G. GUARANTEES GIVEN TO ASSOCIATED COMPANIES

(in EUR) 2012 2011

Subsidiaries 2,000,000 -

Total 2,000,000 -

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4.4.9 REMUNERATION OF THE MEMBERS OF THE MANAGEMENT BOARD AND SUPER-VISORY BOARD AND OF THOSE WITH INDIVIDUAL EMPLOYMENT CONTRACTS

The Group is managed by the management boards and supervisory boards whose remuneration is

presented in the tables below:

(in EUR) 2012 2011

MANAGEMENT

Fixed part of the remuneration 1,383,515 1,431,006

Other receipts (bonuses) 66,132 63,869

Jubilee awards 2,060 2,044

Severance payment 142,841 -

Total 1,594,548 1,496,919

Fixed part Other of the remuneration Jubilee Sever. (in EUR) remuneration (bonuses) awards payment Total

MANEGEMENT

Dušan Zorko 253,875 11,762 - - 265,637

Milan Hojnik 134,972 4,460 - - 139,432

Mira Močnik 84,227 3,267 - - 87,494

Sebastjan Gergeta 27,720 - - - 27,720

Boris Matijaščić 80,975 - - - 80,975

Zlatko Bebić 51,318 - - - 51,318

Jurij Giacomelli 84,480 7,670 - 129,000 221,150

Marjeta Zevnik 141,000 426 2,060 - 143,486

Irma Gubanec 34,560 964 - - 35,524

Mirjam Hočevar 156,000 12,703 - - 168,703

Gorazd Lukman 156,000 10,855 - - 166,855

Zvone Murgelj 27,280 7,315 - 13,841 48,436

Matej Oset 123,000 6,388 - - 129,388

Bogdan Romih 28,108 322 - - 28,430

Total 1,383,515 66,132 2,060 142,841 1,594,548

(in EUR) 2012 2011

INDIVIDUAL EMPLOYMENT CONTRACTS

Fixed part of the remuneration 3,342,996 3,523,669

Other receipts (bonuses) 152,479 202,675

Managementn and other contracts - 3,000

Variable part (stimulation) 85,274 197,080


Severance payment 36,321 -

Total 3,619,989 3,931,085

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(in EUR) 2012 2011

AUDIT COMMITTEE OF THE SUPERVISORY BOARD

Meeting expenses 12,902 1,732

Total 12,902 1,732

(in EUR) 2012 2011


Peter Groznik 5,435 698

Bojan Cizej 3,770 -

Igor Teslić 3,697 -

Marko Koleša - 539

Bojan Košak - 495

Total 12,902 1,732

(in EUR) 2012 2011

PERSONNEL COMMITTEE OF THE SUPERVISORY BOARD

Meeting expenses 13,965 -

Total 13,965 -

(in EUR) 2012 2011


Borut Jamnik 5,655 -

Borut Bratina 4,155 -

Dragica Čepin 4,155 -

Total 13,965 -

(in EUR) 2012 2011

MANAGEMENT BOARD OF BIRRA PEJA

Meeting expenses 18,000 -

Total 18,000 -

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MANAGEMENT BOARD OF BIRRA PEJA

Fatmir Gashi 6,000 -

Mirjam Hočevar 6,000 -

Ekrem Lluka 6,000 -

Total 18,000 -

(in EUR) 2012 2011

MEMBERS OF SUPERVISORY BOARDS

IN THE COMPANIES OF THE LAŠKO GROUP

Borut Bratina 19,889 3,736

Bojan Cizej 34,695 8,022

Dragica Čepin 46,878 13,682

Jure Flerin 8,878 5,419

Peter Groznik 41,600 13,381

Mirjam Hočevar 13,925 7,001

Borut Jamnik 19,045 3,763

Andrej Kebe 1,500 8,652

Bojan Košak 1,500 7,320

Franko Lipičar 15,125 4,173

Marjan Mačkošek 2,500 9,048

Vladimir Malenković 44,539 16,335

Primož Mlekuš 13,420 1,192

Dominik Omar 13,925 4,173

Terezija Peterka 14,020 8,106

Branimir Piano 8,878 5,419

Robert Šega 11,227 6,194

Pavel Teršek 13,650 2,044

Marjeta Zevnik 5,866 12,426

Lilijana Ipavec - 667

Anton Medvešek - 2,384

Iztok Počkaj Vilijam - 667

Janko Remic - 1,703

Franc Rojnik - 1,703

Aleksander Svetlešek - 4,000

Anton Turnšek - 6,796

Total 331,060 158,006

4.4.10 POTENTIAL LIABILITIES AND POTENTIAL ASSETS

COMFORT LETTER

Among the contingent liabilities there is the potential liability arising from the comfort letter to

Perutnina Ptuj signed by the former Director of Pivovarna Laško, Mr Boško Šrot, in January 2009.

With this letter the controlling company Pivovarna Laško guarantees Perutnina Ptuj the satisfaction of

obligations in the amount of EUR 20 million together with interest. Potential liabilities of the Group

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were not disclosed in accordance with IFRS in the annual report for the year to 31 December 2008.

On 20 November 2009, Perutnina Ptuj submitted a request to Pivovarno Laško for repayment of EUR

11,600,120. The said amount regards loans made by Perutnina Ptuj to Center naložbe and Infond Hold-

ing on the basis of a signed comfort letter. With the aid of legal experts the Group is examining the

claim and desires to establish the likelihood of having to return the demanded amount. It has obtained

a number of legal opinions for this purpose. Based on the legal opinions obtained the management of

the Group estimates that no obligation to pay the demanded amount exists for the Group. Therefore

the group did not disclose the said liability in its financial statements.

On 15 February 2011, Pivovarna Laško received a lawsuit from the District Court in Celje in connec-

tion to the comfort letter which Mr. Boško Šrot as the Director of the Company supposedly signed on

10 January 2009. In the lawsuit, the plaintiff Perutnina Ptuj demands a payment of EUR 10,116,489

with the legally prescribed default interest from 1 January 2010 onwards until payment. Pivovarna

Laško has filed an appeal against the lawsuit in court.

DENACIONALISATION IN RADENSKA

On 20 December 2010, the beneficiaries Michael Wiesler and Barbara Purre-Wies (grandchildren of

Dr Anton Šarič) filed a motion for the return of assets pursuant to the Enforcement of Criminal Sanc-

tions Act (ZIKS) that had been nationalised and taken away from Anton Šarič with a court decision.

The beneficiaries assessed the value to be EUR 14.5 million. In addition, they are enforcing the return

of 12 brands of Radenska, Radenci, and payment of damages for the right to the mineral water and

land on which the mineral water springs are located. On 23 December 2010, the carried out the entry

into the land register in the form of a notice of dispute on all land parcels that are the subject of the

denationalization procedure beneficiaries in accordance with the Enforcement of Criminal Sanctions

Act. Notices of dispute have also been placed on several brands of Radenska at the Slovenian Intel-

lectual Property Office. A long-lasting procedure of the settlement of claims can be expected that can

significantly impact the operations of the subsidiary, Radenska, and the Laško Group.

LAWSUIT DUE TO ALLEGED VIOLATION OF THE TAKEOVER LEGISLATION (MERCATOR)

Pivovarna Union together with the other defendants (Pivovarna Laško, Radenska, and

Infond Holding currently undergoing bankruptcy) received a demand for payment of various dam-

age claims (totalling EUR 408,218.05) from 28 plaintiffs due to the alleged violation of takeover legisla-

tion, supposed reconciliation of operations and supposed attainment of the takeover threshold from

individual shareholders. The court fixed a date of a hearing on 9 November 2011 in the matter case ref.

No. V Pg 1490/2010 thereby concluding the main hearing. With its judgement of 30 November 2011

the court rejected all claims of the plaintiff as unfounded and ordered the plaintiffs to cover the costs of

the procedure. The judgment is not yet final. According to the court, the denoted procedure was a test

case although after having obtained access to the file it was established that the court had not issued a

decision on the execution of a test case. The plaintiffs began withdrawing their lawsuit following the

issue of the judgement. Twenty-four plaintiffs have withdrawn from the lawsuit to date. Based on the

withdrawal of the lawsuit, the court halted the procedure through a decision and ordered the plaintiffs

to pay the legal costs thereof.

LAWSUIT BY ERA GOOD

On 13 January 2012, the Group received a lawsuit from the plaintiff Era Good against the defendants

Pivovarna Laško, Pivovarna Union, and Radenska regarding 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






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taken the decision.

ADJUSTMENT OF LAND REGISTRY OR LEGAL SITUATION CONCERNING THE HOLIDAJ ACCOMODATION CA-

PACITIES IN CROATIA


apartments in Barbariga) the activities for their entry into the land registry are in progress. Pivovarna

Laško is entered into the land registry as the owner. In the process of the ownership transformation

the value of this property was valued at zero due to the uncertain situation in relation to the property

in the republics of former Yugoslavia and this value was included into the opening balance. The D.S.U

Company that should have issued a certificate during this process allowing Pivovarna Laško to be en-

tered as successor holds the view that the said property had not been the subject of the privatisation.

Legal opinions are currently being acquired. Moreover, there is likelihood that in the course of ar-

ranging mutual relations with D.S.U. certain obligations may arise for Pivovarna Laško. When regu-

lating, D.S.U. will need to take into consideration the actual state of property and the value of our

investments. The initial value of this property will need to be determined that will serve as the basis in

negotiations (or court proceedings against D.S.U.).

4.4.11 COSTS OF THE AUDITOR

The costs of the audit of the Laško Group performed by the audit firm Deloitte revizija, d. o. o., for

2012 totalled EUR 109,700.

4.4.12 UNDERLYING TRANSACTIONS AFTER THE REPORTING DATE

Transactions after the end of the financial year in the Laško Group are described on page 112 of the

annual report, Chapter 2.13. After the end of the financial year there were no significant transactions

that would affect the non-consolidated financial statements.

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218 Financialreport ofPivovarnaLaško, d. d.

12345

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5.1 Statement of the Management 220

5.2 Auditor’s report 222

5.3 Audited non-consolidated financial statements of Pivovarna Laško, d. d. 225

5.3.1 Statement of financial position 225

5.3.2 Profit or loss account 227

5.3.3 Statement of other comprehensive income 228

5.3.4 Statement of changes in equity in 2012 229

5.3.5 Statement of changes in equity in 2011 231

5.3.6 Statement of cash flows 233

5.3.7 Loss relief of the financial year 234

5.4 Notes to non-consolidated financial statements 235

5.4.1 General data 235

5.4.2 Disclosure of compliance with IFRS 235

5.4.3 Use of new and renewed IFRS and explanatory notes of OPIFRS 235

5.4.4 Significant accounting policies 237

5.4.5 Notes to individual items of the financial statements 247

5.4.6 Financial instruments and risks 283

5.4.7 Relations with the related parties 288

5.4.8 Remuneration of the members of the Management Board and Supervisory

Board and those with individual contracts of employment 292

5.4.9 Potential liabilities and potential assets 294

5.4.10 Costs of the auditor 295

5.4.11 Underlying transactions after the reporting date 295

Contents

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aš

ko

, d

. d

.

220

The Management Board of the Pivovarna Laško Company 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 presentation of the financial position and the results of operations of the Company in ac-

cordance with the International Financial Reporting Standards as adopted by the European Union and

with the Companies Act.

The Management Board of Pivovarna Laško d.d. confirms the Business Report and Financial State-

ments with explanatory notes for the year ended 31 December 2012 and declares:

• that the financial statements have been prepared under the assumption that Pivovarna Laško, d. d.

is a going concern;

• that appropriate accounting policies were consistently applied and that any changes thereof have

been disclosed;

• that the accounting estimates have been prepared in a fair and diligent manner and are in accord-

ance 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.


Dušan Zorko, MSc


Marjeta Zevnik


Mirjam Hočevar


Gorazd Lukman


Matej Oset


5.1

Statement of the Management

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5.2

Auditor’s report

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223

Fin

an

cia

l r

ep

or

t o

f P

ivo

va

rn

a L

aš

ko

, d

. d

.

LA

ŠK

O G

RO

UP

A

NN

UA

L R

EP

OR

T 2

012

Fin

an

cia

l r

ep

or

t o

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ivo

va

rn

a L

aš

ko

, d

. d

.

224

LA

ŠK

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A

NN

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OR

T 2

012

225

Fin

an

cia

l r

ep

or

t o

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va

rn

a L

aš

ko

, d

. d

.5.3

Audited non-consolidatedfinancial statementsof Pivovarna Laško, d. d.for the financial year 2012in accordance with IFRS

5.3.1 STATEMENT OF FINANCIAL POSITION OF PIVOVARNA LAŠKO, D. D.,AS OF 31 DECEMBER 2012

(in EUR) Note 2012 2011

ASSETS

Non-current assets 307,543,188 320,277,999

Intangible fixed assets 1 1,231,781 1,395,064

Tangible fixed assets 2 46,237,123 49,161,657

Investment property 3 5,652,938 6,538,066

Long-term financial investments in the subsidiaries 4.A 237,715,141 245,016,537

Available-for-sale financial assets 4.C 241,655 241,655

Long-term loans 5 404 3,310

Long-term finance lease receivable 6 590,416 751,266

Long-term deferred tax receivables 7 15,873,730 17,170,444

Short-term assets excluding short-term

accruals and prepaid expenditure 72,876,802 85,159,806

Non-current assets held for sale 8 4,408,589 4,408,589

Inventories 9 7,818,899 8,544,047

Short-term operating receivables 10.A 19,282,071 20,735,181

Financial assets available for sale 11 37,909,041 50,026,401

Short-term loans 12 3,162,738 1,105,738

Cash and cash equivalents 13 295,464 339,850

Short-term accruals and prepaid expenditure 14 - 49,527

Total short-term assets 72,876,802 85,209,333

TOTAL ASSETS 380,419,990 405,487,332

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226

5.3.1 STATEMENT OF FINANCIAL POSITION OF PIVOVARNA LAŠKO, D. D., AS OF 31 DECEMBER 2012( c o n t i n u a t i o n )

(in EUR) Note 2012 2011

EQUITY 91,534,436 109,365,419

Capital 15 91,534,436 109,365,419

Share capital 36,503,305 36,503,305

Capital reserves 47,256,606 64,675,034

Profit reserves 3,789,369 3,907,178

Revaluation surplus 3,985,156 4,279,902

LIABILITIES 288,885,554 296,121,913

Provisions and long-term accruals

and deferred income 16 1,349,459 1,421,397

Provisions for severance payments

and jubilee awards 16.A 1,259,169 1,088,909

Long-term accruals and deferred income 16.B 90,290 332,488


Short-term operating liabilities 17 2,814,670 25,289,353

Short-term liabilities excluding short-term

accruals and deferred income 18 279,969,563 263,928,111

Short-term operating liabilities 18.A 20,840,233 21,177,290

Short-term financial liabilities 18.C 259,129,330 242,750,821

Short-term accruals and deferred income 19 4,751,862 5,483,052

Total short-term liabilities 284,721,425 269,411,163


Accounting policies and notes form an integral part of these financial statements and should be read

in accordance them.

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227

Fin

an

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l r

ep

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rn

a L

aš

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, d

. d

.

5.3.2 PROFIT AND LOSS ACCOUNT OF PIVOVARNA LAŠKO, D. D., FOR THE PERIOD1 JANUARY – 31 DECEMBER 2012

(in EUR) Note 2012 2011

Net sales revenues 20.A, B. 88,960,946 94,314,248

Changes in vaues of inventories

of products and work in progress (542,453) 137,035

Other operating revenues 20.C 979,573 2,538,249

Costs of goods, materials and services 20.D (61,972,847) (65,869,989)

Labour costs 20.D (11,015,764) (10,638,357)

Depreciation of intangible

and tangible fixed assets 20.D (4,943,657) (6,294,430)

Operating expenses from revaluation 20.D (666,771) (1,672,108)

Provisions 20.D (262,006) (61,137)

Other operating expenses 20.F (1,846,530) (1,734,344)

OPERATING PROFIT OR LOSS 8,690,491 10,719,167

Financial revenues 21 9,535,307 3,981,229

Financial expenses 21 (34,009,554) (31,073,148)

PROFIT OR LOSS BEFORE TAX (15,783,756) (16,372,752)

Taxes 305,471 2,528,474

NET OPERATING PROFIT/LOSS

FOR THE ACCOUNTING PERIOD

FROM RETAINED OPERATING PROFIT (15,478,285) (13,844,278)

Discontinued operations

NET OPERATING PROFIT OR LOSS

OF THE ACCOUNTING PERIOD

FROM DISCONTINUED OPERATIONS (3,031,980) (1,683,990)

TOTAL NET OPERATING

PROFIT OR LOSS OF THE

ACCOUNTING PERIOD (18,510,265) (15,528,268)

Net loss per share from retained operations

Net loss per share 24 (1.7695) (1.5828)

Adjusted net loss per share 24 (1.7695) (1.5828)

Net loss per share from discontinued operations



Net loss per share




in accordance them.

