Slovenia Business Week no. 48, November 28th, 2005
Table of Contents:
HEADLINES ................................................................................................................. 3
Slovenian IT Company Opens Brussels Branch ......................................................... 3
Business Sentiment Declines in November ................................................................ 3
Stock Exchange Elated With London Roadshow ....................................................... 3
INTERNATIONAL COOPERATION .......................................................................... 5
Great Potential for Armenian-Slovenian Cooperation, Presidents Agree .................. 5
PM Stresses Slovenian Support for Armenian EU Cooperation ................................ 6
CEI Summit Addresses Changed Political Landscape ............................................... 6
EUROPEAN UNION .................................................................................................... 7
Slovenia Cautious about New EU Defence Procurement Deal .................................. 7
Slovenia Not Entirely Happy with Sugar Reform, Says Minister .............................. 7
We Did Our Best, Says Potocnik................................................................................ 8
London Should Hurry Up with EU Budget Proposal, Official Says .......................... 9
EU Presidency Will Be Top Priority for Government EU Office in 2006 ................. 9
LEGISLATION ........................................................................................................... 11
Parliament Passes Changes to Three Tax Laws ....................................................... 11
Companies Bill Enjoys Broad Support in Parliament .............................................. 11
Parliament Passes Remaining Changes to Tax Laws ............................................... 12
Government Amends Copyright Act ........................................................................ 13
STATISTICS/FORECASTS........................................................................................ 14
ERM: Restructuring Major Cause of Unemployment in Slovenia ........................... 14
FINANCE .................................................................................................................... 15
Petrol Prices Dive to Five-Month Lows ................................................................... 15
Central Bank Official Says Euro One of the Hardest Tasks Ever ............................ 15
One-Stop-Shop for Tax, Finance and Legal Data Launched .................................... 15
Supervisors Pleased with Progress in Fund Phasing ................................................ 16
Investment Funds Expect a Boon in the Future ........................................................ 16
Ljubljana Stock Exchange ........................................................................................ 17
Foreign Exchange ..................................................................................................... 17
BRANCH INFORMATION ........................................................................................ 18
Publishers Afraid Flat Tax Rate Would Bring Profit Loss ....................................... 18
Annual Slovenian Book Fair Attracts Ever More Visitors ....................................... 18
Flat Tax Would Be Fatal Mistake for Slovenian Literature ..................................... 19
National Environmental Protection Programme Passed ........................................... 20
COMPANIES .............................................................................................................. 21
Saturnus Embalaza Accepts Latest Bid of Vogel&Noot .......................................... 21
Simobil Has Best Quarter Ever, Upbeat About Future ............................................ 21
KD Group Would Like to Increase its Stake in Delo ............................................... 22
Istrabenz Deposits Mercator Shares with Banka Koper ........................................... 22
Gorenje Boss Eyeing Takeovers Next Year ............................................................. 22
Droga Kolinska CEO Predicts Bright Future ........................................................... 23
Gorenje Exec Says Yes to Mercator Top Post ......................................................... 23
Krka Profits Skyrocket ............................................................................................. 24
Petrol Gets Two New Board Members, CEO Not Selected Yet .............................. 25
Intereuropa Results Fall Short of Plans .................................................................... 25
We'll Raise Prices if Flat Tax Is Introduced, Retailer Says ...................................... 25
SLOVENIA IN BRIEF ................................................................................................ 27
Minister Zupan Reaches Agreement on Slovenian Studies in Vienna ..................... 27
Tender for Lendava-Pince Motorway Section Annulled .......................................... 27
Jansa Congratulates New German Chancellor upon Inauguration ........................... 27
OSCE Ministerial Confirmation of Slovenia's International Role, Rupel Says ....... 27
Government Appoints New State Secretary for Slovenians Abroad ........................ 27
Government Imposes EU-Sponsored Sanctions on Four Countries ......................... 27
PM Jansa and President of Serbia-Montenegro Discuss Kosovo ............................. 28
PM Reiterates Necessity of Structural Reforms ....................................................... 28
Protesters Urge Government to Enter Dialogue, Reconsider Reforms .................... 28
Albanian President Asks for Slovenia's Help in Albania's EU Bid .......................... 28
Petkovsek and Pegan Crown Season with World Champions Titles ....................... 28
HEADLINES
Slovenian IT Company Opens Brussels Branch
Company representatives said at the opening that they wanted to provide solutions for
European institutions and form connections to take part in international projects
SRC.SI, the largest Slovenian company specialising in system integration, opened its
branch office in Brussels on Tuesday, 22 November, the first such solo effort by a
Slovenian company.
Company representatives said at the opening that they wanted to provide solutions for
European institutions and form connections to take part in international projects.
"Our vision of seeing SRC in the heart of Europe has become a reality after 20 years,"
company CEO Gregor Bencina told the press.
"Our 400 employees in five countries around the world bring competitive advantages
to our customers by using information technology," he added.
The opening was also attended by Slovenian MEPs Romana Jordan Cizelj and Alojz
Peterle (both EPP). Jordan Cizelj was pleased that "not only the country's politicians,
but also Slovenian companies are coming to Brussels."
Peterle added that "Slovenian spirit of entrepreneurship is awaking in Europe...I wish
this brave act to be followed by others."
The company, which generated SIT 8bn (EUR 33.4m) in revenues last year, expects
to see further growth in revenues this year. The Brussels project would begin
gradually, initially employing only one person, SRC.SI said.
Several Slovenian companies are already represented in Brussels through the
Slovenian Business and Research Association (SBRA), while others are present
through foreign partners.
Business Sentiment Declines in November
Business sentiment was down 1 percentage point in November over the month before
Business sentiment was down 1 percentage point in November over the month before,
as consumer confidence plummeted by 5 percentage points to offset the gains in retail
(3 percentage points) and the flat confidence in manufacturing.
The seasonally adjusted value of the confidence indicator in manufacturing remained
the same as in October. Yet compared to the year before, it was down 1 percentage
point.
In retail, the confidence indicator was up 3 percentage points over the previous
month. Compared to November 2004, it rose 8 percentage points, according to the
Statistical Office.
The plummeting of the consumer confidence index is attributed to less optimistic
expectations about the general economic situation in the country over the next 12
months.
The consumer confidence indicator is now 7 percentage points lower than the longterm average, the statisticians note.
Stock Exchange Elated With London Roadshow
The Ljubljana Stock Exchange (LJSE) was amazed at the response of major investors
in London, where the stock exchange and six blue chips put on a roadshow
The Ljubljana Stock Exchange (LJSE) was amazed at the response of major investors
in London, where the stock exchange and six blue chips put on a roadshow.
"Considering that this was the first such presentation abroad, the results are very
encouraging," LJSE chairman Marko Simoneti said on Friday, 25 November.
Simoneti said that about 50 major asset management firms called in at the roadshow
and there were 40 one-to-one meetings between the Slovenian blue chips and the
investors.
The roadshow include drug maker Krka, household appliance group Gorenje, retailer
Mercator, hardware trader Merkur, seaport operator Luka Koper and food company
Droga Kolinska.
Finance Minister Andrej Bajuk and Joze P. Damijan, the head of the government's
reform committee, were also on hand, outlining the macroeconomic prospects of
Slovenia, new economic reforms and privatisation plans.
Simoneti told STA the government's presentation suggested that the Slovenian market
was opening up, that foreign portfolio investors were welcome and that the LJSE was
willing to meet their demands regarding trading and reporting.
INTERNATIONAL COOPERATION
Great Potential for Armenian-Slovenian Cooperation, Presidents Agree
Armenia and Slovenia have many similarities and have great potential to improve
cooperation, the presidents of the two countries said after their meeting in Ljubljana
Armenia and Slovenia have many similarities and have great potential to improve
cooperation, the presidents of the two countries said after their meeting in Ljubljana
on Tuesday, 22 November.
