Slovenia Business Week no. 52/2004, December 20th, 2004
Table of Contents:
HEADLINES ............................................................................................................................. 3
Hidria Automotive Gets Deal for General Motors ................................................................. 3
Slovenia's Economy Grows by 4.9% in Q3 ........................................................................... 3
IMAD Says 2005 Crucial for Meeting Convergence Criteria ................................................ 4
INTERNATIONAL COOPERATION ...................................................................................... 5
Cukjati and Dutch Ambassador Discuss EU Presidency ....................................................... 5
Danube Convention Signatories Pledge Sustainable Water Management ............................. 5
Quadrilateral Transport Ministers Sign Cooperation Memorandum ..................................... 5
Greek Ambassador Pays Farewell Visit to Drnovsek ............................................................ 6
Tender for Projects of Cross-Border Cooperation Published................................................. 6
EUROPEAN UNION ................................................................................................................. 7
EU Foreign Ministers Fail to Set Date for Turkey's Accession Talks ................................... 7
EU Foreign Ministers Confirm EU Presidencies until 2020 .................................................. 7
European Ministers Reach Agreement on Vocational Education .......................................... 8
Jansa Says Slovenia Supports EU Talks with Croatia ........................................................... 8
Jansa Expects Tough EU Budget Talks ................................................................................. 9
PM Jansa Says Slovenia Backs Turkey Negotiations Compromise ...................................... 9
LEGISLATION ........................................................................................................................ 10
Parliament Endorses Tax Amendments ............................................................................... 10
Parliament Backs Changes to Personal Income Tax ............................................................ 10
STATISTICS/FORECASTS .................................................................................................... 12
Wages Up in October ........................................................................................................... 12
Unemployment at 10.5% in October .................................................................................... 12
FINANCE................................................................................................................................. 13
Insurer Slovenica to Split into Two Companies in January ................................................. 13
Probanka Posts Growth in Profits ........................................................................................ 13
NKBM Bank Would Like to See Capital Injection .............................................................. 13
Pensions to Go Up by 0.4% ................................................................................................. 14
Adriatic to Expand to Foreign Markets ................................................................................ 14
Ljubljana Stock Exchange .................................................................................................... 15
Foreign Exchange ................................................................................................................. 15
BRANCH INFORMATION .................................................................................................... 16
Telecommunications Agency to Improve Communication with EU ................................... 16
COMPANIES ........................................................................................................................... 17
New Krka CEO Anticipates Double Digit Growth and No Takeovers ................................ 17
Hit Gets Go-Ahead for Acquisition of Hotel Chain Kompas Hoteli ................................... 17
Eles to Wrap Up the Year with EUR 4m Profit ................................................................... 17
Istabenz's Tourism Unit Gets New Management ................................................................. 18
Steelworks Group to Post Record Profits ............................................................................. 18
Car Seat Cover Maker Pleased with 2004 Business Results ................................................ 19
Ownership Change Not to Affect Substantive Ruling on Union Takeover ......................... 20
Kolinska and Droga Agree on Share-Swap Ratio ................................................................ 20
Mercator's Annual Profit Below Expectations ..................................................................... 21
Radenska's Revenues Drop by Over One Quarter ............................................................... 21
Mobitel CEO Says the Company Never Abused Market Position....................................... 21
Merkur Expecting Revenues Growth in 2005 ...................................................................... 22
Airport Company Planning to Up Revenues by 12% in 2005 ............................................. 22
Telekom Slovenije Will Bid for Montenegrin Telco ........................................................... 23
Luka Koper Plans Investments of EUR 24m in 2005 .......................................................... 23
BTC Expecting to Up Net Profit by 25% ............................................................................. 23
Istrabenz Doubles Its Stake in Kolinska .............................................................................. 24
Slovenia Gets Fist On-Line Pharmacy ................................................................................. 24
Gaming Company Hit to Post EUR 17m of Profit ............................................................... 25
Mobitel Pushes Ahead with Kosovo Network ..................................................................... 25
SLOVENIA IN BRIEF ............................................................................................................ 27
Rupel Welcomes Provisional Date for Croatia's EU Accession Talks ................................ 27
Slovenia Joins Wassenaar Arrangement .............................................................................. 27
EU Committee of the Regions - An Opportunity for Local Communities .......................... 27
FM Rupel Says Slovenia Ready for OSCE Presidency ....................................................... 27
Health Insurance Institute Meets Financial Plan .................................................................. 27
Ireland Donates Funds for Demining of Bosnia ................................................................... 27
Ivan Zagar Appointed Regional Development Minister ...................................................... 27
Slovenian MEPs Highlight Importance of Drawing EU Funds ........................................... 28
PM Jansa Backs Start of Accession Talks with Croatia....................................................... 28
Government Appoints New SOD Management ................................................................... 28
New Members for Electoral and Constitutional Commissions Appointed .......................... 28
Luka Faces Mounting Local Opposition to Third Terminal ................................................ 28
2
HEADLINES
Hidria Automotive Gets Deal for General Motors
Hidria Automotive Rotomatika is already developing solutions for the product, which will be
launched on the market in 2007
The Slovenian company Hidria Automotive was entrusted with the development of
components for the starting system of a new generation of diesel engines for the US
corporation General Motors (GM).
The EUR 8m deal has been signed with the US company Remy Automotive, Hidria
Automotive said in a press release.
Hidria Automotive Rotomatika is already developing solutions for the product, which will be
launched on the market in 2007, according to the press release.
Hidria's products will be used by the Poland-based joint venture GM Fiat Powertain.
Slovenia's Economy Grows by 4.9% in Q3
After a growth of 3.9 percent in Q1 and 4.7 percent in Q2, GDP increased by 4.9 percent in
real terms in Q3, year-on-year
Slovenia's gross domestic product (GDP) continued to grow in the third quarter of this year,
as the economy expanded by 4.9 percent compared to the same period last year. In the first
nine months of the year, GDP increased by 4.5 percent over 2003.
After a growth of 3.9 percent in Q1 and 4.7 percent in Q2, GDP increased by 4.9 percent in
real terms in Q3, year-on-year. "Growth is gradually slowing down," Karmen Hren of the
national Statistics Office told the press on Wednesday, 15 December.
Slovenia posted a 2.9-percent growth in the last quarter of 2003, adding 1 percentage point in
the first quarter of 2004. In the second quarter, the addition to the rate of growth was a mere
0.8 percentage points, and only 0.2 percentage points were added in Q3.
GDP at current prices amounted to SIT 1,592bn (EUR 6.6bn) in Q3, up 7.9 percent year on
year. Gross national income meanwhile increased by 8.1 percent.
The third quarter was marked by an upturn in the foreign trade balance. In previous quarters,
the foreign trade balance negatively affected economic growth, with exports rising faster than
imports. The situation has now turned - the trade balance added almost 1 percentage point to
the rate of economic growth.
The high, almost 15-percent, rise of exports and imports in real terms noted in Q2 slowed
down in Q3 and returned to the level of the beginning of the year, when exports and imports
rose by 10 percent.
Domestic spending did not affect economic growth as much as in previous quarters, according
to the Statistics Office. It added 4 percentage points to economic growth, which is about 1.5
percentage points less than in Q2. The main reasons are the slightly slower growth of gross
fixed capital formation and a smaller increase in the inventories than that of the first two
quarters of this year.
Final consumption expenditure continued to grow; households expenditures increased by 3.8
percent, which was about 1 percentage point higher growth than in 2003, and government
expenditures growth also increased at the same time.
Employment was 0.3 percent above last year's level, and so Q3 broke a three-year downward
trend in employment, said Hren.
The GDP statistics for Q4 are expected to be released on 15 March 2005, according to the
Statistics Office.
3
IMAD Says 2005 Crucial for Meeting Convergence Criteria
The Institute for Macroeconomic Analyses and Development (IMAD) anticipates that it will
be clear by the middle of next year whether Slovenia is on the right track of meeting the
convergence criteria
The Institute for Macroeconomic Analyses and Development (IMAD) anticipates that it will
be clear by the middle of next year whether Slovenia is on the right track of meeting the
convergence criteria.
According to Bostjan Vasle of the government institute, Slovenia's entry into the euro zone by
2007 will remain the country's top priority under the new government of Janez Jansa.
The institute will meanwhile have to fulfil a key task next year of gathering data about
inflation, public finances, interest rates and domestic currency rate, Vasle explained for STA.
He also assured that the institute would supplement the convergence programme for the
period 2004-2007, adopted by the government in May, by the end of this year.
The country has to supplement the convergence programme once year, in between 15 October
and 1 December. However, the institute has asked the European Commission for a one-month
postponement given the recent change of government.
Vasle does not expect any extensive changes or corrections to be made to the programme this
time since all key economic policies have already been adopted in previous months by the
former government.