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228

5.3.3 STATEMENT OF OTHER COMPREHENSIVE INCOME OF PIVOVARNA LAŠKO, D. D. FOR THE PERIOD 1 JANUARY – 31 DECEMBER 2012

(in EUR) Note 2012 2011

Net operating profit or loss

of the accounting period (18,510,265) (15,528,268)

OTHER COMPREHENSIVE INCOME

Financial assets available for sale 25 (3,345) 909,524

Profit / (loss) from property revaluation 25 201,543 (115,944)

Deferred tax from revaluation 25 366,796 (67,907)

OTHER COMPREHENSIVE INCOMES 564,994 725,673

TOTAL COMPREHENSIVE INCOME (17,945,271) (14,802,595)

Total comprehensive income per share (2.0515) (1.6923)

Adjusted total comprehensive income per share (2.0515) (1.6923)


in accordance them.

LA

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012

229

Fin

an

cia

l r

ep

or

t o

f P

ivo

va

rn

a L

aš

ko

, d

. d

.

5.3.

4 ST

ATE

ME

NT

OF

CH

AN

GE

S IN

EQ

UIT

Y O

F P

IVO

VAR

NA

LA

ŠKO

, D. D

. FO

R T

HE

PE

RIO

D 1

JAN

UA

RY –

31 D

ECE

MB

ER

20

12

Oth

er

N

et o

pera

ting

Shar

e

Cap

ital

Le

gal

Rese

rves

for

Ow

n

rese

rves

To

tal r

eser

ves

profi

t/lo

ss fr

om

Net

Su

rplu

s fro

m

TOTA

L

(in E

UR)

ca

pita

l re

serv

es

rese

rves

ow

n sh

ares

sh

ares

fr

om p

rofit

fr

om p

rofit

pr

evio

us y

ears

pr

ofit/

loss

re

valu

atio

n

CA

PITA

L

OP

ENIN

G B

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E

as o

f 1 J

anua

ry 2

011

36,5

03,3

05

64,6

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34

3,65

0,33

1

265,

166

(8

,319

) -

3,90

7,17

8

- -

4,27

9,90

2 1

09,3

65,4

19

Tran

sact

ions

with

ow

ners

Incr

ease

in o

wn

shar

es (s

take

s)

- -

- -

(134

,140

) -

(134

,140

) -

- -

(134

,140

)

Fina

ncia

l ass

ets

avai

labl

e fo

r sa

le

- -

- -

142,

459

-

142,

459

-

- -

142,

459

Tota

l tra

nsac

tion

with

ow

ners

-

- -

- 8,

319

-

8,31

9

- -

- 8,

319

Cha

nges

in c

ompr

ehen

sive

inco

me

Net

pro

fit/l

oss

of th

e fin

anci

al y

ear

- -

- -

- -

- -

(18,

510,

265)

-

(18,

510,

265)

Surp

lus

from

rev

alua

tion

of T

FA

- -

- -

- -

- -

- 20

1,54

3

201,

543

Surp

lus

from

fina

ncia

l

inve

stm

men

t rev

alua

tion

- -

- -

- -

- -

- (3

,345

) (3

,345

)

Taxe

s re

late

d to

ind.

item

s

of c

ompr

ehen

sive

inco

me

- -

- -

- -

- -

- 36

6,79

6

366,

796

Tota

l cha

nges

in c

ompr

ehen

sive

inco

me

in 2

012

- -

- -

- -

- -

(18,

510,

265)

56

4,99

4 (

17,9

45,2

71)

LA

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.

230

5.3.

4 ST

ATE

ME

NT

OF

CH

AN

GE

S IN

EQ

UIT

Y O

F P

IVO

VAR

NA

LA

ŠKO

, D. D

. FO

R T

HE

PE

RIO

D 1

JAN

UA

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31 D

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ER

20

12( c

o n

t i n

u a

t i o

n )

Oth

er

N

et o

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ting

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e

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ital

Le

gal

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rves

for

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n

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tal r

eser

ves

profi

t/lo

ss fr

om

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Su

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s fro

m

TOTA

L (in

EU

R)

capi

tal

rese

rves

re

serv

es

own

shar

es

shar

es

from

pro

fit

from

pro

fit

prev

ious

yea

rs

profi

t/lo

ss

reva

luat

ion

C

API

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Cha

nges

in e

quity

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rel

ief

- (1

7,41

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- -

- (2

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(232

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) (8

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65

- -

Abs

orpt

ion

of r

eser

ves

for

own

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es (s

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- -

- (1

26,1

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- 23

2,09

7

105,

969

-

- -

105,

969

Oth

er

- -

- -

- -

- 85

9,74

0

- (8

59,7

40)

-

Tota

l cha

nges

in c

apita

l -

(17,

418,

428)

-

(126

,128

) -

- (1

26,1

28)

- 18

,510

,265

(8

59,7

40)

105,

969

CLO

SIN

G B

ALA

NC

E

as o

f 31

Dec

embe

r 20

12

36,5

03,3

05

47,2

56,6

06

3,65

0,33

1

139,

038

-

- 3,

789,

369

-

- 3,

985,

156

91

,534

,436

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

acc

orda

nce

them

.

LA

ŠK

O G

RO

UP

A

NN

UA

L R

EP

OR

T 2

012

231

Fin

an

cia

l r

ep

or

t o

f P

ivo

va

rn

a L

aš

ko

, d

. d

.

5.3.

5 ST

ATE

ME

NT

OF

CH

AN

GE

S IN

EQ

UIT

Y O

F P

IVO

VAR

NA

LA

ŠKO

, D. D

. FO

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JAN

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31 D

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20

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for

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m

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(in E

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pita

l re

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n sh

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sh

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fr

om p

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fr

om p

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pr

evio

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ofit/

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re

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n

CA

PITA

L

OP

ENIN

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36,5

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1

660,

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(1

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- 4,

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-

- 3,

554,

230

124

,168

,015

Tran

sact

ions

with

ow

ners

Oth

er c

hang

es

- -

- -

3,74

9

(3,7

49)

- -

- -

-

Tota

l tra

nsac

tion

with

ow

ners

-

- -

- 3,

749

(3

,749

) -

- -

- -

Cha

nges

in c

ompr

ehen

sive

inco

me

Net

pro

fit/l

oss

of th

e fin

anci

al y

ear

- -

- -

- -

- -

(15,

528,

268)

-

(15,

528,

268)

Surp

lus

from

rev

alua

tion

of T

FA

- -

- -

- -

- -

- (1

15,9

45)

(115

,945

)

Surp

lus

from

fina

ncia

l

inve

stm

men

t rev

alua

tion

- -

- -

- -

- -

- 90

9,52

4

909,

524

Taxe

s re

late

d to

ind.

item

s

of c

ompr

ehen

sive

inco

me

- -

- -

- -

- -

- (6

7,90

7)

(67,

907)

Tota

l cha

nges

in c

ompr

ehen

sive

inco

me

in 2

011

- -

- -

- -

- -

(15,

528,

268)

72

5,67

2 (

14,8

02,5

96)

LA

ŠK

O G

RO

UP

A

NN

UA

L R

EP

OR

T 2

012

Fin

an

cia

l r

ep

or

t o

f P

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va

rn

a L

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, d

. d

.

232

5.3.

5 ST

ATE

ME

NT

OF

CH

AN

GE

S IN

EQ

UIT

Y O

F P

IVO

VAR

NA

LA

ŠKO

, D. D

. FO

R T

HE

PE

RIO

D 1

JAN

UA

RY –

31 D

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MB

ER

20

11( c

o n

t i n

u a

t i o

n )

Oth

er

N

et o

pera

ting

Shar

e

Cap

ital

Le

gal

Rese

rves

for

Ow

n

rese

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To

tal r

eser

ves

profi

t/lo

ss fr

om

Net

Su

rplu

s fro

m

TOTA

L

(in E

UR)

ca

pita

l re

serv

es

rese

rves

ow

n sh

ares

sh

ares

fr

om p

rofit

fr

om p

rofit

pr

evio

us y

ears

pr

ofit/

loss

re

valu

atio

n

CA

PITA

L

Cha

nges

in e

quity

Cur

rent

Los

s re

lief

- (1

5,13

6,61

9)

- -

- (3

91,6

49)

(391

,649

) -

15,5

28,2

68

- -

Form

ing

rese

rves

for

own

shar

es (s

take

s)

- -

- (3

95,3

98)

- 39

5,39

8

- -

- -

-

Tota

l cha

nges

in c

apita

l -

(15,

136,

619)

-

(395

,398

) -

3,74

9

(391

,649

) -

15,5

28,2

68

- -

CLO

SIN

G B

ALA

NC

E

as o

f 31

Dec

embe

r 20

11

36,5

03,3

05

64,6

75,0

34

3,65

0,33

1 26

5,16

6

(8,3

19)

- 3,

907,

178

- -

4,27

9,90

2 10

9,36

5,41

9

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

acc

orda

nce

them

.

LA

ŠK

O G

RO

UP

A

NN

UA

L R

EP

OR

T 2

012

233

Fin

an

cia

l r

ep

or

t o

f P

ivo

va

rn

a L

aš

ko

, d

. d

.

5.3.6 STATEMENT OF CASH FLOWS OF PIVOVARNA LAŠKO, D. D. FOR THE PERIOD1 JANUARY – 31 DECEMBER 2012

(in EUR) Note 2012 2011

OPERATING PROFIT IN THE PERIOD 8,690,491 10,502,063

Adjustments for:

Depreciation of tangible fixed

assets and investment property 20.D 4,708,418 6,059,192

Depreciation of intangible assets 20.D 235,238 235,238

Write off of long-term assets 20.D 525,788 260,557

Write off of short-term assets 20.D 420,028 561,870

Net movement of provisions 16.A (71,938) 156,248

Total adjustments 5,817,534 7,273,105

CHANGES IN OPERATING CAPITAL

Inventories and non-current assets held for sale 8,9 725,148 333,915

Operating and other receivables 10 1,242,726 (7,244,121)

Operating and other liabilities 18.A (1,068,249) 2,064,312

Total changes in operating capital 899,625 (4,845,894)

NET CASH FLOW FROM OPERATING ACTIVITIES 15,407,650 12,929,274

Cash flow from operating activities

Purchase of tangible fixed assets 2,3 (1,225,613) (2,855,220)

Purchase of intangible long-term assets 1 (71,956) 5,040

purchase / sale of financial assets 4.C,11 (3,203,822) (608,472)

Interest received 21 157,354 44,741

Dividends and capital gains received 21 9,377,953 3,936,488

NET INVESTMENT CASH FLOWS 5,033,916 522,577

Cash flow from financing

Interest paid 21 (14,536,832) (15,396,786)

Purchase of own shares 15 114,292 -

Increase / decrease in financial debt 17,18.C (6,063,411) 2,187,985

NET CASH FLOW FROM FINANCING (20,485,951) (13,208,801)

NET INCREASE / DECREASE IN CASH

AND CASH EQUIVALENTS (44,385) 243,050

Cash and cash equivalents

- at the beginning of the year 13 339,850 96,800

Cash and cash equivalents - at the end of the year 13 295,465 339,850


in accordance them.

LA

ŠK

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A

NN

UA

L R

EP

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T 2

012

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an

cia

l r

ep

or

t o

f P

ivo

va

rn

a L

aš

ko

, d

. d

.

234

5.3.7 LOSS RELIEF OF THE FINANCIAL YEARNet loss in 2012 totalled EUR 18,510,265.

(in EUR) 2012 2011

Net loss of the financial year (18,510,265) (15,528,268)

Loss relief:

Part of other reserves from profit to cover net loss 232,097 391,649

Cover loss from a part of profit from previous years 859,740 -

Part of capital reserves to cover net loss 17,418,428 15,136,619

ACCUMULATED LOSS AS OF 31 DECEMBER - -

The Management Board proposes to the Supervisory Board and the General Meeting that the loss

of 2012 amounting to EUR 18,510,265 should be covered by the profit from the previous years in the

amount of EUR 859,740 and by other profit reserves of EUR 232,097 and by capital reserves of EUR

17,418,428.

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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 is obliged to perform a regular annual audit of its operations. The main activity of the Company

is the production and sale of beer, malt and waters. It also performs other wholesale and retail trade

activities

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 with 8,747,652 ordinary freely nego-

tiable registered no-par-value shares. There are no limitations on the payment of dividends and other

distributions of equity.

5.4.2 DISCLOSURE OF COMPLIANCE WITH IFRS

The financial statements have been drawn up in accordance with the International Financial Report-

ing Standards (IFRS) as adopted by the European Union.

5.4.3 USE OF NEW AND RENEWED IFRS AND EXPLANATORY NOTES OF OPIFRS

A) STANDARDS AND EXPLANATORY NOTES THAT ENTERED INTO FORCE IN THE REPORTING PERIOD

In the current period, the following amendments to the existing standards issued by the Interna-

tional Accounting Standards Board (IASB) and adopted by the EU are valid:

• Amendments to IFRS 7 »Financial instruments: Disclosures« – Transfers of financial assets that

the EU adopted on 22 November 2011 (effective for annual periods beginning on or after 1 July 2011).

5.4

Notes to non-consolidated financial statements

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The adoption of these amendments to the existing standards led to no changes in the accounting

policies of the Group.

B) STANDARDS AND EXPLANATORY NOTES ISSUED BY OMRS 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 that the EU approved but did not yet enter into force:

• IFRS 10 »Consolidated financial statements« that the EU adopted on 11 December 2012 (effective

for annual periods beginning on or after 1 January 2014),

• IFRS 11 »Joint arrangements« that the EU adopted on 11 December 2012 (effective for annual peri-

ods beginning on or after 1 January 2014),

• IFRS 12 »Disclosure of interests in other entities« that the EU adopted on 11 December 2012 (effec-

tive for annual periods beginning on or after 1 January 2014),

• IFRS 13 »Fair value measurement« that the EU adopted on 11 December 2012 (effective for annual


• IAS 27 (amended in 2011) »Separate financial statements« that the EU adopted on 11 December

2012 (effective for annual periods beginning on or after 1 January 2014),

• IAS 28 (amended in 2011) »Investments in associates and joint ventures« that the EU adopted on 11

December 2012 (effective for annual periods beginning on or after 1 January 2014),

• Amendments to IFRS 1 »First-time adoption of IFRS« – Severe hyperinflation and removal of fixed

dates for first-time adopters that the EU adopted on 11 December 2012 (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 that the EU adopted on 5 June 2012 (effective for annual periods beginning

on or after 1 July 2012),

• Amendments to IAS 12 »Income Taxes« – Deferred Tax: Recovery of Underlying Assets that the EU

adopted on 11 December 2012 (effective for annual periods beginning on or after 1 January 2013),

• Amendments to IAS 19 »Employee benefits« – Post-employment Benefits that the EU adopted on

5 June 2012 (effective for annual periods beginning on or after 1 January 2013),

• Amendments to IAS 32 »Financial instruments: Presentation« – Offsetting Financial Assets and



• IFRIC 20 »Stripping Costs in Production Phase of a Surface Mine« that the EU adopted on 11 De-

cember 2012 (effective for annual periods beginning on or after 1 January 2013).

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C) STANDARDS AND INTERPRETATIONS ISSUED BY IASB BUT HAVE NOT YET BEEN ADOPTED BY THE EU

Currently, the IFRS as adopted by the European Union do not considerably differ from the regulations

adopted by the International Accounting Standards Board (IASB) with the exception of the following

standards, changes of the existing standards and interpretations which were not confirmed for use on:

• IFRS 9 »Financial instruments« (effective for annual periods beginning on or after 1 January 2015),

• Amendments to IFRS 1 »First-time adoption of IFRS« – Government Loans (effective for annual


• Amendments to IFRS 9 »Financial instruments« and IFRS 7 »Financial instruments: Disclosures«

– Mandatory Effective Date and Transition Disclosures,

• Amendments to IFRS 10 »Consolidated financial statements«, IFRS 11 »Joint arrangements« and

IFRS 12 »Disclosure of Interests in Other Entities« – Transition Guidance (effective for annual


• Amendments to IFRS 10 »Consolidated financial statements«, IFRS 12 »Disclosure of Interests in

Other Entities« and IAS 27 »Separate Financial Statements« – Investment Entities (effective for

annual periods beginning on or after 1 January 2014),

• Amendments to various standards »Improvements of IFRS (2012)« arising from the annual project

for the IFRS improvement published on 17 May 2012 (IFRS 1, IAS 1, IAS 16, IAS 32, IAS 34) mainly

in order to eliminate discrepancies and misinterpretations of the text (effective for annual periods

beginning on or after 1 January 2013).

The Company estimates that the adoption of these standards, amendments and interpretations will not

have a significant impact on the Company’s financial statements during the period of initial application.

At the same time, the accounting for the hedging of risks connected to the portfolio of financial

assets and liabilities, the principles of which the EU has not yet adopted, still remains unregulated.

The Group assesses that the accounting of risk hedging connected to the portfolio of financial assets

and liabilities to be in accordance with the requirements of IAS 39: (»Financial Instruments: Recogni-

tion and Measurement«) will not have a significant impact on the Company’s financial statements if

used on the date of the statement of financial position.

5.4.4 SIGNIFICANT ACCOUNTING POLICIES

BASIS FOR DRAWING UP THE ANNUAL REPORT

The financial statements have been drawn up in accordance with IFRS, the Companies Act, other

acts and the Rules on Accounting of Pivovarna Laško and are expressed in EUR. When disclosing and

valuating the items, the provisions of the standards were directly applied with the exception of only 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 disclosed at carried at revalued amount or fair value. The valuation

of assets and liabilities is presented in detail in individual sections below.

