Slovenia Business Week no. 40, December 11, 2006
Table of Contents:
HEADLINES ............................................................................................................................. 3
Government Adopts 2006-2009 Stability Programme ........................................................... 3
Exports Slightly Up in October .............................................................................................. 3
Slovenian Trade Offices Abroad to Launch Operations in 2007 ........................................... 4
INTERNATIONAL COOPERATION ...................................................................................... 5
Rupel Meets Lavrov and Rocen ............................................................................................. 5
New Greek Ambassador Presents Credentials ....................................................................... 5
Slovenia Honours Iceland FM with Golden Order ................................................................ 5
Stiglic Nominated Slovenian Ambassador to UN .................................................................. 6
Slovenia and Rwanda Establish Diplomatic Ties .................................................................. 6
EUROPEAN UNION ................................................................................................................. 7
Ministry Presents New EU Research Framework Programme .............................................. 7
Slovenia Favours Updating EU Customs Code, Minister Says ............................................. 7
Cukjati: EU Needs Effective Common Foreign Policy ......................................................... 8
PM Says His Line-Up Fit to Lead EU .................................................................................... 8
FM Labels 18-Month EU Presidency Programme Very Ambitious ...................................... 9
STATISTICS/FORECASTS .................................................................................................... 10
November Turnover on the Stock Market up 46% Y/Y ...................................................... 10
Industrial Output Up 10.7% Y/Y in October ....................................................................... 10
Factory Gate Prices Stay Put at Monthly Level ................................................................... 10
Q3 Growth at Robust 5.6% .................................................................................................. 11
FINANCE................................................................................................................................. 12
Minister Pledges Speedy Plan for State Withdrawal from NLB .......................................... 12
Finance Minister Sanguine about Euro Changeover ............................................................ 12
Two Candidates Apply for Central Bank Governor............................................................. 12
Former ECB Official Praises Achievements, Warns of Pitfalls........................................... 13
Belgium's KBC Awaiting Govt Answer over NLB Ownership ........................................... 13
NKBM Ready for the Euro Changeover .............................................................................. 13
Tax Administration Promises Simpler Income Tax Returns ............................................... 14
Central Bank Leaves Key Interest Rates Unchanged ........................................................... 14
ECB Chief Praises Slovenia's Preparations for the Euro ..................................................... 15
Government Tells Ministries Not to Use Euro Switch to Raise Fees .................................. 15
Ljubljana Stock Exchange .................................................................................................... 16
Foreign Exchange ................................................................................................................. 16
BRANCH INFORMATION .................................................................................................... 17
Retailers Raise Prices in Expectation of Euro ...................................................................... 17
Ski Lift Operators not Alarmed by Warm Weather ............................................................. 17
Business Chambers Ask Companies to Pledge Price Restraint ........................................... 17
Slovenian Tourism to Focus on Quality and Innovation ...................................................... 18
Modernisation Contract Signed for Part of 5th Route Section ............................................. 18
COMPANIES ........................................................................................................................... 20
Government Answer on Gaming Deal Not yet Ready, Bajuk Says ..................................... 20
Julius Fund Acquires Steklarna Rogaska Glassworks ......................................................... 20
Publisher DZS Acquires Montenegrin TV Station .............................................................. 21
Rogaska Glassworks Comes Out of Bankruptcy Protection ................................................ 21
No Company Good Enough for 2006 Business Excellence Award ..................................... 22
Airport Operator Plans EUR 9.6m in Profit in 2007 ............................................................ 22
Pekarna Blatnik and Zito Confirm Failed Takeover Bids .................................................... 23
Mobitel Gets New Board of Directors ................................................................................. 23
Major Prevent Global Owners Embark on Ownership Consolidation ................................. 23
SLOVENIA IN BRIEF ............................................................................................................ 25
EU Justice Ministers Agree to Set Up Human Rights Agency ............................................ 25
Minister Expects Slovenia to Join Schengen Zone in 2007 ................................................. 25
Minister Praises Vocational Education in Slovenia ............................................................. 25
Slovenian Ambassador to UN Bids Farewell to Annan ....................................................... 25
Slovenian Chef Tantalises Taste Buds in New York ........................................................... 25
2
HEADLINES
Government Adopts 2006-2009 Stability Programme
This is the first Stability Programme that Slovenia has had to draft after it received the final
green light on 11 July to join the eurozone on 1 January 2007
The government on Thursday, 7 December adopted the Stability Programme 2006-2009
which explains how Slovenia will meet the conditions of the eurozone Stability and Growth
Pact. "Things in Slovenia are going better than we expected a year ago," Finance Minister
Andrej Bajuk told the press.
This is the first Stability Programme that Slovenia has had to draft after it received the final
green light on 11 July to join the eurozone on 1 January 2007.
The document defines economic policy measures until 2009 taking into account the latest
forecasts by the Institute for Macroeconomic Analysis and Development, the government
think-tank.
According to projections, employment will increase and the Labour Force Survey
unemployment will go down, Bajuk said.
The budget deficit is to drop to 1% of GDP in 2009 and the general government debt hover
around 28% of GDP.
By the end of 2006 indebtedness is projected to reach 28.5% of GDP, which Bajuk said was
far from the Maastricht criterion of 60% of GDP.
The government took full account of the effects of tax reform and the projected increase in
rail infrastructure investments, Bajuk said.
Growth projections until 2013 suggest that the Slovenian economy will expand by about 4% a
year in the absence of additional measures or economic policies.
"If we are ambitious in implementing new reforms, we can however expect growth to the tune
of 5.3%," Bajuk said.
Bajuk also noted that the sustainability of the pension and health systems is guaranteed until
2020, but this is no longer true after 2050.
He said certain measures will have to be taken and youth of today can expect to work longer
than their parents. "The fact is that there are not enough young people so we must tackle these
issues immediately."
Bajuk added that Slovenia will have "very serious problems" if it does nothing. The sooner
things get done, the less it will hurt.
Yet Bajuk also added that the government was not drafting any laws that would raise the
retirement age.
Exports Slightly Up in October
Slovenia's exports of goods amounted to EUR 1.54bn in October
Slovenia's exports of goods amounted to EUR 1.54bn in October, up 19% year-on-year.
Imports increased by 18.7% to EUR 1.64bn, according to preliminary data released by the
National Statistics Office on Friday, 8 December.
The October trade gap stood at EUR 103.5m (down from EUR 107.1m in September), while
the export-import ratio went up to 93.7% from 93.3% in September.
Exports in the first ten months of 2006 amounted to EUR 13.81bn, up 16.3% over the same
period last year. Imports meanwhile rose by 16.2% to EUR 14.81bn. The trade gap stood at
just over EUR 1bn and the export-import ratio at 93.2%.
Slovenia's imports from the EU increased by 14.1% to EUR 11.83bn, while imports from
other countries rose by 25.4% to EUR 2.98bn.
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Exports into EU member states went up by 17.5% to EUR 9.48bn. The remaining EUR
4.32bn (up 13.9%) was exported to other markets.
Slovenian Trade Offices Abroad to Launch Operations in 2007
Public Agency for Entrepreneurship and Foreign Investment (JAPTI) says the first four
Slovenian trade offices abroad are to be launched in January 2007 in Milan, Duesseldorf,
Bucharest and Istanbul
Public Agency for Entrepreneurship and Foreign Investment (JAPTI) says the first four
Slovenian trade offices abroad are to be launched in January 2007 in Milan, Duesseldorf,
Bucharest and Istanbul.
The agency is to open four more offices abroad next year, their locations depending on the
needs of Slovenian companies and the potential for closer bilateral ties.
Trade offices in Milan in Italy and Duesseldorf in Germany opened in November, while the
office in Turkey's Istanbul is due to open in December, followed by the one in the Romanian
capital in January 2007.
According to the agency, the representatives have already been appointed. Lara Cernetic is to
head the Milan office, Janez Trkman the one in Duesseldorf, Daniel Vehovar the Istanbul
office and Branko Grgic the office in Bucharest.
