consolidated annual report of the kad group - domov lp skupine kad... · kad kapitalska druæba...

ConsolidatedAnnual Reportof the KAD Group

TableofConTenTs

6 1 PresentationoftheKapitalskadruæbaGroup 6 1.1 Kapitalskadruæba,d.d. 9 1.2 Modrazavarovalnica,d.d.11 1.3 steklarskanova,proizvodnjasteklaRogaπkaslatina,d.o.o.(inbankruptcy)

12 2 StatementoftheManagementBoardoftheparentcompany

15 3 ReportoftheSupervisoryboardontheverificationoftheAuditedConsolidatedAnnualReportoftheKapitalskadruæbaGroupfor2015

20 4 OrganisationalstructureoftheKapitalskadruæbaGroup20 4.1 Reportingonemployees

21 5 Macroeconomicbackgroundofoperations21 5.1 Inflation22 5.2 Grossdomesticproduct22 5.3 employmentandwages23 5.4 Moneymarket23 5.4.1 Interestrates23 5.4.2 exchangerate24 5.5 Capitalmarket24 5.5.1 equitymarket24 5.5.2 Debtmarket25 5.6 Priceofoil

26 6 PerformanceoftheKapitalskadruæbaGroupbysegmentin201526 6.1 Kapitalskadruæba,d.d.26 6.1.1 Capitalinvestmentmanagement31 6.1.2 Managementofportfolioinvestments33 6.1.3 TransferstothePensionandDisabilityInsuranceInstitute33 6.1.4 Investmentproperty33 6.1.5 Pensionfundmanagement36 6.1.6 activitiesintheimplementationoftheZPIZ-2in201538 6.2 Modrazavarovalnica,d.d.38 6.2.1 Managementofownfinancialassets41 6.2.2 Managementofguaranteefunds44 6.2.3 Managementofmutualequitypensionfunds49 6.3 steklarskanovaRogaπkaslatina

50 7 Riskmanagement

51 8 Significantbusinesseventsaftertheendof2015

54 9 ExpecteddevelopmentoftheKapitalskadruæbaGroupfor2016

58 10 Socialresponsibility58 10.1 Responsibilitytothewidersocialcommunity

60 10.2 Responsibilitytoemployees

60 10.2.1 Concernforemployeetraining

61 10.2.2Concernforasafeandhealthyworkenvironment

62 10.3 environmentalresponsibility

64 11 Reportonrelationswithsubsidiaries64 11.1 ReportonrelationswithModrazavarovalnica

65 11.2 ReportonrelationswithPDP

66 12 Indicators

68 13 Corporategovernancestatement

76 14 Statementofthemanagement’sresponsibility

78 15 Auditor’sreport

80 16 FinancialStatementsfor201580 16.1 Consolidatedincomestatementfortheperiodfrom1January2015to31

December2015

82 16.2 Consolidatedstatementofothercomprehensiveincomefortheperiodfrom

1January2015to31December2015

83 16.3 Consolidatedstatementoffinancialpositionasat31December2015

86 16.4 Consolidatedcashflowstatementfortheperiodfrom1January2015to31

December2015

87 16.5 Consolidatedstatementofchangesinequityfortheperiodfrom1January

2015to31December2015

88 16.6 Consolidatedstatementofchangesinequityfortheperiodfrom1January

2014to31December2014

90 17 Disclosuresandnotes90 17.1 Generaldisclosures

92 17.2 accountingpolicies

112 17.3 Disclosuresandnotestothefinancialstatements

112 17.3.1 notestotheincomestatement

121 17.3.2 notestothestatementoffinancialposition

140 17.3.3 Managingrisksarisingfromfinancialassets

145 17.4 otherdisclosures

4

Tables

20 Table1:numberofemployeesintheKapitalskadruæbaGroup26 Table2:CompositionofKapitalskadruæba’sfinancialassetsasat31December2015withregardto

management27 Table3:breakdownofKapitalskadruæba’scapitalinvestmentsasat31December2015inaccordancewith

theDecreeonthestrategyforManagingstateCapitalInvestments27 Table4:breakdownofKapitalskadruæba’scapitalinvestmentsasat31December2014inaccordancewith

Kapitalskadruæba’sassetmanagementstrategy28 Table5:TenlargestcapitalinvestmentsofKapitalskadruæbabyvalueasat31December201528 Table6:Compositionofcapitalinvestmentsintermsofsizeofownershipstakeasat31December201529 Table7:Capitalinvestmentsthatgeneratedthehighestdividendincomein2015and201430 Table8:Participationatthegeneralmeetings32 Table9:Compositionofequityportfolioinvestmentsasat31December201532 Table10:Compositionofdebtinvestmentsasat31December201533 Table11:Compositionofmoneymarketinvestmentsasat31December201534 Table12:Kapitalskadruæba’srevenuesfrommanagementofthesoDPZin201535 Table13:CompositionoftheinvestmentsofthesoDPZasat31December201536 Table14:CompositionoftheKssoDPZinvestmentsasat31December201538 Table15:financialassetsModrazavarovalnicaasat31December201539 Table16:CompositionofModrazavarovalnica’sfinancialassetsasat31December201539 Table17:Compositionofequityportfolioinvestmentsasat31December201540 Table18:Compositionofdebtinvestmentsasat31December201540 Table19:Compositionofcashandcashequivalentsasat31December201541 Table20:basicdataregardingtheguaranteefundsofModrazavarovalnica42 Table21:CompositionofKsPPsassetsasat31December201542 Table22:GeographicaldistributionofKsPPsinvestmentsasat31December201543 Table23:numberofpolicyholders/participantsandamountpaidintotheKsMRin201543 Table24:structureofKsMRsupplementarypensionannuitiesasat31December201543 Table25:CompositionofKsMRassetsasat31December201544 Table26:GeographicaldistributionofKsMRinvestmentsasat31December201544 Table27:DataregardingmutualpensionfundsmanagedbyModrazavarovalnicaasat31December201558 Table28:Kapitalskadruæba,d.d.’spaymentstothebudgetofthePDII92 Table29:numberofemployeesoftheKapitalskadruæbaGroup121 Table30:Changesinintangibleassets,andlong-termdeferredcostsandaccruedrevenuesin2015121 Table31:Changesinintangibleassets,andlong-termdeferredcostsandaccruedrevenuesin2014122 Table32:Changesinproperty,plantandequipmentin2015122 Table33:Changesinproperty,plantandequipmentin2014123 Table34:Changesininvestmentpropertyin2015123 Table35:Changesininvestmentpropertyin2014124 Table36:Rentalincomeinvestmentpropertyandcostsrelatedtoinvestmentproperty125 Table37:Changesininvestmentsinassociates133 Table38:effectiveinterestratesbyassetgroup137 Table39:PresentgrossvalueoffuturepaymentsoftheKsPPsandtheKsMR138 Table40:Changeininterestrates/returnfortheKsPPsasat31December2015138 Table41:Changeininterestrates/returnfortheKsPPsasat31December2014138 Table42:Changeininterestrates/returnfortheKsMRasat31December2015139 Table43:Changeininterestrates/returnfortheKsMRasat31December2014139 Table44:Changeinmortalityasat31December2015forKsPPs139 Table45:Changeinmortalityasat31December2014fortheKsPPs139 Table46:Changeinmortalityasat31December2015forKsMR139 Table47:Changeinmortalityasat31December2014fortheKsMR140 Table48:exposureoffinancialassetstocreditrisk,excludinganycollateralasat31December2015140 Table49:exposureoffinancialassetstocreditrisk,excludinganycollateralasat31December2014141 Table50:Geographicalconcentrationofcreditexposureoffinancialassets141 Table51:Currencystructureoffinancialassets141 Table52:Currencyriskoffinancialassetsasat31December2015142 Table54:sensitivityanalysisofinvestmentsaccordingtochangesinmarketinterestratesasat31December

2015−changeininterestratesby50basispoints142 Table55:sensitivityanalysisofinvestmentsaccordingtochangesinmarketinterestratesasat31December

2014−changeininterestratesby50basispoints142 Table56:Marketriskoftheequitysecuritiesportfolioasat31December2015143 Table57:Marketriskoftheequitysecuritiesportfolioasat31December2014143 Table58:financialinstrumentsintermsofmarketability143 Table59:expectedactualnon-discountedcashflowsasat31December2015144 Table60:expectedactualnon-discountedcashflowsasat31December2014145 Table61:Remunerationsbycategoryofbeneficiariesin2015146 Table62:ReceiptsofthemembersoftheManagementboardofKapitalskadruæbain2015146 Table63:ReceiptsofthemembersofthesupervisoryboardofKapitalskadruæbain2015147 Table64:Grossreceiptsin2015bycategory,Modrazavarovalnica147 Table65:ReceiptsofthemembersoftheManagementboardofModrazavarovalnicain2015148 Table66:ReceiptsofthemembersofthesupervisoryboardofModrazavarovalnicain2015

Figures

21 figure1:Changeinmonthlyandannualgrowthinconsumerpricesin201522 figure2:Realyear-on-yeargrowthinGDPbyquarterin201523 figure3:Movementintheyield-to-maturityon10-yearGermangovernmentbondsandthe6-month

eURIboRin201523 figure4:MovementintheUsdollar/euroexchangeratein201524 figure5:MovementinthesloveniansbIToPandselectedforeignstockindicesin2015ineuros24 figure6:MovementintheIboXXeURCorporatesTRcorporatebondindexandtheIboXXeURsovereigns

TRgovernmentbondindexin201525 figure7:MovementinpricesofWTIcrudeandnorthseabrentcrudein2015

5

ListofabbreviationsusedaeD automatedexternaldefibrillatorIsa InsurancesupervisionagencyGDP GrossdomesticproductbaMC bankassetsManagementCompanyeCb europeanCentralbankeIR effectiveinterestrateeUR euro−currencyoftheeuropeanUnionfaRs financialadministrationoftheRepublicofsloveniaIasb InternationalaccountingstandardsboardKaD Kapitalskadruæbapokojninskegaininvalidskegazavarovanja,d.d.KDD CentralsecuritiesClearingCorporationKPnG Collectiveagreementforthenon-economicsectoroftheRepublicofsloveniaKPoPnJU Collectiveagreementonthecreationofapensionplanforpublic-sectoremployeesKsMR ModraRentaGuaranteefundKsPPs firstPensionfundGuaranteefundKssoDPZ GuaranteefundoftheCompulsorysupplementaryPensionInsurancefundoftheRepublicofsloveniaKVPs MutualequityPensionfundMlfsaeo Ministryoflabour,family,socialaffairsandequalopportunitiesMKPs ModriUmbrellaPensionfundMDP ModriDynamicsub-fundMPP ModriConservativesub-fundMZP ModriGuaranteedsub-fundMDRs MinistryofDefenceoftheRepublicofsloveniaIfRs InternationalfinancialReportingstandardsIas InternationalaccountingstandardIfRIC InternationalfinancialReportingInterpretationsCommitteeVsPI VoluntarysupplementarypensioninsurancePn1K PensionplanforcollectivevoluntarysupplementarypensioninsurancePn1P PensionplanforindividualvoluntarysupplementarypensioninsurancePnJUK Pensionplanforcollectivesupplementarypensioninsuranceforpublic-sectoremployeesPPs firstPensionfundoftheRepublicofsloveniasbIToP CentralslovenianstockmarketindexsDH slovenskidræavniholding,d.d.(orslovenskidræavniholding)soDPZ CompulsorysupplementaryPensionInsurancefundoftheRepublicofsloveniaUsD UsdollarVaR ValueatRiskZDDPo-2 CorporateIncomeTaxact(officialGazetteoftheRepublicofslovenia,nos.117/2006,90/2007,76/2008,

56/2008,92/2008,5/2009,96/2009,110/2009−ZDavP-2b,43/2010,59/2011,30/2012,24/2012,94/2012,81/2013,50/2014,23/2015and82/2015)

ZfPPIPP financialoperations,InsolvencyandCompulsoryDissolutionact(officialGazetteoftheRepublicofslovenia,nos.126/2007,40/2009,59/2009,52/2010,106/2010−oRZfPPIPP21,26/2011,47/2011−oRZfPPIPP21-1,87/2011−ZPUooD,23/2012−ConstitutionalCourtruling,48/2012−ConstitutionalCourtruling,47/2013,100/2013and10/2015−amended)

ZGD-1 Companiesact(officialGazetteoftheRepublicofslovenia,nos.42/2006,60/2006−amended,26/2007−ZsDU-b,33/2007−ZsReg-b,67/2007−ZTfI,10/2008,68/2008,42/2009,33/2011,91/2011,100/2011−ConstitutionalCourtruling,32/2012,57/2012and44/2013−ConstitutionalCourtruling,82/2013and55/2015)

ZIPRs1415 ImplementationofthebudgetoftheRepublicofsloveniafor2014and2015act(officialGazetteoftheRepublicofslovenia,nos.101/2013,9/2014−ZRTVs-1a,25/2014−ZsDH-1,38/2014,84/2014,95/2014,95/2014−ZUJf-C,14/2015,46/2015and55/2015)

ZIPRs1617 ImplementationofthebudgetoftheRepublicofsloveniafor2016and2017act(officialGazetteoftheRepublicofslovenia,no.96/2015)

ZKDPZJU actGoverningCollectivesupplementaryPensionInsuranceforPublicsectoremployees(officialGazetteoftheRepublicofslovenia,nos.126/2003and32/2015)

ZPIZ PensionandDisabilityInsuranceInstituteZPIZ-1 PensionandDisabilityInsuranceact(officialGazetteoftheRepublicofslovenia,nos.109/2006[official

consolidatedtext]−ZPIZ-1UPb4,112/2006−ConstitutionalCourtruling,114/2006−ZUTPG,17/2007,5/2008,5/2008,10/2008−ZVarDod,73/2008,53/2009,98/2009−ZIUZGK,27/2010−ConstitutionalCourtruling,38/2010−ZUKn,56/2010,79/2010−ZPKDPIZ,94/2010−ZIU,57/2011,94/2011−ConstitutionalCourtruling,105/2011−ConstitutionalCourtruling,61/2010−ZsVarPre,40/2011−ZsVarPre-a,110/2011−ZDIU12,40/2012−ZUJf,96/2012−ZPIZ-2

ZPIZ-2 PensionandDisabilityInsuranceact(officialGazetteoftheRepublicofslovenia,nos.96/2012,39/2013,46/2013−ZIPRs1314-a,63/2013−ZIUPTDsV,99/2013−ZsVarPre-C,101/2013−ZIPRs1415,111/2013−ZMePIZ-1,44/2014,85/2014−ZUJf-b,95/2014−ZIUPTDsV-a,97/2014−ZMePIZ-1a,95/2014−ZIPRs1415-C,95/2014−ZUPPJs15,95/2014−ZUJf-C,31/2015-ZIsDU-3,90/2015-ZIUPTD,90/2015−ZUPPJs16,96/2015−ZIPRs1617and102/2015)

ZPIZ-2b actamendingthePensionandDisabilityInsuranceact(officialGazetteoftheRepublicofslovenia,no.102/2015)

ZPPoGD actGoverningtheearningsofManagementstaffatCompaniesundertheMajorityownershipoftheRepublicofsloveniaandself-GoverninglocalCommunities(officialGazetteoftheRepublicofslovenia,nos.21/2010and8/2011and23/2014−ZDIJZ-C)

ZPZP© bridgingInsuranceforProfessionalathletesact(officialGazetteoftheRepublicofslovenia,nos.41/2014and47/2015)

ZPZP©-1 bridgingInsuranceforProfessionalathletesact(officialGazetteoftheRepublicofslovenia,no.82/2015)ZPZRTH actGoverningtheGradualClosureoftheTrbovlje-HrastnikMineandtheDevelopmentalRestructuring

oftheRegion(officialGazetteoftheRepublicofslovenia,nos.61/2000,42/2003,71/2004,43/2010,49/2010−amended,40/2012−ZUJf,25/2014,46/2014and82/2015)

ZsDH sloveniansovereignHoldingCompanyact(officialGazetteoftheRepublicofslovenia,nos.105/2012,39/2013,101/2013−ZIPRs1415,and25/2014−ZsDH-1)

ZsDH-1 sloveniansovereignHoldingCompanyact(officialGazetteoftheRepublicofslovenia,nos.25/2014and96/2015)

ZUJIK actGoverningthePromotionofPublicInterestinCulture(officialGazetteoftheRepublicofslovenia,nos.96/2002,123/2006−Zfo-1,7/2007−ConstitutionalCourtruling,53/2007,65/2007−ConstitutionalCourtruling,56/2008,4/2010,20/2011,100/2011−ConstitutionalCourtruling,111/2013)

ZVPsJU ClosedMutualPensionfundforPublic-sectoremployeesZZavar Insuranceact(officialGazetteoftheRepublicofslovenia,nos.13/2000,31/2000−ZP-l,91/2000−

amended,12/2001−ConstitutionalCourtruling,21/2002,52/2002−ZJa,91/2002−ConstitutionalCourtruling,29/2003−ConstitutionalCourtruling,40/2004−ZDDPo-1,50/2004,65/2004−ConstitutionalCourtruling,76/2005−ZZVZZ-H,8/2006−oRZZavar62,79/2006,114/2006−ZUe,9/2007,102/2007,69/2008,19/2009,49/2009,83/2009,79/2010,90/2012,102/2012,56/2013,63/2013−Zs-K,66/2014,92/2014and93/2015−ZZavar-1)

ZZavar-1 Insuranceact(officialGazetteoftheRepublicofslovenia,no.93/2015)

6 Presentation of the Kapitalska druæba Group

TheKapitalskadruæbaGroupcomprisestheparentcompanyKapitalskadruæba,d.d.,Modra

zavarovalnica,d.d.andsteklarskanovaRogaπkaslatina,d.o.o.(inbankruptcy).eachofthe

aforementionedcompaniesisdescribedinmoredetailbelow.

1.1 KaPITalsKaDRUæba,D.D.

Company

Companyname:Kapitalskadruæbapokojninskegaininvalidskegazavarovanja,d.d.

Abbreviatedcompanyname:Kapitalskadruæba,d.d.(hereinafter:Kapitalskadruæba)

CompanynameinEnglish:PensionfundManagement

Registeredoffice:Dunajskacesta119,ljubljana

Registrationnumber:5986010000

VATIDnumber:sI59093927

Entryincompaniesregister:ljubljanaDistrictCourt,reg.no.1/28739/00

Ownershipstructureanddataregardingcapital

TheRepublicofsloveniawasKapitalskadruæba’ssoleshareholderasat31December2015.

TheCompany’ssharecapital,amountingtoeUR364,809,523.15,isdividedinto874,235

ordinaryregisteredno-par-valueshares.eachno-par-valuesharerepresentsthesamestake

andcorrespondingamountinthesharecapital.

ActivitiesoftheCompany

Kapitalskadruæba’sprincipleactivityistheprovisionofsupplementaryfundingforpension

anddisabilityinsurancethroughthemanagementofitsownassets,andthemanagement

oftheCompulsorysupplementaryPensionInsurancefund(hereinafter:thesoDPZ)andthe

GuaranteefundoftheCompulsorysupplementaryPensionInsurancefund(hereinafter:the

KssoDPZ).Kapitalskadruæbaalsoperformsotheractivitiesrelatedtoassetmanagement

andassetmanagementsupportservices.

Kapitalskadruæba’sactivitiesaredefinedbythelawandtheCompany’sarticlesofassocia-

tion,accordingtowhichKapitalskadruæbaperformsthefollowingactivities:

58.110 bookpublishing

7

58.120 Publishingofdirectoriesandmailinglists

58.130 Publishingofnewspapers

58.140 Publicationofmagazinesandotherperiodicals

58.190 otherpublishingactivities

58.290 othersoftwarepublishing

59.200 soundrecordingandmusicpublishingactivities

62.010 Computerprogrammingactivities

62.020 Computerconsultancyactivities

62.030 Computerfacilitiesmanagementactivities

62.090 otherinformationtechnologyandcomputerserviceactivities

63.110 Dataprocessing,hostingandrelatedactivities

63.120 Webportals

64.200 activitiesofholdingcompanies

64.300 Trusts,fundsandsimilarfinancialentities

64.990 otherfinancialserviceactivities,exceptinsuranceandpensionfundingactivitiesn.e.c.

65.300 Pensionfundactivities

66.210 Riskandclaimsassessment

66.290 otherauxiliaryactivitiesforinsuranceandpensionfunding

68.100 buyingandsellingofownrealestate

68.200 Rentingandoperatingofownorleasedrealestate

69.200 accounting,bookkeepingandauditingactivities;taxconsultancy

70.100 activitiesofheadoffices

70.220 businessandothermanagementconsultancyactivities

73.200 Marketresearchandpublicopinionpolling

85.590 othereducationn.e.c.

85.600 educationalsupportactivities

Companybodies

Management Board

KapitalskadruæbawasrunbyitsManagementboardin2015inthefollowingcomposition:

�� bachtiarDjalil,President,

�� anjastrojin©tampar,Msc,member,and

�� DrborisænidariË,member.

Thetermofofficeofanjastrojin©tampar,Mscexpiredon30november2015.Drborisæni-

dariË,thecurrentDeputyChairmanofKapitalskadruæba’ssupervisoryboard,beganatem-

porarytermofofficeasmemberoftheManagementboardon23november2015.

ThePresidentandmemberofKapitalskadruæba’sManagementboardwereappointedbythe

supervisoryboardinaccordancewiththeCompany’sarticlesofassociationandtheprovi-

sionsofthesloveniansovereignHoldingCompanyact(hereinafter:theZsDH-1),onthebasis

ofapublictenderprocedure.ThetemporarymemberoftheManagementboardwaslikewise

appointedbytheKapitalskadruæba’ssupervisoryboardpursuanttothesecondparagraph

ofarticle273oftheCompaniesact(hereinafter:theZGD-1).

oneofthemembersoftheManagementboardisappointedpresidentthereof.Membersof

theManagementboardserveafour-yeartermofofficeandmaybere-appointed.TheMan-

agementboardoritsindividualmembersmayberecalledpriortotheendoftheirtermof

office,butonlyforthereasonssetoutinthesecondparagraphofarticle268oftheZGD-1.

aviolationofthearticlesofassociationofKapitalskadruæbathatisdeemedtobeaserious

violationofobligationsmayconstituteareasonofculpabilityresultinginrecall.

TheManagementboardofKapitalskadruæbahasnopowerstoissueorpurchasetreas-

uryshares.

8

Supervisory Board

ThesupervisoryboardofKapitalskadruæbafunctionedinthefollowingcompositionin2015:

�� samolozej,Chairman,

�� aldoTernovec,DeputyChairman(until31January2015),

�� aleksanderMervar,Msc,

�� stanislavseniËar,

�� anabilbija,

�� ladislavRoæiË,Msc,

�� DrborisænidariË,DeputyChairman(from5March2015to22november2015),and

�� CirilasurinaZajc,DeputyChairwoman(since23november2015).

Thetermsofofficeofthefollowingthreemembersofthesupervisoryboardexpiredon31

January2015:

�� aldoTernovec,

�� anabilbija,

�� ladislavRoæiË,Msc.

Thefollowingthreenewmembersbegantheirfour-yeartermofofficeon1february2015:

�� DrborisænidariË,(untilheassumedhisfunctionasmemberoftheManagementboard),

�� CirilasurinaZajc,and

�� ladislavRoæiË,Msc.

ThesupervisoryboardofKapitalskadruæbaisappointedbytheCompany’sGeneralMeet-

ing.Thesupervisoryboardcomprisessixmembersinaccordancewiththesixthparagraph

ofarticle51oftheZsDH-1.Threemembersofthesupervisoryboardareappointedonthe

basisofaproposalbysDH,1whiletwomembersareappointedonthebasisofaproposalby

anational-levelfederation/organisationofpensioners.onememberisappointedonthebasis

ofaproposalbynational-levelrepresentativetradeunionfederationsorconfederations.Ifan

individualinterestgroupdoesnotformulateaproposalfortheappointmentofmembersof

thesupervisoryboardinthemannerdefinedbelow,theGeneralMeetingoftheCompany

appointsmissingmembersatitsowndiscretion.Theproposalforcandidatestorepresent

sDHisformulatedbysDH’sManagementboard,whichinformsthesupervisoryboardof

itschoice.Theproposalforcandidatestorepresentpensionersisformulatedbynational-

levelfederations/organisationsofpensioners,whichinformthesupervisoryboardoftheir

choice.Theproposalforacandidatetorepresenttradeunionsisvoteduponbyrepresenta-

tives(electors)ofnational-levelrepresentativefederations/confederations,whichinformthe

supervisoryboardoftheirchoice.eachrepresentativefederation/confederationhasasmany

representativesasthenumberofrepresentativetradeunionsamalgamatedwithinthem.In

additiontotherepresentativesreferredtointheprecedingsentence,afederation/confedera-

tionelectsonerepresentativeforevery10thousandmembers.Membersofthesupervisory

boardserveafour-yeartermofofficeandmaybereappointed.

General Meeting

Therightsofthesoleshareholderareexercisedbythesloveniangovernment.

1 Thecurrentthreemembersofthesupervisoryboardwereappointedbasedonaproposalbyslovenskaodπkodninskadruæba,d.d.inaccordancewiththepreviouslyvalidZsDH.

9

1.2 MoDRaZaVaRoValnICa,D.D.

Company

Name:Modrazavarovalnica,d.d.(hereinafter:Modrazavarovalnica)

Registeredoffice:Dunajskacesta119,ljubljana


VATIDnumber:sI21026912

Ownershipstructureanddataregardingcapital

KapitalskadruæbawasModrazavarovalnica’ssoleshareholderasat31December2015.

Theinsurancecompany’ssharecapitalamountstoeUR152,200,000andisdividedinto

152,200,000no-par-valueshares.eachsharerepresentsthesamestakeandcorresponding

amountinthesharecapital.Thestakeofindividualno-par-valuesharesinthenominalcapital

isdeterminedwithrespecttothenumberofno-par-valuesharesissued.

Activitiesofthecompany

ModrazavarovalnicaprovideslifeinsuranceservicesinaccordancewiththeInsuranceact

(hereinafter:theZZavar)andthedecisionissuedbytheInsurancesupervisionagency(here-

inafter:theIsa),bywhichitauthorisedtheformertoprovidethefollowingtypesofinsur-

ancetransactions:

�� accidentinsurance−point1ofthesecondparagraphofarticle2oftheZZavar;and

�� lifeinsurance−point19ofthesecondparagraphofarticle2oftheZZavar.

Modrazavarovalnica’sactivitiesaredefinedbythelawandthecompany’sarticlesofasso-

ciation,accordingtowhichModrazavarovalnicaperformsthefollowingactivities:

65.110 lifeinsurance

65.120 non-lifeinsurance(onlyaccidentandhealthinsurancetransactions)

65.300 Pensionfunding

66.210 Riskanddamageevaluation

66.220 activitiesofinsuranceagentsandbrokers

66.290 otheractivitiesauxiliarytoinsuranceandpensionfunding

66.300 fundmanagementactivities

Companybodies

Management Board

TheManagementboardhastwomembersinaccordancewiththecompany’sarticlesof

association.ThesupervisoryboardappointsthemembersoftheManagementboardfora

five-yeartermofoffice.ModrazavarovalnicawasrunbyitsManagementboardin2015in

thefollowingcomposition:

�� borutJamnik,President,whosefive-yeartermofofficebeganon29august2011.Mr

Jamnik’ssecondfive-yeartermofofficebeginson29august2016;and

�� MatijaDebelak,member,whosefive-yeartermofofficebeganon14september2011.Mr

Debelak’ssecondfive-yeartermofofficebeginson14september2016.

TheManagementboardmanagesthecompanyintheintereststhereof,independentlyand

atitsownrisk.TheManagementboardrepresentsModrazavarovalnicawithoutlimitations.

Inlegaltransactions,thecompanyisalwaysrepresentedcollectivelybythePresidentand

memberoftheManagementboard.Thecompany’sarticlesofassociationsetoutthetrans-

actionsanddecisionsforwhichtheManagementboardmustobtaintheconsentofthe

supervisoryboard.

10

TheManagementboardexerciseditscompetencesin2015inaccordancewiththerulesof

procedureofthatbody,reportedregularlytothesupervisoryboardandfulfilleditsobligations

totheshareholder,assetoutintheZGD-1,inaccordancewiththearticlesofassociation.

Supervisory Board

Policyholdersor their representativeshelpco-formulate thebusinesspolicyofModra

zavarovalnica.

Thesupervisoryboardcomprisessixmembersappointedtoafive-yeartermsofofficeby

theinsurancecompany’sGeneralMeetingon9December2011.Halfofthemembersofthe

supervisoryboardwereproposedbypolicyholdersbasedonapubliccalltoproposecandi-

dates.TwomemberswereproposedbytheCommitteeoftheClosedMutualPensionfund

forPublic-sectoremployees(hereinafter:theZVPsJU)onbehalfofZVPsJUpolicyholders,

whileathirdmemberwasproposedbytheCommitteeoftheMutualequityPensionfund

(hereinafter:theKVPs)onthebehalfofotherpolicyholders.

Thesupervisoryboardcomprisesthefollowingmembers:

�� branimir©trukeljservedasChairmanfrom1January2015to22December2015,andhas

servedasDeputyChairmansince23December2015,

�� DraleπGroznikservedasDeputyChairmanfrom1January2015to22December2015,

andhasservedasChairmansince23December2015,

�� DarioRadeπiË,member,

�� Goranbizjak,member,

�� bojanZupanËiË,member,and

�� Marinofurlan,member.

Theresponsibilitiesofthesupervisoryboardaresetoutinthecompany’sarticlesofasso-

ciation,whileitsworkmethodisgovernedbytheaforementionedbody’srulesofprocedure.

adetaileddescriptionoftheactivitiesandworkmethodofthesupervisoryboardin2015is

givenintheReportofthesupervisoryboard.

Twocommitteesfunctionedwithinthesupervisoryboardin2015:anauditcommitteeand

ahumanresourcecommittee.

GeneralMeeting

Kapitalskadruæbaexerciseditsrightsin2015attheGeneralMeetingasthecompany’ssole

shareholder.

11

1.3 sTeKlaRsKanoVa,PRoIZVoDnJasTeKlaRoGa©KaslaTIna,D.o.o.(InbanKRUPTCy)

Generalinformation

Companyname:steklarskanova,proizvodnjasteklaRogaπkaslatina,d.o.o.(inbankruptcy)

Abbreviatedcompanyname:steklarskanovaRogaπkaslatina,d.o.o.(inbankruptcy;here-

inafter:steklarskanovaRogaπkaslatina)

Registeredoffice:steklarskaulica1,3250Rogaπkaslatina


VATIDnumber:30186323

ThecompanyisenteredinthecompaniesregisterattheCeljeDistrictCourt,underregistra-

tionnumber:1/07987/00

Ownershipstructure

Kapitalskadruæbawas100%ownerofsteklarskanovaRogaπkaslatinaon21May2009,

whenbankruptcyproceedingswereinitiatedagainstthelatter.

Companybodies

bankruptcyproceedingswereinitiatedagainststeklarskanovaRogaπkaslatinaon21May

2009.©tefanRola,s.p.wasinitiallyappointedofficialreceiver,butwasrelievedofhisfunc-

tionon6July2011.DrIrenalesjakwasappointedasofficialreceiveronthesameday.bank-

ruptcyproceedingsarestillinprogress.

KapitalskadruæbadoesnotincludethesubsidiarysteklarskanovaRogaπkaslatinainitscon-

solidatedfinancialstatements,astheinclusionofthefinancialstatementsoftheaforemen-

tionedsubsidiaryisnotmateriallysignificantforatrueandfairpresentationofthefinancial

statementsoftheKapitalskadruæbaGroupasawhole.

12 Statement of the Management Board of the parent company

Despitetheeconomicgrowthrecordedinslovenia,economicconditionsremainuncertain.

operationswerehinderedlastyearbystructuralimbalancesinsloveniaandnumerousprob-

lemsinthewiderenvironment,fromthreatstotheeuroduetothecrisisinGreece,which

hasdraggedonformanyyears,andtheunexpectedwaveofrefugees,totheescalationof

armedconflicts,terroristattacksandthecoolingoftheChineseeconomy.Historicallylow

interestrateswereaccompaniedbylargefluctuationsonstockandbondmarketsandfall-

ingoilprices.Volatileeconomicandpoliticalconditionspersist,whileforecastsofglobal

economicgrowtharenotencouraging.Inthecontextoftheseunfavourableexternalcir-

cumstances,Kapitalskadruæbaremainsloyaltoitsmissionofprovidingadditionalfundsfor

compulsorypensionanddisabilityinsurance,andtheprovisionofoccupationalpensioninsur-

anceforspecificcategoriesofworkers.Weareawarethatwecanonlypursueourmissionin

theseuncertainanddifficulteconomicconditionsbyworkingtogetherwithallstakeholders

andstrivingtounderstandtheirneeds,usingalloftheknowledgeandcompetencesofour

employees.atthesametime,wefocusconstantlyontheeffectivemanagementofrisksand

theexploitationofbusinessopportunities.

WemanagedfundsinexcessofeUR675millioninthesoDPZduring2015,representingthe

savingsofmorethan45,600policyholders.Despitethehighlyvolatilefinancialmarkets,we

achievedasolidyieldthroughthemanagementofthesecondlargestpensionfundinslovenia,

whichrankedtheCompanythirdamongpensionfundmanagersin2015.TheKssoDPZis

alsodemonstratingstablegrowth.asat31December2015,atotalof133retireesreceivedan

occupationalpensionfromtheaforementionedfund,whilegrosspensionsamountedtonearly

eUR2million.Despitethestillsmallnumberofoccupationalpensioners,retirement-related

activitieswereparticularlydemandinglastyear,aswecontinuedtodealwithaspecialtype

ofoccupationalretirementsetoutintheactGoverningtheGradualClosureoftheTrbovlje-

HrastnikMineandtheDevelopmentalRestructuringoftheRegion(ZPZRTH),whichincludes

thestate,asco-financier,viatheministryresponsiblefortheinfrastructure.Duetoinsufficient

legalprovisionsandtheneedtoincludeexternalinstitutionsintheaforementionedspecial

formofretirementandcomplexdocumentarychannels,theestablishmentofanappropriate

businessprocesswasverydemanding.Kapitalskadruæbasuccessfullyaddressedthoseand

otherchallengesintheareaofpensioninsurancein2015,when19retireesbeganreceiving

anoccupationalpensioninaccordancewiththespecialprovisionsoftheZPZRTH.

13

ThebridgingInsuranceforProfessionalathletesact(hereinafter:theZPZP©)taskedKapitalska

druæbawiththeimplementationofbridginginsurance,whichrepresentsanopportunitytopar-

tiallyfillthefinancialgapbetweentheendofaprofessionalathlete’sactivesportingcareerandthe

beginningandanewcareer.since2014,Kapitalskadruæbahaswarnedoftheunenforceabilityof

legalprovisionslinkedtotheimplementationofbridginginsuranceandhasdrawnupproposed

solutionsaccordingly.Inappropriateandunenforceablelegalprovisionswererectifiedduring

thesecondhalfof2015withthenewbridgingInsuranceforProfessionalathletesact(ZPZP©-1).

Kapitalskadruæbamustestablishabridgingfundforathletesby1september2016.TheCompany

willsetupaspecialprojectgroupthatwilldrawupthetechnical-operationalbasesofbusiness

processesfortheprovisionofbridginginsuranceforathletes,acompletelynewfieldinslovenia.

Theimplementationoftheaforementionedlegallyprescribedtaskishinderedontheonehand

bythelackofsystematicregulationoftheemploymentrelationsofprofessionalathletes,which

inturnmeansagreatdealofuncertaintyregardingthesuccessofthebridgingfundforathletes.

Inadditiontotheprojectaimedattheimplementationofbridginginsuranceforathletes,

Kapitalskadruæbaalsobeganimplementingaprojectin2015toreplaceitsinformationsys-

tem.Duetothesize,complexityandrisksofsuchprojects,thatreplacementwillbecarried

outgraduallyandcontinueforsometime.Thereplacementoftheinformationsystemwill

alsobeaccompaniedbytheoptimisationofkeybusinessprocessesandtheiradaptationto

numerouschangesinthebusinessandfinancialenvironments.

Thedifficultconditionsthatcharacterisedthe2015financialyearwereagoodopportunityfor

Kapitalskadruæbatopursueitsvisionandstrengthenitsroleintheeconomyandpensionsys-

tem.ourcapitalstabilityandinnovativestrengthintheimplementationofnewpensionsolutions,

andtheCompany’scommitmenttoitsmissionrepresentaguaranteeforthecontinuedsuc-

cessfuloperationsofKapitalskadruæbaforthebenefitofcurrentandfutureretireesinslovenia.

In2015,Modrazavarovalnicawasthefirstontheslovenianmarkettooffersaversthepossi-

bilityofsavinginlife-cyclefunds.Thecompanygainedanimportantcompetitiveadvantage

onthesupplementarypensioninsurancemarketwiththeintroductionoftheModriUmbrella

Pensionfund.TheModriUmbrellaPensionfundcomprisesthreesub-fundswithdifferent

investmentpoliciesdependingontheageoffundparticipants.Itisavailabletoallemploy-

ersandtheiremployeeswhoareawareoftheadvantageofsavingsviatheselectionofan

investmentpolicyadaptedtotheindividual.TheperformanceoftheModriUmbrellaPension

fundexceededourexpectations,asthefundhadnearlyninethousandsaversattheendof

December,withatotalofeUR23millioninassetsundermanagement.

Modrazavarovalnica’scapital,whichensuresthesecurityofpolicyholders’assets,amounted

toeUR201millionattheendof2015,whichiseUR58millionmorethanwhentheinsurance

companybeganoperatingfouryearsago.Thesecurityofpolicyholders’assetsandthehigh-

qualityofitsserviceswillcontinuetobeModrazavarovalnica’scoreguidelines.Thevalue

ofassetsundermanagementalsorecordedgrowthtostandateUR1.3billionattheendof

2015:assetsundermanagementinmutualpensionfundstotalledeUR914million,while

assetsundermanagementinguaranteefundstotalledeUR140million.Thecompany’sown

assetsamountedtoeUR223million.

Uncertaintyonthefinancialmarketsandmajorfluctuationsinthepricesoffinancialinstruments

werecharacteristicof2015.Thevalueofeuropeangovernmentbondsroseslightly,whilethe

valueofcorporatebondswasdownonaverage.Theshareindicesofdevelopedmarketswereup

byanaverageof6.6%.JapaneseandGermansharesrecordedthehighestaveragegains.Unfor-

tunately,slovenianshareslost11.2%oftheirvalueduringthesameperiod,whichhadasignificant

affectontheperformanceofthefirstPensionfund,asdomesticequityinvestmentsaccountfor

58%ofthatfund’sportfolio.TheinsurancecompanycreatedprovisionsintheamountofeUR

4.8millionin2015duetotheaforementionedfund’sfailuretoachievetheguaranteedreturn.

14

ThereturnsofotherpensionfundsmanagedbyModrazavarovalnicawerealsolowerthanthe

previousyearin2015,butwerecomparablewiththereturnsofcompetitiveslovenianpension

funds.Themajorityofslovenianpensionfundsdidnotachievetheirrespectiveguaranteed

returns.Thiswasduetothedifficultmarketconditionsontheonehandandduetotherela-

tivelyhighguaranteedreturntarget,whichwas1.94%annuallyforfundsmanagedbyModra

zavarovalnica,ontheotherhand.TheZVPsJUachievedareturnof3.68%,whiletheKVPs

achievedareturnof1.39%.The11-monthreturnoftheModriUmbrellaPensionfund’ssub-

fundsrangedfrom−1.97%ontheguaranteedsub-fundto3.59%onthedynamicsub-fund.

oneofModrazavarovalnica’smostimportantmarketobjectivesin2015wasincreasedrec-

ognitionandthepositioningoftheinsurancecompanyasthelargestandleadingprovider

ofsupplementarypensioninsuranceontheslovenianmarket.Wecarriedoutthreemajor

advertisingcampaignsandTVadvertising,whichwereaccompaniedbyonlineandprint

advertising,andpresentedModrazavarovalnica’smissionandtheneedforsupplementary

pensionsavings.Wethankedpolicyholdersfortheirtrustandcalledonotherstomakethe

intelligentchoice,eventhoughretirementremainsfaraway.Theannualmeasurementofthe

recognitionofModrazavarovalnicaindicatedthatplannedmarketingactivitiesweretheright

ones,asrecognitionoftheinsurancecompanyimprovedsignificantly.

In2016,Modrazavarovalnicawillcontinuetopursuestrategiesthatfocusonthesecurityofsup-

plementarypensioninsurancepolicyholders.Thatsecuritywillbeensuredthroughasufficient

levelofcapital,prudentoperationsandanincreaseinthevalueofsupplementarypensionsavings.

Majorbusinessobjectivesin2016includegrowthinmarketshareintheareaofsupplementary

pensionsavingsandinthepaymentofsupplementarypensionannuities.Increasedmarketing

activitiesduringthesecondhalfoftheyearwillbeaimedattheplannedtransformationoftheZVP-

sJUintoasub-fundwithaguaranteedreturnandtheestablishmentofanumbrellalife-cyclefund,

wheretheformulationofhigher-riskinvestmentpoliciesforbothfundscanbeexpectedin2017.

Throughthedevelopmentandupdatingofsupplementarypensionsinaccordancewiththe

newfeaturesoftheZPIZ-2andtheimplementingregulationissuedbytheMinistryoffinance,

wewillofferarangeofpensionannuitiesin2016,takingintoaccounttheexpectationsofpoli-

cyholdersandprescribedlimitsonthelevelandtypeofassetsundermanagement.Inaccord-

ancewithadoptedguidelines,wewillcontinuetostrengthenourfocusonthecustomer,offer

themostpersonaltreatmentpossible,monitorcustomers’needsandadvisethemaccordingly.

Weexpectadifficultyearin2016intermsofthemanagementofinvestments,astheresult

ofextremelylowinterestrates,andlowyieldsonbondsandrelativelyhigh-value,higher-risk

investmentcategories.Theguaranteedreturnin2016wascutfrom1.94%to1.08%annually.

Weneverthelessassessthattheachievementofsuchareturnwillbedifficult.

Theinsurancecompany’scommunicationconceptwillcontinuetofocusonlinkingsupplemen-

tarypensioninsurancewithModrazavarovalnicain2016,andthemoreintensivepositioning

oftheinsurancecompanyastheleadingandsecurestmanagerofpensionsavingsandpayer

ofsupplementarypensionannuities.ThekeymessageswillemphasiseModrazavarovalnica

asatrustworthylong-termpartner,wherethesecurityofsavingsandresponsibilityforfund

participantstakepriority.Wewillcontinuetooperateasafamily-friendlycompany,whiledem-

onstratingoursocialresponsibilitythroughresponsibilityfortheenvironment,transparentand

responsibleoperations,andbypublicawarenessaboutthefactthatsupplementarypensionsav-

ingsareanintelligentsolution,astheyfacilitateadecentstandardoflivingfollowingretirement.