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When selecting the accounting policies and when deciding on their use and drawing up these finan-

cial statements, the Pivovarna Laško Management Board took into consideration the following three

requirements:

• Financial statements are understandable when understood by users without any problems,

• Information is relevant if it helps the user to make 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 in the continuation were consistently applied in all the periods

presented.

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 EUR, 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. Profits 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 account.

Exchange rate differences arising from debt securities and other financial instruments are recog-

nised at fair value and are included in the profit or loss of transactions with foreign currencies. Ex-

change rate differences in non-monetary items such as securities kept for trading are shown as a

portion of the increase or decrease of fair value. Currency differences in securities available-for-sale are

included in the revaluation surplus.

RECOGNITION OF REVENUE

Revenue is measured at the fair value of the consideration received or receivables for the sale of

products, goods or services within the regular operations of the Group. Revenue is presented exclusive

of value added tax and excise duties, rebates and reimbursements.

Revenue from the sale of products, goods and materials is recognised in case of compliance with all

the conditions:

• 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.

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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 in the licence agreement.

INVESTMENTS INTO THE SUBSIDIARIES

A subsidiary company is a company where Pivovarna Laško, the controlling company, has the power

to govern the financial and operating policies.

In separate financial statements of Pivovarna Laško, the investments into subsidiaries are measured

at their acquisition values in compliance with IAS 27 (except when classified as non-current assets)

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 39 or IAS 27

are considered. Furthermore, the entire carrying amount of the investment is tested as an asset in ac-

cordance with IAS 36; its book value is compared to the recoverable amount (the higher of its fair value

less costs to sell or value in use).

INVESTMENTS INTO THE ASSOCIATED COMPANIES

An associated company is a company over which the Group has significant influence. It is neither

a subsidiary nor a jointly controlled company. Significant influence is the power to participate in the

financial and operating policy decisions of the investee but is not control or joint control over those

policies.

In consolidated financial statements, business results and the assets and liabilities of the associated

companies are included by using the equity method unless they are classified as non-current assets

held for sale in accordance with IFRS 5. According to the equity method, investments in an associate

company are initially recognised in the consolidated statement of financial position at purchase value

whereas its later measurement depends on the corresponding shares of the investors in earnings,

losses and other comprehensive income of the associated company arising subsequent to the date of

the investment recognition. If the investor’s share in losses or negative other comprehensive income

of the associated company is higher than the value of its stake in the associated company (book value

of the financial investment into the associated company including potential 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 share of the investor decreases to zero, further

losses are defined and the liability recognised only to the extent that the investor has incurred a legal

or constructive obligation or made payments on behalf of the associate company.

On acquisition of the investment in an associate, any positive difference between the purchase value

of the financial investment and the investor’s share of the fair values of the net identifiable assets, li-

abilities or contingent liabilities is regarded in the financial statements of the investor as goodwill and

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is integrated into the book value of the financial investment. On the contrary, any negative difference

between the purchase value of the financial investment and the investor’s share of the fair values of the

net identifiable assets, liabilities or contingent liabilities is immediately recognised in the profit or loss.

When establishing whether in the financial statements of the investor any loss due to impairment

of the investment into the associate company should be recognised, the provisions of IAS 39 or IAS

27 are considered. Furthermore, the entire carrying amount of the investment is tested as an asset in

accordance with IAS 36; its book value is compared to the recoverable amount (greater than the higher

of its fair value less costs to sell or value in use).

Profits and losses resulting from transactions between the investor (and its consolidated subsidiar-

ies) and the associated are recognised in the investor’s financial statements only to the extent of unre-

lated investors’ interests in the associate. The investor’s interest of the profits or losses of the associated

company arising from these transactions is eliminated from the investor’s financial statements.

In separate financial statements of Pivovarna Laško, the investments into the associated companies

are measured at the acquisition price in accordance with IAS 27.

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 (patents, brands, licences 5 years; software 3 years). Estimates of expected functional life

periods and the depreciation method are checked with every preparation of financial statements; po-

tential changes of estimates of the categories mentioned are considered for the future periods and not

retroactively.

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 potential impairment.

Intangible asset is derecognised upon disposal or when no future economic benefits are expected

from further use. The gain or loss arising from derecognition of an intangible asset affects profit or

loss of the period of derecognition.

Depreciation rates are as follows:

Investment into foreign fixed assets 10 – 33.3 %

Other intangible fixed assets 33.3 %

Application software 10 %

Concession 33.3 %

Licences, patents 10 %

TANGIBLE FIXED ASSETS

Land and buildings in use are accounted for using the revaluation models and are disclosed at

revalued amount at the date of the revaluation less any subsequent accumulated amortisation or im-

pairment. Revaluations are made with sufficient regularity to ensure that the carrying amount does

not differ materially from that which would be determined using fair value at the balance sheet date.

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Upward revaluation of land and buildings is recognised or accumulated as the revaluation surplus

in other comprehensive income except when the previous downward revaluation of the same land and

buildings is abolished and recognised in profit or loss; in this case upward revaluation to the value

of the prior downward revaluation is recognised in profit or loss. Downward revaluation of land and

buildings that exceeds potential previously recognised revaluation surplus of the same land and build-

ings is recognised in profit or loss.

Production facilities, machinery, all types of equipment, reusable packaging and small tools are

recognised using the model of purchase price or are disclosed at purchase price less cumulative depre-

ciation and potential impairment.

Tangible fixed assets in acquisition are measured at purchase price less potential impairment. Pur-

chase price also includes borrowing costs in accordance with the accounting policy. They are classified

under tangible fixed assets that will be owned when finished and available for use. Depreciation of

tangible fixed assets starts in the month following the month of the beginning of their use.

Land is not depreciated.

Building depreciation is recognised in profit or loss and the decrease of revaluation surplus is simul-

taneously recognised in retained profit. When buildings are derecognised, their potential revaluation

surplus is transferred directly to retained profit.

Depreciation is calculated using the straight line method and (except for land and tangible fixed as-

sets in acquisition that are not depreciated) and is recognised so that the purchase value or revalued

amount of the intangible fixed assets less potential residual value is written off in the period of its esti-

mated functional life time. The estimates of expected functional life time and residual values and the

depreciation method are checked with every preparation of financial statements; potential changes in

estimates of the categories mentioned are used for future periods and not retrospectively. The expected

functional life time of individual groups of assets is the following:

Buildings 10 – 66 years

Plant and machines 5 – 14 years

Hardware and software 3 years

Vehicles 3 – 9 years

Other equipment 3 – 20 years

Reusable container (barrels, bottles, crates) 4 – 5 years

Credit 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 generated with regard to the tangible fixed asset increase its purchase value

if its future benefits are increased compared to the originally estimated benefits; in this case the costs

that allow the extension of the useful life of the asset initially decrease the accumulated depreciation

calculated till then. The extension of the useful life of a tangible fixed asset means the extension of

originally determined useful life in which the asset is depreciated. All other repairs and maintenance

are included in profit or loss of the financial year when they occurred.

The tangible fixed asset is derecognised on its disposal or when no economic benefits might be ex-

pected to be available from the asset when it is disposed. Profit or loss on disposal affect the profit or

loss of the period in which asset is derecognised.

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INVESTMENT PROPERTY

Investment property is property owned by the Company or under financial lease for the purpose of

earning rent or increasing the value of the property. Investment property is not used for production or

the sale of goods or services, for administrative purposes or for regular operations. After recognition,

they are measured at purchase value whereas later on 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 af-

fects profit or loss of the period in which it is effected.

Investment property is derecognised on its disposal or final interruption of its use and no economic

benefits might be expected to be available from the asset when it is disposed. Profit or loss on disposal

affect the profit or loss of the period in which asset is derecognised.

IMPAIRMENT OF TANGIBLE FIXED ASSETS AND INTANGIBLE ASSETS (EXCEPT GOODWILL)

When financial statements are drawn, all tangible fixed assets and intangible assets (except goodwill)

are checked whether there are any potential indications of impairment. In the event of such indica-

tions of impairment, their recoverable amount is estimated. If the recoverable amount of an individual

asset cannot be established, the recoverable amount of a cash-generating unit is estimated that the

asset concerned belongs to.

The recoverable amount of the asset is the larger of the following: its fair value decreased by sale

expenses, or its value in use. The latter is estimated as the current value of discounted future cash flows

associated with the financial asset taking into account the discount rate before taxation that reflects the

current market estimate of the time value of the money and specific risks related to the assets that were

not considered in the estimate of future cash flows.

The asset (or a cash-generating unit) is impaired to its recoverable amount if the latter is lower than

its book value. Impairment is immediately recognised in profit or loss except when the asset concerned

is carried using revaluation model; in this case the impairment is disclosed as the decrease in revalu-

ation surplus.

LOANS GIVEN, DEPOSITS, MONETARY ITEMS

As financial assets, loans given, deposits and monetary items are initially measured at fair value at

the date of their issue or placement.

After initial measurement they are disclosed at amortised cost using the effective interest method

reduced by potential impairment.

FINANCIAL ASSETS AVAILABLE FOR SALE

After initial measurement, available-for-sale financial assets are subsequently carried at fair value at

the acquisition. This fair value is usually the same as the purchase value; however, sometimes adjust-

ments are needed.

After the initial recognition, the financial assets available for sale are measured at fair value in the

statement of financial position and changes in fair value are recognised under other comprehensive

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income excluding their impairments and interest that are recognised by using the effective interest

rate and exchange rate differences.

The best evidence of fair value is normally given by quoted prices on an active market. If these are

not available, valuation techniques are applied that shall as far as possible take account of market input

data and use recent arm’s length market transactions, reference to the current fair value of another

instrument that is substantially the same and discounted cash flow analysis.

If the fair value of a financial asset available for sale cannot be reliably measured, the asset shall be

carried at its purchase price taking into consideration its potential impairment.

When a financial asset available for sale is derecognised or permanently impaired, the cumulative

other comprehensive income is transferred to profit or loss of the period when the asset was derecog-

nised or permanently impaired.

DERIVATIVE FINANCIAL INSTRUMENTS

Derivative financial instruments are used for managing interest rate risks. They comprise interest

options and interest swaps.

Derivative financial instruments are first recognised at cost on the day a contract is concluded and

later revalued to the fair value on the reporting date. Profits and losses connected to changes in fair

value are immediately recognised in profit and loss unless they are used as protection against risk.

LONG-TERM RECEIVABLES AND DEFERRED TAX LIABILITIES




whereas deferred tax assets are only recognised to the level of such temporary differences that are

expected to be used based on sufficient taxable profits. Deferred tax liabilities are calculated using the

tax rate (and legislation) as prescribed by law in force on the balance sheet date which is expected to be

used at the time the deferred tax is realised or liability for deferred tax settled.







NON-CURRENT ASSETS HELD FOR SALE OR A DISPOSAL GROUP (AND RELATED LIABILITIES)

Non-current assets held for sale (and liabilities associated with the non-current assets) are those

non-current assets or liabilities for whose book value it is reasonable to assume it will be settled mainly

with the sale and not with further use. This condition is deemed to have been complied with only if its

sale is highly probable and if the assets or their group (and liabilities associated with them) are in the

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state in which the sale is possible. The management needs to be committed to the closing of the sale

process within a year from the reclassification to this item of assets or their group (and the associated

liabilities).

The assets (and associated liabilities) related to the subsidiary where it is planned that the dominant

influence will be lost, they need to be classified under a 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 a disposal group are measured at the lower of book value or fair

value less costs to sell.

INVENTORIES

Inventories of raw materials and consumable are disclosed at the lower of cost and net realisable

value and are used according to the weighted average cost formula. 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 goods and partly-finished goods 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).

Inventories of raw materials, materials, spare parts, products and merchandise are written off on

the basis of inventory records, complaint and commission records or upon a proposal of a responsible

person (also damaged products, ullage and fracture) that requires the decision of the management of

the company. The inventories need to be written off in full if the sale is discontinued for ever or its 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

At initial recognition, operating receivables are shown at fair value and are later measured on the

basis of paid values using the effective interest rate method less impairment.

Impairments of operating receivables are made when there is objective evidence that it will not be

able to collect the full amount due. The impairment amount represents the difference between the

book value and the current value of (expected) estimated future cash flows discounted by the effective

interest rate. The impairment amount is recognised in profit or loss.

CASH AND CASH EQUIVALENTS

For the cash flow statement, cash and cash equivalents comprise cash on hand, sight deposits at

banks and investments into the money market instruments without bank overdrafts. Bank overdrafts

are included under short-term financial liabilities in the balance sheet.

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SHARE CAPITAL

Ordinary shares are classified under capital. Transaction costs directly associated with the issue of

new shares which are not connected to the acquisition of a company are shown as a decrease in capital.

Any 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.

OWN SHARES

If the Company reacquired its own shares in the financial year, the paid amount inclusive of transac-

tion costs and exclusive of tax is deducted from total capital as own shares (treasury shares) until these

shares are removed, reissued or sold. The company must form reserves for own shares in the identical

amount for that financial year. At the same time, it must also form provisions for PILR shares owned

by the subsidiaries. Reserves for own shares are released when the Company disposes of its own shares

or removes them, crediting the source from which they were formed. Upon the sale of such shares,

the difference between the sale and book value of own shares is directly calculated into equity capital

and has no effect on profit or loss. Own shares are used for the purposes defined in Article 247 of the

Companies Act.

DIVIDENDS

Until approved by the General Meeting of Shareholders, foreseen dividends are treated as retained

earnings.

PROVISIONS

Provisions are recognised when the Company shows a legal obligation as a result of past transac-

tions for which a probable likelihood exists in the future that it will have to settle the liability and when

a reliable estimate of the liability can be made. Provisions may not be formed to cover future losses

from operations.

The amount of the provision recognised 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 uncer-

tainties. If the provision is measured at the level of future cash flows and the time value of money is

important, the amount is discounted to the current value

The net liabilities of the company in connection to long-term benefits for years of service, except for

pension schemes, are the earnings which employees obtain in exchange for their service during cur-

rent and previous periods. Such liabilities are calculated using the method of foreseen significance of

units and are discounted to their current values.

OPERATING LIABILITIES

Operating liabilities comprise credit to suppliers for purchased merchandise or services and liabili-

ties to employees, the state, owners or others. Liabilities are recognised if it is likely that due to their

settlement the factors enabling economic benefit will decrease and the amount for settlement can reli-

ably be measured. They are initially recognised at fair value, and later measured according to realised

payments using effective interest rates.

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FINANCIAL LIABILITIES

Financial liabilities are recognised at fair value upon their arising, exclusive of any arising transac-

tion costs. In subsequent periods, financial liabilities are measured according to their realised payment

using effective interest rates. Any difference between receipts (exclusive of transaction costs) and li-

abilities are recognised in profit or loss throughout the entire period of the financial liability.

DISCONTINUED OPERATIONS

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 co-ordinated plan to dispose of a separate major line of business or geographical

area of operations or

• is a subsidiary acquired exclusively with a view to resale.

CORPORATE TAX

The amount of corporate tax in the statement of comprehensive income represents the amount of

current and deferred tax.

Current tax is calculated on the basis of taxable profit of the current year. In the statement of compre-

hensive income, taxable profit can differ from profit before taxes by income and expense items taxed or

fiscally recognised in other taxable periods or income and expense items that will never be taxed or fiscally

recognised. Current corporate tax is calculated using the 18-percent tax rate in 2012, 17-percent tax rate

in 2013, 16-percent in 2014 and 15-percent from 2015 on for companies with the registered office in Slo-

venia. The tax rate in Croatia where the registered office of Laško Grupa, Zagreb, is located equals 20 %

whereas in Kosovo (registered office of the Birra Peja Company) the tax rate of the corporate tax equals 10 %.

LONG-TERM RECEIVABLES AND DEFERRED TAX LIABILITIES




whereas deferred tax assets are only recognised to the level of such temporary differences that are ex-

pected to be used based on sufficient taxable profits. Deferred tax is calculated using the tax rate (and

legislation) as prescribed by law in force on the balance sheet date which is expected to be used at the

time the deferred tax is realised or liability for deferred tax settled.







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5.4.5 NOTES TO INDIVIDUAL ITEMS IN THE FINANCIAL STATEMENTS

1. INTANGIBLE FIXED ASSETS

Year 2012 Licences and IA

(in EUR) other IA in acquisition Total

PURCHASE VALUE

1 January 2012 3,354,786 - 3,354,786

Direct acquisition 71,956 - 71,956

Disposal (2,152) - (2,152)

31 December 2012 3,424,590 - 3,424,590


1 January 2012 1,959,722 - 1,959,722

Depreciation during the year 235,239 - 235,239

Disposal (2,152) - (2,152)

31 December 2012 2,192,809 - 2,192,809

CURRENT VALUE

31 December 2012 1,231,781 - 1,231,781

1 January 2012 1,395,064 - 1,395,064

Year 2011 Licences and IA

(in EUR) other IA in acquisition Total

PURCHASE VALUE

1 January 2011 3,354,786 5,039 3,359,825

Transfer of tangible fixed assets - (5,039) (5,039)

31 December 2011 3,354,786 - 3,354,786


1 January 2011 1,724,484 - 1,724,484

Depreciation during the year 235,238 - 235,238

31 December 2011 1,959,722 - 1,959,722

CURRENT VALUE

31 December 2011 1,395,064 - 1,395,064

1 January 2011 1,630,302 5,039 1,635,341

There were intangible assets pledged as of 31 December 2012. The Company pledged a part of the

brand names in the amount of EUR 50 million as security for short-term loans taken out from banks

which are a constituent part of the assets of the Company and in accordance with the accounting stand-

ards on own brand names are not disclosed in the financial statements.