Each office will have three employees, two of them from Slovenia and an expert on
entrepreneurship, marketing and investment from the host country.
The funding for the offices is provided by the Finance Ministry, which earmarked SIT 144.7m
(EUR 0.60m) for the purpose this year.
The agency in addition plans to introduce chargeable services so that the offices will cover
10% of their costs with the sale of services in the second year of operations and 20% within
four years.
The office will provide assistance to all small and medium-sized companies in entering the
market, expanding their exports and investment.
Its job will also be to promote Slovenia as a market attracting foreign direct investment,
mainly by providing advice and the required information to potential investors.
Some of the services for Slovenian companies will be free, while more demanding specific
services, such as detailed market analyses, search for suppliers and subcontractors, will be
chargeable.
The overall budget for internationalisation, direct investment and trade offices abroad
amounts to SIT 500m (EUR 2.09m), with an additional SIT 97m (EUR 0.40m) coming in the
form of EU-funded international projects.
4
INTERNATIONAL COOPERATION
Rupel Meets Lavrov and Rocen
Foreign Minister Dimitrij Rupel met his Russian and Montenegrin counterparts on the
sidelines of the OSCE ministerial in Brussels
Foreign Minister Dimitrij Rupel met his Russian and Montenegrin counterparts on the
sidelines of the OSCE ministerial in Brussels on Tuesday, 5 December. While Rupel invited
Russia's Sergey Lavrov to visit Slovenia, he told Milan Rocen that Montenegro had Slovenia's
support on its path towards the EU and NATO.
Rupel and Lavrov assessed relations between the two countries as very good, according to a
press release by the Foreign Ministry.
The pair established that cooperation was increasing in all areas, particularly in economy.
Rupel also invited his Russian opposite number to visit Slovenia and mark the 15th
anniversary of the establishment of diplomatic relations between the countries.
The pair moreover signed an annual plan of working consultations between the two foreign
ministries and called for strengthening cooperation within the Forum of Slavic Cultures.
The Montenegrin FM meanwhile thanked Rupel for Slovenia's support on its path towards the
EU. Rocen and Rupel also praised good and friendly relations and cooperation between
Montenegro and Slovenia.
Rupel announced Slovenia's support would continue. While many projects involving the
transfer of know-how and experience have already been carried out, this process should go
on, also through the Slovenian-run Centre for European Perspective, which has recently
organised training for Montenegrin diplomats.
The pair also exchanged their views on the situation in the region, stressing that the prospect
of a European future for the countries in the Western Balkans presents the basis for stability
and general development.
New Greek Ambassador Presents Credentials
Meeting Coundoureas, Drnovsek expressed satisfaction over the relations between Greece
and Slovenia, suggesting the two nations could also cooperate within the EU and NATO,
especially in terms of contributing to stability in the Western Balkans
President Janez Drnovsek received on Wednesday, 6 December the credentials of the new
Greek Ambassador to Slovenia Dionyssios Coundoureas, the president's office said in a press
release.
Meeting Coundoureas, Drnovsek expressed satisfaction over the relations between Greece and
Slovenia, suggesting the two nations could also cooperate within the EU and NATO,
especially in terms of contributing to stability in the Western Balkans.
Drnovsek also stressed that the heritage of the Greek antiquity was the cultural heritage of
whole of Europe and that the modern world cold learn a lot by drawing from it. He also once
more invited Greek President Karolos Papoulias to visit Slovenia next year.
Coundoureas presented a copy of his credentials to State Secretary at the Foreign Ministry
Andrej Ster.
Slovenia Honours Iceland FM with Golden Order
Slovenia has honoured Jon Baldvin Hannibalsson, the former foreign minister of Iceland,
with the Golden Order for Service, in recognition of his role in securing support for
Slovenia's independence and international recognition
5
Slovenia has honoured Jon Baldvin Hannibalsson, the former foreign minister of Iceland, with
the Golden Order for Service, in recognition of his role in securing support for Slovenia's
independence and international recognition.
According to a press release from the Foreign Ministry, Hannibalsson became the first high
representative of Iceland to visit Slovenia in October 1992, paving the way to a continuous
dialogue and friendship between the two countries.
Iceland was one of the first countries to acknowledge the new political reality of the former
Yugoslavia.
On 19 December 1991 it became the first European Economic Area member state to
recognise without restrictions the sovereignty and independence of Slovenia.
Iceland was also a consistent supporter of Slovenia's efforts to become an equal member of
the international community. It was a key sponsor of the UN resolution which led to
Slovenia's membership in the organisation on 22 May 1992.
The order was conferred on Hannibalsson on behalf of President Janez Drnovsek by
Slovenia's nonresidential Ambassador to Iceland Rudolf Gabrovec.
Stiglic Nominated Slovenian Ambassador to UN
To become final, the nomination must be endorsed by president Janez Drnovsek
The parliamentary foreign policy committee on Friday, 8 December unanimously confirmed
the nomination of Sanja Stiglic as the new Slovenian Ambassador to the United Nations.
Stiglic will replace the third Slovenian Ambassador to the UN, Roman Kirn, whose four-year
term in office concludes this month, Radio Slovenija reported.
Stiglic is a career diplomat had previously who worked in the team of former Slovenian
ambassador to the UN Danilo Tuerk.
She has recently worked at the Foreign Ministry, where she was in charge of the department
for relations with the countries of North, West and Central Europe. This will be her first stint
as ambassador, Radio Slovenija reported.
To become final, the nomination must be endorsed by President Janez Drnovsek.
Slovenia and Rwanda Establish Diplomatic Ties
The outgoing Slovenian Ambassador to the UN Roman Kirn and his Rwandan counterpart
Joseph Nsengimana have exchanged charters on the establishment of diplomatic relations
between the two countries
The outgoing Slovenian Ambassador to the UN Roman Kirn and his Rwandan counterpart
Joseph Nsengimana have exchanged charters on the establishment of diplomatic relations
between the two countries.
At the meeting in New York on Friday, 8 December the ambassadors also discussed the
current developments at the UN, while Nsengimana acquainted Kirn with the work of the
International Criminal Tribunal for Rwanda, the Slovenian mission at the UN said on
Saturday, 9 December.
Nsengimana expressed his regret that in ten years, the tribunal had only managed to convict
26 war criminals, even though million of people were killed in 100 days of the Hutu genocide
against the Tutsis in 1994.
The court's term is to end in 2008 and many of the accused might walk free. Rwandan courts
could take over the cases, however, Rwanda would have to abolish death sentence first,
Nsengimana is reported to have told Kirn.
6
EUROPEAN UNION
Ministry Presents New EU Research Framework Programme
The new programme is worth over EUR 50bn in the 2007-2013 period, more than double that
of as its predecessor, which runs until the end of this year
The Ministry of Higher Education, Science and Technology held its first presentation on the
7th Research Framework Programme in Ljubljana on Monday, 4 December. The new
programme is worth over EUR 50bn in the 2007-2013 period, more than double that of as its
predecessor, which runs until the end of this year.
The programme is focused on reaching the Lisbon objectives and has therefore been designed
to attract business, explained Patrik Kolar of the Permanent Representation of Slovenia to the
EU, and added that the first tenders for the new programme should be published on 22
December.
In comparison to its predecessor, the new programme involves less administration, more
research, new methods and content, said Kolar. A completely new block entitled "Ideas",
worth EUR 7.5bn, will within the European Research Council support and stimulate basic
research, he explained.
Most funds (EUR 32.4bn) are designated for the block entitled "Co-operation" which
introduces an instrument of joint technology initiatives aimed at strengthening the cooperation
of industry, said Kolar.
Other funds are to be divided among career development and training of researchers (EUR
4.7bn), improving research and innovation capacities (EUR 4.2bn) and non-nuclear actions
(EUR 1.75bn).
An important new feature is also the option of financing large projects with loans from the
European Investment Bank, Kolar added.
The importance of the programme for the EU is clearly shown by the sheer amount of funds
allocated, said Higher Education, Science and Technology Minister Jure Zupan.