DrBorisÆnidariË BachtiarDjalilMemberoftheManagementboard PresidentoftheManagementboard

15Report of the Supervisory board on the verification of the Audited Consolidated Annual Report of the Kapitalska druæba Group for 2015

Pursuanttotheprovisionsofarticle282oftheCompaniesact(hereinafter:theZGD-1),the

supervisoryboardofKapitalskadruæbapokojninskegaininvalidskegazavarovanja,d.d.

(hereinafter:Kapitalskadruæba)herebysubmitsthefollowingreporttotheCompany’sGen-

eralMeeting:

a)ReportoftheSupervisoryBoardonthemethodandextentoftheverificationoftheCompany’smanagementduringthefinancialyear

ThesupervisoryboardofKapitalskadruæbafunctionedinthefollowingcompositionuptoand

including31January2015:samolozej(Chairman),aldoTernovec(DeputyChairman),alek-

sanderMervar,Msc,stanislavseniËar,anabilbijaandladislavRoæiË,Msc.Thetermsofoffice

ofthefollowingmembersofthesupervisoryboardendedon31January2015:aldoTernovec,

anabilbijaandladislavRoæiË,Msc.Thefollowingpersonswerethereforeappointedasnew

membersofthesupervisoryboardattheCompany’sGeneralMeetingon30January2015:Dr

borisænidariË,CirilasurinaZajcandladislavRoæiË,Msc.Thefour-yeartermofofficeofthe

threeaforementionedmembersofthesupervisoryboardbeganon1february2015.atthe

84thsessionofthesupervisoryboardon5March2015,DrborisænidariËwasappointedDep-

utyChairmanofthesupervisoryboard.Heperformedthatfunctionuntilheassumedhisfunc-

tionasmemberofKapitalskadruæba’sManagementboard.forthisreason,CirilasurinaZajc

wasappointedDeputyChairwomanofthesupervisoryboardatthe96thsessionoftheafore-

mentionedbodyon13november2015.MsZajc’stermofofficebeganon23november2015.

Thesupervisoryboardmetat17sessionsduringthe2015financialyearasfollows:10regu-

larsessionandsevencorrespondencesessions.Thesupervisoryboardmetatoneregular

sessionandonecorrespondencesessioninthecompositioninwhichitfunctioneduntil31

January2015.

TheKapitalskadruæbaGroupcomprisestheparentcompanyKapitalskadruæba,Modra

zavarovalnica, d. d. (hereinafter: Modra zavarovalnica) and steklarska nova Rogaπka

16

slatina,d.o.o.(inbankruptcy).InadditiontotheoperationsofKapitalskadruæba,thesuper-

visoryboardalsocontinuouslymonitoredtheoperationsofModrazavarovalnica.

areviewoftheimportantmattersdiscussedbythesupervisoryboardin2015follows:

- ParticularattentioninthemonitoringofKapitalskadruæba’soperationsin2015wasgiven

tomonitoringthemanagementoftheCompany’sassets,andtomonitoringthemanage-

mentoftheCompulsorysupplementaryPensionInsurancefundoftheRepublicofslove-

nia(soDPZ)andtheGuaranteefundoftheCompulsorysupplementaryPensionInsurance

fundoftheRepublicofslovenia(KssoDPZ),whicharemanagedbyKapitalskadruæba.

- ConfirmationoftheannualreportsofKapitalskadruæbaandtheKapitalskadruæbaGroup

forthe2014financialyearandtheproposaltotheGeneralMeetingfortheappointmentof

anauditorforthe2015financialyear.

- ConsenttoKapitalskadruæba’sbusiness-financialplanfor2016.

- InaccordancewiththeprovisionsoftheCompany’sarticlesofassociation,thesupervi-

soryboardalsogavetheManagementboarditsconsenttoconcludetransactionsforthe

purchaseandsaleofsecuritiesandparticipatinginterestsincaseswhenthevalueofaspe-

cifictransactionexceededthevaluesetoutintherelevantsupervisoryboardresolution.

- atits96thsessionon13november2015,thesupervisoryboardrelievedanjastrojin

©tampar,MscofherfunctionasmemberoftheManagementboard,effective30novem-

ber2015,basedontheresignationsubmittedbyMsstrojin©tampar,andappointedDr

borisænidariËtoserveasmemberoftheManagementboardforatermofofficeofone

year.TheappointmentofatemporarymembertotheManagementboardfromthemem-

bersofthesupervisoryboardwascarriedoutbasedontheprovisionsofarticle33ofthe

Company’sarticlesofassociationandthesecondparagraphofarticle273oftheZGD-1.

DuringhistermofofficeasamemberofKapitalskadruæba’sManagementboard,Dræni-

dariË’sfunctionsasmemberandDeputyChairmanoftheCompany’ssupervisoryboard

aresuspended.

- forthepurposeofappointingamembertothesupervisoryboardonthebasisofapro-

posalbyanational-levelfederation/organisationofpensionersfortheperiodinwhichthe

functionofexistingsupervisoryboardmemberDrborisænidariËissuspended,thesuper-

visoryboarddrewupaproposalfortheappointmentofamemberbasedontheproposal

receivedfromtheassociationofPensionersocietiesofslovenia.

anaccreditationcommitteealsofunctionedasanadvisorybodytothesupervisoryboard

in2015.Theaforementionedcommittee’staskwastoprovidesupporttothesupervisory

boardinthesupervisionofthemanagementoftheCompany’stransactionsastheyrelateto

thegovernanceofcompaniesinwhichKapitalskadruæbaholdscapitalinvestments.

Thefour-memberauditcommitteeisapermanentworkingbodyofthesupervisoryboard,

andcloselymonitorstheoperationsoftheCompanyandtheworkoftheManagementboard

fortheneedsofthesupervisoryboard’sdecisions.Thesupervisoryboard’sauditcommittee

functionedinthefollowingcompositionin2015:ladislavRoæiË,Msc(chairman),aleksander

Mervar,Mscandanabilbija(membersuntil31January2015),CirilasurinaZajc(member

since5March2015),andMojcaVerbiË(externalmember).Theauditcommitteemetatten

sessionsin2015,oneofwhichwasheldinthecompositionthatfunctioneduntil31January

2015.Initswork,theauditcommitteeappliedtherecommendationsoftheslovenianDirec-

tors’associationforauditcommitteesandtherecommendationsoftheslovenianInstituteof

auditors,aswellastherulesofprocedureoftheauditcommitteeasadoptedbythesupervi-

soryboard.Theauditcommitteerepresentedapermanentworkingbodyofthesupervisory

board,andcloselymonitoredtheoperationsoftheCompanyandtheworkoftheManage-

mentboardfortheneedsofthesupervisoryboard’sdecisions.Inadditiontoitslegallypre-

scribedtasks,theauditcommitteealsoreviewedtheinterimreportsontheoperationsof

Kapitalskadruæba,itssubsidiariesandthepensionfundsunderKapitalskadruæba’smanage-

ment(soDPZandKssoDPZ).Italsomonitoredtheworkoftheinternalauditdepartment.

17

Theauditcommitteealsocarriedoutaself-assessment.Theauditcommitteeregularlybriefed

thesupervisoryboardonitsworkduringthelatter’ssessions.

AssessmentoftheworkoftheManagementBoardandSupervisoryBoard

onthebasisoftheaforementionedcontinuousmonitoringandsupervisionoftheoperations

ofKapitalskadruæbaanditssubsidiariesduringthe2015financialyear,andbasedonareview

oftheconsolidatedannualreportoftheKapitalskadruæbaGroupfor2015compiledandsub-

mittedbytheManagementboard,thesupervisoryboardassessesthattheannualreport

anddisclosurescontainedthereinreflecttheactualsituationandpositionoftheKapitalska

druæbaGroup.ThesupervisoryboardfindsthattheManagementboardpreparedmateri-

alsinatimelymanner,whichfacilitatedqualityinformationandthethoroughdiscussionof

themostimportantoperationalmatters.TheManagementboardalsoprovidedexhaustive

responsestothesupervisoryboard’sadditionalquestionsandinitiatives.TheManagement

board’sreportingtothesupervisoryboardduringthe2015financialyearenabledthelatter

tocarryoutitssupervisoryrolesatisfactorily.

b)SupervisoryBoard’spositionontheauditreport

Pursuanttothesecondparagraphofarticle282oftheZGD-1,thesupervisoryboardreviewed

anddiscussedtheauditreportrelatingtotheauditofthefinancialstatementsofKapitalska

druæbaGroupfor2015,whichwasconductedbytheauditfirmDeloitterevizijad.o.o.,lju-

bljana.Thesupervisoryboardfindsthattheauditorperformeditstaskinaccordancewith

thelaw,auditingrulesandinternationalauditingstandards.Thesupervisoryboardhasno

remarksregardingtheauditreport.

c)Decisionregardingtheapprovaloftheannualreportfor2015

Pursuanttotheprovisionsofarticle282oftheCompaniesact,thesupervisoryboardhereby

approvestheconsolidatedannualreportoftheKapitalskadruæbaGroupfor2015.

d)ProposaltotheGeneralMeetingonthedischargeoftheManagementBoardandtheSupervisoryBoard

Takingintoaccountpointsa),b)andc)ofthisreport,thesupervisoryboardproposesthat

theGeneralMeetingofKapitalskadruæbaadoptadecisiongrantingdischargetotheCom-

pany’sManagementboardandsupervisoryboardfortheirworkduringthe2015financial

yearpursuanttotheprovisionofarticle294oftheZGD-1.

StanislavSeniËarChairmanofthesupervisoryboard

BusinessReport

20 Organisational structure of the Kapitalska druæba Group


zavarovalnicaandsteklarskanovaRogaπkaslatina.

astheparentcompany,KapitalskadruæbaincludestheModrazavarovalnicainitsconsoli-

datedfinancialstatements.

Kapitalskadruæba’scapitalinvestmentinsharesofPDP,d.d.wassoldtosDHin2015in

accordancewiththeprovisionofthefirstparagraphofarticle82oftheZsDH-1.PDP,d.d.

isthusnolongerasubsidiaryofKapitalskadruæba.

KapitalskadruæbadoesnotincludethesubsidiarysteklarskanovaRogaπkaslatinainitscon-

solidatedfinancialstatements,astheinclusionofthefinancialstatementsoftheaforemen-

tionedsubsidiaryisnotmateriallysignificantforatrueandfairpresentationofthefinancial

statementsoftheKapitalskadruæbaGroupasawhole.

4.1 RePoRTInGoneMPloyees

attheendof2015theKapitalskadruæbaGrouphad115employeesbrokendownasfollows:

59employeesatKapitalskadruæbaand56employeesatModrazavarovalnica.

Table1: Number of employees in the Kapitalska druæba Group

balanceasat31December2015

KapitalskadruæbaGroup 115

21Macroeconomic background of operations

5.1 InflaTIon

annualandaverageinflationrateswerenegativeattheendof2015,withbothstandingat

−0.5%,whileaverageandannualinflationwere0.2%attheendof2014.

Pricesinthefollowingcategoriesrecordedthesharpestdeclinein2015:transportation(down

5.2%),recreationandculture(down2.3%),householdequipment(down1.1%)andhousing

(down1.0%).Thefollowingcategoriesrecordedariseinprices:communicationservices(up

5.3%),foodandnon-alcoholicbeverages(up1.5%),cateringandaccommodationservices(up

1.4%),miscellaneousgoodsandservices(up1.1%),clothingandfootwear(up0.8%),health-

careservices(up0.7%)andalcoholicbeveragesandtobaccoproducts(up0.1%).Therewas

nochange,onaverage,inthepricesofeducationservices.

lowerpricesofrefinedpetroleumproductscontributedmost(0.89percentagepoints)to

deflation.Thepricesofliquidfuelweredown16.3%,whilethepricesofotherfuelsandlubri-

cantsweredown12.7%.Higherpricesoftelephoneandinternetservices(whichwereup

5.8%)contributed0.25percentagepointstoannualpricegrowth,whilehigherfoodprices

contributed0.23percentagepoints.

figure1: Change in monthly and annual growth in consumer prices in 2015 (in %)Source:StatisticalOfficeoftheRepublicofSlovenia

Monthly growth rate

-1.4

-1.2

-1.0

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

1.0

0.8

Dec.Nov.Oct.Sep.Aug.Jul.Jun.MayApr.Mar.Feb.Jan.

22

Annual growth rate

5.2 GRossDoMesTICPRoDUCT

Grossdomesticproduct(GDP)wasup3.3%inrealtermsinthefinalquarterof2015relative

tothefinalquarterof2014.economicactivity,adjustedfortheseasonandnumberofwork-

ingdays,wasup0.6%relativetothethirdquarterof2015.accordingtoinitialestimates,

GDPwasupby2.9%overallinrealtermsin2015.

figure2: Real year-on-year growth in GDP by quarter in 2015 (in %)Source:StatisticalOfficeoftheRepublicofSlovenia

5.3 eMPloyMenTanDWaGes

accordingtofiguresfromthestatisticalofficeoftheRepublicofslovenia,thetotalwork-

forcestoodat917thousandinDecember2015.Theworkforceinemploymenttotalled

804thousand,up0.5%ontheendofDecember2014.Thenumberofregisteredunem-

ployedpersonsstoodat113thousandattheendofDecember2015,adecreaseof5.3%

relativetothenumberofregisteredunemployedpersonsayearearlier.Theregistered

unemploymentratestoodat12.3%inDecember2015,comparedwith10.7%inthefinal

quarterof2014.

TheaveragemonthlygrosswagewaseUR1,594.93inDecember2015,whilethenetwage

waseUR1,035.58.

-0.8

-0.7

-0.6

-0.5

-0.4

-0.3

-0.2

-0.1

0.0


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4th quarter3rd quarter2nd quarter1st quarter

23

5.4 MoneyMaRKeT

5.4.1 Interestrates

Thereferenceinterbankinterestratefortheeuroarea,thesix-montheURIboR,fluctuated

between−0.051%and0.171%in2015.ThekeyinterestrateoftheeuropeanCentralbank

(eCb)wasunchanged,whiletheinterestrateonthedepositfacilitystoodat−0.3%andrep-

resentstherateatwhichexcessliquidityplacedattheeCbbearsinterest.

Theyield-to-maturityon10-yearGermangovernmentbondsroseby0.088percentage

pointsin2015tostandat0.629%.Thelowestyieldof0.075%wasachievedinthemiddle

ofapril.

figure3: Movement in the yield-to-maturity on 10-year German government bonds and the 6-month EURIBOR in 2015 (in %)Source:Bloomberg

■ 10-yearGermanbonds■ 6-monthEURIBOR

5.4.2 Exchangerate

TheUsdollardepreciatedbyaround10.3%againsttheeurointheperiodJanuarytoDecem-

ber2015.TheUsdollar/euroexchangeratestoodat1.0862attheendoftheyear,andaver-

aged1.1102for2015.

figure4: Movement in the US dollar/euro exchange rate in 2015Source:Bloomberg

-0.2

0.0

0.2

0.4

0.6

0.8

1.0


1.00

1.05

1.10

1.15

1.20

1.25


24

5.5 CaPITalMaRKeT

5.5.1 Equitymarket

Thevaluesofshareindicesmeasuredineurosrosein2015.TheJapanesenikkei225index

roseby20.4%duringtheyear,followedbytheMsCIglobalindex,whichrecordedgrowth

of11%,theGermanDaX,whichrecordedgrowthof9.6%andtheUsDowJones,which

recordedgrowthof8.9%measuredineuros.ThesloveniansbIToPindexrecordedthe

sharpestdecline,of11.2%.

figure5: Movement in the Slovenian SBI TOP and selected foreign stock indices in 2015 in euros (index: 1 January 2015 = 100) Source:Bloomberg

■ SBITOP■ DOWJONESINDUS.AVG■ DAX■ NIKKEI225■ MSCI

5.5.2 Debtmarket

TheIboXXeURsovereignsTRgovernmentbondindexgained1.63%in2015,whilethe

IboXXeURCorporatesTRcorporatebondindexwasdown0.66%.

figure6: Movement in the IBOXX EUR Corporates TR corporate bond index and the IBOXX EUR Sovereigns TR government bond index in 2015 (index: 1 January 2015 = 100)Source:Bloomberg

■ Governmentbonds■ Corporatebonds

80

90

100

110

120

130

140


97

98

99

100

101

102

103

104

105


25

5.6 PRICeofoIl

ThepriceofWestTexasIntermediate(WTI)crudeoilfellfromUsD53.27perbarrel(159

litres)atthebeginningof2015toUsD37.04attheendoftheyear.ThepriceofWTIcrude

averagedUsD48.80in2015,downontheaveragepricein2014ofUsD92.89.Thepriceof

brentcrudeaveragedUsD53.56abarrelin2015,9.8%higherthanWTIcrude.

figure7: Movement in prices of WTI crude and North Sea Brent crude in 2015 (in USD per 159-litre barrel)Source:Bloomberg

■ WTIcrude■ Brentcrude

30

35

40

45

50

55

60

65

70


26 Performance of the Kapitalska druæba Group by segment in 2015


zavarovalnicaandsteklarskanovaRogaπkaslatina(inbankruptcy).TheassociatesofKapi-

talskadruæbaarepresentedinnoteno.17ofthefinancialreport.

6.1 KaPITalsKaDRUæba,D.D.

6.1.1 Capitalinvestmentmanagement

Kapitalskadruæbaclassifiesinvestmentstothefollowingtwogroupswithregardtothe

methodofmanagement:

�� capitalinvestments,and

�� portfolioinvestments.

Table2illustratesthecompositionoffinancialassets,whileadetaileddescriptionofthe

aforementionedgroupsfollows.

Table2: Composition of Kapitalska druæba’s financial assets as at 31 December 2015 with regard to managementinEUR000

Typeofinvestment Value Proportion

Capitalinvestments 528,603 56.8%

-strategicinvestments 180,754 19.4%

-Materialinvestments 295,536 31.7%

-Portfolioinvestments 51,039 5.5%

-Investmentsinbankruptcyorliquidation 1,274 0.1%

Portfolioinvestments 402,417 43.2%

-equityportfolioinvestments 171,337 18.4%

-Debtportfolioinvestments 105,159 11.3%

27

Typeofinvestment Value Proportion

-Moneymarket 2 125,921 13.5%

Total financial assets 931,020 100.0%

6.1.1.1 Compositionofcapitalinvestments

Kapitalskadruæba’scapitalinvestmentscomprisedomesticequityinvestmentsincorporatesharesandparticipatingintereststhattheCompanyprimarilyobtainedincorporateowner-shiptransformationprocesses.

TheCompanyheldatotalof45suchinvestmentsattheendof2015.ofthoseinvestments,Kapitalskadruæbahad37so-calledactiveinvestments,including32investmentsinpubliclimitedcompaniesandfiveinvestmentsinlimitedliabilitycompanies.Inadditiontoactiveinvestments,Kapitalskadruæbaalsoheldsixinvestmentsinbankruptcyproceedingsandtwoinvestmentsinliquidationproceedings.finalbankruptcyproceedingwereinitiatedagainststeklarskanovaRogaπkaslatinaon21May2009.

ThevalueofcapitalinvestmentswaseUR528,603thousandasat31December2015,adecreaseofeUR31,729thousandonthepreviousyear.

InaccordancewiththeclassificationofinvestmentssetoutintheDecreeonthestrategyforManagingstateCapitalInvestments(odsUKnD)adoptedbythenationalassemblyoftheRepublicofsloveniainJuly2015,Kapitalskadruæbaclassifiesitscapitalinvestmentsas

strategic,materialandportfolio.

Table3: Breakdown of Kapitalska druæba’s capital investments as at 31 December 2015 in accordance with the Decree on the Strategy for Managing State Capital InvestmentsinEUR000

Typeofinvestment no.ofinvestments ValueProportionofcapitalinvestmentportfolio

strategicinvestments 10 180,754 34.2%

Materialinvestments 9 295,536 55.9%

Portfolioinvestments 183 51,039 9.7%

Investmentsinbankruptcyorliquidation 8 1,274 0.2%

Total capital investments 45 528,603 100.0%

Table4: Breakdown of Kapitalska druæba’s capital investments as at 31 December 2014 in accordance with Kapitalska druæba’s asset management strategyinEUR000

Typeofinvestment no.ofinvestments ValueProportionofcapitalinvestmentportfolio

strategicinvestments 2 360,385 64.3%

Marketableinvestments 15 168,562 30.1%

non-marketableinvestments 254 30,106 5.4%

Investmentsinbankruptcyorliquidation 9 1,279 0.2%

Total capital investments 51 560,332 100.0%

2 MoneymarketinvestmentsalsoincludecashintheamountofeUR38,602thousand.3 Kapitalskadruæbaholdsbothpreferencesharesandordinarysharesinonecompanyclassifiedinportfolioinvestments.bothforms

ofsharesaredeemedoneinvestmentintheaforementionedcompany.4 Kapitalskadruæbaholdsbothpreferencesharesandordinarysharesinonecompanyclassifiedinnon-marketableinvestments.both

formsofsharesaredeemedoneinvestmentintheaforementionedcompany.

28

Investmentswereclassifiedin2014basedonKapitalskadruæba’sinternalclassification.

TheCompany’stenlargestcapitalinvestmentsandtheproportionoftherespectivecompa-

nies’sharecapitalaccountedforbythoseinvestmentsaredisclosedinTable5.

Table5: Ten largest capital investments of Kapitalska druæba by value as at 31 December 2015in%

Companyname Proportionofcompany’ssharecapital

Krka,d.d. 10.65

Modrazavarovalnica,d.d. 100.00

Petrol,d.d. 8.27

Telekomslovenije,d.d. 5.59

Gorenje,d.d. 16.37

lukaKoper,d.d. 4.98

Hit,d.d. 20.32

TermeČateæ,d.d. 23.79

Unionhoteli,d.d. 18.75

elektroMaribor,d.d. 1.61

InvestmentsinwhichKapitalskadruæbaholdsalessthan20%ownershipstakecomprisethe

majorityofcapitalinvestments.so-calledactiveinvestmentsinclude30suchinvestments,

aswellasfourinvestmentsinbankruptcyandliquidationproceedings.adetailedoverview

ofthecompositionofinvestmentsintermsofsizeofownershipstakeisgiveninTable6.

Table6: Composition of capital investments in terms of size of ownership stake as at 31 December 2015

ownershipstakeinsharecapital activeinvestmentsInvestmentsinbank-ruptcyorliquidation

Upto9.99% 22 3

from10.00%to19.99% 9 1

from20.00%to49.99%(associate) 5 3

from50.00%to100.00%(subsidiary) 1 1

Total number of investments 37 8

6.1.1.2 SalesofcompaniesbyKapitalskadruæba

Withtheaimofensuringthetransparencyofsalesproceduresandtheequaltreatmentof

bidders,thesaleofcapitalinvestmentsiscarriedoutviapublictender.Kapitalskadruæba

publishedtwopublictendersforthepurchaseofsharesandparticipatinginterestsin2015.

In2015Kapitalskadruæbareceived10bidsforthepurchaseofsharesandparticipatinginter-

estsrelatingtoninedifferentcapitalinvestmentsheldbytheCompany.Themajorityofbids

wereunacceptableforKapitalskadruæbabecausethebidpricesweretoolow.

Kapitalskadruæbasoldofffourcapitalinvestmentsintheirentiretyin2015inthetotalamount

ofeUR22,354thousand.ThecapitalinvestmentinsharesofPivovarnalaπko,d.d.wassoldin

thescopeofajointsalebyshareholderswhoheldamajorityinterest.Tworesultswereachieved

29

throughthecooperationagreementwithPivovarnalaπko,d.d.:therecapitalisationofthecom-

panyandtherepaymentofitsdebt,aswellasthesimultaneoussaleofthesharesofmajority

owners.KapitalskadruæbaandthebaMCconductedthesale,withthehelpoffinancialand

legaladvisors,onbehalfoftheentireconsortiumofsellers.Thecapitalinvestmentinsharesof

Velana,d.d.wassoldinthescopeofatakeoverbid.ThecapitalinvestmentinsharesofHTG,d.d.

wassoldthroughdirectnegotiationswiththebuyer.ThecapitalinvestmentinsharesofPDP,d.d.

wassoldtosDHinaccordancewiththeprovisionofthefirstparagraphofarticle82oftheZsDH-1.

ThecapitalinvestmentinsharesofCimos,d.d.wasexcludedfromKapitalskadruæba’sbooks

ofaccountinaccordancewiththefinaldecisionconfirmingcompulsorycomposition,which

alsoincludedtheexpropriationofthesharesofcurrentshareholders,whilethecapitalinvest-

mentinCasinoljubljana,d.d.wasexcludedfromKapitalskadruæba’sbooksofaccountbased

ontheconclusionofbankruptcyproceedings.

6.1.1.3 Purchasesofcompanies

Kapitalskadruæbadidnotparticipateinanycorporaterecapitalisationsin2015,nordidit

acceptanybidsforthepurchaseofcapitalinvestments.

6.1.1.4 Dividendsofdomesticcompanies

Dividendincomewasupin2015.KapitalskadruæbarecordedeUR24,782thousandindomes-

ticcorporatedividendsin2015,anincreaseofeUR6,031thousandrelativeto2014,whendivi-

dendstotalledeUR18,751thousand.Thetenlargestcapitalinvestmentsintermsofdividends

accountedfor98.2%ofalldividendsfromcapitalinvestmentsheldbyKapitalskadruæba.

Thepaymentofdividendsin2015wasapprovedbythegeneralmeetingsof25companiesin

whichKapitalskadruæbaheldacapitalinvestment,comparedwith2014,whenthepayment

ofdividendswasapprovedbythegeneralmeetingsof21companiesinwhichKapitalska

druæbaheldacapitalinvestment.

Table7illustratesthehighestdividendincomegeneratedin2015bycapitalinvestmentsheld

byKapitalskadruæba.

Table7: Capital investments that generated the highest dividend income in 2015 and 2014

Issuer

Dividendspersharein2015

(eUR)

Dividendspersharein2014

(eUR)

Totaldividendsin2015

(ineUR000)

Totaldividendsin2014

(ineUR000)

Krka,d.d. 2.50 2.10 8,733 7,335

Telekomslovenije,d.d. 10.00 10.00 3,652 3,652

Petrol,d.d. 11.70 10.10 2,020 1,744

lukaKoper,d.d. 0.94 0.16 655 111

Gorenje,d.d. 0.06 0.00 240 0

HoteliUnion,d.d. 0.33 0.85 111 286

elektroMaribor,d.d. 0.12 0.09 65 49

6.1.1.5 CorporateGovernanceCodeforCompanieswithStateCapitalInvestmentsandtheexercisingofvotingrightsatgeneralmeetings

Inconnectionwiththemanagementofitscapitalinvestmentsintheperiod1January2015

to31December2015,Kapitalskadruæbaapplied,mutatis mutandis,theCorporateGover-

nanceCodeforCompanieswithstateCapitalInvestments,whichwasadoptedbysDHon

19December2014(hereinafter:theCode).

30

asanactiveplayeronthesloveniancapitalmarket,Kapitalskadruæbastrivestointroducein

practiceacontemporaryformofcorporategovernance,theaimofwhichistoensureclear,

predefinedandpubliclyknownprinciples,proceduresandcriteriabywhichtheCompany

actsinexercisingitsownershiprights.Tothatend,theCorporateGovernanceCodeofKapi-

talskadruæbawasusedfrom2009untilDecember2014,anddefinedthepolicyandproce-

duresforexercisingKapitalskadruæba’smanagementrightsincompaniesinwhichitholds

anownershipstake.InDecember2014,sDHadoptedtheaforementionedCode,whichKapi-

talskadruæbaalsoappliesmutatis mutandis toensureuniformoperations.Thedocumentis

publishedonsDH’swebsite.

InadditiontotheCode,Kapitalskadruæbaalsoapplieditsownbasesforvotingatthegen-

eralmeetingsofcompanieswhenmanagingcapitalinvestmentsin2015.Kapitalskadruæba

updatesthebasesforvotingatgeneralmeetingseveryyear,priortotheconveningthereof.

Thesebases,inter alia,definetheremunerationpolicyforsupervisoryboards,management

committeesandmanagementboards,thedividendpolicy,theuseofdistributableprofit,

recapitalisationsviaauthorisedcapital,theacquisitionoftreasurysharesandtheintroduc-

tionofasingle-tiergovernancesystem.TheaforementioneddocumentispublishedonKapi-

talskadruæba’swebsite.

Kapitalskadruæbaexerciseditsmanagementrightsatallgeneralmeetingsofcompanieswith

aregisteredofficeinsloveniainwhichtheCompanyhasanequityholdingthatitmanages

onitsownbehalforonbehalfofthesoDPZ.

Kapitalskadruæbawasentitledtoparticipateonitsownbehalfandonaccountofthepen-

sionfundundermanagementin50generalmeetingsofshareholdersorpartnersofcom-

paniesin2015.RepresentativesofKapitalskadruæbaparticipatedin16generalmeetings

withauthorisationtovote.Inaccordancewitharticle53oftheZsDH-1,sDHexercisedthe

votingrightsofKapitalskadruæbaat32generalmeetingsinthenameandonaccountof

thelatter.Twogeneralmeetingswerecancelledpriortothedateofthemeetingorresched-

uledtoanotherdate.

Whenassessingproposedgeneralmeetingresolutionsandformulatingopinionsforvoting

atgeneralmeetings,KapitalskadruæbacompliedwiththeCodeandinternalbasesforvoting

atgeneralmeetings.Withrespecttotheremunerationofsupervisoryboardsandmanage-

mentboards,Kapitalskadruæbaapplied,mutatis mutandis,therecommendedlevelofwages

fortheperformanceofaparticularfunctionandforsessionfeessetoutintheCode,and

tookintoaccounttheactGoverningtheearningsofManagementstaffatCompaniesunder

theMajorityownershipoftheRepublicofsloveniaandself-GoverninglocalCommunities

(ZPPoGD),asregardstheearningsandotherrightsofmanagementboards,executivedirec-

torsandthemanagementstaffofcompanies.

KapitalskadruæbaactedinaccordancewiththeCodeatallgeneralmeetingsattendedbyits

representativesin2015.DisclosuresregardingKapitalskadruæba’sconductatgeneralmeet-

ingsarepublishedontheCompany’swebsite.

Table8: Participation at the general meetings

formofparticipation no.ofgeneralmeetings

ParticipationbyemployeesofKapitalskadruæbawithauthorisationtovote 16

ParticipationbysDH(authorisationtovotebysDH) 32

Cancelledorrescheduledgeneralmeetings 2

Total 50

31

6.1.1.6 CodeofConductoftheKapitalskadruæbaGroup

InadditiontoKapitalskadruæba,theKapitalskadruæbaGroupincludesthesubsidiaryModra

zavarovalnica.

In2015KapitalskadruæbaadoptedamendmentstotheCodeofConductoftheKapitalska

druæbaGroup(hereinafter:theCodeoftheGroup)duetothesaleofthesubsidiaryPDP.The

CodeoftheGroupisadocumentthatincludestheminimumstandardsofoperationsofGroup

companies,andthatdefinescooperationinspecificareasofoperationsandthemonitoring

oftheGroup’soperationsbytheparentcompany.

TheGuidelinesontheReportingofsubsidiariestotheParentCompanyalsorepresent

anintegralpartoftheCodeoftheGroup.Theaforementionedguidelinessetoutthe

content,deadlinesandmethodsofreportingtotheparentcompanybytheGroup’s

subsidiaries.

6.1.1.7 Managementofcapitalinvestmentsinthefuture

ThenewsloveniansovereignHoldingCompanyact(ZsDH-1)enteredintoforceatthe

endofapril2014.Themanagementofinvestmentsonbehalfandontheaccountof

theRepublicofsloveniaremainedtheresponsibilityofsDH,evenfollowingtheentry

intoforceoftheZsDH-1.TherewasapartialchangeinKapitalskadruæba’sannualobli-

gationtoprovidefundingtotheZPIZ:basedontheprovisionofthethirdparagraphof

article52oftheZsDH-1,theCompanymusttransferfundsintheamountofeUR50

millioneveryyeartotheZPIZbynolaterthan29september,primarilyforthepurpose

ofadjustingpensions,oraproportionallyloweramountiftheamountforadjustingpen-

sionsislower.

article79oftheZsDH-1statesthatKapitalskadruæbamustbetransformedintoaninde-

pendentandautonomousdemographicreservefundbynolaterthan31December2015,as

setoutinthelawgoverningpensionanddisabilityinsurance,followingtheprioradoptionof

therelevantlaw.Thesamearticlealsostatesthat10%ofproceedsfromthesaleofcapital

investmentsheldbytheRepublicofsloveniamustbetransferredtoaspecialaccountatthe

Ministryoffinance.Theaforementionedfundsmaybeusedexclusivelytofinancethedemo-

graphicreservefund.alongsidetheformulationofademographicreservefund,theZsDH-1

alsoenvisagesthetransferoftheZPIZ’sinvestmentinZavarovalnicaTriglav,d.d.toKapi-

talskadruæba.noactgoverningthetransformationofKapitalskadruæbaintoademographic

reservefundhasbeenadoptedtodate.

sDHwillmanageinvestmentsinaccordancewiththeZsDH-1,theodsUKnD,therelevant

investmentmanagementpolicyandtheCorporateGovernanceCode,andonthebasisof

theannualinvestmentmanagementplan.TheodsUKnDalsoincludestheclassificationof

investments(thedefinitionandclassificationofcapitalinvestmentsintostrategic,mate-

rialandportfolioinvestments),towhichKapitalskadruæbaisalsoboundwhenmanaging

investments.Theannualinvestmentmanagementplan,whichmustbeadoptedbynolater

thantheendofnovemberforthenextcalendaryear,definessDH’spreciseobjectivesin

themanagementofspecificinvestments,aswellasmeasuresandguidelinesforachiev-

ingthoseobjectives.

6.1.2 Managementofportfolioinvestments

6.1.2.1 Equityportfolioinvestments

equityportfolioinvestmentsincludeforeignsharesandinvestmentcouponsfromtheinvest-

mentfundsofdomesticandforeignissuers.Thevalueofequityportfolioinvestmentassets

waseUR171,337thousandasat31December2015.

32

Table9: Composition of equity portfolio investments as at 31 December 2015inEUR000

Typeofinvestment ValueProportionofequity

portfolioinvestments

foreignshares 8,338 4.9%

Investmentfunds 162,999 95.1%

domesticinvestmentfunds 10 0.0%

foreigninvestmentfunds 162,989 95.1%

Total equity portfolio investments 171,337 100.0%

Thefivelargestinvestmentsaccountedforatotalof58.5%oftheportfolioofequityinvest-

mentsasat31December2015.Theseinvestmentsincludedindexfundsrepresentedbythe

MsCIWorldglobalstockindices(sMsWlDGyandXMWoGy),anindexfundrepresented

bytheUss&P500(sPyUs),anindexfundrepresentedbytheUsIXTtechnologysector

index(XlKUs)andanindexfundrepresentedbytheGermanDaX(DaXeXGR).

6.1.2.2 Debtportfolioinvestments

ThebalanceofdebtportfolioinvestmentsstoodateUR105,159thousandattheendof2015.

at86.5%,domesticbondsaccountedforthehighestproportionofdebtportfolioinvest-

ments.InvestmentsindomesticbondstotalledeUR90,936thousand,whileinvestmentsin

foreignbondstotalledeUR11,241thousand.Theremainderwasaccountedforbyclaimsfor

accruedinterest.

TheprimaryfocusofKapitalskadruæba’sinvestmentactivitiesin2015wasonsecurityand

maintainingthevalueofassetsduetoanincreaseinthegenerallevelofrisk.

Table10: Composition of debt investments as at 31 December 2015inEUR000

Typeofinvestment ValueProportionofdebt

portfolioinvestments

Domesticbonds 90,936 86.5%

-domesticgovernmentbonds 78,096 74.3%

-domesticcorporateandbankbonds 12,840 12.2%

foreignbonds 11,241 10.7%

-foreigngovernmentbonds 1,172 1.1%

-foreigncorporateandbankbonds 10,069 9.6%

Claimsforinterest 2,982 2.8%

Total debt portfolio investments 105,159 100.0%

Thefivelargestinvestments,togetherwithaccruedinterest,accountedforatotalof56.9%

oftheportfolioofdebtinvestmentsasat31December2015.allfiveinvestmentswereindif-

ferentissues(nos.59,66,67,69and70)ofsloveniangovernmentbonds.

6.1.2.3 Moneymarketinvestments

ThebalanceofmoneymarketinvestmentswaseUR125,921thousandattheendof2015.

loansgranted(deposits)accountforthemajorityoftheaforementionedinvestments.

33

Table11: Composition of money market investments as at 31 December 2015inEUR000

Typeofinvestment ValueProportionoftheportfolioof

moneymarketinvestments

loansgranted(deposits) 86,509 68.7%

Cashandcashequivalents 38,602 30.7%

-Cashontransactionaccountsatbanks 38,585 30.7%

-eurocalldeposits 17 0.0%

Commercialpaper 810 0.6%

Total money market investments 125,921 100.0%

6.1.3 TransferstothePensionandDisabilityInsuranceInstitute

Inaccordancewiththethirdparagraphofarticle52oftheZsDH-1,Kapitalskadruæba’s

annualobligationtotheZPIZdependsontheamountoftheadjustmenttopensions,

whichislimitedtoeUR50million.InaccordancewiththeprovisionsoftheImplementa-

tionofthebudgetoftheRepublicofsloveniafor2014and2015act(ZIPRs1415),Kapi-

talskadruæbatransferredeUR19milliontotheZPIZin2015fortheannualbonuspaid

topensioners.KapitalskadruæbahastransferredatotalofeUR664,321thousandtothe

budgetoftheZPIZ.

Inaccordancewitharticle67oftheZIPRs1617,KapitalskadruæbamusttransfereUR50mil-

lionayeartotheZPIZin2016and2017.

6.1.4 Investmentproperty

Kapitalskadruæbaholdsinvestmentpropertyinthefollowingcommercialbuildings:

�� steklenidvor,Dunajskacesta119,ljubljana;

�� beæigrajskidvor,Dunajskacesta56and58,andKræiËevaulica3,ljubljana;

�� nebotiËnik,©tefanovaulica1,3and5,ljubljana;and

�� smelt,Dunajskacesta160,ljubljana.

alloftheaforementionedpropertiesarecurrentlyleased,excepttheconferencehallinthe

beæigrajskidvorcommercialbuilding,whichKapitalskadruæbawillleasefortheorganisation

ofvariousevents.

6.1.5 Pensionfundmanagement

6.1.5.1 OperationsoftheSODPZ

Pursuanttothelaw,KapitalskadruæbahasbeenthemanageroftheCompulsorysupplemen-

taryPensionInsurancefundoftheRepublicofslovenia(soDPZ)sinceitsestablishmentin

2001.ThesoDPZisamutualpensionfundthatprovidesoccupationalinsuranceinaccord-

ancewiththeZPIZ-2.

ThesoDPZisintendedforpolicyholderswhoperformespeciallydifficultworkandworkthat

isharmfultothehealth,andforpolicyholderswhoperformworkthatcannolongerbeper-

formedsuccessfullyafteracertainage.ThesoDPZcomprisesassetsthatarefinancedby

fundscollectedthroughthepaymentofoccupationalinsurancecontributionsandrevenues

generatedbythemanagementofthosefunds,andareearmarkedexclusivelytocoverliabili-

tiestooccupationalinsurancepolicyholders.

34

ThesoDPZhad45,664policyholdersasat31December2015.Theactualreturnonthe

soDPZwas1.84%in2015,comparedwiththeguaranteedreturnof2.30%inthesame

period.ThenetvalueofsoDPZassetswaseUR672,098thousandattheendof2015,and

exceededtheguaranteedvalueofsoDPZassets(eUR620,039thousand)byeUR52,059

thousand.ThesoDPZheld798,762,486unitsincirculationin2015.

asthemanagerofthesoDPZ,Kapitalskadruæbaisentitledtothereimbursementofsub-

scriptionandredemptioncosts,andannualmanagementfees.Thesubscriptionfeeamounts

to2.3%,theredemptionfeeamountsto0.5%andtheannualmanagementfeeamountsto

1.0%.Kapitalskadruæba’srevenuesfromthemanagementofthesoDPZtotalledeUR7,814

thousandin2015,brokendownasfollows:eUR6,528thousandinmanagementfees,eUR

1,239thousandinsubscriptionfeesandeUR47thousandinredemptionfees.

Table12: Kapitalska druæba’s revenues from management of the SODPZ in 2015inEUR000

Revenuesfrommanagementactivities 2015 2014

Managementfees 6,528 5,834

subscriptionfees 1,239 1,210

Redemptionfees 47 29

Total 7,814 7,073

on6november2015,Kapitalskadruæbareceiveddecreeno.1032-5/2013-26of30october

2015fromtheMinistryoflabour,family,socialaffairsandequalopportunitiesapproving

amendmentstotheoccupationalpensioninsuranceplan.Theaforementionedamendments

relatetoareductioninmanagementfeeswithrespecttothenetvalueofassetsunderman-

agement.applicationoftheprovisionsoftheoccupationalpensioninsuranceplanbegins

withtheentryintoforceofamendmentstotheRulesonthemanagementofthecompulsory

supplementarypensioninsurancefundoftheRepublicofslovenia.entryintoforceislinkedto

consentobtainedfromthesecuritiesMarketagency,butwilltakeplacewithin90daysfrom

thedeliveryofthedecisiontothefundmanagerconfirmingtheamendmentstothepension

plan.KapitalskadruæbasentarequesttothesecuritiesMarketagencyon4December2015

fortheissueofconsenttotheamendmentstotheRulesonthemanagementofthecompul-

sorysupplementarypensioninsurancefundoftheRepublicofslovenia.

TheactamendingthePensionandDisabilityInsuranceact(ZPIZ-2b)enteredintoforceon

1January2016.Thesecondparagraphofarticle38oftheZPIZ-2bstatesthatKapitalska

druæbamustharmonisetheoccupationalpensioninsuranceplanandtheoccupationalpen-

sionpaymentplanwiththeprovisionsoftheZPIZ-2bwithin12monthsfollowingtheentry

intoforceoftheaforementionedact.Theprovisionsofvalidpensionplansatthetimethe

ZPIZ-2benteredintoforceapplyuntilthenewpensionplanapplies.TheKssoDPZwillbe

liquidatedwiththeentryintoforceofthenewpensionplan,whileoccupationalpensionswill

bepaidfromthesoDPZaspartialredemptionvalues.

6.1.5.2 SODPZinvestments

Themanagerwillmanagefundassetsinsuchawayastoachieve,ataminimum,theguar-

anteedreturninthecontextofminimalrisk,whiletakingintoaccountliquiditycriteria.The

managerwillallocatetheinvestmentsofthefundtoensurethattheywillbeappropriately

diversifiedandthattheywillnotexceedlegallimitsregardingthetypesofinvestments

allowedandthelevelofassetsinspecifictypesofinvestments,withtheexceptionssetout

intherelevantfundmanagementrules.