According to Vasle, the country's key priority in the coming months would be to curb
inflation and adopt structural changes regarding the public finances.
The main risks the country will face will be the excessive inflow of capital, which might
jeopardise the permitted exchange rate between tolar and euro, and the excessive credit
expansion, Vasle explained.
4
INTERNATIONAL COOPERATION
Cukjati and Dutch Ambassador Discuss EU Presidency
After the Netherlands, the EU presidency will be taken over by Luxembourg in the first half of
2005
Speaker of Parliament France Cukjati received Dutch Ambassador to Slovenia Jan C.
Henneman on Monday, 13 December. Talks focused on Slovenia's EU presidency, with
Cukjati observing that the experience of the Netherlands can be extremely valuable for
Slovenia, according to a press release.
Henneman said that relations between Slovenia and the Netherlands were very good both on a
bilateral level as well as in a broader EU context, the parliament said in a press release.
The Dutch ambassador pointed out that the two countries share similar views on numerous
issues, for example the future EU financial perspective, agriculture policy, and issues related
to the environment and justice.
After the Netherlands, the EU presidency will be taken over by Luxembourg in the first half
of 2005. Slovenia is to form part of the EU presiding troika that is scheduled to serve from the
beginning of 2007 to mid-2008. If the EU constitution fails to be adopted, Slovenia will be
presiding independently in the first half of 2008.
Cukjati also briefed the Dutch ambassador on next year's work of the parliament. He said the
National Assembly is to focus especially on the open issues regarding the EU and the
Balkans. He also announced a public debate on the European constitution, according to the
press release.
Danube Convention Signatories Pledge Sustainable Water Management
Environment Ministry State Undersecretary Mitja Bricelj said the Sava agreement, ratified by
Slovenia, Bosnia-Herzegovina, Croatia and Serbia-Montenegro, would enter into force on 29
December
A ministerial declaration was passed at a session of the International Commission for the
Danube River Protection on Monday, 13 December, which highlights the commitment of
participating states to further strengthen cross-border cooperation in sustainable water
management in the Danube region. The document also sets in detail the priorities for the next
10 years.
According to a Slovenian official attending the session, the declaration pays special attention
to subregional activity, such as the Framework Agreement on the Sava River Basin.
Environment Ministry State Undersecretary Mitja Bricelj said the Sava agreement, ratified by
Slovenia, Bosnia-Herzegovina, Croatia and Serbia-Montenegro, would enter into force on 29
December.
Quadrilateral Transport Ministers Sign Cooperation Memorandum
The transport ministers from Slovenia, Croatia, Italy and Hungary signed a memorandum of
understanding on cooperation in establishing the fifth pan-European transport route
The transport ministers from Slovenia, Croatia, Italy and Hungary signed a memorandum of
understanding on cooperation in establishing the fifth pan-European transport route on
Thursday, 16 December.
According to the document, the ministers will welcome the set-up of a secretariat of the fifth
corridor in Trieste, Slovenia's Janez Bozic told STA.
5
Each country has also bound itself to promoting an effective sustainable transport system for
the sake of its economy's competitiveness, to enhancing cooperation in the region, and to
develop the transport infrastructure connecting each country.
The commitments of the four ministers also include their efforts to obtain EU funds for the
implementation of transport infrastructure projects, Bozic said, adding that he had briefed his
counterparts on the most important transport projects that Slovenia has completed lately and
those it is to complete over the next year.
Greek Ambassador Pays Farewell Visit to Drnovsek
The pair said the relations between Slovenia and Greece were excellent, with still numerous
possibilities to improve economic cooperation
Slovenian President Janez Drnovsek on Thursday, 16 December received outgoing Greek
Ambassador George Nicolaidis, who is wrapping up a three-year term in office. The pair said
the relations between Slovenia and Greece were excellent, with still numerous possibilities to
improve economic cooperation, according to a press release.
Drnovsek and Nicolaidis also touched on Turkey's EU accession, the Greek ambassador
pointing out that Greece does back Turkey's accession - under certain conditions, including
the recognition of Cyprus.
Nicolaidis said he hoped that Slovenia and Greece could soon exchange visits of senior
officials. Drnovsek thanked the ambassador for his contribution to the development of
bilateral relations and wished him all the best for his future work, Drnovsek's office said in the
press release.
Tender for Projects of Cross-Border Cooperation Published
The programme aims at boosting the development of the border area by ensuring economic
cohesion, encouraging sustainable development and developing human resources
The National Agency for Regional Development published on Friday, 17 December the first
public tender for funding projects within the cross-border cooperation programme SloveniaHungary-Croatia 2004-2006.
The programme aims at boosting the development of the border area by ensuring economic
cohesion, encouraging sustainable development and developing human resources. BR>
It makes part of the EU initiative Interreg III, which stimulates interregional cooperation in
the EU between 2000-06 and is financed under the European Regional Development Fund
(ERDF).
Slovenia will distribute a total of SIT 1.65bn (EUR 6.88m) within this tender, Hungary SIT
2bn (EUR 8.34m) and Croatia SIT 1.2bn (EUR 5m).
The Slovenian projects bidding for the funds have to be submitted to the agency by 1 March
2005. They could be conducted in the regions of Pomurje, Podravje, Karst, Savinja Valley,
Lower Sava Valley and the southeastern regions.
6
EUROPEAN UNION
EU Foreign Ministers Fail to Set Date for Turkey's Accession Talks
Also on the agenda of the meeting of the EU foreign ministers were the EU's financial
arrangements between 2007 and 2013
The EU foreign ministers, including Slovenia's Dimitrij Rupel, failed to set a date for the start
of EU accession negotiations with Turkey. Asked about his position on Turkey's EU
accession process, Rupel said it was positive in principle.
The ministers also failed to agree on the final result of Turkey's negotiations and on the
conditions that Ankara must meet in the accession process. The decision was left to the EU
leaders.
Rupel said his position on Turkey's EU accession talks was positive in principle. He added
that "we are aware that there will be many problems in the negotiations, that the process will
be a lengthy one and that Turkey will have to meet demanding conditions. But Europe needs
Turkey, its entry brings more benefits than problems and it must be supported."
Also on the agenda of the meeting of the EU foreign ministers on Monday, 13 December were
the EU's financial arrangements between 2007 and 2013. Slovenia believes that the
arrangements should consider the special needs of the new member states, particularly in
distributing money from the structural and the cohesion funds, Rupel said on the sidelines of
the meeting. This is the opinion of most of the new member states, including Poland.
EU Foreign Ministers Confirm EU Presidencies until 2020
The EU foreign ministers on Monday, 13 December confirmed the list of presidencies of the
EU council between 2007 and 2020, according to which Slovenia will preside over the EU in
the first half of 2008
The EU foreign ministers on Monday, 13 December confirmed the list of presidencies of the
EU council between 2007 and 2020, according to which Slovenia will preside over the EU in
the first half of 2008. "The list has been passed without a debate," Foreign Minister Dimitrij
Rupel said on the side of the meeting.
Minister Rupel said that the preparations for the Slovenian presidency would begin on 1
January and would be mainly underway at the government and the Foreign Ministry.
As early as the beginning of next year Slovenia will meet Germany and Portugal, with which
the country is to make up the 18 month team presidency between 2007 and mid 2008, Rupel
announced.
Rupel said that the country would prepare "for the worst", that is for the possibility that it
presides over the EU Council on its own if the European Constitution fails to be ratified on
time.
Only after the constitutional referendums in France and Great Britain, which will be held in
2005 and 2006 respectively, as well as after referendums in some other member states will it
be clear what will be the nature of Slovenia's EU presidency, Rupel said.
The preparations will be lengthy and will require considerable personnel reinforcement and
more funds, said Rupel.
Following the first team presidency of Germany, Portugal and Slovenia (2007-2008) will be
those of France, Czech Republic and Sweden (2008-2009), Spain, Belgium and Hungary
(2010-2011), Poland, Denmark and Cyprus (2011-2012), Ireland, Lithuania and Greece
(2013-2014), Italy, Latvia and Luxembourg (2014-2015), the Netherlands, Slovakia and
Malta (2016-2017), Great Britain, Estonia and Bulgaria (2017-2018), and Austria, Romania
and Finland (2019-2020).
7
European Ministers Reach Agreement on Vocational Education
Education ministers of the EU member states, candidate countries and members of the
European Economic Area have evaluated the conditions in vocational education and
qualification, especially the aspect of reforming national systems of vocational education
European education ministers have reached an accord on the primary tasks in vocational
education and qualification in the EU, dubbed the "Maastricht communiqué", at the
Maastricht conference on vocational education. The communiqué foresees the formation of a
common qualifications framework and introducing a credit system into vocational education.
Education and Sports Minister Milan Zver said at press a conference on Wednesday, 15
December that education ministers of the EU member states, candidate countries and
members of the European Economic Area have evaluated the conditions in vocational
education and qualification, especially the aspect of reforming national systems of vocational
education.
