Slovenia Business Week, no.34, October 30, 2006
Table of Contents:
HEADLINES ............................................................................................................................. 3
CCIS Fears Target Cut in Public Expenditure not to Be Met ................................................ 3
Business Sentiment Drops in October .................................................................................... 3
Social Partners Okay Active Employment Policy Programme .............................................. 4
INTERNATIONAL COOPERATION ...................................................................................... 5
Slovenian, Montenegrin Chambers to Cooperate in Arbitration............................................ 5
Vizjak Promoting Slovenia's Foreign Investment Lure ......................................................... 5
Government Decides to Open Consulate in South Korea ...................................................... 5
EUROPEAN UNION ................................................................................................................. 7
Next EU Troika Finalise Development Programme of EU Presidency ................................. 7
EU Audit Report Suggest Slovenia Has Problem with Animal Premiums ............................ 7
Slovenia Calls for Protection of Its Spirits ............................................................................. 7
Agency Claims Animal Premiums Data in EU Court Report Wrong .................................... 8
Slovenia Opposes Reduction of Vineyards, New Indication Rules ....................................... 8
European Commission Warns Slovenia About Kyoto Targets .............................................. 9
LEGISLATION ........................................................................................................................ 10
Parliament Passes Act on the Euro ....................................................................................... 10
MPs Pass First Three Tax Reform Acts ............................................................................... 10
MPs Pass Three More Tax Reform Acts .............................................................................. 11
FINANCE................................................................................................................................. 12
Insurers Vzajemna and Adriatic Slovenica Planning a Merger ........................................... 12
Central Bank Governor Points to Dangers of Volatility ...................................................... 13
Slovenica Supervisor Says Merger with Vzajemna Necessary ............................................ 13
KD Holding sells its 20% stake in newspaper publisher Delo ............................................. 14
Ljubljana Stock Exchange .................................................................................................... 14
Foreign Exchange ................................................................................................................. 15
BRANCH INFORMATION .................................................................................................... 16
Publishers Submit Petition for Zero-Percent Book Tax ....................................................... 16
Minister Underscores Importance of Common Energy Policy ............................................ 16
COMPANIES ........................................................................................................................... 18
Zito Tops Pekarna Blatnik Bid for Mlinotest ....................................................................... 18
Iskra Avtoelektrika Launches Production in China ............................................................. 18
Small Firm Announces Bid for Conglomerate Sava ............................................................ 19
Viator&Vektor Mulls Management Buyout ........................................................................ 19
10 Slovenian Companies Make it to List of Leading Job Creators ...................................... 20
Railways Could Generate EUR 19m Loss in 2006, Supervisor Says .................................. 21
Gorenje Sees Profits, Sales Increase Marginally ................................................................. 21
Regulator Says Zito Owners Must Clear Takeover Bid for Mlinotest ................................. 21
Government Adopts Plan of Sale for Lendava Refinery...................................................... 22
Gaming Partners Present Mega Project Plans to Government ............................................. 22
Slovenian Telco Bidding for Kosovo Mobile License ......................................................... 23
Adria Follows Competitors in Introducing E-tickets ........................................................... 24
Petrol Ups Revenues, Profits in First Nine Months ............................................................. 24
Bavcar Receives Second Mandate as Istrabenz CEO .......................................................... 25
FAIRS, CONGRESSES ........................................................................................................... 26
Dutch, Slovenian Officials Stress Labour Mobility ............................................................. 26
Innovation Conference Calls for More Links ...................................................................... 26
Slovenia Should Encourage Women Entrepreneurs ............................................................ 27
Congress Discusses Road Building Experience ................................................................... 27
State Counting on Private Funds for Road Construction ..................................................... 27
SLOVENIA IN BRIEF ............................................................................................................ 29
Local Government Minister Discusses Euroregion Plans in Trieste.................................... 29
Slovenia, Hungary Boost Police Cooperation ...................................................................... 29
Slovenian, French Ministers Discuss Environment Cooperation......................................... 29
Slovenian Railways Publish Call for Director General ........................................................ 29
Minister: Schengen Entry Feasible in 2007 Pending Council Decision .............................. 29
Demining Fund Gets Another Donation from Switzerland ................................................. 29
Minimum Wage Act Gets Majority Support ........................................................................ 29
2
HEADLINES
CCIS Fears Target Cut in Public Expenditure not to Be Met
The Chamber of Commerce and Industry of Slovenia (CCIS) has welcomed the cut in public
expenditure envisaged in the budget bills for 2007 and 2008, while it also expressed concern
that the 2-percentage-point target cut would not be met by 2008
The Chamber of Commerce and Industry of Slovenia (CCIS) has welcomed the cut in public
expenditure envisaged in the budget bills for 2007 and 2008, while it also expressed concern
that the 2-percentage-point target cut would not be met by 2008.
Moreover, the CCIS warned on Thursday, 26 October that research and development
expenditure was still tailored to the needs of researchers in the public sector, rather than the
actual needs of the economy, something that the chamber said it had been warning about for
years.
According to its press release, the Chamber is also concerned that the planned reduction in
expenditure would not be carried through. "Cuts in budgetary revenues and expenditures are
as a rule planned when budgets are being drawn up, while their realisation actually shows an
increase."
The CCIS praised the envisaged increase in the budget of the Economy Ministry, saying these
funds should encourage economic activity. While welcoming a raise in funds for
technological development, the CCIS was disappointed that the structure of the envisaged
expenditure should remain almost intact.
The changes to the 2007 budget foresee revenues of EUR 7.7bn and expenditure of EUR
8.1bn. The deficit is to stand at around EUR 325m. In 2008, revenues are to grow to EUR
8.1bn and expenditure to EUR 8.4bn, with the budget deficit at EUR 307m.
Both documents are currently in parliamentary procedure. They were drafted by the Finance
Ministry on the basis of macroeconomic trends projected in the autumn economic forecast of
the Institute for Macroeconomic Analysis and Development. The 2008 budget bill and the
changes to the 2007 budget are to be submitted for final vote in parliament on 16 and 17
November.
Business Sentiment Drops in October
The seasonally adjusted business sentiment indicator dropped by 1 percentage point in
October over the month before, depressed by dwindling confidence in manufacturing and
retail
The seasonally adjusted business sentiment indicator dropped by 1 percentage point in
October over the month before, depressed by dwindling confidence in manufacturing and
retail.
The index was still 8 percentage points higher than in the same month of 2005, and 13 points
above the long-term average, the National Statistics Office said.
The manufacturing confidence index shed 1 percentage point in comparison with September.
It was up 9 percentage points year-on-year and 15 points above the long-term average.
Confidence in retail meanwhile dropped by 3 percentage points, while construction
confidence index added 3 percentage points, reaching an all-time high. The service sector
confidence remained level.
The consumer confidence index added 1 point, due to consumers' upbeat projections about the
amount of money saved in the next 12 months.
3
The business sentiment indicator is a weighted average of the confidence indicators in
manufacturing, retail and the consumer confidence indicator, which are in turn calculated with
the aid of surveys on business trends in the fields.
Social Partners Okay Active Employment Policy Programme
The Economic and Social Council, the industrial relations forum endorsed the programme of
active employment policy measures for the 2007-2013 period and an action plan for the first
two years of implementation, worth EUR 172.6m
The Economic and Social Council, the industrial relations forum, on Friday, 27 October
endorsed the programme of active employment policy measures for the 2007-2013 period and
an action plan for the first two years of implementation, worth EUR 172.6m.
The social partners (employers, unions and the government) welcomed the inclusion of
performance monitoring indicators and decided that the council would scrutinise
implementation annually.
The long-term nature of the programme was also praised, as the measures had previously been
adopted for each year individually.
According to the Labour Ministry, the programme has now been brought into line with the
programming documents that serve as the basis for the phasing of money from the European
Social Fund in the 2007-2013 period.
The implementing plan for 2007 and 2008 envisages financing from the national budget and
the European Social Fund. EUR 74m is planned for planned measures in 2007 and EUR 98.6
for in 2008.
The Chamber of Commerce and Industry of Slovenia (CCIS) noted that it was impossible to
say whether the money was appropriately distributed, as individual activities do not come
with earmarks.
On the other hand, Saso Hribar Milic of the Employer's Association welcomed the fact that
the programme was open-ended, as it will be possible to adapt it to market demand.
The active employment policy programme is divided to four main measures: assistance in job
searching, training and education, promotion of employment and self-employment, and
programmes to boost social inclusion.
4
INTERNATIONAL COOPERATION
Slovenian, Montenegrin Chambers to Cooperate in Arbitration
The Slovenian and Montenegrin chambers of commerce and industry have signed a deal on
cooperation in international arbitration
The Slovenian and Montenegrin chambers of commerce and industry have signed a deal on
cooperation in international arbitration, Kreso Puharic of the Slovenian Chamber of
Commerce and Industry of Slovenia (CCIS) said on Tuesday, 24 October.