35

Themeasureofthefund’ssuccess(benchmarkindex)isthelatter’sguaranteedreturn,which

isensuredonamonthlyandannualbasis.

Thebasicobjectivesoffundmanagementwereasfollowsin2015:

�� toincreasetheactualvalueofassetsovertheirguaranteedvalue,whilemaximisingthe

amountoftheexpectedsurplusinthecontextofthetargetedlevelofrisk.

Themanagerappliedanactivemanagementstrategywiththeaimofachievingitsobjec-

tivesatthefundlevel.Itappliedacombinationofactiveandpassiveinvestmentstrategies

atthelevelofinvestmentcategories.Themanagerusedatop-downapproachtomanage

fundassets.

Inassessingthesuccessoffundassetmanagement,themanagermadeacomparisonwith

thebenchmarkindex,withthefund’sguaranteedreturnandwiththesuccessofothermutual

pensionfundmanagers.

ThevalueofsoDPZassetsstoodateUR674,960thousandasat31December2015,an

increaseof7.8%relativeto2014.

Investmentsindebtsecuritiesaccountforthehighestproportion(45.4%)ofsoDPZassets.

Theproportionaccountedforbytheaforementionedassetswasdownslightlyin2015com-

paredwiththepreviousyear.bondsaccountforthemajorityofthisclassofinvestments,

followedbyinvestmentcoupons(26.7%)andinvestmentsinloansanddeposits(23.4%).The

proportionaccountedforbythethreeaforementionedclasseswasdownrelativeto2014.The

proportionaccountedforbyotherformsofinvestmentswasuprelativeto2014.

Table13: Composition of the investments of the SODPZ as at 31 December 2015inEUR000

Class Value Proportionoffundassets

2015 2014 2015 2014

shares 4,455 6,333 0.7% 1.0%

Debtsecurities 306,656 311,964 45.4% 49.8%

loansanddeposits 157,588 157,932 23.4% 25.2%

Investmentcoupons 180,407 135,822 26.7% 21.7%

Cashandcashequivalents 25,674 13,996 3.8% 2.2%

otherclaims 180 326 0.0% 0.1%

Total 674,960 626,373 100.0% 100.0%

Duetothelimitedsizeoftheslovenianfinancialmarketandawiderselectionofinvestment

opportunities,aportionofthefund’sassetswereinitiallychannelledabroad.Thefund’s

exposuretocurrencyriskwasdownin2015,astheproportionofsecuritiesdenominatedin

foreigncurrenciesdeclinedfrom7.4%to5.5%.

6.1.5.3 OperationsoftheKSSODPZ

WiththetransferofthefirstpolicyholdertotheKssoDPZinMay2013,Kapitalskadruæba

createdandbecamethemanageroftheKssoDPZ.TheCompanybeganpayingoccupa-

tionalpensionsinJune2013.

anoccupationalpensionispaidfromthetimethatrightisearneduntilold-ageorearlyretire-

ment.soDPZpolicyholdersearntherighttoanoccupationalpensionwhentheyfulfilthecondi-

36

tionssetoutintheplanforthepaymentofoccupationalpensions.Whenpolicyholdersexercise

theirrightstoanoccupationalpension,thefundsontheirpersonalaccountinthesoDPZare

transferredtotheKssoDPZandthepolicyholdersareissuedanoccupationalpensionpolicy.

atotalof123policyholdersweretransferredtotheKssoDPZin2015.Thetotalvalueof

fundstransferredforthosepolicyholderswaseUR4,350thousand.Kapitalskadruæbais

entitledtoafeeof1.5%ofeachpensionpayment.PensionpaymentfeestotalledeUR29

thousandin2015.

6.1.5.4 KSSODPZinvestments

ThevalueofKssoDPZassetswaseUR3,624thousandasat31December2015.

Investmentsinbondsaccountedforthehighestproportion(58.4%)ofKssoDPZassets,fol-

lowedbyinvestmentsindeposits(23.5%)andotherclaims(15.8%).

Table14: Composition of the KS SODPZ investments as at 31 December 2015inEUR000

Class Value Proportionoffundassets

2015 2014 2015 2014

Debtsecurities 2,118 629 58.4% 59.6%

loansanddeposits 851 231 23.5% 21.9%

Cashandcashequivalents 84 8 2.3% 0.8%

otherclaims 571 187 15.8% 17.7%

Total 3,624 1,055 100.0% 100.0%

Despiteitsrelativelysmallsize,thestructureoftheguaranteefund’sinvestmentswasinline

withlegalprovisionsandfocusedonensuringliquidityforthepaymentofpensionannuities.

TheIsaagencyissuedadecisioninnovember2015allowingKapitalskadruæbacertaindevia-

tionsinthestructureofKssoDPZinvestmentsfromthoseprescribedbythelaw,asfollows:

�� forinvestmentsindepositsandcertificatesofdepositatbanksofupto50%ofinsurance

technicalprovisionsoncertaindays,wherethetotalofsuchinvestmentsataspecificbank

maytotal10%ofinsurancetechnicalprovisions;and

�� forinvestmentsincashonhandandonsightaccountsofupto20%ofinsurancetechni-

calprovisionsoncertaindays.

TheaforementioneddeviationsarepermitteduntilthevalueofKssoDPZassetsreacheseUR

7,200thousand,butuntilnomorethan26november2017.

6.1.6 ActivitiesintheimplementationoftheZPIZ-2in2015

Kapitalskadruæbawasactivelyinvolvedagainin2015withthebusinessprocessesofthe

soDPZ,inparticularoccupationalretirement,thepaymentofoccupationalpensions,active

notificationofliablepersonsandpolicyholdersregardingdevelopmentsintheareaofoccu-

pationalinsurance,regularmeetingsofthesoDPZCommitteeandactivitiesrelatingtothe

resolutionofcurrentoccupationalretirementissues.Therewasactivecommunicationinthat

regardwiththeMinistryoflabour,family,socialaffairsandequalopportunities(Mlfsaeo),

thePensionandDisabilityInsuranceInstitute(ZPIZ),theMinistryofDefenceoftheRepublic

ofslovenia(MDRs),theMinistryofInfrastructure,theMinistryofCulture,theMinistryof

finance(Mf),thefinancialadministrationoftheRepublicofslovenia(faRs),theTrbovlje-

Hrastnikmine,thesoDPZCommittee,themedia,policyholdersandliablepersons.

37

ThenewactGoverningtheClosureoftheTrbovlje-HrastnikMineandtheDevelopmental

RestructuringoftheRegion(ZPZRTH-e)enteredintoforceinJune2014andsetoutthecon-

ditionsforobtainingtherighttoanoccupationalpensionforspecificcategoriesofemployees

oftheTrbovlje-HrastnikMine.sincetheentryintoforceofthenewactandagainin2015,

Kapitalskadruæbaworkedintentlytocarryoutactivitiesthatwouldfacilitatetheunimpeded

occupationalretirementofTrbovlje-HrastnikminepolicyholdersonthebasisoftheZPZ-

RTH.Duetothedeficientnatureoftheaforementionedact,agreatdealofcoordinationwas

requiredwiththeZPIZ,theMlfsaeo,theMinistryofInfrastructure,theMf,theTrbovlje-

Hrastnikmine,tradeunionsandpolicyholders.TheRepublicofsloveniaprovidedco-financ-

inginaccordancewiththelawforallpolicyholderswithinsufficientfundsontheirpersonal

accountforthepaymentofoccupationalpensions,andensuredthatthosepolicyholdersare

abletoexerciseallrightstowhichtheyareentitledbasedontheZPZRTH.anagreementwas

reachedwiththeMinistryofInfrastructureinapril2015onthetransferoffundslackingfor

occupationalretirementbasedonarticle16coftheZPZRTH.InJune2015,Kapitalskadruæba

paidthefirstoccupationalpensionsinaccordancewiththeZPZRTH.Italsopaidcontribu-

tionstotheZPIZontimeforthebuyoutofyearsofserviceand,inadditiontocontributions

forcompulsoryhealthinsuranceandtaxprepaymentsfromoccupationalpensions,alsopaid

contributionsforvoluntaryinclusionincompulsorypensionanddisabilityinsurance.

KapitalskadruæbawasactivelyinvolvedintheformulationandadoptionofthenewactGov-

erningtheGradualClosureoftheTrbovlje-HrastnikMineandtheDevelopmentalRestructur-

ingoftheRegion(ZPZRTH-f).Thenewactenteredintoforceon4november2015andbrings

certainnewfeaturesintheareaofoccupationalretirementforcertaingroupsofemployeesat

theTrbovlje-Hrastnikmine,includinganewlydefinedoccupationalpension.Thenewoccupa-

tionalpensionnowincludescontributionsforcompulsoryhealthinsuranceandcontributions

forvoluntaryinclusionincompulsorypensionanddisabilityinsurance.becausetheZPZRTH-

fdoesnotsetoutthebasisforthecalculationofcontributionsforcompulsoryhealthinsur-

anceaccordingtothethirdparagraphofarticle413oftheZPIZ-2,theopinionsoftheMfand

faRshadtobeobtained.Kapitalskadruæbadrewupaproposalforthreepossiblevariations

ofthecalculationoftheoccupationalpensionandsentittotheMfandfaRsforapproval.

Duetotheurgencyofthematter,theCompanyconsultedonnumerousoccasionswiththe

Mf,faRsandMlfsaeo.becausetheopinionreceivedremainssomewhatunclear,wewent

aheadandperformedacalculationoftheoccupationalpensionanywayforonepolicyholder

whomeetstheconditionsforoccupationalretirement.Thepossibilitythereforeexistsofa

recalculationornewassessmentoftheoccupationalpension.

Thepossibilityofthebuyoutofyearsofserviceisavailabletooccupationalinsurancepoli-

cyholdersandtherecipientsofanoccupationalpensiononthebasisoftheeleventhpara-

graphofarticle202oftheZPIZ-2.KapitalskadruæbaworkedwiththeMlfsaeoandZPIZin

connectionwiththebuyoutofyearsofservice,andmeetingswereheldwiththeaforemen-

tionedinstitutionsinanattempttofindthecommonbasesfortheaforementionedprocess.

KapitalskadruæbamadefivetransfersoftheredemptionvaluetotheZPIZin2015duetothe

buyoutofyearsofservice.

TheactamendingtheactGoverningthePromotionofPublicInterestinCulture(ZUJIK-e)

enteredintoforceinJanuary2014.Thefourthparagraphofarticle12oftheaforementioned

actstatesthataballetworkeristobeallocatedonehalfoftheperiodinwhichtheywere

includedinoccupationalinsurance.Duetoambiguitiesregardingtheimplementationofthe

aforementionedarticle,anewactGoverningthePromotionofPublicInterestinCultureis

beingdrawnup.In2015,Kapitalskadruæbasubmitteditscommentsregardingtheprovision

ofoccupationalinsurance,andattendedajointmeetingwithrepresentativesoftheMinistry

ofCultureandtheMlfsaeo,whereproblemsrelatingtooccupationalinsuranceandthe

occupationalretirementofballetworkerswerepresented.

38

forthepurposeofdraftingthenewZPIZ-2b,whichintroducesthecreationofsolidarity

reservestoco-financethepaymentofoccupationalpensionstopolicyholderswithout

insufficientfundsontheirpersonalaccounts,Kapitalskadruæba’scertifiedactuaryfol-

lowedtheinitiativeoftheMlfsaeoanddrewupaconceptforthecreationandfunc-

tioningofsolidarityreserves,aswellascalculationsandasimulationofthecollection

anddisbursementofthosereserves,whichwerepresentedtotheMlfsaeo’sworking

group.onthisbasis,Kapitalskadruæbaparticipatedinthedraftingofproposedarticles

oftheaforementionedact.

KapitalskadruæbaregularlyinformedtheMlfsaeoin2015aboutcurrentoccupationalinsur-

anceandretirementissues,andworkedwiththeaforementionedministrytodeveloppro-

posedsolutionsandinitiativesinconnectionwiththeimplementationoftheZPIZ-2.Kapitalska

druæbaalsoputforthinitiativesandproposalsforchangesandamendmentsaimedatthe

comprehensiveregulationoftheareaofoccupationalinsurance,andactivelyparticipatedin

theMlfsaeo’sworkinggroups.

Kapitalskadruæbainformsalloccupationalinsurancestakeholdersregularlyviaitswebsite

aboutallofthelatestdevelopmentsandtheoperationsofthefund.TheCompanycommu-

nicateswithpolicyholdersandliablepersonsthroughouttheyear,bothpersonallythrough

thecontactcentreandthroughatoll-freetelephonenumberandemail.In2015Kapitalska

druæbaorganisedsevenpresentationsforpolicyholders,liablepersons,tradeunionsand

humanresourcedepartments.

KapitalskadruæbaalsoregularlyinformedthesoDPZCommitteewithregardtoactivitiesin

theareaofoccupationalinsurance,theoperationsofthefundandissuesassociatedwith

occupationalretirement.ThesoDPZCommitteeactivelyparticipatedinthesearchforoccu-

pationalretirementsolutionsandcontinuouslyputforthinitiativestoaddressthisissue.The

soDPZCommitteemetfivetimesin2015.

6.2 MoDRaZaVaRoValnICa,D.D.

Modrazavarovalnica’sfinancialassetsincludetheinsurancecompany’sownassetsandthe

assetsofbothguaranteefunds.

Modrazavarovalnica,d.d.’sownassetsandtheassetsofbothguaranteefundsaredeemed

theinsurancecompany’sfinancialassets.

Table15: Financial assets Modra zavarovalnica as at 31 December 2015inEUR000

financialassets amount

ownfinancialassets 221,407

financialassetsoftheKsPPs 97,458

financialassetsoftheKsMR 39,714

Total 358,579

6.2.1 Managementofownfinancialassets

Modrazavarovalnica’sownfinancialassetstotalledeUR221,407thousandattheendof2015.

ThecompanybreaksdownitsfinancialassetsbytheitemsinTable16.Thelargestpropor-

tionisaccountedforbytheportfolioofequityinvestments,followedbydebtinvestments.

39

Table16: Composition of Modra zavarovalnica’s financial assets as at 31 December 2015inEUR000

financialassets amount

equityportfolioinvestments 117,310

equitynon-portfolioinvestments 21,635

Portfolioofdebtinvestments 77,872

Cashandcashequivalents 4,590

Total 221,407

6.2.1.1 Equityportfolioinvestments

equityportfolioinvestmentsincludeforeignsharesandinvestmentsintheinvestmentfundsofdomesticandforeignissuers.ThevalueoftheaforementionedinvestmentswaseUR117,310thousandasat31December2015.Thefivelargestinvestmentsintheportfolioofequityinvestmentsasat31December2015wereasfollows:anindexfundrepresentedbytheMsCIglobalindex(XMWoGy),thesharesoftheCoca-ColaCompany,anindexfundrepresentedbytheMsCIglobalindex(sMsWlDGy),aninvestmentfundthatinvestsintheagriculturesector(MooUs)andanindexfundthatinvestsinthesharesofemergingmarkets(MXfsln).

Table17: Composition of equity portfolio investments as at 31 December 2015inEUR000

Investment amount

shares 31,428

-Domesticshares 0

-foreignshares 31,428

Investmentfunds 85,882

-Domesticinvestmentfunds 412

-foreigninvestmentfunds 85,470

Total 117,310

shareindicesmeasuredineuroswereupbyanaverageof6.6%in2015.Theportfoliowasmostexposedtothefinancialsectorattheendof2015,followedbythesectorsofnon-cycli-calconsumergoodsandinformationtechnology.Intermsofcurrencies,theportfoliowasmostexposedtotheUsdollarandtheeuroattheendof2015.Morethanhalfoftheafore-mentionedportfolioisinvestedintheequitiesofissuersfromnorthamerica,whileclosetoonethirdisinvestedineuropeanissuers.Theremainderisaccountedforbyinvestmentsinissuersfrommoredevelopedasiancountriesandfromemergingeconomies.

6.2.1.2 Equitynon-portfolioinvestments

asat31December2015,Modrazavarovalnicaheldtwoequityinvestmentsindomesticissu-ersthatrequireadifferentapproachtomanagementthanportfolioinvestmentsonaccountofthesizeoftheassociatedparticipatinginterest:investmentsinsharesofCinkarnaCelje,d.d.andPozavarovalnicasava,d.d.ThevalueoftheaforementionedinvestmentstotalledeUR21,635thousandattheendof2015.

Thesaleofsharesinæito,d.d.wascompletedon5october2015withthetransferofthosesharesandthereceiptofconsideration.effortstosellsharesofCinkarnaCelje,d.d.wereconcludedinaugustwithoutanactualsalebeingcompleted.

40

6.2.1.3 Debtinvestments

ThebalanceofdebtinvestmentsstoodateUR77,872thousandattheendof2015.Corporate

bondsaccountedforthehighestproportionofdebtinvestments,followedbygovernment

bondsanddeposits.

Table18: Composition of debt investments as at 31 December 2015inEUR000

Investment amount

Bonds 57,568

Governmentbonds 24,479

-Domesticgovernmentbonds 11,003

-foreigngovernmentbonds 13,476

Corporatebonds 33,089

-Domesticcorporatebonds 5,320

-foreigncorporatebonds 27,769

Deposits 17,500

Commercial paper 434

Treasury bills 2,370

Total 77,872

ThevalueofModrazavarovalnica’sgovernmentbondportfoliowaseUR24,479thousand

asat31December2015.Theaforementionedportfolioprimarilycomprisesthegovernment

bondsofeuroareacountries.Theproportionofbondsaccountedforbydomesticissuers

was45%attheendof2015,whileforeignissuersaccountedfor55%.Morethan90%of

bondsaredenominatedineuros,whileaminorproportionaredenominatedinUsdollarsand

norwegiankroner.Themajorityofinvestmentsareaccountedforbysloveniangovernment

bonds,andbyindexfundsofeuroareagovernmentbonds.nearlyonehalfofbondshavea

maturityofbetweenfiveand10years,whilethemajorityofbondsbearafixedcouponrate.

Modrazavarovalnicaprimarilyholdscorporatebondsfromeuroareacountries.Domestic

corporatebondsaccountedfor16%ofthecorporatebondportfolioasat31December2015,

whileforeigncorporatebondsaccountedfor84%.allcorporatebondsandfundsthatinvest

incorporatebondsaredenominatedineuros.Thelargestinvestmentsasat31December

2015wereaccountedforbyfundscomprisingeuropeancorporatebonds.Modrazavaroval-

nicawasmostexposedtothebondsofissuersfromthesectorsoffinance,telecommunica-

tionsservicesandpublicservices.

6.2.1.4 Investmentsincashandcashequivalents

ModrazavarovalnicaheldeUR4,590thousandincashandcashequivalentsattheendof2015.

Table19: Composition of cash and cash equivalents as at 31 December 2015inEUR000

Investment amountineUR

Cashonaccountsatbanksandcashinhand 4,590

Total 4,590

41

6.2.2 Managementofguaranteefunds

Modrazavarovalnicaisthelargestpayerofsupplementarypensionsinslovenia,andman-

agedtwoguaranteefundsin2015intendedforthatpurpose:

�� thefirstPensionfundGuaranteefund,fromwhichsupplementarypensionannuities

arepaidsinceaugust2004fromconvertedpensioncertificatestoallpersonswhohave

reached60yearsofage;and

�� theModraRentaGuaranteefund,whichoffersacomprehensiveselectionofsupplemen-

tarypensioninsuranceannuitiessinceDecember2011inaccordancewiththeZPIZ-2.

ModrazavarovalnicapaideUR15.2millioninsupplementarypensionsto17,335policyhold-

ersin2015.atotalof7,345policyholdersreceivedapensionannuityfromsupplementary

pensioninsurance(Modrarenta),while9,990policyholdersreceivedapensionannuityfrom

supplementarypensioninsuranceinthescopeofthefirstPensionfund(inexchangefor

pensioncertificates).

Table20: Basic data regarding the guarantee funds of Modra zavarovalnica

Guaranteefundno.ofrecipients

ofannuitiesin2015

assetsundermanagement

eURmillion

expenditureannuitiesin2015

eURmillion

KsPPs−firstPensionfundGuaranteefund 9,990 100 6.2

KsMR−ModraRentaGuaranteefund 7,345 40 9

Total 17,335 140 15.2

6.2.2.1 FirstPensionFundGuaranteeFund

TheKsPPscomprisesseparateassetsformulatedon13July2004forallpolicyholders

whohavereachedaminimumof60yearsofageandthusobtainedtherighttoanannuity.

WhentheyobtaintherighttoanannuityonthebasisofaninformativecalculationbyModra

zavarovalnica,eachpolicyholderselectstherelevantformofpensionannuity.Policyholders

with2,000orlesspointsmayreceiveapensionannuityinalump-sumamount.apolicyholder

withmorethan2,000pointsontheirinsurancepolicymaychoosebetweenalifetimepen-

sionannuityandalifetimepensionannuitywithaguaranteedpaymentperiod.Policyhold-

erswithbetween2,000and5,000pointsmayalsobepaidanannualpensionannuity.The

guaranteedpaymentperiodissetat5,10or15years.shouldthepolicyholderdieduringthe

guaranteedpaymentperiod,thepensionannuityispaidtotheirbeneficiariesorheirsuntil

theexpirationofthatperiod.

PolicyholderswhoreceiveaPPspensionannuityareentitledtothesurplusreturnoftheguar-

anteefundovertheguaranteedreturninaccordancewiththegeneraltermsandconditions

ofsupplementarypensioninsuranceunderthefirstPensionfundoftheRepublicofslovenia

−conversionforpensioncertificates(PPs-sP01).Theproportionofthesurplusearmarkedfor

thepermanentincreaseinannuitiesisdeterminedonceayearbythefundmanager’smanage-

mentboard.Halfofthesurplusreturnfrom2014intheamountofeUR2,215thousandwas

allocatedin2015forapermanentincreaseinannuities.Theannuitiesreceivedbyallpolicy-

holders/recipientsofPPspensionannuitieswhoenteredintoaninsurancepolicybyDecem-

ber2014intheformofamonthlyorannualannuitywere2.3%higheronaverageinJune.The

annuitiesof9,691policyholdersortheirbeneficiarieswereincreased.Thedifferenceforthe

periodJanuarytoMay2015waspaidtogetherwiththeJunepaymentofincreasedannuities.

atotalof1,308policyholderswhoreachedtheageof60yearsobtainedtherighttoanannu-

ityin2015.ThosepersonspaidatotalofeUR3,628thousandintotheKsPPsforsupple-

mentarypensions.

42

ThevalueoffundassetsstoodateUR99,593thousandasat31December2015.Themajor-

ityor65%ofassetsareaccountedforbybonds,followedbysharesanddeposits.

Table21: Composition of KS PPS assets as at 31 December 2015inEUR000

assets amount

shares 13,435

bonds 64,451

Commercialpaper 1,723

Treasurybills 310

loansanddeposits 10,800

Investmentcoupons 6,188

Cashandcashequivalents 551

otherclaims 2,135

Total 99,593

asat31December2015,atotalof65%ofKsPPsassetswereinvestedintheRepublicof

slovenia,while35%ofallassetswereinvestedinforeignissuers.bondsaccountedforthe

highestproportionofinvestmentsinforeignissuers.

Table22: Geographical distribution of KS PPS investments as at 31 December 2015 inEUR000

area amount

Domesticinvestments 64,388

foreigninvestments 35,205

Total 99,593

6.2.2.2 ModraRentaGuaranteeFund

annuitypensioninsuranceisintendedforthepaymentofpensionannuitiestopolicyhold-

ers/participantsinsupplementarypensioninsuranceplanswhohaveexercisedtheirrightto

apensionfromcompulsoryinsuranceviatheZPIZ.

Whenconcludinganannuitypensioninsurancepolicy,eachpolicyholdermaychooseone

formoflifetimeannuity,andthusexercisetheirrighttoasupplementaryold-agepension.

Policyholderswereabletochoosefrom24differentsupplementarypensionformsin2015.

ThetraditionalModrarentaisalifetimepensionannuitypaidonamonthlybasiswithout

aguaranteedpaymentperiod.

TheModrarentawithaguaranteedpaymentperiodisalifetimepensionannuitypaidon

amonthlybasiswithaguaranteedpaymentperiodof5,10,15or20years.

TheacceleratedModrarentawithafullguaranteeisalifetimepensionannuitywitha

guaranteedmonthlypaymentperiodofbetween1and10years(acceleratedmonthlypay-

mentandguaranteeintheeventofdeath),followedbytheannualpaymentofanannuity

equaltothepreviousmonth’samount.

43

TheacceleratedModrarentawithalimitedguaranteeisalifetimepensionannuitywith

aguaranteedmonthlypaymentperiodofbetween2and10years(acceleratedmonthlypay-

mentandguaranteeintheeventofdeathinbetween1to9years),followedbytheannual

paymentofanannuityintheamountofeUR12.

by31December2015,atotalof7,902policyholders/participantshadexercisedtheirrightto

asupplementaryold-agepensionandoptedtoreceiveamonthlypensionannuity.The2,143

policyholderswhoexercisedtheirrighttoanold-agepensionin2015paidinatotaleUR

20,469thousandtotheguaranteedfund.

Table23: Number of policyholders/participants and amount paid into the KS MR in 2015

Pensionfundnumberofparticipants/

policyholdersRedemptionvalue

ofassets(ineUR000)

KVPs 295 3,267

ZVPsJU 1,539 10,175

MKPs 13 48

Pensionfundsofothermanagers 296 6,979

Total 2,143 20,469

Theamountofanindividual’spensionannuitydependsontheselectedassetsofthesupple-

mentarypensioninsurance,thetechnicalinterestrate,mortalitytablesseparatedbygender,

thepolicyholder’sdateofbirth,thepolicyholder’sagewhentheannuityinsuranceentered

intoforceandthecostsofthepaymentoftheannuity.Theaverageageofannuityrecipients

is61years,whileatotalof53%ofannuityrecipientsaremale.

Table24: Structure of KS MR supplementary pension annuities as at 31 December 2015

TypeofannuityProportion

ofpolicyholdersaverageamountof

annuity(ineUR)

TraditionalModrarenta 1% 52

Modrarentawithaguarantee 2% 70

acceleratedModrarentawithafullguarantee 20% 117

acceleratedModrarentawithalimitedguarantee 77% 173

Total 100% 159

ThevalueoffundassetsstoodateUR39,976thousandasat31December2015.Themajority

ofassetsareaccountedforbybonds,investmentcouponsandinvestment-gradedeposits.

Table25: Composition of KS MR assets as at 31 December 2015inEUR000

assets amount

bonds 23,945

loansanddeposits 5,730

Commercialpaper 1,287

Treasurybills 2,440

44

assets amount

Investmentcoupons 5,908

Cashandcashequivalents 404

otherclaims 262

Total 39,976

asat31December2015,40%ofKsMRassetswereinvestedintheRepublicofslovenia,

while60%ofallassetswereinvestedinforeignissuers.

Table26: Geographical distribution of KS MR investments as at 31 December 2015 inEUR000

area amount

Domesticinvestments 15,977

foreigninvestments 23,999

Total 39,976

6.2.3 Managementofmutualequitypensionfunds

Modrazavarovalnicaisthelargestproviderofsupplementarypensioninsuranceinslovenia,

andisanimportantproviderofold-agesavingsinthescopeofthesecondpensionpillar.

Morethan270thousandindividualsheldsavingsinthecompany’smutualpensionfundsin

December2015,whiletheassetsoftheaforementionedfundstotalledeUR914million.Paid-

insupplementarypensioninsurancepremiums,excludingtransfersofassetsbetweenthe

KVPsandMKPs,totalledeUR46millionin2015,anincreaseof7%relativeto2014.

Modrazavarovalnicamanagesfourmutualpensionfunds,whicharemanagedanddisclosed

separatelyasassetsheldbythepolicyholders/participantsinthefollowingfunds:

�� theClosedMutualPensionfundforPublic-sectoremployees,

�� theMutualequityPensionfund,

�� ModriUmbrellaPensionfund,and

�� thefirstPensionfundoftheRepublicofslovenia.

Table27: Data regarding mutual pension funds managed by Modra zavarovalnica as at 31 December 2015

fund

numberofparticipants/

policyholders

numberofemployers/

liablepersons

amountofassetsundermanagement

(eURmillion)

KVPs−MutualequityPensionfund 27,085 230 174

ZVPsJU−ClosedMutualPensionfundforPublic-sectoremployees

210,908 1,920 696

MKPs−ModriUmbrellaPensionfund 8,839 96 23

PPs−firstPensionfund 23,651Intendedonlyforindividuals

22

Total 270,483 2,246 915

Pursuanttoarticle313oftheZPIZ-2,Modrazavarovalnicamustcreateprovisionsiftheactual

netvalueofpensionfundassetsislowerthantheguaranteedvalueoffundassetsduringthe

accountingperiodbychargingequityanamountequaltothesumofdeficitsinthevalueof

45

aparticipant’sassetsuptotheguaranteedandactualvalueofthatperson’sassets.atthe

endof2015ModrazavarovalnicacreatedprovisionsintheamountofeUR15,556thousand

forfailuretoachievetheguaranteedreturnonmutualpensionsfunds.eUR15,342thousand

ofthatamountrelatedtothePPs.

6.2.3.1 ClosedMutualPensionFundforPublic-SectorEmployees

TheZVPsJUwasestablishedthroughthecollectionofassetsfromtheaccountsofpub-

lic-sectoremployees,whichensurestherighttoasupplementaryold-agepensionand

otherrightsdefinedinthepensionplan.Inadditiontothepremiumspaidintothefundby

employers,public-sectoremployeesmayalsopaypremiumsthemselves,thusensuringa

highersupplementarypensionandtheexploitationoftaxreliefinthecalculationofper-

sonalincometax.asfundmanager,Modrazavarovalnica,d.d.ensuresaminimumguar-

anteedreturnonsavings.

PursuanttotheZKDPZJUandKPoPnJU,collectiveinsuranceunderthePnJUKpension

planincludedallpersonswiththestatusofpublic-sectoremployeeasat1august2003orto

whomtheKPnGapplied.IndividualswhoconcludedanemploymentcontractwiththeRepub-

licofslovenia,alocalcommunityorpubliclawentityasemployerafter1august2003were

includedinthePnJUKpensionplanonthedaytherelevantemploymentcontractwascon-

cludedoronthedaythepersoninquestionsreceivedthestatusofpublic-sectoremployee.

Theagreementonmeasurestoreducethescopeoffundsforwagesandotherpublic-sector

labourcostsfor2015includedtheextensionofreducedsupplementarypensioninsurance

premiumsforpublic-sectoremployees.InDecember2014,thesloveniangovernmentand

representativepublic-sectortradeunionssignedanannextothecollectiveagreementfor

thenon-economicsectoroftheRepublicofsloveniaandsetthelevelofpremiumstobepaid

byemployersfor2015.Premiumsintheperiod1January2015to30June2015amounted

to10%ofthepremiumapplicableasat1January2013(themonthlypremiumforthehigh-

estpremiumgradewaseUR2.68).Premiumsintheperiod1July2015to31october2015

amountedto15%ofthepremiumapplicableasat1January2013(themonthlypremium

forthehighestpremiumgradewaseUR4.02).Premiumsintheperiod1november2015to

31December2015amountedto30%ofthepremiumapplicableasat1January2013(the

monthlypremiumforthehighestpremiumgradewaseUR8.03).

onthebasisofthePnJUKpensionplanandZVPsJUrules,Modrazavarovalnica,asman-

ageroftheZVPsJU,isentitledtosubscriptionandmanagementfeesassociatedwiththe

ZVPsJU.subscriptionfeesarechargedasapercentageofthepaid-inpremiumatthetime

ofpaymentandaretransferredtothefundmanager’saccount.Thefeeamountedto0.5%in

2015.TheannualmanagementfeefortheZVPsJUis0.5%oftheaverageannualnetvalue

ofZVPsJUassets.allotheroperatingcostsofthefundarebornebyModrazavarovalnica.

TheZVPsJUisthelargestslovenianpensionfund,bothintermsofthenumberofpolicy-

holdersandassetsundermanagement.Theaforementionedfundhad210,908participants

andassetstotallingeUR696millionattheendof2015.at3.68%,thereturnontheZVPsJU

waswellabovetheguaranteedreturnof1.94%in2015andrankedtheZVPsJUasthemost

profitableslovenianpensionfund.

ManagementoftheZVPsJUin2015wasaimedatsecurity,profitability,theliquidityand

diversificationofinvestments,andlong-termgrowthinthevalueofZVPsJUassets.The

mostsignificantchangesin2015wereanincreaseintheproportionofbondsandtreasury

bills,andadecreaseintheproportionofequitiesanddeposits.at55%,themajorityoffund

assetswereaccountedforbyinvestmentsinbondsattheendof2015,followedbyinvest-

mentsininvestmentcouponsat26%,investmentsintreasurybillsat9%,andbankdeposits

andcertificatesofdeposit.

46

supplementarypensioninsuranceforpublic-sectoremployeesmaybeterminatedunder

regularorextraordinarycircumstances.Regularterminationofcollectiveinsuranceunderthe

PnJUKpensionplantakeseffectwhentheparticipantoftheZVPsJUexercisestheirright

toasupplementaryold-agepensionortherighttoanearlysupplementaryold-agepension.

extraordinaryterminationmaytakeeffectwhenapublic-sectoremploymentcontractister-

minated,providedthat120monthshavepassedsinceanemployee’sinclusionintheinsur-

ancescheme,orbybeneficiaries/heirsintheeventofdeath.specialarrangementsapplied

until1august2013forallZVPsJUparticipants,whoon1august2003werelessthan10

yearsshyoffulfillingtheminimumcriteriatoobtaintherighttoanold-agepension.Insuch

cases,participantschosebetweentherighttoasupplementaryold-agepensionorthelump-

sumpaymentoftheredemptionvalueundercompulsoryinsuranceatthetimeofretirement.

Theinsuranceof3,764participantswasterminatedin2015,whiletheredemptionvaluepaid

waseUR21million.

6.2.3.2 MutualEquityPensionFund

TheKVPsisanopenmutualpensionfundintendedfortheimplementationofvoluntary

supplementarypensioninsuranceplans.anyemployeesincludedinthecompulsorypen-

sioninsuranceschememayparticipateintheKVPs.since2002,theKVPsincludessepa-

ratepensionplansforindividualandcollectivevoluntarysupplementarypensioninsurance,

designatedPn1PandPn1K.asfundmanager,Modrazavarovalnicaensuresaminimum

guaranteedreturnonsavings.

InaccordancewiththePn1PandPn1KpensionplansandtheKVPsrules,thefundman-

agerisentitledtosubscription,redemptionandfundmanagementfees.In2015,thefund

managementfeewas1%oftheaverageannualnetvalueofKVPsfunds.subscriptionfees

arechargedasapercentageofthepaid-inpremiumatthetimeofpaymentandamounted

to3%in2015.Redemptionfeesarechargedasapercentageofthepaid-outvalueoffunds

andamountedto1%in2015.

TheKVPsachievedareturnof1.39%in2015,whichwasbelowtheannualguaranteedreturn

of1.94%duringthesameperiod.Thereturnachievedwascomparablewiththoseachieved

byotherslovenianpensionfunds.ThevalueoffundassetsstoodateUR174millionasat31

December2015.

ManagementoftheKVPsin2015wasaimedatsecurity,profitability,theliquidityanddiversifi-

cationofinvestments,andlong-termgrowthinthevalueofKVPsassets.Themostsignificant

changesin2015wereanincreaseintheproportionoftreasurybillsandbonds,andadecrease

intheproportionofdepositsandequities.at49%,themajorityoffundassetswereaccounted

forbyinvestmentsinbondsattheendof2015,followedbyinvestmentsininvestmentcoupons

at24%,investmentsintreasurybillsat12%,andbankdepositsandcertificatesofdeposit.

supplementarypensioninsurancecanbeterminatedunderregularorextraordinarycircum-

stances.Insuranceisterminatedunderregularconditionswhenapolicyholderobtainsthe

righttoapensionundercompulsoryinsurance.extraordinaryterminationapplieswhena

fundparticipantwithdrawsfromtheinsuranceschemeonthebasisofawrittenstatement

regardingwithdrawal,oruponthedeathoftheparticipant.Thetransferofassetstoanother

personrepresentsaspecialwaytoterminateinsurance.aparticipant/policyholdermayexer-

cisetheirrighttothepaymentoffundspaidinbytheiremployeruntil31December2012

when10yearshavepassedsincetheirinclusionintheinsurancescheme.

Theinsuranceof1,711participants/policyholderswasterminatedin2015,whiletheredemp-

tionvaluepaidwaseUR15million.atotalof342participants/policyholdersoptedforthe

paymentoftheredemptionvalueoffundunitsfinancedbytheemployeruntil31December

2012,inthetotalamountofeUR2.5million.

47

6.2.3.3 FirstPensionFundoftheRepublicofSlovenia

ThePPsisintendedexclusivelyforthecoverageofpaymentsofpensionannuitiesfromsup-

plementarypensioninsurancepoliciesthatwerecreatedthroughtheconversionofpension

certificates.since1January2003,thePPsisaclosedmutualpensionfund,towhichaddi-

tionalpaymentsortheinclusionofadditionalparticipantsisnotpossible.sinceaugust2004,

theaccumulatedassetsofallpolicyholders/participantsatleast60yearsofagearetrans-

ferredtotheKsPPs,thepurposeofwhichistocoverpaymentsofsupplementarypension

annuities.IfaPPspolicyholder/participantdiesbeforetheyobtaintherighttoapensionannu-

ity,theirheirshavetherighttothepaymentoftheredemptionvalueofthepolicyinquestion.

ModrazavarovalnicaisentitledtoanannualfeeformanagingthePPs,whichamountedto

1%oftheaverageannualnetvalueofassetsin2015.Itisalsoentitledtoaredemptionfee,

whichiscalculatedasapercentageoftheredemptionvaluepaidtoheirs.

TheactualreturnofthePPswas−20.0%in2015,whiletheguaranteedannualreturnwas

1.0%.Thenegativereturnoftheaforementionedwastheresultoffallingpricesofslovenian

shares,inparticularsharesofTelekomslovenije,d.d.astheresultoftheunsuccessfulsale

ofthatcompany.PPsassetstotalledeUR22millionattheendof2015.

Theprimaryobjectiveofthefundmanagerin2015wastherestructuringofthePPsportfolio

withtheaimofthegreaterdiversificationandliquidityofinvestments,inparticularareduc-

tioninexposuretonon-marketableequityinvestments,whichalsorequiredadecisionissued

bytheIsainapril2014,underwhichtheaforementionedbodytaskedModrazavarovalnica

withharmonisingthestructureofPPsinvestmentswithlegalrequirementsby31october

2016andthedisposalofinvestmentsinparticipatinginterestsinlimitedliabilitycompanies.

Tothatend,ModrazavarovalnicabeganthesaleofitsparticipatinginterestinGeoplin,d.o.o.

in2015,thelatterbeingtheinsurancecompany’slargestinvestmentinalimitedliabilitycom-

pany.Thesalesprocessiscurrentlysuspendedduetothecoordinationofactivitieswiththe

aforementionedcompany’sotherowners.Theparticipatinginterestinelan,d.o.o.wassold

in2015,whileparticipatinginterestsinotherlimitedliabilitycompaniesremainintheport-

folioduetoalackofmarketinterestandrelativelylowvalues.

salesactivitiescontinuedin2015aimedatthejointsaleofamajoritypackageofsharesof

Telekomslovenije,d.d.Thatprocesswashaltedinaugust2015,withouttheaforementioned

salebeingcompleted.In2015,wereducedourexposure,inpartorfull,tofournon-market-

ableequityinvestments.

ThefundmanagerdisclosedimpairmentsintheamountofeUR15,342thousandattheend

of2015duetofailuretoachievetheguaranteedreturnofthefund.asignificantportionofthe

aforementionedamountrelatestoprovisionscreatedin2013and2014duetotheimpairment

oftheinvestmentinCimos,d.d.additionalprovisionsofeUR4,767thousandwerecreated

in2015onaccountoffallingpricesofslovenianequities.

atotalof1,308policyholdersobtainedtherighttoapensionannuityin2015.Thecorrespond-

ingPPsassetsintheamountofeUR3,628thousandweretransferredtotheKsPPs.atotal

of25paymentsoftheredemptionvalueintheamountofeUR86thousandweremadedue

tothedeathofpolicyholders/participants.

6.2.3.4 ModriUmbrellaPensionFund

TheMKPsisanopenfundintendedfortheimplementationofvoluntarysupplementarypension

insuranceplans.anyemployeesincludedinthecompulsorypensioninsuranceschememay

participateintheMKPs.apensionplanforcollectivesupplementarypensioninsurance(the

PnMZK)hasbeeninplacesince2015andincludespolicyholdersviatheiremployers,ashas

anindividualsupplementarypensionplan(thePnMZP)intendedforindividualpolicyholders.

48

TheMKPscomprisesthreesub-fundsthatarecreatedasseparateassets,whereeachsub-

funddefinesitsowninvestmentpolicyandobjective,andeachsub-fundisintendedfor

atargetagegroupofparticipants.TheModriDynamicsub-fundisintendedforyounger

participantsupto50yearsofageandpursuesahigher-riskinvestmentpolicy.TheModri

Conservativesub-fundisintendedforparticipantsaged50to60years,whiletheModri

Guaranteedsub-fundisintendedforparticipantsabove60yearsofage.asthemanager

oftheModriGuaranteedsub-fund,Modrazavarovalnicaensuresaminimumguaranteed

returnonsavings.

onthebasisofthedetailedrulesoftheModriUmbrellaPensionfund,Modrazavarovalnica,

asmanageroftheMKPs,isentitledtosubscriptionandmanagementfeesassociatedwith

theMKPs,whicharepaidfromtheaforementionedfund’sassets.subscriptionfeesare

chargedasapercentageofthepaid-inpremiumatthetimeofpaymentandaretransferred

tothefundmanager’saccount.Thefeeamountedto3%in2015.Theannualmanagement

feefortheMKPsis1%oftheaverageannualnetvalueofanindividualsub-fund’sassets.

ThereturnoftheModriGuaranteedsub-fundwas−1.97%overan11-monthperiodin2015,

whiletheguaranteedreturnduringthesameperiodwas1.77%.Intheperiodfebruaryto

December2015,theModriConservativesub-fundachievedareturnof2.61%,whilethe

ModriDynamicsub-fundachievedareturnof3.59%.ThereturnsachievedbytheModri

ConservativeandModriDynamicsub-fundswereamongthebestamongprovidersofsup-

plementarypensioninsurancein2015.

asthemanageroftheModriGuaranteedsub-fund,Modrazavarovalnicatakesanactive

approachtoassetmanagement,theaimofwhichistomeettheoperationalobjectiveof

management,i.e.toachieveandexceedtheaveragereturnofcompetitivepensionfunds

whilemaintainingtheactualvalueoffundassetsabovetheguaranteedvalue.Inmanaging

theModriConservativeandModriDynamicsub-funds,itpursuestheoperationalobjectives

ofmanagement,i.e.toachieveandexceedtheaveragereturnofcompetitivepensionfunds.