It is important that Slovenia gets back as much money as possible from the EU budget to
which it contributes, stressed Zupan, and added that the cooperation with European
companies and involvement in the European policy-making is of even greater importance.
Slovenia has been "successful" in drawing EU funds from the fifth and sixth research
framework programmes, said ministry officials and explained that in the fifth programme, 481
applicants received EUR 39.6m, which added up to 0.26% of the allocated funds.
In the sixth programme 429 applicants secured 360 contracts so far and received EUR 56.5m,
which represents 0.47% of all funds in the programme.
Around 400 contracts worth EUR 62m could be signed by the end of the programme,
although the numbers are likely to be higher, at around EUR 70m, ministry officials said.
Slovenia Favours Updating EU Customs Code, Minister Says
Slovenia endorses the proposal to update the EU customs code, as it would cut red tape in
customs procedures and unburden the economy, Economy Minister Andrej Vizjak said in
Brussels at the sidelines of a meeting of EU ministers responsible for competitiveness
Slovenia endorses the proposal to update the EU customs code, as it would cut red tape in
customs procedures and unburden the economy, Economy Minister Andrej Vizjak said in
Brussels on Monday, 4 December at the sidelines of a meeting of EU ministers responsible
for competitiveness.
Updating the code in line with the proposal, presented by the European Commission in
November last year, would bring a centralised customs system. This includes the "single
7
window", a one-stop facility for carrying out all legal procedures linked with imports, transit
and exports of goods.
The ministers also discussed the protection of intellectual property, a key element of the
future innovation strategy, and the European Commission's patent regulation document,
according to Vizjak.
The ministers also stressed the need to establish a European Institute of Technology, Vizjak
said. He added that the funding issue still remains open, though.
The member states would therefore ask for "additional info" from the Commission regarding
the open issues connected with the institute, he said.
Cukjati: EU Needs Effective Common Foreign Policy
Speaker of Parliament France Cukjati told his EU counterparts that effective EU action in hot
spots required a common foreign policy, collective planning and management of
humanitarian aid, and unified command over reaction forces
Speaker of Parliament France Cukjati told his EU counterparts on Monday, 4 December that
effective EU action in hot spots required a common foreign policy, collective planning and
management of humanitarian aid, and unified command over reaction forces.
"The EU has found the key for the prevention of conflicts because it was built on the
following principles: solidarity, equality, co-operation and respect between nation", Cukjati
told a meeting of parliament speakers from EU members and the European Parliament.
In a discussion on the EU role in conflict prevention, he emphasised that these principles
could easily fade if the EU did not promote them in other countries, the parliament said in a
press release.
According to Cukjati, effective interventions in hot spots are made possible by the EU
constitutional treaty. The treaty brings new concepts in common foreign and security policy
which would help Europe to take a more effective role in the prevention and solution of
conflicts.
The two-day meeting entitled "Future of Europe: From Reflection to Action" focuses on the
exchange of national parliaments' opinions and viewpoints on the future EU activities
regarding the fate of the European constitutional treaty.
PM Says His Line-Up Fit to Lead EU
Prime Minister Janez Jansa said Slovenia was prepared for its stint at the helm of the EU at
least as well as other countries
Prime Minister Janez Jansa said on Tuesday, 5 December Slovenia was prepared for its stint
at the helm of the EU at least as well as other countries. "We are fully in line with the
timetable, somewhere even ahead of it," Jansa said as he addressed the press on the second
anniversary of the inauguration of his government.
Asked by a reporter whether his ministerial line-up was fit to preside over the EU in the first
half of 2008, Jansa said he did not expect the presidency to pose any problem for his
administration, which had been involved in various EU bodies for two years.
"The essential thing is that the contents are well prepared. The organisation and running of
various bodies within the EU is largely a routine. Things are running smoothly, it is contents
where Slovenia can add value, and this is what we have focused on," Jansa said.
Touching on the issue of personnel, Jansa said training was under way. "None of those who
will be assigned responsible jobs during the presidency have done this before, this will be new
for everyone, which is why this is getting much more attention."
Jansa noted that the 18-month presidency plan of the next presiding troika - Germany,
Portugal and Slovenia - was ready.
8
According to him, the government will step up the preparations for the presidency next year,
as well as the efforts to meet all the requirements for Slovenia's entry into the Schengen zone.
We expect Slovenia to be a full-fledged member of the border-free zone during its EU
presidency, Jansa said.
The head of the deputy faction of coalition New Slovenia (NSi) said last week Jansa was
considering the replacement of a further three or four ministers as he doubted whether they
were fit to head their departments during the EU presidency.
While Jansa denied this, Alojz Sok insisted that was what he understood from the prime
minister's meeting with the NSi deputy faction over the dismissal of Janez Drobnic as the
minister of labour, the family and social affairs.
Responding to suggestions from the opposition ranks that his cabinet was not competent
enough to preside over the EU, Jansa said he would prefer EU presidency were not a matter of
political prestige.
Non-governmental organisations have meanwhile said that Slovenia cannot preside over the
EU until it has tackled the issue of the erased.
In retort Jansa said: "There are thousands of NGOs in Europe. It has already been decided
whether Slovenia will preside over the EU or not. Slovenia will preside over the EU and it
will do the job well."
FM Labels 18-Month EU Presidency Programme Very Ambitious
The 18-month presidency programme, drafted by the troika of forthcoming EU presiding
countries is "very ambitious", as it includes a lot of foreign policy, economic challenges,
issues concerning new Europe and global affairs
The 18-month presidency programme, drafted by the troika of forthcoming EU presiding
countries is "very ambitious", as it includes a lot of foreign policy, economic challenges,
issues concerning new Europe and global affairs, FM Dimitrij Rupel said in Berlin on
Tuesday, 5 December.
This is the first time that a presidency programme was jointly drafted by three countries. This
guarantees greater continuity in EU policies, the Slovenian FM said after meeting his German
and Portuguese opposite numbers Frank-Walter Steinmeier and Luis Amado.
Slovenia will focus on "EU constitutional treaty, enlargement, energy policy and intercultural
dialogue", Rupel told STA. The treaty because it will come into focus during Slovenia's stint
in the first half of 2008, while in enlargement Slovenia will stress the accession of the
Western Balkan countries to the EU, he added.
Energy policy will meanwhile remain an issue also during Slovenia's presidency, while
intercultural dialogue will mainly stress relations between the Muslim and Christian cultures.
"Slovenia has some experience in such matters, also at home and with ethnicities with which
is used to live in a joint country. We are ready to deal with this issue in-depth," he said.
The 18-month plan has to be confirmed by the bloc's foreign ministers at their meeting on 11
December. The introductory part of the document, dealing with strategic priorities, is also
harmonised with the following EU presiding troika - France, the Czech Republic and Sweden.
Germany, Portugal and Slovenia are to preside over the EU in succession, starting with
Germany on 1 January 2007.
9
STATISTICS/FORECASTS
November Turnover on the Stock Market up 46% Y/Y
Turnover on the Ljubljana Stock Exchange (LJSE) in November topped SIT 20.6bn (EUR
86m)
Turnover on the Ljubljana Stock Exchange (LJSE) in November topped SIT 20.6bn (EUR
86m), up 45.8% over the year before and 77.9% above the monthly average for 2005,
according to the LJSE's monthly statistical report.
All the major indices were up, in particular the main market SBI 20, which added 2% over the
month before and soared to a new record of 6,067 points on 30 November. The index added
31.1% in the 12 months to November.
The SBI TOP index of the six biggest blue chips was up 0.7% on a monthly comparison, the
PIX investment fund index edged 0.1% lower and the bond BIO index added 0.6%.
The fastest growing shares on the official market were port operator Luka Koper (+14%),
airport operator Aerodrom Ljubljana (+11.6%), retailer Mercator (+8.8%) and beverage group
Pivovarna Lasko (+4.5%).