The deal, signed by Puharic, the head of permanent arbitration at the CCIS, and his
Montenegrin counterpart Nebojsa Vucinic, is to ensure quick and quality problem solving
between the companies from both countries.
Puharic mentioned that the countries of SE Europe present the second most important
Slovenian market and account for nearly 20% of Slovenian exports.
Vucinic meanwhile said that the agreement signed in Ljubljana would foster economic ties
between the two countries.
He told STA that Montenegro wants to strengthen political and business ties with Slovenia,
including in the areas of winter tourism and the metal industry.
Vizjak Promoting Slovenia's Foreign Investment Lure
Attending the real-estate fair EXPO REAL 2006 in Munich, Economy Minister Andrej Vizjak
took the opportunity to present the possibilities that Slovenia has to offer to investors
Attending the real-estate fair EXPO REAL 2006 in Munich on Tuesday, 24 October,
Economy Minister Andrej Vizjak took the opportunity to present the possibilities that
Slovenia has to offer to investors.
Vizjak told STA that he outlined the resolution on national development projects and
government documents on promoting investments and also highlighted the advantages that
Slovenia can offer to foreign investors.
He enumerated stable macroeconomic environment, the fact that the country is adopting the
euro, its geostrategic position and its familiarity with SE European markets as the country's
key advantages.
Vizjak moreover believes that the country is also attractive due to its optimal ratio between
labour costs and quality.
According to data by the Slovenian central bank, last year foreign direct investments (FDI) of
German companies in Slovenia reached EUR 517.8m, which presented 8.7% of all foreign
investments.
The countries topping German investments in Slovenia in 2005 were Austria (28%),
Switzerland (18%), the Netherlands (10%) and France (9%).
Government Decides to Open Consulate in South Korea
The consulate will cover the entire South Korea, while the consul will strive for strengthening
bilateral relations as well as political, cultural and scientific cooperation
The Slovenian government decided on Thursday, 26 October to open an honorary consulate in
South Korea and appoint Yoon Byong Hwa as the honorary consul.
The consulate will cover the entire South Korea, while the consul will strive for strengthening
bilateral relations as well as political, cultural and scientific cooperation, the Government PR
and Media Office said on Thursday, 26 October.
South Korea is a very important Asian partner for Slovenia, the press release also reads.
5
The countries cooperate within the Organisation of Security and Co-operation in Europe
(OSCE) and the ASEM Europe-Asia Forum.
The trade between the two countries amounted to US$ 100m in 2005.
6
EUROPEAN UNION
Next EU Troika Finalise Development Programme of EU Presidency
Germany, Portugal and Slovenia will successively chair the EU from 2007 to mid-2008
Germany, Portugal and Slovenia, which will successively chair the EU from 2007 to mid2008, on Monday, 23 October finalised the 18-month presidency programme in the field of
development cooperation, the Slovenian Foreign Ministry has said.
The programme was finalised in a meeting of German Minister of Economic Cooperation and
Development Heidemarie Wieczorek-Zuel, State Secretary for Bilateral Affairs and
Development at the Portuguese Foreign Ministry Joao Gomes Cravinho and State Secretary at
the Slovenian Foreign Ministry Bozo Cerar.
The troika's development cooperation programme will focus on the implementation of the
European development policy consensus and the Monterey programme, the effectiveness of
the bloc's development aid and coherence of development policies and the inclusion of Africa,
the Pacific and Caribbean in global economic trends, the press release reads.
Cerar was quoted as saying that Slovenia would endeavour to place special emphasis on
women and children in armed conflicts. The participants of the meeting, which was held at Ig,
south of Ljubljana, were also briefed on the activities of the International trust Fund for
Demining and Mine Victims Assistance (ITF).
EU Audit Report Suggest Slovenia Has Problem with Animal Premiums
Slovenia has by far the worst record among all EU member states when it comes to granting
unjustified animal premiums in 2005, the annual report for the year released by the European
Court of Auditors suggests
Slovenia has by far the worst record among all EU member states when it comes to granting
unjustified animal premiums in 2005, the annual report for the year released on Tuesday, 24
October by the European Court of Auditors suggests.
According to the report, as much as 48.2% of the suckler cow premiums granted to Slovenian
farmers were unjustified. With cattle premiums the share reaches 56.2% and with ewe and
goat premiums 24.1%.
The auditors checked to which extent the animal premiums payed-out as part of the EU's
Common Agricultural Policy (CAP) were in fact used.
They tried to determine the number of cases where the animals did not actually exist or were
not entitled to premiums. The sample which included 14.9% of the premiums showed 1.8% to
be unjustified.
The only other countries to be significantly burdened by the report apart from Slovenia are
Italy and Malta. In Italy 11.4% of the suckler cow premiums and 21.8% of the special cattle
premiums were unjustified, whereas in Malta 11.2% of the cattle premiums have been
determined as false.
Slovenia Calls for Protection of Its Spirits
Slovenia succeeded in placing the protection of geographical names for several of its
brandies into a draft regulation on spirits at a meeting of the EU's agriculture ministers in
Luxembourg
Slovenia succeeded in placing the protection of geographical names for several of its brandies
into a draft regulation on spirits at a meeting of the EU's agriculture ministers in Luxembourg
on Tuesday, 24 October.
7
According to the Slovenian Agriculture Ministry, the country succeeded to push travarica
(herbal brandy), pelinkovec (absinth), brinjevec (gin), dolenjski sadjevec (Dolenjsko region
fruit brandy), home made rum, janzevec (anise brandy) and orehovec (walnut brandy) into the
proposal.
The ministers mainly discussed vodka, focusing on the definition and the produce that it is
made of.
The Finnish EU presidency, backed by Scandinavian countries, proposed that vodka could be
manufactured under a traditional method from grain, apples or sugar molasses.
The proposal also stipulates that vodkas, produced from other plants, such as grapes, should
mention the fact on the bottle.
Slovenia endorsed Finland's proposal, the ministry added.
However, the proposal has been opposed by the European Commission and the UK, which
argued that it could pose problems in implementing the rules of the EU's internal market and
in the World Trade Organisation.
The European Parliament is due to give its first opinion on the issue in March.
Agency Claims Animal Premiums Data in EU Court Report Wrong
After the European Court of Auditors rebuked Slovenia for granting excessive animal
premiums, the country's official said that the data quoted in the court's annual report for
Slovenia was incorrect
After the European Court of Auditors on Tuesday, 24 October rebuked Slovenia for granting
excessive animal premiums, the country's official on Wednesday, 25 October said that the
data quoted in the court's annual report for Slovenia was incorrect.
Franc Kebe, the head of the Agency for Agricultural Markets and Rural Development
explained in Brussels that 11.8% of requests for suckler cows and 7.7% of requests for cattle
were disallowed and therefore not paid out.
"The agency sent a report on animal premiums to the European Commission in August 2005,
while a bilateral meeting in June 2006 agreed that the report was misinterpreted and
incorrectly filled out, so we followed the Commission's recommendation, drew up a new
report and sent it to the European Commission on 17 June."
Kebe added that the report of the Court of Auditors was unfortunately based on the old data,
rather than those given out by his agency. "According to new data, the margin is 11.8% for
suckler cow premiums, which is normal and within EU average, and 7.7% for special cattle
premiums."
The report meanwhile stated that as much as 48.2% of the suckler cow premiums granted to
Slovenian farmers were unjustified. With cattle premiums the share reaches 56.2% and with
ewe and goat premiums 24.1%.
According to Kebe, the agency initially submitted incorrect data, because its services
misinterpreted what they should be reporting about. While they should have reported on
irregularities with individual animals, the agency's services understood they were to report on
sanctions affecting farmers.
"Sanctions are as a rule grater than irregularities," Kebe explained. He added that the opinion
of the European Court of Auditors was not binding on Slovenia, given that the court
supervised the Commission, rather than individual member states.
Slovenia Opposes Reduction of Vineyards, New Indication Rules
Slovenia's representative at the meeting of EU agriculture ministers in Brussels voiced the
country's opposition to changing the system of geographical indications, reduction of
vineyards and a ban on the use of saccharose to enrich wine
8
Slovenia's representative at the meeting of EU agriculture ministers in Brussels on
Wednesday, 25 October voiced the country's opposition to changing the system of
geographical indications, reduction of vineyards and a ban on the use of saccharose to enrich
wine.
In a bid to simplify regulations on geographical indications of wine, the European
Commission had proposed wines be classified into two groups: those with and those without a
geographical indication. It also proposed a uniform registry of geographical indication.
According to Gvido Mravljak, a state secretary at the Ministry of Agriculture, Forestry and
Food, Slovenia believes that the proposed simplification is inadequate and is for keeping the
national systems of geographical indications.
"If national regulations were replaced, this would additionally complicate designation as
consumers and producers would have to get used to it, which would cause additional
problems to Slovenia," Mravljak told STA following the session in Brussels.