Thismeansthatthemanageractivelydeviatesfromtheassetstructureofcompetitivefunds

andfromthelong-termstrategicallocationofassets,andinvestsincategoriesorindividual

investmentsthatitassessesareundervaluedaccordingtocertaininvestmentcriteria.

TheassetsoftheModriGuaranteedsub-fundtotalledeUR15,378thousandattheendof

2015.at44%,thehighestproportionofthesub-fund’sassetswereaccountedforbybonds,

followedbybankdepositsat16%,investmentsininvestmentfundsthatinvestinbondsat

13%andadditionalliquidfundsat11%.Investmentsininvestmentfundsthatinvestinshares,

andtreasurybillsandcommercialpaperaccountforasmallerportionoffundassets.

TheassetsoftheModriConservativesub-fundtotalledeUR3,275thousandattheendof

2015.at40%,thehighestproportionofthesub-fund’sassetswereaccountedforbyinvest-

mentsininvestmentfundsthatinvestinshares,followedbyinvestmentsininvestmentfunds

thatinvestinbondsat22%,bankdepositsat14%andadditionalliquidfundsat13%.Invest-

mentsinbondsandcommercialpaperaccountforasmallerportionoffundassets.

TheassetsoftheModriDynamicsub-fundtotalledeUR3,793thousandattheendof2015.

at62%,thehighestproportionofthesub-fund’sassetswereaccountedforbyinvestments

ininvestmentfundsthatinvestinshares,followedbyinvestmentsininvestmentfundsthat

investinbondsat12%,whileadditionalliquidfundsandbankdepositseachaccountfor9%

ofsub-fundassets.Investmentsinbondsandcommercialpaperaccountforasmallerpor-

tionoffundassets.

supplementarypensioninsurancecanbeterminatedunderregularorextraordinarycircum-

stances.Insuranceisterminatedunderregularconditionswhenapolicyholderobtainsthe

righttoapensionundercompulsoryinsurance.extraordinaryterminationapplieswhena

49

fundparticipantwithdrawsfromtheinsuranceschemeonthebasisofawrittenstatement

regardingwithdrawal,oruponthedeathoftheparticipant.Thetransferofassetstoanother

personrepresentsaspecialwaytoterminateinsurance.aparticipant/policyholdermayexer-

cisetheirrighttothepaymentoffundspaidinbytheiremployeruntil31December2012

when10yearshavepassedsincetheirinclusionintheinsurancescheme.

Theinsuranceof17participants/policyholderswasterminatedin2015,whiletheredemption

valuetotalledeUR57thousand.atotalof12participants/policyholdersoptedforthepayment

oftheredemptionvalueoffundunitsfinancedbytheemployeruntil31December2012,in

thetotalamountofeUR106thousand.

6.3 sTeKlaRsKanoVaRoGa©KaslaTIna

Pursuanttothefinancialoperations,InsolvencyandCompulsoryDissolutionact,bankruptcy

proceedingswereinitiatedagainststeklarskanovaRogaπkaslatinaon21May2009.Itisevi-

dentfromthefinallistoftestedclaimsof3June2014thatclaimstotallingeUR9,765,732.25

wereregistered.ofthatamount,claimstotallingeUR209,800.27werecontested.

TheofficialreceiverDrIrenalesjakdraftedfourperiodicreportsin2015regardingthepro-

gressofbankruptcyproceedingsagainststeklarskanovaRogaπkaslatina.Currentactivi-

tieslinkedtothesaleofassetsandactivitiesassociatedwithlitigation,etc.werecarried

outin2015.

Theunredeemedbankruptcyestatecomprisesholidayfacilitiesthathavenotyetbeenentered

inthelandregisterandthreeparcelsinRogaπkaslatina.Theestimatedvalueofunredeemed

assetsisaroundeUR60,000.

ThecompanyrecordedinflowsofeUR342,343.49andoutflowsofeUR36,325.52from1

Januaryto31December2015.Thelargestinflowwasfromthesaleofacommercialbuilding

inRogaπkaslatinaforeUR307,800.00andfromthesaleofanapartmentonRoglaforeUR

34,002.00.ThelargestoutflowintheamountofeUR31,211.07wasaccountedforbyapay-

menttobankaCeljefromthedistributionofthespecialbankruptcyestate.

ThecompanyhadanaccountbalanceofeUR383,837.02asat31December2015.

50 Risk management

RiskmanagementisexplainedinChapter17.2accountingpoliciesinthefinancialreportsec-

tionofKapitalskadruæba’sannualreport.

51Significant business events after the end of 2015

Thesloveniangovernment,initsroleasKapitalskadruæba’sGeneralMeeting,appointed

Janezbedinaasmemberofthesupervisoryboardon8January2016untilDrborisænidariË’s

functionasmemberoftheManagementboardceases.

ThenewPensionandDisabilityInsuranceact(ZPIZ-2b)enteredintoforceon1January

2016,bringingchangesforKapitalskadruæba,too.Inaccordancewiththenewact,occu-

pationalpensionswillbepaiddirectlyfromthesoDPZ,whiletheKssoDPZwillceaseto

function.ThemanagementfeeschargedbyKapitalskadruæbawillrisewiththetransfer

ofassetsfromtheKssoDPZtothesoDPZ,astheCompanydidnotchargemanagement

feesfortheKssoDPZ.

amendmentstotheoccupationalpensioninsuranceplanapprovedbytheMlfsaeoinits

decisionof30october2015enteredintoforceon4february2016andrelatetoareduction

inmanagementfeeswithrespecttothenetvalueofassetsundermanagement.

basedonKapitalskadruæba’srequest,thesecuritiesMarketagencyissuedconsenton4

february2016totheamendmentstotheRulesonthemanagementofthecompulsorysup-

plementarypensioninsurancefundoftheRepublicofslovenia.Theamendmentsenterinto

forceon9March2016,andrelatetoareductioninmanagementfeeswithrespecttothenet

valueofassetsundermanagement.

on28January2016,theGeneralCourtoftheeuropeanUnionrejectedinfulltheslovenian

government’smotiontoannuleuropeanCommissiondecisionno.sa.26379of19septem-

ber2012onthemeasuresinfavourofelan,d.o.o.Theaforementionedrulingextinguished

Kapitalskadruæba’scontingentliabilityinconnectionwiththepotentialrepaymentofstate

aidreceived.TheCompanythusreverseditsoff-balance-sheetliabilitytoelan,d.o.o.inthe

amountofeUR6,457thousand.

on28January2016,thegovernment,initsroleasthebaMC’sgeneralmeeting,adopteda

decisionbasedontheZGD-1andtheGovernmentMeasurestostrengthenthestabilityof

banksactrequiringthebaMCtotransfer(forconsideration)allclaimsagainstsava,d.d.and

allbondsofsava,d.d.initspossessiontosDHandKaDatthetransfervaluesatwhichit

receivedtheaforementionedhigh-risksitems,aspartoftheimplementationofmeasuresto

strengthenthestabilityofbanks,oratthefairvaluesorbookvaluesofthoseitemsasat30

52

June2015,ifthelatterarehigherthanthetransfervalues.Thosevaluesarefurtherincreased

forfinancingcostsequaltotheweightedcostofthebaMC’scapitalintheamountof4.2%

fortheperioditownedtheaforementioneditems.

asat31December2015,Kapitalskadruæbaheldacapitalinvestmentinsharesofsava,d.d.

valuedateUR255thousand.on12february2016,thecreditorcommitteeofsava,d.d.

adoptedaresolution,wherebythesharecapitaloftheaforementionedcompanyisreduced

fromeUR14.1milliontozerothroughthecancellationofallexistingshares.Theaforemen-

tionedresolutionbecomesvalidwiththefinalconfirmationofcompulsorycomposition.If

theresolutionconfirmingcompulsorycompositionbecomesfinal,Kapitalskadruæbawilllose

theentirevalueofitsinvestmentinsharesofsava,d.d.

ThesecuritiesMarketagencyissuedadeclaratorydecisionon5february2016inwhichit

ruledinfavouroftherequestofsDH,thesloveniangovernment,Kapitalskadruæba,nova

KreditnabankaMaribor,d.d.,ZavarovalnicaTriglav,d.d.andthefundforthefinancingof

theDecommissioningofKrπkonuclearPowerPlanttoissueadeclaratorydecisiontoliftthe

prohibitionontheexercisingofvotingrightsthatwasimposedonTelekomslovenije,d.d.,

ljubljanaasthetargetcompany.

on2february2016,acommitteecomprisingtheaforementionedcreditorsadoptedaresolu-

tion,wherebythesharecapitalofPomurskemlekarne,d.d.isreducedfromeUR1.4millionto

zerothroughthecancellationofallexistingshares.Theaforementionedresolutionbecomes

validwiththefinalconfirmationofcompulsorycomposition.

ThenewInsuranceact(ZZavar-1)enteredintoforceon1January2016andtransposesthe

europeansolvencyIIDirectiveintoslovenianlaw.Theaforementioneddirectivedefinesthe

frameworkfortherevisedregulatoryregimegoverningtheinsurancesector,reformsregard-

ingcapitalrequirementsandthemanagementofriskstowhicheUinsurersandreinsurers

areexposed.

Themainsolutionssetoutintheaforementionedactrelatetothesolutionssetoutinthesol-

vencyIIDirective,whichincludes14existinginsuranceandreinsurancedirectives,whilenew

rulesregardingsolvencyhavebeenadded.Themainsubstantivechangesrelativetothepre-

viousarrangementsmaybefoundintheareasofquantitativeandqualitativerequirements,

rulesgoverningsupervision,supervisoryreportingandthepublicdisclosureofinformation,

aswellasthesupervisionofgroups.ThesolvencyIIDirective,whichisimplementedwith

theZZavar-1,requiresinsurancecompaniestocalculatecapitaltakingintoaccountallrisks

towhichtheyareexposed.Inadditiontoinsurancerisks,theymustalsotakeintoaccount

market,creditandoperationalrisks.

Theaforementionedactplacesgreateremphasisontheprudentmanagementofrisksby

insurancecompaniesandonsoundinternalcontrols,withtheaimofincreasingthelevelof

securityofpolicyholders.Italsoimposednewrequirementsregardingthecapitaladequacy

ofinsurancecompanies,wherethelevelofcapitalrequirementswilldependontheinsur-

ancecompanyitselfanditsmanagementofrisks.TheultimateobjectiveofsolvencyIIisto

increasetheprotectionandsecurityofpolicyholders.

Thetransitiontothenewdirectivewasadifficultprocess,andrequiredsignificanthuman

resourcesandtheadaptationofinformationtechnology,allofwhichModrazavarovalnica

successfullycompleted.Weadaptedtheorganisationalstructure,appointedpersonsrespon-

sibleforkeyfunctionsattheinsurancecompany,andadoptedand/oramendedallnecessary

bylaws.Wethusenter2016preparedfortheimplementationofsolvencyII.

sinceJanuary2016,Modrazavarovalnicahasofferedupdatedformsofpensionannuities

basedonthenewpensionplan,whichwasapprovedbytheMlfsaeoinoctober2015and

53

whichhasalsobeenenteredinaspecialregisterofpensionplansatthefaRs.TheZPIZ-2

statesthatsupplementarypensionsintheformofapensionannuitycanbepaidonthebasis

ofaspecialpensionplanapprovedbytheministryresponsibleforlabour.Detailedruleson

thecalculationandpaymentofpensionannuitiesaredefinedbytheministryresponsiblefor

financeincooperationwiththeministryresponsibleforlabour.Detailedrulesandminimum

requirementsthatinsuranceandpensioncompaniesmusttakeintoaccountinthecalcula-

tionofpensionannuitieswerepublishedin2015andenteredintoforceon1January2016.

Tothatend,wecreatedanewguaranteefundinJanuary2016forthepaymentofsupple-

mentarypensionannuities,withpolicyholders’participationinprofits.

Changetotheaforementionedrulesenteredintoforceon19March2016andexpandedthe

rangeofsupplementarypensionsthatprovidersmayoffertopolicyholders.Thelimitonthe

acceleratedpaymentofsavingsexceedingeUR20,000nowonlyappliestocollectivesav-

ingsafter1January2013(i.e.accordingtotheZPIZ-2).Inthiscase,amonthlysupplemen-

tarypensionduringacceleratedpaymentmaynotexceedtwicetheamountofamonthly

termpensionannuity(form2:1).Theaforementionedlimitdoesnotapplytoallsupplemen-

tarypensioninsuranceassetsaccumulatedfromemployercontributionsuntil31December

2012andfromindividualcontributions.anindividualmaythuschooseanacceleratedform

ofmonthlypensionannuityintheperiod1−20years,andthenasupplementarypensionof

eUR30foreachthreemonthsuntiltheendoftheirlife.

54 Expected development of the Kapitalska druæba Group for 2016

Kapitalskadruæbawasestablishedwiththeaimofcoveringthedeficitinthepublicpension

anddisabilityinsurancesystem,whichisfinancedaccordingtotheprincipleofintergenera-

tionalexchange.Inaccordancewithitsmission,theCompanymusttransformitselfintoan

independentandautonomousdemographicreservefundassetoutintheZsDH-1.Details

willbesetoutinaseparateact.asonesourceoffinancing,theZsDH-1statesthat10%of

proceedsfromthesaleofcapitalinvestmentsheldbytheRepublicofsloveniamustbetrans-

ferredtoaspecialaccountattheMinistryoffinance,andthattheaforementionedfundsmay

beusedexclusivelytofinancethedemographicreservefund.alongsidetheformulationofa

demographicreservefund,theZsDH-1alsoenvisagesthetransferoftheZPIZ’sinvestment

inZavarovalnicaTriglav,d.d.toKapitalskadruæba.

TechnicalstudiescarriedoutbyKapitalskadruæbatodatewiththehelpofexternalexperts

andpresentedtoallimportantstakeholders,representaqualitybasis,forboththeactgov-

erningthedemographicreservefundandforthedevelopmentofcomprehensiveandlong-

termsustainablepensionsolutions.

Kapitalskadruæba’smissionhasbeenthesamesinceitsinceptionandinconceptualtermsentails

performingthefunctionofdemographicreservefundtotheextentpermittedbyitsassets.The

ImplementationofthebudgetoftheRepublicofsloveniafor2016and2017act(ZIPRs1617)

envisagestheadjustmentofpensionsandthustransfersbyKapitalskadruæbatothepension

fundinthemaximumpossibleamountenvisagedbytheZsDH-1,i.e.eUR50million.Thefulfil-

mentofourlegalobligationrequirestheeffectivemanagementofcapitalinvestmentsandthe

continuedtransformationofKapitalskadruæbaintoaportfolioinvestor.In2016,wewillcontinue

thesaleofsloveniangovernmentequityinvestmentsandtheplacementofproceedsintoliquid

portfolioinvestments.WewilladaptandupdateKapitalskadruæba’sassetmanagementstrategy

duetotheCompany’stransformationintoademographicreservefund,theunstableconditions

ontheglobalfinancialmarkets,lowinterestratesandforecastsofweakeconomicgrowth.

Kapitalskadruæba’sroleinthestructureofslovenia’spensionsystemisbecomingincreas-

inglyimportantwiththegrowthinsoDPZassetsandthepaymentofpensionstotheafore-

mentionedfund’spolicyholders.fundamentalchangesareoccurringintheslovenianpension

systemwiththepaymentofoccupationalpensionsfromtheaforementionedfundinaccord-

ancewiththeZPIZ-2.Compulsorysupplementarypensioninsurance,whichisbasedonthe

55

actualsavingsofpolicyholdersinagivenperiod,isreplacingpensionsthatarefinancedon

thefly,andthereforerepresentsamodernformofpensionpaymentfoundedonacapital

basis.Theaforementionedinsurancefacilitatesearlyretirementforemployeeswhoperform

especiallydifficultworkandworkthatisharmfultotheirhealth,andworkthatcannolonger

beperformedsuccessfullyafteracertainage,anddoesnotusegeneralgovernmentand

budgetsources.Thesepensions,firstpaidin2014,representoneofmanypossiblesustain-

ableformsthatwillbecomeincreasinglyimportantduetotheunfavourabledemographic

characteristicsofsloveniansociety.Kapitalskadruæbaperformsthefunctionofdemographic

reservefundnotonlybecauseitcoversthedeficitinthepublicsystem,butalsobecauseitis

acreativedeveloperofcomprehensive,long-termsustainablepensionsolutions.

asthemanagerofthesoDPZ(thesecondlargestmutualpensionfundintermsofsize,with

thefastestgrowthinassets),Kapitalskadruæbawillworkactivelywithallstakeholdersin

theoccupationalinsurancesystem,bothviathefund’scommitteeanddirectly.Inproviding

compulsorysupplementarypensioninsurance,theCompanyisguidedbyconcernforpolicy-

holdersandtheiremployers,andforoccupationalpensioners.Wewillthereforecontinueto

strivetobeoneofthemostsuccessfulpensionsavingsmanagersinslovenia,andtoensure

thatsystematicpensionsolutionsareaimedatprovidinghigher-qualityandsaferformsof

insurance.Inthisway,wewillcontributetotheimprovedpensionstabilityofoccupational

insurancepolicyholdersandpensioners.

Duetolegislativechangesandwiththeaimofoptimisingbusinessprocessesthatareadapted

totheactualrequirementsofthebusinessenvironment,wewillimplementthreemajorpro-

jectsin2016,inadditiontotheCompany’stransformationintoademographicreservefund:

1.theimplementationoftheZPIZ-2b;2.theestablishmentofabridgingfundforathletes;and

3.thereplacementofITsupportforassetandfundmanagement.

TheprovisionsofthePensionandDisabilityInsuranceact(ZPIZ-2b)eliminate,toagreat

extent,thedeficienciesthataroseduringtheimplementationofpensioninsuranceandthat

werenotgovernedbythelaw.Verificationoftheaccuracyofpaid-incontributionsisnow

governedbythelaw,whilehigherfinesforliablepersonswhofailtofulfiltheirobligationsto

policyholdershavebeenset.solidarityreservesarebeingestablishedwiththeaimofelimi-

natingproblemsinthepaymentofoccupationalpensionstopolicyholderswhomeetthe

conditionsforoccupationalretirementbutdonothavesufficientfundsontheiraccounts.The

ZPIZ-2bimposesnumerousnewtasksandcompetencesonKapitalskadruæba.Wewillthus

transformthesoDPZandadjusttheoccupationalpensioninsuranceplanin2016inaccord-

ancewiththeZPIZ-2b.TheZPIZ-2bsetsoutacomprehensivesoDPZpensionschemein

whichthesavingsandpaymentelementswillbelinked.Thisrequiresthetransformationof

thecurrentKssoDPZandthetransferoftheoccupationalpensionpaymentfunctioninthe

scopeofanintegratedoccupationalinsurancepensionplan.asaresult,wewillalsoupdate

thesoDPZmanagementstrategy,asourguidingprinciplein2016remainsthemaximisation

ofKapitalskadruæba’sassetsandtheassetsofoccupationalinsurancepolicyholders.Kapital-

skadruæbawillassumenewcompetencesandobligationswiththeentryintoforceofthenew

pensionplan,includingcontrolovertheaccuracyofcontributionpayments,andin2018the

functionofmisdemeanoursauthority,whichwillincreasetheneedforadditionalemployees.

Thesecondproject,whichcarriesoverfrom2015,includesthecreationofabridginginsur-

ancefundforprofessionalathletesandthestartoftheprovisionofbridginginsurance.The

ZPZP©-1repealedtheoriginalbridginginsurancearrangementsandsetadeadlineof1sep-

tember2016forthecreationofthebridgingfundandadeadlineof30June2016forthecrea-

tionofafundcommittee.TheZPZP©-1statesthatfromoctober2016sportsassociations,as

employers,willbeobligedtopaycontributionsforbridginginsuranceforprofessionalathletes

bythedeadlinesandintheamountssetoutintheaforementionedact.Professionalathletes

willalsobeabletomakesvoluntarypaymentstothefunduptoalegallydefinedannuallimit.

56

Thebiggestchallenges,resultinginthehighestcosts,willariseduetourgentadaptationsto

ITsupportforthefunctioningofthebridgingfundandduetotheestablishmentofappropri-

atecommunicationchannelswiththeMinistryofeducation,scienceandsport,asthebody

responsiblefortheregisterofpolicyholders,andwithsportsassociationsasthoseobliged

topayregularmonthlycontributions.

In2016,wewillcontinuetheprocessofreplacingthesoftwareusedtosupportassetand

fundmanagement.Themostimportantdeadlinesintheaforementionedprojectarelinkedto

bothofthepreviouslydescribedprojects,i.e.theadaptationofthesoDPZtotheprovisionsof

theZPIZ-2bandtheestablishmentofandstartofoperationsofthebridgingfundforathletes.

newsoftwaresolutionsarebeingintroducedgradually,withtheprimaryfocusonthepursuit

ofprojectobjectivesthatarelinkedtolegallybindingdeadlinesforKapitalskadruæba.The

upgradingoftheinformationsystemwillbeaccompaniedbytheoptimisationofkeybusiness

processes,whichwillbeadaptedtochangesinthebusinessenvironmentandfinancialworld.

Throughthecommitmentandhighlevelofmotivationofallemployees,wewillfulfilour

missionagainin2016,whilebuildingandincreasingtheCompany’slong-termvalueforits

ownerthroughprudentandreliabledecisions.Throughtransformationintoademographic

reservefund,wewillopennewperspectivesfortheslovenianpensionsystemandsupport

thesustainableandlong-termeconomicdevelopmentofslovenia.Thisalsorepresentsan

appropriateresponsetochangingdemographicconditionsandtheprojecteddevelopment

ofthoseconditionsinslovenia.

In2016,Modrazavarovalnicawillcontinuetopursuestrategiesthatfocusonthesecurity

ofsupplementarypensioninsurancepolicyholders.Thatsecuritywillbeensuredthrougha

sufficientlevelofcapital,prudentoperationsandanincreaseinthevalueofsupplementary

pensionsavings.Themostpressingproblemsassociatedwithsupplementarypensioninsur-

anceincludetheproportionofemployeesnotincludedinsuchascheme,premiumsthatare

absolutelytoolow,meaningthatpensionannuitieswillnotcoverthedifferenceinlowerpen-

sionsfromcompulsoryinsuranceinthemajorityofcases,andtheacceleratedwithdrawalof

savings,althoughtheoptimalchoicefollowingretirementisanequallydistributedannuity

untiltheendofthepolicyholder’slife.Toreversethatnegativetrend,measuresarerequired

topromotethedevelopmentofsupplementarypensioninsurance.Inadditiontotheactive

raisingofawarenessandpromotions,thosemeasureswillcompriseeffortstoincludecol-

lectivesupplementarypensioninsuranceinnegotiationsontheharmonisationofcollective

agreements,includinginthecommercialsector,anincreaseintheamountoftaxreliefand

theabolishmentoftheabsolutelimitontaxreliefforsupplementarypensioninsurance,with

theentirepensionannuitydeductedfromthepersonalincometaxbase.

Itisevidentfromresearchcarriedoutin2015thatthekeyfactorinselectingasupplemen-

tarypensioninsuranceproviderremainssecurity:reliabilityandtrust,economicstabilityand

security,manyyearsofexperienceandreferences.Theimportanceofsecurityisthatmuch

greaterduetoagenerallylowleveloftrustinfinancialinstitutions,whichisstillpresentand

hasasignificantimpactonmarketdevelopments.

Thefocusofourdevelopmentwillbeonalternativesupplementarypensioninsurancesales

channels,includingonlinesalesandothernewmarketapproaches.Wewilldevelopourmar-

ketapproachwiththeaimofprovidingcustomersadistinctlydifferentexperiencecompared

withcompetitiveproducts,andofferingthemauniqueserviceintermsofpreparingand

exchanginginformation,andanup-to-dateandcompetitiveinformativeoffer.

Majorbusinessobjectivesin2016includegrowthinmarketshareintheareaofsupplementary

pensionsavingsandinthepaymentofsupplementarypensionannuities.Potentialgrowthin

premiumsalsoliesinincreasingtheindividualpremiumsofZVPsJUpolicyholders.Inaddi-

tiontothepremiumspaidbytheiremployers,whichhavebeencutforfourstraightyearsas

57

theresultofausteritymeasures,public-sectoremployeesmayalsosaveforasupplementary

pensionontheirown,butindividuallyandnolongeronaccountofareductioningrosswages.

Thesameconditionsthatapplytoemployersapplyforthepaymentofindividualpremiums

byZVPsJUparticipants,andthusprovidepublic-sectoremployeesamoreaffordableformof

individualsupplementarypensioninsurance.Increasedmarketingactivitiesduringthesecond

halfoftheyearwillbeaimedattheplannedtransformationoftheZVPsJUintoasub-fundwith

aguaranteedreturnandtheestablishmentofanumbrellalife-cyclefund,wheretheformula-

tionofhigher-riskinvestmentpoliciesforbothfundscanbeexpectedin2017.

Throughthedevelopmentandupdatingofsupplementarypensionsinaccordancewiththe

newfeaturesoftheZPIZ-2andtheimplementingregulationissuedbytheMinistryoffinance,

wewillofferarangeofpensionannuitiesin2016,takingintoaccounttheexpectationsofpoli-

cyholdersandprescribedlimitsonthelevelandtypeofassetsundermanagement.Inaccord-

ancewithadoptedguidelines,wewillcontinuetostrengthenourfocusonthecustomer,offer

themostpersonaltreatmentpossible,monitorcustomers’needsandadvisethemaccordingly.

Themeasurementoftherecognitionattheendof2015indicatedthatModrazavarovalnicais

relativelywell-knownamongpolicyholders,althoughrecalloftheinsurancecompanyispoorer

relativetootherprovidersofsupplementarypensioninsurance(consumersrecogniseModra

zavarovalnica,butfailtoconnectitwiththecoreproductthatitoffers).Theinsurancecompa-

ny’scommunicationconceptwillthereforecontinuetofocusonlinkingsupplementarypension

insurancewithModrazavarovalnicain2016,andthemoreintensivepositioningoftheinsurance

companyastheleadingandsecurestmanagerofpensionsavingsandpayerofsupplementary

pensionannuities.ThekeymessageswillemphasiseModrazavarovalnicaasatrustworthylong-

termpartner,wherethesecurityofsavingsandresponsibilityforfundparticipantstakepriority.

Certainchangeswillbemadetobusinessprocessestoachievealloftheaforementioned

objectives,andtoachieveoperationalexcellenceandcreateanenvironmentthatpromotes

theinnovativenessandcreativityofemployees.

Integratedinformationsupportforpensionfundsundermanagementandthestandardisa-

tionofprocessesformanagingassetsandliabilitieswillbecompletedin2016,bothinthe

areaofmutualpensionfundsandguaranteefundsforthepaymentofsupplementarypen-

sions.Developmentactivitieswillfocusontheupgradingofinformationservicesinthearea

ofsalesandmarketing(Modrie-invoice,ModrinetandCRM),withtheaimofmaintaininga

comprehensiveoverviewofcustomers.

Weexpectadifficultyearin2016intermsofthemanagementofinvestments,astheresult

ofrecordlowinterestrates,andlowyieldsonbondsandrelativelyhigh-value,higher-risk

investmentcategories.Theguaranteedreturnin2016wascutfrom1.94%to1.08%.Wenev-

erthelessassessthattheachievementofsuchareturnwillbedifficult.opportunitieswillhave

tobesoughtinnewinvestmentcategories.Weplantoachieveareturnthatisatleastequal

tothereturnofselectedbenchmarkindicesandtoexceedtheaveragereturnofcompetitive

pensionfunds.InmanagingthefirstPensionfund,wewillpursuetheobjectiveofclosing

thenegativegapbetweentheguaranteedandactualvalueofassets,andthusreducethe

levelofrequiredprovisionsastheresultoffailuretoachievetheguaranteedreturn,whichin

turnwillhaveapositiveeffectonoperatingresultsachievedin2016.

Modrazavarovalnicawillalsodedicatespecialattentiontotheprofessionalandpersonal

developmentofitsemployees,whoensurethesuccess,growthanddevelopmentofthe

insurancecompany.Wewillcontinuetooperateasafamily-friendlycompany,whiledemon-

stratingoursocialresponsibilitythroughresponsibilityfortheenvironment,transparentand

responsibleoperationsandactivitiesaimedatraisingpublicawarenessaboutthefactthat

supplementarypensionsavingsareinevitableandanurgentsourceofincometofacilitatea

decentstandardoflivingfollowingretirement.

58 Social responsibility

10.1 ResPonsIbIlITyToTHeWIDeRsoCIalCoMMUnITy

Kapitalskadruæba’smissionistheprovisionofsupplementaryfundingforcompulsorypen-

sionanddisabilityinsurance.KapitalskadruæbatransfersfundsintheamountofeUR50

milliontotheZPIZeveryyearbynolaterthan29september,primarilyforthepurposeof

adjustingpensions,oraproportionallyloweramountiftheamountrequiredtoadjustpen-

sionsislower.

TheZsDH-1resultedinachangetopreviousarrangementsregardingthetransfertothe

budgetoftheZPIZ.Inaccordancewiththethirdparagraphofarticle52oftheZsDH-1,the

annualobligationtotheZPIZdependsontheamountoftheadjustmentpensions,whichis

limitedtoeUR50million.notwithstandingtheaforementioned,Kapitalskadruæbatransferred

eUR19,000thousandtotheZPIZin2015fortheannualbonuspaidtopensionersbasedon

theprovisionsoftheZIPRs1415-C.Kapitalskadruæbahastransferredthecumulativeamount

ofeUR664,321thousandtothebudgetoftheZPIZ.

Table28: Kapitalska druæba, d. d.’s payments to the budget of the PDII

year amountoftransfer(ineUR)

1999 7,093,974

2000 55,499,916

2001 34,948,255

2002 41,729,261

2003 26,602,404

2004 26,602,404

2005 26,602,404

2006 39,121,182

2007 39,121,182

2008 49,000,000

2009 49,000,000

59

year amountoftransfer(ineUR)

2010 100,000,000

2011 50,000,000

2012 50,000,000

2013 50,000,000

2014 0

2015 19,000,000

Total 664,320,982

becausetheassociationofPensionersocietiesofsloveniabringstogetherandmotivates

individualswhochoosetospendtheirtimeactivelyfollowingretirement,Kapitalskadruæba

donatedwritten-offcomputersandmobilephonesatthebeginningof2015.

Kapitalskadruæbadonatedwritten-offfurnituretotheMinistryoftheInteriorduetothelack

andgenerallypoorstateofequipmentattheaforementionedministry.

InJune2015,Kapitalskadruæbaoptedtopurchaseadefibrillatorintendedforfirstaidinthe

eventofcardiacarrest.ItislocatedinthecommonareaoftheCompany’scommercialbuild-

ingandispubliclyaccessibletoeveryoneinthatbuildingandthesurroundingarea.Thedefi-

brillatorisenteredintheaeDdatabasewiththeaimofraisingpublicawarenessaboutthe

importanceandaccessibilityofthedevicebyallthoseinthevicinityoftheCompany.The

aimofthepurchasewastocontributetoimprovingthepossibilityofrevivingpersonssuf-

feringfromcardiacarrest.

asasociallyresponsiblecompany,Modrazavarovalnicaalsorespondstotheneedsofthe

environment.Wearedevelopingacultureofdonations,whichisbecomingengrainedinour

socialresponsibility.Wesupportsociallybeneficialprojectsthateducationalinstitutionsare

unabletoimplementaloneviainternalsources,andrespondtorequestsforfinancialaidfrom

educationalinstitutionsintheeventofnaturaldisasters.In2015,wesupportedthebalkan

express2015summerschoolorganisedbythefacultyofeconomicsinljubljana.Theaimof

theprojectwastoeducateslovenianandforeignundergraduateandpostgraduatestudents

studyingeconomicandbusiness.

Thecompanyalsorespondedthroughouttheyeartotherequestsofindividualassociations

andorganisationsthatwereprovidedpromotionalmaterialsforrafflesandgifts(sportsasso-

ciationsandclubs,retireeassociations,firefighterassociations,etc.).

Modrazavarovalnicafocusesasignificantportionofitscommunicationactivitiesonraising

theawarenessofthepopulationregardingtheimportanceofold-agesavings.Thefollowing

activitieswerecarriedoutwiththeaimofimprovingawarenessaboutsupplementarypen-

sioninsurance:theorganisationofnumerousconsultations,thedraftingofinformationfor

publicationoncorporatewebsitesandininternalnewsletters,andtheofferingofprofessional

helpinthepreparationofresponsestoquestionsaboutsupplementarypensioninsurance

posedtoemployersandunionsbyemployees.Thehumanresourceandaccountingdepart-

mentsofcustomershavebeeneducatedaboutthepossibilitiesandadvantagesofpay-outs

intheformofasupplementarypension,whileinformationofficesatcorporateheadquarters

havebeenintroduced.Representativesofthecompanyattendedtheannualconferenceof

companiesundertheauspicesofthefamily-friendlyCompanyassociationandthefinancial

daysorganisedbyUniCreditbankaagainlastyear,wheretheygaveapresentationonsup-

plementarypensioninsurance.

60

10.2 ResPonsIbIlITyToeMPloyees

10.2.1 Concernforemployeetraining

existingworkareasandthedevelopmentofnewbusinessfunctionsattheCompanyare

enhancedusingvariousformsofpre-plannedtrainingadaptedtothespecificjobrequire-

mentsandknowledgerequiredbyeachemployee,andtotheCompany’sdevelopmentally

establishedtasks.employeesthusreceiveadditionaltrainingbothinsloveniaandabroadby

attendingshorterorlongerseminarsandworkshops,andthroughplannedinternaltraining

carriedoutregularlyforallemployees.

During2015,employeesattendedseminarsonthefollowingtopics:taxregulations,wages,

personnelandotherdocumentationbearingpersonaldata,occupationalsafetyandhealth,

publicprocurement,valuation,thefamily-friendlyCompanycertificate,finance,current

issuesrelatingtocommerciallaw,thelatestdevelopmentsinthepreventionofmoneylaun-

dering,thebusinessacademy,thecollection,archiving,managementandretentionofdata,

informationtechnologyandauditing.

Inaccordancewithitseducationandtrainingplan,Kapitalskadruæbaalsoorganisedinternaltrain-

ingprogrammesin2015onthefollowingtopics:thepreventionofmoneylaundering,personal

dataprotection,conductintheeventofafireorotherdisaster,thecodeofethics,thelatestdevel-

opmentinlegislationgoverningcompanies(ZGD-1)andtheefQM(europeanfoundationforQual-

ityManagement)excellencemodel.Kapitalskadruæbaorganisedaworkshoponthesubjectof

businessetiquetteinseptember2015forallemployees,andanotherworkshopinoctober2015on

effectivecommunicationandcooperationamongstemployees.allemployeeswerealsoafforded

theopportunitytobuildontheirknowledgeoffinance-relatedenglishandbusinessGerman.

Kapitalskadruæbapromotescontinuingeducationandtheacquisitionofvariouslicencesin

theemployer’sinterest.Thisimprovesthequalityoftheworkprocessandimprovesemploy-

ees’qualificationsforworkinaspecificposition.In2015oneemployeeattendedmaster’s

degreecourses(accordingtothebolognamodel),threeattendedpostgraduatecourses(mas-

ter’sofscience),whiletwoemployeesattendedtrainingtoreceiveprofessionalqualifications.

Modrazavarovalnicaisawarethatonlyqualifiedemployeesarecapableofachievingthe

insurancecompany’sobjectivesandthattheworkofemployeescontributestomoresuc-

cessfuloperations.Modrazavarovalnicaencouragesitsemployeestocontinuouslyeducate

themselvesinallareas,astheinsurancecompany’ssuccessdependsontheirmotivation,

qualificationsandknowledge.educationandtrainingfacilitatetheacquisitionofstrategically

importantknowledge,moreefficientworkandthesuccessfulachievementofobjectives,

whileinthelongtermtheyaffectthecommitmentofemployeesandincreasetheirloyaltyto

theinsurancecompany,whichinturnresultsinalowerornearlyzeroturnoverrate.

almost92%ofemployeesattendedvariousformsofeducationandtrainingin2015.Three

employeeswereincludedinundergraduatestudies,oneinspecialisedstudiesandonein

doctoralstudies.Inadditiontoexternaltraining,Modrazavarovalnicaalsoorganisesinternal

employeetrainingcarriedoutindependentlybythecompany’sexperts.

employeesattendedseminars,consultations,conferencesandworkshopsatexternalinstitu-

tions,primarilywiththeaimofenhancingtheirexistingknowledgeandacquiringnewtechni-

calknowledge.educationandtrainingareadaptedtotheneedsoftheindividualjobandtothe

specificknowledgerequiredbyeachemployee,andarecoordinatedwithdevelopment-oriented

tasks.Theemphasiswasprimarilyonthedevelopmentofmanagerialandsalesskillsandskills

requiredforimprovedeffectiveness,andonincreasingawarenessregardingexposuretoopera-

tionalrisksandtrainingfortheprofessionalperformanceofallactivitiesattheinsurancecom-

panythatensureoperationalcompliancewiththelawandmitigatealltypesofoperationalrisks.

61

10.2.2 Concernforasafeandhealthyworkenvironment

Kapitalskadruæbaensuresasafeandpleasantworkenvironmentbyrespectingallregu-

lationsgoverningworkplacesafetyandbyprovidingtheappropriateworkingconditions.

Tasksrelatingtooccupationalhealthandsafety,andfiresafetyarecarriedoutregularly.

amongthemostimportanttasksinthisareaareregularemployeetraininginthearea

ofoccupationalhealthandsafety,participationintheassessmentofrisksinthework-

placeandworkingenvironment,regularperiodicpreventativemedicalexaminations,the

reviewofdeclarationsofworkplacesafety,studiesoftheworkenvironment(measure-

mentsofthemicro-climate,lightingandnoiseintheworkplace),measurementsofelec-

tricalinstallations,inspectionsofworkequipmentandexaminationsofcompliancewith

firesafetymeasures.

TheCompanyisawarethatmaintainingandimprovinghealthisimportant,asonlyhealthy

andsatisfiedemployeeswhoworkinasafeandstimulatingworkenvironmentareeffective

andinnovative,andarelesspronetosickleave.Wearethereforeimplementingsystemati-

callytargetedactivitieswiththeaimofmaintainingandstrengtheningthephysicalandmen-

talhealthofemployees.Thisisachievedbyimprovingtheorganisationofworkandthework

environment.Goodinterpersonalrelationshipsarethemostimportantinthisregard,asthey

haveadecisiveimpactonthehealthandwell-beingofemployees.Weencourageemployees

toactivelyparticipateinactivitiestoprotectandstrengthentheirhealth,includingthepos-

sibilityofattendingorganisedrecreationalactivities,andfacilitatetheselectionofahealthy

lifestyleandpromotetheirpersonaldevelopment.

Collectivesupplementarypensioninsuranceisanotherimportantaspectofensuringand

increasingthefuturesocialsecurityofemployees.asaresponsiblecompanythatcaresfor

itsemployees,KapitalskadruæbapaysmonthlypremiumsintotheModriUmbrellaPension

fund(MKPs)ofthefundmanagerModrazavarovalnica.Theaforementionedinsuranceis

alsoconsideredoneofthemostvaluedformsofmotivationamongemployees.Underthe

agreementonthecreationofapensionfundconcludedinfebruary2015,allemployeesare

eligibleforinclusionintheMKPsunderthesameconditions.

Kapitalskadruæbapaysthemaximumsupplementarypensioninsurancepremiumforits

employeesintheamountof5.844%ofanemployee’sgrosswages,oramaximumofeUR

234.92amonth.ThefirstpremiumswerepaidintotheMKPsinMarch2015.

Thecostsofemployeepremiumsforvoluntarysupplementarypensioninsurance(KVPs5and

MKPs)totalledeUR109thousandin2015.

Modrazavarovalnicaalsoprovidesitsemployeesasafeworkenvironmentandstimulating

workconditions.employeesconductthemselvesinaccordancewiththedeclarationofsafety

withriskassessment,theprimaryaimofwhichistopreventworkplaceinjuries,healthissues,

occupationaldiseasesandwork-relateddiseases.employeesregularlyparticipateinoccupa-

tionalhealthandsafetytrainingandfiresafetytraining,andarealsoincludedinaprogramme

ofpreventivehealthexaminations.

Thecompanyisawareoftheimportanceofensuringthehealthofallemployees.Through

theimplementationofanactionplantopromotehealth,employeesareencouragedtopur-

sueahealthylifestyleandthusreducetherisksofdisease,bothintheworkplaceandintheir

privatelives.agreatdealofinformationoncurrenthealthtopicsandusefularticlesabout

exerciseandhealthyeatingareavailableontheModrinetintranetsite.freshseasonalfruit

isavailabletoallemployeestwiceaweek,whilevaccinationsagainstthefluandtick-borne

meningoencephalitisareorganised.Thecompanyalsointroduceda30-minutemorningexer-

5 PremiumsforemployeeswerepaidintotheMutualequityPensionfund(KVPs)until1March2015.

62

ciseprogrammein2016.Theaforementionedprogrammeisheldonceaweek,andempha-

sisesthestretchingoftheneckshoulderandback,whicharesubjecttothegreatestburden

inofficework.

Thecompanyprovidesallofitsemployeessocialsecurityfollowingretirement,underthe

sameconditions,throughthepaymentofthemaximumtax-deductiblepremiumsintothe

collectivepensioninsuranceplanoftheMKPsmanagedbytheModrazavarovalnica.

A family-friendly company

Kapitalskadruæbaisawareoftheimportanceandadvantagesofanactivefamily-friendlypol-

icyattheCompanythatfacilitatesthebalancingofworkandfamilylife.TheKapitalskadruæba

teamisdiverseandincludesmanyyoungparentswithsmallchildren.TheCompanystrives

tofurtherimprovetheworkingenvironmentandtomakeitpossibleforallemployeestobal-

ancetheircareerdevelopmentandfamilylife,whichhasbecomepartoftheorganisational

culture.Wethusmaintainedactivitiesinthescopeofthefamily-friendlycompanyprojectin

2015.Thefollowing12measureswereadoptedduringtheacquisitionofthebasicandfullcer-

tificates:communicationwithemployees,opinionpollsamongemployees,publicrelations,

timeaccount,children’stimebonus,additionalannualleave,thephilosophyandconceptof

management,areintegrationplanfollowinganextendedabsence,socialisingamongemploy-

ees,theparticipationofemployees’familiesintemporaryjobsattheCompany,thegiving

ofgiftstocelebratenewbornsandnewyear’sgiftsforchildren.Themajorityofemployees

whorespondedtoanopinionpollindicatedthatthebalanceoftheirprivateandworklives

hasimproved.amongthemostpopularmeasuresarethetimeaccount,thechildren’stime

bonusforthefirstdayofprimaryschool,andnewyear’sgiftsandgiftsfornewborns.