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2. T

AN

GIB

LE F

IXE

D A

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Pr

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tion

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2

eq

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(in

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6 17

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Dir

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n -

- -

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1,80

9,07

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ualifi

catio

n -

- -

66,5

82

- -

66,5

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Tran

sfer

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stm

ents

-

128,

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Dis

posa

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) -

(1,4

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31 D

ecem

ber

2012

7,

887,

235

25,6

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44

108,

189,

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25,0

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11,1

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27

221,

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1 Ja

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6

Dep

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n du

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792,

121

1,35

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3 1,

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1,24

1,34

8 -

4,70

8,41

7

Req

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n -

- -

66,5

82

- -

66,5

82

Dis

posa

l -

- (2

2,02

6)

(1,1

11,1

93)

(243

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) -

(1,3

76,7

85)

31 D

ecem

ber

2012

-

961,

724

101,

539,

818

19,9

58,7

52

9,43

7,64

6 -

131,

897,

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31 D

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2012

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887,

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24,6

38,6

20

6,64

9,30

9 5,

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1,74

7,18

1 22

1,50

8 46

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1 Ja

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y 20

12

7,88

7,23

5 25

,302

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7,

510,

602

5,32

5,53

2 2,

623,

363

512,

456

49,1

61,6

57

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Pr

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1

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1 Ja

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8,01

7,96

4 33

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10

6,81

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3 24

,912

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10

,690

,983

69

6,04

3 18

5,05

4,43

9

Dir

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2,69

6,64

9 2,

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-

18,5

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901,

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837

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Rev

alua

tion

55,7

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(7,6

99,6

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- -

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(7,6

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sfer

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/to

IFA

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-

- 5,

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296,

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) (5

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(847

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31 D

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2011

7,

896,

026

26,0

27,8

34

107,

716,

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25,0

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40

11,0

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27

512,

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1 Ja

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965,

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31 D

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2011

-

734,

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205,

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19,6

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9,86

4 -

129,

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278

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2011

7,

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25,2

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7,51

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2 5,

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3,36

3 51

2,45

6 49

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1 Ja

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8,

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6 2,

929,

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53,6

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18

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The disposals of tangible fixed assets represent the sale and write-off of such assets. The Company

has tangible fixed assets under a finance lease equalling EUR 33,660. Since 2008, the Company has

been utilizing the revaluation model for valuing real estate since while equipment and piece inventory

are valued using the cost model. The Company’s real estate was not evaluated on 31 December 2012.

The book value of intangible fixed assets reflects their fair value.

The Company made profit of EUR 19,342 from the sale of tangible fixed assets which is disclosed

as a revaluation of operating revenue and a loss of EUR 314,570, which is disclosed as revaluation of

operating expenses.

The company pledged tangible fixed assets which on 31 December 2012 amounted to EUR 30,027,719

to secure long- and short-term loans. The book value of pledged real estate amounted to EUR 25,412,339

and pledged equipment EUR 4,615,380. As of 31 December 2012, the liabilities for the purchase of tan-

gible fixed assets are carried totalling EUR 264,361.

3. INVESTMENT PROPERTY

Year 2012


PURCHASE VALUEST

1 January 2012 134,905 6,403,161 6,538,066

Revaluation - enforc. /impairment (2,414) (115,060) (117,474)

Disposal (188,565) (579,089) (767,654)

31 December 20122 (56,074) 5,709,012 5,652,938

CURRENT VALUE

31 December 2012 (56,074) 5,709,012 5,652,938

1 January 2012 134,905 6,403,161 6,538,066

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Year 2011


PURCHASE VALUE

1 January 2011 11,786 3,311,912 3,323,698

Revaluation - enforc /impairment 123,119 912,792 1,035,911

Requalification (transfer from assets held for sale) - 2,943,324 2,943,324

Transfer of equioment from 2010 - (414,962) (414,962)

Adj. Of transfer of TFA from 2010 - 123,484 123,484

31 December 2011 134,905 6,876,550 7,011,455


1 January 2011 - 446,090 446,090

Transfer of adjusted value of equipment - (213,313) (213,313)

Requalification (transfer from assets held for sale) - 240,612 240,612

31 December 2011 - 473,389 473,389

CURRENT VALUE

31 December 2011 134,905 6,403,161 6,538,066

1 January 2011 11,786 2,865,822 2,877,608

Investment property also includes property which is not used for carrying out the basic activity but

leased out by the Company. The Tri Lilije sports arena and catering facilities (Hotel Hum and Tabor

Castle) and holiday facilities are all recorded as investment property. With regard to the holiday ac-

commodation capacities in Croatia (holiday Centre in Ičići and holiday apartments in Barbariga) the

activities for their entry into the land registry are in progress. This is presented in more detail on page

274 of this report. The Company generated EUR 398,508 of operating expenses and EUR 189,148 of

operating revenue.

At the beginning of 2012, the management continued the procedure of divesting the catering facili-

ties Hotel Hum and Hotel Savinja and Tri lilije sports arena. In June, Hotel Savinja was sold for EUR

591,000, which is by EUR 176,653 less that the book value of this facility. Under this heading other

operating expenses totalling EUR 176,653 were recognised.

Investment property in the amount of EUR 4,531,496 has been pledged as security for long- and

short-term loans from banks.

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4. LONG-TERM FINANCIAL INVESTMENTS

4. A. LONG-TERM FINANCIAL INVESTMENTS IN THE SUBSIDIARIES

Stake in

(in EUR) capital 2012 2011

STAKES IN THE COMPANIES IN THE GROUP

In Slovenia:

Pivovarna Union, d. d., Ljubljana 97.922% 169,327,822 169,269,001

Vital Mestinje, d. o. o. 96.920% 1,457,761 1,457,761

Radenska, d. d., Radenci 82.058% 46,472,459 46,387,081

Delo, d. d., Ljubljana 80.834% 20,286,555 27,732,150

Firma Del, d. o. o., Laško 100.000% 7,427 7,427

237,552,024 244,853,420

Abroad:

Laško Grupa, d. o. o., Zagreb 100.000% 2,709 2,709

Laško Grupa, d. o. o., Sarajevo 69.220% 160,408 160,408

163,117 163,117

Total 237,715,141 245,016,537

DATA ON THE SUBSIDIARIES

Percentage Value Profit/

Activity Country of participation of total loss

(in EUR) of the Company of the company in capital capital in 2012

Subsidiaries Radenska, d. d., beverage Radenci production Slovenia 82.058% 71,009,842 (3,984,133) Skupina Union beer production Slovenia 97.922% 87,254,129 (3,640,467) and beverages Vital Mestinje, d. o. o. beverage production Slovenia 96.920% 3,457,414 91,199 Skupina Delo newspaper and Slovenia 80.834% 15,672,659 (2,089,603) publishing activities Firma Del, d. o. o., Laško beer production Slovenia 100.000% 35,280 961 Jadranska Pivovara - Split, d. d. beer production Croatia 99.460% (4,873,317) (3,764,764) Laško Grupa, d. o. o., trade Zagreb intermediary Croatia 100.000% 25,097 32,200 Laško Grupa, d. o. o., trade Sarajevo intermediary BiH 69.220% 312,997 24,333

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In accordance with IAS 27, the Company valuates long-term financial investments in the subsidiar-

ies according to the cost model

The Company possesses 441,740 shares of the subsidiary Pivovarna Union or a 97.922% stake;

539,536 shares in the subsidiary Delo or an 80.834% stake, 5,396,852 shares in the subsidiary Jadran-

ska pivovara – Split or a 99.459% ownership stake and 4,753,644 shares in the subsidiary Radenska or

a 93.911% ownership stake. The Company temporary sold 600,000 RARG shares (11.9%) in 2011. De-

spite the concluded contract on management rights and temporary transfer, Pivovarna Laško remained

their owner so that the Company did not carry out recognition of the investment. The share of voting

rights is higher as a result and currently totals 93.911%.

In addition, the Company also has majority ownership stakes in the following subsidiaries: Vital Mes-

tinje (96.92%), Laško Grupa, Zagreb (100%) and Laško Grupa, Sarajevo (69.22%) and Firma Del (100%).

For the purpose of establishing the need for impairment, appraisals of the investments in the Delo

Company including investments into the Večer Company were made by an authorised appraiser on

30 September 2012. On 31 December 2012, the value was updated. The estimated recoverable amount

of the investments on the last day of 2012 amounted to EUR 20,286,554 or EUR 37.60 per share, re-

flecting a decrease of EUR 7,446,003 over the stated book value. The negative difference is shown as

impairment among financial expenses.

The investments in the subsidiaries Pivovarna Union, Radenska and Vital Mestinje were not ap-

praised by an authorised business appraiser. Based on appraisals from 2010, the management re-

viewed the realisation of assessed planned cash flows and established that the realised business results

of 2012 exceeded planned business results, thus it assesses that there is no need for impairment of the

aforementioned investments.

Long-term financial investments in subsidiaries increased in 2012 due to additional purchases in the

amount of EUR 144,606. Pivovarna Laško increased its investment in Pivovarna Union by EUR 58,822,

its investment in Radenska by EUR 85,378 due to new purchases and in Delo EUR 406.

1. FINANCIAL INVESTMENT INTO THE SUBSIDIARY RADENSKA, D. D., RADENCI

On the basis of a final judgment in a dispute between the plaintiff Nova Kreditna banka Maribor as

the lien creditor and defendant Pivovarna Laško as the lien debtor, the Company reduced its invest-

ment in Radenska in 2011 by 345,304 shares, which the previous Management Board of Pivovarna

Laško had pledged to the benefit of the company Center naložbe for its receipt of a loan from NKBM.

The 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. The enforcement

had not yet been implemented by the date of the certification of the financial statements on 6 April

2012; however, due to the aforementioned facts, the Company transferred a portion of the investments

in the amount of EUR 3,637,650 corresponding to the average book value of 345,304 RARG shares

among assets available-for-sale. Due to the pledging of RARG shares, financial expenses had already

been recognised in 2009 and accrued costs and deferred revenues formed in the identical amount.

Despite the final judicial decision on the enforcement, the creditor (NKBM) did not initiate the en-

forcement proceedings until the date of the approval of the annual accounts.

On 30 November 2011, a framework contract (repurchase agreement) was concluded between

Deželna Banka Slovenia, d. d. and Pivovarna Laško, d. d. on the temporary sale of securities whose

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subject was the repurchase of 600,000 RARG shares of Radenska. The purchase price of the shares

equals EUR 5,000,000 and the repurchase price of the shares shall be EUR 5,146,306. The annual

depreciation rate is 6.5 %. The reacquisition date is 30 may 2013. Pivovarna Union is the pledger and

jointly liable party. The voting rights arising from the ownership of the said shares belong to the tem-

porary seller (Pivovarna Laško) for the duration of the repurchase agreement. Considering the context

of the transaction, the repurchase transaction represents a financial liability for Pivovarna Laško, there-

fore the Company did not disclose a reduction in the financial investment in the shares of the subsidi-

ary Radenska and similarly, on 31 December 2012 did not disclose a decrease in the management stake

in the aforementioned company.

DENATIONALISATION REQUESTS IN RADENSKA, RADENCI

The denationalization beneficiary Rudolf Höhn-Šarič, Baltimore, USA lodged a request for the de-

nationalisation of nationalised real estate in 1993. The lodged request regards the restitution of an

ownership stake in the former company and subordinate restitution into ownership and possession

real estate and payment of damages. In kind, this represents the majority of land and buildings inside

the Radenci Health Resort in Radenci and a part of the land and buildings at the location of the current

Boračeva bottling plan.

ADMINISTRATIVE PROCEDURE BEFORE THE ADMINISTRATIVE UNIT OF GORNJA RADGONA

The denationalisation request was lodged in compliance with the Denationalization Act on 4 May

1993. After the Supreme Court of the Republic of Slovenia established in a review procedure in July

2009 that the beneficiary Rudolf Hohn-Šarič was deemed a Yugoslav and Slovene citizen from 28 Au-

gust 1945 onwards, proceedings continued before the Administrative Unit of Gornja Radgona. Three

oral proceedings were published in April 2010, May 2011, January 2012, March 2012 and September

2012. The current proceedings are focused on the filing of preparatory forms, clarification of facts and

circumstances relevant to the decision in this matter and determination of the fact whether the ben-

eficiary had been entitled to receive compensation from a foreign country based on the Agreement on

Subsidies and Countervailing Measures between Austria and Germany of 1961 and the implementing

regulations.

On 27 June 2012, the Administrative Unit in Gornja Radgona issued a decision which refused the

request for the re-privatization of a nationalised company Zdravilišče Slatina Radenci (Radenci Health

Resort), Hohn in Comp. Public Trading Company in Radenci with a 48-percent stake (owned by Wil-

helmina Hohn Šarič). With the supplementary decision by the Administrative Unit in Gornja Radgona

the Zdravilišče Slatina Radenci (Radenci Health Resort), Hohn and Comp. Public Trading Company

is corrected and renamed to Kuranstalt Sauerbrun Radein AG. The beneficiary lodged an appeal and

Radenska submitted several preparatory forms. The Administrative Unit referred the appeal and the

preparatory forms to the Ministry of Economic Development and Technology.

In 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.

Public Trading Company together with the brands such as Radenska and labels with the trademark

label of three hearts, the label of two hearts and the label of one heart including the movable property.

Buildings and land are not the subject of the expert opinion. The deadline for the production of the

opinion is February 2013 with the proposal of the prolongation of the deadline.

NON-CONTENTIOUS PROCEEDINGS BEFORE THE DISTRICT COURT IN NOVO MESTO

The request for the return of property was lodged on 20 December 2010 in accordance with the

Enforcement of Criminal Sanctions Act. The beneficiaries Michael Wiesler and Barbara Purre-Wies

(grandchildren of Dr Anton Šarič) filed a motion for the return of assets and a proposal of the notifica-

tion with regard to the procedure before the Slovenian Intellectual Property Office. The beneficiaries

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assessed the value to be EUR 14.5 million. In addition, they are enforcing the return of 12 brands of

Radenska, Radenci, and payment of damages for the right to the mineral water and land on which the

mineral water springs are located. All together, 20 prepared forms of the beneficiary Rudolf Hohn-

Šarič have been lodged, and as many answers. On 23 December 2010, the beneficiaries carried out the

entry into the land register in the form of a seal indicating a dispute on all land parcels that are the

subject of the denationalization procedure. Notices of dispute have also been placed on several brands

of Radenska at the Slovenian Intellectual Property Office. The District Court in Novo mesto fixed a date

of the main hearing, namely 25 March 2013.

2. FINANCIAL INVESTMENT INTO THE SUBSIDIARY DELO, D. D., LJUBLJANA

A) PROCEDURES IN THE CASE OF A SALE OF A 100-PERCENT STAKE IN THE DELO COMPANY, LJUBLJANA

The Laško Group is selling its entire stake in the Delo Company. In addition to Pivovarna Laško

with 80.834% ownership stake in the aforementioned company, the subsidiary Radenska also owns a

19.17% ownership stake in the company.

The procedures connected to the sale of the investment commenced in October 2010 when a man-

date for the organised sale was submitted to the KPMG Company, Ljubljana. A due diligence exercise

of financial and tax operations was performed by the companies Ernest & Young, Ljubljana and Schon-

herr (Austria) in November 2010. A public invitation to investors was published in the newspapers

Delo and Financial Times (UK) 30 November 2010. The deadline for expression of interest was 14

December 2010. On 21 December 2010, an information memorandum was sent to potential investors

and seven NDAs were signed. The deadline for submitting non-binding offers was 28 January 2011. A

number of non-binding offers arrived by this date; however, the offered prices were lower than expect-

ed. Discussions with tenderers were carried out in February regarding the possibility of increasing the

non-binding offers. Discussions with three tenderers were performed by 1 march 2011 who additionally

obtained the Vendor due diligence for review and attend the management presentation. The deadline

for the submission of improved non-binding offers was 8 April 2011. On 14 April 2011, two non-binding

tenderers were submitted a request to improve their bids and give a detailed definition of the transac-

tion structure by 26 June 2011.

In July 2011, the tenderers submitted combined offers; however, they were not in accordance with

the published offer of sale. The Management Board examined the offers and took the view that the

procedure of sale should be stopped until the end of September. On 22 July 2011, all potential tenderers

were notified that the sale of Delo was dependent on the concluded sale of Večer. At the same time,

activities commenced for the restructuring of the company in terms of a division of activities on the

basis of which a newly designed offer of sale would be prepared. Additionally, measures for streamlin-

ing operations in Delo began to improve business results.