Slovenia in particular disagrees with the proposal that the variety and the vintage is given for
wines without geographical indication as it believes this would give an advantage to wines
from the Third World. In this case the consumer would decide on buying a wine on the basis
of wine-grape variety, rather than its origin.
According to Mravljak, EU agriculture ministers agreed that the efforts to reduce excessive
wine production should include an improvement of quality.
European Commission Warns Slovenia About Kyoto Targets
The European Commission has warned several EU members, including Slovenia, about the
need to take additional measures to meet the greenhouse gases emission targets in the 20082012 Kyoto commitment period
The European Commission has warned several EU members, including Slovenia, about the
need to take additional measures to meet the greenhouse gases emission targets in the 20082012 Kyoto commitment period.
According to the Commission's data, published on Friday, 27 October, greenhouse gases
emissions in Slovenia are expected to rise by 4.7% by 2010 instead of decreasing by 8% in
comparison with the 1990 levels.
If Slovenia enacts additional measures for reducing the emissions, they could decrease by
1.7% by 2010, still not enough to meet the Kyoto targets.
However, taking into account carbon sinks, the Commission projects that Slovenia could
reduce its carbon dioxide emissions by a further 8.3%.
The total reduction would then stand at 10%, above the 8% target reduction, set by the
Commission.
Carbon sinks consist of biomass and forests that absorb carbon dioxide from the atmosphere.
The government adopted the national plan for distributing emission coupons for the 20082012 period at its session on Thursday, 26 October. It will send the plan to the Commission
for review.
9
LEGISLATION
Parliament Passes Act on the Euro
The parliament passed the act on the euro, which defines the procedures during Slovenia's
changeover to the euro as a national currency on 1 January 2007
The parliament on Thursday, 26 October passed the act on the euro, which defines the
procedures during Slovenia's changeover to the euro as a national currency on 1 January
2007.
The act, which was passed in 60-to-0 vote and has been harmonised with the European
Central Bank, deals with the procedure for adopting the euro, sets the period when both
currencies will be in use and determines the withdrawal of the tolar from circulation.
Serving as the legal basis for a smooth transition in public administration, the judiciary,
financial markets and the economy, the bill defines that both currencies will be in circulation
for the first two weeks of 2007. During this period the difference for cash payments will be
returned in euros.
Cash-free transactions will be carried out in euros from 1 January 2007. The main interest rate
SITIBOR will be replaced by EURIBOR, whereas tolar deposit accounts, securities, contracts,
bills and other financial instruments will be transformed into euros on the day of the switch
free of charge.
The bill also determines that in the first two months of 2007 banks, savings banks and post
offices will have to exchange tolars for euros free of charge. Slovenia's central bank will
change tolar banknotes for euros indefinitely and without commission, but it will only
exchange tolar coins until 31 December 2016.
The National Assembly also passed amendments the act on book-entry securities, the aim of
which is to promote the development of the national capital market.
The original proposal would spell an end to public access to the share register, which is kept
by the Central Securities Clearing Corporation, as the Finance Ministry claimed that public
access facilitated trading on the grey market.
However, this provision was thrown out by the parliament's finance committee, which
reasoned that the small shareholders would then have only limited access to the share register.
MPs Pass First Three Tax Reform Acts
Parliament passed on 26 October the income tax act, the corporate income tax act and the tax
procedure act
Parliament passed on Thursday, 26 October the income tax act, the corporate income tax act
and the tax procedure act. The three acts present the first part of the seven bill tax reform
package, with the vote on the remaining four expected on Friday, 27 October.
The new income tax act, passed with 47 votes in favour and 17 against, is aimed at reducing
the tax burden by increasing the general tax relief and reducing progressivity.
The current five tax brackets are being replaced by three and the top rate is being reduced
from 50 to 41%. The remaining two brackets have been set at 16% and 27% respectively.
The second reading of the bill on Tuesday, 24 October saw MPs passing a coalition
amendment stipulating that tax benefits for mentally or physically disabled children remain in
place after they grow up, effective already for the 2005/06 period.
The corporate income act, also passed in a 47-17 vote, gradually reduces the corporate income
tax rate from 25% to 20% until 2010.
Finally, the tax procedure act was backed by 59 MPs and rejected by one. It is designed to cut
red tape and improve the legal protection of the taxpayers.
10
MPs Pass Three More Tax Reform Acts
Parliament confirmed the value added tax (VAT) act, the property tax act and the taxation of
vessels act, which are three of the seven acts that constitute the government-sponsored tax
reform
Parliament confirmed on Friday, 27 October the value added tax (VAT) act, the property tax
act and the taxation of vessels act, which are three of the seven acts that constitute the
government-sponsored tax reform. The only tax bill left for passage is the bill on inheritance
tax, which is to be tackled on 2 November.
The VAT act, which simplifies the VAT return procedure and raises to EUR 25,000 the
threshold for paying the tax, was backed by 46 MPs while 18 voted against.
During the second reading of the VAT bill lawmakers endorsed the coalition-sponsored
amendment which demands that those that will no longer be eligible to pay the tax will have
to file a request for being exempt from paying the VAT.
The property tax act was meanwhile backed in a 48-5 vote. The act's main novelties include a
taxation of financial leasing with the provision that the tax is to be payed upon the signing of
the relevant contract.
The taxation of vessels, which introduces a tax on vessels exceeding 5 metres in length, was
opposed by only MP.
On 26 October parliament already confirmed the income tax act, the corporate income tax act
and the tax procedure act.
11
FINANCE
Insurers Vzajemna and Adriatic Slovenica Planning a Merger
Two large Slovenian insurance companies are planning a merger that would create a major
player on the Slovenian insurance market and a serious competitor for the country's leading
insurer, Zavarovalnica Triglav
Two large Slovenian insurance companies are planning a merger that would create a major
player on the Slovenian insurance market and a serious competitor for the country's leading
insurer, Zavarovalnica Triglav.
Vzajemna, the largest specialised health insurance company, and Adriatic Slovenica, the
second-largest general insurer in the country, have launched the relevant proceedings and the
merger has been endorsed by both supervisory boards, the two companies said in a joint press
release on Wednesday, 25 October.
The next step is an appraisal of the value of both insurers, which will serve as a basis for
determining the swap ratio. Since Vzajemna is a mutual insurance company, its customers
will get stakes in the merged company.
The parties to the merger talks expect considerable synergies, including the development of
premium services in health and property insurance and tighter cooperation with health care
providers.
Vzajemna and Adriatic Slovenica expect several million euros in synergies from the
streamlining of back-office tasks and IT.
The merged company is projected to collect gross annual premiums of SIT 110bn (EUR
460m).
The announcement has been welcomed by the director of the Association of Slovenian
Insurers Mirko Kaluza, who said that strengthening domestic insurers is necessary because of
mounting foreign competition.
"I support domestic ownership, although not at all costs - but if a merger of two insurers [is
positive], I endorse it," Kaluza told STA.
Meanwhile, rival company Zavarovalnica Triglav fears that an excessive monopoly may
occur on the supplementary health insurance market as a result of the merger, adding that the
merger is the business of the two companies involved.
The Insurance Supervision Agency refused to comment on the announcement for the
meantime. The two insurers have not yet asked for permission for the takeover from the
Competition Protection Office and the Insurance Supervision Agency as the move needs to be
confirmed first by the shareholders of the two companies.
Adriatic Slovenica is a subsidiary of asset management firm KD Group. It was established in
mid-2005 with the merger of Adriatic and Slovenica.
In 2005 it held a 23% market share, with premiums worth SIT 48bn (EUR 200.3m) and a
profit of SIT 1bn (EUR 4.17m).
Vzajemna is by far the country's largest health insurer, boasting a market share of 63% in
2005. It finished 2005 with a loss of SIT 2.6bn (EUR 10.8m).
The insurer wanted to re-incorporate as a joint-stock company but parliament halted the
procedure in January this year for fear that its customers might lose out.
In its effort to demutualise, Vzajemna became embroiled in a battle with the Agency for
Insurance Supervision which even revoked the licence of CEO Marko Jaklic. That decision
was subsequently overturned by the Supreme Court.
12
Central Bank Governor Points to Dangers of Volatility
Volatility in financial markets could cause a crisis for a small and open economy, even just by
a deviation of a major monetary policy, Bank of Slovenia Governor Mitja Gaspari told the
participants a conference on restructuring of the financial sector in such economies
Volatility in financial markets could cause a crisis for a small and open economy, even just by
a deviation of a major monetary policy, Bank of Slovenia Governor Mitja Gaspari told on
Thursday, 26 October the participants a conference on restructuring of the financial sector in
such economies.
Slovenia, an example of small and open economy, has in the past few years become heavily
involved in economic globalisation, Gaspari said at the central bank-organised event.
The liabilities of the Slovenian private sector towards companies abroad already correspond
to 80% of GDP, up by a half since five years ago.