Modrazavarovalnicaisalsotheproudholderofthefullfamily-friendlyCertificate.Concern

fortherightfamilyandworklifebalancehasbecomeapartofthecompany’sorganisational

culture.Thecompanybelievesthatsatisfiedemployeesaremoresuccessfulandthatthey

feelgreaterloyaltytothecompany,andthatsatisfactionhelpsreducetheburdenofstress,

allofwhichcontributestobetterworkresults.Thecompanyalsoensuresthegoodflowof

information,employeesatisfactionandapositiveworkclimate.

Practical training of a student registered with the Institute for Blind or Partially Sighted

Youth, Ljubljana

astudentregisteredwiththeInstituteforblindorPartiallysightedyouth,ljubljanacom-

pletedapracticaltrainingprogrammeatKapitalskadruæbain2015.Weattemptedtomake

thestudent’spracticaltrainingaspleasantaspossible,whilefamiliarisinghimwiththeimpor-

tanceandworkofKapitalskadruæba,andwithcertainworkprocessesattheCompany.a

greatdealofemphasiswasalsoplacedonapersonalapproachandinteractionwiththestu-

dent,whocompleted76hoursofon-the-jobtrainingatKapitalskadruæbain2015.Inthisway,

wemadeitpossibleforapartiallysightedstudenttotrainintheworkenvironmentforthe

purposeofgainingsomedegreeofindependenceandfacilitatinghisinclusioninthebroader

socialenvironmentfollowingthecompletionofhiseducation.

10.3 enVIRonMenTalResPonsIbIlITy

Theirrationaluseofnaturalresourcesandthepollutionoftheenvironmentarebecoming

pressingissuesthatKapitalskadruæbacannotoverlook.TheCompanythereforeestablished

separatewastecollection,whichfacilitatesthefurtheruseand/orprocessingofwaste.The

processingofwastehelpsprotecttheenvironment.becausewasteisusedasaresourcein

theproductionofnewproducts,weuselessnaturalresourcesandsignificantlylessenergy.

TheCompanypaysparticularattentiontothecollectionofplasticbottlecaps.Wecollected

63

atotalof40kilogramsduringtheyear,whichwedonatedtotheHappyfeetassociationfor

theCareofPersonswithDevelopmentalDisabilitiesin2015.

Kapitalskadruæbacollectsemptyprintercartridgesandsendsthemforrefilling.eachrefilled

printercartridgerepresentsadditionalsavingsforKapitalskadruæbaandispartoftheproject

toreduceandoptimiseoperatingcosts.ItisalsoareflectionofCompany’sresponsibilityfor

protectingtheenvironment.

atenderwasissuedin2014forthesupplyofelectricityinaccordancewiththeDecreeon

GreenPublicProcurement.TheCompanytookintoaccounttheprovisionsandrequirements

oftheaforementioneddecreeandsignedanagreementonthesupplyof100%ofelectricity

producedfromrenewablesources.energythatisproducedfromenvironmentallyfriendly,

renewablesourcesdoesnotusefossilfuels,whiletheproductionofenergyfromrenewable

sourcesdoesnotdrainnaturalresources.Thus,theburdenontheenvironmentfromgreen-

housegases,harmfulemissionsandradioactivewasteisreduced.

asasociallyresponsiblecompany,Modrazavarovalnicaalsosupportsenvironmentallyori-

entedactivities.Thecompanyseparateswaste,workstoreducetheuseofpaper,collects

usedprintercartridgesandrespondstocharitablecampaigns.Tothatend,itisalsodevelop-

ingvariouswebapplicationsthatreducetheneedforprintingandthatfacilitatefasterand

morereliablenotificationprocedures.

byusingthefreeModrie-accountwebservice,saverscanaccessdataregardingtheirown

monthlycontributionsandthecontributionsoftheiremployersatanytime,andmonitorthe

balanceofsupplementarypensionsavings.byintroducingelectronicnotificationchannels,

wearealsosavingpaperandthuscontributingtotheconservationofnature.

Modrazavarovalnicaalsocollectedalargequantityofplasticbottlecapsin2015,whichwere

donatedtotheHappyfeetassociationtohelpchildrenwithdifferentdevelopmentaldisabili-

ties.Thefoundersoftheaforementionedassociationaretheparentsofchildrenwithcerebral

palsyandotherdevelopmentdisabilities.employeesalsorespondedtothe‘santaClausefor

aDay’projecttohelpnumerouswell-intentionedpeopleprovideChristmaspresentstomore

than8,500childrenfromsloveniaandbosniaandHerzegovina.employeeswerealsoactively

involvedinthecollectionofaidforsociallydisadvantagedfamilies,andalsoremembered

theirfour-leggedanimalfriends.

In2015wesupportedthe‘you,MeandUsforslovenia’project,theaimofwhichisto

raisetheawarenessofyouthabouttheimportanceofahealthyenvironmentandattitudeto

nature,andtherecyclingofmaterialsthatcanbeusedasrawmaterialsforfurtherprocess-

ing.Theaforementionedprojectalsostrikesacharitablenote,asthefundscollectedwillbe

earmarkedforthepurposeofbuyinganincubatorandresuscitationtableforaslovenian

maternityhospital.

64 Report on relations with subsidiaries

astheparentcompany,Kapitalskadruæbaholdsa100%participatinginterestinModra

zavarovalnica,andhelda66.04%participatinginterestinPDPuntil21January2015.no

transactionswereexecutedbetweentheparentcompanyanditssubsidiariesin2015under

conditionsthatdeviatedfrommarketconditions.

11.1 RePoRTonRelaTIonsWITHMoDRaZaVaRoValnICa

Leaseofbusinesspremises

ModrazavarovalnicaleasesbusinesspremisesfromKapitalskadruæba.aleaseagreementwasconcludedin2011foraperiodoffiveyears.Themonthlyrentforequippedbusinesspremisesmeasuring1,704.23m2amountstoeUR27,714.Theaforementionedrentalfeeincludes46parkingplacesandelectricitycosts.

Useofcomputerprograms

astheexclusiveholderofmaterialcopyrightsonsoftwareusedtosupportpensionfunds,includingthesoftwarepackagesKadskladi,ProcschedulerfortheZVPsJU,ProcschedulerfortheKVPsandKad.net,KapitalskadruæbaallowsModrazavarovalnicatousethatsoftwareundertherelevantagreement.astheholderofrightstouseasoftwarepackagetosupportassetmanagement,KapitalskadruæbaalsoallowsModrazavarovalnicatousetheadTreas-uryandIteonaloæbesoftware,withtheconsentoftheexclusiveholdersofmaterialrightsonthoseprograms.Theiruseispermittedfortheperiodoftimesetoutinthemutualagree-mentontheleaseoftheaforementionedprograms.ThemonthlycontractualvalueiseUR9,800,excludingVaT.ThatamountisbeingreducedgraduallyduetoModrazavarovalnica’stransitiontoanindependentsoftwaresolutionforassetandfundmanagement.

ProvisionofITservices

KapitalskadruæbaprovidesITservicesforModrazavarovalnica.Thoseservicesincludethemaintenanceofworkstationsandotherusers,helpdeskservices,internetaccessservices,reportingsystemservices,datafileandprintingservices,roamingservicesforbusinesssoft-wareinthetestandproductionenvironmentsinKapitalskadruæba’sITinfrastructure,andmaintenanceofthelatter.Themonthlyfeeincludesthecostoflabourofexperts,thecostofhardwaremaintenance,thecostsofsystemsoftwarelicencesandinternetcosts.The

monthlycontractualvalueiseUR10,752,excludingVaT.

65

Agreementonthefinancingofthepensionplan

KapitalskadruæbahadanagreementwithModrazavarovalnicauntilfebruary2015onthe

financingofthePn1Kpensionplan,whichisimplementedbytheMutualequityPension

fund;anagreementhasbeeninplacesincefebruary2015onthefinancingofthePnMZK

pensionplan,whichisimplementedbytheopenModriUmbrellaPensionfund.Kapitalska

druæbapaysthemaximumsupplementarypensioninsurancepremiumforitsemployeesin

theamountof5.844%ofanemployee’sgrosswages,oramaximumofeUR234.92amonth.

11.2 RePoRTonRelaTIonsWITHPDP

ProvisionofHRservices

KapitalskadruæbaprovidedHRandgeneralservicesforthesubsidiaryPDPuntilthelatter’s

mergerwithsDHon1July2015.Theaforementionedservicesincludedallactivitiesincon-

nectionwithrecruitmentandtheterminationofemploymentrelationships,thekeepingof

HRrecords,thecompilationofdataforthecalculationofsalaries,expertassistanceinthe

harmonisationofinternalacts,responsibilityforandexecutionofHRMandtraining,andall

otherHR-relatedtasksinaccordancewiththeapplicablelabourlegislation.Themonthlyfee

waseUR150,excludingVaT.

Provisionoffinancial-accountingservices

KapitalskadruæbaprovidedthefollowingservicesforthesubsidiaryPDPuntilitwasmerged

withsDH:themanagementofthecompany’sbooksofaccount,thecompilationoffinancial

statementsinaccordancewithvalidstandardsandlegislation,thepreparationoftaxreturns

andtheprovisionofotheraccounting-relatedservices.anagreementontheprovisionof

financial-accountingserviceswasconcludedforthatpurpose.ThemonthlyfeewaseUR

1,666,excludingVaT.

ProvisionofITservices

KapitalskadruæbaprovidedITservicesforthesubsidiaryPDPuntilitsmergerwithsDH.

Thoseservicesincludedthemaintenanceofworkstationsandotheruserdevices,helpdesk

services,messagingsystemservices,datafileservices,fixedtelephonyservices,theleas-

ingofbusinesssoftware(licences),roamingservicesforbusinesssoftwareintheproduction

environmentinKapitalskadruæba’sITinfrastructure,andthemaintenanceofthelatter.The

monthlyfeeincludedthelabourofexperts,thecostsofsystemsoftwarelicencesandthe

costofhardwaremaintenance.ThemonthlycontractualvaluewaseUR688,excludingVaT.

WiththedeletionofPDPfromthecompaniesregisteron1July2015,theagreementonthe

provisionoftheaforementionedserviceswasalsoterminated.

66 Indicators

in EUR 000

2015 2014 2015 2014

1. FINANCING RATIOS

a) Equity financing ratio

equity 1,004,495 997,9170.85 0.80

total equity and liabilities 1,184,036 1,249,082

b) Long-term financing ratio

equity + long-term liabilities (including provisions) + long-term accrued costs and deferred revenues

1,179,507 1,146,0881.00 0.92

total equity and liabilities 1,184,036 1,249,082

2. INVESTMENT RATIOS

a) Operating fixed asset investment ratio

fixed assets (at carrying amount) 7,730 7,9190.01 0.01

assets 1,184,036 1,249,082

b) Long-term investment ratio

fixed assets + long-term deferred costs and accrued revenues (at carrying amount) + investment property + long-term financial assets + long-term operating receivables 1,012,425 851,402

0.86 0.68assets 1,184,036 1,249,082

3. HORIZONTAL FINANCIAL STRUCTURE RATIOS

a) Equity to fixed assets ratio

equity 1,004,495 997,917129.95 126.02

fixed assets (at carrying amount) 7,730 7,919

67

2015 2014 2015 2014

b) Acid test ratio

liquid assets 44,146 37,0409.75 0.36

short-term liabilities 4,529 102,994

c) Quick ratio

liquid assets + short-term receivables 50,290 39,42411.10 0.38


d) Current ratio

short-term assets 157,843 391,10234.85 3.80


4. EFFICIENCY RATIOS

a) Operating efficiency

operating revenues 40,431 36,0410.88 0.92

operating expenses 45,908 39,220

5. PROFITABILITY RATIOS

a) Net return on equity

net profit for the period 29,351 73,4600.03 0.08

average equity (excluding net profit/loss for period) 949,801 937,482

b) Dividends to share capital ratio

dividends for financial year 0 00.00 0.00

average share capital 364,810 364,810

68 Corporate governance statement

Inaccordancewiththeprovisionsofpoint3.4oftheCorporateGovernanceCodeforCom-

panieswithstateCapitalInvestments,Kapitalskadruæbaherebyissuesitscorporategovern-

ancestatementfortheperiod1January2015to31December2015.

1.1 asapubliclimitedcompanywhosesoleshareholderistheRepublicofslovenia,Kapitalska

druæbavoluntarilycomplieswiththeCorporateGovernanceCodeforCompanieswithstate

CapitalInvestments,whichrecommendstheprinciples,proceduresandcriteriaforconduct

bymembersofthemanagementandsupervisorybodiesofcompaniesinwhichtheRepublic

ofsloveniaisashareholder.

KapitalskadruæbaherebyissuesitsstatementofcompliancewiththeCorporateGovern-

anceCodeforCompanieswithstateCapitalInvestments,whichwasadoptedbysDHon

19December2014.Theaforementionedcodeincludesprinciplesandrecommendedbest

practicesforthecorporategovernanceofcompanieswithstatecapitalinvestments.The

codewaspublishedonthewebsiteofslovenskidræavniholdingathttp://www.sdh.si/sl-si/

upravljanje-nalozb/kodeks-upravljanja-kapitalskih-nalozb-republike-slovenije.

ThestatementofcompliancewiththeCorporateGovernanceCodeforCompanieswithstate

CapitalInvestmentsispublishedontheCompany’swebsiteathttp://www.kapitalska-druzba.si.

TheManagementboardandthesupervisoryboardofKapitalskadruæbaherebydeclarethat

theyvoluntarilycomplywiththeCorporateGovernanceCodeforCompanieswithstateCapi-

talInvestmentsintheirworkandoperations.anydeviationsfromtheCorporateGovernance

CodeforCompanieswithstateCapitalInvestmentsarecitedandexplainedbelow:

3.Corporategovernanceframeworkforcompanieswithcapitalassetsofthestate

3.1Themaingoalofacompanywithstatecapitalinvestmentsengagedinaprofitableactivityshallbetomaximisethecompany’svalueandtogeneratethehighestpossiblereturnsforitsowner.Companiesshallalsopursueothergoalsthataredefinedbyregula-tionsorthearticlesofassociationofanindividualcompany(e.g.providingapublicser-viceandprovidingaccesstotheinfrastructurebycitizens).Withtheaimofensuringtheincreasedtransparencyofacompany’sgoalsandconsideringthefactthatallsharehold-ersmustagreewiththepursuitofnon-economicgoals,companiesshallensurethatallsuchgoalsareclearlydefinedintheirdocumentsonincorporation,irrespectiveofwhetherthosegoalsderivefromstatutoryprovisionsorthewillofshareholdersand/orowners.

69

Note:Giventhespecificpurposeofitsestablishmentanditsplannedtransformationintoan

autonomousdemographicreservefund,andtakingintoaccountthestatecapitalinvestment

managementstrategy,Kapitalskadruæba’sprimaryconcernisthefulfilmentofitslegalobli-

gationtoprovidefundstotheZPIZ.

3.2Notwithstandingtheownershipstructure,themanagementboardofapubliclim-itedcompanywithstatecapitalinvestmentsandthemanagementboardofalargeandmedium-sizedpubliclimitedcompanyorlimitedliabilitycompanyinwhichthestateorSDH,individuallyorcollectively,directlyorindirectly,holdacontrollinginflu-ence,shallformulateandadoptacorporategovernancepolicyinconjunctionwiththesupervisoryboard.Thatpolicyshalldefinetheprincipalguidelinesregardingcorpo-rategovernanceandthecontentsetoutinRecommendationno.21andAppendixA.14oftheCorporateGovernanceCode,takingintoaccountthestatecapitalinvestmentmanagementstrategy.Thegovernancepolicyshallbeadoptedforthefutureperiodandshallbeupdatedbythecompanysothatitisinlineatalltimeswithregulations,thecompany’sarticleofassociation,thestatecapitalinvestmentmanagementstrat-egyandcurrentcorporategovernanceguidelines.Thegovernancepolicyshallincludethedateofthelastupdateandshallbeaccessibleonthecompany’spublicwebsite.Note:Givenitstransformationintoanautonomousdemographicreservefund,asenvisaged

bythelaw,Kapitalskadruæbahasnotyetadoptedacorporategovernancepolicy.TheCom-

pany’scorporategovernancepolicywillbeformulatedtakingintoaccounttheprovisionsof

thelawgoverningitstransformation,whichwilldefinethefunctioningofthedemographic

reservefundandadditionalpermanentsourcesoffinancing,andtakingintoaccountthestate

capitalinvestmentmanagementstrategy.

6.Supervisoryboard

6.4Asupervisoryboardshallbecomposedinsuchawayastoensureresponsiblesupervisionanddecision-makingintheinterestsofacompany.Thecompositionofasupervisoryboardshalltakeintoaccountprofessionalknowledge,experienceandskillsthatdifferfrommembertomemberbutarecomplementary(intermsofknowl-edgeandexperience).Thediversecompositionofasupervisoryboard,intermsofcharacteristicssuchasage,gender,internationalcomposition,etc.(i.e.theheteroge-neityofitscomposition),shallbeensuredtothegreatestextentpossible.Note:Kapitalskadruæbacomplieswiththeaforementionedprovisionsofthecodemutatis mutan-dis,takingintoaccountthecogentprovisionsofarticle51oftheZsDH-1andtheCompany’sarti-

clesofassociation,whichsetoutaspecialcompositionofKapitalskadruæba’ssupervisoryboard.

6.6Ifageneralmeetingelectsmembersofasupervisoryboard,asproposedbythesupervisoryboard,thesubstantiationofproposalsfortheadoptionofresolutionsshallinclude,inadditiontothedatarequiredbylaw,ataminimuminformationregardingeachproposedcandidate’smembershipinothermanagementorsupervisorybodiesandanassessmentof(potential)conflictsofinterests,wherethatassessmentalsoshalltakeintoaccounttheindividualcriteriastatedinAppendixCtotheCorporateGovernanceCode.Asupervisoryboardshallalsodiscloseinformationastowhetheraproposedcandidateisindependentintermsofthedefinitionsetoutinthecodeandwhethertheproceduressetoutinthecodeweretakenintoaccountintheselectionofacandidate.Note:TheCompanydoesnotcomplywiththeaforementionedprovisionofthecodeinfull

duetothecogentprovisionsofthesloveniansovereignHoldingCompanyact(ZsDH-1)and

Kapitalskadruæba’sarticlesofassociation,whichenvisageaspecialprocedurefornominat-

ingmemberstoKapitalskadruæba’ssupervisoryboard.

6.7.8Immediatelyfollowingtheconveningofageneralmeetingthatwillvoteonnewsupervisoryboardmembersbasedontheproposalofthesupervisoryboardofacompanywithstatecapitalinvestments,thechairmanofthatcompany’ssupervisory

70

boardshallinvitecandidateswhohavebeenproposedforelectionbythesupervisoryboardtosubmittheirapplicationstoSDH’sHRcommitteeforaccreditation.Iftheiraddressesareknown,SDH’sHRcommitteemayalsoinvitecandidatestosubmittheirapplicationsforaccreditationandnomination.Note:TheCompanydoesnotcomplywiththeaforementionedprovisionofthecodeinfull,

becausetheRepublicofsloveniarepresentsKapitalskadruæba’sGeneralMeeting.Inaccord-

ancewiththeprovisionsoftheZDsH-1,threemembersareappointedtothesupervisory

boardbasedonsDH’sproposal.

7.Managementboardorseniormanagement

7.3Thesupervisoryboardofacompanywithstatecapitalinvestmentsthatisorgan-isedasapubliclimitedcompanyorasalargeormedium-sizedlimitedliabilitycom-panyshalldraftaremunerationpolicyforgovernancebodiesinaccordancewiththeCorporateGovernanceCodeforCompanieswithStateCapitalInvestmentsandsub-mitittothegeneralmeetingforadoption.Thedraftingofsuchaproposalshallbetheresponsibilityofthechairmanofthesupervisoryboardandthenominationcommittee,providedthatthelatterexists.Atthegeneralmeeting,thechairmanofthesupervisoryboardshallpresentshareholdersandotherownersthecurrentremunerationpolicyandtheimplementationthereof,andshallprovideanassessmentofthefunctionandroleoftheaforementionedpolicy.Thesupervisoryboardshallensurethattheremu-nerationofmembersofthemanagementboardorseniormanagementisinlinewiththepolicyadoptedbythegeneralmeetinginaccordancewiththelaw.Note:TheremunerationofmembersoftheManagementboardisgovernedbytheZsDH-1.

Inaccordancewiththefifthparagraphofarticle51oftheZsDH-1,thesameconditionsand

criteriathatapplytothemembersoftheManagementboardofsDH,accordingtothepro-

visionsoftheZsDH-1,applytothemembersofKapitalskadruæba’sManagementboard.no

remunerationpolicyhasbeenadoptedtodate.

10.Adoptionofacodeofethicsandcorporateintegrity

10.2CompanieswithstatecapitalinvestmentsshallestablishasystemofcorporateintegritywithasmanyelementsoftheSlovenianCorporateIntegrityGuidelinesaspossible,takingintoaccountthesizeofacompanyandtheseverityofbreachesofcorporateintegrity(knownorsuspected).SDHsupportsthesolutionthat,largecompa-niesinparticular,shallentrusttheoversightofcorporateintegrity,asanindependentfunction,toacorporateintegrityofficerwhowillbeprovidedtherequisitetrainingandpaymentfortheirexpertassistance,andthenecessarymaterialmeansandauthorisa-tionstoensuretheirunhinderedwork.Note:KapitalskadruæbacomplieswiththeessentialelementssetoutintheslovenianCor-

porateIntegrityGuidelines,althoughithasnotyetestablishedtheindependentfunctionof

corporateintegrityofficer.

1.2 DescriptionofthemainfeaturesoftheCompany’sinternalcontrolandriskmanage-mentsystemsinrelationtothefinancialreportingprocessNote:Kapitalskadruæbamanagesrisksandcarriesoutinternalcontrolsatalllevels.The

purposeofinternalcontrolsistoensuretheaccuracy,reliabilityandtransparencyofallpro-

cesses,andtomanagetherisksassociatedwithfinancialreporting.

Internalcontrolsarecarriedoutbythefinanceandaccountingsector,whichisresponsible

formaintainingthebooksofaccountandforthecompilationoffinancialstatementsinaccord-

ancewiththevalidfinancialreporting,taxandotherregulations.Thoseregulationsensurethat:

�� businesseventsarerecordedonthebasisofcredibleaccountingdocuments,whichin

turnensuresthatbusinesseventsarerecordedaccuratelyandfairlyandprovidesassur-

ancethattheCompanydisposesofitsassetsinanhonestmanner;and

71

�� businesseventsarerecordedandthefinancialstatementscompiledinaccordancewith

theapplicablelaws.

Kapitalskadruæba’sfinancialstatementsforeveryfinancialyearareverifiedandauditedbyan

externalauditor.onthebasisoftheresolutionpassedbyGeneralMeetingon31august2015,

theCompany’sfinancialstatementsfor2015wereauditedbyDeloitterevizijad.o.o.,ljubljana.

TheInternalauditDepartmentisanindependentorganisationalunitthatreportsdirectlyto

theCompany’sManagementboard.Thisensurestheindependenceofitsworkanditsseg-

regationfromtheimplementingfunctionsthataresubjecttoauditing.Theverificationofthe

Company’sinternalcontrolsystemsandtheprovisionofassurancesregardingthefunctioning

ofthosesystemsrepresentthecoreareaofinternalauditingwork.Internalauditorsassess

theeffectivenessofthefunctioningofinternalcontrolsintermsofthemanagementofthe

riskstowhichtheCompanyisexposed.Inaccordancewithitsannualworkplan,whichis

approvedbytheCompany’sManagementboardandsupervisoryboard,theInternalaudit

DepartmentperformsauditsofindividualareasoftheCompany’soperations.TheInternal

auditDepartmentcontributestotheimprovedperformanceoftheCompanythroughrecom-

mendationsforimprovementstobusinessprocessesandprocedures.

1.3 SignificantdirectandindirectownershipoftheCompany’ssecuritiesintermsofachievingaqualifyingholdingassetoutintheactgoverningtakeoversNote:Kapitalskadruæba’ssoleowneristheRepublicofslovenia,whichholdsall874,235

ordinaryregisteredno-par-valueshares(100%ofsharecapital).

1.4 HoldersofsecuritiesthatprovidespecialcontrollingrightsNote:TheCompanydoesnothavesecuritiesthatwouldprovidespecialcontrollingrights.

1.5 RestrictionsonvotingrightsNote:Kapitalskadruæba’ssoleowneristheRepublicofslovenia,whichholdsall874,235

ordinaryregisteredno-par-valueshares.Therearenorestrictionsonitsvotingrights.

1.6 Company’srulesontheappointmentandreplacementofmembersofthemanagementandsupervisorybodies,andchangestotheArticlesofAssociationNote:Therulesontheappointmentandreplacementofmembersofthemanagementand

supervisorybodiesandonstatuschangesaredefinedinthearticlesofassociation.

ThesupervisoryboardofKapitalskadruæbaisappointedbytheCompany’sGeneralMeet-

ing.Thesupervisoryboardcomprisessixmembersinaccordancewiththesixthparagraph

ofarticle51oftheZsDH-1.Threemembersofthesupervisoryboardwereappointedonthe

basisofaproposalbysDH,whiletwomemberswereappointedonthebasisofaproposal

bynational-levelfederations/organisationsofpensioners.onememberwasappointedonthe

basisofaproposalbynational-levelrepresentativetradeunionfederationsorconfederations.

Ifanindividualinterestgroupdoesnotformulateaproposalfortheappointmentofmembers

ofthesupervisoryboardinthemannerdefinedbelow,theGeneralMeetingoftheCompany

appointsmissingmembersatitsowndiscretion.Theproposalforcandidatestorepresent

sDHisformulatedbysDH’sManagementboard,whichinformsthesupervisoryboardof

itschoice.Theproposalforcandidatestorepresentpensionersisformulatedbynational-

levelfederations/organisationsofpensioners,whichinformthesupervisoryboardoftheir

choice.Theproposalforacandidatetorepresenttradeunionsisvoteduponbyrepresenta-

tives(electors)ofnational-levelrepresentativefederations/confederations,whichinformthe

supervisoryboardoftheirchoice.eachrepresentativefederation/confederationhasasmany

representativesasthenumberofrepresentativetradeunionsamalgamatedwithinthem.In

additiontotherepresentativesreferredtointheprecedingsentence,afederation/confedera-

tionshalleachhaveonerepresentativeforeverytenthousandmembers.Membersofthe

supervisoryboardserveafour-yeartermofofficeandmaybereappointed.

72

MembersoftheManagementboardareappointedbythesupervisoryboardonthebasis

ofapublictender.oneofthemembersoftheManagementboardisappointedpresident

thereof.MembersoftheManagementboardserveafour-yeartermofofficeandmaybere-

appointed.TheManagementboardoritsindividualmembersmayberecalledpriortotheend

oftheirtermofoffice,butonlyforthereasonssetoutinthesecondparagraphofarticle268

oftheZGD-1.aviolationofthearticlesofassociationofKapitalskadruæbathatisdeemedto

beaseriousviolationofobligationsmayconstituteareasonofculpabilityresultinginrecall.

ThearticlesofassociationandamendmentstheretoareadoptedbytheGeneralMeetingof

KapitalskadruæbaattheproposaloftheManagementboardandsupervisoryboard.

1.7 Powersofseniormanagement,inparticularpowerstoissueorpurchasetreasurysharesNote:ThepowersofseniormanagementaresetouttheCompanyarticlesofassociation.

TheManagementboardofKapitalskadruæbahasnopowerstoissueorpurchasetreasury

shares.

1.8 InformationregardingthefunctioningoftheCompany’sGeneralMeetinganditskeycom-petences,andadescriptionoftherightsofshareholdersandhowthoserightsareexercisedNote:TheCompany’ssoleshareholderexercisesitsrightsarisingfromtheownershipofshares

attheGeneralMeeting.TheGeneralMeetingistheCompany’shighestbodyandfunctionsin

accordancewiththeprovisionsoftheZGD-1,theZsDH-1andtheCompany’sarticlesofasso-

ciation.TheGeneralMeetingisconvenedbytheCompany’sManagementboard,asdefined

bythelawandthearticlesofassociation,andwheneveritsconveningisintheinterestofthe

Company.TheGeneralMeetingmayalsobeconvenedbythesupervisoryboard.TheGeneral

MeetingmustalsobeconvenediftheshareholderrequeststhattheManagementboarddoso.

Theshareholder’swrittenrequesttoconvenetheGeneralMeetingmustincludeanagenda,a

proposedresolutionforeachproposeditemoftheagendatobedecideduponbytheGeneral

Meeting,oranexplanationoftheagendaitemiftheGeneralMeetingwillnotdecideonthe

iteminquestion.TheconveningoftheGeneralMeetingmustbepublishedatleast30days

priortothemeeting.TheconveningoftheGeneralMeetingispublishedonthewebsitesof

theaJPesandKapitalskadruæba.ThepublicationoftheconveningoftheGeneralMeeting

mustalsoincludeproposedresolutionsanddetailsoftheplacewhereallmaterialssubmitted

fordecision-makingattheGeneralMeetingmaybeaccessed.ashareholderwhoisregistered

assuchinthecentralregisterofbook-entrysecuritiesattheendofthefourthdaypriortothe

GeneralMeetingisentitledtoparticipateandexercisetheirvotingrightsattheGeneralMeeting.

TheGeneralMeetingmakesdecisionsonbasicmattersrelatingtoKapitalskadruæba,inparticu-

lartheadoptionoftheCompany’sarticlesofassociationandamendmentsthereto.Itadopts

theannualreport,ifthesupervisoryboardhasnotconfirmedtheannualreportoriftheMan-

agementboardandthesupervisoryboarddeferthedecisionregardingtheadoptionofthe

annualreporttotheGeneralMeeting.Itdecidesontheuseofdistributableprofitattheproposal

oftheManagementboardandsupervisoryboardandonthegrantingofdischargetomembers

oftheManagementboardandsupervisoryboard.ItappointsandrecallsmembersofKapital-

skadruæba’ssupervisoryboardandappointstheCompany’sauditor.Itdecidesonmeasures

toincreaseorreducesharecapital,unlessthearticlesofassociationorthelawdetermineoth-

erwise.Itdecidesonthewinding-upofKapitalskadruæbaandonstatuschangesthereto,and

decidesonothermattersinaccordancewiththelawandthearticlesofassociation.

1.9 Informationregardingthecompositionandfunctioningofmanagementandsupervi-sorybodiesandtheircommitteesNote:ThegovernanceofKapitalskadruæbaisbasedonlegalprovisionsandtheprovisions

oftheCompany’sarticlesofassociation.TheCompanyhasatwo-tiergovernancesystem

underwhichtheCompanyismanagedbyitsManagementboardandtheworkofthelatter

issupervisedbythesupervisoryboard.

73

1.9.1 SupervisoryBoardTheresponsibilitiesofthesupervisoryboardaresetoutintheCompany’sarticlesofasso-

ciation,whileitsworkmethodisgovernedbytheaforementionedbody’srulesofprocedure.

adetaileddescriptionoftheactivitiesandworkmethodofthesupervisoryboardin2015is

givenintheReportofthesupervisoryboard.ThesupervisoryboardofKapitalskadruæba

functionedinthefollowingcompositionin2015:

�� samolozej,Chairman,

�� aldoTernovec,DeputyChairman(until31January2015),

�� aleksanderMervar,Msc(member),

�� stanislavseniËar(member),

�� anabilbija(memberuntil31January2015),

�� ladislavRoæiË,Msc(member),

�� DrborisænidariË,(membersince1february2015;DeputyChairmanfrom5March2015

to22november2015);hisfunctiononthesupervisoryboardhasbeensuspendedsince

23november2015,and

�� CirilasurinaZajc(membersince1february2015;DeputyChairwomansince23novem-

ber2015).

Twocommitteesfunctionedwithinthesupervisoryboardin2015:anauditcommitteeand

anaccreditationcommittee.Thecompositionandworkoftheaforementionedcommittees

arepresentedintheReportofthesupervisoryboard.

1.9.2 ManagementBoardInaccordancewiththeZsDH-1andtheCompany’sarticlesofassociation,theManagement

boardhasaminimumoftwoandamaximumofthreemembers.ThemembersoftheMan-

agementboardareappointedtoafour-yeartermofofficebythesupervisoryboardbased

onapublictenderprocedure.Kapitalskadruæba,d.d.wasrunbyitsManagementboardin

2015inthefollowingcomposition:

�� bachtiarDjalil,President,

�� anjastrojin©tampar,Msc,member,and

�� DrborisænidariË,member.

ThePresidentandmemberofKapitalskadruæba’sManagementboardwereappointedbythe

supervisoryboardinaccordancewiththeCompany’sarticlesofassociationandtheprovi-

sionsoftheZsDH-1,onthebasisofapublictenderprocedure.ThePresidentoftheMan-

agementboardbachtiarDjalilbegananewfour-yeartermofofficeon2January2015.The

termofofficeofanjastrojin©tampar,Mscexpiredon30november2015.Thetemporary

memberofKapitalskadruæba’sManagementboard,DrborisænidariË,wasappointedfora

periodofoneyearbyKapitalskadruæba’ssupervisoryboardpursuanttothesecondpara-

graphofarticle273oftheZGD-1.DrænidariË’stermofofficebeganon23november2015.

TheManagementboardmanagesthecompanyintheintereststhereof,independentlyand

atitsownrisk.ThemembersoftheManagementboardrepresentKapitalskadruæbainde-

pendentlyandwithoutrestrictions.Thecompany’sarticlesofassociationsetoutthetrans-

actionsanddecisionsforwhichtheManagementboardmustobtaintheconsentofthe

supervisoryboard.TheManagementboardofKapitalskadruæbaisanswerabletothesuper-

visoryboardandtheGeneralMeetingforitswork.InmanagingtheCompany’stransactions,

itmustactwiththedueprofessionaldiligenceofagoodmanager,safeguardthebusiness

secretsofKapitalskadruæbaandcomplywiththeprohibitionofcompetitionclause.

TheManagementboardexerciseditscompetencesin2015inaccordancewiththerulesof

procedureofthatbody,reportedregularlytothesupervisoryboardandfulfilleditsobliga-

tionstotheshareholder,assetoutintheZGD-1andZsDH-1,inaccordancewiththearticles

ofassociation.

FinancialReport

76 Statement of the management’s responsibility

TheManagementboardofKapitalskadruæbapokojninskegaininvalidskegazavarovanja,d.

d.,approvesthefinancialstatementsoftheKapitalskadruæbaGroupfortheyearended31

December2015,andtheaccompanyingnotesanddisclosuresthereofonpages90to149,

whichareanintegralpartofthefinancialstatements.

TheManagementboardconfirmsthattheappropriateaccountingpolicieswereconsistently

applied,andthattheaccountingestimatesweremadeundertheprincipleofprudenceand

goodmanagement.TheManagementboardalsoconfirmsthatthefinancialstatementsgive

trueandfairpresentationofthefinancialpositionoftheKapitalskadruæbaGroupandthe

resultsofitsoperationfortheyearended31December2015.

TheManagementboardisalsoresponsiblefortheappropriateaccountingsystemandadop-

tionofmeasurestosecurethepropertyandotherassets.TheManagementboardconfirms

thatthefinancialstatementsandnotesthereofhavebeencompiledundertheassumptionof

agoingconcern,andinaccordancewiththecurrentlegislationandInternationalfinancial

Reportingstandards(IfRs)adoptedbytheeU.

TheTaxauthoritiesmay,atanytimewithinaperiodof5yearsaftertheendoftheyearfor

whichataxassessmentwasdue,carryoutanauditoftheKapitalskadruæbaGroup’sopera-

tions,whichmayleadtoassessmentofadditionaltaxliabilities,defaultinterest,andpenal-

tieswithregardstocorporateincometaxorothertaxesandduties.TheManagementboard

isnotawareofanycircumstancesthatmayresultinasignificanttaxliability.

DrBorisÆnidariË BachtiarDjalilMemberoftheManagementboard PresidentoftheManagementboard

78

Auditor’s report

80 Financial Statements for 2015

16.1 ConsolIDaTeDInCoMesTaTeMenTfoRTHePeRIoDfRoM1JanUaRy2015To31DeCeMbeR2015

Item Notes 1.1. − 31.12.2015

in EUR 000

1.1. − 31.12.2014

Continued operations

1. Net revenue from sales 1

c) Revenue from sales on the domestic market 39,942 35,297

Total revenue from sales 39,942 35,297

4. Other operating revenue (including revaluation revenue) 2 489 744

Total revenue 40,431 36,041

5. Costs of goods, materials and services 3

b) Costs of materials -253 -240

c) Costs of services -4,342 -3,837

Total costs of goods, materials and services -4,595 -4,077

6. Labour costs 4

a) Payroll costs -4,260 -4,042

b) Social security insurance costs -683 -650

c) Pension insurance costs -213 -206

d) Other labour costs -482 -438

Total labour costs -5,638 -5,336

81

Item Notes 1.1. − 31.12.2015

in EUR 000

1.1. − 31.12.2014

7. Amortisation, depreciation and write-offs 5

a) Depreciation and amortisation -1,170 -1,168

c) Operating expenses from revaluation of current assets -31 -22

Total write-downs -1,201 -1,190

8. Other operating expenses 6 -34,474 -28,617

Total expenses -45,908 -39,220

Operating profit (loss) -5,477 -3,179

9. Financial revenue from shares and interests 7

b) Shares and interests in associates 2,999 3,046

c) Financial revenue from other shares and interests 45,046 57,450

d) Financial revenue from other investments 11,375 11,456

Total financial revenue from shares and interests 59,420 71,952

10. Financial revenue from loans 7

b) Financial revenue from loans to others 1,922 2,280

Total financial revenue from loans 1,922 2,280

11. Financial revenue from operating receivables 7

b) Financial revenue from operating receivables due from others 6,954 0

Total financial revenue 6,954 0

Total financial revenue 68,296 74,232

12. Financial expenses due to write-off and impairment of financial assets

8

b) Financial expenses due to impairment and write-off of other investments

-9,297 -5,513

b) Financial expenses due to impairment and write-off of associated companies

-1,569 0

Total financial expenses due to impairment and write-off of financial assets

-10,866 -5,513

13. Financial expenses for financial liabilities 8

d) Financial expenses for other financial liabilities -19,001 0

Total financial expenses for financial liabilities -19,001 0

82

Item Notes 1.1. − 31.12.2015

in EUR 000

1.1. − 31.12.2014

Total financial expenses -29,867 -5,513

Profit (loss) from ordinary activity 32,952 65,540

15. Other revenue 9 26 51

16. Other expenses 10 -4 -3

Total profit (loss) from continued operations 32,974 65,588

17. Income tax 11 0 -2,804

18. Deferred tax 12 -3,623 10,273

19. Net profit/loss from continued operations for the period 29,351 73,057

Discontinued operations

20. Profit or loss from discontinued operations 13.1 0 403

21. Net profit or loss for the period 13 29,351 73,460

a) Net profit or loss of the majority shareholder for the period 29,351 72,751

b) Net profit or loss of the minority shareholder for the period 0 709

Disclosuresandnotesonpages90to149areaconstituentpartoffinancialstatements.