There were no big losers, although Telekom Slovenije was down 3.6%, spa operator Terme
Catez lost 3.4% and retailer Merkur edged 1.3% lower.
Compared to November 2005, drug maker Krka was the biggest winner, adding 79.4%. It was
followed by energy company Petrol (+66.1), Mercator (+30%), Aerodrom Ljubljana (28.2%)
and Pivovarna Lasko (+26.9%).
Krka was the busiest share in terms of turnover in November, clocking up deals worth SIT
5.2bn (EUR 21.7m). Petrol followed with SIT 2.5bn (EUR 10.4m) and Telekom Slovenije
with SIT 1.8bn (EUR 7.5m).
The market capitalisation topped SIT 2,624bn (EUR 10.9bn) at the end of November. Shares
bar investment funds accounted for 59.8%, with bonds representing 36% and investment
funds 4.2% of the total.
Despite the delisting of four companies from the free market, the market capitalisation of
companies increased by SIT 30.5bn (EUR 127.2m) in November.
Total market capitalisation excluding investment funds was equal to 40.1% of GDP.
Industrial Output Up 10.7% Y/Y in October
The output in the first ten months of the year exceeded by 7.4% the output in the same period
last year
Slovenia's industrial output increased by 10.7% year-on-year in October and was up 1.5%
over the previous month, according to the latest data from the National Statistics Office.
The output in the first ten months of the year exceeded by 7.4% the output in the same period
last year.
On a yearly comparison, the volume of industrial production rose in manufacturing (11.5%)
and mining (16.6%). It dropped in electricity, gas and water supply (2.0%)
Looking at the three main industrial groupings, the output of capital goods went up by 16.2%,
of intermediate goods industries by 9.8% and of consumer goods industries by 9.1%
compared to October 2005.
Factory Gate Prices Stay Put at Monthly Level
Factory gate prices in November were level with those in October, but rose by 2.2% since the
beginning of the year
10
Factory gate prices in November were level with those in October, but rose by 2.2% since the
beginning of the year, according to the National Statistics Office.
The monthly increase in the prices of raw materials (0.2%) was offset by the drop in the
prices of non-durable consumer goods (0.2%), energy products and capital goods (0.1% in
both cases). The prices of durable consumer goods were level with October's.
Q3 Growth at Robust 5.6%
The data was presented by the Statistics Office with an official commenting the growth cycle
probably reached its peak
Slovenia's economy expanded by 5.6% in the third quarter of 2006 over the same period last
year, which is the most robust growth in the past six to seven years. The data was presented
by the Statistics Office on Friday, 8 December with an official commenting the growth cycle
probably reached its peak.
Karmen Hren, the head of the department for national accounts, told the press Slovenia would
be facing a gradual slowdown from now on.
Third quarter growth was buoyed by domestic consumption, which was up 6.5% in real terms
compared to the third quarter in 2005. The soaring consumption was in turn propelled by a
surge in gross fixed capital formation.
This was up 14.5% year-on-year, the highest figure since 1999, when Slovenia introduced
VAT. Gross fixed capital formation in fact contributed three percentage points to Q3 growth.
Gross domestic product (GDP) in the first nine months of the year was up 5.2% in real terms
year-on-year, Hren explained further.
Housing construction continued to hop (16.3%), coupled with a surprising surge in nonresidential construction (16.5%). There was also a considerable increase in investment in
machinery and equipment, in particular in transport.
After a period of negative export-import trends, export prices exceeded import prices in Q3,
according to Hren. Import and export growth peaked at the beginning of the year, whereupon
it turned down.
Q3 exports were 5.6% above the 2005 figure. The slowdown was largely the result of a
decline in the export of services, in particular in tourism. Imports were meanwhile up 7%.
Value added in volume terms increased the most in construction, adding 15.3% or the most in
the past seven years. In manufacturing, it added 8.4% and 10.9% in financial consulting.
Value added in basic industries thus began to top that in services.
The aggregate employment was up 1.3%, which is the most robust growth since 2002. Most
new jobs opened in the construction industry.
Considering the favourable economic trends, the state sector shows a positive picture too,
according to national account expert Andrej Flajs.
The share of government revenues and expenditures in GDP has been in decline thanks to
high growth. Moreover, expenditure growth is lagging behind the growth in revenues.
General government deficit in the third quarter equalled 0.9% of GDP, up from 0.8% in Q2.
The bulk of deficit is generated in the first quarter, when economy is slow.
The estimated deficit for the third quarter is thus 1.5% of GDP, down 0.3 percentage points
down over the same period last year.
11
FINANCE
Minister Pledges Speedy Plan for State Withdrawal from NLB
Bajuk, presenting the activities of the ministry in the past two years, added that "talks
regarding the ownership of NLB with its strategic owner, the Belgian KBC group, were never
closed"
Finance Minister Andrej Bajuk said on Monday, 4 December that he would "in the coming
days or weeks at the latest" unveil a tangible plan for the state's withdrawal from Nova
ljubljanska banka (NLB), Slovenia's largest bank.
Bajuk, presenting the activities of the ministry in the past two years, added that "talks
regarding the ownership of NLB with its strategic owner, the Belgian KBC group, were never
closed".
Bajuk also told the press that the ministry wants to keep the state's stake at 25% plus one
share to allow for supervision from its supervisory bodies.
"The other option will be open for Slovenian investors and we will discuss it in the following
days," the minister added.
KBC owns 34% of NLB, but the state has been reluctant to let it become a majority owner,
quoting supervisory concerns. KBC announced earlier this year that it would "reassess" its
role in NLB, limiting it to that of a pure financial investor.
Finance Minister Sanguine about Euro Changeover
Slovenia has put in place infrastructure that will allow for the resolution of potential
problems
The Finance Ministry is sanguine about the 1 January changeover to the euro. Slovenia has
put in place infrastructure that will allow for the resolution of potential problems, Finance
Minister Andrej Bajuk told the press on Monday, 4 December.
"The euro is the most important project Slovenia has ever embarked on. It is an achievement
we should all be proud of and proof of what we can do as a society," he said.
According to Bajuk, Slovenia has been and will continue to honour the commitments under
the EU's Growth and Stability Pact. "Economic trends are in line with the commitments and
we shall honour them," he said.
Bajuk added that public spending, budget deficit, public debt and inflation have all gone
down. "Slovenia will join the eurozone with stable prices, which further reduces the scope for
shocks after the currency change."
Commenting on several euro-related price hikes in the recent weeks, Bajuk said that
"everyone can vote with their feet."
The minister was addressing the press to present the achievements of his ministry halfway
into the government's term. "The government has implemented a large part of its programme,
but there is still a lot of work ahead."
Bajuk underlined solid economic growth, which is expected to be at 4.7% this year, and the
favourable business sentiment. "This shows that things are going the right way. This gives us
hope that Slovenia is on the right path."
Two Candidates Apply for Central Bank Governor
Gaspari's six year term ends on 31 March 2007
Two candidates have applied for the post of the governor of Banka Slovenije, Slovenia's
central bank, President Janez Drnovsek's office told STA on Monday, 4 December.
The office refused to talk about the names.
12
According to the Bank of Slovenia act, the president has to propose a candidate to the
National Assembly in 30 days and has the right to name candidates that had not applied.
The president's office started the procedure for nominating the new governor on 25 October
and the deadline for applications ran out the previous Friday, 8 December.
Gaspari's six year term ends on 31 March 2007. He took over from France Arhar, who headed
the central bank for 10 years and is considered the father of the Slovenian currency, the tolar.
Former ECB Official Praises Achievements, Warns of Pitfalls
The bank has done its job well and with credibility, Otmar Issing said in a lecture in
Ljubljana
A former chief economist of the European Central Bank (ECB) on Tuesday, 5 December
lavished praise on the role of the Slovenian central bank, Banka Slovenije, in the preparations
for the adoption of the euro. The bank has done its job well and with credibility, Otmar Issing
said in a lecture in Ljubljana.