The amount of claims meanwhile reached 60% of the GDP, up from 40% five years ago,
Gaspari revealed.
Furthermore, 51% of all liabilities and 33% of all claims are in the finance sector, a reflection
on the rapid strengthening of financial integration.
According to Gaspari, in order to reap the benefits of financial integration there should be at
least a minimal coordination of economic policies.
However, this risks hampering competition between various economic policies and
undermining the efforts to preserve the stability of the domestic financial system with various
instruments, he said.
Slovenica Supervisor Says Merger with Vzajemna Necessary
Commenting on the announced merger of Slovenia's largest mutual insurer Vzajemna and the
country's second largest insurance company Adriatic Slovenica, Janez Bojc, Adriatic
Slovenica's chief supervisor, told the daily Dnevnik o that the move would enable Vzajemna to
survive
Commenting on the announced merger of Slovenia's largest mutual insurer Vzajemna and the
country's second largest insurance company Adriatic Slovenica, Janez Bojc, Adriatic
Slovenica's chief supervisor, told the daily Dnevnik on Friday, 27 October that the move
would enable Vzajemna to survive.
"In a way, Vzajemna is dying. It is not able to carry out a capital increase, it is not clear how it
will be privatised, it will have difficulties coping with the market situation," assessed Bojc,
who is also the deputy manager of KD Group, which owns Adriatic Slovenica.
The two insurers are to merge with Vzajemna transferring its property to Adriatic Slovenica.
Its business, employees and customers are to go over to Adriatic Slovenica with the customers
of Vzajemna, a mutual insurance company, being reimbursed through stakes in the merged
company, Bojc explained.
Adriatic Slovenica is to issue new shares at the value corresponding to the value of Vzajemna,
he added.
Vzajemna is severely limited in terms of its operations given that it is only licensed for
supplementary health and accident insurance, Bojc said.
He added that the Agency for Insurance Supervision was keeping Vzajemna from expanding
its activities due to doubts concerning its solvency. "To put it mildly, Vzajemna is in a
depressive state," Bojc summed up.
According to him, a merger with Adriatic Slovenica would primary benefit the members of
Vzajemna, as it would render Vzajemna more competitive, enabling its customers to pay
lower premiums and sell their shares if they feel like doing so.
Adriatic Slovenica is a subsidiary of asset management firm KD Group. It was established in
mid-2005 with the merger of Adriatic and Slovenica.
13
In 2005 it held a 23% market share, with premiums worth SIT 48bn (EUR 200.3m) and a
profit of SIT 1bn (EUR 4.17m).
Vzajemna is by far the country's largest health insurer, boasting a market share of 63% in
2005. It finished 2005 with a loss of SIT 2.6bn (EUR 10.8m).
The insurer wanted to re-incorporate as a joint-stock company but parliament halted the
procedure in January this year for fear that its customers might lose out.
In its effort to demutualise, Vzajemna became embroiled in a battle with the Agency for
Insurance Supervision which even revoked the licence of CEO Marko Jaklic. That decision
was subsequently overturned by the Supreme Court.
KD Holding sells its 20% stake in newspaper publisher Delo
KD Holding, the investment arm of asset management firm KD Group sold its 20% stake in
newspaper publisher Delo to the banks Abanka and Probanka in a deal worth SIT 4.2bn
(EUR 17.5m)
KD Holding, the investment arm of asset management firm KD Group, on Friday, 27 October
sold its 20% stake in newspaper publisher Delo to the banks Abanka and Probanka in a deal
worth SIT 4.2bn (EUR 17.5m).
KD Holding offloaded the stake at SIT 31.600 (EUR 131.86) per share, which is much lower
than the price it paid for the stake in November 2005 (SIT 37.910/EUR 158.20 per share).
However, this is still more than the SIT 26,500 (EUR 110.58) closing price of Delo on the
Ljubljana Stock Exchange on 27 October.
KD Group said in a press release that it had entered Delo wanting to eventually become a
strategic owner. However, since it has been unable to increase the stake despite active efforts,
it decided to call it quits.
The Delo management board said that the decision was the owner's to make. Regardless of the
change in shareholder structure, the management will continue to strive towards the set
objectives, a press release from Delo reads.
KD Holding acquired Delo last November from asset management firm Infond Holding in
exchange for a 4.16% stake in grocer Mercator.
The arrival of KD Group in Delo also marked the beginning of major personnel changes at the
top of the publisher, which ended with the appointment of Danilo Slivnik, then editor of the
right-leaning weekly Mag, to the top executive post.
In a related development, KD Group and its subsidiaries sold just under 4% of food company
Droga Kolinska in five deals worth a combined SIT 1.8bn (EUR 7.5m).
Jure Mikuz of KD Group's brokerage arm KB BPD, told the business daily Finance that the
sale was carried out because this was a good moment to offload. "We believe that we can earn
better returns with other securities," he said.
Mikuz did not wish to disclose the buyer.
There has been a flurry of merger and acquisition activities at KD Group recently: in addition
to the bid for Dezelna banka, the group is also behind the announced merger of insurer
Adriatic Slovenica, its subsidiary, with mutual health insurer Vzajemna.
Ljubljana Stock Exchange
The SBI 20 index closed the week 112.89 points (1.94%) higher at 5,929.54
A surprise takeover announcement was the catalyst of a bullish run for Slovenian blue chips
last week. The SBI 20 index closed the week 112.89 points (1.94%) higher at 5,929.54.
The announcement by Ibiko, a small real estate management firm, that it would publish a
takeover bid for conglomerate Sava sent the share of the Kranj-based company soaring and
set investors into a buying rush.
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Apart from Sava's 6% gain - it ended the week at SIT 51,205 (EUR 213.67), well above the
SIT 49,500 (EUR 206.56) Ibiko said it would offer - the excitement showed in the robust
volumes, which stood at SIT 12.7bn (EUR 53m).
However, 64% of that came in block deals, foremost due to deals struck by asset management
firm KD Group in selling its 20% stake in newspaper publisher Delo and a 4% stake in food
company Droga Kolinska.
Karl Lipnik of the Ilirika brokerage said that he expected the group to use the EUR 25m it got
from the transactions to acquire Dezelna banka Slovenije, Slovenia's 12th largest bank.
As if that was not enough action for a week, bread and pasta maker Zito raised the stakes in
the battle for rival Mlinotest by going ahead with the takeover bid it announced despite
questions over the legality of the move.
The Securities Market Agency (ATVP) agency responded by telling Zito it must first get
shareholder approval since it is the target of a takeover by the family-owned bakery Pekarna
Blatnik. Blatnik is also bidding for Mlinotest and some analysts speculate it launched the bid
for Zito solely to hamper Zito's intended bid for Mlinotest.
Zito was down 1.32% to SIT 37,500 (EUR 156.48).
In the winners column, retailer Mercator did not lag far behind Sava, gaining nearly 6% to
SIT 45,122 (EUR 188.29). Lipnik believes partnership talks with Serbian retailer Rodic have
provided a boost to the share.
With the spotlight shining elsewhere, the two biggest shares, pharma compay Krka and
energy group Petrol, were more or less static: Krka lost 0.28% to SIT 185,038 (EUR 772.15),
whereas Petrol was 0.19% higher at SIT 114,318 (EUR 477.04).
Logistics group Intereuropa stood out among the losing shares, shedding 2.09% to SIT 5,979
(EUR 24.95).
The PIX investment fund index gained 109.87 points (2.28%) to 4,938.07 as popular
investment funds took their cue from the blue chips.
Meanwhile, the BIO bond index fell 0.3 points (0.3%) to 119.23.
Foreign Exchange
Mean exchange rate of the Bank of Slovenia
Euro (EUR) - SIT 239.60 (-----)
U.S. dollar (USD) - SIT 188.97 (-1.10)
Swiss franc (CHF) - SIT 150.60 (-0.35)
British pound (GBP) - SIT 357.34 (-0.34)
15
BRANCH INFORMATION
Publishers Submit Petition for Zero-Percent Book Tax
A delegation of book publishers submitted a petition with 6,200 signatures to Parliamentary
Speaker France Cukjati, calling for the abolition of the value added tax on books
A delegation of book publishers submitted on Monday, 23 October a petition with 6,200
signatures to Parliamentary Speaker France Cukjati, calling for the abolition of the value
added tax on books.
"In a most determined manner the petition calls for a zero-tax on the printed word," said Rok
Zavrtanik, the director of the publisher Sanje.
Zavrtanik, also the initiator of the petition, added that he was aware that the desired tax rate
could not be achieved over night.
"I believe this is a long-term project. A host of prejudices held by Slovenians need to be
anticipated," he added.
One of the more persistent prejudices is the one which says that the move will allow the
publishers to earn more money, he said.
This is untrue, said Zavrtanik, adding that the small size of the market and no foreign
investors make book publishing a risky affair in Slovenia.