Despite being relatively far apart and lacking regular dialogue, there are many reasons
the countries should improve ties and strengthen cooperation, Slovenia's Janez
Drnovsek and Armenia's Robert Kocharian said.
Kocharian, who began a two-day official visit to Slovenia on 22 November, said
Armenia was looking to learn from Slovenia's experiences in joining the EU.
According to Drnovsek, the two countries will work on concluding a number of
fundamental bilateral agreements that would pave the way to greater cooperation.
As part of efforts to step up ties, Drnovsek accepted Kocharian's invitation to visit
Armenia next year. "Maybe then we can implement some of the ideas put forward at
the meeting," Drnovsek said.
Moreover, the Slovenian president said Slovenia viewed favourably Armenia's
aspirations to seek EU membership.
According to him, Kocharian outlined a number of proposals for how Slovenia could
help Armenia in its efforts to meet EU membership criteria. "We will examine them
and agree on the best way to carry them out," Drnovsek said.
Meanwhile, Kocharian hailed Slovenia's stint as OSCE chairman this year, saying it
has played an "active and persistent" role in negotiations aimed at resolving the
Armenian-Azerbaijani dispute over the Nagorno-Karabakh.
He said that the renewal of the negotiating process and appearance of "cautious
optimism" for a breakthrough in talks between the two sides has coincided with
Slovenia's chairmanship.
Kocharian added that it was nevertheless still too early to speak about the possibility
for an agreement.
He said that the negotiations with Azerbaijan would continue and that mediators
would visit the region again at the end of the year, while he is set to meet his Azeri
counterpart in January.
Moreover, Drnovsek and Kocharian also examined Armenia's relations with Turkey.
According to Kocharian, Armenia has never opposed Turkey's bid to join the EU,
although it maintains that the EU should set Turkey equal conditions for membership
as it does other countries.
No country should get special treatment, such as in regard to its duties to establish
good relations with neighbours and admitting difficult parts of history, he added.
Drnovsek said Turkey and Armenia should work on establishing normal cooperation
as soon as possible, since this would benefit both sides.
Moreover, he said that Turkey should open its border with Armenia, as it makes no
sense for it to keep up barriers to the movement of people, goods and services.
Kocharian also commented on the upcoming referendum in Armenia in which people
are to decide whether to transfer some of the executive power from the president to
parliament and government. He said he hoped the referendum would succeed.
Moreover, he pledged that regardless of the referendum outcome "reforms would
continue to be carried out at the same pace as so far". He added that a referendum
"yes" would represent an important step forward in Armenia's efforts to join the EU.
PM Stresses Slovenian Support for Armenian EU Cooperation
Prime Minister Janez Jansa told Armenian President Robert Kocharian that his
country has Slovenia's full support in cooperating with the European Union
Prime Minister Janez Jansa told Armenian President Robert Kocharian that his
country has Slovenia's full support in cooperating with the European Union, PM's
office said on Tuesday, 22 November.
Kocharian, who was on an official visit to Slovenia, also discussed the cooperation of
both countries within the Organisation for Security and Co-operation in Europe
(OSCE). He stressed that as OSCE chair Slovenia has given a lot of attention to
solving open regional issues in the Trans-Caucassus region.
Jansa and Kocharian also agreed that the countries could improve their economic
cooperation and should draft suitable bilateral agreements to that purpose.
Earlier in the day Kocharian met President Janez Drnovsek, while tomorrow he is to
hold talks with Foreign Minister and OSCE chairman Dimitrij Rupel and Parliament
Speaker France Cukjati.
CEI Summit Addresses Changed Political Landscape
Changes in the political landscape in the region which are the result of the entry of
several Central European Initiative (CEI) members in the EU topped the agenda of
this year's summit of the organisation in Bratislava
Changes in the political landscape in the region which are the result of the entry of
several Central European Initiative (CEI) members in the EU topped the agenda of
this year's summit of the organisation in Bratislava.
The meeting also discussed the cooperation between EU members and candidates, the
CEI's director general Harald Kreid told the press on Friday, 25 November.
Prime Minister Janez Jansa, who is a member of the troika as Slovenia chaired the
CEI last year, pointed to economic cooperation, saying that it would be a good move
if CEI countries attracted more investment.
According to Jansa, the organisation has successfully adapted to the new
circumstances by addressing the issues of economic cooperation between the CEI's
EU members and candidate countries.
Slovenia has been a recipient of such economic aid in the past and now, Jansa
believes, it's time the country "repays its debt". He also said that economic
cooperation would move from exchange of opinions to more concrete proposals.
"There were a couple of initiatives today which called for enhancing such exchanges
with meetings of businesspeople," Jansa said.
Jansa also believes that an exchange of opinions between EU member states and
candidates would be very useful.
At the plenary, Jansa said it was imperative that CEI contributes to a bridging of
differences between the member countries.
He called for the establishment of new programmes, such as a special fund to finance
the exchange of experience between EU and non-EU countries of the initiative.
The CEI summit ended by passing a declaration calling for increased cooperation
between CEI states and expressed its support for EU expansion.
Albania is to chair the organisation next year.
EUROPEAN UNION
Slovenia Cautious about New EU Defence Procurement Deal
Slovenia supports the code of conduct, but will decide whether to sign up after a
thorough examination
Defence Minister Karl Erjavec was cautious about the voluntary code of conduct for
defence procurement agreed by EU defence ministers on Monday, 21 November.
Slovenia supports the code of conduct, but will decide whether to sign up after a
thorough examination, he told the press.
"We will examine the rules and make a decision, but we will certainly not be the first
country to participate. Adopting the code requires changing domestic legislation,
including provisions on public contracting," Erjavec explained.
The code of conduct is designed to increase cross-border competition within the EU
by opening up defence markets in EU member states.
The code of conduct, which is to take effect in July 2006, affects purchases exceeding
one million euros, with the exception of nuclear and chemical weapons.
It is voluntary and non-binding for the EU member states. However, the member
states should deliver their decisions until April 2006. Denmark has already opted out,
while Spain is said to have second thoughts.
Since EU defence is not part of the internal market, the member states are not obliged
to publish public commands for arms purchases and are able to protect their local
manufacturers.
The ministers also adopted a report on efforts to fill shortfalls in Europe's military
capabilities by 2010. They discussed progress in developing units that would allow
the EU to engage in rapid military interventions.
Erjavec pointed out that Slovenia would take part in a multinational military unit
together with Italy and Hungary in 2007 by contributing 128 soldiers and support
staff.
Moreover, the EU defense ministers confirmed the budget of the European Defence
Agency for next year, which amounts to EUR 5m. Slovenia's contribution is to be
worth around EUR 60,000.
Slovenia Not Entirely Happy with Sugar Reform, Says Minister
The price reduction is too steep and compensations too small, Agriculture Minister
Marija Lukacic told the press after the talks
Slovenia is not entirely happy with the reform of the sugar sector that EU agriculture
ministers adopted on Thursday, 24 November after three days of negotiations. The
price reduction is too steep and compensations too small, Agriculture Minister Marija
Lukacic told the press after the talks.
Lukacic was nevertheless confident that the agreement allows the continuation of
sugar production in Slovenia. "I hope the owners of the sugar plant in Ormoz will
decide to keep going," she said.
The minister said she abstained from voting on the price reductions and
compensations. However, Slovenia did succeed with its advocacy of the four-year
period for reforms and additional funds for restructuring for sugar farmers and
industry.
The first change in EU sugar policy in four decades includes a 36% cut in European
sugar prices, to be phased in over a period of four years starting in 2006; the European
Commission had originally recommended a cut of 39% cut.