In addition to the priorities of vocational education, they also discussed how it can contribute
to achieving the Lisbon goals, according to which Europe is to become the most prosperous
economy based on knowledge in the world by 2010.
According to Zver, those goals call for a number of reforms in social systems and subsystems,
therefore a thorough reform of the school system will be necessary. In higher education,
results are already visible within the Bologna process, while vocational education is a more
problematic area in view of the differences among the member states.
Standardisation in this field calls for an emphasis on the formation of a European system of
qualifications that will trigger the adjustment of the national systems.
Zver also said it is vital to introduce a credit system into vocational education. A system of
acknowledging education and experience, already common in higher education, would serve
above all to facilitate the acknowledgement of prior education and work experience.
As for reaching the Lisbon goals, Zver says it will be difficult. In the past few years, there is a
tendency in Europe for the educational system to adjust to the demands of the common
market. The system of vocational education, therefore, must qualify people to work in the
market without disregarding relevant social issues, which is necessary for a radical reform.
The minister stressed that Slovenia is appropriately involved in the project of education and
qualification until 2010. Among the problems the country is facing, Zver mentioned that the
number of vocational school students that is held back is above the European average,
cooperation between the economy and the school system is weak, and there is also
incompatibility and bad interaction among school programmes.
Jansa Says Slovenia Supports EU Talks with Croatia
Slovenia has expressed backing for the launch of EU membership negotiations with Croatia
Slovenia has expressed backing for the launch of EU membership negotiations with Croatia,
Slovenian Prime Minister Janez Jansa told reporters as the EU summit in Brussels ended.
Jansa said he hoped Slovenia's statement of support for Croatia would create a new
framework for bilateral cooperation between the countries which would in turn help to
promote the resolution of open issues in a European spirit.
Explaining the decision of EU leaders, Jansa said it was decided that membership negotiations
with Croatia would be launched on 17 March of next year. However, Croatia's cooperation
with the International Criminal Tribunal for the Former Yugoslavia is an obligation for
Croatia, the Slovenian PM added.
The new wording of the decision to begin accession negotiations now sets down exactly who
will monitor Croatia's cooperation with the tribunal, Jansa said, adding that the EU foreign
ministers would be tasked with this.
8
"Slovenia, which still has a number of open issues with Croatia, believes that Croatia has
made progress in cooperation with The Hague; the results cannot be disputed although they're
far from perfect...Compared to other countries of the region, there has been progress," Jansa
said.
For Slovenia, the issue of Croatian cooperation with The Hague is not of strategic importance,
which is why it had no reason to oppose the launch of membership negotiations, Jansa added.
Jansa Expects Tough EU Budget Talks
Slovenian Prime Minister Janez Jansa expects that the talks on the EU budget framework for
2007-2013 will be "one of the most difficult issues dealt with in the EU in the first half of
2005"
Slovenian Prime Minister Janez Jansa expects that the talks on the EU budget framework for
2007-2013 will be "one of the most difficult issues dealt with in the EU in the first half of
2005".
Speaking after the EU summit in Brussels on Friday, 17 December, where EU leaders only
stated their intent to reach agreement on the matter by June 2005, Jansa described the talks on
the budget by saying that "everything had been crossed out".
Jansa said that he expected the talks to return to scratch several times before an agreement is
finally achieved.
Analysts believe that the big differences between the members on the so-called financial
perspective could result in the talks dragging out past the set deadline. The differences are
demonstrated in the very vague set of principles adopted today by the EU leaders.
The decision states only that the new perspective should guarantee sufficient funds for the EU
to effectively tackle future challenges, including those stemming from the developmental
differences among the members.
According to Jansa, the much-disputed spending ceiling remains an open issue in talks on the
future budget framework. Jansa said he believes today's decision "emphasises the respect for
the needs of the new members".
PM Jansa Says Slovenia Backs Turkey Negotiations Compromise
Slovenia has backed the launch of EU accession talks with Turkey under the set conditions
Slovenia has backed the launch of EU accession talks with Turkey under the set conditions,
Prime Minister Janez Jansa said at the conclusion of the EU summit in Brussels on Friday, 17
December.
Commenting on the decision of the EU to launch negotiations with Turkey under certain
conditions, Jansa said it was "only right that the expected date for the conclusion of talks is
left open so that nobody has the illusion that everything will go smoothly," Jansa said.
He said the decision to launch official membership negotiations was a compromise, given the
conditions that have been set.
"If Turkey undertakes fast reforms, it will be a different country then than it is today, a
country that will meet all the conditions thus making the final decision easier," Jansa said.
"But if Turkey heads the other way, it is safe to say that negotiations will not result in its
membership of the EU," he added.
Jansa said that public opinion in the EU must be respected in the case of Turkey as in all
cases. He believes that there are currently two groups of countries in the EU: a group in which
public debates have been intense and there is support for Turkish membership and those
countries where there has been little or no public debate and there is no clear stance on
Turkey's bid.
Slovenia is part of the second group, Jansa said, adding that he sees no need for a referendum
on Turkey's bid in Slovenia.
9
LEGISLATION
Parliament Endorses Tax Amendments
The changes are part of a comprehensive tax reform adopted earlier this year and enter into
force on 1 January 2005
Parliament has adopted changes to the corporate income act, the tax procedure act and the tax
administration act. Proposed by the former government, the changes are part of a
comprehensive tax reform adopted earlier this year and enter into force on 1 January 2005.
Parliament opened the session on Thursday, 16 December with the endorsement of seven
substitute MPs. The deputies then focused on amendments to the income tax act and changes
to the companies' act put forward by the Janez Jansa government.
The need for the acts, which were passed in a fast-track procedure, was dictated by changes in
EU regulations, a ruling by the Constitutional Court and incompatibilities among a number of
amendments to acts in the tax reform passed by parliament.
According to the measures' proponents, the amendments to the corporate income act are
aimed at bringing down tax barriers to the free flow of capital. Dividends and other capital
gains will be separated from the tax base in cases when the ownership share of the recipients
of these funds exceeds 20 percent, rather than the current 25 percent.
Transition periods will also be established in line with the relevant EU directive: on 1 January
the threshold will be lowered to 15 percent, and on 1 January 2009 it will go down to 10
percent.
The need for the proposed amendments to the tax procedure act have been dictated by EU
regulations dealing with the exchange of information among the tax bodies of EU member
states. These amendments should facilitate cooperation between Slovenian tax bodies and
those of the other EU members.
The amendments change the order of outstanding tax collection when the collected sum does
not cover all tax liabilities. Changes have also been proposed to the calculation of penalty
interest. These changes are also needed to harmonise national acts that were passed after the
tax procedure act entered into force.
Changes to the tax administration act refer to a transitional period during which tax inspectors
must obtain a mandated level of education. According to the act, inspectors must have a
university or higher education with at least five years of experience, and must also be
certified.
Parliament Backs Changes to Personal Income Tax
The parliament also adopted amendments to the company act
Parliament backed on Thursday, 16 December the government-proposed changes to the
personal income tax act, which introduce lower taxes on capital gains. The amendments were
adopted in the fast-track procedure.
The changes to the act, which was passed in April and is due to come into effect on 1 January
2005, envisage that only 40 percent of major ownership shares be liable to tax. The tax rate
remains at 50 percent, but with the changed base, it will amount only to 20 percent.
Justifying the changes, Finance Minister Andrej Bajuk told the parliamentary finance and
monetary policy committee that the amended act would increase investments and create a
more friendly environment for entrepreneurs.
In addition to introducing lower taxes on capital gains, the amended act envisages tax
deduction for natural disaster subsidies for 2004 that will be paid next year, and lowers tax
base for public servants and officials sent to work abroad.
10
The parliament also adopted amendments to the company act, which bring the national
legislation into line with the acquis.
The amendments, also to come into effect in 2005, introduce international accounting
standards, harmonise the company legislation with the offences act and the capital adequacy
directive, and stipulate environment-friendly standards.
11
STATISTICS/FORECASTS
Wages Up in October
Slovenians earned an average net salary of SIT 169,508 (EUR 707) in October
Slovenians earned an average net salary of SIT 169,508 (EUR 707) in October, which is up
0.5 percent over September and up 5.5 over the same month last year, according to the
Statistics Office.
The average gross salary amounted to SIT 270,303 (EUR 1,127) in October, up 0.7 percent
over the month before and up 5.1 percent year-on-year. In real terms, gross salaries increased
by 0.4 percent at the monthly level and by 1.7 percent year-on year.
In the first ten months of the year, employees earned an average monthly net pay of SIT
165,202 (EUR 687), which is an increase of 5.5 percent over the average take-home pay in the
same period last year. The gross salary was also up by 5.5 percent to SIT 262,793 (EUR
1,096) in the period.