Issing, a former member of the ECB executive board, said the central bank was instrumental
in reigning in inflation and maintaining the stability of the tolar-euro exchange rate.
The real convergence with the European standard of living has been "exceptional", said
Issing. However, he was quick to point to the risks Slovenia faces due to its ageing
population.
Slovenia's low public debt should not be an excuse for inactivity, it is necessary to prepare for
the hard times, he said in a lecture organised by the central bank.
After Slovenia joins the eurozone it should not relax budget policy. It will also have to avert
the rising labour costs which could have a negative impact on competitiveness, he said.
Once it adopts the euro Slovenia will renounce fiscal and exchange rate policy, but it will still
have budgetary and structural policies to counter external shocks.
Budget policy is limited with the Stability and Growth Pact, which caps the budget deficit at
3% of GDP, so Slovenia has to strive to balance the budget or even push it into surplus, Issing
explained.
In addition to the budget policy, Slovenia can mitigate external shocks with a flexible labour
market. "The greater the flexibility, the better the reaction to shock," he said.
Belgium's KBC Awaiting Govt Answer over NLB Ownership
KBC owns 34% of NLB
Belgian financial group KBC, which owns a third of NLB, Slovenia's largest bank, is awaiting
the government's answer to its proposal regarding the ownership over NLB. "The KBC has
sent a proposal some months ago. We are still waiting for the answer," KBC said in Brussels
on Tuesday, 5 December.
"KBC still has no reason to change its role of a financial investor in NLB. If any new
proposals arrive, we will study them," KBC told STA.
The financial group's answer comes after Finance Minister Andrej Bajuk said on Monday, 4
December that talks with KBC were never closed.
He also announced that he would "in the coming days or weeks at the latest" unveil a tangible
plan for the state's withdrawal from the bank.
KBC owns 34% of NLB, but the state has been reluctant to let it become a majority owner,
quoting supervisory concerns. KBC announced earlier this year that it would "reassess" its
role in NLB, limiting it to that of a pure financial investor.
NKBM Ready for the Euro Changeover
According to its chairman Matjaz Kovacic, the bank has fully adjusted its software, while
recent simulations have confirmed the system is well-prepared for the changeover
13
The management of Nova kreditna banka Maribor (NKBM), Slovenia's second largest bank,
presented on Wednesday, 6 December the final preparations for the euro changeover.
According to its chairman Matjaz Kovacic, the bank has fully adjusted its software, while
recent simulations have confirmed the system is well-prepared for the changeover.
Between 31 December and 2 January, 200 NKBM employees will be making sure the
changeover to the new currency runs smoothly and effectively. Despite the bank holidays,
eleven of NKBM offices will be open between 10 AM and 2 PM on 1 and 2 January.
Already in October the bank launched an information campaign in which it urged its clients to
bring tolar banknotes to the bank as soon as possible.
According to the executive director Vlasta Brecko, sufficient supplies of euro cash have been
ensured. The bank has been offering currency exchange free of charge since 1 December,
while euro cash will be available in automated teller machines as of 2007.
Kovacic said intensive preparations for the euro presented not only a hefty financial burden of
between SIT 550m (EUR 2.3m) and SIT 600m (EUR 2.5m), but also a technically and
logistically demanding project of the highest priority.
"So far, Slovenia has been the only country to make the big bang adoption of the euro without
any experience to help in the matter", said Kovacic.
According to Kovacic, the biggest logistic challenge is the exchange of cash, as tolars have to
be taken out of the circulation and changed into euros in a very short period. Moreover, the
most extensive part of the project is the adjustment of the information technology.
The management of the bank declined to reveal the exact quantity of euros the bank ordered
for about 300,000 of its retail clients. However, the bank will have to convert account
balances and banknotes worth about SIT 2.3bn (EUR 9.6m).
Tax Administration Promises Simpler Income Tax Returns
The Tax Administration and the Finance Ministry are promising simpler income tax returns
for the 2006 income tax returns
The Tax Administration and the Finance Ministry are promising simpler income tax returns
for the 2006 income tax returns. Taxpayers will get filled in forms by mail early in 2007 and
will only be required to check the data before submitting them to their local tax authority,
Ivan Simic, the head of the Tax Administration, told the press on Wednesday, 6 December.
To facilitate the process for companies and other institutions that disburse salaries and other
payments, the tax Administration will make the necessary software available online on 20
December. It will also organise two training sessions for accountants, in Maribor and
Ljubljana, Simic said.
The automation will be taken one step further for the 2007 tax year: taxpayers will get their
complete income tax returns by mail. If they agree with the calculations, the decision will be
considered final, those who disagree will be able to lodge an appeal, according to Simic.
Moreover, the Tax Administration will set up an automatic customer relations system in
February 2007. Dubbed "Vida", the animated artificial intelligence assistant will answer
frequent questions via the internet, email, SMS and telephone.
Finance Minister Andrej Bajuk said that he was proud to see how things were changing. We
have achieved much more than was expected, he said.
Central Bank Leaves Key Interest Rates Unchanged
According to the press release by Banka Slovenije, the current interest rates are in line with
achieving price stability and the stability of the national currency's nominal rate to the euro
The Slovenian central bank has left key interest rates unchanged on Wednesday, 6 December,
a day before the European Central Bank (ECB) was to stage a meeting on the issue.
14
According to the press release by Banka Slovenije, the current interest rates are in line with
achieving price stability and the stability of the national currency's nominal rate to the euro.
The bank's Council also assessed on Wednesday, 6 December that economic growth cooled
off somewhat in Q3 compared to the first half of the year, but that investment and imports
remained strong.
The council also adopted 14 executive regulations to the new banking act, bringing the rules
and criteria for risk management in line with the European banking directive and the Basel
agreement.
ECB Chief Praises Slovenia's Preparations for the Euro
The president of the European Central Bank (ECB) praised the Slovenian central bank and
the government for the job they have done in preparation for the 1 January adoption of the
euro
The president of the European Central Bank (ECB) on Thursday, 7 December praised the
Slovenian central bank and the government for the job they have done in preparation for the 1
January adoption of the euro. "They have shown model cooperation with the ECB and other
European institutions," Trichet said.
According to him, Slovenia has shown that "we are not a closed shop but an open shop," for
all countries that manage to meet the Maastricht criteria for the adoption of the euro.
Yet he also pointed out that it was "abnormal that there are restrictions on Slovenia's workers"
wanting to work in other countries of the eurozone.
For a free market to operate properly, there has to be free movement of goods and services as
well as labour, he said. "It does not make economic sense to keep the barriers."
Trichet also told Slovenia to be mindful of labour costs and competitiveness. "By joining the
eurozone, you are taking responsibility for price stability, which means a lot of commitments
especially in fiscal terms."
Government Tells Ministries Not to Use Euro Switch to Raise Fees
The government made the commitment not to use the changeover to the euro to increase fees
and contributions determined in regulations and other legal acts that it adopts or which it can
influence
The government on Thursday, 7 December made the commitment not to use the changeover
to the euro to increase fees and contributions determined in regulations and other legal acts
that it adopts or which it can influence. All ministries and government departments have been
ordered to honour the commitment until 30 June 2007.
Statistical data shows that there have been no price hikes and inflation in November was even
lower than expected. The government made the commitment to preclude price rises in the
coming months, Finance Minister Andrej Bajuk said after the cabinet session.
According to him, the commitment is a positive and responsible move considering that
surveys show how people expect prices to rise and their standard of living to fall.
The government also urged courts, local authorities and companies in majority or partial state
ownership to refrain from raising prices. It advised trade associations to make similar
commitments so that businesses do not up prices until the changeover project is completed in
June 2007.
Bajuk said Slovenia was an open economy, so people need to be trusted to make the right
decision - if goods or services are too expensive, they should "vote with their feet". These are
messages that retailers understand well, he added.