He also pointed to the fact that the zero tax has existed for 140 years in the UK, saying that
"this is one of the reasons why English is such a prevalent and strong language nowadays".
When being handed the document, Cukjati promised that the initiators will soon be able to
present their petition in front of the appropriate parliamentary committees.
Minister Underscores Importance of Common Energy Policy
Economy Minister Andrej Vizjak has reiterated the importance of the EU forming a common
energy policy in order to deal with the increasing challenges in ensuring a stable and cheap
supply of energy
Economy Minister Andrej Vizjak has reiterated the importance of the EU forming a common
energy policy in order to deal with the increasing challenges in ensuring a stable and cheap
supply of energy.
Speaking at the Energy 06 conference in Maribor on Wednesday, 25 October, Vizjak pointed
out that a rise in prices of energy resources and relations with countries outside the EU who
provide the bloc with energy had caused a stir in recent times.
In the given circumstances it is impossible for each EU member state to sort out energy issues
alone, which is why the only solution is common policy in the field, Vizjak told the biggest
annual energy conference in Slovenia.
With the era of energy self-sufficiency well and truly over - Slovenia now gets 53% of its
energy needs from abroad - it is high time to find suitable solutions for ensuring stable and
cheap energy, Vizjak added.
According to him, Slovenia is restructuring its energy sector in a bid to improve its
competitiveness. The process will be concluded with the arrival of strategic partners with
reach in Slovenia and outside.
"Slovenia currently lacks 500 megawatts of power; in the future it will need an extra 400
megawatts," Vizjak explained. According to him, the country must therefore examine all
possible avenues for meeting demand, while the most feasible solution seems to be the
construction of a second reactor at the Krsko Nuclear Power Plant.
16
Vizjak pointed out that the government had put the plans for a second reactor in the resolution
on development projects for 2007-2023. The investment is worth EUR 2bn, which NEK will
be able to pay fully from the energy it produces, he explained.
According to Vizjak, the second reactor of the Krsko N-Plant would be able to make
electricity at 35 to 40 euros per megawatt hour, a very competitive price. However, he
reiterated that the construction of a second reactor depended largely on the construction of a
depository for radioactive waste.
Vizjak added that the government was not planning to sell its stakes in energy companies
through privatisation but rather to enable fresh supply of capital that would be used to fund
new projects. One such project is the construction of a EUR 600m thermal unit at the Sostanj
Thermal Power Plant.
He said that gradual privatisation would enable companies to become more efficient while at
the same time securing adequate funds for expansion, a key to breaking on to the wider
European energy arena.
This was echoed by general manager of Slovenia's leading power producer, HSE, Joze
Zagozen, who told the conference that his company was looking to invest in SE Europe.
According to him, HSE has earmarked more than 100 potential locations for the construction
of hydro and thermal power plants. A total of 20 of these locations are undergoing in-depth
analyses at the moment, he added.
Zagozen explained that HSE was interested in joint ventures with large European energy
investors and added that there was significant interest in the privatisation of HSE from foreign
and domestic companies.
The participants of the conference were also addressed by the head of the Directorate for
Competition at the European Commission Herbert Ungerer. He stressed that Europe was
facing a major challenge in ensuring benefits and choice for electricity users in the face of full
liberalisation of the electricity market in mid-2007.
17
COMPANIES
Zito Tops Pekarna Blatnik Bid for Mlinotest
The Ljubljana-based bread and pasta maker Zito topped a rival bid for the acquisition of
counterpart Mlinotest, offering SIT 1,680 (EUR 7.03) per share
The Ljubljana-based bread and pasta maker Zito on Monday, 23 October topped a rival bid
for the acquisition of counterpart Mlinotest, offering SIT 1,680 (EUR 7.03) per share. The
offer, trumping the one made by family-owned bakery Pekarna Blatnik, is open until 22
November. The target stake is set at 33%.
While Zito itself currently does not hold a share in Mlinotest, the associated company Pekarna
Vrhnika holds a 17.04% stake in the Ajdovscina-based bread and pasta maker. If its bid is
successful, Zito would therefore acquire at least 50.04% of Mlinotest together with the
companies it controls.
Zito also informed the shareholders of Mlinotest who had already accepted the initial bid
made by Pekarna Blatnik that the takeover act entitled them to back out to accept a rival offer.
Pekarna Blatnik offered SIT 1,600 (EUR 6.69) per share on 3 October.
According to the Ljubljana-based Zito, the takeover bid is subject to approval from the
Competition Protection Office.
Meanwhile, Zito transformed from a rival to acquire Mlinotest to a takeover target of Pekarna
Blatnik, which last week published an intention to take over the company that is several times
its size.
This could prove tricky as some interpretations of the takeover act indicate that Zito is
therefore not be allowed to bid for Mlinotest. Some analysts suggested that block Zito's bid
for Mlinotest was probably the only reason Pekarna Blatnik launched the bid for Zito.
Despite the legal questions, the Zito supervisory board decided last Friday, 27 October to go
ahead with the offer after the company entered the battle for Mlinotest on 13 October, saying
it would make a bid that would trump Blatnik's.
Iskra Avtoelektrika Launches Production in China
Iskra Avtoelektrika, the Nova Gorica-based maker of electronic components for the car
industry, has launched a plant in the Chinese city of Taicang
Iskra Avtoelektrika, the Nova Gorica-based maker of electronic components for the car
industry, has launched a plant in the Chinese city of Taicang. Iskra Suzhou Autoelectric,
which will be making starter motors, alternators and DC commutator motors, is expected to
raise output to EUR 10m next year.
The Chinese subsidiary will produce parts for the Chinese market and for Western customers
of Iskra Avtoelektrika who have production facilities in China, the company said in a press
release on Monday, 23 October. Some 35% of the output is to be exported, mainly to the US
and to other subsidiaries across the globe.
Iskra Suzhou Autolectric was incorporated in September 2005, while preparations for the
launch of production started in early 2006. The plant was officially inaugurated on Friday, 27
October by the management of Iskra Avtoelektrika and representatives of the local authorities.
"I am convinced that the expansion of all of our projects will be successful in the coming
years, making a significant contribution to the growth of the entire group," Iskra
Avtoelektrika chairman Ales Nemec was quoted as saying at the opening.
This is not the company's only venture in China: preparations are already underway for the
launch of serial production in its subsidiary Fawer Iskra, which was established in 2000 as a
joint venture with the Chinese car parts maker Fawer.
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Iskra Avtoelektrika posted profits of EUR 1.9m for 2005, down 5% year-on-year and 41%
below plans. Sales last year topped EUR 132m, which is an increase of 6% over the year
before but still 4% below the target.
Small Firm Announces Bid for Conglomerate Sava
The Slovenjske konjice-based Ibiko announced it would be offering SIT 49,500 (EUR 206.56)
per share in its bid for Sava, making Sava worth around SIT 85bn (EUR 354.7m)
In another David versus Goliath takeover announcement, a small real estate management
company has let it be known it intends to publish a takeover bid for conglomerate Sava.
The Slovenjske konjice-based Ibiko, owned by financial mogul Franc Gajsek, announced on
Tuesday, 24 October it would be offering SIT 49,500 (EUR 206.56) per share in its bid for
Sava, making Sava worth around SIT 85bn (EUR 354.7m).
Ibiko, which last year reported revenues of SIT 66m (EUR 275,000) and a profit of SIT 4.3m
(EUR 18,000), said it had already notified the Securities Market Agency of its plans.
Responding to the news, Sava, which is one of the largest companies in Slovenia, said it sees
the move as a "compliment", as it demonstrates faith in the company's vision and growth.
In a statement for STA, Sava chairman Janez Bohoric said it was impossible to make an
assessment of the seriousness of Ibiko's takeover bid.
Franc Gajsek, who is a small shareholder of Sava (holding 0.27%) as well as numerous other
Slovenian companies also refused to say more, telling STA that he is bound to secrecy by the
investors behind the deal.
This is not the first time that Gajsek has expressed interested in buying at least part of Sava.
At the AGM on 1 June 2005, he announced he would like to buy at least 25% in Sava. At the
time he claimed he was acting on behalf of foreign investors.
Bohoric said that previous announcements by Gajsek means that despite the fact that this
announcement was a surprise it was in "some respects not surprising since it came from a man
who has voiced such plans in the past".
The chairman of Sava doubts that Ibiko on its own has 400 million euros needed to buy Sava.
"Time will tell if he has the backing of a strong international financial institution," he added.
Meanwhile, analysts give Ibiko almost no chance of succeeding in the takeover bid due to
Sava's concentrated ownership structure.
Branko Jovic of the Abanka Vipa asset management unit pointed out for STA that the NFD
asset management firm holds nearly 50% of Sava together with its affiliates.
"I don't think anything substantive will come of this and I don't think Ibiko will succeed with
the announced price, which is a touch above the market price," Jovic said.