In January 2012, the KPMG Company concluded the first phase of the potential separation activity

project (simulation of a spin off balance sheet) but it stopped due to extremely demanding procedures

as well as due to the cessation of the sale process of the Delo Company. Based on this report the Man-

agement of Pivovarna Laško entrusted the Management Board of Delo (via the Delo’s Supervisory

Board) to implement additional measures to ensure positive operations of the company.

Currently, a draft contract is being finalised with the potential buyer of the Večer Company. If the

procedure is successfully concluded, the process of the sale of Delo will start. If the sale of the Večer

Company fails, than potential method of the sale of Delo will be examined in the months to come so

that also the Slovenian Competition Protection Agency would agree with it. In relation to the sale of

Večer, the Delo Company requested Slovenian Competition Protection Agency to extend the deadline

for the sale until 31 March 2013.

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B) ASSESSMENT OF THE VALUE OF DELO, D. D., LJUBLJANA

On 30 September 2012, the valuation of the investment into the Delo Company was conducted by a

certified business valuator registered with the Slovenian Institute of Auditing.

On 31 December 2012, the valuation of the said investment was updated.

The most important elements and findings during the valuation procedure are as follows:

• The subject of the valuation was the majority stake of the company (80.83%) enabling the majority

owner to impact the process of adopting decisions by the management bodies as well as to impact

the formulation of strategy and business decisions (on investments, borrowing and so on). The

majority owner may also implement status changes;

• The company’s market value equals the current value of expected free cash flows since in accord-

ance with a general financial assumption the company’s value equals the sum of all future benefits

which it brings to its owner(s);







• The valuator also attempted to use the method of comparable companies and comparable trans-

actions. The companies and transactions used are not comparable enough in terms of size (the

benchmark company is significantly larger) and scope of activities (in addition to the publication of

newspapers, the company is also involved in publishing and other media) which consequently has

an affect on both the profitability and financial position of the company. As a result, this method

was merely used as a control method;

• The valuator used assessments of operations in 2012 and the 2013 Business Plan of Delo. In esti-

mating future returns, the valuator took the company’s potential into account, determined on the

basis of past operations of the company and analyses of its activities. The appraisal envisaged two

scenarios of company operations in the future (optimistic and pessimistic) which differ in terms


Based on all the listed assumptions, the recoverable value of the 80.83% equity stake in Delo on

31 December 2012 was assessed for the purpose of verifying impairment in accordance with IAS 36,

which is identical to the value if used, namely: EUR 20,286,554 or EUR 37.60 per share.

3. FINANCIAL INVESTMENT INTO JADRANSKA PIVOVARA – SPLIT, D. D.

A) PROCEDURES IN THE CASE OF A SALE OF 99,11% STAKE IN JADRANSKA PIVOVARA – SPLIT, D. D.

Already in 2009, the management of Pivovarna Laško decided to terminate the production in

Jadranska pivovara and to move it to Laško or sell the production line to the most favourable bidder

due to poor financial position and for streamlining purposes. The announced relocation of produc-

tion was realised in 2010. In April 2010, Jadranska pivovara ceased the production activity and in the

autumn of 2010, also the filling of beer. The Company went to great lengths to find a buyer throughout

the year; however, no transaction was concluded with the individual buyers interested in acquiring the

production line.

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In autumn 2010, a mandate for the sale of a 99.11% stake in Jadranska pivovara – Split was therefore

submitted to the Caper Company, Zagreb. The intention to sell the stake publically was published in

the Croatian newspaper Poslovni Dnevnik and on the Mergemarkt business portal on 26 November

2011. By 17 December 2010, Caper prepared a list of potential buyers and sent them a teaser. The infor-

mation memorandum prepared on 24 December 2010 was submitted to two potential buyers, namely

SABMiler and Bavaria NV. The deadline for submitting non-binding offers was 2 March 2011. Prior to

this date, an inspection of Jadranska pivovara was carried out for the interested buyers. The deadline

for the submission of non-binding offers was extended twice. During this time both SABMiler and

Bavaria NV withdrew their offers; however, a new buyer appeared, Arena, d. o. o., Split. Despite the

extension of the deadline for the submission of bids to 25 March 2011, Arena did not provide a bid. The

Management Board of the Company establishes that the sales procedure has been unsuccessful and

will take a decision regarding further procedures.

After several years of unsuccessful attempts to sell the entire company as a joint stock company

and the asset deal, the Management Board decided in the second half of 2012 to sell the production-

technical equipment of Jadranska pivovara.

Interviews with buyers and companies interested in the purchase of the brewery equipment were con-

ducted. Negotiations are taking place with the selected intermediary dealing with the sale of equipment.

B) VALUATION OF JADRANSKA PIVOVARA – SPLIT, D. D.

Long-term financial investment into Jadranska pivovara – Split was impaired in full already in 2009.

In 2011, the valuation of immovable and movable property was performed by certified valuators. Ac-

cording to the optimistic scenario, the market value of the real estate on 31 December 2011 amounts to

EUR 6,388,680 and the market value under liquidation conditions equals EUR 5,308,990. The mar-

ket value under liquidation conditions according to the pessimistic scenario amounts to EUR 4,404,011

million. The estimated market value of the equipment of Jadranska pivovara (optimistic scenario) on

31 December 2011 amounts to EUR 3,574,700 and the market value under liquidation conditions (pes-

simistic scenario) EUR 1,821,106.

Based on the valuations of individual assets on 31 December 2011, it can be established that the value

of the Company’s assets decreased in recent years therefore no new valuation of the investment is

required. The value of the investment in Jadranska pivovara was equal to zero on the last day of 2012.

TRENDS CONCERNING LONG-TERM FINANCIAL INVESTMENTS – SUBSIDIARIES

(in EUR) 2012 2011



Acquisition of RARG 85,378 1,128

Acquisition of PULG 58,822 1,155

Acquisition of e Delo 406 74,979,203

Impairment of RARG - (3,637,650)

Impairment of Delo (7,446,002) (47,247,053)


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4. B. LONG-TERM FINANCIAL INVESTMENTS INTO ASSOCIATED COMPANIES

DATA ON THE ASSOCIATED COMPANIES

Percentage of Value profit/

Activity Country of participation of total loss

(in EUR) of the Company the company in capital capital in 2012

Associated company Thermana, d. d., spa and hotel Laško activities and of simlar Slovenia 20.630% 27,519,581 (1,051,155) accomodation facilities

As of 31 December 2012, Pivovarna Laško owned 645,003 shares of Thermana representing a

20.63% ownership stake in the aforementioned company. The original purchase value of the invest-

ment equalled EUR 6,897,921. In 2010, the investment was impaired to zero value.

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 procedure for

acquiring the consent of subscribers was carried out in February 2011. On 28 February 2011, the agree-

ment was signed and reconciled by NLB, Pivovarna Laško and Zavarovalnica Triglav which together

represent a 44.85% ownership stake in Thermana. Coordinating activities with the remaining poten-

tial signatories of the agreement on the implementation of sales of shares continued in 2011.

Pivovarna Laško signed the Agreement on the joint sale of shares of Thermana (51.96% stake) on

10 October 2011. NLB as the sales broker started the selling activities. A public tender for the sale of

the investment was published in the Delo newspaper 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 to potential buyers. Nobody expressed the intention to buy.

4. C. LONG-TERM AVAILABLE-FOR-SALE FINANCIAL ASSETS

(in EUR) 2012 2011

Other investments into shares and stakes at purchase value 241,655 241,655

Total 241,655 241,655

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TRENDS OF LONG-TERM AVAILABLE-FOR-SALE FINANCIAL ASSETS

(in EUR) 2012 2011

Balance as of 1 January 241,655 320,942


Impairment - (79,287)

Balance as of 31 December 241,655 241,655

Compared to the previous year, the value of the long-term available-for-sale financial assets did not

decrease.

5. LONG-TERM LOANS GRANTED

(in EUR) 2012 2011

Other long-term loans 404 3,310

Total 404 3,310

Long-term loans refer to housing loans granted by the company to its employees or the purposes of

solving their housing-related issues

6. LONG-TERM FINANCIAL LEASE RECEIVABLES

(in EUR) 2012 2011

Long-term financial lease receivables 590,416 751,266

Total 590,416 751,266

(in EUR) 2012 2011


Other companies 421,340 517,100

Total 590,416 751,266

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 2012 amounted to EUR 421,340. The financial lease receivables

mature on 15 October 2015. In 2012, the Company leased out packaging in the amount of EUR 37,228

to Birra Peja Peć with the maturity date 31 December 2014. The value of the aforementioned receivable

on the last day of the 2012 amounted to EUR 169,076.

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7. LONG-TERM DEFERRED TAX LIABILITIES

(in EUR) 2012 2011

Long-term deferred tax receivables 16,576,992 18,240,502

Long-term deferred tac liabilities (703,262) (1,070,058)

Net long-term deferred tax receivables 15,873,730 17,170,444

Long-term deferred tax receivables and liabilities are calculated on the basis of temporary differences

using the liability method and by taking into consideration the tax rates ranging from 17% to 15%.

(in EUR) 2012 2011

At the beginning of the year - deferred tax receivables 18,240,502 15,436,180

Change in operating profit or loss (1,663,510) 2,895,197

Change in comprehensive income - (90,875)

Total 16,576,992 18,240,502

As of 31 December 2012, the Company disclosed net long-term deferred tax receivables in the amount

of EUR 15,873,730, which is by EUR 1,296,714 less than in the previous year.

MOVEMENT OF LONG-TERM DEFERRED TAX RECEIVABLES

Fair Liabilities to value (in EUR) employees (finan. assets) Other Total

DEFERRED

TAX RECEIVABLES

1 January 2011 316,102 14,754,510 365,568 15,436,180

Changes in profit

or loss account 2,528 2,253,051 639,618 2,895,197

Change in the statement

of comprehensive income - (90,875) - (90,875)

31 December 2011 318,630 16,916,686 1,005,186 18,240,502

Changes in profit

or loss account (52,470) (1,837,533) 226,493 (1,663,510)

31 December 2012 266,160 15,079,153 1,231,679 16,576,992

Long-term deferred tax receivables reflected in profit or loss decreased by EUR 1,663,510. Deferred

tax receivables arising from the liabilities to the employees decreased by EUR 52,470 while the de-

ferred tax liabilities arising from tax losses increased and equalled EUR 226,493. Receivables arising

from impairment and revaluation of financial assets decreased and equalled EUR 1,837,533.

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Long-term deferred tax liability in the amount of EUR 703,262 in the statement of financial position

decreases the deferred tax receivable. Compared to the previous year, long-term deferred tax liability

did not change considerably.

Long-term deferred tax liabilities refer to the revaluation of property performed in 2008 and 2011.

As of 31 December 2012, deferred tax liabilities arising from the revaluation of property amounted to

EUR 703,262.

MOVEMENT OF LONG-TERM DEFERRED TAX LIABILITIES

Fair value Fair value

(In EUR) (land, buildings) (financial assets Total

DEFERRED TAX LIABILITIES

1 January 2011 1,092,511 514 1,093,025


of comprehensive income (23,191) 224 (22,967)

31 December 2011 1,069,320 738 1,070,058

Change in profit or loss account - (738) (738)


of comprehensive income (366,058) - (366,058)

31 December 2012 703,262 - 703,262

Long-term deferred tax liabilities refer to the revaluation of property to fair value disclosed in the

revaluation surplus. The applied tax rate is 15%. As of 31 December 2012, it totalled EUR 703,262.

8. NON-CURRENT ASSETS HELD FOR SALE

(in EUR) 2012 2011

Property held for sale 770,939 770,939

Other non-current assets held for sale 3,637,650 3,637,650

Total 4,408,589 4,408,589

Non-current assets held for sale also include the value of business and warehouse space with the ad-

joining land in Ljubljana, which the Company plans to dispose of within one year, and 345,304 RARG

shares for which the enforcement order was issued at the end of 2011 in favour of the lienholder Nova

kreditna banka Maribor (more in Note 4.)

Compared to the last day of the previous year, the value of non-current assets held for sale did not

change.

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9. INVENTORIES

(in EUR) 2012 2011

Materials and raw materials 5,253,746 5,442,140

Work in progress 811,208 998,140

Products 1,367,662 1,694,418

Merchandise 386,283 409,349

Total 7,818,899 8,544,047

MOVEMENT OF INVENTORY VALUE ADJUSTMENT

(in EUR) 2012 2011

Formed during the year 40,373 -

Balance at the end of the year 40,373 -

Compared to the previous year, the value of inventories decreased by EUR 725,148 or by 8.5%. The

value of work in progress (18.7%) and finished products (19.3%) especially decreased. As of 31 Decem-

ber 2012, inventories were pledged in the amount of EUR 2 million. The book value of inventories does

not exceed their net recoverable amount.

In 2012, the inventory value adjustment was formed equalling EUR 40,373 due to a write-off of

obsolete inventory.

INVENTORY SURPLUSES AND DEFICITS

(in EUR) 2012 2011

Inventory surpluses 14,212 82,428

Inventory deficits (11,423) (75,598)

No substantial deficits or surpluses were established during the regular annual inventory.

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10. A. SHORT-TERM OPERATING RECEIVABLES

(in EUR) 2012 2011

Short-term trade receivables:

on domestic market 18,673,399 19,819,256

on foreign market 4,829,688 5,105,232


Total 18,494,798 20,144,158

Short-term operating receivables to others 2,152,925 1,000,841

Advances (46,017) 97,067

Less value adjustment (1,319,635) (506,885)

Total 19,282,071 20,735,181

As of 31 December 2012, the Company disclosed EUR 19,282,071 of short-term operating receivables,

which is by EUR 1,453,110 less than on the last day of the previous year. Due to the sale at the end of

2012, short-term operating receivables from domestic buyers decreased.

The disclosed value of short-term operating and other receivables reflects their fair value.

VALUE ADJUSTMENTS OF SHORT-TERM OPERATING RECEIVABLES

(in EUR) 2012 2011


Recovered written off receivables (102,849) (79,594)

Final write off of receivables (80,869) (65,189)

Forming value adjustments during the year - 364,978

Increasef adjustment - defendants 411,677 -


The revaluation adjustment of trade receivables increased due to lawsuits in the amount of EUR

416,616; however, it decreased due to write-offs of receivables in the amount of EUR 80,869 and due

to collected claims in the amount of EUR 102,849.

Trade receivables amounting to EUR 4,947,835 are secured by the guarantees received and sureties

in the amount of EUR 4,835,500.

The age structure of receivables is presented in the chapter Financial Instruments and Risks – Credit

Risk.

As of 31 December 2012, the loans received by the Company are secured by trade receivables amount-

ing to EUR 9,000,000.

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10. B. SHORT-TERM RECEIVABLES FOR EXCESS CORPORATE TAX PAYMENT

In tax return for 2012, the Company discloses a tax loss of EUR 3,185,273. As of 31 December 2012,

the uncovered tax loss amounts to EUR 7,658,340 and refers to the established uncovered tax loss from

the previous years and the current year. In 2011, the Company did not demonstrate a tax base and thus

in 2012 it did not pay any deductible input corporate tax.

11. SHORT-TERM AVAILABLE-FOR-SALE ASSETS

(in EUR) 2012 2011

Short-term finnacial assets

available for sale - fair value 36,961,773 49,729,099

Short-term finnacial assets

available for sale - purchase value 947,268 297,302

Total 37,909,041 50,026,401

As of 31 December 2012, the value of short-term available-for-sale assets amounted to EUR

37,909,041. Compared to the previous year, they reduced by EUR 12,117,360.

1. FINANCIAL INVESTMENT INTO POSLOVNI SISTEM MERCATOR, D. D., LJUBLJANA

As of 31 December 2012, the Company was the owner of 317,498 MELR shares (8.43%), which taking

into account a market value of EUR 114 per share on 31 December 2012, amounts to EUR 36,194,772.

The fair value of the aforementioned stake as of 31 December 2012 is by EUR 14,783,066 lower than the

acquisition cost amounting to EUR 50,977,838 or EUR 160.56 per share. The management estimates

that the unsuccessful attempt to sell the MELR shares, the fall in the share price means permanent

impairment therefore it was decided to disclose them as a financial expense.

PROCEDURES IN A SALE OF A 23.43% STAKE IN PS MERCATOR, D. D., LJUBLJANA

Following unsuccessful discussions with banks, the Supervisory Board of Pivovarna Laško instruct-

ed the Management Board to implement the public sale of the MELR shares. A contract on consulta-

tion for the sale was signed with NLB on 3 February 20111. A call for tender for the sale of the 23.43%

stake in PS Mercator owned by the Laško Group was published on 4 February 2011. The tender fixed

the deadline for the submission of binding offers, namely 9 March 2011.