15
Ljubljana Stock Exchange
The bullish mood on the Ljubljana Stock Exchange (LJSE) persisted last week with the main
market SBI 20 index gaining 2.63% to a new all-time high at 6,282.04 points
The bullish mood on the Ljubljana Stock Exchange (LJSE) persisted last week with the main
market SBI 20 index gaining 2.63% to a new all-time high at 6,282.04 points on Friday, 8
December. The blue chip SBI TOP was up 2.46% to 1,463.25 points.
Volumes amounted to SIT 10.32bn (EUR 43.06m), 32% of which represented block deals.
The bulk was traded in pharma company Krka, with deals worth SIT 1.32bn (EUR 5.51m),
SIT 722m (EUR 3.01m) of which was in block deals. The share was up 0.88% to SIT 188,896
(EUR 788.25).
Energy company Petrol gained 4.34% to SIT 122,349 (EUR 510.55) on SIT 559m (EUR
2.33m) in total volumes.
Port operator Luka Koper saw SIT 363m (EUR 1.51m) worth of shares change hands. It
gained 4.16% to SIT 11,750 (EUR 49.03).
The most substantial increase was posted by food company Droga Kolinska, which surged
13.39% to SIT 3,689 (EUR 15.39) on SIT 52m (EUR 0.22m) in total volume.
On the down side, hardware retailer was down 0.46% to SIT 41,399 (EUR 172.75) on SIT
66.9m (EUR 0.28m) in total volume.
The main event on the market last week was a new twist in the battle for the acquisition of
Mlinotest, after financial firm Vipa unexpectedly acquired on Monday, 4 December the
almost 22% stake that state-owned KAD and SOD funds held in Mlinotest for SIT 1,800
(EUR 7.51) per share.
The bid topped the rivalling offers made by bread and pasta maker Zito and family-owned
bakery Pekarna Blatnik, which offered SIT 1,730 (EUR 7.25) and SIT 1,695 (EUR 7.07),
respectively.
Zito confirmed on Wednesday, 6 December it had failed to meet its 33% takeover target as it
was only able to increase its 17.04% stake in Mlinotest to 44.15%. Pekarna Blatnik said it had
gained only 2.31% of the Ajdovscina-based company between 4 October and 4 December.
The acquisition by Vipa propelled Mlinotest 10% higher to SIT 1,699 (EUR 7.09) on
Tuesday, 5 December, while the share gained 7.84% to SIT 1,849 (EUR 7.72) on the week.
On other markets the PIX investment fund index gained 2.76% to 5,073.71 points, while the
bond BIO index was up marginally 0.11% to SIT 120.18 points.
Foreign Exchange
Mean exchange rate of the Bank of Slovenia
Euro (EUR) - SIT 239.63 (-----)
U.S. dollar (USD) - SIT 180.45 (-0.56)
Swiss franc (CHF) - SIT 150.68 (-0.21)
British pound (GBP) - SIT 353.48 (-2.74)
16
BRANCH INFORMATION
Retailers Raise Prices in Expectation of Euro
Retailers started raising prices a month before the euro changeover on 1 January 2007, the
Slovenian Consumers' Association (ZPS) president Breda Kutin told the press
Retailers started raising prices a month before the euro changeover on 1 January 2007, the
Slovenian Consumers' Association (ZPS) president Breda Kutin told the press on Tuesday, 5
December. Since inflation is low, there is no real reason for these increases, she noted.
The association noted steep increases in the prices of frozen French fries and other frozen
products, canned tuna, rice, bacon, cottage cheese, cheeses and eggs.
The Pricewatch project, which was launched in a bid to prevent unwarranted price hikes in the
run-up to the adoption of the euro, revealed that the prices of drinks have also risen since
August.
The association received some complaints from consumers, which revealed growth in the
prices of food delivery.
The association has been monitoring prices of products and services since February and with
the gathered data it will make a "black list" of those who have increased their prices the most
and publish it on a website.
Earlier in the year the association noted increases mostly in the prices of services in sectors
where there is less competition, for example in bank services and car parks.
With the project, carried out together with the International Institute for Consumer Research,
the association wants to prevent the companies from rising the prices in order to round off the
prices in euros, but cases of such practice have been revealed.
Kutin mentioned two cases in which car parks increased their prices in order to round the
prices to 1 and 50 euros respectively. In the first case the price rose from SIT 200 to SIT 240
and in the second case from SIT 10,000 to SIT 11,980.
Ski Lift Operators not Alarmed by Warm Weather
Moreover, they are hoping for a successful season
Despite the ongoing spell of unusually warm weather, ski lift operators in Slovenia are not
alarmed yet by high temperatures. Moreover, they are hoping for a successful season, as
Secretary General of the Slovenian Association of Ski Lift Operators Dusan Bozicnik told
STA on Wednesday, 6 December.
The operators hope the skiing season would start before the Christmas and New Year
holidays. Bozicnik explained that they would probably start making artificial snow this
weekend.
Bozicnik said that this year's ski season was scheduled to start on 15 December. According to
him, all Slovenian ski resorts are prepared for the production of artificial snow.
Slovenian Environmental Agency forecast snow for this weekend but said it was unlikely it
would snow during the holidays.
Last winter was cold, however, no extremely low temperatures were recorded. The number of
days with the blanket of snow exceeded the long-term average. It snowed as late as March
2006. The ski season in 2005 started already on 24 November, when there was enough natural
snow.
Business Chambers Ask Companies to Pledge Price Restraint
Unjustified price hikes on account of the euro changeover are one of the biggest fears of
Slovenian consumers ahead of the switch planned for 1 January 2007
17
The Chamber of Commerce and Industry of Slovenia (CCIS) and Chamber of Craft Industries
(OZS) urged on Thursday, 7 December Slovenian companies to sign up to a euro price code.
Companies adhering to the code will pledge not to raise their prices as part of the upcoming
euro changeover, the chambers told STA on Thursday, 7 December.
According to the CCIS, the companies that have already signed the price code expressed their
own will to do so. "They wanted to contribute to a stable business environment in Slovenia,
trust among business partners, customers and consumers, and confidence in the euro as the
national and European currency."
The OZS, too, called on small companies not to abuse the euro changeover and increase
prices of products and services. It supports the general recommendation to companies to show
responsibility towards consumers and their purchasing power.
According to the OZS, its management board decided at the latest meeting that the prices in
euros in its price lists would be rounded down.
Unjustified price hikes on account of the euro changeover are one of the biggest fears of
Slovenian consumers ahead of the switch planned for 1 January 2007. In a Eurobarometer
survey conducted in September, 66% of Slovenians said they were worried about price
increases related to the euro changeover.
Slovenian Tourism to Focus on Quality and Innovation
Stakeholders in tourism gathered in Maribor to examine ways of creating added value and
offering innovative products
Stakeholders in tourism gathered in Maribor on Thursday, 7 December to examine ways of
creating added value and offering innovative products. There is increasing demand for
products that offer something more, and such products typically have higher value added, the
head of the Economy Ministry's Directorate for Tourism, Marjan Hribar, said in his address.
Hribar noted in his address Slovenian Tourism Forum that a five-year strategic assessment
period is running out this year. Objectives in terms of quantity have been fulfilled, but the
quality indicators are lagging behind targets.
According to him, the goals of raising tourism revenues to EUR 1.6bn, increasing the number
of beds in four- and five-star hotels and finishing a EUR 1.6bn investment cycle by 2010 will
be met.
However, efforts to up the number of overnight stays, improve occupancy rates and increase
the number of high-end rooms in small hotels and private facilities are off-target, Hribar said.
Looking at the 2007-2013 EU budget period, Hribar said the main objectives would be to
invest in tourism infrastructure and upgrade organisational structures with a view to
improving quality.
Dimitrij Piciga, the head of the Slovenian Tourism Board, which organised the event, said the
organisation would have to become an active player in tourism projects.
He added that Slovenian tourism must enter existing markets with new products, and make
efforts to give new products a clear image that will set them apart from the competition.
Piciga said the key strategic guidelines would be to implement the new tourism brand and
establish destination management.
According to him, one of the big opportunities for the promotion of tourism will be Slovenia's
presidency of the EU in 2008.