Jovic said he finds it difficult to believe that Gajsek could have secured a loan so big as to
enable him to finance the takeover on his own, which is why it is highly likely that other
investors are behind the offer.
Meanwhile, Karel Lipnik of the Ilirika brokerage said that Ibiko had increased its stake in
Sava of late, but that its total share is still minute. Lipnik added that Ibiko's demand has been
behind the recent rise in the price of Sava shares.
Sava, a conglomerate made up of 30 companies in the chemical, tourism, real estate and
investment sector, generated revenues of SIT 18.5bn (EUR 77.2m) in the first half of this
year. Its net half-year profit stood at SIT 2.7bn (EUR 11.3m).
Viator&Vektor Mulls Management Buyout
The group's ownership structure is highly dispersed at the moment and it is in the company's
interest that the group stabilises and consolidates
The management of the Ljubljana-based logistics group Viator&Vektor is thinking about
carrying out a management buyout, the company told STA on Tuesday, 24 October.
19
As the most important reason for the buyout, the managers listed motivation for improving the
business results and increase the trust into the company's functioning.
The group's ownership structure is highly dispersed at the moment and it is in the company's
interest that the group stabilises and consolidates, the managers added.
Viator&Vektor's largest owner is investment firm Infond Holding with 24.76%, followed by
the Petin company with 20%, owned by Peter Pavcek, the son of Viator&Vektor CEO Zdenko
Pavcek.
Other major owners include investment companies Zlata moneta 2 (19.58%), Proholding
(13.03%) and coach and haulage company Alpetour (7.45%).
According to the dailies Dnevnik and Delo, the management will publish its bid soon,
offering around SIT 35,000 (EUR 146.36) a share.
While that price beats the grey market price of SIT 23,000 (EUR 96.18) it is still below the
share's book value of SIT 45,000 (EUR 188.17).
According to Dnevnik, the management has set the success threshold for the bid at 75% plus
one share.
"When the decision has been made, we will publish a public bid, transparent and legal," the
company meanwhile added.
10 Slovenian Companies Make it to List of Leading Job Creators
A total of 10 Slovenian companies have made it to the list of 500 leading European companies
in terms new jobs creation
A total of 10 Slovenian companies have made it to the list of 500 leading European
companies in terms new jobs creation. The top-ranked Slovenian company on "Europe's 500"
list is retailer Engrotus, which is ranked 30th, the Brussels-based Entrepreneurs for Growth
association, which compiles the list, said on its website.
The Slovenian companies averaged annual employment and revenue growth of 27%,
respectively, between 2002 and 2005, well above the European averages of 16% and 18%, the
Imago marketing agency said in a press release on Tuesday, 24 October.
According to Entrepreneurs for Growth, the Celje-based Engrotus created 1,395 new jobs
between 2002 and 2005, which makes for employment growth of 109%. The revenues of the
2005 winner of the Gazelle award for the fastest growing company in Slovenia soared 105%
in this period.
The top-ranked Slovenian company is followed by Cistoca cleaning service with 120% job
growth (427 new jobs) and revenue growth of 106.3%. Cistoca is ranked 88th on the list and
is the only other Slovenian company among the top 100.
IT services provider Sinfonika is ranked 135th (97 new jobs), rubber products manufacturer
Siliko 245th (62), tent maker Expo Biro 336th (52), truck equipment maker Prigo 347th (38),
gaming machines maker Gold Club 368th (35), window maker Arcont IP 432nd (24), travel
agency Occasio 441st (18) and maker of insulation materials Izoterm-Plama 474th (12).
The Slovenian companies were invited to take part in the independent listing of the 500 fastest
growing Europe companies by newspaper publisher Dnevnik, which is a media partner of the
Europe's 500 project. Dnevnik is also the organiser of the Gazelle, a selection of the fastestgrowing company in Slovenia.
A total of 11 Slovenian companies were registered for Europe's 500 listing, with 10 of them
making it among the top 500, the Ljubljana-based Imago said in its press release.
The agency also points out that companies from new EU members generated more jobs than
their Western European counterparts. The most rapid growth was recorded among Lithuanian
companies (45%), followed by Slovenian companies (27%) and Latvian companies (25%).
Europe's 500 awards are to be conferred to the companies on 25 November in Vienna by
European Commissioner of Industry and Enterprise Guenter Verheugen.
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Railways Could Generate EUR 19m Loss in 2006, Supervisor Says
Railways operator Slovenian Railways faces a SIT 4.5bn (EUR 18.81m) loss by the end of the
year, said the head of the company's supervisory board Peter Verlic
Railways operator Slovenian Railways faces a SIT 4.5bn (EUR 18.81m) loss by the end of the
year, the head of the company's supervisory board Peter Verlic said in Ljubljana on Tuesday,
24 October.
In his statement, given during the board's on-going session, Verlic explained that the
Slovenian Railways recorded a loss of SIT 2.5bn (EUR 10.45m) in the first eight months of
the year.
"The matters...call for action. We have tasked the management to prepare a list of short-term
measures at once. The system needs a director general to draft a restructuring plan," Verlic
added.
The measures are expected to be discussed at the supervisory board's next session, scheduled
for 15 November, he said.
It is worrying that losses in the transport of cargo alone recorded a loss of SIT 2bn (EUR
8.36m), Verlic stressed, adding that the supervisors called on the management to draft a
precise overview of the events.
Slovenian Railways' business plan for 2006 envisages a loss of SIT 839m (EUR 3.5m),
including sales of plots, Verlic noted.
The railways operator recently lost its director general Joze Jurkovic, who resigned on 11
October, citing personal reasons.
Gorenje Sees Profits, Sales Increase Marginally
Household appliance maker Gorenje saw sales of SIT 184.7bn (EUR 770.7m) in the first nine
months of this year, up 4.2% over the year before
Household appliance maker Gorenje saw sales of SIT 184.7bn (EUR 770.7m) in the first nine
months of this year, up 4.2% over the year before. Net profit meanwhile increased by 1.5%
year-on-year and stood at SIT 3.1bn (EUR 12.9m), according to unconsolidated results.
Earnings per share were at SIT 367.3 (EUR 1.53), which is 5.5 % more than in the same
period last year, the company said in a press release on Thursday, 26 October.
Gorenje said it had expanded is presence in Eastern Europe, posting brisk sales in the Czech
Republic, Slovakia, Ukraine, Russia and Bulgaria.
Moreover, the company introduced its own brand in Great Britain, where sales increased by
40%. In Germany and France, sales of its branded products were up by a quarter.
The company pointed out that although white goods still accounted for some 84% of the sales,
revenues in heating and entertainment programmes had been growing rapidly.
The company has been pursuing its strategy of preserving production capacity in Slovenia and
seeking growth abroad.
In 2004 it acquired Czech rival Mora Moravia and this month it opened a EUR 20m factory
for refrigerators and freezers in Valjevo, Serbia.
That way Gorenje gets the status of local producer, which provides conditions for long-term
growth, the press release reads.
The results were presented to the supervisory board, which said the company performed well
and stayed on course.
Regulator Says Zito Owners Must Clear Takeover Bid for Mlinotest
The Securities Market Agency (ATVP) has ordered bread and pasta maker Zito to call a
shareholders' meeting within three days for the management to get shareholders' approval of
its decision to make a rival bid for the acquisition of Mlinotest, a company in the same line of
business
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The Securities Market Agency (ATVP) has ordered bread and pasta maker Zito to call a
shareholders' meeting within three days for the management to get shareholders' approval of
its decision to make a rival bid for the acquisition of Mlinotest, a company in the same line of
business.
Zito confirmed it had received such an order from the ATVP on Thursday, 26 October.
The Zito management published a takeover bid for Mlinotest of Ajdovscina on Monday, 23
October, topping an offer made by family-owned bakery Pekarna Blatnik. However, since
Blatnik also published an intention to acquire Zito, some analysts suggested that, under the
takeover act, Zito was not allowed to bid for Mlinotest.
The Economy Ministry, which drew up the act, said that the management of a company that is
a target of a planned takeover should not venture into deals that could jeopardise the
company's operations or incapacitate the takeover offer without the consent of the
shareholders' meeting.
Some analysts suggested that blocking Zito's bid for Mlinotest was probably the only reason
Pekarna Blatnik launched the bid for Zito, a company that is several times its size.
Zito offered SIT 1,680 (EUR 7.03) per Mlinotest share, while Pekarna Blatnik offered SIT
1,600 (EUR 6.69) per share.
Government Adopts Plan of Sale for Lendava Refinery
The sale of the 100% stake, which has a nominal value of SIT 2.6bn (EUR 10.8m), is to be
completed by the end of 2007
The government has confirmed a programme for the sale of Nafta Lendava, Slovenia's sole oil
refinery. The sale of the 100% stake, which has a nominal value of SIT 2.6bn (EUR 10.8m),
is to be completed by the end of 2007.