In parallel with the public offering, negotiations with the financial fund, Mid Europa Partners Ltd,

United Kingdom were held in February. Three offers were received by 9 March 2011 from: Mid Eura

UK, Agrokor HR and Warburg Pincus US. The deadline for a decision on the sale of the Mercator

Company was specified as 15 April 2011, which was later extended to 30 April 2011. The offer for the

purchase of a 23.34% stake of MELR was extended by Agrokor to 4 May 2011. On 26 April 2011, the

Company received the decision of the Competition Protection Office no. 306-29/2011-4, which prohib-

its companies from the Laško Group from disposing of MELR shares without the prior approval of the

CPO. The very same day, an action by the companies Pivovarna Laško, Pivovarna Union and Raden-

ska, Radenci, was brought before the Supreme Court against the CPO decision and an application

for suspension of the operation of the contested decision was lodged. On 29 April 2011, the Supreme

Court of the Republic of Slovenia in its decision N. G 23/2011-11 rejected the proposal for the issue of a

temporary order to postpone the enforcement of the contested CPO decision.

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The Supervisory Board of Pivovarna Laško held on 4 May 2011 adopted the decision: »The Supervi-

sory Board agrees that it could not accept the offer of Agrokor for the purchase of MELR shares owned

by the companies in the Laško Group because due to the decision of the Competition Protection Office

of 26 April 2011 and decision on the rejection of the temporary order of the Supreme Court of 29 April

2011, the Group could not dispose of the MELR shares due to the CPO decision No. 306-29/2011-4 dat-

ing 26 April 2011 concerning the ion of the aforementioned Agreement the companies of the Group

could not accept the offer of the company Agrokor for the purchase of MELR shares owned by the

companies in the Laško Group because due to the decision of the Competition Protection Office of 26

April 2011 and decision on the rejection of the temporary order of the Supreme Court of 29 April 2011,

the Group could not dispose of the MELR shares.«

Procedures related to the signing of the Agreement on the Joint Sale of Mercator were carried out in

June 2011. The agreement of the companies in the Laško Group was signed on 8 June 2011. The compa-

nies of the Laško Group, namely Pivovarna Laško, Pivovarna union and Radenska, Radenci, concluded

an agreement on a joint sale of shares of the Mercator Company with the companies Nova Ljubljanska

banka, Abanka Vipa, NFD Holding, NFD, Gorenjska banka, Nova kreditna banka Maribor, Hypo Alpe-

Adria-bank and Banka Celje that entered into force on 16 June 2011. These contractual parties or the

signatories of the agreement are the owner of 1,883,826 MELR shares of the Mercator Company rep-

resenting a 50.03% stake in the share capital of Mercator. The agreement on a joint sale of shares was

concluded for a period of 12 months and involves a possibility of its renewal. In the Agreement, the sell-

ers agreed that the sales procedure of the 50.03% stake in Mercator would be conducted in cooperation

with a financial advisor who will be specified by the contractual parties in accordance with the agree-

ment. In July, a financial adviser for the sale of the investment was selected, namely the ING Company

from London and Banka Koper also entered the agreement. Thus the stake increased to 52.10%.

At the extraordinary General Meeting of Shareholders of Pivovarna Laško held on 30 July 2011, a

consent was given to enter into a contract of agency in accordance with Article 47 of the Takeovers Act,

namely due to the acquisition intention published by the KS Naložbe Company. The financial advisor

presented the consortium of sellers with the received offers on 19 October 2011. Four non-binding of-

fers were presented, one of them from a strategic tenderer. The consortium of sellers signed a contract

with the only strategic bidder on 7 November 2011, which gives the bidder exclusive treatment for a

contractually specified period. On 16 December 2011, the SPA was approved by all members of the

consortium except by the companies of the Laško Group and NLB. The Supervisory Board of Pivovarna

Laško postponed the decision on the SPA due to the acquisition intention concerning Pivovarna Laško

by the American company Eatons Capital from Las Vegas. On 22 December 2011, the Securities Market

Agency took the view that the acquisition intention of Eatons Capital was invalid. On the same day, the

acquisition intention concerning Pivovarna Laško was published by Poslovni sistem Mercator.

On 27 December 2011, the Supervisory Board of Pivovarna Laško took note of the acquisition inten-

tion of the Mercator Company and took a decision to further support the continuation of the procedure

of a sale of the Mercator shares and to put the topic of a consent to the procedure of a sale on the agen-

da of the General Meeting in accordance with Article 47 of the Takeovers Act. On 29 December 2011,

the convocation of a general meeting was published. The date was 30 January 2012. Based on Article 47

of the Takeover Act the decision concerning the consent to the sale of the shares of Mercator to Agrokor

was on the agenda. The exclusive treatment of Agrokor in the negotiations was also prolonged. At its

meeting of 27 January 2012, the Supervisory Board took note of the content of the contract of sale of

the shares of Poslovni sistem Mercator and agreed with the sale contract and invited the Management

Board to reduce risks related to the non-implementation of the contract in the continuation of the

negotiations. On 7 February 2012, the Agrokor Company withdrew from the sales process. The view of

the Banks is that the sales of a stake in Mercator should continue.

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At its meeting on 27 January 2012, the Supervisory Board of Pivovarna Laško gave its approval to the


Agrokor Company at a price of EUR 221 that can be changed as envisaged by the sales mechanism de-

fined in the sales contract. The approval to the sale of 464,390 shares or a 12.33% stake of the Mercator

Company owned by Pivovarna Union to the Agrokor Company was also given by the General Meeting

of shareholders of Pivovarna Union on 31 January 2012. In order to sell 96,952 shares or a 2.57% stake

of the Mercator Company owned by Radenska, the approval of the Supervisory Board of Radenska was

not necessary.

On 7 February 2012, the members of the consortium of sellers was submitted the information by the

consultant, ING bank, that the Agrokor Company withdrew from the sales process.

Based on the adopted strategy for 2012, the companies of the Laško Group continued the activities to

sell the 23.34% stake in Mercator. Thus, the companies of the Laško Group and other parties interested

in the joint sale of the Mercator shares (hereinafter: the sellers) concluded a new agreement on a joint

sale at the end of October 2012. The agreement was signed by the sellers who are together the majority

owner of shares in Mercator. Currently, a sales process is in the initial phase of organisation.

2. OTHER FINANCIAL INVESTMENTS AVAILABLE-FOR SALE

Among other short-term financial assets available-for-sale, the investment into the shares of Elektro

Gorenjska is disclosed in the amount of EUR 947,268 or 1,6 % as well as the investment in the shares

of Probanka in the amount of EUR 767,000 (6.27 %). In 2012, the shares in Ceste mostovi Celje, d. d.

were impaired fully due to the initiation of the bankruptcy proceedings (EUR 238,355) and the shares

of Probanka amounting to EUR 1,342,624.

TRENDS OF SHORT-TERM FINANCIAL ASSETS AVAILABLE-FOR-SALE

(in EUR) 2012 2011



Transfer from non-current assets held for sale (MELR) - (3,397,229)

Impairment (12,058,462) (3,107,634)

revaluation - (253)

Sale (Etol) (58,898) (167,032)


12. SHORT-TERM GRANTED LOANS

(in EUR) 2012 2011

Short-term deposits 3,035,402 880,000

Short-term loans 16,838,613 15,667,888



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As of 31 December 2012, short-term granted loans amounted to EUR 3,162,738 and mainly regard

bank deposits. In 2012, the Group approved a loan of EUR 1,063,000 to the subsidiary, Jadranska pivo-

vara – Split, to overcome liquidity problems and at the same time repaid a portion of the loan for which

Pivovarna Laško, had given collateral to banks which Jadranska pivovara had taken out. All net assets

of the Delo Group in the amount of EUR 2011 million, Fructal Group in the amount of EUR 2,039,734

million and Jadranska pivovara. The liability arising from given guarantees was disclosed in the ac-

counts of Pivovarna Laško already in 2009 and it was debited to profit or loss in 2009. For the value

of loans made to Jadranska Pivovara from Split in 2012 impairment amounting to EUR 1,063,000 was

recognised under financial expenses and value adjustment was made. The value adjustment of the

short-term loan was performed since a great probability exists that the loan will not be repaid.

Short-term loans granted to other entities decreased by EUR 98,402 in 2012 while deposits with

banks increased by EUR 2,155,402.

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13. CASH AND CASH EQUIVALENTS

(in EUR) 2012 2011

Credit with banks 192,036 262,562

Cash in hand and cheques received 21,762 35,574

Cash items in the process of collection 81,636 41,714

Total 295,434 339,850

14. SHORT-TERM ACCRUALS AND PREPAID EXPENDITURE

(in EUR) 2012 2011

Accruals and prepaid expenditure - 49,527

Total - 49,527

As of 31 December, the Company does not disclose accruals and prepaid expenditure.

15. EQUITY

The capital of Pivovarna Laško consists of called-up capital, capital reserves, profit reserves, revenue

reserves, retained profit or loss from previous years, surpluses from the revaluation of financial in-

vestments classified as assets-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 named 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 2012, capital reserves reduced by EUR 17,418,428 in order to cover loss. As of 31 December 2012,

the reserves totalled EUR 47,256,606 and all of them arise from the paid-in share premium in the

previous capital injections.

Reserves comprise legal reserves amounting to EUR 3,650,331 and reserves for own shares equalling

EUR 139,038.

Reserves for own shares decreased in 2012 due to a sale of 4,190 lots to ensure the severance payment

to external shareholder and due to revaluation to lower stock exchange value totalling EUR 126,128.

In 2012, Pivovarna Laško acquired 3,435 own shares from the subsidiary, Radenska, that were used

together with the initial balance of 755 lots to make the severance payment on the basis of the con-

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trolling contract. As of 31 December 2012, Pivovarna Laško does not have own shares; however, own

shares are possessed by the subsidiaries, namely Radenska 17,760 lots and Pivovarna Union 2,131 lots.

On 31 December 2012, own shares were recalculated to the exchange market price that amounted to

EUR 6.99. As a controlling company, Pivovarna Laško has formed reserves for own shares owned by

companies in the Laško Group.

Statutory reserves can exclusively be used for covering loss.

Revaluation surplus was formed based on the effects of the revaluation of property and financial as-

sets held for sale to fair value. The revaluation surplus formed in the previous years was derecognised

due to the sale of shares whose effect of revaluation was disclosed in the revaluation surplus. Revalua-

tion surplus whose value amounted to EUR 3,856,195 on 31 December 2012 refers in full to the revalu-

ation of property. In 2012, the property revaluation surplus decreased by the transfer of depreciation

from revaluation in the amount of EUR 859,740 and increased by the recalculated deferred taxes to

new, lower tax rates.

As of 31 December 2012, book value of a share of Pivovarna Laško equalled to EUR 10.46 in accord-

ance with IFRS. At the end of 2012, the market value of a share equalled EUR 6.99 and was by 33.2%

lower than the book value.

16. PROVISIONS AND LONG-TERM ACCRUED COSTS AND DEFERRED REVENUE

16. A. PROVISIONS FOR SEVERANCE GRANTS AND JUBILEE AWARDS OR OTHER LONG-SERVICE BENEFITS

(in EUR) 2012 2011

Provisions for severance grants and jubilee awards 1,259,169 1,088,909

Total 1,259,169 1,088,909

Provisions are established for estimated liabilities with regard to the payment of severance grants

and jubilee awards such as long-term benefits for years of service at the date of that statement of finan-

cial position and discounted to current value. Provision was made for planned payments.

When calculating potential liabilities with regard to the retirement grant, 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 grant 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 for the excess amount.

Overview of additional assumptions:

• Growth of average wages in the Republic of Slovenia is assumed to be o.9% annually in 2013, 1.7%

in 2014 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 grants 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

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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 o the years of pensionable ser-

vice of each individual employee.

The selected discounted interest rate is 4.60% annually, which equals the return on 10-year cor-

porate bonds with high credit rating in Euro zone at the end of November 2012 increased by add-on

concerning the local risk.

TRENDS OF PROVISIONS FOR RETIREMENT GRANTS AND JUBILEE AWARDS

Severance benefits paid Jubilee

(in EUR) upon retirement awards Total

Balance as of 1/1/2012 775,177 313,732 1,088,909

Increase 6,789 255,217 262,006

Reduction - absorption (51,043) (31,931) (82,974)

Reduction - removed - (8,772) (8,772)

Balance as of 31/12/2012 730,923 528,246 1,259,169

Compared to 2011, provisions for retirement grants and jubilee awards in 2012 decreased by actual

retirements and payments of jubilee awards in the amount of EUR 82,974, and by the amount of

provisions for jubilee awards in the amount of EUR 8,772. The provisions increased by the amount of

additional provisions established for retirement grants in the amount of EUR 262,006 due to changes

in the employment structure and modified conditions of retirement.

16. B. PROVISIONS AND LONG-TERM ACCRUED COSTS AND DEFERRED REVENUE

(in EUR) 2012 2011

Provisions and long-term accruals and deferred income 90,290 332,488

Skupaj 90,290 332,488

TRENDS OF LONG-TERM ACCRUED COSTS AND DEFERRED REVENUE

Newly Sbalance as of Absorption formed Balance as of (in EUR) 1/1/2012 in 2012 Removed in 2012 31/12/2012

LONG_term ADE - disabled

above the quota 132,488 105,651 - 63,453 90,290

provisionse - guarantee-

Jadranska pivovara 200,000 - 200,000 - -

Total 332,488 105,651 200,000 63,453 90,290

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Long-term accrued costs and deferred revenues decreased by EUR 200,000 in 2012 due to the

transfer of the current part of liabilities from the guarantee to Jadranska pivovara to short-term accrued

costs and deferred revenues and the increased exemption for disability pension insurance for disabled

persons in the amount of EUR 63,453.

17. LONG-TERM FINANCIAL LIABILITIES

(in EUR) 2012 2011

Long-term loans from banks 3,447,498 68,705,112

Long-term loans from other companies 27,172 37,465

Total 3,474,670 68,742,577

transfer to short-term financial liabilities (660,000) (43,453,224)

Total 2,814,670 25,289,353

Long-term financial liabilities relate to the long-term loans received from banks. In September 2012,

it was agreed with the creditor banks on the rescheduling of the liabilities and based on this agree-

ment the majority of long-term loans matures on 30 March 2013. Therefore, long-term loans totalling

EUR 24,629,353 were transferred to short-term liabilities. And short-term loans amounting to EUR

3,987,500 were transferred to long-term financial liabilities that mature in 2015. The short-time part of

the loan concerned amounts to EUR 660,000.

On average, the interest rate for long-term loans in 2012 amounted to 5.07%. The disclosed value of

long-term loans reflects their fair value.

MATURITY OF LONG-TERM LOANS FROM BANKS

(in EUR) 2012 2011

Maturity from 4 to 6 years - 4,323,172


Maturity from 1 to 2 years 660,000 12,814,211

Short-term part of long-term financial liabilitties 660,000 43,453,224

Total 3,447,498 68,705,112

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18. CURRENT LIABILITIES

18. A. CURRENT OPERATING LIABILITIES

(in EUR) 2012 2011

Short-term liabilities to companies in the Group as suppliers 8,332,777 7,833,917

Short-term liabilities to other suppliers 6,946,283 6,321,150

Short-term liabilities to others:

to employees 613,052 680,087

to state 3,311,752 5,783,249

Short-term liabilities for advances 122,485 197,777

Other short-term liabilities 1,513,884 361,110

Total 20,840,233 21,177,290

Compared to the previous year, short-term operating liabilities decreased by EUR 384,607. Trade

liabilities amounting to EUR 15,118,358 that increased by EUR 963,291 compared to the previous year

represent the biggest share under short-term operating liabilities. Liabilities to the companies in the

Group that amount to EUR 8,219,625 represent 54.3% of all trade payables. In 2012, liabilities to the

companies of the Group increased by EUR 385,708 whereas liabilities to other suppliers increased

by EUR 577,583. Large proportion of liabilities to the companies in the Group has already matured,

namely EUR 5,437,683 representing 26.15% of all short-term operating liabilities.

Compared to the last day of the previous year, liabilities to state decreased by EUR 2,471,497 mainly

due to lower liabilities related to value added tax and excise duty.

18. B. SHORT-TERM CORPORATE TAX LIABILITIES

As of 31 December 2012 as well as on the last day of 2011, the Company did not disclose any corporate

income tax liabilities. The Company disclosed a surplus of tax revenues over expenses in the amount

of EUR 4,489,143 in 2012. The tax return of the Company disclosed a tax loss of EUR 3,198,090 in 2011.

Uncovered tax loss on the last day of 2012 amounted to EUR 7,725,484.

18. C. SHORT-TIME FINANCIAL LIABILITIES

(in EUR) 2012 2011

Short-term part of long-term financial liabilities 660,000 43,453,224



Short-term loans obtained from banks 213,433,218 153,870,985

Other long-term liabilities from financing 777,382 810,146

Total 259,129,330 242,750,821

As of 31 December 2012, short-term financial liabilities totalled EUR 259,129,329. Short-term loans

from the banks amount to EUR 213,433,218 and the loans acquired from the companies of the Group

EUR 42,450,977.

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The value of short-term financial liabilities on the last day of 2012 amounted to EUR 259,129,329

and compared to the previous year it increased by EUR 16,769,008. Short-term loans from banks in-

creased by EUR 16,769,008 due to the transfer of long-term loans whereas short-term loans acquired

from the companies in the Group increased by EUR 1,451 due to interest.

The average interest rate for short-term loans from banks in 2012 equalled 5.18% and for short-term

loans obtained from the companies of the Laško Group 5.79%. The disclosed value of short-term finan-

cial liabilities reflects their fair value.