Unemployment at 10.5% in October
While the unemployment rate among men was 8.9 percent, it stood at 12.4 percent among
women
Slovenia's registered unemployment rate for October stood at 10.5 percent, according to the
National Statistics Office. While the unemployment rate among men was 8.9 percent, it stood
at 12.4 percent among women.
Out of the labour force of 881,637 in October, 92,538 people were registered as unemployed.
This marks an increase of 2 percent over the month before and a drop of 6.5 percent over
October 2003.
The average unemployment rate for the first ten months was 10.7 percent.
According to the ILO-standards based Labour Force Survey, Slovenia posted a 6 percent
unemployment rate in the third quarter of 2004.
12
FINANCE
Insurer Slovenica to Split into Two Companies in January
With the split approved by the Agency for Insurance Supervision, Slovenica zivljenje, the new
company to emerge in January, will sell life insurance, while Slovenica will continue to sell
property insurance in line with its current license
Insurer Slovenica is due to split into two insurance companies, one dealing in property
insurance and the other in life insurance, at the beginning of next year, the management
announced on Monday, 13 December.
With the split approved by the Agency for Insurance Supervision, Slovenica zivljenje, the
new company to emerge in January, will sell life insurance, while Slovenica will continue to
sell property insurance in line with its current license.
As Slovenica's chief executive Matija Senk explained at the news conference, the decision to
split the insurer into two was not prompted by formal but by strategic reasons.
Slovenica will transfer to Slovenica zivljenje 20 percent of its capital, totalling SIT 1.793bn
(EUR 7.47m). The two insurers will keep the same ownership structure, meaning KD Group
will be their 99-percent owner.
While getting ready to be divided into two companies, the insurer also underwent
restructuring, saving measures were introduced and portfolio management was launched.
Satisfied with the results, the management said that Slovenica's performance this year was
above Slovenia's average, reporting a record, 34-percent growth in life insurance in the first
eleven months.
The insurer anticipates to post total premiums of SIT 17.1bn (EUR 71.3m) this year, while
indemnities are expected to amount to SIT 9.2bn (EUR 38.3m). The profits are thus to stand
between SIT 200m (EUR 0.83m) and SIT 260m (EUR 1.08m).
Probanka Posts Growth in Profits
By November the bank turned over SIT 163bn (EUR 680m)
The Maribor-based bank Probanka will have generated more than SIT 900m (EUR 3.75m) in
gross profits by the end of the year. Management board chair Romana Pajenk told the press on
Tuesday, 14 December that by November the bank turned over SIT 163bn (EUR 680m), and
thus already exceeded the target for the whole year.
The 11 month volume of business for the Probanka group stood at SIT 216bn (EUR 900m),
up 18 percent compared to the whole of last year.
According to Pajenk, the bank plans to increase the volume of business by 16 percent in 2005,
while net revenues are to go up by 11 percent. Probanka also hopes to generate more than SIT
1bn (EUR 4.17m) in gross profits for the first time ever.
At the end of last year, Probanka ranked 10th among Slovenian banks with a market share of
2 percent.
NKBM Bank Would Like to See Capital Injection
The Maribor-based bank favours capital injection that would bring new owners and is also
willing to negotiate on a foreign owner provided it would ensure quality
Nova Kreditna banka Maribor (NKBM) would like to see fresh capital injection, less state
influence and independence regarding its organisation, the bank's chief executive Crtomir
Mesaric has commented for Delo on what policy the new government should take towards the
country's second biggest bank.
13
As Mesaric said in an interview published on Thursday, 16 December, the Maribor-based
bank favours capital injection that would bring new owners and is also willing to negotiate on
a foreign owner provided it would ensure quality.
By contrast, the NKBM opposes the idea that the government would simply sell the bank to
either domestic or foreign owners. "Our goal is to become a regional bank in line with the
European criteria," Mesaric said, insisting that the bank needs fresh capital for that.
According to Mesaric, the capital expansion could be gradual, with the stake to be put up for
sale to domestic and foreign investments on the stock exchange.
The NKBM's chief executive would like to see the state share to go under two thirds and the
bank's share capital to increase by one half in coming years.
According to the daily, a number of foreign banks are believed to be interested in the NKBM
shares, including American Citigroup, German HVB, and French Societe Generale.
Pensions to Go Up by 0.4%
The rise is the result of an adjustment to increases in salaries
After pensions have stayed put for several months now, a raise has finally come for Slovenian
pensioners. According to a decision taken on Thursday, 16 December by the Pension and
Disability Insurance Institute (ZPIZ), pensions will go up by 0.4 percent in December.
The rise is the result of an adjustment to increases in salaries. The ZPIZ established a minor
difference between the year-on-year growth in salaries in the January-October period and the
rate in the growth of pensions over the same period.
While salaries increased by almost 3.79 percent in the comparable period, pensions were up
by 3.75 percent. However, under the pension act, the difference must be multiplied by 12,
which results in a 0.4% rise.
The lowest bracket base pension amounts to SIT 99,052 (EUR 413) as of 1 December, while
the highest bracket base pension is SIT 396,211 (EUR 1,652). The state pension is now SIT
32,984 (EUR 138), while the old age pension under the law on the pension insurance of
farmers totals SIT 42,097 (EUR 176).
In the first eleven months of the year, the ZPIZ posted a little over one billion tolars (EUR
4.17m) in excess of expenditure over revenue. While the overall revenue stood at SIT 761.8bn
(EUR 3.177bn), the expenditure totalled SIT 760.7bn (EUR 3,172bn). The institute
nevertheless remains in debt; in November debts amounted to SIT 20.2bn (EUR 84.2m).
Adriatic to Expand to Foreign Markets
Initially, it plans to open a branch office in Italy's Trieste and later expand to the whole of
Friuli-Venezia Giulia region
The Koper-based insurance company Zavarovalnica Adriatic is set to expand to foreign
markets. Initially, it plans to open a branch office in Italy's Trieste and later expand to the
whole of Friuli-Venezia Giulia region.
"Expansion is imperative," the insurer's chair Dusan Novak told the press on Friday, 17
December. According to him, this year has been successful for the company. Life insurance
premiums were up by 12 percent to SIT 15.7bn (EUR 65.48m).
The 2004 net profit estimate is SIT 265m (EUR 1.11m) for property insurance and SIT 505m
for health insurance, while the life insurance sector has posted SIT 60m (EUR 0.25m) in
losses.
Speaking about 2005 projects, Novak highlighted the merger with a part of its parent
company, Slovenica, which will split into two companies - Slovenica zivljenje for life
insurance, and Slovenica premozenje for property insurance. The latter will merge with
Adriatic by 1 January 2006.
14
Operating costs have amounted to SIT 8.5bn (EUR 35.45m), up 9 percent over last year. The
most substantial compensations have been paid out to policy holders in Posocje, the NW
Slovenian region that was hit by a strong earthquake in July.
Ljubljana Stock Exchange
Volumes were high in the past week, with total turnover amounting to SIT 7.3bn (EUR
30.4m), or almost SIT 1.5bn (EUR 6.25m) per day, which is 20 percent above this year's daily
average
A profit warning issued by Slovenia's largest retailer Mercator injected pessimism into the
stock market. Although the SBI 20 benchmark index shed only 0.34 percent on the week, to
close at 4,875.15 points, analysts believe stocks could dip further in the coming weeks.
Volumes were high in the past week, with total turnover amounting to SIT 7.3bn (EUR
30.4m), or almost SIT 1.5bn (EUR 6.25m) per day, which is 20 percent above this year's daily
average.
The attention of investors was focused squarely on the official market, where the big names
shed ground on account of the announcement by Mercator that its profit for 2004 would stand
at SIT 6bn (EUR 25m), SIT 2bn (EUR 8.33m) less than forecast.
Mercator shares reacted by starting a dive that saw them down by almost 5 percent on the
week at one point. In the end, the share managed to recover some ground to finish the week
3.81 percent lower at SIT 39,780 (EUR 165.90).
Shares in drug maker Krka, the most active stock on the week, were also hit by the general
pessimism, losing 1.07 percent to SIT 84,344 (EUR 351.76).
The SBI 20 would have shed even more ground had it not been for shares in energy and
tourism group Istrabenz and chemical and tourism group Sava, which managed to inject some
light into otherwise gloomy trading. Buoyed by the two companies' investment sprees, the
first gained 2.22 percent to SIT 10,014 (EUR 41.76) and the latter picked up 2.12 percent to
SIT 41,901 (EUR 174.75).
Popular investment companies followed the blue chips on the way down. The PIX investment
fund index finished the week 1.19 percent off at 4,496.66. Moreover, the IPT free market
index edged down 0.21 percent to 4,134.09 points.