Modernisation Contract Signed for Part of 5th Route Section
The management of the National Rail Transport Agency and subcontractors signed on 8
December a SIT 8.7bn (EUR 36.3m) deal to modernise the Pragersko-Ormoz section of the
railway
18
The management of the National Rail Transport Agency and subcontractors signed on Friday,
8 December a SIT 8.7bn (EUR 36.3m) deal to modernise the Pragersko-Ormoz section of the
railway. The section in NE Slovenia is part of the 5th pan-European transport corridor which
makes it a priority investment, Agency director Rajko Satler said.
The signing in Maribor was also attended by Jelka Sinkovec Funduk, the head of the
Railways Directorate at the Transport Ministry, who said this was the first and an important
investment for modernising the country's rail infrastructure.
The contractors selected for the construction will begin the works on 15 December and are
expected to complete the modernisation in 720 days. Minor disturbances to passenger and
cargo transports are expected during the works.
The deal is also partly financed by the European Union, which contributed SIT 3.5bn (EUR
14.6m), while the remainder came from the state budget.
19
COMPANIES
Government Answer on Gaming Deal Not yet Ready, Bajuk Says
The government has still not decided on the conditions set by US casino operator Harrah's
Entertainment and Slovenia's Hit for launching a mega gaming and entertainment centre in
western Slovenia
The government has still not decided on the conditions set by US casino operator Harrah's
Entertainment and Slovenia's Hit for launching a mega gaming and entertainment centre in
western Slovenia, although "a lot has been achieved in talks already", Finance Minister
Andrej Bajuk said in Ljubljana on Monday, 4 December.
"Several issues have been sorted out. Both sides agree that the Slovenian side should hold the
majority stake and that there should be more investment," Bajuk said.
His comments are related to conditions the gaming partners made for the EUR 700m deal.
According to reports, these include the lowering of the tax on gaming and the adoption of
provisions allowing foreigners to own more than 20% in a gaming venture.
"Talks are also continuing regarding a lower effective tax rate, and local authorities will be
included in them shortly," the minister added, but he refused to say when the talks would be
closed.
"As we are still in talks it makes no sense to go into details," he said.
The deadline by which the government should respond to the proposal by Hit and Harrah's ran
out on 26 November, a month after the two companies presented an in-depth project analysis
to the ministry.
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.
Harrah's is requesting that the tax on gaming be lowered and that new provisions be adopted
that would allow foreigners to own more than 20% in a gaming venture.
Hit CEO Niko Trost was upbeat about the ministry's response. "I think that some kind of the
green light was given for the project to continue. We assess it as a large and positive step to
continue developing and finish the project," he told the press in Nova Gorica.
Trost explained that the joint venture would pay lower taxes than Hit's current 37% bracket.
The actual tax rate will depend on investments in the non-gaming part of the venture, Trost
said.
Julius Fund Acquires Steklarna Rogaska Glassworks
The Julius fund, owned by the asset management firm Zvon, acquired glassworks Steklarna
Rogaska for SIT 2.5bn (EUR 10.43m)
The Julius fund, owned by the asset management firm Zvon, acquired glassworks Steklarna
Rogaska for SIT 2.5bn (EUR 10.43m), Steklarna Rogaska CEO Robert Licen told STA on
Monday, 4 December.
According to Licen, the Julius fund will spend an additional SIT 1bn (EUR 4.17m) on a
capital increase, allowing the beleaguered glassworks to repay all of its outstanding
bankruptcy protection claims.
Rogaska's debtors include Slovenia's three largest banks, Nova Ljubljanska banka, Nova
Kreditna banka Maribor and SKB. The banks had converted their outstanding claims into
ownership stakes on January.
In line with Rogaska's restructuring plan, the separate owners would get 100% of their claims
repaid, while ordinary debtors would get back 20% of their claims.
20
Steklarna Rogaska filed for bankruptcy protection at the beginning of 2005. At the time, the
management estimated Steklarna Rogaska's debts at SIT 12.6bn (EUR 52.6m), including over
SIT 9bn (EUR 37.5m) owed to banks.
Zvon is owned by the Krekova druzba investment fund manager, a company affiliated with
the Slovenian Roman Catholic Church.
Publisher DZS Acquires Montenegrin TV Station
Slovenian publisher DZS became the sole owner of the Montenegrin company IN CO, which
owns the country's second most popular TV channel, TV IN
Slovenian publisher DZS on Wednesday, 6 December became the sole owner of the
Montenegrin company IN CO, which owns the country's second most popular TV channel,
TV IN.
The acquisition strengthens DZS's media portfolio and provides a long-term revenue stream
as well as synergies in content production, DZS said in a statement published in the daily
Dnevnik.
The company said TV IN had recorded significant growth in ratings and advertising revenues
in recent years. Considering the development of the Montenegrin media market, revenues are
expected to continue increasing.
DZS is the owner in Slovenia of the daily Dnevnik and tabloid Direkt. It is also market leader
in textbook publishing.
The company posted sales of SIT 23.8bn (EUR 99.3m) for 2005 and a net profit of SIT 667m
(EUR 2.7m).
Rogaska Glassworks Comes Out of Bankruptcy Protection
General manager of Steklarna Rogaska Robert Licen told the press in Rogaska Slatina that
the proceedings which started almost exactly a year ago had been completed successfully
Slovenia's once proud glassworks from Rogaska Slatina has got some of its shine back by
emerging from bankruptcy protection proceedings.
General manager of Steklarna Rogaska Robert Licen told the press in Rogaska Slatina on
Wednesday, 6 December that the proceedings which started almost exactly a year ago had
been completed successfully.
The success is a major achievement for Steklarna Rogaska that only last year posted losses of
SIT 1.8bn (EUR 7.5m) and owed around EUR 53m to its creditors, including several
Slovenian banks.
According to Licen, the company paid all creditors but two banks by the deadline.
The development comes after the Julius fund, owned by the asset management firm Zvon,
acquired the glassworks for SIT 2.5bn (EUR 10.43m) on Monday, 4 December.
The Julius fund spent an additional SIT 1bn (EUR 4.17m) on a capital increase that allowed
the beleaguered glassworks to repay all of its outstanding bankruptcy protection claims.
Meanwhile, general manager of the Julius fund Leo Ivanjko said that his company move was
not speculative, as it has long-term interests in the world-famous glassworks.
Ivanjko explained that his company had purchased the claims of the creditors, but refused to
specify the value of the deals.
Licen added that the company, which employs 970 people, will end the year without a loss.
Moreover, he promised that it would pay the pension and health insurance contributions for its
employees for the previous two years over the coming two years.
Steklarna Rogaska filed for bankruptcy protection at the beginning of 2005 in a last-ditch
attempt to deal with an increasingly dire situation that had seen it run up huge debts with
banks.
21
At the time, the management estimated Steklarna Rogaska's debts at SIT 12.6bn (EUR
52.6m), including over SIT 9bn (EUR 37.5m) owed to banks.
The shareholders - mostly former and current workers - approved a plan for debt conversion
at the end of August 2005, opening the door for bankruptcy protection.
No Company Good Enough for 2006 Business Excellence Award
Higher Education, Science and Technology Minister Jure Zupan told the press that the
Esotech ecology and energy company was given the silver certificate, while the Novo mesto
general hospital and several local administrative units received bronze certificate
The Slovenian Business Excellence Awards board followed last year's example and decided
not confer the main award for this year, as none of the nominated companies succeeded in
meeting all the excellence criteria.
Higher Education, Science and Technology Minister Jure Zupan told the press on Wednesday,
6 December that the Esotech ecology and energy company was given the silver certificate,
while the Novo mesto general hospital and several local administrative units received bronze
certificates.
The list of companies that received the bronze certificate includes magnets and ceramic parts
maker AET, household appliance maker BST hisni aparati, hotel operator G&P hoteli Bled,
construction company SCT and logistics group Viator&Vektor.
Chris Leber, chief executive of the European Foundation for Quality Management (EFQM),
pointed to the importance of taking part in national and European business excellence awards.