To secure the short-term loans, the Group pledged 539,516 shares (80.83%) of the Delo Company,

4,399,803 shares (86.92%) of Radenska, 440,295 shares (97.60%) of Pivovarna Union, 317,498 shares

(8.43%) of Poslovni sistem Mercator, 213,115 shares (6.27%) of Probanka, Maribor, 645,003 shares

(20.6%) of Thermana, Laško, 270,648 shares of Elektro Gorenjska (1.6%). A portion of the short-term

loans are additionally insured with a mortgage and a lien on moveable assets and investment real

estate. As of 31 December 2012, the book value of the pledged shares amounted to EUR 272,090,080.

A part of short-term loans is additionally secured by mortgage and pledged investment property.

The book value of pledged immovable and movable property and investment property equalled EUR

34,559,215 on 31 December 2012. Short-term loans are also secured by accounts receivable and as of

31 December 2012 they totalled EUR 9.000.000 and by pledged brands equalling EUR 50,000,000.

The value of all unpaid short-term loans secured by shares, a mortgage, and liens on moveable assets,

investment property and accounts receivable amounted to EUR 214,093,218 as of 31 December 2012.

Short-term loans in the amount of 42,450.977 that the Company obtained from its subsidiaries are

secured by bills of exchange.

19. ACCRUALS AND DEFERRED INCOME

(in EUR) 2012 2011

Short-term accruals and deferred income 4,751,862 5,483,052

Total 4,751,862 5,483,052

The liability regarding the guarantee for Jadranska pivovara in the amount of EUR 510,463 and li-

ability arising from the guarantee for Nova kreditna banka Maribor in the amount of EUR 3,637,650

are disclosed under accrued costs and deferred revenues as well as the liabilities in respect of leave not

taken amounting to EUR 149,134.

Accrued costs and deferred revenues were reduced by the mobilised guaranteed for the loan to

Jadranska pivovara in the amount of EUR 1,020,926. Due to its poor financial position, Jadranska

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.

At the end 2009, the value of the guarantee for the loans granted to Jadranska pivovara – Split

amounted to 5,110,524 whereas on the last day of 2012 it equalled EUR 510,463.

The previous Management Board of Pivovarna Laško pledged 345,304 shares of Radenska for a loan

in the amount of EUR 6,250,000 which had been taken out with the Nova kreditna banka Maribor

by its controlling company at that time, Center naložbe. Since Center naložbe failed to repay the loan

upon maturity, the creditor Nova kreditna banka Maribor based on the contract on the lien of securi-

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ties, filed an application for the enforcement. The Company filed an appeal against the enforcement

decision. In 2011, on the basis of a final judgment in a dispute between the plaintiff Nova Kreditna

banka Maribor as the lien creditor and defendant Pivovarna Laško as the lien debtor, the Company

reduced its investment in Radenska by 345,304 shares, which the previous Management Board of

Pivovarna Laško had pledged to the benefit of the company Center naložbe for its origination of a loan

from NKBM.The District Court in Maribor ruled in favour of the applicant. The decision became final

on 8 December 2011. The creditor, NKBM, submitted an application for the enforcement based on the

enforceable title (Article 17 of the Enforcement and Securing of Civil Claims Act) and the Court issued

an enforcement decision that same day. Enforcement has not yet been implemented by the date of the

confirmation of the annual report.

20. OPERATING REVENUES AND EXPENSE

20. A. ANALYSIS OF SALES REVENUES BY MARKET

(in EUR) 2012 2011

Revenues from sale of products and services in Slovenia 56,897,415 63,112,064

Revenues from sale of products and services on foreign market 13,338,199 11,515,153

Revenues from sale of materials and merchandise in Slovenia 18,641,738 19,065,985


and merchandise onforeign market 83,594 621,046

Total 88,960,946 94,314,248

20. B. ANALYSIS OF SALES REVENUES BY TYPES OF PRODUCTS

(in EUR) 2012 2011

Revenues from the sale of beera 66,586,303 71,540,375

Revenues from the sale of other beverages 2,882,966 1,507,797

Sales revenues - other 19,491,677 21,266,076

Total 88,960,946 94,314,248

Compared to 2011, net sales revenues decreased by 5.67%. On the domestic market, the revenues

generated through the sale of products and services decreased by EUR 6,638,896 whereas on foreign

markets they increased by EUR 1,285,594.

On foreign markets, the biggest shares of revenues are achieved on the markets of former Yugosla-

via, mainly in Croatia, but also the shares on the EU markets have been increasing.

In the beer segment, net turnover decreased by 6.92%; however, in the segment of other beverages,

net turnover increased – mainly the sales of sweet beverages. The net turnover relating to the sale of

merchandise decreased by 8.34%.

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20. C. OTHER OPERATING REVENUES (INCLUDING OPERATING REVENUES FROM REVALUATION)

(in EUR) 2012 2011

Revenue from reversal of provisions 76,970 37,031

Other operating revenues 727,779 379,837

Operating rervenues from revaluation - short-term assets 154,992 752,420

Operating rervenues from revaluation - long-term assets 19,832 1,368,961

Total 979,573 2,538,249

20. D. OPERATING COSTS AND EXPENSES

(in EUR) 2012 2011

Costs of sold merchandise (Horeca) 18,441,351 19,294,414

Costs of materials, raw materials and merchandise 24,950,863 25,074,794

Costs of services 18,580,633 21,500,781

Depreciation 4,943,657 6,294,430

Revaluation from operating expenses - long-term assets 209,782 1,488,403

Revaluation from operating expenses - short-term assets 456,989 183,705

Costs of salaries 8,030,817 7,857,203

Contributions for social security 1,355,771 1,321,768

Other labour costs 1,629,176 1,459,386

Costs of provisions 262,006 61,137

Other operating expenses 1,846,530 1,734,344

Total 80,707,575 86,270,365

Compared to the previous year, operating expenses decreased by EUR 5,562,790 or 6.4%. The pur-

chase value of the merchandise sold decreased by 4.4% but costs of raw materials and materials re-

mained at the level of 2011. Costs of services also decreased, namely by EUR 2,920,148 or 13.6%.

Revaluation from operating expenses also decreased because property revaluation was not performed

at the end of 2012.

Due to limited investments in recent years the cost of depreciation in 2012 reduced by EUR 1,350,773

compared to the previous year.

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20. E. COSTS BY FUNCTIONAL GROUP

Production Costs of



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

Depreciation 3,590,392 546,819 806,446 4,943,657

Operating expenses from

revaluation of long-term assets 4,858 4,037 200,887 209,782


revaluation of short-term assets - 416,616 40,373 456,989

Labour costs 4,707,144 2,996,232 3,312,388 11,015,764

Costs of provisions 120,724 61,563 79,719 262,006

Other costs 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 of



Costs of merchandise

sold (Horeca) - 19,294,414 - 19,294,414

Costs of materials,

raw materials

and merchandise 24,377,502 426,084 271,208 25,074,794

Costs of services 2,506,935 14,340,366 4,653,480 21,500,781

Depreciation 4,826,321 548,182 919,927 6,294,430


revaluation of long-term assets 15,018 60,187 1,413,198 1,488,403


revaluation of short-term assets 525 148,688 34,492 183,705

Labour costs 4,546,916 3,052,231 3,039,210 10,638,357

Costs of provisions 24,191 12,138 24,808 61,137

Other costs 289,001 257,616 1,187,727 1,734,344

Total 36,586,409 38,139,906 11,544,050 86,270,365

In 2012, the production costs increased by EUR 288,098 and the costs of general activities went up

by EUR 2,496,625. Costs of sale increased by EUR 4,022,345.

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2O. F. OTHER OPERATING EXPENSES

(in EUR) 2012 2011

Taxes and other charges 2,733 11,420

Charges related to water and ecology 212,948 285,850

scholarships and awards to pupils performng mandatory practice 3,812 -

Land use compensation 144,089 139,261

membership fees to associations 27,886 37,989

Other costs (donations, enforcement) 403,086 420,988

default interest expenses 343,508 272,958

Investment property impairment expenses 312,284 124,751

Other operating expenses 396,184 441,128

Total 1,846,530 1,734,345

2O. G. COSTS OF DISCONTINUED OPERATION

(in EUR) 2012 2011

Operating expenses from revaluation - short-term assets 217,104 217,104

Total 217,104 217,104

21. FINANCIAL REVENUES AND EXPENSES

(in EUR) 2012 2011

FINANCIAL REVENUES excluding excghange rate differences 9,535,152 3,981,190

Financial revenues from profit participation 9,377,953 3,936,488

Financial revenues from loans given 31,617 24,001

Financial revenues from operating receivables 125,582 20,701

FINANCIAL EXPENSES excluding

excghange rate differences (34,008,618) (31,073,148)


and write offs of financial investments (19,505,485) (15,676,362)

Financial expenses from financial liabilities (14,503,133) (15,381,190)

Financial expenses from operating liabilities - (15,596)

Exchange rate differences from financing (781) 39

Negative exchange rate differences (936) -

Positive exchange rate differences 155 39

Net financial expenses (24,474,247) (27,091,919)

Financial expenses exceed financial revenues by EUR 24,474,247. Financial expenses arising from

financial liabilities amount to EUR 14,503,133 and from impairment of financial investments EUR

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19,505,485. Financial expenses related to loans obtained from the banks amount to EUR 12,049,335

and the loans received from the companies in the Group total EUR 2,453,798.

Impairments of the following investments are shown among financial expenses: in the Delo Compa-

ny in the amount of EUR 7,446,003 (based on appraisals performed by a certified business valuator),

shares of Poslovni system Mercator in the amount of EUR 10,477,434 (on the basis of revaluation to

the fair market price), shares of Probanka, Maribor in the amount of EUR 1,342,624 (based on revalu-

ation to the stock exchange value), shares of the Ceste mostovi Celje Company in the amount of EUR

238,355 (due to the initiation of the bankruptcy proceedings) the said shares are valued to zero EUR on

the last day of 2012).

21. A. DISCONTINUED OPERATIONS

(in EUR) 2012 2011


and write offs of fin. investments (1,063,000) (1,833,608)

Net financial expenses (1,063,000) (1,833,608)

22. INCOME TAX

(in EUR) 2012 2011

Deferred tax (1,663,509) (2,895,196)

Total (1,663,509) (2,895,196)

22. A. DEFERRED TAX FROM CONTINUING OPERATIONS

(in EUR) 2012 2011

Deferred tax from retained operations 305,471 2,528,474

Total 305,471 2,528,474

22. B. DEFERRED TAX FROM DISCONTINUED OPERATIONS

(in EUR) 2012 2011

Deferred tax from discontinued operations (1,968,980) 366,722

Total (1,968,980) 366,722

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22. C. CALCULATION OF CORPORATE TAX

(in EUR) 2012 2011

Profit or loss before taxation (16,846,756) (18,423,464)

Tax calculated according to the valid tax rate

Adjustment of revenues to granted revenue tax level (8,967,536) (3,571,580)

Non-recognised tax expenses 21,325,148 18,684,561

Tax base I (4,489,144) (3,310,483)

Change in tax base 1,303,871 112,394

Tax base II (3,185,273) (3,198,089)

Tax relief - -

Tax base III (3,185,273) (3,198,089)

Tax loss (3,185,273) (3,198,089)

Tax - -

In 2012, tax loss amounting to EUR 3,185,273 was made. Due to this loss, tax relief that could be

brought forward to the next year was not established. On the last day of 2012, the Company showed

an uncovered tax loss of EUR 7,658,340 of which deferred tax receivables according to a 15% tax rate

amounted to EUR 1,148,751 which will be accounted for in future years from taxable income.

The authorities can verify the operations of the company any time in the period five years after it

would have had to be paid and this can result in additional tax liabilities, the interest charged on arrears

of taxes due and fines imposed by taxation authorities with regard to corporation tax. The management

of the company is not aware of any circumstances that could represent relevant liabilities.

23. EXCHANGE RATE DIFFERENCES

Exchange rate differences from operations and financing considered in the Income Statement are

as follows:

(in EUR) 2012 2011

Exchange rate differences from financing (781) 39

Total (781) 39

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24. LOSS PER SHARE

(in EUR) 2012 2011

total loss (18,510,265) (15,528,268)

Number of all ordinary shares issued 8,747,652 8,747,652

Own shares 454 755

Weighted number of issued ordinary shares 8,747,198 8,746,897

Net loss per share (2.12) (1.78)

Adjusted net loss per share (2.12) (1.78)

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 own shares.

25. CHANGES IN OTHER COMPREHENSIVE INCOME

(in EUR) 2012 2011

Financial assets available for sale (3,345) 909,524

Profit / loss from property revaluation 201,543 (115,944)

Defered taxes from revaluation 237,835 (67,907)

Other comprehensive income 436,033 725,673

26. DIVIDENDS PER SHARE

In 2012, dividends were not paid similarly to 2011.

5.4.6 FINANCIAL INSTRUMENTS AND RISKS

27. FINANCIAL RISKS

27. A. CREDIT RISK

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 borrowers, and failure to

meet their contractual obligations. To this end, the receivables are constantly monitored by business

partner and maturity and the collection, reminders and charging interest on arrears and also the recov-

ery through enforcement of judicial decisions contribute to better payment discipline of our buyers.

The Laško Group manages the credit risk also by securing receivables on foreign markets. Receivables

from more risky partners on the domestic and foreign markets are additionally secured by bank guar-

antees and mortgages. When such security can not be provided with certainty, business is conducted

on the basis of advances. In 2012, the credit risk increased and increased risk is also expected in 2013.

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At the end of 2012, even the payment discipline of our major buyers worsened, which caused ad-

ditional liquidity problems. It is believed that there is a considerable risk of spreading late-payment

culture also in 2013, which is the result of the financial crisis in all the segments of the economy.

MATURITY OF TRADE RECEIVABLES

(in EUR) 2012 2011

Non-maturity 13,790,163 18,072,827


Maturity from 31 to 60 days 217,740 468,381




At the end of 2012, the Company reduced trade receivables by 6.1% compared to 2011. As of 31 De-

cember 2012, the majority of receivables were not yet due or are the amounts due up to 30 days. With

regard to receivables due over 90 days and amounting to EUR 5,391,058 value adjustment was formed

of EUR 5,008,289. More detailed information on the amounts due and adequate measures still enable

the management of credit risk.

Domestic customers provided the Company with the guarantees amounting to EUR 1 million and

foreign customers in the amount of EUR 1.8 million whereas the mortgages and surety bonds equalled

EUR 2.0 million.

27. B. LIQUIDITY RISK


term and long-term insolvency is of particular significance. To avoid problems with the current liquid-

ity, the Company manages the liquidity risk, drafts and implements a policy of regular liquidity man-

agement including the plans of cash outflows and sufficient inflows. It is difficult for the Company to

manage the liquidity risks through suitable credit lines for the short-term management of cash flows

in the form of revolving credits and the allowable transaction account limits. In addition, all loans

from the banks are appropriately secured with the assets of the Company, so should an unfavourable

situation in the financial market arise with the banks requiring the repayment of loans at maturity, the

Company can repay the loans by selling the assets of the Company.

As of 31 December 2012, Pivovarna Laško discloses a surplus of EUR 211,844,623 of short-term li-

abilities over short-term assets. The coefficient calculated as the ratio between the short-term assets

and short-term liabilities equals 0.26, which results in a high degree of liquidity risk.

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, an 80.83% stake in the Delo Company and a 23.34%

stake in Poslovni sistem Mercator, and all other investments and property not required for business

were implemented in 2012. At the same time, the management discusses comprehensive solutions

with the creditor banks with regard to long-term rescheduling of all our liabilities.

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Until the sales of individual investments are successfully completed, Pivovarna Laško will have seri-

ous liquidity problems that can only be solved by an agreement with the banks (acting as creditors and

also as important owners of the Company). If the sale of property fails, the only possible solution to the

liquidity problem is to acquire new sustainable sources (capital injection). Within the strategic measures

of financial restructuring there will be negotiations held with the banks concerning the rescheduling of

loans in the long run. The one-year agreement on the rescheduling of loans concluded with the banks in

May 2012 expires on 31 March 2013. More detailed information is provided in the business report on pages

103 and 104. The activities aiming at the agreement on debt rescheduling are performed on a daily basis

whereas no agreements have been reached concerning the acquisition of new sustainable resources.

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.

AGE STRUCTURE OF TRADE PAYABLES

(in EUR) 2012 2011

Non-maturity 9,106,876 8,952,248





Maturity from 181 to 360 days (11) -

Maturity over 360 days 12,971 35,396

Total 15,279,060 14,155,067

MATURITY OF SHORT-TERM FINANCIAL LIABILITIES TO THE BANKS

(in EUR) 2013

January- March 199,726,061

April - June 13,601,787

July - September 522,143

October - December 254,286

Total 214,104,277

MATURITY OF LONG-TERM FINANCIAL LIABILITIES TO THE BANKS

(in EUR) 2012 2011

Maturity from 4 to 6 years - 4,323,172


Maturity from 1 to 2 years 660,000 12,814,211

Total 2,787,500 25,251,888

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27. C. INTEREST RATE RISK

Interest rate risk of the Company arises from long-term and short-term financial obligations. Due

to financial obligations, the Company is exposed to interest rate risk of cash flow. Interest rate risk

represents a possible change in the interest rate on the financial market, mainly due to taking out

loans linked to a variable interest rate (EURIBOR). From the end of 2011, a decreasing tendency of EU-

RIBOR can be observed, which had a positive impact on loan charges linked to a variable interest rate

(EURIBOR). Financing under variable interest rate conditions represents one third of all Company

financing while the other two thirds are represented by loans with a fixed interest rate. It is estimated

that the Company’s exposure to interest rate risks in 2012 (the same as in 2011) is still moderate and

manageable.