Perhaps fuelled by the growing uncertainty on the market, bonds registered a good week,
pushing the BIO bond index 0.62 percent higher to 121.53 points.
Foreign Exchange
Mean exchange rate of the Bank of Slovenia
Euro (EUR) - SIT 239.78 (0.00)
U.S. dollar (USD) - SIT 180.73 (-1.24)
Swiss franc (CHF) - SIT 156.06 (-0.09)
British pound (GBP) - SIT 349.43 (+2.67)
15
BRANCH INFORMATION
Telecommunications Agency to Improve Communication with EU
The Post and Electronic Communication Agency will improve its communication with the
European Commission in order to prevent any further inaccuracies in its reports about the
telecommunications market in Slovenia
The Post and Electronic Communication Agency will improve its communication with the
European Commission in order to prevent any further inaccuracies in its reports about the
telecommunications market in Slovenia. This is what the agency director Nikolaj Simic said
in Brussels on Thursday, 16 December after talks at the Commission's DG for the Information
Society.
Simic, who said on 15 December that the European Commission's report on the
implementation of electronic communication regulations in Slovenia included a number of
false assessments, said that the talks did not reveal the reasons for the incorrect data in the
report.
He said the criticisms of the agency were mainly due to the fact that the Commission largely
considered the opinions of alternative mobile and other services providers in Slovenia.
The Commission said in the report that the agency's activities and independence have been
heavily criticised ever since its establishment. It said that alternative mobile and other services
providers in Slovenia in September blamed the absence of efficient regulation for the poor
situation on the market. They blamed the state-owned stake in the national telco Telekom
(62.5%) as the main hurdle for market liberalisation, which casts a shadow on the agency's
independence, the Commission observed.
Simic said that the agency was completely independent from authorities. It will also become
financially independent on 1 January 2005 when it will no longer be funded by the national
budget, he noted.
As for the European Commission warning that Slovenia has failed to assume EU regulations
in electronic communication, the director of the Post and Electronic Communication Agency
said that the state would pass all EU electronic communication regulations shortly. Thus the
Commission will have no reason to launch infringement proceedings against Slovenia, which
were announced by European Commissioner for the Information Society Viviane Reding on 6
December, according to Simic.
While observing that Slovenia adopted the core directives in the electronic communication
act, the Commission said in its report that the country has failed to implement secondary
legislation in order to give full effect to primary legislation.
Quoting alternative services providers in its report, the Commission observed that the Post
and Electronic Communication Agency was inefficient, not committed to regulating the
market, and procrastinating in resolving disputes on key issues. As a result, only a few
decisions have been made that promote the opening up of the market, the Commission wrote
in its report.
The Commission services are now studying whether there is a lack of efficient market
regulation.
16
COMPANIES
New Krka CEO Anticipates Double Digit Growth and No Takeovers
Joze Colaric is due to assume office on 1 January to succeed Milos Kovacic
Drug maker Krka anticipates its sales to grow much over 10 percent next year, the company's
new chief executive told an interview for the business weekly Gospodarski vestnik published
on Monday, 13 December.
Joze Colaric, who is due to assume office on 1 January to succeed Milos Kovacic, said that
Krka, which ranks 11th among generic drug producers, plans to enter the top ten by 2008.
Commenting on the rumours that Krka might merge with Swiss Novartis, which took over the
other Slovenian top drug maker Lek in 2001, Colaric said that he did not "see any special
synergy" between the two.
Colaric also estimated that there was little probability of a hostile takeover, since in terms of
market capitalisation Krka exceeds one billion euros by far.
He insisted that Krka wished to remain independent, which is also set down in the company's
strategy for the period 2005-2008, adopted by the supervisory board in November.
On the other hand, Krka wants foreign investors to be interested in its shares and increase
their stakes in the company, therefore it plans to organise a series of promotion events abroad,
said Colaric.
In the future, Krka plans to boost its sales in western, southeastern and eastern Europe as well
as on the Eurasian market overall. Slovenia, Croatia, Russia, Poland and old EU members will
remain its top markets, the new CEO also announced.
Hit Gets Go-Ahead for Acquisition of Hotel Chain Kompas Hoteli
The gaming chain Hit bought a fresh 15.32 percent stake in the hotel chain Kompas Hoteli
earlier in November, rising its total share in this Kranjska gora-based company to 85.52
percent
The Competition Protection Office has approved the gaming company Hit's takeover of the
hotel chain Kompas hoteli. The office said on Monday, 13 December that the decision was
made in late November.
The gaming chain Hit bought a fresh 15.32 percent stake in the hotel chain Kompas Hoteli
earlier in November, rising its total share in this Kranjska gora-based company to 85.52
percent.
Slovenia's leading gaming chain published a takeover bid for Kompas hoteli on 15 October,
offering SIT 15,793 (EUR 66) per share.
The company promised in the bid not to cut jobs in Kompas hoteli and pledged to secure a
long-term development for Kranjska gora that would make this Alpine ski resort more
competitive with domestic and foreign rivals.
The management of Kompas hoteli did not oppose Hit's takeover attempt, estimating that it
was not contrary to the company's strategic goals.
Eles to Wrap Up the Year with EUR 4m Profit
According to Korosec, the company's business results are mainly a consequence of
rationalising business processes and of an increased consumption of electricity, which has
risen by 2 percent over last year
The national power grid operator Elektro-Slovenija (ELES) expects to end the year with a
profit of over SIT 1bn (EUR 4.17m). The company realised all of its key investments in 2004,
17
including a 440/110 kW substation in the western town of Divaca, manager Vekoslav
Korosec said on Monday, 13 December.
In 2004, Eles invested more than SIT 5bn (EUR 20.8m) in new constructions and renovation
of power lines, substations and other facilities.
Even though the results of the company exceeded the plans, Korosec said he was aware that
his future as head of Eles would depend on the government and the company's new
supervisory board. "The government can replace the manager of Eles at any time," Korosec
told the press.
Korosec said the energy programme of the new Janez Jansa government was "very generally
written", although he does agree with its principles as defined in the national energy
programme that was adopted earlier this year.
The programme comprises the construction of new international transmission lines,
investments in new production facilities, and necessary rationalisation of electric power
consumption.
Eles has managed to make a very good profit despite the fact that its network charge has been
frozen for the third year in a row; the company does not expect to raise its network charge in
2005.
According to Korosec, the company's business results are mainly a consequence of
rationalising business processes and of an increased consumption of electricity, which has
risen by 2 percent over last year.
Over the past four years, the state - which owns a 100-percent stake in Eles - has received SIT
3.2bn (EUR 13.3m) from Eles dividends.
Istabenz's Tourism Unit Gets New Management
Hoteli Morje posted operating revenues of SIT 8bn (EUR 33.3m) in the first ten months of the
year
Hoteli Morje, the tourism business of the group Istrabenz, got a new management on Monday,
13 December. The supervisory board named Tomislav Ceh the new chairman of the board,
while Vesna Nahtigal and Edvard Lesnik were appointed members of the board.
Ceh, former member of the board and director of the tourism company Postojnska jama
Turizem, announced that the new management would aim at streamlining the companies
within Hoteli Morje and restructuring its investments and marketing.
Among other priorities, Ceh plans a formal merger between Hoteli Morje, Hoteli Palace and
Turisticna druzba Kras into one company, and anticipates major investments in renovation of
Grand Hotel Adriatic in Adriatic, Hotel Jama in Postojna and Hotel Palace in Portoroz.
Hoteli Morje posted operating revenues of SIT 8bn (EUR 33.3m) in the first ten months of the
year, which is an increase of 12 percent over the same period last year.
Steelworks Group to Post Record Profits
Slovenske zelezarne, the state-owned steelworks group, is expected to post all-time high
profits of SIT 1.5bn (EUR 6.25m) this year
Slovenske zelezarne, the state-owned steelworks group, is expected to post all-time high
profits of SIT 1.5bn (EUR 6.25m) this year, the management told a news conference on
Tuesday, 14 December.
The chairman of the board Tibor Simonka said the group's good performance was a result of
favourable global market conditions, cost-cutting measures and new programmes ensuring
higher value added.
According to Simonka, the group is gaining in know-how and value added, and is capable of
facing fierce competition on the European and global markets.
18
Slovenske zelezarne, which incorporates six companies, is expected to generate sales
revenues of SIT 92bn (EUR 384m) in 2004, rising by one third over the previous year.
In other positive trends, the exports were up 19 percent to currently account for 72 percent of
the entire production, while the value added rose from EUR 23,147 to EUR 26,343 per
employee.
Recording the best results in the group were Acroni, expected to post annual profits of SIT
700m (EUR 2.91m), and Elektroda, due to generate profits over SIT 200m (EUR 0.83m).
Slightly below the expectations, Nozi will end the year with a profit of SIT 130m (EUR
0.54m), while Metal managed to reverse a negative trend of 2003, when it posted losses of
SIT 869m (EUR 3.62m).