The deal also provides for more flexibility in compensations to farmers who give up
their sugar quotas: farmers wishing to abandon beet growing will be paid basic
compensation equivalent to 64.2% of the revenues they lose due to the price cuts.
Despite the unfavourable outcome for Slovenia, Lukacic noted that the Ormoz factory
had several scenarios ready, notably sugar production combined with bioethanol
production.
"This would be the best solution for our agriculture, as we would preserve sugar beet
production and use wheat and maize for bioethanol," she noted.
Lukacic's confidence in the preservation of sugar beet growing stems from the fact
that she was in touch with major growers throughout the talks, and they said they
were willing to continue to grow beet under these conditions.
Similarly, agricultural economist Emil Erjavec said that the outcome was not so bad
for Slovenian farmers, which means that sugar production could be preserved.
However, this depends entirely on Slovenia's only sugar factory, Tovarna sladkorja
Ormoz, which Erjavec says would be less profitable but still a viable business with
the incentives that the EU is offering.
"It is maybe a bit perverse how much money the EU is willing to spend to lower the
quotas and production," Erjavec noted.
The chairman the Ormoz sugar factory meanwhile told STA he could not comment on
the reform compromise. Jurij Dogsa said he would be able to say more once he has
studied the proposal.
We Did Our Best, Says Potocnik
Potocnik, speaking at the first anniversary of the Commission headed by Jose Manuel
Barroso, added that the Commission could have been more vocal regarding the issues
connected to the EU budget framework for 2007-2013
European Science and Research Commissioner Janez Potocnik told the press in
Brussels on Tuesday, 22 November that the European Commission has "tried to do its
best, both as a whole and as individual commissioners" in the past year.
Potocnik, speaking at the first anniversary of the Commission headed by Jose Manuel
Barroso, added that the Commission could have been more vocal regarding the issues
connected to the EU budget framework for 2007-2013.
"If it is somehow obvious that Europe needs a clearer sense of direction the
Commission is the institution that should have done more to secure that direction,"
Potocnik said.
However, he is confident that the Commission's activities should be assessed with a
broader European picture in mind, including issues regarding globalisation, terrorism,
natural disasters and, especially, the EU constitutional treaty.
"There are many things that we have succeeded in doing," Potocnik added, such as
reinvigorating the Lisbon process, simplifying Europe's legislation and launching
accession talks with Croatia and Turkey.
Regarding his field of operations, namely science and research, Potocnik was
especially pleased that knowledge has finally become one of the most important
topics in the bloc.
The former Slovenian European affairs minister was also pleased that the
Commission had recently adopted the Seventh Research Framework Programme
(FP7).
London Should Hurry Up with EU Budget Proposal, Official Says
State Secretary for European Affairs Marcel Koprol has said Britain should hurry up
with drafting its proposal for the 2007-2013 EU spending plan
State Secretary for European Affairs Marcel Koprol has said Britain should hurry up
with drafting its proposal for the 2007-2013 EU spending plan. According to him, this
view was shared by French European Affairs Minister Catherine Colonna during a
meeting the pair held in Paris on Tuesday, 22 November.
Speaking at a press conference in Ljubljana on Wednesday, 23 November, Koprol
said that he and Colonna agreed the proposal drafted by Luxembourg was the best
basis for reaching agreement.
He explained they also agreed that there is little possibility for any major changes to
Luxembourg's proposal.
However, Koprol stressed that Slovenia was still in favour of an overhaul of the EU
budget, although it believes that he sees little possibility for that before 2013.
"Slovenia would like to see the European budget modernised. However, time will be
needed for this," Koprol said.
According to him, a debate on overhauling the EU budget could be launched in 2009
or 2010, meaning that a modernised budget could enter into force after 2013.
Koprol said that the current spending structure should remain in place only for the
upcoming EU budget period, after which changes would have to be made.
Moreover, he said that EU member states were unhappy with Britain's slow response
in drafting a new budget proposal.
London is playing a tactical game, he said, adding that he was unhappy about this,
something he made clear during a recent meeting of EU foreign ministers.
Koprol reiterated the view that new EU members cannot be asked to finance the 2004
enlargement. "This is unacceptable. The EU works on the principle of solidarity and
the (old members) cannot expect that (new members) will finance this enlargement
before reaching the average EU level of development," he added.
Slovenia would like an agreement on the 2007-2013 EU spending plan to be reached
before the end of the year as it otherwise stands to lose a large chunk of development
aid.
EU Presidency Will Be Top Priority for Government EU Office in 2006
Preparations for Slovenia's EU presidency, and a strategy for effective functioning in
the EU will be the main tasks of the Government Office for EU Affairs (SVEZ) in 2006
Preparations for Slovenia's EU presidency, and a strategy for effective functioning in
the EU will be the main tasks of the Government Office for EU Affairs (SVEZ) in
2006, the head of the office, Marcel Koprol, told the press on Wednesday, 23
November.
At the presentation of SVEZ's 2005 results and its plans for 2006, Koprol said that the
role of the office has changed since Slovenia joined the EU. As an equal EU member,
the country can participate in the framing of the common European policies, he
added.
SVEZ has established that there is no mechanism within the EU, which would enable
a fast identification of Slovenia's interests in decision-making on the European level.
The office would thus like to set up such a mechanism in 2006 in order to protect
Slovenia's interests.
In January, a working group was established for the project of the Slovenia's EU
presidency in 2008, the priorities of which are to be discussed at the beginning of
December. The government also included the project in the budget framework for the
next two years.
Slovenia is still involved in the EU aid programmes, such as the Phare Programme
and the Schengen Facility. Around EUR 164m are still at Slovenia's disposal within
these programmes, and will be spent, according to Koprol.
Koprol's deputy, Katja Rejec Longar, stressed that SVEZ intends to pay more
attention to pretrial procedures which also involve Slovenia as an EU member, as they
have been ignored until now.
SVEZ also oversees the EU portal, a part of the government's information system for
classification and publication of the EU-related documents. It currently encompasses
70,000 documents, and is to be put online in 2006 to make it more accessible to the
public.
SVEZ's 2005 results will be included in the government's 2005 report, which the
cabinet is to discuss at the beginning of 2006.
LEGISLATION
Parliament Passes Changes to Three Tax Laws
Changes to three tax laws were passed by parliament by parliament on 22 November
in what is part of a mini tax reform that should enter into force on 1 January
Changes to three tax laws were passed by parliament on Tuesday, 22 November in
what is part of a mini tax reform that should enter into force on 1 January 2006.
The changes passed in emergency procedure were designed by the government to
simplify the Slovenian tax code after a comprehensive tax reform entered into force
on 1 January 2005.
According to Finance Minister Andrej Bajuk, due to the euro changeover planned for
2007, the country cannot afford any radical reforms, which would imply risks at the
moment.
Lawmakers passed changes to the value added tax act, the payroll tax act and the
corporative tax act, three of the five tax acts discussed by parliament last week.
The amendments to the VAT act, passed in a 46:15 vote, will allow companies with
up to SIT 50m (EUR 0.20m) of annual revenues to pay VAT only after their invoice
has been paid, instead of, as is currently the case, when they issue the invoice.
According to Bajuk, the changes will lift the burden of around 70% of all companies
liable to pay VAT. However, the change will apply only to domestic transactions,
Bajuk said.
With a 79:0 vote, the MP's also passed amendments to the payroll tax, which is to be
gradually abolished by 2009, Bajuk said. This will take a great deal of tax wedge off
the wages higher than SIT 165,000 (EUR 688), that is for higher income earners.
Amendments to the corporate income tax act were passed as the last, envisaging a
20% tax relief to encourage research and development. A 40% relief could be
legislated for less developed areas, pending EU approval, Bajuk explained.