16.2 ConsolIDaTeDsTaTeMenTofoTHeRCoMPReHensIVeInCoMefoRTHePeRIoDfRoM1JanUaRy2015To31DeCeMbeR2015

01/01 - 31/12/2015

in EUR 000

01/01 - 31/12/2014

19. Net profit or loss for the period 29,351 73,460

Net profit or loss of the majority shareholder for the period 29,351 72,751

Net profit or loss of the minority shareholder for the period 0 709

21. Gains (losses) on revaluation of AFS financial assets -17,284 76,971

83

01/01 - 31/12/2015

in EUR 000

01/01 - 31/12/2014

Gains (losses) on revaluation of AFS financial assets -17,284 76,971

23. Other comprehensive income 81 0

24. Total comprehensive income for the period 12,148 150,431

Total comprehensive income of the majority shareholders for the period 12,148 149,722

Total comprehensive income of the minority shareholders for the period 0 709


16.3 ConsolIDaTeDsTaTeMenToffInanCIalPosITIonasaT31DeCeMbeR2015

Item Notes 31. 12. 2015

in EUR 000

31. 12. 2014

ASSETS

A. Non-current assets 14

I. Intangible assets and long-term deferred costs and accrued revenues

5. Other long-term deferred costs and accrued revenues 645 464

Total intangible assets 645 464

II. Property, plant and equipment 15

2. Buildings 6,862 7,180

4. Other plant and equipment 223 275

Total property, plant and equipment 7,085 7,455

III. Investment property 16 14,438 14,842

IV. Long-term financial assets

1. Long-term financial assets, except loans

b. Shares and interests in associated companies 17 34,374 21,334

c. Other shares and interests 19 675,026 599,281

d. Other long-term financial assets 19 221,395 198,593

Total long-term financial assets, except loans 930,795 819,208

2. Long-term loans 20

b. Long-term loans to others 59,359 9,380

Total long-term loans 59,359 9,380

Total long-term financial assets 990,154 828,588

84

Item Notes 31. 12. 2015

in EUR 000

31. 12. 2014

V. Long-term operating receivables 21

3. Long-term operating receivables due from others 103 53

Total long-term operating receivables 103 53

VI. Deferred tax assets 13,768 6,578

Total fixed assets 1,026,193 857,980

B. Current assets

I. Assets held for sale 18 6,574 197,739

III. Short-term financial assets

1. Short-term financial assets except loans 19

d. Other short-term financial assets 39,104 46,262

Total short-term financial assets, except loans 39,104 46,262

2. Short-term loans 20

b. Short-term loans to others 61,180 107,432

Total short-term loans 61,180 107,432

Total short-term financial assets 100,284 153,694

IV. Short-term operating receivables 21

2. Short-term operating trade receivables 1,227 1,660

3. Short-term operating receivables due from others 4,917 724

Total short-term operating receivables 6,144 2,384

V. Cash 22 44,146 37,040

Total current assets 157,148 390,857

C. Short-term deferred costs and accrued revenues 695 245

Total assets 1,184,036 1,249,082

EQUITY AND LIABILITIES

A. Equity

I. Called-up capital 23 364,810 364,810

II. Capital surplus 24 216,413 215,953

III. Revenue reserves 25 0 0

IV. Revaluation surplus 331,867 350,916

V. Retained earnings 62,054 -9,447

85

Item Notes 31. 12. 2015

in EUR 000

31. 12. 2014

VI. Net profit/loss for the year 29,351 72,751

Total majority interest 1,004,495 994,983

VII. MINORITY INTEREST 0 2,934

Total capital 1,004,495 997,917

B. Provisions and long-term accrued costs and deferred revenues 29

I. Provisions for pensions and similar obligations 324 315

II. Other provisions 157,959 137,920

Total provisions and accrued costs and deferred revenues 158,283 138,235

I. Long-term financial liabilities 26 0 0

II. Long-term operating liabilities 27

4. Long-term operating liabilities from advances 12 6

5. Other long-term operating liabilities 36 12

Total long-term operating liabilities 48 18

III. Deferred tax liabilities 16,681 9,918

Total long-term liabilities 16,729 9,936

D. Short-term liabilities

I. Liabilities included in disposal groups 28 0 92,784

II. Short-term financial liabilities 26 0 0

III. Short-term operating liabilities 27

2. Short-term operating trade payables 3,412 6,169

4. Short-term operating liabilities from advances 0 6

5. Short-term liabilities to the State 131 2,792

6. Other short-term operating liabilities 562 520

Total short-term operating liabilities 4,105 9,487

Total short-term liabilities 4,105 102,271

D. Short-term accrued costs and deferred revenues 424 723

Total equity and liabilities 1,184,036 1,249,082


86

16.4 ConsolIDaTeDCasHfloWsTaTeMenTfoRTHePeRIoDfRoM1JanUaRy2015To31DeCeMbeR2015

01/01 - 31/12/2015

in EUR 000

01/01 - 31/12/2014

A. Cash flows from operating activities

a) Net profit or loss and adjustments

Profit or loss before tax 32,974 65,991

Income tax and other taxes not included in operating expenses 0 -2,804

Adjustments for amortisation and depreciation 1,170 1,179

Adjustments for revaluation operating expenses 0 2,999

Adjustments for financial revenue from financing -45,776 -21,309

Adjustments for financial expenses from financing 29,867 11,404

Total cash flow derived from the income statement items 18,235 57,460

b) Change in net current assets − operating items in the balance sheet

Opening less closing operating receivables -3,810 1,135

Opening less closing deferred costs and accrued revenues -450 -5

Opening less closing deferred tax assets -7,190 28,236

Opening less closing assets (disposal groups) held for sale 0 -13,429

Closing less opening operating liabilities -5,382 4,780

Closing less opening accrued costs and deferred revenues, and provisions

19,749 10,301

Closing less opening deferred tax liabilities 6,763 -25,462

Total items of net current assets − operating items in the balance sheet 9,680 5,556

c) Net cash from (used in) operating activities 27,915 63,016

B. Cash flows from investing activities

a) Cash receipts from investing activities

Interest and dividends received from investing activities 39,161 41,317

Cash receipts from disposal of long-term financial assets 54,842 44,071

Cash receipts from disposal of short-term financial assets 53,410 0

Total cash receipts from investing activities 147,413 85,388

b) Cash disbursements from investing activities

Cash disbursements to acquire intangible assets -252 -156

Cash disbursements to acquire property, plant and equipment -43 -179

Cash disbursements to acquire investment property -101 -70

Cash disbursements to acquire long-term financial assets -149,286 -46,742

Cash disbursements to acquire short-term financial assets 0 -72,206

87

01/01 - 31/12/2015

in EUR 000

01/01 - 31/12/2014

Total cash disbursements from investing activities -149,682 -119,353

c) Net cash from (used in) investing activities -2,269 -33,965

C. Cash flows from financing activities

a) Cash receipts from financing activities

Receipts from paid up capital 460 86

Total cash receipts from financing activities 460 86

b) Cash disbursements from financing activities

Cash repayments of long-term financial liabilities -19,000 0

Total cash disbursements from financing activities -19,000 0

c) Net cash from (used in) financing activities -18,540 86

D. Closing balance of cash

a) Net cash for the period 7,106 29,137

b) Opening balance of cash 37,040 7,903

c) Total closing balance of cash 44,146 37,040


16.5 ConsolIDaTeDsTaTeMenTofCHanGesIneQUITyfoRTHePeRIoDfRoM1JanUaRy2015To31DeCeMbeR2015

Share capital

Capital surplus

Revalu-ation

surplusRetained earnings

Net profit or loss for

the yearMajority interest

Minority interest

in EUR 000

Total

A. 1. As at 31 Dec. 2014 364,810 215,953 350,916 -9,447 72,751 994,983 2,934 997,917

A. 2. As at 1 Jan. 2015 364,810 215,953 350,916 -9,447 72,751 994,983 2,934 997,917

B. 1. Changes in equity − transactions with owners

0 460 -41 -3,055 0 -2,636 -2,934 -5,570

d) Additional payments of capital

0 460 0 0 0 460 0 460

j) Other changes in equity 0 0 -41 -3,055 -3,096 -2,934 -6,030

B. 2. Total comprehensive income for the period

0 0 -17,203 0 29,351 12,148 0 12,148

a) Net profit or loss for the period

0 0 0 0 29,351 29,351 0 29,351

88

Share capital

Capital surplus

Revalu-ation




Minority interest

in EUR 000

Total

e) Gains (losses) on revaluation of financial assets

0 0 -16,975 0 0 -16,975 0 -16,975

f) Gains (losses) on revaluation of financial assets − associated companies

0 0 -309 0 0 -309 0 -309

g) Other components of comprehensive income for the period

0 0 81 0 0 81 0 81

B. 3. Movements in equity 0 0 -1,805 74,556 -72,751 0 0 0

a) Allocation of the remaining net profit for the comparative period to other equity components

0 0 -1,805 74,556 -72,751 0 0 0

C. Closing balance as at 31 Dec. 2015

364,810 216,413 331,867 62,054 29,351 1,004,495 0 1,004,495


16.6 ConsolIDaTeDsTaTeMenTofCHanGesIneQUITyfoRTHe

PeRIoDfRoM1JanUaRy2014To31DeCeMbeR2014

Share capital

Capital surplus

Revalu-ation




Minority interest

in EUR 000

Total

A. 1. As at 31 Dec. 2013 364,810 215,867 277,932 4,155 -17,589 845,175 11,348 856,523

A. 2. As at 1 Jan. 2014 364,810 215,867 277,932 4,155 -17,589 845,175 11,348 856,523

B. 1. Changes in equity − transactions with owners

0 86 0 0 0 86 -9,123 -9,037

d) Additional payments of capital

0 86 0 0 0 86 0 86

j) Other changes in equity 0 0 0 0 0 0 -9,123 -9,123

B. 2. Total comprehensive income for the period

0 0 76,971 0 72,751 149,722 709 150,431

a) Net profit or loss for the period

0 0 0 0 72,751 72,751 709 73,460

e) Gains (losses) on revalu-ation of financial assets

0 0 77,440 0 0 77,440 0 77,440

f) Gains (losses) on revalu-ation of financial assets − associated companies

0 0 -469 0 0 -469 0 -469

B. 3. Movements in equity 0 0 -3,987 -13,602 17,589 0 0 0

89

Share capital

Capital surplus

Revalu-ation




Minority interest

in EUR 000

Total

a) Allocation of the remaining net profit for the comparative period to other equity components

0 0 -3,987 -13,602 17,589 0 0 0

C. Closing balance as at 31 Dec. 2014

364,810 215,953 350,916 -9,447 72,751 994,983 2,934 997,917


90 Disclosures and notes

17.1 GeneRalDIsClosURes

Parentcompanyprofile

KapitalskadruæbaisapubliclimitedcompanywithitsregisteredofficeatDunajskacesta

119,ljubljana,slovenia.ThesoleshareholderofKapitalskadruæbaistheRepublicofslove-

nia.ThesharecapitaloftheCompanytotalseUR364,809,523.15andisdividedinto874,235

registeredno-parvalueordinaryshares.eachsharehasthesameinterestandtheattributed

amountinthesharecapital.Therightsofthesoleshareholder,i.e.theRepublicofslovenia,

areexercisedbytheGovernmentoftheRepublicofslovenia.

TheactivitiesofKapitalskadruæbaaredefinedbylawandbytheCompany’sarticlesofasso-

ciation.onthebasisofthestandardClassificationofactivities,accordingtotheCompany’s

articlesofassociationandentryintheCompaniesRegister,Kapitalskadruæbaalsoperforms

otheractivitiesrelatedtoassetmanagementandservicesrelatedtosupporttoassetman-

agement:otherfinancialintermediation,pensionfunding,activitiesancillarytopensionfund-

ing,tradeinownrealestate,leaseofownrealestate,softwaresupplyandconsultancy,data

processing,networkdataservices,othercomputerrelatedactivities,accountingandbook-

keepingservices,taxconsultancy,marketresearchandpublicopinionpolling,businessand

othermanagementconsultancy,activitiesofholdingcompanies,publishingofjournalsand

periodicals,andothereducationalservices.

AmendmentstotheArticlesofAssociationandtheRulesonAppointingtheManagementBoardandtheSupervisoryBoardofthecontrollingcompany

Thearticlesofassociationanditsamendmentsandsupplementsareadoptedbytheannual

GeneralMeetingofKapitalskadruæbaontheproposaloftheManagementboardandthe

supervisoryboard.

MembersoftheManagementboardareappointedbythesupervisoryboardonthebasisof

apublicjobannouncement.onememberoftheManagementboardisappointedPresident

oftheManagementboard.ThetermofofficeoftheManagementboardmembersisfour

yearswiththepossibilityofre-appointment.TheManagementboardoranyofitsmembers

maybedismissedearlyonlyduetothereasonsreferredtoinarticle268(2)oftheZGD-1.The

91

breachofthearticlesofassociationofKapitalskadruæbarepresentingaseveredereliction

ofdutiesmayconstitutecausefordismissal.

TheManagementboardofKapitalskadruæbaisnotauthorisedtoissueorpurchasetreasury

shares.

ThesupervisoryboardofKapitalskadruæbaisappointedbytheCompany’sannualGeneral

Meeting.Incompliancewitharticle51(6)oftheZsDH-1,thesupervisoryboardiscomposed

ofsixmembers.Threemembersofthesupervisoryboardareappointedontheproposalof

slovenskidræavniholding,d.d.6(sloveniansovereignHolding),twomembersontheproposal

ofthepensioners’governmentalorganisationsandonememberontheproposaloftradeunion

associationsorconfederationswhicharerepresentativeofthecountry.Ifstakeholdersdonot

formulateaproposalfortheappointmentofsupervisoryboardmembersasdefinedbelow,

themissingmembersofthesupervisoryboardareappointedatthediscretionoftheannual

GeneralMeeting.Thecandidatesfromamongtherepresentativesofthesloveniansovereign

HoldingareproposedbytheManagementboardofthesloveniansovereignHolding,which

informsthesupervisoryboardabouttheselection.Thecandidatesfromamongtherepre-

sentativesofthepensionersareproposedbythepensioners’governmentalorganisationsand

associations,whichinformthesupervisoryboardabouttheselection.Thecandidatesfrom

amongtherepresentativesofthetradeunionsareelectedbytherepresentatives(electors)of

therepresentativegovernment-leveltradeunionassociationsorconfederations,whichinform

thesupervisoryboardabouttheselection.anyrepresentativeassociationorconfederationhas

thenumberofrepresentativesequaltothenumberoftherepresentativetradeunionsitcom-

prises.Inadditiontotherepresentativesreferredtointheprevioussentence,theassociation

orconfederationelectsanotherrepresentativeforeverytenthousandmembers.Thetermof

officeofthesupervisoryboardmembersisfouryearswiththepossibilityofre-appointment.

Informationaboutsubsidiaries

subsidiariesofKapitalskadruæbaarepresentedinthetablebelow.

in EUR 000

Subsidiary Country Share in equity

Equity of the company as at

31 Dec. 2015Net profit

for 2015

Modra zavarovalnica, d. d. Slovenia 100.00% 201,324 4,725

Steklarska nova Rogaπka Slatina, d. o. o. − in bankruptcy

Slovenia 100.00% negative n.a.

astheparentcompany,KapitalskadruæbaconsolidatesModrazavarovalnica.

KapitalskadruæbadoesnotconsolidatethesubsidiarysteklarskanovaRogaπkaslatina,d.o.

o.inconsolidatedfinancialstatements,sincetheintegrationofsubsidiary’sfinancialstate-

mentsinconsolidatedstatementsisnotrelevantforatrueandfairviewofthefinancialstate-

mentsoftheKapitalskadruæbaGroupasawhole.

Dataonconsolidation

ConsolidationoffinancialdataiscarriedoutforKapitalskadruæba,asthehighestlevel.The

consolidatedannualReportoftheKapitalskadruæbaGroupisavailableathttp://www.kapi-

talska-druzba.si/o_kapitalski_druzbi/letna_porocila.

6 Thecurrentthreemembersofthesupervisoryboardwereappointedontheproposalofslovenskaodπkodninskadruæba,d.d.accord-ingtothepreviouslyapplicableZsDH.

92

Informationabouttreasuryshares

TheGrouphasnotreasuryshares.

Informationaboutemployees

attheendof2015,theKapitalskadruæbaGrouphad115employees,ofwhom59inKapital-

skadruæbaand56inModrazavarovalnica.

Table29: Number of employees of the Kapitalska druæba Group

As at Dec. 2015

The Kapitalska druæba Group 115

17.2 aCCoUnTInGPolICIes

Basisofpreparation

Datainfinancialstatementsarebasedonbook-keepingdocumentsandbooksofaccount

keptinlinewiththeInternationalfinancialReportingstandards.financialstatementshave

beencompiledbytakingintoaccountthefundamentalaccountingassumptions:going

concern,consistencyandaccrualbasis.accountingpolicieshavebeenformulatedbytak-

ingintoaccountqualitativecharacteristics:understandability,relevance,reliabilityand

comparability.

Significantaccountingestimatesandjudgements

Thepreparationoffinancialstatementsrequiresthemanagementtomakecertainestimates

andassumptionsthataffectthereportedamountsofassetsandliabilitiesoftheCompany

aswellastheamountsofrevenuesandexpenses.

Theadequacyofusedassumptionsandestimatesischeckedperiodically.

Relevantestimatesrefertotheimpairmentofassets,theclassificationoffinancialinstruments

andthedistinctionbetweenthefinancialinstrumentsheldtomaturityandavailableforsale,

andtheestablishmentofprovisions.

onthedateofthestatementoffinancialpositionthemanagerassesseswhetherthere

isobjectiveevidenceofimpairmentofafinancialassetoragroupoffinancialassets.If

suchevidenceexists,theassetisimpaired.Impairmentlossisrecognisedintheprofit

orloss.

Theestimatesofassetvaluemainlydependonthecurrentandexpectedmacroeconomic

situationintheeUandotherrelevantmarketswheretheCompanyoperatesandthataffect

thefuturecashflowprojection,theinterestratesinfluencingtherequiredreturnbothon

debtandequitycapital,andthestockprices,whichalsoinfluencetheestimatedvalueofthe

financialinstruments.

Theassessmentsandestimatesarealsoappliedindeterminingthe(useful)lifeoffixedassets

andinvestmentproperty,thebasisforimpairmentoffinancialassetsexposedtocreditrisk

andthesettingoffairvalueoflong-termprovisions.

93

Statementofcompliance

TheconsolidatedfinancialstatementsofKapitalskadruæba,d.d.,andallitssubsidiaries

(hereinafter:theGroup)havebeenpreparedinaccordancewiththeInternationalfinancial

Reportingstandards(IfRs)adoptedbytheInternationalaccountingstandardsboard(Iasb)

aswellastheInterpretationsadoptedbytheInternationalfinancialReportingInterpretations

Committee(IfRIC)andtheeuropeanUnion(eU).

Initsfinancialstatements,theGroupappliedallIfRsandIfRICrequiredin2015.Itdidnot

applyanystandardorinterpretationbeforeitsapplicationbecameobligatoryin2015.

Amendmentstostandardsandinterpretations

Standardsandinterpretationseffectiveforthecurrentperiod

Inthecurrentaccountingperiod,thefollowingamendmentstotheexistingstandardsand

newinterpretationsissuedbytheInternationalaccountingstandardsboard(Iasb)and

adoptedbytheeUapply:

�� amendmentstovariousstandards−‘ImprovementstoIfRss(2011-2013)’,resultingfromthe

annualprojectforimprovementofIfRss(IfRs3,IfRs13andIas40)primarilywithaviewto

removeinconsistenciesandtoclarifywording,adoptedbytheeUon18December2014(the

amendmentswillneedtobeappliedforannualperiodsbeginningonorafter1January2015),

�� IfRIC21‘levies’,adoptedbytheeUon13June2014(effectiveforannualperiodsstart-

ingonorafter17June2014).

Theadoptionoftheseamendmentstotheexistingstandardsandinterpretationshasnotled

tosignificantchangesintheCompany’sfinancialstatements.

StandardsandinterpretationsissuedbyIASBandadoptedbytheEUbutnotyeteffective

onthedateofapprovalofthesefinancialstatements,thefollowingamendmentstotheexist-

ingstandardsissuedbyIfRICandadoptedbytheeUwereinissuebutnotyeteffective:

�� amendmentstoIfRs11‘Jointarrangements’−accountingforacquisitionsofInterestsin

Jointoperations,whichtheeUadoptedon24november2015(effectiveforannualperi-

odsbeginningonorafter1January2016),

�� amendmentstoIas1‘Impairmentofassets’−DisclosureInitiative,adoptedbytheeU

on18December2015(effectiveforannualperiodsbeginningonorafter1January2016),

�� amendmentstoIas16‘Property,Plantandequipment’andIas38‘Intangibleassets’−

ClarificationofacceptableMethodsofDepreciationandamortisation,adoptedbytheeU

on2December2015(effectiveforannualperiodsbeginningonorafter1January2016),

�� amendmentstoIas16‘Property,Plantandequipment’andIas41‘agriculture’-agricul-

ture:bearerPlants−adoptedbytheeUon23november2015(effectiveforannualperiods

beginningonorafter1January2016),

�� amendmentstoIas19‘employeebenefits’-DefinedbenefitPlans:employeeContribu-

tions,adoptedbytheeUon17December2014(effectiveforannualperiodsstartingon

orafter1february2015),

�� amendmentstoIas27‘separatefinancialstatements’−equityMethodinseparate

financialstatements,adoptedbytheeUon18December2015(effectiveforannualperi-

odsbeginningonorafter1January2016),

�� amendmentstovariousstandards−‘ImprovementstoIfRss(2010-2012)’,resultingfrom

theannualprojectforimprovementofIfRss(IfRs2,IfRs3,IfRs8,IfRs13,Ias16,Ias

24andIas38)primarilywithaviewtoremoveinconsistenciesandtoclarifywording

adoptedbytheeUon17December2014(theamendmentswillneedtobeappliedfor

annualperiodsbeginningonorafter1february2015),

94

�� amendmentstovariousstandards−‘ImprovementstoIfRss(2012-2014)’,resultingfrom

theannualprojectforimprovementofIfRss(IfRs5,IfRs7,Ias19andIas34)primarilywith

aviewtoremoveinconsistenciesandtoclarifywording,adoptedbytheeUon15Decem-

ber2015(theamendmentswillneedtobeappliedforannualperiodsbeginningonorafter

1January2016).

StandardsandinterpretationsissuedbytheIASB,butnotyetadoptedbytheEU

atpresent,theIfRsasadoptedbytheeUdonotsignificantlydifferfromregulationsadopted

bytheInternationalaccountingstandardsboard(Iasb)exceptfromthefollowingnewstand-

ardsandamendmentstotheexistingstandards,whichwerenotendorsedforuseintheeU

onthedaythesefinancialstatementswerepublished(theeffectivedatesindicatedbelow

applyforentireIfRs):

�� IfRs9‘financialInstruments’(effectiveforannualperiodsstartingonorafter1January

2018),

�� IfRs14‘RegulatoryDeferralaccounts’(effectiveforannualperiodsstartingonorafter1

January2016)−europeanCommissionconcludednottostarttheprocedureforendorse-

mentofthisinterimstandardandtowaitforitsfinalversiontobeissued,

�� IfRs15‘RevenuefromContractswithCustomers’andsubsequentamendments(effective

forannualperiodsstartingonorafter1January2018),

�� IfRs16‘leases’(effectiveforannualperiodsstartingonorafter1January2019),

�� amendmentstoIfRs10‘Consolidatedfinancialstatements’,IfRs12‘DisclosureofInter-

estsinotherentities’andIas28‘InvestmentsinassociatesandJointVentures’−Invest-

mententities:applyingtheConsolidationexception(effectiveforannualperiodsbeginning

onorafter1January2016),

�� amendmentstoIfRs10‘Consolidatedfinancialstatements’andIas28‘Investments

inassociatesandJointVentures’−salesorcontributionsofassetsbetweenaninves-

toranditsassociate/jointventure,andfurtheramendments(thedateofentryintoforce

hasbeendeferredindefinitelyuntilthecompletionoftheresearchprojectrelatedto

equitymethod),

�� amendmentstoIas12‘IncomeTaxes’−RecognitionofDeferredTaxassetsforUnrealised

losses(effectiveforannualperiodsbeginningonorafter1January2017).

TheGroupanticipatesthattheadoptionofthesenewstandardsandamendmentstothe

existingstandardswillhavenomaterialimpactontheconsolidatedfinancialstatementsin

theperiodofinitialapplication.

atthesametime,hedgeaccountingregardingtheportfoliooffinancialassetsandliabilities,

whoseprincipleshavenotyetbeenadoptedbytheeU,isstillunregulated.

accordingtotheGroup’sestimates,applicationofhedgeaccountingfortheportfoliooffinan-

cialassetsorliabilitiespursuanttoIas39:‘financialInstruments:Recognitionandmeasure-

ment’wouldnotsignificantlyimpactthefinancialstatements,ifappliedasatthedateofthe

cashflowstatement.

Foreigncurrencytranslation

ThefinancialstatementsoftheGrouparepresentedintheeuro(eUR),whichisthefunctional

andreportingcurrencyoftheCompany.assetsandliabilitiesoriginallyexpressedinforeign

currenciesareretranslatedintothedomesticcurrencyatthereferenceexchangerateofthe

eCb.foreigncurrencytransactionsareinitiallyrecognisedinthefunctionalcurrency,trans-

latedattheexchangerateapplicableonthetransactiondate.Monetaryassetsandliabilities

inforeigncurrencyaretranslatedattheexchangerateofthefunctionalcurrencyprevailing

onthedateofthestatementoffinancialposition.anydifferencesarisingonthetranslation

offoreigncurrenciesarerecognisedinprofitorloss.non-monetaryassetsandliabilities,rec-

95

ognisedathistoricalcostinforeigncurrency,aretranslatedattheexchangerateapplicable

onthedayofthetransaction.non-monetaryassetsandliabilitiesmeasuredatfairvaluein

foreigncurrencyaretranslatedattheexchangerateeffectiveonthedaywhenthefairvalue

wasestablished.

Basicpolicies

Thefinancialstatementshavebeenpreparedonagoingconcernbasis.

Thefinancialstatementshavebeencompiledonhistoricalcostbasis,exceptforfinancial

assetsatfairvaluethroughprofitorlossandavailable-for-salefinancialassets,measuredat

fairvalue.Theitemsintheseparatefinancialstatementsarepresentedintheeuro,rounded

tothenearestthousand(000eUR),exceptwherespecificallystatedotherwise.

Basisofconsolidation

TheconsolidatedfinancialstatementscompriseehfinancialstatementsofKapitalskadruæba

anditssubsidiariesasat31Decemberofayear.Thefinancialstatementsofthesubsidiaries

havebeenpreparedforthesamefinancialyearasthoseoftheparentcompanyandbyapply-

ingtheuniformaccountingpolicies.Intheeventofanyinconsistencyofaccountingpolicies,

suitableadjustmentshavebeenmadeinconsolidatedfinancialstatements.

allintra-groupbalancesandtransactions,includinganyunrealisedincomearisingfromintra-

groupbalancesandtransactions,areeliminatedinfull.

allsubsidiariesbecomesubjecttoconsolidationwhencontrolistransferredtotheGroup

andtheconsolidationisabandonedwhencontrolofasubsidiaryistransferredoutsidethe

Group.IftheGrouplosescontrolofasubsidiaryduringtheyear,theconsolidatedfinancial

statementsincludetheresultsofsuchsubsidiaryuptothelastdayonwhichthecontrolover

itstillexisted.

Intangibleassets

Intangibleassets,acquiredindividually,arerecognisedatcost.afterinitialrecognitionthe

costmodelisapplied.Theusefullifeofanitemofintangibleassetsislimited.Theamortisa-

tionofintangibleassetsisrecognisedinprofitorloss.Intangibleassetsgeneratedwithinthe

Group,otherthandevelopmentcosts,arenotcapitalised.Costsrepresentexpensesofthe

periodinwhichtheyareincurred.

Thecarryingamountofanintangibleassetisreviewedannuallyforimpairment,iftheasset

hasnotbeenputtouse,ormorefrequentlywhenthereareindicationsofimpairment.Dis-

closedintangibleassetsareimpairedwhentheircarryingamountexceedstheirnetrecov-

erableamount.Intheeventofimpairment,thecarryingamountoftheassetisdecreased

toitsnetrecoverableamountandatthesametimeanexpensearisingfromimpairmentis

recogniseddirectlyinprofitorloss.

TheGroupusesthestraightlineamortisationmethodforintangibleassetsaccordingtothe

estimatedusefullife:

Asset Amortisation rate in %

Software 10

Software applications obtained after 1 Jan. 2008 20.00−33.33

96

Theamortisationofintangibleassetsiscalculatedonthestraight-linebasisovertheestimated

usefullivesoftheassets,whichis10years.Theestimatedusefullifeofsoftwareapplications

acquiredafter1January2008is3to5years.

TheGroupreviewsthevalueofitsassetsinordertoestablishtheexistenceofandthe

amountofimpairment.Ifthecarryingamountofanassetexceedsitsestimatedrecover-

ableamount,i.e.thevalueinuse,itiswrittendowntotherecoverableamountagainst

operatingexpenses.

Profitandlossarisingfromretirementordisposalofanintangibleassetisdeterminedasthe

differencebetweenthesalevalueondisposalandthebookvalue.Thedifferenceisrecog-

nisedasincomeorexpenseintheincomestatement,whentheunderlyingintangibleasset

isretiredordisposed.

Property,plantandequipment

buildingsandequipmentarecarriedatcost,lessdepreciationandimpairmentlosses.

Depreciationisaccountedforunderthestraight-linebasisovertheestimatedusefullife

oftheassets:

Asset Depreciation rate in %

Buildings 3.00-3.33

Equipment 16.67−33.33

Building parts 6.00

everyyearanimpairmenttestiscarriedoutonproperty,plantandequipment.Impairment

ismadeiftheasset’sestimatedrecoverableamountislessthanitscarryingamount.The

Groupreducesthecarryingamountofsuchassetstotheirrecoverableamount.Thedecrease

isdisclosedasimpairmentlossdirectlyintheincomestatement.

buildingsorequipmentarederecognisedwhentherelevantassetissoldorwhentheGroup

nolongerexpectseconomicbenefitsfromtheasset’scontinuinguse.Profitandlossarising

fromderecognitionoftheassetisincludedintheincomestatementintheyearwhenthe

assetiswrittenoffthebooks.

Theresidualvalueoftheassets,theestimatedusefullifeofassetsandthedepreciation/amor-

tisationmethodarerevisedand,ifnecessary,changeduponthecompilationoftheannual

financialstatements.

anitemofproperty,plantandequipmentwhoseindividualvalueaspersupplier’sinvoice

doesnotexceedeUR500,maybecarriedasagroupoflowvalueassets.lowvalueassets

whoseindividualcostdoesnotexceedeUR500maybeclassifiedasmaterials.

MaintenanceCostsandIncreaseinFixedAssetsValue

Maintenancecostsarethecostsarisingfromtheconclusionandexecutionoftransactions

requiredtomaintaintheconditionsallowingtheuseandtheachievementoftheprimary

purposeofthebuilding.Maintenancecomprisesallworksaccordingtotheregulationson

buildingoffacilitiesandfunctioningoffireprotectionsystemsandotherprotectionandres-

cuemeasures.

97

CriteriafortheDeferralofMaintenanceCostsandtheIncreaseinFixedAssetsValue

Maintenancecostsincludethecostsofmaintainingafixedassetsusefulduringitsuseful

life.Theincreaseinfixedassetcomprisescostsrequiredtoincreasethefuturebenefitsofa

fixedassetincomparisontopastbenefits.

Investmentproperty

Investmentpropertythatqualifiesforrecognitionisinitiallymeasuredatcost.Thecostof

investmentpropertycomprisesthepurchasepriceandallcostsdirectlyattributabletothe

acquisition.suchcostsincludecostsoflegalservices,realestatetransfertax,andother

transactioncosts.

TheGrouprecognisesinvestmentpropertywhenitisprobablethatthefutureeconomic

benefitsthatareassociatedwiththeinvestmentpropertywillflowtotheentityandthecost

oftheinvestmentpropertycanbemeasuredreliably.Investmentpropertyincludesthereal

propertythatisnotusedbytheGroupforitsprincipalactivity.

Investmentpropertyismeasuredatcost,reducedbydepreciationandimpairmentlosses.

Thedepreciationrateofinvestmentpropertyisbetween3.00and3.33percentannuallyand

theestimatedusefullifeis33.33or30years.Thedepreciationrateofpartsofinvestment

propertyis6.00percentannuallyandtheestimatedusefullifeis16.67years.

everyyearanimpairmenttestiscarriedoutoninvestmentproperty.Impairmentismadeif

theinvestmentproperty’sestimatedrecoverableamountislessthanitscarryingamount.The

Groupreducesthecarryingamountofsuchinvestmentpropertytoitsrecoverableamount.

Thedecreaseisdisclosedasimpairmentlossdirectlyintheincomestatement.

Gainsorlossesarisingoneliminationordisposalofinvestmentproperlyaredeterminedas

thedifferencebetweenthenetreturnondisposalandthecarryingamount,andarerecog-

nisedintheprofitorloss.

Financialassets

ClassificationofFinancialAssets

TheGroupclassifiesfinancialassetsinthefollowingcategories:

�� financialassetsmeasuredatfairvaluethroughprofitorloss;

�� held-to-maturityfinancialinvestments;

�� available-for-salefinancialassets;

�� loans.

Theclassificationdependsonthepurposeforwhichaninvestmentwasacquired.

anassetisclassifiedinthegroupoffinancialassetsatfairvaluethroughprofitorlossif:

a. atleastoneofthefollowingcriteriaisfulfilled:

-afinancialassethasbeenacquiredorincurredprincipallyforthepurposeofsellingor

repurchasingitinthenearterm;or

-afinancialassetispartofaportfolioofidentifiedfinancialinstrumentsthataremanaged

togetherand

-forwhichthereisevidenceofarecentactualpatternofshort-termprofit-taking;

b.itisaderivative(exceptforaderivativethatisadesignatedandeffectivehedginginstru-

ment);

c. itisanyfinancialassetdesignatedassuchbytheentity,ifactivemarketforsuchasset

existsorifitsvaluecanbemeasuredreliably.

98

anassetisclassifiedinthegroupofheld-to-maturityfinancialassetsifthefollowingcriteria

arefulfilled:

a. afinancialassetisanon-derivativefinancialassetwithfixedordeterminablepayments;

b. ithasdeterminablematurity;

c.whichtheCompanyhasthepositiveintentandabilitytoholdtomaturity.

Thegroupofavailable-for-salefinancialassetscomprisesthefinancialassetsnotclassified

inanyothergroup.

basedontheprescribedclassificationcriteriatheshareslistedonthestockexchangemay

beclassifiedintothegroupofassetsmeasuredatfairvaluethroughprofitorlossorinthe

groupofavailable-for-salefinancialassets.Inadditiontothesetwogroups,bondsmaybe

alsoclassifiedintothegroupofassetsheldtomaturity.MostofassetsoftheGroupareclas-

sifiedunderavailable-for-salefinancialassets.

long-termandshort-termfinancialassetsaredisclosedseparatelyinthestatementoffinan-

cialposition.long-termfinancialassetsareinvestmentsthattheGroupintendstoholdfora

periodlongerthanoneyearandwhicharenotheldfortrading.

Recognitionoffinancialassets

Initially,alltheGroup’sinvestmentsexceptfinancialassetsclassifiedatfairvaluethrough

profitorlossarerecognisedatfairvalue,includingthedirectlyrelatedcostsofacquisition.

Investmentsclassifiedatfairvaluethroughprofitorlossarerecognisedatfairvalue(direct

costsofacquisitionarenotincludedinthecost).

1. Financial assets measured at fair value through profit or loss

financialassetsatfairvaluethroughprofitorlossaremeasuredatfairvalue.Gainsand

lossesonassetsdesignatedatfairvaluethroughprofitorlossarerecogniseddirectlyin

theprofitorloss.

Thefairvalueofassetsactivelytradedonregulatedmarketsisdeterminedatthequoted

closingpriceonthestockexchangeonthelasttradingdayoftheperiod.Thefairvalueof

assetswhosemarketpriceisnotquotedonfinancialmarketsisdeterminedonthebasis

ofavaluationtechnique.Valuationtechniquesincludeusingrecentarm’slengthmarket

transactionsbetweenknowledgeable,willingparties,ifavailable,referencetothecurrent

fairvalueofanotherinstrumentthatissubstantiallythesame,andthediscountedcash

flowanalysis.

acquisitionandsaleofassetsclassifiedatfairvaluethroughprofitorlossarerecognisedon

thetradingdayi.e.onthedayofcommitmenttobuyortosellafinancialasset.

2. Financial assets held to maturity

financialassetswithfixedordeterminablepaymentsandmaturity,otherthanderivative

financialinstruments,arerecognisedasheld-to-maturityfinancialassetsiftheGrouphasa

positiveintentionandtheabilitytoholdtheinvestmenttomaturity.Investmentsheldforan

indefiniteperiodoftimearenotclassifiedinthisgroup.

Investmentswhicharerecognisedasheld-to-maturityarecarriedatamortisedcostusingthe

effectiveinterestratemethod.Theamortisedcostiscalculatedbyallocationofthepremium

orthediscountonacquisitionovertheperioduntilthematurityoftheinvestment.Gainsand

lossesoninvestmentscarriedatamortisedcostarerecognisedintheprofitorloss(disposal,

impairmentoreffectsofthediscount/premiumamortisation).Investmentsdesignatedas

held-to-maturityarerecognisedonthesettlementdate.

99

3. Available-for-sale financial assets

afterinitialrecognitionallinvestmentsclassifiedbythecompanywithinavailable-for-sale

financialassetsarecarriedatfairvalueorpurchasecostiffairvaluecannotbedetermined

reliably.Gainsandlossesonavailable-for-salefinancialassetsarerecognisedinthestate-

mentofcomprehensiveincomeasthenetunrealisedcapitalgainsuntiltheinvestmentis

soldordisposedofinsomeothermanner.Ifaninvestmentisimpaired,theimpairmentis

recognisedinprofitorloss.

acquisitionandsaleofinvestmentsclassifiedasavailable-for-salefinancialassetsarerecog-

nisedonthetradingdatei.e.onthedayofcommitmenttobuyortosellanindividualfinan-

cialasset.

4. Loans

loansandreceivablesarefinancialassetswithfixedordeterminablepaymentsthatarenot

tradedonaregulatedmarket.TheyincludeloansandreceivablesacquiredbytheCompany

aswellasthosegrantedbytheCompany.loansandreceivablesaremeasuredatamortised

costusingtheeffectiveinterestratemethodandarerecognisedonthesettlementdate.

Financialassetsmeasuredatcost

assetsaremeasuredatcostifthefairvaluecannotbereliablymeasured,becausetherange

ofreasonablefairvalueestimatesissignificantandtheprobabilitiesofthevariousestimates

cannotbereasonablyassessed.

available-for-salefinancialassetsaremeasuredatstockprices.Ifastockpriceisnotavail-

ableforaparticularasset,thefairvalueisdeterminedusingthevaluationmodelstakinginto

accountsubjectivevariablesthatarenotpubliclyavailableonmarketsorbymakingvalue

estimatesofparticularassets.Thefollowingmethodsareappliedinmakingthevalueesti-

matesofparticularassets:income-basedvaluation,asset-basedvaluationandthecompari-

sonapproach,involvingacomparisonwiththecomparablelistedcompanies.

Investmentsinsubsidiariesandassociatedcompanies

aconsolidatedsubsidiaryisanentityinwhichthecontrollingentityholdsacontrollinginter-

estoracontrollinginfluenceassociatedwithotherreasons,andwhichisamemberofthe

groupforwhichtheconsolidatedfinancialstatementsareprepared.anassociateisacom-

panyinwhichtheparenthasasignificantinfluenceandwhichisneitherasubsidiarynora

jointventure.

Intheseparatefinancialstatements,investmentsintheequityofsubsidiariesaremeasured

atcost,lessanyimpairmentloss.

Intheseparatefinancialstatements,investmentsinassociatesaremeasuredatfairvalue

(marketvalue)oratcostiffairvaluecannotbedeterminedreliably,reducedbyimpairment

losses.Gainsandlossesontheseinvestmentsarerecognisedinequityasarevaluationsur-

plusfrominvestmentsuntiltheinvestmentissoldordisposedofinsomeothermanner.When

anassetisimpaired,theimpairmentisrecognisedintheprofitorloss.

TheCompanydisclosesassociatesandjointventuresaccordingtoIas28.Thereversalof

impairmentofassociatesandjointventuresisrecognisedasincome,butonlyuptothe

amountoftheinvestmentimpairedinthepast.

100

Financialassetvaluationmethods

Thefairvalueofcertainsharesisdeterminedusingthevaluationmodelstakingintoaccount

subjectivevariablesthatarenotpubliclyavailableonmarkets.Certaindataforvaluationare

obtainedformthebloombergsystemandotherfinancialsources,whereasinsomecases

animportantsourceisthedataanddocumentsaboutthepastandexpectedfutureperfor-

manceprovidedbycompanies.

sharevaluationsaremadeaccordingtotheincome-basedapproach,thediscountedfreecash

flowmethod,asset-basedapproach,theregularliquidationmethodandthemarketcompari-

sonvaluationmethod,involvingacomparisonwiththecomparablelistedcompanies.bond

valuationsweremadeaccordingtothemarketcomparisonvaluationmethod,involvinga

comparisonwiththecomparablelistedbonds.

Determinationoffairvalue

fairvalueassessmentoffinancialinvestmentsdependsonavailabilityofmarketdatabased

onwhichtheCompanycanassessfairvalue.Threelevelsareappliedinfairvaluemeas-

urement:

�� level1inputcomprisesquoted(unadjusted)pricesforidenticalassetsorliabilitiesinan

activemarketwhichareavailabletotheCompanyonthemeasurementdate;

ThisgroupincludestheassetsownedbyModrazavarovalnica,valuedbasedontheCbbT

priceinanactivemarketandvaluationonthebasisoftransactionpriceinanactivemarket.

TheassumptionofanactivemarketappliesiftheCbbTpricehasbeenquotedforatleast

halfofthetradingdaysinthepast30daysuntilvaluation.IfthetradingoroTCmarketis

active,thelastknownCbbTpriceisused,noolderthan15days,forfairvaluemeasure-

ment.IfthetradingoroTCmarketisnotactive,thelastknownCbbTpriceisused,no

olderthan90days,forfairvaluemeasurement.IfthelastknownCbbTpriceisolderthan

thelasttransactionpriceofthefinancialassetoriftheCbbTpriceisnotavailable,thelast

knowntransactionpriceisused,noolderthan90days,forfairvaluemeasurement,in

whichcasetheassumptionofanactivemarketappliesifthetransactionpriceisnotolder

than15days.Inothercases,thefairvalueofafinancialassetisdeterminedusingavalua-

tiontechnique.ThisgroupdoesnotincludetheassetsownedbyKapitalskadruæba,d.d.,

valuedbasedonthepricesadoptedfromthebloombergsystem.

�� level2inputincludesinputsotherthanthequotedpricesincludedinlevel1andwhich

areobservableeitherdirectlyorindirectlyforanassetorliability;

level2assetsincludetheassetsvaluedbasedoncomparablemarketdata(otherthan

quotedpricesofidenticalassets)obtainedindirectlyordirectlyforanidenticalorsimilar

asset;thebasisofvaluationistheyieldcurveofcomparablefinancialassetswithsimi-

larmaturityandcreditrisk.Inaddition,level2alsoincludestheinvestmentsownedby

Modrazavarovalnica,valuedbasedonthestockpriceonaninactivemarket,valuedbased

ontheCbbTpriceonaninactivemarketandthevaluationonthebasisoftransactionprice

onaninactivemarket.forstockmarkets,theassumptionofanactivemarketappliesifthe

averagedailytradinginthefinancialassetinthelast180daysuntilthefairvaluemeas-

urementexceededeUR0.5million,takingintoaccountthenumberoftradingdays.Ifthe

stockmarketisactive,thelastknownstockpriceisused,noolderthan15days,forfair

valuemeasurement.Ifthestockmarketisnotactive,thelastknownstockpriceisused,

noolderthan90days,forfairvaluemeasurement.Inothercases,thefairvalueofafinan-

cialassetisdeterminedusingavaluationtechnique.Thesecondgroupdoesnotinclude

theassetsownedbyKapitalskadruæba,d.d.,valuedbasedonthepricesadoptedfromthe

bloombergsystem.

�� level3inputincludesunobservableinputsforanassetorliability.

level3includestheassets,thefairvalueofwhichisdeterminedusingownvaluation

101

modelstakingintoaccountsubjectivevariablesthatarenotpubliclyavailableonmarkets.

Moreover,level3alsoincludesdebtinstrumentsownedbyModrazavarovalnica,valued

usingavaluationtechnique(takingintoaccountlevel3inputs),debtsecurities,theCbbT

priceofwhichisnotavailableonan(in)activemarketandwhosevalueisdeterminedusing

avaluationtechnique(takingintoaccountlevel3inputs)aswellasdebtinstrumentsval-

uedonthebasisoftheinputprovidedbythirdparties.Inadditiontoalltheseassets,level

3fairvalueincludesallassetsownedbyKapitalskadruæba,d.d.,wherefairvalueofdebt

financialinstrumentsisdeterminedusingthebloombergGenericprices(bGn)andthe

bloombergValuationservicesprices(bVal).Thismethodologyandassumptionsofprice

calculationarenotavailabletothepublic,soalltheseassetsownedbyKapitalskadruæba,

d.d.,areclassifiedintolevel3fairvaluehierarchy.

Thefairvaluevaluationoflevel3assetswasmadebyapplyingtheincome-basedapproach,

thediscountedfreecashflowmethod,andtheasset-basedapproachaccordingtotheregu-

larliquidationmethod.

Thefairvalueofcertainsharesisdeterminedusingthevaluationmodelstakingintoaccount

subjectivevariablesthatarenotpubliclyavailableonmarkets.Certaindataforvaluationare

obtainedformthebloombergsystemandotherfinancialsources,whereasinsomecases

animportantsourceisthedataanddocumentsaboutthepastandexpectedfutureperfor-

manceprovidedbycompanies.

TheentireIfRa13mustbeappliedinfairvaluemeasurementassessment,inadditiontothe

abovestatedlevels.