The two companies of the group which employ the disabled, SUZ Jesenice and ZIP Center
Ravne, also reported satisfactory results, according to Simonka.
As to the privatisation of the group, which is still in majority ownership of the state, Simonka
said that the state could not remain the group's owner in the long run.
Car Seat Cover Maker Pleased with 2004 Business Results
The Slovenian car-seat cover manufacturer Prevent has announced that the group will post
SIT 115bn (EUR 479m) in consolidated revenues this year, up 5 percent over the previous
year
The Slovenian car-seat cover manufacturer Prevent has announced that the group will post
SIT 115bn (EUR 479m) in consolidated revenues this year, up 5 percent over the previous
year in what the company management said was a successful business year.
The group expects to post SIT 78bn (EUR 325m) in revenues with exports this year, which is
SIT 10bn (EUR 42m) more than last year. Profit will be down from last year's SIT 1.4bn
(EUR 5.8m) to SIT 1.2bn (EUR 5m), the CEO Joze Kozmus told the press on Tuesday, 14
December.
Kozmus highlighted that the Prevent group this year won a new client, the automobile giant
DaimlerChrysler. In March the company will launch the production of leather car seat covers
for Mercedes S series, the most prestigious Mercedes model.
The company also successfully completed the development of car seat covers for the new
generation of VW Passat, which will be launched in 2005. It also established Prevent-GBR,
specialised in making leather car seat covers, with Italian partner GBR S.P.A..
Kozmus said that the 2004 business year had been a very tough one. The crisis in the
automobile industry continued, while it was also an unfavourable year for the textile industry.
Although expecting difficulties in the textile industry to continue next year, Kozmus is
optimistic that Prevent would post a profit.
A leading European car seat cover manufacturer, Prevent supplies some of the leading
European car manufacturers, such as Volkswagen, Ford, Peugeot, Renault, Citroen, BMW,
DaimlerCrysler and Volvo. The company holds a 16-percent market share in Europe and
controls about 6 percent of the global market of car seat covers.
Prevent also manufactures work clothes and gloves, and is active in construction, timber and
metal industries, as well as transport. The company allocates about EUR 20m for investments
every year.
The company, which launched the production of car seat covers back in 1957, saw a major
breakthrough in 1976, when it won a deal with Volkswagen. It has produced about 21 million
car seat cover sets in the past 28 years. Today, Prevent produces almost three million sets a
year.
The company employs over 9,100 workers, 5,000 of them in the automobile programme
alone. It posted EUR 500m of revenues last year, EUR 300m from exports alone. Kozmus
announced that exports would amount to EUR 340m in 2005.
19
Ownership Change Not to Affect Substantive Ruling on Union Takeover
After Slovenia's leading brewer raised its stake in a rival brewer to 53.85 percent, Pivovarna
Lasko clearly controls Pivovarna Union
After Slovenia's leading brewer raised its stake in a rival brewer to 53.85 percent, Pivovarna
Lasko clearly controls Pivovarna Union. Lasko now needs a go-ahead from the Competition
Protection Office, but its head told STA on Monday, 13 December, that "the increase in
Lasko's stake does not affect the substantive ruling".
According to Andrej Plahutnik, the anti-trust office must establish whether the concentration
as it is complies with competition regulations, and whether Lasko now controls the Ljubljanabased brewer.
He said that in the ruling issued in July last year, the office found Lasko not to be in control as
yet. This is now clear, and in this aspect, Lasko made this part of the job easier for us,
Plahutnik said.
The official did not want to say when the office will issue its ruling on the Lasko case. "We
must do a good job. We have come quite far, but I would not like to set any deadlines,"
Plahutnik said.
In June the Administrative Court decided that the Competition Protection Office must
examine once again whether the ownership concentration of the country's largest brewers,
Pivovarna Union and Pivovarna Lasko, is in accordance with competition regulations.
The court's decision, taken on 16 June, came after all involved parties - both Slovenian
brewers and Belgium's Interbrew, appealed the competition watchdog's decision that the
ownership concentration between Lasko and Union had not taken place yet since Lasko's
stake did not exceed 50 percent.
Pivovarna Lasko acquired an additional 5.98% stake from food company Perutnina Ptuj,
paying SIT 91,000 (EUR 380) per share. The brewer thus raised its share in Union to 53.85%,
while its rival in the battle of control, Belgium's Interbrew, holds 41.32%.
Kolinska and Droga Agree on Share-Swap Ratio
Droga shareholders will get 14.25 shares of Kolinska for each share of Droga
The managements of food companies Droga and Kolinska have agreed on a share-swap ratio
for their planned merger. Droga shareholders will get 14.25 shares of Kolinska for each share
of Droga. This is according to an agreement reached on Wednesday, 15 December and posted
on the website of the Ljubljana Stock Exchange.
By fixing the share-swap ratio, the managements have agreed on one of the main elements of
the merger agreement, a document that is expected to be finalised in January 2005. The ratio
was fixed on the basis of an assessment made by external auditors.
Following a meeting of both managements, Kolinska chair Lojze Dezelak expressed
satisfaction that he was able to take part in such an important project, while his counterpart
from Droga, Robert Ferko, explained that "the share-swap ratio is within the share ratio as
seen in the past five years".
The managements will now focus on other elements on the merger agreement, which they
intend to reveal to the public in January 2005. The draft agreement will then be scrutinised by
auditors, whereupon it will be reviewed by the management and supervisory boards of both
companies.
The shareholders are expected to vote on the merger at general meetings of both companies
expected to be convened by the end of March 2005. If the merger is endorsed, the new
company should be quoted on the stock market by summer.
Kolinska will have a new owner by that time if energy and tourism company Istrabenz's
takeover bid proves to be successful. Istrabenz has offered SIT 6,500 (EUR 27.11) per
20
Kolinska share, which would make the deal worth SIT 20.6bn (EUR 85.91m). Istrabenz
already holds a 9.73 percent stake in Kolinska, and also owns a stake in Droga.
Kolinska of Ljubljana and Izola-based Droga and have been working on a merger since last
spring. The companies have already drawn up a prospectus showing that the merger could
result in synergy effects amounting to between SIT 15bn (EUR 62.5m) and 18bn (EUR 75m).
Mercator's Annual Profit Below Expectations
Retailer Mercator anticipates to generate profits of SIT 6bn (EUR 25m) in 2004
Retailer Mercator anticipates to generate profits of SIT 6bn (EUR 25m) in 2004, which is SIT
2bn (EUR 8.34m) short of its business plans, the company said on Wednesday, 15 December.
According to the company, the profits have been trimmed due to purchases of new companies
and celebrations of the company's 55th anniversary.
As part of celebrations, all the employees received money awards totalling SIT 1bn (EUR
4.17m). Another SIT 1bn (EUR 4.17m) went for paying off some 400 workers who
terminated employment after their companies were purchased by the retailer.
The business plan for 2005, adopted by the supervisory board on Tuesday, 14 December
meanwhile envisages net revenues of SIT 260.27bn (EUR 1.08bn), to surpass this year's
figures by 18.7 percent.
The 2005 net profit is meanwhile anticipated to increase by 1.9 percent year-on-year to stand
at SIT 6.47bn (EUR 26.9m), the company said in a press release.
Mercator plans to pursue cost-cutting measures next year, but since the results would only
show in the long run, the company expects some more deviations from business targets in the
future.
Radenska's Revenues Drop by Over One Quarter
Beverages producer Radenska is expected to post sales revenues of SIT 7.8bn (EUR 32.5m)
and profits of 350m (EUR 1.45m) this year
Beverages producer Radenska is expected to post sales revenues of SIT 7.8bn (EUR 32.5m)
and profits of 350m (EUR 1.45m) this year, which is far below last year's figures, the
company revealed on Wednesday, 15 December.
This year the Radenci-based company will generate only 77 percent of the revenues reported
in 2003, as the volume of sales dropped by one quarter.
The management said the poor performance was prompted by tough trade conditions after
Slovenia's EU entry, with the prices of raw materials, notably sugar and packaging, going up.
As Radenska's director general Zlatko Hohnjec told the news conference, the outgoing year
has represented a serious test of the company's aptitude.
Next year, the company plans to increase sales of beverages by 13 percent on the Slovenian
market and by 17 percent on the foreign markets in a bid to post revenues of SIT 8.1bn (EUR
33.7m).
Mobitel CEO Says the Company Never Abused Market Position
Mobitel had 170,000 users when Simobil and Debitel entered the market
Mobitel has never received any subsidies or privilege treatment from the state, the CEO of
Slovenia's leading mobile services provider Anton Majzelj told a weekly Mag published on
Wednesday, 15 December.
"We have not abused the market position that we have as an operator with significant market
power with any of our business measures," Majzelj told the latest issue of Mag, adding that
the company respected all EU regulatory elements.