The novelties, passed in a 46:13 vote, introduce the option of changing the selected
taxation period after five years instead of seven, and that the entire expense of
depreciation be recognised for tax purposes. Moreover, double taxation is abolished.
For 2006 and 2007 tax breaks for investments into equipment, which would have to
be reduced to 10% according to the current legislation, will be raised to 20%, Bajuk
explained.
Companies Bill Enjoys Broad Support in Parliament
Among the major changes, the bill envisages the possibility for establishing a
European joint-stock company or Societas Europea (SE), a supra-national
organisation that can operate in all EU countries without having to establish
subsidiaries or branch offices
MPs confirmed the comprehensive new companies' bill in first reading on
Wednesday, 23 November. Although the bill was passed in a convincing 52:7 vote,
several deputy groups have announced they would put forward amendments in the
second reading.
Among the major changes, the bill envisages the possibility for establishing a
European joint-stock company or Societas Europea (SE), a supra-national
organisation that can operate in all EU countries without having to establish
subsidiaries or branch offices.
The possibility for the establishment of a SE stems from EU regulations adopted in
2001, which took effect a year ago.
The second major change to existing legislation is that companies will have the
possibility to opt for a one-tier management system instead of the current two-tier
system.
Unlike the existing two-tier system, there is no supervisory board in an one-tier
system, with the management board consisting of executive and non-executive
members.
The one-tier system looks set to become a target of criticism, as the opposition said
the proposed solutions do not guarantee workers' representation on the board to a
sufficient degree.
The bill envisages provisions linked to Slovenia's adoption of the euro, which is
scheduled for 2007. As a result, companies will have to express their total capital
stock in euros rather than tolars.
Parliament Passes Remaining Changes to Tax Laws
Parliament passed changes to the income tax act and tax procedure act on 23
November
Parliament passed on Wednesday, 23 November changes to the income tax act and tax
procedure act to wrap up the debate on the mini reform of the tax code that it had
started on 22 November. The income tax law, which was passed in a 37-to-26 vote,
divides earnings into active and passive income, for which different rules apply.
In line with the changes, active income, such as salaries and royalties, will be taxed
the same as until now, subject to a progressive tax with five brackets on annual basis.
Passive income, including capital gains and earnings from interest, will meanwhile be
subject to a pay-as-you-go tax of 20% regardless of the individual's total annual
earnings.
The tax rate for capital gains will be progressively lower relative to the period of
ownership, so tax will not be levied after the expiry of 20 years, Finance Minister
Andrej Bajuk told parliament in his presentation of the law.
Meanwhile, income generated from mutual funds will no longer be taxed, whereas
other types of similar income will be treated either as interest or dividends. Taxation
on real estate transactions will remain unchanged.
Moreover, several types of bonuses (company mobile phones and free parking) will
be exempt from income tax, as will be special state-provided payments for large
families and war veterans.
The new income tax law also raises the income threshold for sole proprietors for
which they can claim standardised expenses from SIT 3.9m (EUR 16,280) to SIT 6m
(EUR 25,045).
Among the coalition-sponsored amendments adopted during the session was a
provision that would make all assistance to disabled people exempt of income tax.
The opposition failed to have any of its proposed amendments passed.
In advocating the changes, the coalition parties said that the document does away with
the most illogical provisions of the income tax law adopted last year at the behest of
the former government.
Meanwhile, lawmakers from the opposition Liberal Democracy (LDS) and Social
Democrats (SD) voted against the changes, claiming that a number of the provisions
were bad. Most of their criticism was aimed at the provision that would see all interest
earnings, regardless of amount, taxed as of 2008.
Moreover, lawmakers unanimously backed (54 votes) changes to the tax procedure
act that are aimed at improving the efficiency of the Tax Administration.
Government Amends Copyright Act
The government amended the act on copyright and related rights to bring it in line
with two EU directives and facilitate negotiations between copyright holders and
users in determining fees
The government on Thursday, 24 November amended the act on copyright and related
rights to bring it in line with two EU directives and facilitate negotiations between
copyright holders and users in determining fees.
The amendments harmonise the act with Directive 2001/84/EC on the resale right for
the benefit of the author of an original work of art and Directive 2004/48/EC on the
enforcement of intellectual property rights.
Whereas the amendments were required for compliance with the EU body of laws, the
government also took the opportunity to introduce arbitration in the face of mounting
disputes between copyright holders and users, Economics Minister Andrej Vizjak told
the press.
According to the proposal, an organisation or association of users may request
arbitration in case they fail to reach agreement with copyright holders or their
representatives in four months.
STATISTICS/FORECASTS
ERM: Restructuring Major Cause of Unemployment in Slovenia
With 28.44 restructuring-related job losses per 10,000 employed Slovenia has by far
the worst record among EU members in this regard
According to European Restructuring Monitor (ERM) data, 2,690 restructuringrelated layoffs were registered in Slovenia in the third quarter of 2005.
With 28.44 restructuring-related job losses per 10,000 employed Slovenia has by far
the worst record among EU members in this regard, Sweden being second with a
16.74/10,000 ratio.
The ERM report states that the lion's share of job losses in Slovenia can be traced
back to job cuts at the interior, defence and finance ministries and in the regional
administration sector.
According to ERM, in 2007, these institutions will have to face an additional 600
redundancies.
Further layoffs are also planned at leading European car-seat cover maker Prevent,
which will part with 300 workers, reducing its total workforce to 430 in the future.
The ERM report also mentions the Koper-based company Tomos, which had to let go
a third of its workforce or 155 workers in September 2005 after being cancelled a deal
with Swedish furniture giant Ikea.
FINANCE
Petrol Prices Dive to Five-Month Lows
Prices are calculated over a period of 28 days, whereby the five highest and lowest
quotations over the four-week period are excluded
Retail prices of petrol fell to five-month lows on Tuesday, 22 November as the
stagnant price of oil on the world markets has pushed domestic retail prices down by
about 9% in line with the new pricing model.
A litre of regular petrol costs SIT 220 (EUR 0.92), down 19.4 tolars (EUR 0.08).
Premium is SIT 23.1 (EUR 0.1) cheaper at SIT 222.9 (EUR 0.93).
Diesel went down SIT 18.30 (EUR 0.08) to SIT 221.30 (EUR 0.92), with heating oil
is cheaper SIT 15.10 (EUR 0.06) at SIT 140.6 (EUR 0.59).
The price changes are in line with the new petrol pricing model, which the
government introduced on 10 October.
Prices are calculated over a period of 28 days, whereby the five highest and lowest
quotations over the four-week period are excluded.
The government introduced the model (which expires on 3 January) in order to
cushion the impact of volatile global oil prices on domestic retail prices.
Economist Franci Krizanic told STA that prices are likely to fall in the coming
months provided there are no extraordinary events. However, diesel and heating oil
will remain quite expensive due to seasonal factors.
Krizanic said oil could be as low as 30 US dollars a barrel in one year, but he believes
the government should take advantage of this trend to raise duties and speed up road
infrastructure investments.
Central Bank Official Says Euro One of the Hardest Tasks Ever
The changeover to the euro will be one of the most difficult projects that the central
bank has ever undertaken
The changeover to the euro will be one of the most difficult projects that the central
bank has ever undertaken, a central bank official has told a presentation of Slovenia's
euro coins.
Brane Bertoncelj, the head of the department for cash transactions at the central bank,
told a debate on Monday, 21 November that the actual physical conversion represents
only a minor part of the project, although it is the part that the people will experience
most directly.
The Bank of Slovenia estimates that 234 million euro coins will be necessary, to
replace about the same number of tolar coins which will be destroyed.