The programme, adopted on Thursday, 26 October, comes two months after Economy
Minister Andrej Vizjak and the boss of Russian oil giant Lukoil, Vagit Alekperov, signed a
memorandum of understanding on Lukoil's participation in the privatisation of Nafta
Lendava.
The government says it wants a buyer that will treat Nafta Lendava as a strategic investment.
In addition, it needs to have the market and financial clout to promote growth and create jobs
at the company.
The buyer will be selected in a two-stage bidding procedure. The prices will be just one
criterion, the Government PR and Media Office said in a press release.
Nafta Lendava and its subsidiaries Nafta Petrochem, Nafta Strojna, Nafta Geoterm, Eko
Nafta, Nafta Inzeniring and Nafta Informatika are on the government's 2006/07 list of state
property for sale.
Gaming Partners Present Mega Project Plans to Government
Casino operators Hit and Harrah's Entertainment unveiled an in-depth analysis of the
planned construction of a mega gaming and entertainment centre near the western Slovenian
town of Nova Gorica to government officials
Casino operators Hit and Harrah's Entertainment unveiled at Bled on Thursday, 26 October an
in-depth analysis of the planned construction of a mega gaming and entertainment centre near
the western Slovenian town of Nova Gorica to government officials. Finance Ministry State
Secretary Andrej Sircelj hailed the meeting as "injecting a new impetus into the talks".
Sircelj, who heads the government's team leading negotiations with Hit and Harrah's, said that
the talks would continue in a month's time, after the government responded to the views
presented by the companies.
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In a statement issued after the talks, Sircelj said it was still difficult to say when the gaming
centre estimated at EUR 700m could be built. "There are many issues that still need to be
sorted out, including the acquisition of land."
Moreover, Sircelj said that another issue at hand was the need for Slovenia to create suitable
conditions for the investment. "The talks were successful in this respect, after all the
government has promised to present its stance within a month," he added.
Sircelj would not speak about the conditions made by Harrah's in order to realise the project.
There are no demands - we are engaged in talks that are taking place in a constructive
atmosphere, Sircelj told the press.
He said it was in the best interest of the negotiations that they be given time. The agreement
will be reached as soon as possible, but probably not as early as in a month or two, said
Sircelj.
The Finance Ministry official did not wish to disclose where the views of the two sides
diverge. Asked whether he supported the lowering of the tax on gaming and the adoption of
provisions allow foreigners to own more than 20% in a gaming venture as currently set down
in legislation - conditions that Harrah's is reported to have made for the project - Sircelj said
talks were dealing with these issues.
"Of course we expect new investments to bring additional jobs, greater development of
certain regions as well as the whole of Slovenia and that all this will have a positive impact on
economic growth," he said.
Meanwhile, Hit chairman Niko Trost echoed the satisfaction with the talks. "True to our
promise we have compiled a project analysis that deals with what we promised, including the
programme, line of products, marketing strategy, target markets and distribution channels".
He claimed the analysis confirmed the rationale behind the project.
Richard Mirman, senior vice-president at Harrah's Entertainment, was also tight-lipped about
the nature of the talks with the government as well the company's plans.
He said his company was willing to invest as much as was needed to make the project a
success since it was convinced that the location was excellent. Mirman added that it was too
early to determine the exact value of the investment as there was still a lot to do.
Hit and Harrah's formed a joint venture in November 2005. The initial plans for the project
included a high-class hotel with 800 to 1,200 rooms and a casino stretching over 4,500 sq.
metres with 1,500 slot machines and 70 tables.
Slovenian Telco Bidding for Kosovo Mobile License
Telco Telekom Slovenije is entering bidding for the second mobile operator license in the
province of Kosovo through a local subsidiary
Telco Telekom Slovenije is entering bidding for the second mobile operator license in the
province of Kosovo through a local subsidiary. The Kosovo Ministry of Transport, Post and
Telecommunications published the call for bids on Thursday, 26 October, setting EUR 20m as
the lowest price for the 15-year license.
One of the main criteria in selecting the winner, according to Kosovo Minister of Transport
and Telecommunications Kemal Ahmeti, will be the speed with which it will cover the
province with its network, local media report.
Moreover, the quality and quantity of services offered as well as the experience of the bidder
in the field of mobile telecommunications will also be important factors in the selection.
According to Mobitel, Telekom Slovenije's mobile arm and the biggest mobile operator in
Slovenia, Telekom's local subsidiary Ipko.net will be filing a bid.
Bidding will be open until 17 January 2007.
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This is the second time Kosovo authorities have issued a call to tenders for the second mobile
license, with the initial selection process annulled after having been won by Mobitel and local
partner Mobikos.
The reason for the annulment was "serious flaws" in the selection process that were
supposedly established in an independent audit.
Although Mobitel appealed UNMIK's decision to annul the tender - it was backed by the
Telecommunications Regulatory Authority, which said the tender process was carried out
correctly - and even won its case in court, the UN administration nevertheless refused to grant
the Slovenian operator frequencies for the network.
To ensure that no such complications happen this time around the Kosovo government has
asked Swedish consultancy firm Stela Con to aid it with the tender process. It has already
drafted the call to applications.
Apart from Mobitel's local partner, five other companies entered bids for the second mobile
services license in Kosovo back then, among them Swedish Tele 2, the consortium IPKO,
linked to the US Western Wireless International, Albacell (Norwegian Telenor and Siemens),
and Kostel (Orange Group).
Mobitel's biggest rival for the licence was US company Western Wireless International.
Local media reports had suggested that the US company relied on respected US lobby groups
to pressure UNMIK and the Kosovo government into invalidating the bidding after it lost out
to Mobitel.
Adria Follows Competitors in Introducing E-tickets
Flag carrier Adria Airways has announced it will introduce e-ticketing as of mid-November
Flag carrier Adria Airways has announced it will introduce e-ticketing as of mid-November.
The service is just one of the novelties for the company, which will also launch in December a
route between Ljubljana and Kiev.
According to Adria Airways, passengers will no longer have to make the journey to the travel
agent's to buy tickets. Electronic tickets will be available for all Adria's direct flights.
"The e-ticket is an important step forward for Adria Airways, which brings our services closer
to the passenger," Adria's marketing director Tomaz Kostanjsek said at a press conference in
Ljubljana on Thursday, 26 October.
Adria will operate around 180 flights a week to 19 destinations, mostly in Europe, in its
winter schedule.
In line with the schedule, it will service the Ljubljana-Frankfurt route 25 times a week and the
Ljubljana-Vienna route 26 times a week. Moreover, Adria's planes will make three journeys a
day to Munich.
Other destinations include Paris, Brussels, Zurich, Istanbul, Pristina, Skopje, Moscow,
Sarajevo, London, Tirana, Warsaw, Amsterdam, Copenhagen and Rome.
It also plans charter flights to Cairo, Hurghada and Sharm El-Sheik in Egypt, as well as
Larnaca in Cyprus.
Petrol Ups Revenues, Profits in First Nine Months
Energy group Petrol generated revenues to the tune of SIT 342bn (EUR 1.43bn) in the first
nine months of 2006
Energy group Petrol generated revenues to the tune of SIT 342bn (EUR 1.43bn) in the first
nine months of 2006, up 12% year-on-year. Its profit soared by 30% to SIT 9.5bn (EUR
39.72m), the company said on Friday, 27 October.
Petrol's net profit, however, also includes the SIT 996m (EUR 4.16m) that the group received
through a claim against the state and SIT 1.35bn (EUR 5.64m), stemming from the sale of
Petrol's stake in investment firm NFD.
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The group managed to sell a total of 1,453,000 tonnes of products, 1% over the target and in
line with the sale in the January-September period in 2005.
Revenues from Petrol's supplementary activities totalled SIT 37.3bn (EUR 156m), topping the
target by 11% and last year's figures by 13%.
Slovenia's largest fuel trader operated 356 gas stations in total, including 303 in Slovenia, 33
in Bosnia-Herzegovina, 19 in Croatia and one in Serbia.
Bavcar Receives Second Mandate as Istrabenz CEO
According to a press release by Istrabenz, its supervisors established that in his past five
years in office Bavcar successfully headed and coordinated the company's management board
Supervisor of Istrabenz, the food, energy and tourism conglomerate, awarded to CEO Igor
Bavcar another six-year term in office on Friday, 27 October.
Istrabenz is to have a two-member management in the future, with Srecko Kenda continuing
on the side of Bavcar, whereas Aldo Gabrijel is to take on the role of adviser to the CEO. The
board's fourth member Niko Trost already left in March to take over as CEO of gaming
company Hit.
According to a press release by Istrabenz, its supervisors established that in his past five years
in office - he took over in June 2002 - Bavcar successfully headed and coordinated the
company's management board. During this period Istrabenz grew into a group with 60
companies, employing almost 5,000 people.
"My decision for a two-member management board aims it strengthening a second current in
the company," Bavcar explained for the daily Delo on Saturday, 28 October.