"Because all Slovenian and EU regulations ensuring a liberal market were respected they want
to introduce some global novelty - regulating retail prices, which is pure nonsense," Majzelj
21
said when asked about its rivals' proposals about what the state should do to increase the
competition on the market.
Mobitel's 80 percent market share (1.5 million users) was not handed to it on a plate, as has
been suggested in recent months, according to Majzelj. "Mobitel had 170,000 users when
Simobil and Debitel entered the market," Majzelj said.
"Our only true advantage was that all big rivals underestimated Mobitel as yet another parastatal, monopolistically spoiled and socialisticly lulled company, which will collapse on the
market," Majzelj said.
Majzelj told Mag that his company is worth EUR 1.5bn, with the trademark worth even more.
He said Mobitel had much more to offer than its rivals Vega and Simobil. Mobitel
undoubtedly has lower prices than the EU average, he said.
He said Mobitel had not given up its ambition in Kosovo, where it was together with a local
partner granted the license of the second mobile operator in an international call which was
later annulled by UNMIK. Majzelj said the company expects the license agreement to be
implemented.
Majzelj also said that Mobitel together with Telekom Slovenija placed a bid in Montenegro
and is considering to purchase 50 percent of the Gibraltar telco.
Asked about the privatisation of Mobitel, Majzelj told the weekly that a change in ownership
would bring new quality to the company.
Merkur Expecting Revenues Growth in 2005
The supervisory board of hardware retailer Merkur approved the group's 2005 business plan
The supervisory board of hardware retailer Merkur on Wednesday, 15 December approved
the group's 2005 business plan, which given this year's excellent result forecasts further
growth of revenues exceeding mid-term projections.
According to the plan, Merkur's home entertainment unit, Bofex, is withdrawing from
Austria's market. Merkur's supervisors voiced support to the management for their past and
future work, the company said in a press release.
Merkur has enhanced its leading position on the domestic market, at the same time expanding
its business to Croatia and other southeastern European countries. According to the 2005
business plan, Merkur's return on capital is expected to top 8.5 percent next year.
Merkur plans to carry on its retail network expansion, offering household products, products
for gardening and leisure, as well as for entrepreneurs and craftsmen. Two new stores are
planned in the towns of Skofja Loka and Radovljica.
Merkur also plans to open two new stores in Croatia and one in Belgrade, which is expected
to be one of Merkur's largest stores. By keeping Bofex in the group, Merkur will also be able
to maintain its major market share in hardware retail, the Naklo-based company said.
The estimated costs of Merkur's withdrawal from Austria - Bofex holds an 80-percent stake in
Big Bang Handels with stores in Vienna and Graz - totals some EUR 10m. The estimated loss
of Bofex amounts to some SIT 400m (EUR 1.66m) from this year's operations and to SIT
1.1bn (EUR 4.58m) from the past years.
Airport Company Planning to Up Revenues by 12% in 2005
Aerodrom Ljubljana, the company managing the Ljubljana airport of Brnik, expects to record
41,064 arrivals and departures in 2005
Aerodrom Ljubljana, the company managing the Ljubljana airport of Brnik, expects to record
41,064 arrivals and departures in 2005, 14 percent more than in 2004, the company said on
Thursday, 16 December.
The company's supervisory board discussed the 2005 basic business policy and financial plan
as well as the plan for the company's development for the year 2005.
22
Aerodrom expects the number of passengers to increase by 15 percent to 1.2 million, while no
major changes are expected in cargo transport, according to the company's forecasts published
on the web site of the Ljubljana Stock Exchange.
The company, furthermore, expect to up its revenues by 12 percent to SIT 6.013 billion (EUR
25 million). Aerodrom's investments are expected to top SIT 1.99 billion (EUR 8.3 million).
The major investments are a multi-storey car park and a new terminal.
Telekom Slovenije Will Bid for Montenegrin Telco
Telekom Slovenije will submit a binding offer for the purchase of a majority stake in the
Montenegrin telco
Telekom Slovenije will submit a binding offer for the purchase of a majority stake in the
Montenegrin telco, STA was told by Darinka Pavlic Kamien, the spokesperson of the
Slovenian telco. Binding offers will be accepted until 22 December.
Expansion to foreign markets is part of the strategy of Telekom Slovenije, Pavlic Kamien
said, adding that the markets of SE Europe were set as a priority, as the company sees some
business opportunity there in the forthcoming period.
"Market expansion will provide the company additional growth and raise its value," Pavlic
Kamien said.
Asked about Telekom's findings in the due diligence, Pavlic Kamien said that the
Montenegrin telco was "a technologically well-developed company that has the opportunity to
grow in all segments of operation: fixed-line telephony with accompanying services, Internet
offer and mobile telephony".
Also in the running for the 51.12-percent state-owned stake in Telekom Crne Gore are
Hungary's Matav, which is in the majority ownership of Deutsche Telekom, Austria's
Mobilkom, Serbia's Telekom and the US company Western Wireless International.
"We see our advantages in good familiarity of the economic, cultural and social
environment," the Slovenian telco is confident, stressing its good business experience and
joint projects from the past.
The Montenegrin telco is the majority owner of the Montenegrin mobile services provider
Monet and the Montecard telephone box network.
Luka Koper Plans Investments of EUR 24m in 2005
Luka Koper, the company managing the port of Koper, plans to post SIT 18.8bn (EUR 78.4m)
revenues in 2005
Luka Koper, the company managing the port of Koper, plans to post SIT 18.8bn (EUR 78.4m)
revenues in 2005, up 17 percent over this year. The 2005 business plan, confirmed by the
company's supervisory board on Thursday, 16 December, foresees SIT 3.3bn (EUR 13.8m) of
operating profit next year, while the total profit is to amount to SIT 4.7bn (EUR 19.6m).
Expenses are to increase most notably because of investments, which are to total SIT 5.7bn
(EUR 23.8m), the company said in a press release posted on the website of the Ljubljana
Stock Exchange.
The company already on 23 November met the target plan of 11 million tonnes of cargo
handled at the port. The figure is to rise to 12 million tonnes by the end of the year. Luka
Koper expects positive trends to continue in future, planning to handle 13 million tonnes of
cargo in 2005.
BTC Expecting to Up Net Profit by 25%
The BTC group, which manages Ljubljana's major shopping and storage hub, expects to wrap
up the year with service sales revenues of SIT 8.299bn (EUR 34.61m) and a net profit of SIT
1.24bn (EUR 5.17m)
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The BTC group, which manages Ljubljana's major shopping and storage hub, expects to wrap
up the year with service sales revenues of SIT 8.299bn (EUR 34.61m) and a net profit of SIT
1.24bn (EUR 5.17m), 25 percent more than in 2003.
Next year the company's service sales revenues are expected to rise by 17 percent and the net
profit by 28 percent to SIT 1.592bn (EUR 6.639m), according to the forecasts published
Thursday, 16 December by BTC on the web site of the Ljubljana Stock Exchange.
Between 2001 and 2004 the company made direct investments of SIT 13.2bn (EUR 55m),
SIT 4.6bn (EUR 19m) this year alone. Its biggest completed investment has been a multistorey car park with 780 parking places on four floors of around 5,000 sq metres each.
Marking the 50th anniversary of BTC will be its most ambitious investment ever, the Atlantis
water city, which is to be opened at the end of April 2005. The water park will be extending
on an area of 20,364 sq metres, business premises covering some 14,800 sq metres.
According to the company, Atlantis will be able to welcome a total of 4,000 visitors, who will
be able to enjoy various activities and services, including 14 swimming pools, waterfall baths,
saunas, massages, and toboggan slides. BTC expects at least 500,000 visitors per year.
Istrabenz Doubles Its Stake in Kolinska
Istrabenz now controls 20 percent of the food producer
Energy and tourism company Istrabenz has doubled its ownership share in the food company
Kolinska after the investment company Maksima sold its 10.18-percent stake on Thursday, 16
December. Istrabenz now controls 20 percent of the food producer.
Istrabenz said Maksima's sale was an important step to the consolidation of the Slovenian
food company and a clear signal to all other Kolinska shareholders that Istrabenz's offer of
SIT 6,500 (EUR 27.11) a share, which is valid until 14 January 2005, is a good one.
The CEO of Istrabenz Igor Bavcar believes that Maksima's move will encourage other
Kolinska owners to sell. "Our main goal is to consolidate the food industry, to make it even
stronger on the market and ready for the challenges of tough competition conditions on the
markets of the EU," Bavcar wrote in a press release.
Istrabenz also owns a 6-percent stake in Droga, another food company, which is planning to
merge with Kolinska.