After a mint is selected, the coins will be sent to five banks, which will be in charge of
distributing them to vendors, retailers and cash machines, he explained.
The Bank of Slovenia will also make starter cash kits for vendors and individuals to
get acquainted with the new coins and bills.
One-Stop-Shop for Tax, Finance and Legal Data Launched
The Tax-Fin-Lex information portal is to present data on tax, finance, accounting and
legislation in one place
The Tax-Fin-Lex information portal, launched on Tuesday, 22 November in
Ljubljana, is to present data on tax, finance, accounting and legislation in one place,
the Tax-Fin-Lex company said.
According to Zlata Tavcar, head of the company, Tax-Fin-Lex will feature laws,
regulations, explanations by state institutions, court rulings, opinions by tax experts
and other relevant data.
The portal, which plans to gain some 4,000 subscribers in the next three years, is
especially meant for accountants, finance experts, tax counsellors, lawyers and legal
experts, Tavcar told the press.
According to her, the web site was one year in the making and currently holds some
10,000 documents. She also said that documents are sorted according to their date of
creation or change. The page will be continuously updated, she stressed.
Supervisors Pleased with Progress in Fund Phasing
The monitoring committee overseeing the implementation of the Single Programming
Document for the 2004-2006 period has assessed the progress in the phasing of EU
funds since 2004 as satisfactory
The monitoring committee overseeing the implementation of the Single Programming
Document for the 2004-2006 period has assessed the progress in the phasing of EU
funds since 2004 as satisfactory.
The committee, which met in Radenci on Wednesday, 23 November, assessed that
most of the initial problems were associated with insufficient absorption capacities,
which are being improved with new instructions and regulations as well as staff
training.
State Secretary at the Government Office for Structural Policy and Regional
Development Franci Rokavec, who chaired the session, told the press that the
committee found 72% of the SIT 57bn (EUR 238m) had already been allocated.
According to him, positive trends have been recorded in payments and submitted
requests for payments - requests for reimbursement for 14% of all available funding
have been sent to the payment authority, which is a great leap forward compared to a
few months ago, he said.
Representatives of the European Commission also attended the session alongside
regional partners, representatives of local communities and NGOs.
Investment Funds Expect a Boon in the Future
Investment funds are one of the branches of the financial sector with the brightest
future
Investment funds are one of the branches of the financial sector with the brightest
future, Stane Valant, head of the association of asset management firms, told a twoday conference of the association on Thursday, 24 November.
Valant added that there are many opportunities for investment in funds. However, he
stressed in Portoroz that competition from foreign funds also means that domestic
funds have to be ever more professional.
According to Valant, 100 investment funds currently vie for savers in Slovenia, with
the recently passed tax legislation also making them even more alluring.
Tomaz Kosak from the Bank of Slovenia meanwhile presented the savings structure
in Slovenia, the country's financial environment and capital assets.
He said that the structure of financial markets is gradually changing, with the banking
sector in decline and non-financial sectors, such as real estate, on the rise.
Household bank savings accounts currently account for 40.1% of GDP, with the rest
in investment funds, investment companies, insurance and retirement funds, Kosak
added.
The corporate sector also keeps the bulk of its funds in the banks (57.7% of GDP),
with investments into domestic alternatives also stable at 46% of GDP. However,
investments abroad are surging, currently amounting to 9.7% on GDP.
Amounts paid into foreign investment funds that are marketed in Slovenia amounted
to SIT 1.4bn/EUR 5.84m so far this year and are slowly edging closer to payments
into domestic funds (SIT 3bn/12.52m), which are on the decline.
Kosak also said that people seem to be much more interested in buying real estate,
with purchases growing by 34% growth this year, which has also sent real-estate
prices up.
Ljubljana Stock Exchange
Krka and Petrol pushed SBI 20 benchmark index higher
The SBI 20 benchmark index finished the week at 4,632.01, up 21.79 points (0.47%)
over last week. The rise was largely due to oil trader Petrol (up 2.3%), which closed
the week at SIT 70,189 (EUR 292.98) and drug maker Krka (up 2.2%, SIT
106,492/EUR 444.52).
After the Monday (21 November) and Tuesday (22 November) drops, the SBI 20
rebounded on total trade of SIT 26.7bn (EUR 111.45m), with a vast majority in block
deals.
The positive finish came despite a slight drop in the price of grocer Mercator, which
closed at SIT 37,093 (EUR 154.83), down 0.13%.
Mercator, however, generated over two thirds of the entire weekly turnover, as SIT
18.4bn (EUR 76.80m) (including SIT 18.1bn/EUR 75.55m in block deals) of its
shares changed hands.
The biggest deal was concluded on Wednesday, 23 November, when Holding
Istrabenz deposited nearly 15% of Mercator shares with Banka Koper as part of a
repurchase agreement between the two corporations in a single block deal worth SIT
17.97bn (EUR 75m).
In line with the agreement, Istrabenz deposited a 14.99% stake it acquired from the
Pension Fund Management (KAD), while it had bought a total of 16.33% from the
fund.
Alongside six blue chips, the Ljubljana Stock Exchange (LJSE) put on a roadshow in
London on Friday, 25 November and was amazed at the response of major investors
there.
"Considering that this was the first such presentation abroad, the results are very
encouraging," LJSE chairman Marko Simoneti told STA.
He added that about 50 major asset management firms called in at the roadshow and
there were 40 one-to-one meetings between the Slovenian blue chips and the
investors.
The rise in the SBI 20 was not reflected by the PIX investment fund index, which
slumped 67.61 points, ending at 4,071.25 points. The bond BIO index meanwhile
shed 0.06 points to 123.08.
Foreign Exchange
Mean exchange rate of the Bank of Slovenia
Euro (EUR) - SIT 239.56 (-0.01)
U.S. dollar (USD) - SIT 203.90 (-1.19)
Swiss franc (CHF) - SIT 154.89 (+0.03)
British pound (GBP) - SIT 350.55 (+0.63)
BRANCH INFORMATION
Publishers Afraid Flat Tax Rate Would Bring Profit Loss
In an interview for the daily Dnevnik Mitja Zupancic of the publishing house Druzina
said that with the introduction of the announced 20% flat tax rate Slovenian
publishers would be left without any profit overnight
In an interview for the daily Dnevnik on Monday, 21 November, Mitja Zupancic of
the publishing house Druzina said that with the introduction of the announced 20%
flat tax rate Slovenian publishers would be left without any profit overnight.
Nevertheless, Zupancic admitted that had not yet received any calculations from those
who have drafted the reforms about how they would affect the publishing businesses.
But "if I take into account last year's financial results and the unchanged prices, our
publishing house, which is a medium business, is in danger of losing most of its
planned profit overnight," said the commercial director of the Roman Catholic
publisher Druzina.
Zupancic moreover wonders what the reforms would mean for small publishing
houses, which represent the majority of publishers in the country, if they were to
affect medium-sized ones.
Moreover, the head of the Chamber of Commerce's Association of Publishers and
Book Traders, does not believe in book subsidies as a solution to counter the effect of
the planned higher VAT. As an alternative, he suggests that books be exempt from
taxes.
Zupancic also said that all European countries have mechanisms to publish books,
which are needed, but would find it terribly hard to survive on the market.
Annual Slovenian Book Fair Attracts Ever More Visitors
The fair will open to the general public on 30 November
The public is ever more interested in the annual Slovenian Book Fair, which will take
place for the 21st time at the conference centre Cankarjev dom in Ljubljana, the chair
of its management board Rudi Zaman told the press on Tuesday, 22 November.
While the fair will open to the general public on 30 November, the grand opening will
be held the night before, when an award ceremony is also to take place. The key
speaker will be the acclaimed Slovenian writer from Trieste, Boris Pahor.