Impairmentoffinancialassets

TheGroupregularlyreviewstherequirementforimpairmentoffinancialassetsclassifiedas

availableforsale.Investmentswhosevaluehassignificantlydeclinedinthereportingperiod

and/orsuchadeclineisprolongedareimpaired.TheGroupestimatesthattheassumption

ismetofasignificantdeclineinthevalueofequityinvestmentswhosenegativerevaluation

inequity,inclusiveofexchangeratedifferences,reaches40%oftheircost.Inthiscasesuch

equityinvestmentsareimpairedinthetotalamountofthecumulativeunrealisednetlossand

exchangeratedifferences.Whentheamountofrevaluationduetoimpairmentandexchange

ratedifferencesrecognisedintheequityequalsbetween10%and39%,theCompanyconsid-

erstheneedforimpairmentbasedonthetimecomponentandtherelevanceofinvestments

intermsoftheportfoliosize.Whenthenegativerevaluationrecognisedintheequityequals

between10and39%oftheinvestment’scostandtheinvestmentisnotimpaired,theremust

berelevantindicatorstoshowthatimpairmentisnotrequired.Theneedforimpairmentof

suchfinancialassetsisreviewedatleastonthedateofthestatementoffinancialposition

ormoreoftenifnecessary.onceaninvestmenthasbeenimpaired,thetotalamountofthe

negativerevaluationrecognisedinequityinclusiveofexchangeratedifferencesisimpaired

infutureperiods.

Modrazavarovalnicaregularlyreviewstherequirementforimpairmentoffinancialassetsclas-

sifiedasavailableforsale.Investmentswhosevaluehassignificantlydeclinedinthereporting

periodand/orsuchadeclineisprolongedareimpaired.Theinsurancecompanyconsidersa

significantdeclineinthevalueofequityinvestmentstobeoneinwhichtheamountofthe

negativerevaluationandexchangeratedifferencesrecognisedintheequityreach40%of

theinvestment’scost.Inthiscasesuchequityinvestmentsareimpairedinthetotalamount

ofthecumulativeunrealisednetlossandexchangeratedifferences.Theinsurancecom-

panyassessesthatthedeclineisprolongedwhentheasset’svaluehasbeendecreasingfor

straightforward9−12months.Theneedforimpairmentisreviewedasandwhennecessary

oratleastannuallyonthebalancesheetdate.

102

TheGrouponlyimpairsdebtinstrumentsclassifiedasavailable-for-salewhoseprincipal

amountswillnotberecoveredorwillnotberecoveredinfullonmaturityaccordingtothe

estimatemadebytheCompanyasaprudentmanager.Intheformercasesuchdebtinstru-

mentsareimpairedtozero,whileinthelattercase,debtinstrumentsareimpairedtothe

percentageoftheprincipalwhichtheCompanyestimateswithcertaintytoberepaidon

maturity.Inthelattercase,debtinstrumentsthathavenomaterialeffectonthefinancial

statementsarenotcarriedatamortisedcostsbutratheratestimatedrealisablevalue.The

needforimpairmentofsuchfinancialassetsisreviewedatleastonthedateofthestatement

offinancialpositionormoreoftenifnecessary.

Theabovedoesnotapplytonon-marketableinvestmentsofKapitalskadruæbawhosefair

valueisdeterminedbymodel.Theseinvestmentsarealwayssubjecttopermanentimpair-

mentrecognisedintheincomestatement.

Impairmentandreversalofimpairmentoffinancialassetscarriedatamortisedcost

Ifthereisobjectiveevidencethatanimpairmentlossonloansorheld-to-maturityfinancial

assetscarriedatamortisedcosthasbeenincurred,theamountofthelossismeasuredas

thedifferencebetweenthefinancialasset’scarryingamountandthepresentvalueofesti-

matedfuturecashflowsdiscountedatthefinancialasset’soriginaleffectiveinterestrate.The

carryingamountofthatitemofassethastobedecreasedthroughtheallowanceaccount.

Impairmentlosseshavetobepostedinoperatingresultasrevaluationfinancialexpenses.

If,inasubsequentperiod,theamountoftheimpairmentlossdecreasesandthedecrease

canberelatedobjectivelytoaneventoccurringaftertheimpairmentwasrecognised(such

asanimprovementinthedebtor’screditrating),thepreviouslyrecognisedimpairmentloss

shallbereversedthroughtheallowanceaccount.Thereversalofimpairmentlossesshallnot

resultinacarryingamountofthefinancialassetthatexceedswhattheamortisedcostwould

havebeeniftheimpairmentlosshadnotbeenrecognisedatthedateonwhichtheimpair-

mentlossisreversed.Theamountofthereversalofanimpairmentlossshallberecognised

inprofitorlossasrevaluationfinancialrevenue.

Impairmentandreversalofimpairmentoffinancialassetscarriedatcost

Ifthereisobjectiveevidencethatanimpairmentlosshasincurredonanunquotedequity

instrumentthatisnotcarriedatfairvaluebecauseitsfairvaluecannotbereliablymeas-

ured,theamountoftheimpairmentlossismeasuredasthedifferencebetweenthecarrying

amountofthefinancialassetandthepresentvalueofestimatedfuturecashflowsdiscounted

atthecurrentmarketrateofreturnforsimilarfinancialassets.suchimpairmentlossesshall

notbereversed.TheGroupisusingthevaluationmodeltodetermineifthereisobjective

evidenceofimpairment.

Impairmentandreversalofimpairmentofavailable-for-salefinancialassets

Whenadeclineinthefairvalueofanavailable-for-salefinancialassethasbeenrecognised

directlyinothercomprehensiveincomeandthereisobjectiveevidencethattheassetis

impaired,thecumulativelossthathadbeenrecogniseddirectlyinothercomprehensive

incomeshallberemovedfromequityandrecognisedinprofitorlosseventhoughthefinan-

cialassethasnotbeenderecognised.

Theamountofthecumulativelossthatisremovedfromequityandrecognisedinprofitor

lossshallbethedifferencebetweentheacquisitioncost(netofanyprincipalrepaymentand

amortisation)andcurrentfairvalue,lessanyimpairmentlossonthatfinancialassetprevi-

ouslyrecognisedinprofitorloss.

Impairmentlossesrecognisedinprofitorlossforaninvestmentinanequityinstrumentclas-

sifiedasavailableforsaleshallnotbereversedthroughprofitorloss.

103

If,inasubsequentperiod,thefairvalueofadebtinstrumentclassifiedasavailableforsale

increasesandtheincreasecanbeobjectivelyrelatedtoaneventoccurringaftertheimpair-

mentlosswasrecognisedinprofitorloss,theimpairmentlossshallbereversed,withthe

amountofthereversalrecognisedinprofitorloss.

Recoverableamountofnon-currentassets

asatthereportingdatetheGroupestimatesifthereexistanyfactorsindicatingthatnon-

currentassetsneedtobeimpaired.Ifeventsoccurindicatingthattheasset’sbookvalue

ishigherthantheestimatedrecoverableamount,thevalueoftheassetisimpairedtoits

recoverableamountorthatofcash-generatingunit.Therecoverableamountisthegreater

ofanasset’s(orcashgeneratingunit’s)netsellingpriceandvalueinuse.Inassessing

thevalueinuse,theestimatedfuturecashflowsarediscountedtotheirnetpresentvalue

usingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueof

moneyandtherisksspecifictotheasset.foranassetthatdoesnotgeneratelargelyinde-

pendentcashinflows,therecoverableamountisdeterminedforthecash-generatingunit

towhichtheassetbelongs.lossesarisingfromimpairmentarerecognisedunderoperat-

ingexpensesfromrevaluation.

Derecognitionoffinancialinstruments

afinancialassetisderecognisedwhenalltherisksandbenefitsaswellasthecontrolover

contractualrightsrelatedtothefinancialinstrumentaretransferred.afinancialliabilityis

derecognisedwhenitissettled,cancelledorexpired.

Non-currentassets(disposalgroups)heldforsale

non-currentassets(disposalgroups)heldforsalearethosewhosecarryingamountisjus-

tifiablyexpectedtobesettledpredominantlywithasaleinthenext12monthsratherthan

withtheircontinueduse.

Whenanassetisdesignatedasheldforsaleorclassifiedasadisposalgroupheldforsaleor

whentheassetisderecognised,dependingontheorderoftheevents,theassetisnolonger

amortisedordepreciated.suchnon-currentassetordisposalgroupheldforsaleshallbe

measuredatthelowerofitscarryingamountorfairvalue,lesscoststosell.

Operatingandotherreceivables

operatingreceivablesarerecognisedattheamountofinvoicesissued,lessanyallowances.

TheallowanceassessmentsarebasedontheGroup’sreasonableexpectationsthatapay-

mentisnolongerlikelyinfulland/orinaspecificamount.

Cashandcashequivalents

Uponinitialrecognition,cashandcashequivalentsarerecognisedattheamountarisingfrom

theunderlyingdocument.Cashandcashequivalentscomprisebankbalances,cashonhand,

calldepositsandshort-termdepositswithmaturityofuptothreemonths.

Deferredcostsandaccruedrevenues

Deferredcostsandaccruedrevenuesincludeshort-termdeferredcostsandshort-term

accruedrevenues.

104

Equity

Kapitalskadruæbaholdsnotreasuryshares.ItssoleshareholderistheRepublicofslovenia.

TheCompany’sequityissharecapital.ThesharecapitalofeUR364,810thousandisrepre-

sentedby874,235ordinary,registered,non-parvalueshares.eachsharehasthesameinter-

estandtheattributedamountinthesharecapital.Kapitalskadruæbaholdsnotreasuryshares.

Totalequityconsistsof:called-upcapital,capitalsurplus,revenuereserves,retainednet

earningsorretainednetloss,revaluationsurplusandtemporarilyundistributednetprofitor

unsettledlossforthefinancialyear.

RevenuereservesarerecognisedaccordingtotheZGD-1.Inlinewitharticle52(2)ofthe

ZsDH-1distributableprofitofKapitalskadruæbacannotbedistributedtotheshareholders.

ordinarysharesareclassifiedasequity.Directadditionalcostsofnewsharesissue,lesstax

effects,areincludedintheequity.

Revaluationsurplus

Revaluationsurplusarisessolelyfromeffectsofvaluationoffinancialassetsavailableforsale

atfairvalue.amountsofrevaluationsurplusdisclosedinthestatementoffinancialposition

arecorrectedforamountsofdeferredtax.

Provisions

Provisionsarerecognisedforcurrentliabilities(legalorconstructive)arisingfrompastevents

whenitislikelythatanoutflowofassetsthatgenerateeconomicbenefitswillberequiredto

settlesuchanobligation,andwhentheamountoftheliabilitycanbereliablyestimated.The

amountrecordedasaprovisionisthebestestimateofexpensesrequiredtosettleexisting

liabilitiesonthebalancesheetdate.Whenthetimevalueofmoneyisrelevant,theprovisions

aredeterminedonthebasisofdiscountedcashflowsatthediscountrate(pre-tax)reflecting

thetimevalueofmoney;whereappropriate,anyrisksspecifictotheliabilityareincluded.If

theGroupsetsprovisionsbasedondiscountedcashflows,theincreasesinnetpresentvalue

areovertheyearsrecognisedasfinancialexpenses.

Wheresomeoralloftheexpenditurerequiredtosettleaprovisionisexpectedtobereim-

bursedbyotherparties,thereimbursementisrecognisedasaspecialasset,butonlywhen

itisvirtuallycertainthatreimbursementwillbereceived.Inthiscasethecostsofprovision

arediscloseddecreasedbyexpectedreimbursement.

Thechangeinmathematicalprovisionsisdisclosedintheincomestatementasincreaseor

decreaseinotheroperatingexpenses.

TheGroupestablishedlong-termprovisions:

�� whentheguaranteedvalueofassetsexceedstheactualvalueofassetsbelongingtoan

individualinsuredperson/member,namelyintheamountoftheestablisheddeficit,i.e.the

sumofdifferencesbetweentheguaranteedassetsoftheinsuredperson/memberandthe

actualvalueoftheassetsoftheinsuredperson/member;

�� ifalawsuitisfiledagainsttheCompanyoriftheCompanyestimatesaclaimisvery

probable;

�� forterminationbenefitsandjubileeawards,calculatedonthebasisofassumptiononthe

expectedemployeefluctuation,yearsofserviceandexpectedyearsuntilretirement,tak-

ingintoaccountindividualandcollectiveemploymentcontractsaswellastheCompany’s

internalregulations.

105

Therecognitionofprovisionsinthebooksofaccountandinthestatementoffinancialposi-

tionisreversedwhenthepossibleobligationsforwhichtheprovisionsweremadenolonger

existorsuchprovisionsarenolongerneeded.Provisionscanonlybeusedforitemsofthe

typeforwhichtheywereoriginallyrecognised.

Insurancecontracts−guaranteefunds

accordingtotheInternationalfinancialReportingstandard4(IfRs4)andtheInternational

actuarialstandardofPracticeno.3(IasP3),theGuaranteefundofthePPs(firstPension

fund)andtheGuaranteefundofMR(Modrazavarovalnica)areclassifiedamonginsurance

contracts.aninsurancecontractisacontractunderwhichoneparty(theinsurer)accepts

significantinsuranceriskfromanotherparty(thepolicyholder)byagreeingtocompensate

thepolicyholderifaspecifieduncertainfutureevent(theinsuredevent)adverselyaffects

thepolicyholder.

UnderIfRs4,aneventisuncertain,ifatleastoneofthefollowingisuncertainattheincep-

tionofaninsurancecontract:

�� whetheraninsuredeventwilloccur;

�� whenitwilloccur;or

�� howmuchtheinsurerwillneedtopayifitoccurs.

Insurancecontractsentailingsignificantinsuranceriskareinbooksofaccounttreatedaccord-

ingtoIfRs4.Ifinsurancecontractsdonotentailsignificantinsurancerisk,theyareinbooks

ofaccounttreatedasfinancialcontractsunderIas39.

Insurancecontractliabilities−technicalprovisions

TechnicalprovisionsforinsurancecontractsaresetasideinaccordancewiththeInsurance

actanditsimplementingregulations,aswellasincompliancewithIfRs4.

Modrazavarovalnica,d.d.isrequiredtomakeanadequateamountoftechnicalprovisions

whicharedesignedtocoverfutureliabilitiesfrominsurancecontractsandpotentialrisk

lossesarisingfrominsuranceoperations.

Mathematicalprovisionsarecalculatedforeveryinsurancecontractseparately.Theprospec-

tivemethodisappliedinthecalculationoftheseprovisions.

Thecalculationstakeintoaccountactuarialassumptions,theprovisionsoftheapplicable

legislationandallcontractualobligationstotheinsuredpersonsaccordingtothecontentof

insurancecontracts.

Thecalculationoftechnicalprovisionsderivingfrominsurancecontractsandtheiradequacy

isonanannualbasisinspectedandcommentedonbyanauthorisedactuaryappointedby

theCompany’sManagementboard.

NettechnicalprovisionsoftheGuaranteeFundofMR

nettechnicalprovisionsoftheGuaranteefundofMRrepresentmathematicalprovisionsfor

insurancepoliciesoftheGuaranteefund“Modrarenta”,concludedaftertheretirementof

theinsuredpersonswhooptedforregularterminationofsupplementarypensioninsurance.

MathematicalprovisionsarecalculatedaccordingtotheInsuranceact,Technicalbasisfor

annuitypensioninsuranceofModrazavarovalnica,d.d.andtheinsurance-technicalstand-

ards,prospectivelyforeachinsurancepolicyseparately.GermanannuitytablesDaV1994R

wereappliedinthecalculation.Theaccruedinterestrate,themortalitytablesandthecosts

arethesameasappliedinthecalculationofsupplementarypension.

106

NettechnicalprovisionsoftheGuaranteeFundofthePPS

nettechnicalprovisionsoftheKsPPs(GuaranteefundofthefirstPensionfund)represent

mathematicalprovisionscomposedof:

�� mathematicalprovisionsforpoliciesofthePPs;

�� provisionsforsmoothingthemortalityexperienceofthePPs;and

�� provisionsforsmoothingthereturnexperienceofthePPs.

MathematicalprovisionsforthepoliciesofthePPS

MathematicalprovisionsforthepoliciesofthePPsarecalculatedbasedonarticle117ofthe

InsuranceactandtheRulesontheCalculationofMathematicalProvisions.

ThecalculationisbasedonthemostrecentannuitymortalitytablesapprovedbytheInsur-

ancesupervisionagency.

Theaccruedinterestrateandthecostsarethesameasappliedintheannuitycalculation.

Themortalitytablesusedinthecalculationofmathematicalprovisionsaremoreconserva-

tivethanthoseusedinannuityallocation.

ProvisionsforsmoothingthemortalityexperienceofthePPS

Provisionsforsmoothingthemortalityexperiencearedeterminedupontheinitialcalculation

ofthemathematicalprovisionasthedifferencebetweenthevalueofthetransferredassets

andthevalueofmathematicalprovisionssetasideforthePPspolicy.

Provisionsforsmoothingthemortalityexperiencethatarecalculatedperindividualpolicies

upontransferincreasetheprovisionsforsmoothingthemortalityexperienceofthePPsand

arecreatedaggregatelyforallinsuredpersons.

Theyarecalculatedandrecognisedmonthlyuponthecalculationofthemathematicalprovi-

sionsforthepoliciesoftheKsPPsforthecurrentmonth.Theyarerecordedonthemathemat-

icalprovisionsaccountundersubgroup“provisionsforsmoothingthemortalityexperience”.

Theprovisionsforsmoothingthemortalityexperiencemaybeadditionallyestablishedatthe

year-endfromthesurplusfundsoftheKsPPs,i.e.:

�� ifmathematicalprovisionsarenotestablishedaccordingtothemostrecentannuitytables,

thefollowingisentirelyallocatedtoprovisions:

-surplusassetsfromreturnoftheGuaranteefundinexcessoftheguaranteedreturn;

-surplusassetsresultingfrommortalityofpopulationwithannuityinsurancepolicies;

�� however,ifmathematicalprovisionsareconsistentwiththemostrecentannuitytables,

thesurplusassetsresultingfrommortalityofpopulationwithannuityinsurancepolicies

areallocatedtoprovisions.

ProvisionsforequalisationoftheyieldexperienceofthePPS

Provisionsforequalisationoftheyieldexperienceareestablishedattheyear-endifmath-

ematicalprovisionsforthePPspoliciesaresetasideaccordingtothemostrecentannuity

tables.Ifso,thesurplusassetsresultingfromthesurplusreturnoftheKsPPsovertheguar-

anteedreturn,areallocatedtopermanentincreasesofannuitiesorthewholeorpartofthem

areusedforcreatingprovisionsforsmoothingthereturnexperience.Theshareofsurplus

earmarkedforannuitiesissetbythemanagementoftheadministrator.

Claimsprovisions

Provisionsforclaimsoutstandingforguaranteefundsareestablishedintheamountofthe

liabilitiesthattheguaranteefundhastopayoutbasedoninsurancecontracts,withregard

towhichaneventinsuredhasoccurredbeforetheendofaccountingperiod.

107

Operatingliabilities

operatingliabilitiescomprisetradepayablesforacquiredassetsorservices,andliabilities

toemployees,thestate,etc.liabilitiesarerecognisedifitisprobablethatanoutflowof

resourcesembodyingeconomicbenefitswillresultfromtheirsettlementandtheamountat

whichthesettlementwilltakeplacecanbemeasuredreliably.

Accruedcostsanddeferredrevenues

accruedcostsanddeferredrevenuescompriseaccruedrevenueandotheraccrualsand

incomecollectedinadvance.accruedcostsarethedisclosedaccruedcostsfromordinary

activityoftheGroup.

Revenue

Therevenueisrecognisediftheincreaseofeconomicbenefitsintheaccountingperiodis

relatedtotheincreaseinassetsordecreaseinliabilitiesandiftheincreasescanbemeasured

reliably.Revenuesandincreasesofassetsordecreasesofliabilitiesarerecognisedsimulta-

neously.TheCompanyrecognisesthefollowingtypesofrevenues:

1.Revenuesfrominsurancepremiums

netrevenuesfrominsurancepremiumsareidenticaltogrosspremiumwritten.Grosspre-

miumwrittenisrecognisedinaccountingrecordsinthedayitisaccountedandnotonthe

dayitispaid.

2.Revenuefromfees

TheGroupisentitledtoentryandexitfeesaswellasanannualmanagementfeeforthe

managementofthepensionfunds’assets.entryfeesarechargedasapercentageofthe

premiumpaid,theexitfeesrepresentapercentageofredemptionvalue,whereastheman-

agementfeeiscalculatedasapercentageofaverageannualnetassetvalueofanindividual

fundduringthesavingperiod.

a. Entry fee

TheGroupchargesentryfeesfortheperformanceofitsactivitiesinaccordancewiththepen-

sionscheme.Thismeansthattheassetscollectedandtransferredtoanindividualpension

fundarereducedbytheamountoftheentryfeesandthefundmanagestheassetsattribut-

abletothenetpremium.Theentryfeesarechargedinthepercentageofthepremiumatthe

timeofthepayment.

b. Management fee

TheGroupmanagesmutualpensionfundsandchargesmanagementfee,thusthemonthly

valueofassetsofthefundsisreducedbythecostofmanagementfees.Themanagement

feeiscalculatedasapercentageoftheaveragevalueofthefund’sassets,determinedasthe

arithmeticmeanofthenetvalueofthefund’sassetsontheconversiondayofthecurrentyear.

c. Exit fee

Inaccordancewiththepensionscheme,theGroupisentitledtoexitfees,wherebythe

redemptionvalueisreducedbytheexitfeesandthenetvalueispaidtotheindividualwho

terminatedthescheme.exitfeesarecalculatedinapercentageoftheredemptionvalue

whenthepolicyispaid.

3.Revenuefromleasepayments

Therevenuefromleaseofinvestmentpropertyisrecognisedoverthedurationofindividual

leasecontract.

108

Financialrevenue

1.Interest

Interestincomeiscalculatedandrecognisedattheeffectiveinterestrate.Interestondebt

securitiesisdisclosedintheCompany’sstatementoffinancialpositiontogetherwithfinan-

cialinvestments.

2.Dividends

DividendsarerecognisedwhentheGroupobtainstherighttopayment.

3.Revenuefromsaleoffinancialassets

Revenuesfromthesaleoffinancialassets(gainsonthedisposaloffinancialassets)are

accountedforandrecognisedonthetradingday.

Costs

Costsofmaterialsandservices

Costsofmaterialsandservicesareclassifiedbyprimarytypes.TheGroupdoesnotclassify

costsbyfunctionaltype,becausetheentireGrouprepresentsasinglefunctionaltype.

Borrowingcosts

Costsofborrowingsarerecognisedintheperiodtowhichtheyrefer.

Employeebenefits

labourcostsincludegrosssalaries,grosssalarycompensationspaidbytheCompany,ben-

efitsinkind,giftsandawardstoemployees,severancepay,aswellastherelevanttaxesand

dutiespaidbythepayer.Thesecostsarerecognisedasthecurrentexpensesoftheperiod.

TheGroupalsorecognisespotentialfutureemployee-relatedcostsbasedontheCollective

agreement.Theseexpensesarerecognisedovertheentireperiodofemploymentofanindi-

vidualemployeetowhomthecollectiveagreementrefers.

Expenses

expensesarerecognisedifthedecreaseineconomicbenefitsinthereportingperiodis

associatedwithdecreasesinassetsorincreasesindebtandifthisdecreasecanbereliably

measured.expensesshouldthereforeberecognisedsimultaneouslywiththerecognitionof

adecreaseofassetsorofanincreaseofliabilities(debts).

Financialexpenses

financialexpensescompriseexpensesforfinancing,mostlyinterestexpenses.Revaluation

financialexpensesariseinassociationwiththeimpairmentoffinancialassets.expensesfrom

thesaleoffinancialassets(lossesonthedisposaloffinancialassets)areaccountedforand

recognisedonthetradingday.

Tax

1.Currenttax

Currenttaxassetsandliabilitiesinrespectofpresentandpastperiodsarerecognisedat

amountswhichtheGroupexpectstopaytoorreceivefromthetaxadministration.Current

taxistheexpectedtaxpayableonthetaxableincomefortheyear,usingtaxratesenacted

atthebalancesheetdate.

109

2.Deferredtax

Deferredincometaxassetsandliabilitiesarecalculatedaccordingtothebalancesheetlia-

bilitymethod.onlydeferredtaxassetsandliabilitiesarisingfromtemporarydifferencesare

recognised.

adeferredtaxassetisalsorecognisedonaccountofunusedtaxlossesandunusedtaxcred-

itscarriedforwardtothenextperiod,ifitisprobablethatfuturetaxableprofitwillbeavailable

againstwhichtheunusedtaxlossesandunusedtaxcreditscanbeutilised.

onthebalancesheetdate,deferredtaxassetsarerevisedandimpairedonaccountofthose

taxassetsforwhichitisnolongerprobablethatfuturetaxableprofitwillbeavailableagainst

whichtheunusedtaxlossesandunusedtaxcreditscanbeutilised.

Deferredtaxassetsandliabilitiesarerecognisedusingthetaxrateapplicablewhentheasset

isexpectedtoberealisedorliabilitiessettled.Taxrates(andtaxlegislation)enactedorclose

tobeingenactedatthebalancesheetdateareused.

Deferredtaxischargedorcrediteddirectlytocomprehensiveincome,ifitrelatestoitems

thatarecreditedorchargeddirectlytocomprehensiveincome.

Cashflowstatement

Thecashflowstatementiscompiledundertheindirectmethod(formatII)fromthedata

includedinthestatementoffinancialpositionat31December2015and31December

2014,incomestatementdatafortheyear2015,andadditionaldatanecessaryforthe

adjustmentofrevenueandexpenditureandfortheappropriatebreakdownofsignifi-

cantitems.

Segmentreporting

In2015,theKapitalskadruæbaGrouphadnobusinesssegments.

Riskmanagement

Intheeconomiccrisis,riskmanagementprovedtobeaveryimportantarea,becauseeffi-

cientriskmanagementisaconditionforsuccessfulandstableoperations.Therefore,risk

managementiscrucialinperformingactivitiestoachievethegoalsoftheGroup.Theuseof

standardmethodologiesformanagingriskenablesqualitativeevaluationofalltypesofrisk,

atimelyresponseandthereductionofriskexposure.TheGroupobserveslegalregulations

intheforefrontwhilealsoregulatingriskmanagementthroughinternalactssuchasthe

Rulesonriskmanagement,whichincludeinadditiontoindividualriskdescription,internal

riskmanagementorganisation,measuresandmethodsusedtomitigatetherisks,aswellas

proceduresofcontrolandresponsestoindividualrisks.

Withtheaimofimprovingassetmanagementinthelong-term,theGroupcontinuesto

developandupgradetheentireriskmanagementsystem.especiallyinModrazavarov-

alnica,theprojectofsolvencyIIisimportant,thestrategicgoalofwhichistoprotect

theassetsoftheinsuredpersonsandalsotomeetcapitalrequirements,improverisk

management,provideconditionsforbettercapitalallocation,increasetransparencyof

operationsandsimilar.

Inthecourseofitsactivity,theGroupisexposedtofinancial,operationalandstrategicrisks.

financialrisksincludetheimportantmarketrisks(theriskofchangesinsecuritiesprices,

interestrateriskandcurrencyrisk)aswellascreditandliquidityrisk.

110

Riskofsecuritiespricechange

Theriskofsecuritiespricechangeistheriskthatthevalueofafinancialinstrumentwillfluc-

tuateasaresultofchangesinmarketprices,whetherthosechangesarecausedbyfactors

specifictotheindividualinstrumentoritsissuerorfactorsaffectingallinstrumentstraded

intheregulatedmarketsinfinancialinstruments.Theriskofsecuritiespricechangeisman-

agedbyregularmonitoringofthemarketsituationandmacroeconomicindicatorsthataffect

themovementinthegenerallevelofmarketpricesandbymaximumpossibledispersionof

investmentstoeliminatemostofthenon-systematicrisk.Thedispersalofapartofinvest-

mentsabroadhaddecreasedtheGroup’sdependenceoftheportfoliooflong-terminvest-

mentsonthemovementofpricesonthesloveniancapitalmarket.

Themonitoringandmeasurementofriskiscarriedoutthroughthecalculationofvaluesat

risk(VaR)appliedtotheportfolioasawholeaswellasseparatelyforequityanddebtsecu-

rities.Thebetaindicatorisalsocalculatedforequitysecurities,asameasureofsystematic

risk.Thefluctuationsinsecuritiespricesareregularlymonitored.

Interestraterisk

TheverynatureofinvestmentsindebtsecuritiesanddepositsexposestheGrouptointer-

estrateriskresultingfromtheriskthatinvestmentvalueswillfluctuateduetochangesin

marketinterestrates.owingtothedecreaseininterestratestheassetswereexposedto

reinvestmentrisk.Theexposuretointerestrateriskisregularlymeasuredbythemodified

durationindicator.furthermore,theCompany’sinternalcommitteesmonitorthefluctuation

ininterestratesandmarketforecastsandanalysisonaweeklybasis,providinginvestment

recommendationsonthisbasis.

TheGroupminimisestherisksarisingfrominterestratesbyrestructuringtheportfoliobased

onmarketconditions,byreducingtheaveragematurityofbondportfolios,byrestructuring

assetswithfixedinterestrateintoassetswithvariableinterestrateorviceversa,depending

ontheexpectedmovementinmarketinterestratesandbyclassifyingassetsintothegroup

offinancialassetsheldtomaturityaccordingtotheIfRs.In2015,theGroupdidnotuse

derivativefinancialinstrumentsforinterestrateriskhedging.

Currencyrisk

Inmanagingapartoffinancialassetsinvestedinforeigncurrencies,theGroupisalsoexposed

tocurrencyrisk.

Currencyriskismonitoredandmanageddailybymatchingthecurrenciesoffinancialassets

withlegalandinternalrestrictions.Thebasisformeasuringcurrencyriskisthemonitoring

andcalculationofexposuretoindividualcurrencies.In2015,theGroupdidnotusederivative

financialinstrumentsforcurrencyriskhedging.

Creditrisk

Creditriskisrelatedtoinvestmentsindebtinstruments(investmentsinbonds,treasurybills,

commercialpapers,certificatesofdeposit,deposits,cashassets)andentailsthepossibility

ofinvestmentsbeingonlypartlyrepaidornotatall.Themanagementofcreditriskforinvest-

mentsindebtsecuritiesisimplementedbycarefulselectionofbusinesspartners,regular

monitoringofcompanies’operationsandbyestablishinginvestmentlimitswithregardto

exposuretoindividualinvestments.Creditriskisalsomanagedbydispersionofinvestments

intermsofissuers,industriesandgeographicalareas,byregularmonitoringofcreditmargins

andratingsofinvestmentsandissuersorcontractualpartners.

111

accordingtointernalacts,businesspartners’creditratingisdeterminedbyratingsassigned

bystandard&Poor’s,fitchandMoody’s,andin-houseanalyses.Thecreditriskarisingfrom

foreigndebtsecuritiesisnormallymanagedthroughinvestingintheforeigndebtsecurities

thataregivenacreditratingbbb-ormorebyrenownedcreditratingagencies,aswellas

throughadjustmentofthecreditratingstructureoftheportfoliototheadoptedinternallimi-

tations.Themaximumexposure,i.e.highyield,issetfordebtsecurities.

Withregardstoinvestmentsindeposits,debenturesandcertificatesofdeposits,aninternal

modelhasbeendevelopedfordeterminationoflimitsofsuchinvestmentsinindividualbanks.

Internallimitsforindividualbanksareregularlyupdated.Thetotalexposuretoasinglebank

ismonitoredonaregularbasisandcomplieswiththelegalregulations.

Liquidityrisk

liquidityriskistheriskrelatedtotheliquidityofthecapitalmarketorinvestmentandthe

riskofsolvencyoftheGroup.TheGroupmanagesitsassetsandliabilitiesinsuchamanner

astobeableatanytimetosettleitsliabilitiesastheyfalldue.Thepolicyprescribingregular

liquiditymanagementispursuedaccordingtothelawandsecondaryregulations.

Duetothelowliquidityofthesloveniancapitalmarket,liquidityriskisencounteredinthe

majorityofinvestmentsinassociationwithdomesticequityanddebtsecurities,withthe

highestriskposedbynon-listedinvestments.bydispersingaportionofinvestmentsabroad,

theGroupisabletoreduceliquidityriskbyinvestingonlyinthemostliquidsecurities.More-

over,liquidityriskismanagedbydailymonitoringoftheinflowsandoutflowsandprecise

matchingofmaturityofassetsandliabilities.

Operationalrisk

operationalriskistheriskofalossduetoinappropriateinternalprocessesorincorrectaction

bypeopleordefectivefunctioningofsystemswithintheCompanyorasaresultofexter-

naleventsandactions.operationalriskalsoincludeslegalanddocumentaryriskaswellas

therisksarisingfromtradingprocedures,settlementandvaluationofassetsandliabilities.

operationalriskismanagedthroughasystemofappropriateauthority,internalcontrolsand

bydefiningbusinessprocessesandensuringthesuitableemployeequalifications.Inorder

tominimiseoperationalrisks,companiesestablishedasystemofrecordinglosseventsand

regularlymonitoringtheimplementationofthemeasuresadopted.

InadditiontotheRiskManagementDepartmentthereisalsotheInternalauditDepartment,

payingspecialattentiontoverifyingtheinternalcontrolsystemandmakingproposalsfor

itsimprovement.

Strategicrisk

strategicriskistheriskofalossowingtoincorrectbusinessdecisions,inappropriateorgani-

sationandstrategyoftheCompanyandinsufficientresponsetothechangesinthebusiness

environment.significantstrategicrisksincludelegislative,taxandpoliticalrisks,resulting

fromthestate’sdiscretionaryrighttoadoptdecisions,andmayleadtochangesinthebusi-

nessandtaxenvironment.Theserisksalsoinfluencetheprocessesinvolvedinthesaleof

companieswheretheGroupholdsinterests,theamountofliabilitiestothepensionbudget

andconsequentlythemanagementoffinancialassets.

TheManagementboardisinchargeofformulatingappropriateorganisationandstrategy,

andmustadoptallmeasuressuitableforachievingthestrategicgoalsaswellastopreserve

andstrengthentheGroup’sreputation.anappropriatesupervisionsystemisprovidedfor

managingthisrisk,enablingmonitoringoftheimplementationofgoalsdefinedinthebusi-

112

nessstrategyandthepreventionoferrorsthatwouldresultindissatisfactionofbusiness

partners.strategicrisksarealsomanagedbyregularmonitoringandparticipationinthedraft-

ingoflegalbasesandbyoutsourcingexternalconsultants(taxconsultants,auditors,legal

consultants,ITconsultants,etc.).

17.3 DIsClosUResanDnoTesToTHefInanCIalsTaTeMenTs

17.3.1 Notestotheincomestatement

Noteno.1

Net sales revenues

in EUR 000

2015 2014

Revenues from the sales of services 31,022 27,226

Revenues from management 7,843 7,079

Revenue from lease payments 1,062 992

Other revenue 15 0

Total 39,942 35,297

Revenuesfromthesaleofservicesmostlyrefertorevenuesfrominsurancepremiums.

in EUR 000

2015 2014

Revenue from the sales on the domestic market 39,942 35,297

Total 39,942 35,297

Noteno.2

Other operating revenue (including revaluation revenue)

in EUR 000

2015 2014

Revenues from reversal of long-term provisions 11 716

Other operating revenues 477 28

Revaluation operating revenue 1 0

Total 489 744

Revenuesfromreversaloflong-termprovisionsintheamountofeUR11thousandconstitute

revenuesfromthereversalofprovisionsforonerouscontractsofKapitalskadruæba.

otheroperatingrevenuesofeUR477thousandmainlyrefertorevenuefrompaymentof

thedeficitinKsMRintheamountofeUR363thousand.otheroperatingrevenuesinclude

revenuesfromderecognitionofstatute-barredliabilitiesintheamountofeUR108thousand

andotherminoritems.

113

Noteno.3

Costs of goods, materials and services

in EUR 000

2015 2014

Costs of materials 253 240

Costs of services 4,342 3,837

Total 4,595 4,077

Costs of materials

Costsofmaterialscomprisecostsofpowersupply,write-offoflowvalueassets,costsof

officestationeryandprofessionalliterature,andothercostsofmaterials.

Costs of services

Costsofservicesincludecostsoftransport,maintenanceworkonbusinesspremisesand

property,plantandequipment,leasepayments,reimbursementofcostsassociatedwith

labour,costsofpaymenttransactions,bankingservicesandinsurancepremiums,costsof

intellectualandpersonalservices,costsoftradefairs,advertisingandentertainment,costs

ofservicesprovidedbynaturalpersons,andcostsofotherservices.

Costs of audit

Thecostsofauditingthe2015financialstatementsandannualReportoftheKapitalska

druæbaGrouptotalledeUR13,100.

Noteno.4

Labour costs

in EUR 000

2015 2014

Payroll costs 4,260 4,042

Social security costs 683 650

Pension insurance costs 213 206

Other labour costs 482 438

Total labour costs 5,638 5,336

Noteno.5

Amortisation, depreciation and write-offs

2015

in EUR 000

2014

Depreciation/amortisation 1,170 1,168

Amortisation of intangible assets 244 287

Depreciation of buildings 307 308

Depreciation of garages 11 11

Depreciation of equipment and spare parts 103 62

Depreciation of investment property 505 500

114

2015

in EUR 000

2014

Revaluation operating expenses 31 22

Revaluation operating expenses associated with current assets 31 22

Total 1,201 1,190

Amortisation of intangible assets

Thecostsrefertotheamortisationofcomputersoftwareandlicences.

Depreciation of buildings

ThesecostsincludethecostsofdepreciationofbusinesspremisesownedbyKapitalska

druæba.

Depreciation of equipment and spare parts

Depreciationofequipmentandsparepartsrepresentsdepreciationofelectronicequipment,

woodenfurniture,carsandotherequipment.

Noteno.6

Other operating expenses

in EUR 000

2015 2014

Change in technical provisions 11,393 13,140

Provisions 6,031 26

Other operating expenses 17,050 15,451

Total 34,474 28,617

In2015,ModrazavarovalnicaincreasedmathematicalprovisionsofeUR11,393thousand,

establishedprovisionsfornon-achievementofguaranteedrateofreturnofthemanagedfund

equallingeUR4,980thousandandformedprovisionsforpensionsandjubileeawardsinthe

amountofeUR17thousandaswellasmadeprovisionsfortestingtheadequacyofprovi-

sionstotallingeUR524thousand.

In2015,KapitalskadruæbacreatedeUR13thousandofprovisionsfornon-achievementof

guaranteedreturnoftheCompulsorysupplementaryPensionInsurancefundoftheRepub-

licofslovenia(soDPZ),andprovisionsforcontingentliabilityoftheCompanyarisingfrom

IndemnityagreementtotallingeUR497thousand.

Themajorportionofotheroperatingexpensesincludesgrossclaimspaidforlifeinsurance

byModrazavarovalnicaequallingeUR15,176thousand,consistingofaccountedpension

annuities.

Noteno.7

Financial revenue

2015

in EUR 000

2014

Financial revenue from shares and interests 48,045 60,496

Financial revenue from other investments and loans 13,297 13,736

115

2015

in EUR 000

2014

Financial revenue from other investments 11,375 11,456

Financial revenue from loans 1,922 2,280

Financial revenue from operating receivables 6,954 0

Total 68,296 74,232

financialrevenuefromoperatingreceivablestotallingeUR6,954thousandconstitutesrepay-

mentofstateaidfromelan,d.o.o.,whichdidnothappenin2014.

Financial revenue from shares and interests

in EUR 000

2015 2014

Dividends and shares in profits 21,243 25,234

Revaluation financial revenue from shares and interests 813 5,747

The effect of restatement of financial revenue from shares and interests due to the adjustment of associates to equity method

2,724 1,203

Gains from the disposal of financial assets 23,265 28,312

- available-for-sale financial assets 22,951 28,295

- financial assets measured at fair value through profit or loss 314 17

Total 48,045 60,496

Financial revenue from other investments and loans

in EUR 000

2015 2014

Interest income 12,734 9,730

Revenue from the revaluation of receivables, liabilities and loans to retain their value

563 22

Exchange rate gains 563 22

Revenue from realised gains 0 3,984

Revenue from the sale of financial assets available for sale 0 3,981

Revenue from the sale of financial assets measured at fair value through profit or loss

0 3

Other financial revenue 0 0

Total 13,297 13,736

Revenue from sale of financial assets

in EUR 000

2015 2014

Revenue from realised gains 23,265 32,296



116

RevenuefromthesaleoffinancialassetsintheamountofeUR22,951thousandconstitute

realisedcapitalgainsfromthedisposalofavailable-for-salefinancialassets.Revenuefromthe

saleoffinancialassetsintheamountofeUR314thousandconstituterealisedcapitalgains

fromthedisposaloffinancialassetsmeasuredatfairvaluethroughprofitorloss.

Interest income

in EUR 000

2015 2014

Deposits 1,922 2,280

Bonds 10,686 7,437



- financial assets held to maturity 2,944 2,968

Other securities 126 13


- financial assets held to maturity 6 0

Total 12,734 9,730

Financial revenue from operating receivables

in EUR 000

2015 2014

Financial revenue from operating receivables 6,954 0

Total 6,954 0

financialrevenuefromoperatingreceivablestotallingeUR6,954thousandconstitutesrepay-

mentofstateaidfromelan,d.o.o.,accordingtotheCommissionDecisionsa.26379of19

september2012.

Noteno.8

Financial expenses for long-term and short-term financial asset write-offs

2015

in EUR 000

2014

Loss from disposal of financial assets 545 642

- at fair value through profit or loss 189 18

- held-to-maturity 0 275

- available-for-sale 356 349

Interest expense 1 0

Revaluation operating expenses 8,736 13,594

Expenses from the revaluation of financial assets measured at fair value through profit or loss

5,105 1,827

Impairment of equity investments at fair value through profit or loss 2,876 82

Impairment of shares and interests measured at cost 0 10,864

Expenses from the cancellation of shares and subordinated bank bonds 0 747

117

2015

in EUR 000

2014

Exchange rate losses 656 50

Other revaluation expenses 99 24

Other financial expenses 16 0

Expenses for ZPIZ 19,000 0

Reversal of impairments 0 -8,723

The effect of restatement of financial expenses from shares and interests due to the adjustment of associates to equity method

1,569 0

Total 29,867 5,513

expensesfromthesaleoffinancialassetsintheamountofeUR545thousandconstitute

realisedcapitallossesfromthedisposaloffinancialassets.