The management of Kolinska on Thursday, 16 December recommended to all shareholders to
accept the Istrabenz takeover offer. Apart from Maksima, other major owners include the
state-run funds Pension Management Fund (11.55%) and the Slovenian Restitution Fund
(10.59%) and the Zavarovalnica Triglav insurance company (6.9%).
Slovenia Gets Fist On-Line Pharmacy
People from all over the country will be able to order nonprescription drugs, vitamin
preparations, cosmetic products, contraception products etc. simply by logging in
Slovenia's first on-line pharmacy was launched on Thursday, 16 December. People from all
over the country will be able to order nonprescription drugs, vitamin preparations, cosmetic
products, contraception products etc. simply by logging in.
The web pharmacy is the on-line version of the Nove Poljana pharmacy in Ljubljana. It
operates 24 hours a day. Orders are received by mail within 24 hours from the confirmation.
Users will also be able to get pharmaceutical advice via e-mail.
Dusan and Sonja Hrobat, the owners of the pharmacy, already tried to introduce an on-line
pharmacy service in 2001, but had to terminate the activity after one month as the law of that
time did not allow that kind of sale. The law changed upon Slovenia's accession to the EU.
Still, Sonja Hrobat said that 11,000 persons visited the web site in that one month, so a
positive public response is expected now that the new on-line service has been established.
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Gaming Company Hit to Post EUR 17m of Profit
The casino and hotel chain Hit will generate about SIT 55bn (EUR 229m) of revenues this
year
The casino and hotel chain Hit will generate about SIT 55bn (EUR 229m) of revenues this
year, over SIT 42bn (EUR 175m) from the gaming business. According to the CEO Branko
Tomazic, the company will post SIT 4bn (EUR 17m) of profit and pay the state SIT 13bn
(EUR 54m) of taxes from gaming.
The group also announced a rebranding, which will be an investment worth SIT 200m (EUR
834,000). Marketing director Andrej Sluga said on Wednesday that the old trade mark no
longer met the market needs.
The company wanted to bring its market image into line with its vision and strategy. The new
marketing concept will also be applied on the markets of Italy and Austria, as the company
generates 90 percent of its revenues thanks to foreign guests.
"Hit Universe of Fun" will be the new corporate brand. The new gaming brand will be "Hit
Stars", and the hotel and the rest of the offer will be marketed as "Hit Holidays". "We wanted
a name that would stand for the rich, adventurous spending of leisure time for the guests, who
come mainly from demanding West European markets," Sluga explained.
Hit has recently increased its share in the hotel chain Kompas hoteli. Tomazic said that SIT
7bn (EUR 29m) had been invested in the project at this popular ski resort in NW Slovenia.
Mobitel Pushes Ahead with Kosovo Network
Mobitel and its local partner Mobikos on 17 December paid for the license granted to them
by the Kosovar authorities in mid-October but later cancelled by UNMIK
Slovenia's number one mobile carrier Mobitel is pushing ahead with efforts to launch
Kosovo's second mobile phone network in spite of opposition from the United Nations
administration in the province (UNMIK).
Mobitel and its local partner Mobikos on Friday, 17 December paid for the license granted to
them by the Kosovar authorities in mid-October but later cancelled by UNMIK.
By paying the license fee and pushing ahead with efforts to get the construction of the
network underway, Mobitel wants to show that UNMIK had no authority to cancel the
license.
Speaking for the daily Dnevnik, Mobitel managing director Anton Majzelj said the seven
million euros paid by Mobitel for the license will be freed up for the Kosovar government to
withdraw once Mobitel is provided radio frequencies for the new network.
The payment of the license fee comes in spite of a decision by UNMIK on 20 October
invalidating the selection process for the second mobile carrier in Kosovo because of "serious
flaws" in the process.
UNMIK's decision was revealed on the same day that Mobitel signed the license contract with
the Kosovar Telecommunication Regulatory Authority (TRA).
Mobitel responded to UNMIK's announcement on 26 October by launching legal action to
protect its interests. Back then, Majzelj said Mobitel's first conclusions showed that UNMIK
did not have the authority to annul the tender.
The TRA selected the Mobitel and Mobikos consortium as the winner of bidding for the
second mobile phone license in the province in June, but the Kosovo government requested an
opinion on the matter from UNMIK.
An independent audit team reviewed the tender process and, according to UNMIK, found
serious flaws. The details of the audit's findings have been very sketchy though as the report is
said to be classified.
Apart from Mobitel's local partner, five other companies entered bids for the second mobile
services license in Kosovo, among them Swedish Tele 2, the consortium IPKO, linked to the
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US Western Wireless International, Albacell (Norwegian Telenor and Siemens), and Kostel
(Orange Group).
Mobitel's most serious rival for the licence was US company Western Wireless International,
which Mobitel claims did not lodge an official complaint against the tender process with the
TRA.
Local media reports have suggested that the US company instead relied on respected US
lobby groups to pressure UNMIK and the Kosovar government into invalidating the selection
process.
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SLOVENIA IN BRIEF
Rupel Welcomes Provisional Date for Croatia's EU Accession Talks
Foreign Minister Dimitrij Rupel, who attended a meeting of EU foreign ministers in Brussels
on Monday, 13 December, said he was pleased that the uncertainty ended over the fixing of a
date for the start of accession negotiation between the EU and Croatia. "A date exists - spring
2005 - and I believe that this has been a fitting decision for Croatia," Rupel said on the side of
the EU General and External Relations Council.
Slovenia Joins Wassenaar Arrangement
On Thursday, 16 December, Slovenia became a member of the Wassenaar arrangement, a
multilateral export control regime, joining over 30 countries producing conventional arms and
dual-use goods and technologies. The decision was taken at the 10th plenary session that was
held on 8 and 9 December in Vienna, the Foreign Ministry said on Monday, 13 December.
EU Committee of the Regions - An Opportunity for Local Communities
The EU Committee of the Regions opens new possibilities for local communities, given that
Slovenia is best represented proportionally in comparison to the number of its members in
other EU institutions, stated the head of Slovenia's delegation to the committee, Maribor
Mayor Boris Sovic, at presentation of the Slovenian representatives' activities in 2004 on
Wednesday, 15 December.
FM Rupel Says Slovenia Ready for OSCE Presidency
Slovenian Foreign Minister Dimitrij Rupel on Wednesday, 15 December briefed the
parliamentary foreign policy committee on Slovenia's preparations for the 2005 OSCE
presidency. The committee pointed out that the OSCE presidency was a national project that
must be carried out in collaboration with the National Assembly.
Health Insurance Institute Meets Financial Plan
The Slovenian Health Insurance Institute (ZZZS) has announced that its business results will
be in line with the financial plan this year, which means that its deficit will not exceed SIT
14.4bn (EUR 60m). No deficit is anticipated in the ZZZS operations next year, as the
financial plan foresees a balance of receipts and expenditure, director general Borut Miklavcic
told the press on Wednesday, 15 December.
Ireland Donates Funds for Demining of Bosnia
Ireland has made a donation of 115,450 euros to the Slovenian-run International Trust Fund
for Demining and Mine Victims Assistance (ITF) in what is the country's third such
contribution. The agreement on the donation was signed in Ljubljana on Thursday, 16
December by Irish Ambassador Gary Ansbro and ITF Director Dorijan Marsic, the fund said
in a pres release.
Ivan Zagar Appointed Regional Development Minister
Ivan Zagar was appointed minister without portfolio in charge of regional development and
local self-government in parliament on Thursday, 16 December. The 16th minister of the
Janez Jansa cabinet has already been sworn in.
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Slovenian MEPs Highlight Importance of Drawing EU Funds
Slovenian MEPs backed the adoption of the EU budget for 2005 on Thursday, 16 December
but told STA in Strasbourg that Slovenia would have to pay great attention to drawing EU
funds so as not to become a net contributor to the European budget as early as next year.
PM Jansa Backs Start of Accession Talks with Croatia
Before the beginning of the EU summit in Brussels, Slovenian PM Janez Jansa has backed the
start of accession negotiations with Croatia without conditions.
Government Appoints New SOD Management
The government has appointed a new management team at the state-run Slovenian Restitution
Fund (SOD), with Milan Podpecan appointed the managing director. The top job at the
restitution fund is considered one of the most important corporate posts in Slovenia.
New Members for Electoral and Constitutional Commissions Appointed
Parliament has appointed new members of the national Electoral Commission and of the
parliamentary Constitutional Commission. Heading the former will be Anton Gaspet Frantar,
while Parliament Speaker Cukjati was named the head of the Constitutional Commission.
Luka Faces Mounting Local Opposition to Third Terminal
Port operator Luka Koper faces mounting opposition to its plan for a large shipping terminal
in Ankaran near Koper from angry locals who have already collected 3,000 signatures in an
initiative against the plan. The new terminal, which is to spread along 650 metres of the coast,
is supposed to enable access to the biggest cargo ships, which have a capacity up to 8,000
containers.
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