The fair, closing on 4 December, will feature fewer publishers than before, around 80,
due to space problems. Accompanying events will include public debates at the fair's
café, forums of publishers, presentations of new books, shows for children and young
people, to name a few.
The main topic of the "Publishers' Academy" will be the cooperation of smaller
publishers, according to its head Miha Kovac. It will feature lectures by foreign
experts, with the US Robert Baensch as the key lecturer. He will discuss publishing at
a time of globalisation.
Mitja Zupancic, the head of the Chamber of Commerce's Association of Publishers
and Book Traders, pointed to an increasing number of experts taking part a series of
debates dubbed "The Bookfinder".
Around 350 experts are expected this year as opposed to 182 in 2004, when the forum
was first introduced. Also included in the Bookfinder debates will be a lecture by
Andrinee Pollen on the book market and reading culture in Scandinavia.
The main topic of the Bookfinder debates will be the 45th anniversary of the "Bralna
znacka" reading competition, which encourages reading in Slovenia's elementary
schools.
In its first year, the competition included 119 children, while this year around 140,000
pupils with 5,000 supervisors are taking part.
The focus of thirty "Debate Cafés" to take place this year will be on literature and
youth, myths, poets among musicians, story-telling, and cross-over literature, such as
Harry Potter.
Flat Tax Would Be Fatal Mistake for Slovenian Literature
The panel, entitled "Tax on Books - Tax or Books", therefore called on the
government to carry out suitable analyses, and debate on possible solutions with
cultural workers
The proposed flat tax would constitute a fatal error regarding the Slovenian language,
culture and art, a public panel agreed in Ljubljana on Tuesday, 22 November.
The panel, entitled "Tax on Books - Tax or Books", therefore called on the
government to carry out suitable analyses, and debate on possible solutions with
cultural workers.
According to writer Slavko Pregl, who chaired the panel, every new tax levied on
books since 1991 has worsened the position of Slovenian publishing.
Mitja Zupancic, head of the Chamber of Commerce and Industry of Slovenia's
Publishing, Printing and Media Association, meanwhile said that the panel was
organised to foster dialogue before decisions are taken.
According to the organiser of the panel, Slovenia lacks a developed book trading
network and other ways to distribute literature, causing high book prices.
Zupancic added that the consequence is a drop in book sales, while borrowing is on
the rise. A Slovenian on average buys three books a year, including school textbooks,
while he borrows nine.
According to him the Slovenian publishing market is worth around EUR 100m
annually, with the two largest publishers controlling just under two thirds (Mladinska
knjiga 44% and DZS 21%).
A book in Slovenia costs EUR 25 on average, its print run is around 1,500 copies, and
its yearly sales are around 1,000 on average, Zupancic added.
He explained that a majority of EU countries have substantially lower book taxes,
while some abolished them altogether. Zupancic cited Sweden, which reduced its tax
on books from 25% to 6%, while Croatia dropped it.
Panel members also agreed that a rise in tax on books would further decrease their
sales. Andrej Lesjak of the Delo revije publisher warned that in case of a flat tax
people would first reduce their purchases of non-essential products.
Since they cannot live without food and medicine they would buy less books,
magazines and newspapers, he warned. Lesjak therefore called on the government not
to experiment in areas that could have long-term effects.
President of the Slovenian Writers' Association Vlado Zabot meanwhile decried the
"it is not important what people read as long as they read" mentality.
He said its consequences could already be seen in the discontinuation of several nonprofit but nevertheless important publishing programmes and in the spread of
"yellow" thinking.
He does not doubt the government's good intentions with the proposed reforms,
however, expects that politics will fulfill its obligation and establish a book fund, as
passed by parliament.
National Environmental Protection Programme Passed
This strategic document is based on sustainable development and aims at improving
the quality of the environment and life as well as protect natural resources
The resolution on the national environmental protection programme for the 20052012 period was passed in parliament on Thursday, 24 November.
This strategic document is based on sustainable development and aims at improving
the quality of the environment and life as well as protect natural resources.
The programme sets down key goals and priorities as well as schedules for their
implementation, Environment Minister Janez Podobnik explained to MPs.
The document is divided into four major sections ranging from climate change;
protection of nature and biotic diversity; to ensuring a better quality of life; and waste
management and the use of renewable resources.
The implementation of its goals is anticipated to be funded from a special
environmental tax as well as from the national budget and EU funds.
COMPANIES
Saturnus Embalaza Accepts Latest Bid of Vogel&Noot
The management of the Slovenian packaging maker Saturnus Embalaza accepted on
17 November the latest takeover bid of the Austrian company Vogel&Noot
Verpackungstechnik
The management of the Slovenian packaging maker Saturnus Embalaza accepted on
17 November the latest takeover bid of the Austrian company Vogel&Noot
Verpackungstechnik, Saturnus said on Monday, 21 November.
According to the press release, Vogel&Noot purchased on 15 November enough
shares needed for the offer to be successful, therefore Saturnus management decided
to accept the bid, which the Austrian company made earlier this month.
On 15 November, Vogel&Noot owned a total of 51,526 shares of the Ljubljana-based
company, which represents 59.96% of all Saturnus shares, the press release also says.
Vogel&Noot published its initial bid on 3 October, offering EUR 152.35 a share. The
Austrian producer of metal food packaging then acquired an additional 15.249% of all
shares, raising its stake to nearly 41%.
After holding talks with several Saturnus shareholders, representatives of the Austrian
company decided on 23 October to raise their bid for the first time to EUR 171.13 a
share.
The company then raised the bid for the second time on 10 November to EUR 179,48
a share, after it held talks with the state-run Restitution Fund Management (SOD) and
Pension Fund Management (KAD), which were willing to sell.
Simobil Has Best Quarter Ever, Upbeat About Future
The company generated revenues of EUR 27.9m in the quarter, which is 10% more
than in the same quarter last year
Slovenia's second-largest mobile operator Simobil had its "best quarter ever" in the
third quarter of this year, chairman Zoran Thaler told the press on Tuesday, 22
November. He said that Simobil has high hopes for the future given new efforts by the
telecommunications watchdog to put the market in order.
Although market conditions were far from optimal Simobil managed to produce its
best quarter ever, Thaler said.
The company generated revenues of EUR 27.9m in the quarter, which is 10% more
than in the same quarter last year. Earnings before interest, tax, depreciation and
amortisation (EBITDA) stood at EUR 8.7m, up 16%, he said.
"Our results may still be someway off international norms...but things are moving
towards something that could be considered normal," Thaler explained.
According to Thaler, Simobil had 349,000 users at the end of the third quarter, which
is 3.9% less than at the same time last year. He explained that the figures were not
comparable because new standards were introduced for counting the number of users.
Based on the new data, Simobil's market share in Slovenia was 22.1%, which is
somewhat below the 23.4% it had last year.
Thaler said that Simobil, which has been one of the loudest critics of Slovenia's
telecommunications regulator, has noticed progress in the market of late.
"We have witnessed a number of important decisions, especially as regards operators
with significant market power," he said in a reference to Mobitel, Slovenia's largest
mobile operator, which control over 70% of the market.
Simobil expects that these decisions will reflect on the company's operations in 2006,
Thaler said.
KD Group Would Like to Increase its Stake in Delo
Under Slovenian law, a company wishing to acquire a 20% to 24.99% share in a
media outlet needs the approval of the Culture Ministry
Asset management firm KD Group has asked the Culture Ministry to give it a green
light in its bid to gain a 20% stake or more in Slovenia's largest newspaper outlet
Delo, the national radio station Radio Slovenija reports.
KD Group expects a prompt reply, as it depends on the ministry whether the company
increases its share in Delo from the current 19.99% to the planned 24.99%.