Public Administration Minister Gregor Virant meanwhile praised local administration units
for making it among certificate recipients.
"We want to implement those managerial principles in the Slovenian public administration
that have proven themselves to be positive in the best companies," Virant added.
The Slovenian Business Excellence Award was conferred for the first time in 1998. The
previous winners include software company Hermes Softlab, car manufacturer Revoz,
holding company Sava, port manager Luka Koper, fuel trader Petrol and others.
Airport Operator Plans EUR 9.6m in Profit in 2007
The company also intends to spend EUR 28.4m for investments in the coming year
Airport operator Aerodrom Ljubljana plans EUR 9.6m in profits in 2007, 9% above its plans
for 2006. The company also intends to spend EUR 28.4m for investments in the coming year,
Aerodrom Ljubljana said on Wednesday, 6 December.
The numbers were unveiled at the session of the airport operator's supervisory board.
The company plans 1.49 million of passengers, 7% more than in 2006, and 45,774 flights
(arrivals and departures), a 14% increase. It also expects to transport 16,829 tonnes of cargo, a
16% rise over 2006.
Aerodrom Ljubljana's largest investment in the coming year will be completing the first phase
of the construction of the new passenger terminal in a bid to allow for the Schengen regime
division of traffic. The company also plans to increase the length of the runway.
The supervisors agreed to convene an extraordinary shareholders' meeting. They will publish
the convocation on Friday, 8 December. The meeting was demanded by the government in
mid-November. The state is the major shareholder.
The cabinet wants to replace supervisory board member Janez Potocnik, the undersecretary at
the Transport Ministry, with Franc Zeljko Zupanic, the director general of the civil aviation
directorate at the ministry.
This will bring the company's operations in line with EU requirements that were enacted by
the ministry earlier in the year.
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Pekarna Blatnik and Zito Confirm Failed Takeover Bids
Food group Zito and family-owned bakery Pekarna Blatnik confirmed that they had both
failed in their respective bids to take over bread and past maker Mlinotest
Food group Zito and family-owned bakery Pekarna Blatnik confirmed on Wednesday, 6
December that they had both failed in their respective bids to take over bread and past maker
Mlinotest. The takeover battle for Mlinotest took an unexpected turn with the emergence of a
third player in the form of financial firm Vipa.
Zito, offering SIT 1,730 (EUR 7.25) per share or SIT 35 (EUR 0.15) more than Pekarna
Blatnik, failed to meet its 33% takeover target after state-run KAD and SOD funds decided to
sell their 22% stake in Mlinotest to Vipa on Monday, 4 December, which was also the
deadline for the bids of Zito and Pekarna Blatnik.
Zito confirmed it was only able to increase its 17.04% stake in Mlinotest to 44.15%, whereas
Pekarna Blatnik said it had gained only 2.31% of the Ajdovscina-based company between 4
October and 4 December.
In its press release, Zito reiterated its position that a consolidation of the Slovenian bakery
sector and the merging of different players in the food industry were vital for the effectiveness
and competitiveness of the Slovenian food industry.
Zito therefore regrets the state's decision not to sell its stake in Mlinotest to Zito, whereby it
would back a strategic restructuring of Zito, which it owns.
KAD and SOD explained on Tuesday, 5 December that Vipa had offered SIT 1,800 (EUR
7.51) per share, which makes the deal worth SIT 931.82m (EUR 3.89m).
In a related development, asset management company KD Group, considered by analysts the
main engine behind Zito's bid for Mlinotest, increased its stake in Zito by 8.8% to nearly 25%.
KD Group said it had bought the shares from investment firms Infond ID and Infond ID 1 at
an unspecified price. The market value of the stake is around EUR 5m.
Mobitel Gets New Board of Directors
The shareholders of mobile operator Mobitel appointed a new board of directors under chief
executive officer Klavdij Godnic
The shareholders of mobile operator Mobitel on Thursday, 7 December appointed a new
board of directors under chief executive officer Klavdij Godnic, who is currently serving as
the chairman of IT provider S & T Hermes Plus, effective in February.
The other board members are Telekom chairman Bojan Dremelj; Telekom management board
members Filip Ogris Martic and Zeljko Puljic; Metod Zaplotnik, the CFO of
telecommunications company Iskratel; and Igor Marinsek, the director of Mobitel's legal and
human resources department.
The remaining two board members will be appointed by the works council, Mobitel said in a
press release on Thursday, 7 December.
The composition of the board of directors was endorsed earlier this week by the supervisory
board of its parent company, Telekom Slovenije.
The new board comes after the decision to put in place a single-tier management structure, a
novelty in Slovenia introduced by this year's companies act.
By far the largest wireless operator with a 72% market share, Mobitel is in 100% ownership
of telco Telekom Slovenije.
It reported a 8% increase in operating revenues in the first nine months of this year, to SIT
70.6bn (EUR 294.6m), with net profit soaring 27% to SIT 7.8bn (EUR 32.5m).
Major Prevent Global Owners Embark on Ownership Consolidation
Prevent was the 9th biggest Slovenian exporter last year, with exports at SIT 54bn (EUR
225.4m), down 34% year-on-year
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A group of major shareholders of Prevent Global, the Slovenj Gradec-based maker of car seat
covers, published on Thursday, 7 December an offer for the acquisition of all shares at SIT
30,100 (EUR 125.6) per share, making the bid for the outstanding shares worth SIT 1.17b
(EUR 4.9m).
The bidders - Prevent Global chairman Joze Kozmus, entrepreneur Nijaz Hastor and the
companies TBP, Prevent Halog Sajoma and Eurocity - already own 77.62% of the stock of the
non-listed company.
The Prevent Global management believes that consolidation of ownership will make it easier
to manage the company and penetrate new markets.
Kozmus met on Friday, 8 December the head of the Association of Free Trade Unions of
Slovenia (ZZZS) at the company, Vlado Zorman, who does not oppose the offer.
"The workers are not being forced to sell their shares, which is good," Zorman told the press,
adding that the offered price was good.
The company posted net sales of SIT 75.2bn (EUR 313.8m) for 2005 according to its
financial statements, with net profit at SIT 608m (EUR 2.5m).
Prevent was the 9th biggest Slovenian exporter last year, with exports at SIT 54bn (EUR
225.4m), down 34% year-on-year.
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SLOVENIA IN BRIEF
EU Justice Ministers Agree to Set Up Human Rights Agency
The most important accomplishment of a meeting of EU justice ministers on Monday, 4
December was an agreement on the establishment of a human rights agency, Slovenian
Justice Minister Lovro Sturm said at the sidelines of the meeting.
Minister Expects Slovenia to Join Schengen Zone in 2007
Interior Minister Dragutin Mate expects Slovenia to join the Schengen no-border zone by the
end of 2007 after EU interior ministers endorsed on Tuesday, 5 December the phased-out
removal of border checks starting in December 2007.
Minister Praises Vocational Education in Slovenia
Education and Sports Minister Milan Zver praised Slovenia's system of vocational and
professional education as he outlined achievements in the field at a meeting of EU education
ministers in Helsinki on Tuesday, 5 December.
Slovenian Ambassador to UN Bids Farewell to Annan
Slovenian Ambassador to the UN Roman Kirn, who is concluding his four year term in office,
paid a farewell visit to UN Secretary General Kofi Annan on Wednesday, 6 December. Annan
thanked Kirn for his contribution to the reform efforts at the UN which the ambassador made
in the capacity as one of the vice-presidents of the UN General Assembly.
Slovenian Chef Tantalises Taste Buds in New York
A respected Slovenian chef made a special appearance at a famous culinary foundation in
New York on Wednesday, 6 December as part of an event aimed at promoting Slovenian
cuisine. Chef Vesna Carman prepared a number of Slovenian delicacies at a culinary meeting
at the James Beard House in Manhattan that was attended by American friends of Slovenia as
well as Slovenian diplomatic officials and other Slovenians living in the US.
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