The management board's new term in office begins on 1 June 2007.
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FAIRS, CONGRESSES
Dutch, Slovenian Officials Stress Labour Mobility
Dutch Ambassador John C.M. Groffen and Slovenian Labour Minister Janez Drobnic
stressed the importance of labour mobility for reaching high employment levels, as they
addressed a conference on mobility in Ljubljana
Dutch Ambassador John C.M. Groffen and Slovenian Labour Minister Janez Drobnic stressed
the importance of labour mobility for reaching high employment levels, as they addressed a
conference on mobility in Ljubljana on Tuesday, 24 October.
According to C.M. Groffen, the EU lacks the necessary labour force, the bloc's population is
ageing and the number of highly skilled workers is too low.
The EU moreover has a 9% unemployment rate, which reaches 18% for the under 25-year
olds, the Dutch ambassador told the participants of an international conference on
entrepreneurial aspects of mobility.
Reaching a high level of mobility, meaning the establishment of a "continental labour market"
would quickly address the issue of the lack of workers, he added, pointing out that in a
globalised mobile world the workers have to be mobile as well.
Labour, Family and Social Affairs Minister Janez Drobnic meanwhile said that Slovenia not
only lacks mobility in certain sectors of the economy, but also with the young.
"Mobility should start during studies", Drobnic added and called for "simplifying the
procedures for aliens, regulate credit-based education, certification and acquiring
qualifications for both, the employed and the unemployed".
Drobnic also welcomed the Netherlands' decision to abolish the restrictions to the free flow of
labour in certain sectors.
Innovation Conference Calls for More Links
According to the state secretary of the Economy Ministry, the share of companies active in
innovation reaches 21% in Slovenia, compared to the 44% average in the EU
Links between individual players in the process of innovation is a necessity unless the country
only wants to have partial success in the field, Andrijana Starina Kosem of the Economy
Ministry told the participants of a conference on innovation on Tuesday, 24 October.
According to the ministry's state secretary, the share of companies active in innovation
reaches 21% in Slovenia, compared to the 44% average in the EU.
Launching the three-day Heureka06! conference in Ljubljana, Starina Kosem added that
Slovenia also lags behind in added value per employee with EUR 24,000, compared with the
EU's EUR 75,000.
She also pointed to the 5.8% share of high technology products in Slovenia. The EU's average
is 17.8%, in Japan it stands at 22%, while the US manages 27%, she said.
This is why five innovation awards that were awarded by the Slovenian forum of innovators
are so much more important, she added.
The awards went to ski equipment manufacturer Elan for its Speedwave skis, to household
appliance components maker Domel for designing an ultra silent turbocompressor engine for
vacuum cleaners, manufacturing lines producer Boni-mat for its line of circular transporters,
to industrial equipment manufacturer Litostroj E.I. for its MRO system to determine the
resonance wobble of a hydro power plant rotor and to home appliance maker Gorenje for its
smart table refrigerator.
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Slovenia Should Encourage Women Entrepreneurs
Slovenia is among the EU countries with the lowest share of female entrepreneurs
The closing day of a congress of the World Association of Women Entrepreneurs saw
participants discussing the situation of women entrepreneurs in different countries. Only 20%
of the entrepreneurs in Slovenia are women, the association's vice-president Marta Turk said
at the press conference following a debate on Tuesday, 24 October.
This places Slovenia among the EU countries with the lowest share of female entrepreneurs,
Turk explained. In France, for example, the share is 33%, while the US are topping the list
with more than a 50% share of women entrepreneurs.
Slovenia should therefore encourage women entrepreneurship, Turk said, proposing the
establishment of women enterprise centres, where women would get advice and also support,
for example with day care for their children.
However, in the last years the number of young female entrepreneurs in Slovenia has been
growing, Turk added.
The association is a voluntary organisation, established in 1945 in France. Slovenia joined in
1993 and this year it organised the association's 54th annual congress, which started on 21
October and brought together 135 women from around 30 countries.
Congress Discusses Road Building Experience
The congress on roads and transport was opened by Transport Minister Janez Bozic, who
presented Slovenia's key projects on motorways, national roads and railways infrastructure
as well as in the areas of maritime and air transport
This year's eighth congress on roads and transport will not focus that much on the
achievements in road construction in Slovenia bur rather evaluate the experience gained in
road construction so far, Ana Petkovsek of the congress' programming committee told the
press in Portoroz on Wednesday, 25 October.
Petkovsek added prior to the congress' launch that this year's event will be taking place at a
time that Slovenia is at a cross-roads as far as road construction is concerned. This is a crucial
time since the competition of Slovenia's motorway network is nearing, while a new transport
vision is emerging in Europe, she said.
The congress was opened by Transport Minister Janez Bozic, who presented Slovenia's key
projects on motorways, national roads and railways infrastructure as well as in the areas of
maritime and air transport.
The government's projects aim to give Slovenia safe, rapid and well-developed transport
infrastructure and place the country on the map of European transport corridors, Bozic added.
State Counting on Private Funds for Road Construction
Projections until 2023 suggest Slovenia will need EUR 6.3bn for the modernisation of road
infrastructure until 2023 on top of the existing earmarks
Projections until 2023 suggest Slovenia will need EUR 6.3bn for the modernisation of road
infrastructure until 2023 on top of the existing earmarks. Since it is impossible to secure all
this money from the budget, private funding will have to be brought in, a conference on road
transport has been told.
The construction of three sets of expressways and additional motorway sections (which are
envisaged in the strategy of national development projects until 2023) will require EUR
2.8bn.
This is more than the value of the entire programme of motorway construction since 1994,
Gregor Ficko, state undersecretary at the Transport Ministry, told the conference on Thursday,
26 October.
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The expressways (dubbed the development axes) are estimated at EUR 1.45bn, of which 14%
is to come from private sources.
The additional motorway sections meanwhile are worth EUR 1.36bn, with 35% of the funds
expected to be provided by private entities.
The participants of the panel agreed that private funds were in ample supply with Vili
Zavrlan, the head of the National Directorate for Roads, saying there was more foreign and
domestic capital.
Since the only way the investors can earn a return on investment is through tolls, the
participants agreed that roads which would be built with private capital would have to be toll
roads.
"Only toll roads will be built with private capital," the managing director of the Slovenian
Motorway Company (DARS) Lado Prah added.
Economist France Krizanic meanwhile said that even cities or municipalities may decide to
finance road construction.
They could found a company which takes out loans on the capital market and builds a road,
Krizanic told STA on the margins of the conference.
Abdon Peklaj, a member of the DARS board, meanwhile indicated that his company, which
manages Slovenian motorways, might be interested in constructing roads on the development
axes.
"Over the years DARS has gathered a lot of experience and know-how...When the time comes
to make a decision, we will definitely be thinking about that," he told STA.
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SLOVENIA IN BRIEF
Local Government Minister Discusses Euroregion Plans in Trieste
Plans for an alliance of regions from Italy, Slovenia, Austria, Hungary and Croatia dominated
talks Local Government and Regional Policy Minister Ivan Zagar held with governor of
Italy's Friuli-Venezia Giulia region Ricardo Illy in Trieste on Tuesday, 24 October.
Slovenia, Hungary Boost Police Cooperation
Slovenian Interior Minister Dragutin Mate and his Hungarian counterpart Jozsef Petretei
signed an agreement on cross-border police cooperation in Brdo pri Kranju on Wednesday, 25
October. The agreement deals with all areas of police work, according to Mate.
Slovenian, French Ministers Discuss Environment Cooperation
Slovenian Environment and Spatial Planning Minister Janez Podobnik and his French
counterpart Nelly Olin have agreed that the countries will exchange exhibitions on their
natural heritage and that Slovenia can count on the help of French experts during its stint as
EU president in the first half of 2008.
Slovenian Railways Publish Call for Director General
The supervisory board of the Slovenian Railways published a call for applications for the post
of director general in the daily Delo on Thursday, 26 October. The call comes after the
previous head of the state railways operator, Joze Jurkovic, resigned on 11 October for
personal reasons.
Minister: Schengen Entry Feasible in 2007 Pending Council Decision
Slovenian Interior Minister Dragutin Mate is confident that Slovenia could join the Schengen
passport-free zone by the end of 2007 if the EU Council endorses in December the proposal
that the Portuguese Schengen Information System (SIS) be implemented in the EU
newcomers.
Demining Fund Gets Another Donation from Switzerland
The Slovenian-run International trust Fund for Demining and Mine Victims Assistance (IFT)
has received over EUR 310,000 from Switzerland for demining activities in BosniaHerzegovina. This brings the amount of Switzerland's donations to the ITF since 1999 to US$
3.2m.
Minimum Wage Act Gets Majority Support
The National Assembly has endorsed by 49 votes against 16 the minimum wage act. The
revote on Thursday, 26 October came after the law was recently vetoed by the National
Council.
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