Under Slovenian law, a company wishing to acquire a 20% to 24.99% share in a
media outlet needs the approval of the Culture Ministry. Should it want to increase its
stake further it needs the green light from the competition watchdog.
KD Group became an owner of Delo last week by buying a 19.99% stake from the
investment firm Infond ID in a swap deal that saw a 4.16% share in grocer Mercator
go to Infond.
Istrabenz Deposits Mercator Shares with Banka Koper
Holding Istrabenz has deposited nearly 15% in grocer Mercator with Banka Koper as
part of a repurchase agreement between the two corporations
Holding Istrabenz has deposited nearly 15% in grocer Mercator with Banka Koper as
part of a repurchase agreement between the two corporations.
In line with the agreement, Istrabenz deposited with the bank a 14.99% stake in
Mercator acquired from the Pension Fund Management (KAD) (it had bought a total
of 16.33% from the fund).
Banka Koper is to hold on to the stake until the end of 2008, after which Istrabenz
will repurchase the shares at SIT 38,000 (EUR 158.60) per share, the two companies
said in a press release.
According to the press release, Istrabenz will pay interest at six-monthly intervals to
Banka Koper. The interest rate was not specified.
Istrabenz said that the deal frees up cash for other investment activities. Moreover, it
added that in line with the deal, it keeps all voting rights in Mercator, as well as the
right to a dividend.
According to a statement from press release, Istrabenz now directly owns 1.8% of
Mercator.
Gorenje Boss Eyeing Takeovers Next Year
Although the company's operations are mainly focused on Europe, it also has plans
for Latin America and has already founded a representative office in China
Franjo Bobinac, the chief executive of household appliance maker Gorenje, has told
business daily Finance that Gorenje does not have any takeover ambitions for this
year, but could mount a takeover bid next year.
Although the company's operations are mainly focused on Europe, it also has plans
for Latin America and has already founded a representative office in China.
"I will not exclude the transfer of our technology and establishment of a joint
company with a Chinese partner in China," said Bobinac.
Gorenje's largest owners include the state-run Pension Management Fund (KAD) and
state-run Restitution Fund (SOD).
SOD will sell its share back to Gorenje, while KAD will own 25% of the company
next year in line with a tripartite agreement that envisages SOD pulling out altogether
and selling its stakes to Gorenje and KAD.
Bobinac said that one of the options would be for KAD to sell its share to portfolio
investors, although yields in the industry are not so high.
Gorenje's return on equity was 7.5% in the first nine months of the year, but Bobinac
estimates that the figure will rise to more than 10%.
In the light of recent high-profile dismissals of managers at companies part-owned by
the state, Bobinac said that the owners have the right to replace the management.
However, if the owners do have the intention to replace the board, they should do it as
quickly as possible and then give the new board some space and allow it to work.
The worst thing a company can do is to deal with itself too much, Bobinac stressed.
Droga Kolinska CEO Predicts Bright Future
Apart from becoming the No.1 in coffee, pate and soft drinks, the company also expect
EUR 500m in revenues after penetrating the Middle East and Central Asian markets
In five years time Droga Kolinska will become the biggest regional food-processing
company, CEO Robert Ferko told the Vecer daily on Thursday, 24 November.
Apart from becoming the No.1 in coffee, pate and soft drinks, the company also
expect EUR 500m in revenues after penetrating the Middle East and Central Asian
markets, Ferko assessed the potential of Slovenia's largest food company.
The company, created in a merger of Droga and Kolinska in May, is currently
undergoing an "intensive period of consolidation" and will focus on "organic growth
rather than acquisitions", he told Vecer.
Ferko believes that there are no more acquisition targets in Slovenia. Therefore the
company has begun buying abroad, doubling its production capacity in Macedonia
while retaining a strong sales network in Croatia.
He also said that a new EUR 20m plant in Bosnia-Herzegovina will start production
in 2006, while the company will also increase its investments in Serbia's Soko Stark.
The company plans a total of SIT 10bn (EUR 41.74m) in investments for 2006, when
the company's revenues are to climb to EUR 330m (EUR 200m planned for 2005),
while the group's net profit is to top SIT 3bn (EUR 12.52m).
The company's majority owner is the holding Istrabenz with a 55.6% share. In
Slovenia it employs a 1,100-strong workforce, while the entire groups has around
3,800 employees.
Ferko also touched on the layoff plans by the company, saying that 285 workers will
be made redundant, with 146 given the pink slip this year.
"It has been known since the year 2000 that we will have to dismiss workers and this
has become even more obvious after Slovenia joined the EU in 2004," he explained.
Ferko also told the daily that he sees no "reasons for workers to go on strike, as the
company respects the collective bargaining agreement and intends to do so in the
future".
Droga Kolinska wishes to stress the performance-based part of the wage, with a new
pay scheme to be unveiled shortly, Ferko added.
Gorenje Exec Says Yes to Mercator Top Post
The 34-year-old said he would ask to have his contract at Gorenje terminated as of 31
December, to take over as Mercator CEO on 1 January of 2006
Member of the management board of home appliance group Gorenje, Ziga Debeljak,
has accepted an offer to become chairman of Slovenia's leading grocer, Mercator.
The Gorenje CFO informed Mercator's supervisory board that he agreed with its offer
to take over from Zoran Jankovic.
The 34-year-old said he would ask to have his contract at Gorenje terminated as of 31
December, to take over as Mercator CEO on 1 January of 2006.
Having been given the authority to put together the new Mercator board, Debeljak is
set to hold talks with potential candidates in the coming weeks.
The Mercator supervisory board would then vote on the appointment of all the board
members at one session, expectedly on 13 December, he said in a press release.
"Taking over at the helm of Mercator is a big challenge for me that I intend to take
head-on and with full responsibility," he said, adding that he believes he can help
Mercator grow further.
He added that the biggest challenges would entail dealing with the growing
competition on the Slovenian market and the need to strengthen Mercator's position
on foreign markets.
"I firmly believe that Mercator will continue to carry out its mission as the leading
retail chain in SE Europe, increasing the satisfaction of its customers, ensuring social
security to its employees and creating shareholder value in a socially-responsible
way."
The hugely popular Jankovic, who has been credited with turning Mercator into
Slovenia's biggest grocer and biggest employer since taking over as CEO in 1998,
was axed by the supervisors last week.
The no-cause dismissal came after changes in the ownership structure of Mercator:
holding Istrabenz and beverages group Pivovarna Lasko became the biggest owners
of Mercator in August.
Differences between Istrabenz and Pivovarna Lasko on one hand and Jankovic on the
other were said to be behind the firing.
Debeljak had been mentioned as the most likely candidate to replace Jankovic.
Krka Profits Skyrocket
Drug maker Krka posted bumper profits for the first three quarters of the year, as net
profit was up 30% year-on-year to SIT 14.3bn (EUR 59.7m)
Drug maker Krka posted bumper profits for the first three quarters of the year, as net
profit was up 30% year-on-year to SIT 14.3bn (EUR 59.7m).
Sales grew at a rate of 15% in the same period, to SIT 97.8bn (EUR 408.2m), Krka
chief executive Joze Colaric told the press on Thursday, 24 November.
According to the chief executive, the company plans to increase sales by an annual
10% in the coming years through organic growth.
We intend to remain an independent pharma company which will take over foreign
medium-sized companies, he said.
For 2006, Krka projects sales of SIT 150bn (EUR 626m). In intends to stay focused
on Europe, Central Asia and the US.
Sales across the group grew faster than at the core company in the January-September
period, mostly due to outstanding performance of the Polish and Croatian subsidiaries
and the spa arm Krka Zdravilisca, Colaric explained.