Average interest difference (in EUR) Interese level rate in % in interest

Actual interest expenses 13,781,846 5.28 -

Expenses in the case

of increase in int. rate by 1% 16,392,044 6.28 2,610,198


of decrease in int. rate by 1 % 11,171,648 4.28 (2,610,198)


of increase in int. rate by 1,5 % 17,697,143 6.78 3,915,297


of decrease in int. rate by 1,5 % 9,866,549 3.78 (3,915,297)

If the average interest rate increased by 1%, and the indebtedness remained at the same level, ex-

penses would increase by EUR 2,610,198 and in the case of 1.5% increase in the average interest rate,

expenses would increase by EUR 3,915,297.

If the average interest rate decreased by 1%, and the indebtedness remained at the same level, fi-

nance expenses would decrease by EUR 2,610,198 and in the case of 1.5% decrease in the average inter-

est rate, finance expenses would increase by EUR 3,915,297.

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 dropping 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

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 2012. The Company

has no influence on this risk regarded as relevant.

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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 undisturbed supply.

27. E. FOREIGN EXCHANGE RISK

Foreign exchange risk is insignificant since most contracts concluded by the Company with the sup-

pliers are 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.

27. F. EQUITY 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):

(in EUR) 2012 2011

Financial liabilities 261,943,999 268,040,173

Cash 295,464 339,850

Net financial liabilities 261,648,535 267,700,323

Capital 91,419,597 109,571,175

Gearing ratio (v %) 286.21 244.32

The ratio between net financial liabilities and equity indicates that Pivovarna Laško is overindebted.

27. G. RISK OF A CHANGE IN FAIR VALUE OF THE FINANCIAL INVESTMENTS


erty is undoubtedly also an important financial risk. In should be highlighted that financial invest-

ments 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 the impairment and write-offs of financial investments are presented.

There is a considerable risk that also in 2013 impairments will be necessary as a result of the drop in

stock exchange prices in general and not only in Slovenia owing to the ongoing market turmoil and a

lack of liquidity of the entire economy. It is estimated that the biggest risk of impairment is attributable

to our investment in Mercator since the general financial and economic crises also affects the segment

of population and this is consequently reflected in the operations of the biggest trading company. In

2012, the Company booked impairment and write-offs of investments totalling EUR 20,5 million of

financial expenses.

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Fair value Differ. - impact on Differ. - impact on

as of Differ. - impact on revaluation deferred tax

(in EUR) 31/12/12 value DFN surplus liability

Market value MELR

as of 31/12/2012 39,194,772 - - -



Increase in price by 5 % 41,154,511 1,959,739 1,567,791 391,948

Decrease in price by 5% 37,235,033 (1,959,739) (1,567,791) (391,948)

AVAILABLE-FOR-SALE FINANCIAL ASSETS MEASURED AT FAIR VALUE AS OF 31 DECEMBER

(in EUR) 2012 2011

Level 1 36,194,772 46,672,206

Level 2 1,714,269 3,056,893

Total 37,909,041 49,729,099

5.4.7 RELATIONS WITH THE RELATED PARTIES

28. TRANSACTIONS WITH RELATED PARTIES

28. A. SALE TO THE COMPANIES IN THE LAŠKO GROUP

(in EUR) 2012 2011

Radenska, d. d. Radenci 2,079,928 972,404

Vital Mestinje, d. o. o. 38,332 816

Skupina Union 12,370,260 11,762,662

Skupina Delo - 2,880

Jadranska pivovara - Split, d. d. - 49,373

Laško Grupa, d. o. o., Sarajevo 248,499 -

Laško Grupa, d. o. o., Zagreb 274,000 -

Total 15,011,019 12,788,135

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28. B. PURCHASE FROM THE COMPANIES OF THE LAŠKO GROUP

(in EUR) 2012 2011

Radenska, d. d. Radenci 3,225,305 2,994,119

Vital Mestinje, d. o. o. 583,861 252,729

Skupina Union 18,652,101 20,803,297

Skupina Delo 15,688 31,131

Jadranska pivovara - Split, d. d. 114,245 715,276

Laško Grupa, d. o. o., Sarajevo 344,658 163,020

Laško Grupa, d. o. o., Zagreb 883,936 867,426

Total 23,819,794 25,826,998

The data are given in gross values including the value added tax. The purchase by related companies

mainly relate to the purchase of commercial goods in Horeca.

28. C. RECEIVABLES FROM AND PAYABLES TO THE COMPANIES IN THE LAŠKO GROUP

(in EUR) 2012 2011

Operating receivables - companies of the Laško group

Radenska, d. d. Radenci 376,912 134,504

Vital Mestinje, d. o. o. 16,545 42

Skupina Union 2,016,950 1,242,011

Skupina Delo - 2,880

Jadranska pivovara - Split, d. d. 2,699,492 2,590,857

Laško Grupa, d. o. o., Sarajevo - 38,916

Laško Grupa, d. o. o., Zagreb 228,100 (2,590,857)

Total 5,337,999 1,418,353

Operating liabilities - companies of the Laško group

Radenska, d. d. Radenci 312,500 393,761

Vital Mestinje, d. o. o. - 118

Skupina Union 7,869,189 7,415,762

Jadranska pivovara - Split, d. d. 4,550 -

Laško Grupa, d. o. o., Sarajevo 33,386 13,489

Laško Grupa, d. o. o., Zagreb - 10,787

Total 8,219,625 7,833,917

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28. D. LOANS ACQUIRED FROM THE COMPANIES OF THE LAŠKO GROUP

(in EUR) 2012 2011

Radenska, d. d., Radenci 33,100,000 33,100,000

Skupina Union 9,300,000 9,300,000

Firma Del, d. o. o., Laško 50,977 49,526

Total 42,450,977 42,449,526

In 2012, the amount of liabilities under the loans was increased due to interest on a loan of Firma

Del, d. o. o.

As of 31 December 2012, liabilities to Radenska arising from the interest on the loans granted amount

to EUR 146,962 and to Pivovarna Union EUR 43,324.

28. E. LOANS MADE TO THE COMPANIES OF THE LAŠKO GROUP

(in EUR) 2012 2011

Subsidiaries

Jadranska pivovara - Split, d. d. (long-term loan) 9,062,000 7,990,000

Adjustments of loans Jadranska pivovara - Split, d. d. (9,062,000) (7,990,000)

Total subsidiaries - -

Other related companies

Infond Holding, d. d., Maribor 1,699,613 1,699,613

Center naložbe, d. d., Maribor 5,900,000 5,900,000

Popravek vrednosti danih posojil (7,599,613) (7,599,613)

Total other related companies - -

Total - -

In 2012, the Company granted short-term loans to the subsidiary Jadranska pivovara – Split totalling

EUR 1,063,000 for severance payments and for overcoming the liquidity problems. Value adjustments

were established for loans and charged to current profit or loss.

28. F. REVENUE FROM THE COMPANIES OF THE LAŠKO GROUP

(in EUR) 2012 2011

Subsidiaries


Skupina Union 2,697,826 44,331

Total 7,520,391 1,184,020

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28. G. FINANCIAL EXPENSES OF THE COMPANIES IN THE LAŠKO GROUP

(in EUR) 2012 2011

Subsidiaries


Skupina Union 525,374 527,458

Delo, d. d., Ljubljana - oslabitev - 8,183,810

Jadranska pivovara - Split, d. d. - oslabitev posojil in obresti - 1,833,608

Firma Del, d. o. o., Laško 1,451 4,091

Total 2,455,249 12,634,267

28. H. INTEREST PAYABLE TO THE COMPANIES IN THE LAŠKO GROUP

(in EUR) 2012 2011

Subsidiaries

Radenska, d. d., Radenci 146,962 177,108

Skupina Union 43,324 48,182

Total 190,286 225,290

28. I. GUARANTEES GIVEN TO THE ASSOCIATED COMPANIES IN THE LAŠKO GROUP

(in EUR) 2012 2011

Subsidiaries

Jadranska pivovara - Split, d. d. (for bank loans) 510,463 1,531,389

Jadranska pivovara - Split, d. d.

(installments already paid for the quarantee) 2,107,305 -

Jadranska pivovara - Split, d. d. (interest not booked) 999,482 -

Radenska, d. d., Radenci (for bank loans) 4,100,000 5,900,000

Pivovarna Union, d. d., Ljubljana (for bank loans) 1,890,354 3,000,000

Total 9,607,604 10,431,389

Guarantee value adjustment (510,463) (1,531,389)

Total subsidiaries 9,097,141 8,900,000

Other related companies

Birra Peja, a. d., Peć 2,000,000 2,000,000

Total related comapnies 2,000,000 2,000,000

Total 11,097,141 10,900,000

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As of 31 December 2012, the value of the guarantees given to the subsidiaries amounts to EUR

9,607,604. Their value increased by EUR 197,141 compared to the previous year.

The receivables from Jadranska pivovara, Split, are disclosed among off-balance-sheet receivables,

namely under guarantees for the repayment of loans in 2009 equalling EUR 510,463. Also the receiva-

bles that incurred in 2011 and 2012 and could not be recognised then since the conditions for them to

be recognised under the assets were not met are included among the off-balance-sheet items (for the

paid guarantees amounting to EUR 2,107,305 and accrued interest equalling EUR 999,482).

5.4.8 REMUNERATION OF THE MEMBERS OF THE MANAGEMENT BOARD AND SUPERVISORY BOARD AND THE EMPLOYEES WITH INDIVIDUAL CONTRACTS 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) 2012 2011

MANAGEMENT BOARD

Fixed part of remuneration 672,000 520,304

Other remuneration (bonuses) 17,291 10,717


Total 691,351 533,065

Other

Fixed part of the remuneration Jubilee

(in EUR) remuneration (bonuses) awards Total

MANAGEMENT

BOARD - IN 2012

Dušan Zorko 192,000 48 - 192,048

Marjeta Zevnik 120,000 - 2,060 122,060

Matej Oset 120,000 6,388 - 126,388

Mirjam Hočevar 120,000 - - 120,000

Gorazd Lukman 120,000 10,855 - 130,855

Total 672,000 17,291 2,060 691,351

Earnings received by the employees on the basis of individual contracts in 2011 are shown in the

table below:

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INDIVIDUAL CONTRACTS

Fixed part of remuneration 1,113,980 1,087,376

Other remuneration (bonuses) 27,818 33,400

Management and other contracts - 3,000


Total 1,143,858 1,126,842

In 2012, the members of the Supervisory Board of Pivovarna Laško received session fees in the total

amount of EUR 155,583 in accordance with Article 30 of the Articles of Association and the decision of

the last General Meeting of Shareholders.

(in EUR) 2012 2011

SUPERVISORY BOARD

Vladimir Malenković 31,119 13,865

Peter Groznik 22,680 10,170

Bojan Košak 1,500 7,320

Andrej Kebe 1,500 8,652

Bojan Cizej 21,275 5,552

Dragica Čepin 18,075 2,838

Borut Jamnik 19,045 3,763

Borut Bratina 19,889 3,736

Marjan Mačkošek 2,500 9,048

Aleksander Svetelšek - 4,000

Anton Turnšek - 4,582

Total 137,583 73,526

(in EUR) 2012 2011


Marko Koleša - 539

Peter Groznik 5,435 698

Bojan Košak - 495

Bojan Cizej 3,770 -

Igor Teslić 3,697 -

Total 12,902 1,732

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(in EUR) 2012 2011


Borut Jamnik 5,655 -

Dragica Čepin 4,155 -

Borut Bratina 4,155 -

Total 13,965 -

5.4.9 POTENTIAL LIABILITIES AND POTENTIAL ASSETS

Potential liabilities relate to given guarantees or security amounting to EUR 8,850,817. The guaran-

tees totalling EUR 5,990,354 were given to subsidiaries for the borrowings from the banks amount-

ing and EUR 2,000,000 taken by the associated company Birra Peja, Peć. The subsidiary, Radenska,

was granted guarantee totalling EUR 4,100,000 and the subsidiary Pivovarna Union equalling EUR

1,890,354. The guarantee equalling EUR 350,000 was provided to the Customs Administration of the

Republic of Slovenia with regard to excise duty.

The receivables from Jadranska pivovara, Split, are disclosed among off-balance-sheet receivables,

namely under guarantees for the repayment of loans in 2009 equalling EUR 510,463. Also the receiva-

bles that incurred in 2011 and 2012 and could not be recognised then since the conditions for them to

be recognised under the assets were not met are included among the off-balance-sheet items (for the

paid guarantees amounting to EUR 2,107,305 and accrued interest equalling EUR 999,482).

Among the contingent liabilities there is the potential liability arising from the comfort letter to Pe-

rutnina Ptuj signed by the former management of Pivovarna Laško on 31 December 2012. The comfort

letter was not disclosed in the 2008 Annual Report since the management had not disclosed it. On

20 November 2009, Perutnina Ptuj submitted a request to Pivovarna Laško for repayment of EUR

11,600,120. The said amount regards loans made by Perutnina Ptuj to Center naložbe and Infond Hold-

ing on the basis of a signed comfort letter. With the aid of legal experts the Group is examining the

claim and desires to establish the likelihood of having to return the demanded amount. It has obtained

a number of legal opinions for this purpose. Based on the legal opinions obtained the management of

the Group estimates that no obligation to pay the demanded amount exists for the Group. Therefore

the group did not disclose the said liability in its financial statements. On 15 February 2011, Pivovarna

Laško received a lawsuit from the District Court in Celje in connection to the comfort letter which Mr.

Boško Šrot as the Director of the Company supposedly signed on 10 January 2009. In the lawsuit,

the plaintiff Perutnina Ptuj demands a payment of EUR 10,116,489 with the legally prescribed default

interest from 1 January 2010 onwards until payment. Pivovarna Laško has filed an appeal against the

lawsuit in court.

LAWSUIT DUE TO ALLEGED VIOLATION OF THE TAKEOVER LEGISLATION (MERCATOR)

Pivovarna Union together with the other defendants (Pivovarna Laško, Radenska, and Infond Hold-

ing currently undergoing bankruptcy) received a demand for payment of various damage claims (total-

ling EUR 408,218.05) from 28 plaintiffs due to the alleged violation of takeover legislation, supposed

reconciliation of operations and supposed attainment of the takeover threshold from individual share-

holders. The court fixed a date of a hearing on 9 November 2011 in the case ref. No. V Pg 1490/2010

thereby concluding the main hearing. With its judgement of 30 November 2011, the court rejected

all claims of the plaintiff as unfounded and ordered the plaintiffs to cover the costs of the procedure.

The judgment is not yet final. According to the court, the said procedure was a test case although

after having obtained access to the file it was established that the court had not issued a decision on

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the execution of a test case. The plaintiffs began withdrawing their lawsuit following the issue of the

judgement. Twenty-four plaintiffs have withdrawn from the lawsuit to date. Based on the withdrawal

of the lawsuit, the court halted the procedure through a decision and ordered the plaintiffs to pay the

legal costs thereof.

LAWSUIT BY 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 regarding 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








taken the decision.

ADJUSTMENT OF LAND REGISTRY OR LEGAL SITUATION CONCERNING THE HOLIDAJ ACCOMODATION CA-

PACITIES IN CROATIA


apartments in Barbariga) the activities for their entry into the land registry are in progress. Pivovarna

Laško is entered into the land registry as the owner. In the process of the ownership transformation

the value of this property was valued at zero due to the uncertain situation in relation to the property

in the republics of former Yugoslavia and this value was included into the opening balance. The D.S.U

Company that should have issued a certificate during this process allowing Pivovarna Laško to be en-

tered as successor holds the view that the said property had not been the subject of the privatisation.

Legal opinions are currently being acquired. Moreover, there is likelihood that in the course of ar-

ranging mutual relations with D.S.U. certain obligations may arise for Pivovarna Laško. When regu-

lating, D.S.U. will need to take into consideration the actual state of property and the value of our

investments. The initial value of this property will need to be determined that will serve as the basis in

negotiations (or court proceedings against D.S.U.).

5.4.10 COSTS OF THE AUDITOR

The costs of the audit performed by the audit firm Deloitte revizija, d. o. o. for 2012 totalled EUR

22,400.

5.4.11 UNDERLYING TRANSACTIONS AFTER THE REPORTING DATE

Transactions after the end of the financial year in Pivovarna Laško are described on page 112 of the

Annual Report, Chapter 2.13. After the end of the financial year, there were no significant transactions

that would affect the non-consolidated financial statements.

C O L O P H O N

Publisher: Pivovarna Laško, d. d., Trubarjeva 28, 3270 Laško

Design: atelje.Balant, Ljubljana

Text: Pivovarna Laško, d. d.

Translating: LPI.SI

May, 2013

Documents

Annual report 2012