Slovenia accounts for 18.6% of the sales, while Eastern Europe accounts for over a
quarter of the sales and grew by 63% over last year.
In one of its key markets for the drug maker, Russia, sales grew by 64%.
Central European sales were meanwhile up by 35% and now account for almost a
quarter of the sales, Colaric explained.
Western Europe and overseas markets accounted for about 14% of the sales, with
Southeast Europe contributing about 16%.
Prescription drugs account for 79% of the sales, followed by over-the-counter drugs
with 11% and veterinary products 4%.
Petrol Gets Two New Board Members, CEO Not Selected Yet
The supervisory board of oil trader Petrol appointed two new board members in
charge of energy and finance respectively
The supervisory board of oil trader Petrol on Thursday, 24 November appointed two
new board members in charge of energy and finance respectively, but they have not
appointed a successor to outgoing chief executive Janez Lotric yet.
Bostjan Napast, the incumbent director of purchasing, will be put in charge of energy,
while Alenka Vrhovnik Tezak will take over as chief financial officer from her former
boss Vladimir Jancic, Petrol said in a press release.
The supervisors will hold their next meeting on 30 November, when Lotric's term
runs out. "We are pretty certain that Petrol will have a new chairman by then," head of
the supervisory board Joze Zagozen told STA.
According to him, interviews with candidates for CEO will start on Monday, 28
November, with the best candidate likely to be put forward for nomination on
Wednesday, 30 November. Eight people have applied for the post.
Intereuropa Results Fall Short of Plans
Logistics group Intereuropa generated net sales revenues of SIT 37.2bn (EUR
155.2m) in the first nine months of 2005
Logistics group Intereuropa generated net sales revenues of SIT 37.2bn (EUR
155.2m) in the first nine months of 2005, down 2% on the same period in 2004 and
8% below targets, the company said on Friday, 25 November.
Net profit of the Koper-based company tumbled 38% in the same period, amounting
to SIT 1.77bn (EUR 7.38m), which is 12% short of plans.
According to Intereuropa, the drop can be attributed to a drop in revenues in Q1,
while in September the company beat forecasts.
In accordance with the current positive trends and a development of new logistic
capabilities, the company expects to end the year just under projections.
Revenues from land transport, which accounts for more than half of all revenues,
stood at SIT 19.4bn (EUR 80.97m). Meanwhile, a 32% drop was reported in the
volume of forwarding services.
We'll Raise Prices if Flat Tax Is Introduced, Retailer Says
According to Spar director general Igor Mervic, neither retailers nor producers can
take the burden of higher prices, a reason why he believes political dialogue on a flat
tax rate is needed
The government reform committee is misleading people by claiming that retail prices
will not go up as a result of a 20% flat tax rate from the current 8.5% VAT, said the
CEO of one of the main chains of shops in the country.
"Of course we'll raise prices. We'll be unable to avoid it if a flat tax is introduced.
What they'll give companies through tax changes, they'll take away from consumers,"
Spar director general Igor Mervic told the daily Dnevnik on Saturday, 26 November.
According to Mervic, neither retailers nor producers can take the burden of higher
prices, a reason why he believes political dialogue on a flat tax rate is needed.
A flat tax rate, however, would not be the only shock for the retailers.
Mervic also expects them to be affected by the ban on Sunday shopping, the
eurochangeover and the related double pricing before the exchange rate is fixed, plus
the arrival of foreign discount chains.
Spar is not afraid of discount retailers though, as it has been getting ready for the
competition for a while, said Mervic.
He also outlined some of his company's future projects: they are planning to open
eleven shops by the end of 2005 and an additional 14 next year, but refused to speak
about locations.
SLOVENIA IN BRIEF
Minister Zupan Reaches Agreement on Slovenian Studies in Vienna
Minister of Higher Education, Science and Technology Jure Zupan told a press
conference in Ljubljana on Tuesday, 22 November that he reached an agreement with
Austrian Minister of Education, Science and Culture Elisabeth Gehrer on the
financing of Slovenian studies at the University of Vienna on Monday, 21 November.
Tender for Lendava-Pince Motorway Section Annulled
The national auditing commission has annulled the decision by Slovenia's Motorway
Company (DARS), which chose a consortium of four Slovenian contractors to
construct the SIT 15bn (EUR 62.61m) motorway section between Lendava and Pince.
The 9.1 km section from Lendava to the Pince border crossing with Hungary is
scheduled to be completed by the end of 2006.
Jansa Congratulates New German Chancellor upon Inauguration
Prime Minister Janez Jansa has congratulated Angela Merkel upon her inauguration
as the new German chancellor, the PM's office said on Tuesday, 22 November. Jansa
used this occasion to express his delight with the good relations between Slovenia and
Germany, which he hopes will strengthen even more in the future, contributing to the
common goals of peace and security in Europe, the press release says.
OSCE Ministerial Confirmation of Slovenia's International Role, Rupel Says
The staging of the OSCE ministerial meeting will be a testament to Slovenia's role as
an active and responsible member of the international community, Foreign Minister
Dimitrij Rupel believes. According to Rupel, who is the acting OSCE chairman-inoffice, the ministerial meeting, to be held in Ljubljana on 5 and 6 December, is an
important event for Slovenia, as it will be yet another confirmation of Slovenia's role
in the international community.
Government Appoints New State Secretary for Slovenians Abroad
The cabinet appointed on Thursday, 24 November Zorko Pelikan the new state
secretary of the Government Office for Slovenians Abroad. Zorko, who is to assume
his post on 1 December, will succeed Franc Puksic, who resigned in July over
disagreements with the government, the Government Media and PR office said.
Government Imposes EU-Sponsored Sanctions on Four Countries
The government has followed the EU in imposing sanctions against Myanmar, Ivory
Coast, Zimbabwe and the Democratic Republic of Congo, while lifting sanctions
against Libya. According to the Government PR and Media Office, the sanctions
imposed on Thursday, 24 November by the Slovenian cabinet on the four countries
are in line with decisions taken by the EU Council. Meanwhile, the cabinet also
followed the EU's lead in lifting sanctions against Libya. In line with the government
decree, the embargo on arms sales to Libya, in place since 1986, has been lifted.
PM Jansa and President of Serbia-Montenegro Discuss Kosovo
Prime Minister Janez Jansa has met President of Serbia-Montenegro Svetozar
Marovic for talks that examined the future of Kosovo and the independence
referendum in Montenegro.
PM Reiterates Necessity of Structural Reforms
The government structural reforms are not directed against workers nor the welfare
state, but against unjustified privileges, PM Janez Jansa said in a message before the
anti-reform worker's mass protest. "I therefore believe that the planned reforms are in
the interest of all citizens," Jansa stressed in a press release circulated late on Friday,
25 November. He reiterated that all parties in the social dialogue share a view that in
order for Slovenia to reach its ambitions goals, reform is needed.
Protesters Urge Government to Enter Dialogue, Reconsider Reforms
Trade union leaders urged the government to listen to their demands and drop the
reforms that would curb worker's rights and worsen the standard of living in the
country, as they addressed a crowd of over 40,000 on Saturday, 26 November in
Ljubljana. With 40,000 workers, students and pensioners at the rally, this was the
largest protest in Slovenian history.
Albanian President Asks for Slovenia's Help in Albania's EU Bid
Albanian President Alfred Moisiu told his Slovenian counterpart Janez Drnovsek that
he would like Slovenia to support Albania's bid to join the EU, as the two presidents
met in Ljubljana on Saturday, 26 November.
Petkovsek and Pegan Crown Season with World Champions Titles
The 38th World Gymnastics Championships in Melbourne, Australia has ended with a
double Slovenian victory, which saw Mitja Petkovsek on parallel bars and Aljaz
Pegan on high bar become world champions.