Impairmentlosswasrecognisedonavailable-for-saleequityinvestmentcarriedatfairvalue

throughequityandclassifiedunderavailable-for-salefinancialassetsinthetotalamountof

eUR9thousand.Thisinvestmenthadalreadybeenimpairedinthepast.onceaninvestment

hasbeenimpaired,thetotalamountofthenegativerevaluationrecognisedinequityinclusive

ofexchangeratedifferencesisimpairedinfutureperiods.

sharesandstakesclassifiedasavailable-for-salefinancialassetswereimpairedinthetotal

amountofeUR2,867thousand.TheGroupassessedthattherewasimpartialevidenceof

impairmentsoftheseassets.Thefairvalueofassetswasestimatedbasedoninternalvalu-

ationsandoneexternalvaluation.assetvaluationsweremadeaccordingtothefollowing

methods:income-basedapproach,thediscountedfreecashflowmethod,theasset-based

approach,thenetassetvaluationmethodundertheassumptionofagoingconcernand

regularliquidationandthepeercomparisonmethod(comparablelistedcompanies),where

theprocedureisbasedonselectedmultipliersandthevalueoftherelevantcompanyis

assessedbasedonthecomparisonofperformanceindicatorsandstockpriceofcompara-

blecompanies.Thevaluationmodelsusedin2015indicatedasmallerneedforimpairments

thanin2014.

TheGrouprevaluedequityinvestmentscarriedatfairvaluethroughprofitorlossinthe

amountofeUR5,105thousand.

onthebasisofarticle67a(5)oftheZIPRs1415-C,Kapitalskadruæbain2015creditedeUR19

milliontotheZPIZ(PensionandDisabilityInsuranceInstitute)forannualallowanceforpen-

sioners.Todate,KapitalskadruæbahaspaideUR664,321thousandtotheZPIZ.Thesepay-

mentswereincludedinthefinancialexpensesfromotherfinancialliabilitiesintheincome

statement.

Foreign currency translation

in EUR 000

2015 2014

Exchange rate gains 563 22

Exchange rate losses -656 -50

Net exchange rate gains/losses -93 -28

In2015,thenetexchangeratelossamountedtoeUR93thousand.

118

Profit or loss from financial assets

in EUR 000

2015 2014

Income from financial assets 68,296 74,232

Expenses from financial assets -29,867 -5,513

Net profit or loss financial asset 38,429 68,719

Noteno.9

Other revenue

in EUR 000

2015 2014

Other unusual items 26 51

Total 26 51

amajoramountofotherunusualitemsrepresentsrevenuefrompreviousperiods.

Noteno.10

Other expenses

in EUR 000

2015 2014

Other items 4 3

Total 4 3

Themajorityofotherexpensesisaccountedforbytaxpaidondividendsfromabroad.

Noteno.11

Income tax

in EUR 000

2015 2014

Profit or loss before tax 45,919 56,727

Tax on dividends from abroad 225 0

Non-deductible expenses 5,039 13,147

Non-taxable revenue -71,314 -36,045

Tax allowance -109 -414

Tax loss -625 -16,915

Total -20,865 16,500

Tax rate - 17%

Income tax - 2,804

Tax on dividends from abroad 88 -

TheKapitalskadruæbaGroupdoesnotprepareaconsolidatedtaxbalancesheet.In2015,

KapitalskadruæbaandModrazavarovalnicad.d.hadnocorporateincometaxliability.

119

IntheManagementboard’sopinionthecalculationoftaxliabilityissuitableandmadeonthe

basisofviewspresentedbelowandinaccordancewiththeopinionsprovidedbytaxconsult-

ants.Itishoweverpossiblethatthecompetenttaxauthoritieswouldadoptadifferentposition

oncertainissues,whichcouldresultinadifferencebetweenthetaxliabilitiesdisclosedinthe

financialstatementsofconsolidatedcompaniesandtheamountassessedbythetaxauthorities.

onthebasisofarticle67a(5)oftheZIPRs1415-C,Kapitalskadruæbain2015creditedeUR19

milliontotheZPIZ(PensionandDisabilityInsuranceInstitute)forannualallowanceforpen-

sioners.Todate,KapitalskadruæbahaspaideUR664,321thousandtotheZPIZ.Thesepay-

mentswererecognisedintheincomestatementunderotherfinancialexpensesandastax

deductibleexpensesinthecalculationofthetaxliability.

Theeffectivetaxrate(astheratiobetweenthecorporateincometaxandprofitorlossbefore

tax)wasnotcalculated,becausetheKapitalskadruæbaGroupdisclosedtaxlossin2015.

Noteno.12

Deferred tax

at31December2015,deferredcorporateincometaxincludedtheitemstatedinthetable

below.

in EUR 000

Balance sheet Income statement

31. Dec. 2015 31. Dec. 2014 2015 2014

Deferred income tax liabilities 44,046 48,408 313 19

Total deferred income tax liabilities 44,046 48,408 313 19

Deferred income tax assets 41,131 45,068 -3,936 10,254

Loss brought forward which can be used as tax allowance

11,624 4,167 7,457 272

Value adjustment of investments 29,394 40,828 -11,434 10,274

Dividend adjustment 33 34 0 -263

Provisions 80 39 41 -29

Total deferred income tax assets 41,131 45,068 -3,936 10,254

Netting of deferred tax assets and liabilities 2,915 3,340 -3,623 10,273

Disclosure of tax loss

in EUR 000

2015 2014

Tax loss as at 31 December of the reporting period 441,084 405,855

Tax loss not considered in the calculation of deferred taxes 415,507 401,688

Tax loss considered in the calculation of deferred taxes 25,577 4,167

TaxlossamountingtoeUR415,507thousanddoesnotcomprisedeferredtaxassets,whereas

taxlossofeUR25,577thousandincludesdeferredtaxassets.Taxlossesaretransferable

withouttimelimitation.

In2015,KapitalskadruæbaandModrazavarovalnicadisclosednocorporateincometaxliabili-

ties,becauseataxlosswasidentifiedfor2015.

120

Disclosure of changes in deferred tax recognised directly in the statement of comprehensive income

in EUR 000

Changes in deferred tax 2015 2014

Balance as at 1 January 48,408 35,380

Changes during the year 4,362 13,028

Balance as at 31 December 44,046 48,408

DeferredtaxliabilitiesofeUR44,046thousandat31December2015aroseonrevaluation

offinancialassetsmeasuredatfairvaluethroughthestatementofcomprehensiveincome.

Noteno.13

Net earnings/loss per share

Thebasicnetearnings/losspershareiscalculatedbydividingthenetprofit/lossattributable

toequityholdersoftheCompanybytheweightedaveragenumberofordinarysharesout-

standingduringtheperiod.Theweightedaveragenumberofordinarysharesoutstandingis

calculatedonthebasisofdataaboutthenumberofordinarysharesoutstanding,takinginto

accountanyacquisitionsanddisposalswithintheperiodandthetimeduringwhichtheshares

participatedinthegenerationofprofit.Dilutednetearnings/losspersharealsoincludesall

potentialordinarysharesthatoriginatedinexchangeablebonds,optionsandfutures.When

calculated,earnings/lossandthenumberofordinarysharesoutstandingareadjustedfor

effectsofalladjustablepotentialordinarysharesthatwouldoccuriftheywereswappedfor

ordinarysharesintheaccountingperiod.

2015 2014

Net profit or loss attributable to holders of ordinary shares of the parent company (000 EUR)

29,351 72,751

Diluted net profit or loss attributable to holders of ordinary shares of the parent company (000 EUR)

29,351 72,751

Weighted average number of ordinary shares for basic net earnings per share

874,235 874,235

Diluted average number of ordinary shares for diluted net earnings per share

874,235 874,235

Net earnings per share (EUR) 33.6 83.3

asat31December2015,theGroupheldnofinancialinstrumentsthatwouldrequireadjust-

mentofeitherthenetprofitorlossortheweightedaveragenumberofordinaryshares.

Noteno.13.1

Profit or loss from discontinued operations

TheresultfromdiscontinuedoperationstotallingeUR403thousandfrom2014referstothe

companiesthatareintendedtobesold.

121

17.3.2 Notestothestatementoffinancialposition

Noteno.14

Intangible assets and long-term deferred costs and accrued revenues

Table30: Changes in intangible assets, and long-term deferred costs and accrued revenues in 2015

in EUR 000

31. Dec. 2015Other long-term deferred costs

and accrued revenues

Cost

Cost as at 1 Jan. 2015 3,352

- Additions 425

- Disposals -64

Cost as at 31 Dec. 2015 3,713

Value adjustment

Value adjustment as at 1 Jan. 2015 2,888

- Disposals, write-offs -64

- Depreciation/amortisation 244

Value adjustment as at 31 Dec. 2015 3,068

Carrying amount

Carrying amount as at 1 Jan. 2015 464

Carrying amount as at 31 Dec. 2015 645

Table31: Changes in intangible assets, and long-term deferred costs and accrued revenues in 2014

in EUR 000

31. 12. 2014Other long-term deferred

costs and accrued revenues

Cost

Cost as at 1 Jan. 2014 3,196

- Additions 156

Cost as at 31 Dec. 2014 3,352

Value adjustment

Value adjustment as at 1 Jan. 2014 2,601


Value adjustment as at 31 Dec. 2014 2,888

Carrying amount

Carrying amount as at 1 Jan. 2014 595

Carrying amount as at 31 Dec. 2014 464

122

Noteno.15

Property, plant and equipment

Table32: Changes in property, plant and equipment in 2015

in EUR 000

31. 12. 2015 BuildingsOther plant and

equipment Total

Cost

Cost as at 1 Jan. 2015 10,217 2,670 12,887

- Additions 0 51 51

- Disposals 0 -102 -102

Cost as at 31 Dec. 2015 10,217 2,619 12,836

Value adjustment

Value adjustment as at 1 Jan. 2015 3,037 2,395 5,432

- Disposals, write-offs 0 -102 -102

- Depreciation/amortisation 318 103 421

Value adjustment as at 31 Dec. 2015 3,355 2,396 5,751

Carrying amount

Carrying amount as at 1 Jan. 2015 7,180 275 7,455

Carrying amount as at 31 Dec. 2015 6,862 223 7,085

Table33: Changes in property, plant and equipment in 2014

in EUR 000

31. 12. 2014 BuildingsOther plant and

equipment Total

Cost

Cost as at 1 Jan. 2014 10,217 2,538 12,755

- Additions 0 179 179

- Disposals 0 -47 -47

Cost as at 31 Dec. 2014 10,217 2,670 12,887

Value adjustment

Value adjustment as at 1 Jan. 2014 2,719 2,380 5,099

- Disposals, write-offs 0 -47 -47

- Depreciation/amortisation 318 62 380

Value adjustment as at 31 Dec. 2014 3,037 2,395 5,432

Carrying amount

Carrying amount as at 1 Jan. 2014 7,498 158 7,656

Carrying amount as at 31 Dec. 2014 7,180 275 7,455

123

Noteno.16Investment property

Table34: Changes in investment property in 2015

in EUR 000

31. 12. 2015 Buildings

Cost

Opening balance as at 1 Jan. 2015 18,939

- Acquisitions 123

- Disposals, transfers -22

Closing balance as at 31 Dec. 2015 19,040

Value adjustment




Carrying amount



Thefairvalueofinvestmentpropertydoesnotsignificantlydeviatefromitscarryingamount

asat31December2015.Theestimatedfairvalueofinvestmentpropertywasassessedbased

oninternalvaluation.TheappraisedvalueofinvestmentpropertywaseUR16,020thousand

asat31December2015.Thecarryingamountofinvestmentpropertywascheckedagainst

themarketvalueforsignsofimpairment,ofwhichtherewerenone.

Table35: Changes in investment property in 2014

in EUR 000

31. 12. 2014 Buildings

Cost


- Acquisitions 70


Value adjustment




Carrying amount



124

Table36: Rental income investment property and costs related to investment property

in EUR 000

2015 2014

Rental income from investment property 1,051 982

Costs related to investment property 643 747

Information about encumbrances

Kapitalskadruæbaistheco-ownerofinvestmentpropertiesonwhichapledgehasbeen

enteredtosecureliabilitiesofeUR1,000thousand.TheremainingassetsownedbytheGroup

arefreefrommortgages,pledgesorotherencumbrances.

fixedassetsarenotunderfinanceleasenothavetheybeenacquiredforthepurposeof

trading.

Noteno.17

Investments in subsidiaries, associates and joint ventures

Investmentsinsubsidiariesasat31December2015include:

Subsidiary Registered office Equity stake in %

Modra zavarovalnica, d. d. Dunajska cesta 119, Ljubljana 100.00

Steklarska nova Rogaπka Slatina, d. o. o. − in bankruptcy 7

Steklarska ulica 1, Rogaπka Slatina 100.00

astheparentcompany,KapitalskadruæbaconsolidatesModrazavarovalnica.Kapitalska

druæbadoesnotconsolidatethesubsidiarysteklarskanovaRogaπkaslatina,d.o.o.incon-

solidatedfinancialstatements,sincetheintegrationofsubsidiary’sfinancialstatementsin

consolidatedstatementsisnotrelevantforatrueandfairviewofthefinancialstatementsof

theKapitalskadruæbaGroupasawhole.

asat31December2015,theinterestsinthefollowingassociatedcompanieswereheld:

Associated company Registered office Equity stake in %

Casino Maribor, d. d. − in bankruptcy 8 Glavni trg 1, Maribor 20.00

Gio, d. o. o. − in liquidation Dunajska cesta 160, Ljubljana 28.68

Gospodarsko razstaviπËe, d. o. o. Dunajska cesta 18, Ljubljana 29.51

Hit, d. d.9 Delpinova ulica 7a, Nova Gorica 20.32

Kli Logatec, d. d. − in liquidation10 Tovarniπka cesta 36, Logatec 27.70

Loterija Slovenije, d. d. GerbiËeva ulica 99, Ljubljana 25.00

Terme »ateæ, d. d. »ateæ ob Savi, Topliπka cesta 35, Breæice 23.79

Terme Olimia, d. d. Zdraviliπka cesta 24, PodËetrtek 24.79

7 PursuanttotheZfPPIPP,thebankruptcyadministratorremovedsharesfromtheKDDrecords;priortothebankruptcyprocedure,Kapitalskadruæbaheldtheequitystakeasshowninthetableabove.

8 TheshareswereaccordingtotheZfPPIPPdeletedfromtheKssbythereceiver.Priortobankruptcy,Kapitalskadruæbaheldastakepresentedinthetableabove.

9 InHit,d.d.,theCompanyholds20.32%ofvotingrights.Preferencesharesbecamevotingrightsduetonon-paymentofpreferencedividends.

10Kapitalskadruæbaalreadyobtainedfundsfromtheliquidationestate.ThecompanyisexpectedtobedeletedfromtheCompaniesRegisterin2016.

125

Kapitalskadruæbaconsolidatesthefollowingcompaniesintheconsolidatedfinancialstate-

mentsusingtheequitymethod:

�� Hit,d.d.,

�� GospodarskorazstaviπËe,d.o.o.,

�� loterijaslovenije,d.d.,and

�� CinkarnaCelje,d.d.

CinkarnaCelje,d.d.,isanassociateofModrazavarovalnica,andisnotpreparingconsoli-

datedfinancialstatements.

otherassociatedcompaniesarenotconsolidatedusingtheequitymethod,sincetheinte-

grationoftheirfinancialstatementsinconsolidatedfinancialstatementsisnotrelevantfor

atrueandfairviewofthefinancialstatementsoftheKapitalskadruæbaGroupasawhole.

Kapitalskadruæba,d.d.,isnotexposedtoanyrisksarisingfromownershipstakesinsubsidi-

aryandassociatedcompaniesKapitalskadruæba,d.d.,suchasforinstance:

�� provisionoffundsfortheoperations/capitaladequacyofthesubsidiaryorassociate;

�� participationincoveringcontingentliabilitiesofthesubsidiaryorassociatedcompany.

Table37: Changes in investments in associates

in EUR 000

2015 2014

Carrying amount as at 1 Jan. 21,334 13,391

Changes -667 1,557

- Attribution of net profit due to the acquisition of associates using the equity method

1,155 1,203

- Exclusion of dividends -2,232 -836

- Exclusion of revaluation surplus -227 -469

- Impairment/strengthening 637 1,659

Transfer of associates from available-for-sale assets 13,707 6,386

Carrying amount as at 31 Dec. 34,374 21,334

in EUR 000

31. 12. 2015 31. 12. 2014

Shares and interests in associated companies 34,374 21,334

Total 34,374 21,334

Noteno.18

Assets held for sale

in EUR 000

31. 12. 2015 31. 12. 2014

Assets held for sale 6,574 197,739

Total 6,574 197,739

non-currentassetsheldforsaleintheamountofeUR6,574thousandasat31December

2015areheldforsaleinthenext12months.

126

Noteno.19

Financial assets, excluding loans

in EUR 000

Long-term Short-term Total

31. 12. 2015 31. 12. 2014 31. 12. 2015 31. 12. 2014 31. 12. 2015 31. 12. 2014

Shares and interests in associated companies

34,374 21,334 0 0 34,374 21,334

Other shares and interests 675,026 599,281 0 0 675,026 599,281

Other financial assets 221,395 198,593 39,104 46,262 260,499 244,855

Assets held for sale 0 0 6,574 197,739 6,574 197,739

Total 930,795 819,208 45,678 244,001 976,473 1,063,209

financialassetsoftheGroupotherthanloansareclassifiedintooneofthefollowinggroups:

financialassetsatfairvaluethroughprofitorloss,financialassetsheldtomaturity,andavail-

able-for-salefinancialassets.Inaddition,financialassetsarealsoclassifiedasnon-current

andcurrent.

asat31December2015,financialassetsexceptloanswereclassifiedintothefollowing

categories:

in EUR 000


31. 12. 2015 31. 12. 2014 31. 12. 2015 31. 12. 2014 31. 12. 2015 31. 12. 2014

Financial assets measured at fair value through profit or loss

49,634 36,080 9,021 16,796 58,655 52,876

Financial assets held to maturity

89,473 62,803 9,004 7,277 98,477 70,080

Available-for-sale financial assets

757,314 698,004 27,653 220,915 784,967 918,919

Investments in associates under the equity method

34,374 21,334 0 0 34,374 21,334

Total 930,795 818,221 45,678 244,988 976,473 1,063,209

Investments in securities

in EUR 000

31. 12. 2015 31. 12. 2014

Financial assets measured at fair value through profit or loss 58,655 52,876

Equity securities 31,910 29,603

Debt securities 26,745 23,273

Financial assets held to maturity 98,477 70,080

Available-for-sale financial assets 819,341 940,253

Equity securities 684,066 797,989

Debt securities 135,275 142,264

Total 976,473 1,063,209

127

Financial assets at carrying amount and fair value as at 31 December 2015

in EUR 000

Asset Carrying amount Fair value

Financial assets at fair value through profit or loss 58,655 58,655



Loans 120,539 120,539

Cash and cash equivalents 44,146 44,146

Total 1,141,158 1,157,868

Financial assets at carrying amount and fair value as at 31 December 2014

in EUR 000

Asset Carrying amount Fair value




Loans 116,812 116,812

Cash and cash equivalents 37,040 37,040

Total 1,217,061 1,228,063

accordingtoitsaccountingpolicy,theKapitalskadruæbaGroupcarriesassetsatfairvalue

whichequalsthemarketvalueoffinancialasset.Thedifferencebetweenthecarryingamount

andfairvalueappearsonfinancialassetshelduntilmaturitythataremeasuredatamortised

cost.Thefairvalueoffinancialassetscomprisingloansandreceivablesalsoequalstheir

amortisedcost.

Changes in securities investments in 2015

in EUR 000

31. 12. 2014 AcquisitionsDisposals,

maturity Revaluation 31. 12. 2015


52,876 40,450 -31,616 -3,055 58,655

Financial assets held to maturity

70,080 33,527 -8,080 2,950 98,477

Available-for-sale financial assets

940,253 62,875 -198,621 14,834 819,341

Total 1,063,209 136,852 -238,317 14,729 976,473

128

Financial assets by type of interest rate as at 31 December 2015

in EUR 000

31. 12. 2015 31. 12. 2014

Investments in debt instruments 260,497 235,617

- Fixed Rate 255,354 229,877

- Variable interest rate 5,143 5,740

Loans and deposits 120,556 150,612

- Fixed Rate 120,556 150,612

- Variable interest rate 0 0

Total 381,053 386,229

Fair value hierarchy as at 31 December 2015

in EUR 000

Level 1 Level 2 Level 3 Total


36,956 17,004 4,695 58,655

Available-for-sale financial assets 678,846 39,208 101,287 819,341

Total 715,802 56,212 105,982 877,996

Level 1

ThisgroupincludestheassetsownedbyModrazavarovalnica,valuedbasedontheCbbT

priceinanactivemarketandvaluationonthebasisoftransactionpriceinanactivemar-

ket.TheassumptiononanactivemarketappliesistheCbbTpricehasbeenquotedforat

leasthalfofthetradingdaysinthepast30daysuntilvaluation.IfthetradingoroTCmarket

isactive,thelastknownCbbTpriceisused,noolderthan15days,forfairvaluemeasure-

ment.IfthetradingoroTCmarketisnotactive,thelastknownCbbTpriceisused,noolder

than90days,forfairvaluemeasurement.IfthelastknownCbbTpriceisolderthanthelast

transactionpriceofthefinancialassetoriftheCbbTpriceisnotavailable,thelastknown

transactionpriceisused,noolderthan90days,forfairvaluemeasurement,inwhichcase

theassumptiononanactivemarketappliesifthetransactionpriceisnotolderthan15days.

Inothercases,thefairvalueofafinancialassetisdeterminedusingavaluationtechnique.

ThisgroupdoesnotincludetheassetsownedbyKapitalskadruæba,d.d.,valuedbasedon

thepricesadoptedfromthebloombergsystem.

Level 2

level2assetsincludetheassetsvaluedbasedoncomparablemarketdata(otherthanquoted

pricesofidenticalassets)obtainedindirectlyordirectlyforanidenticalorsimilarasset;the

basisofvaluationistheyieldcurveofcomparablefinancialassetswithsimilarmaturityand

creditrisk.

Inaddition,level2alsoincludestheinvestmentsownedbyModrazavarovalnica,valued

basedonthestockpriceonaninactivemarket,valuedbasedontheCbbTpriceinaninac-

tivemarketandthevaluationonthebasisoftransactionpriceinaninactivemarket.level2

includesinvestmentsofModrazavarovalnicameasuredusingbenchmarkmarketdata;the

valueoffinancialassetsmeasuredatfairvalueiseUR9,232,322,andtheyincludethebonds

ofsIDbanka,d.d.,andsIJ,d.d.,andtreasurybillsoftheRepublicofsloveniaaswellasthe

129

Rs33governmentbond.ThepriceofsIDbankabondwascalculatedbasedonslovenian

governmentbondsloVen403/22/18.ThevalueoftheRs33bondwascalculatedbased

onyieldtomaturityofacomparableliquidsloveniangovernmentbondsloReP21/403/22.

ThepricesofbondsofsIJ,d.d.,andtreasurybillsoftheRepublicofsloveniawerecalculated

onthebasisoftheaverageyieldtomaturityofcomparableliquidbondsandtreasurybills

respectively.ThevaluationmodelappliedtothebondsofsIJ,d.d.,includesthebondsof

ThyssenKruppaG,arcelorMittals.a.andsmurfitKappaGroupPlC,andthemodelapplied

tothetreasurybilloftheRepublicofsloveniaincludesthetreasurybillsoftheRepublicof

Italy,PortugalandtheKingdomofspain.level2alsoincludesinvestmentsofModrazavarov-

alnicainthesharesofthecompanieselektroGorenjskaKranj,elektroMaribor,elektroCelje

andelektroPrimorskatotallingeUR2,228,571.Theyarevaluedbasedonthemarketdataof

comparablecompanieslistedonthestockmarket.ThetotalcapitalapproachandtheeV/

ebITDamultiplierwereappliedinthevaluation.

level2comprisesinvestmentsofKapitalskadruæbainthesharesofelektroGorenjska,d.d.,

elektroPrimorska,d.d.,elektroCelje,d.d.,elektroljubljana,d.d.,elektroMaribor,d.d.,

andGeoplin,d.o.o.,whosefairvaluehasbeenestimatedbasedonthemarketcomparison

methodusingthecomparablelistedcompanies.adjustedmultiplierswereused.Thesecond

groupdoesnotincludetheassetsownedbyKapitalskadruæba,d.d.,valuedbasedonthe

pricesadoptedfromthebloombergsystem.

Level 3

level3includestheassets,thefairvalueofwhichisdeterminedusingownvaluationmodels

takingintoaccountsubjectivevariablesthatarenotpubliclyavailableonmarkets.Moreo-

ver,level3alsoincludesdebtinstrumentsownedbyModrazavarovalnica,valuedusinga

valuationtechnique(takingintoaccountlevel3inputs),debtsecurities,theCbbTpriceof

whichisnotavailableonan(in)activemarketandwhosevalueisdeterminedusingavalua-

tiontechnique(takingintoaccountlevel3inputs)aswellasdebtinstrumentsvaluedonthe

basisoftheinputprovidedbythirdparties.level3includesthesharesofsomeslovenian

companiesownedbyModrazavarovalnica,inthetotalamountofeUR1,685,109.Themajor

aretheinvestmentsinHit,d.d.,elektroljubljana,d.d.,andCerta,d.d.Thevalueofthesaid

investmentswasprimarilysetbythepresentvalueofexpectedfreecashflowmodel.Thefair

valueoftheinvestmentinHit,d.d.,waseUR780,656asat31December2015.Thevalua-

tionwasmadebasedona7.8%discountrate.ThefairvalueofthesharesofCerta,d.d.,was

eUR280,566asat31December2015;thevaluationwasmadebytakingintoaccounta2%

long-termgrowthrateanda15%discountrate.Thefairvalueoftheinvestmentinelektro

ljubljana,d.d.,waseUR260,126asat31December2015;thevaluationwasmadebytaking

intoaccountan8.56%discountrateanda2.5%long-termgrowthrate.level3alsoincludes

depositsofModrazavarovalnicaintheamountofeUR34,030,013andcommercialpapers

Mel08andMel09totallingeUR3,443,468.Thepricesofcommercialpapersarecalculated

basedonthetheoretical(amortised)valueofcommercialpapersinviewoftheinterestrate

applicabletotherelevantpurchase.In2015,Modrazavarovalnicareclassifieddepositsand

commercialpaperstolevel3,butthishadnoeffectontheoperatingresult.Theinvestment

insloveniangovernmentbondsRs33wasreclassifiedfromlevel3tolevel2.

Thefairvaluevaluationoflevel3assetsownedbyKapitalskadruæbawasmadebyapply-

ingtheincome-basedapproach,thediscountedfreecashflowmethod,andtheasset-based

approachaccordingtotheregularliquidationmethod.

Moreover,level3fairvalueincludesallassetswherefairvalueofdebtfinancialinstruments

isdeterminedusingthebloombergGenericprices(bGn)andthebloombergValuationser-

vicesprices(bVal).Thismethodologyandassumptionsofpricecalculationarenotavailable

tothepublic,soalltheseassetsareclassifiedintolevel3fairvaluehierarchy.Thefairvalue

130

ofcertainsharesisdeterminedusingthevaluationmodelstakingintoaccountsubjective

variablesthatarenotpubliclyavailableonmarkets.Certaindataforvaluationareobtained

formthebloombergsystemandotherfinancialsources,whereasinsomecasesanimpor-

tantsourceisthedataanddocumentsaboutthepastandexpectedfutureperformancepro-

videdbycompanies.

ThefairvalueofordinarysharesofHit,d.d.,wasestimatedbyapplyingtheincome-based

approach,andusingthediscountedfreecashflowmethod.Theestimatedfreecashflowwas

discountedatan8.80%discountrate.Theremaininggrowthrateofnormalisedfreecash

flowis2%.TheestimatedfairvalueofthesharesofPomurskamlekarna,d.d.,iseUR0.00,

becausethecompanyisincompulsorysettlementproceedingsandthefinancialrestruc-

turingplanenvisagesdeletionofownershipofexistingshareholders.Thefairvalueofthe

equitystakeinGospodarskorazstaviπËe,d.o.o.,wasestimatedbyapplyingtheincome-

basedapproach,usingthediscountedfreecashflowmethod,andtheasset-basedapproach

tocompanyvaluation,accordingtotheregularliquidationmethod.Theestimatedfreecash

flowwasdiscountedatan7.8%discountrate.Theremaininggrowthrateofnormalisedfree

cashflowis2%.asignificantiteminthevaluationofGospodarskorazstaviπËe,d.o.o.,is

thevalueofthecompany’srealestate,whichwasclassifiedasunnecessaryproperty.The

estimatedvalueofthisrealestateissetusingtheregularliquidationmethod.Theliquida-

tionperiodisexpectedtolastfor24monthsandrisk-freeinterestrateusedfordiscounting

is1.7%.ThefairvalueofthesharesofPerutninaPtuj,d.d.,wasestimatedbyapplyingthe

income-basedapproach,andusingthediscountedfreecashflowmethod.Theestimatedfree

cashflowwasdiscountedatan9.87%discountrate.Theremaininggrowthrateofnormal-

isedfreecashflowis2%.ThefairvalueofthesharesofTermeolimia,d.d.,wasestimated

byapplyingtheincome-basedapproach,andusingthediscountedfreecashflowmethod.

Theestimatedfreecashflowwasdiscountedatan8.46%discountrate.Theremaining

growthrateofnormalisedfreecashflowis2%.ThefairvalueofthesharesofTalum,d.d.,

wasdeterminedusingtheincome-basedmethod,bymeansofthemethodofdiscountedfree

cashflow,partlycorrectedbytheestimatedsharevalueusingthecomparablelistedcompa-

niesmethod.Thediscountrateforfreecashflowintheincome-basedvaluationmethodis

9.90%.Theremaininggrowthrateofnormalisedfreecashflowis2%.Thefairvalueofthe

sharesofTKIHrastnik,d.d.,wasestimatedbyapplyingtheincome-basedapproach,and

usingthediscountedfreecashflowmethod.Theestimatedfreecashflowwasdiscountedat

an9.07%discountrate.Theremaininggrowthrateofnormalisedfreecashflowis2%.The

estimatedfairvalueoftheholdinginGIo,d.o.o.−inliquidation,wasestimatedbyapplying

theasset-basedapproachaccordingtotheregularliquidationmethod.Thefairvalueofthe

equitystakeinelanInventa,d.o.o.,wasestimatedbyapplyingtheincome-basedapproach,

usingthediscountedfreecashflowmethod.Theestimatedfreecashflowwasdiscountedat

an9.47%discountrate.Theremaininggrowthrateofnormalisedfreecashflowis1.5%.The

investmentsinthesharesofModrazavarovalnicaandloterijaslovenije,d.d.,aredisclosed

atcost,becauseasufficientlyreliablevaluationisnotpossibleduetocertainexpectedlegis-

lativeamendmentsthatcouldsignificantlyinfluencetheestimatedvalueofthecompanies.

Fair value hierarchy as at 31 December 2014

in EUR 000

Level 1 Level 2 Level 3 Total


40,395 10,176 2,305 52,876


Total 745,442 23,398 224,289 993,129

131

Level 1

level1comprisesassetswhosefairvalueisdeterminedbasedonquotedpricesofidentical

assetsonanactivemarket.ThisgroupincludestheassetsofModrazavarovalnica,valued

basedonthepricesobtainedfromthebloombergsystem,ifthemarketvalueverification

modelindicatedthatmodelpricesaresetonthebasisofmarketdata.Thepricesobtained

fromthebloombergsystem,arenotdirectlythepricesatwhichtheinsurancecompany

could,onthevaluationdate,sellsecurities,buttheirapplicationprovidesforobjectiveevalu-

ationandthepricereflectstheactualmarkettransactionsandisanappropriateindicatorof

thepricethattheinsurancecompanywouldgainuponthesaleofthebondonthemarket.

Theproviders’pricesdonotmateriallydifferfromthepriceapplied.assetswereclassified

intolevel1,ifthepricewasentirelybasedonmarketdataandinmorethan50%ondirectly

enforceablequotations.

ThisgroupdoesnotincludetheassetsownedbyKapitalskadruæba,d.d.,valuedbasedon

thepricesadoptedfromthebloombergsystem.

Level 2

level2assetsincludetheassetsvaluedbasedoncomparablemarketdata(otherthanquoted

pricesofidenticalassets)obtainedindirectlyordirectlyforanidenticalorsimilarasset;the

basisofvaluationistheyieldcurveofcomparablefinancialassetswithsimilarmaturityand

creditrisk.

Moreover,level2alsoincludestheinvestments indebt instrumentsownedbyModra

zavarovalnica,valuedbasedonthedatafromthebloombergsystem,forwhichthesaid

marketvalueverificationmodelindicatedthatthepricewasmainlysetonthebasisofmar-

ketdataandinlessthan50%basedondirectlyenforceablequotations.Investmentsindebt

instrumentsofModrazavarovalnica,classifiedintolevel2basedonthemarketvalueveri-

ficationmodelaccountforeUR8,118,341.on31December2014,theseinvestmentswere

transferredfromlevel1.Thistransferdidnothaveaneffectontheprofit/loss.amongthe

investmentsofModrazavarovalnica,thebCe14bondwasvaluedateUR2,053,337onthe

basisofcomparablemarketdata.ThepriceofthebCe14bondiscalculatedaccordingtothe

discountrateofbondsfromacomparableindustry,creditratingandcurrency.Thediscount

rateiscalculatedbasedonaveragecreditspreadsofcomparablebondsandthecompara-

bleeuroswapcurvetakingintoaccountthemodifiedtermofthebCe14bond.level2also

includesassetsinvestmentsofModrazavarovalnica,d.d.,inthesharesofthecompanies

elektroGorenjskaKranj,elektroMaribor,elektroCeljeandelektroPrimorskatotallingeUR

1,856,877.Theyarevaluedbasedonthemarketdataofcomparablecompanieslistedonthe

stockmarket.ThetotalcapitalapproachandtheeV/ebITDamultiplierwereappliedinthe

valuation.on31December2014,theseinvestmentsownedbyModrazavarovalnicawere

reclassifiedfromlevel3tolevel2.Thisreclassificationdidnothaveaneffectontheprofit/

loss.InadditiontoallthesaidinvestmentsownedbyModrazavarovalnica,level2also

includescommercialpapersGen02andIMl01wortheUR4,172,352.bothinvestmentsare

ownedbyModrazavarovalnicaThepricesarecalculatedbasedonthetheoretical(amortised)

valueofcommercialpapersinviewoftheinterestrateapplicabletotherelevantpurchase.

ThesecondgroupdoesnotincludetheassetsownedbyKapitalskadruæba,d.d.,valued

basedonthepricesadoptedfromthebloombergsystem.

Thevaluationoflevel2fairvaluewasappliedtocertainbondsownedbyKapitalskadruæba,

d.d.,accordingtothemarketcomparisonvaluationmethod,involvingacomparisonwiththe

comparablelistedbonds.Thevaluationofcertainlevel2shareswasmadeusingthemethod

involvingacomparisonwiththecomparablelistedcompanies.

132

Level 3

level3includestheassetswhosefairvaluewasassessedbasedonownvaluationmodels,

takingintoaccountsubjectivevariablesthatarenotpubliclyavailableonmarkets,andthose

investmentsindebtinstrumentsofModrazavarovalnica,whichhavebeenvaluedonthebasis

ofdatafromthebloombergsystem,wherethesaidmarketvalueverificationmodelindicated

thatthepriceswerebasedonunobservableinputs.

onthebasisofthemarketvalueverificationmodel,level3comprisedbondsofsomeslove-

nianbanksandilliquidsloveniangovernmentbondsownedbyModrazavarovalnica,totalling

eUR7,777,094.on31December2014,thesebondsweretransferredfromlevel1.Thisreclas-

sificationdidnothaveaneffectontheprofit/loss.level3alsoincludesthesharesofsome

sloveniancompaniesownedbyModrazavarovalnica,inthetotalamountofeUR1,552,128.

ThemajoraretheinvestmentsinHit,d.d.,elektroljubljana,d.d.,andCerta,d.d.Thevalueof

thesaidinvestmentswasprimarilysetbythepresentvalueofexpectedfreecashflowmodel.

ThefairvalueoftheinvestmentinHit,d.d.,waseUR780,656asat31December2014.The

valuationwasmadebasedona7.8%discountrate.ThefairvalueofthesharesofCerta,d.d.,

waseUR280,566asat31December2014;thevaluationwasmadebytakingintoaccounta

2%long-termgrowthrateanda15%discountrate.Thefairvalueoftheinvestmentinelektro

ljubljana,d.d.,waseUR260,126asat31December2014;thevaluationwasmadebytaking

intoaccountan8.56%discountrateanda2.5%long-termgrowthrate.

Thefairvaluevaluationoflevel3assetsinvolvingthesharesownedbyKapitalskadruæba,d.

d.,wasmadebyapplyingtheincome-basedapproach,thediscountedfreecashflowmethod,

andtheasset-basedapproachaccordingtotheregularliquidationmethod.

Inadditiontoalltheseassets,level3fairvalueincludesallassetsownedbyKapitalska

druæba,d.d.,wherefairvalueofdebtfinancialinstrumentsisdeterminedusingthebloomb-

ergGenericprices(bGn)andthebloombergValuationservicesprices(bVal).Thismethod-

ologyandassumptionsofpricecalculationarenotavailabletothepublic,soalltheseassets

ownedbyKapitalskadruæba,d.d.,areclassifiedintolevel3fairvaluehierarchy.

ThefairvalueofsharesownedbyKapitalskadruæba,d.d.,isdeterminedusingthevalua-

tionmodelstakingintoaccountsubjectivevariablesthatarenotpubliclyavailableonmar-

kets.Certaindataforvaluationareobtainedformthebloombergsystemandotherfinancial

sources,whereasinsomecasesanimportantsourceisthedataanddocumentsaboutthe

pastandexpectedfutureperformanceprovidedbycompanies.

In2014,assetsownedbyKapitalskadruæba,d.d.,whosefairvaluewascalculatedbasedon

theassumptionsstatedbelowwereimpairedonthebasisofthevaluationsmade.Thefair

valueofordinarysharesofHIT,d.d.,wasestimatedbyapplyingtheincome-basedapproach,

andusingthediscountedfreecashflowmethod.Theestimatedfreecashflowwasdis-

countedatan8.6%discountrate.Theremaininggrowthrateofnormalisedfreecashflowis

2%.ThefairvalueofthesharesofPomurskemlekarne,d.d.,wasestimatedbyapplyingthe

income-basedapproach,andusingthediscountedfreecashflowmethod.Theestimated

freecashflowwasdiscountedatan8.9%discountrate.Theremaininggrowthrateofnor-

malisedfreecashflowis2%.ThefairvalueoftheequitystakeinGospodarskorazstaviπËe,

d.o.o.,wasestimatedbyapplyingtheincome-basedapproach,usingthediscountedfree

cashflowmethod,andtheasset-basedapproachtocompanyvaluation,accordingtothe

regularliquidationmethod.Theestimatedfreecashflowwasdiscountedatan7.8%discount

rate.Theremaininggrowthrateofnormalisedfreecashflowis2%.asignificantiteminthe

valuationofGospodarskorazstaviπËe,d.o.o.,isthevalueofthecompany’srealestate.The

valuationofrealestatewasmadebyusingtheincome-basedmethod,theincomecapitali-

sationapproachandthedevelopmentmethod.Thedirectsalescomparisonapproachwas

alsousedinthevaluationofrealestate.Thediscountrateof8.71%wasappliedunderthe

133

incomecapitalisationapproach.Thediscountratesappliedinthedevelopmentmethodwere

10.19%,8.71%and7.64%.ThefairvalueofthesharesofelektroGorenjska,d.d.,wasesti-

matedbyapplyingthemarketcomparisonvaluationmethod,involvingacomparisonwith

thecomparablelistedcompanies.ThefairvalueofthesharesofelektroPrimorska,d.d.,was

estimatedbyapplyingthemarketcomparisonvaluationmethod,involvingacomparisonwith

thecomparablelistedcompanies.ThefairvalueofthesharesofPDP,d.d.,wasestimatedby

applyingtheasset-basedapproachaccordingtotheregularliquidationmethod.Thecompa-

niesownedbyPDP,d.d.,werevaluedbyapplyingtheincome-basedapproach,andusing

thediscountedfreecashflowmethod.ThefairvalueofthesharesofCimos,d.d.,wasesti-

matedbyapplyingtheasset-basedapproachtocompanyvaluation.Compulsorysettlement

proceedingswereinitiatedagainstthecompanyon3June2014.Thereisahighprobability

thattheexistingshareholderswillbeexpropriatedinthescopeofthecompulsorysettlement

proceedings.ThereportontheoperationsoftheinsolventdebtorCimos,d.d.,showsthatin

2014thecompanycontinuedoperatingatalossandthecompany’sequityasat30novem-

ber2014waseUR-131.7million.

Table38: Effective interest rates by asset group

2015 2014

Financial assets held to maturity 3.37% 4.60%

Financial investments in loans and deposits 5.16% 1.83%

Noteno.20

Loans to others

in EUR 000


31. 12. 2015 31. 12. 2014 31. 12. 2015 31. 12. 2014 31. 12. 2015 31. 12. 2014

Loans to others 59,359 9,380 61,180 107,432 120,539 116,812

Total 59,359 9,380 61,180 107,432 120,539 116,812

asat31December2015,loansbyKapitalskadruæbatoothersconstituteddepositswith

abanka,d.d.,Gorenjskabanka,d.d.,Hypoalpe-adria-banka,d.d.,novaKreditnabanka

Maribor,d.d.,novaljubljanskabanka,d.d.,ljubljana,sberbank,d.d.,UniCreditbanka,d.

d.,Delavskahranilnica,d.d.,andHranilnicalon,d.d.

asat31December2015,loansbyModrazavarovalnicatoothersconstituteddepositswith

banksinslovenia.

Noteno.21

Operating receivables

in EUR 000


31. 12. 2015 31. 12. 2014 31. 12. 2015 31. 12. 2014 31. 12. 2015 31. 12. 2014

Operating trade receivable 0 0 1,227 1,660 1,227 1,660

Operating receivables due from others

103 53 4,917 724 5,020 777

Total 103 53 6,144 2,384 6,247 2,437

134

eUR103thousandofnon-currentoperatingreceivablesofKapitalskadruæbaduefrom

othersrepresenteUR67thousandpaidintothereservefundforthemaintenanceofreal

estate,receivablesfromacompanyincompulsorysettlementproceedingsequallingeUR

34thousand,andeUR2thousandofloansgrantedtobuyersofformerstate-ownedapart-

ments,whichKapitalskadruæbaobtainedundertheDenationalizationactandsoldunder

theHousingact.

short-termoperatingtradereceivablesofeUR1,227thousandrelatetooperatingreceivables

fromcustomersofKapitalskadruæbaequallingeUR819thousandandoperatingreceivables

fromcustomersofModrazavarovalnicad.d.totallingeUR408thousand.

short-termoperatingreceivablesfromothersofeUR4,917thousandrelatetooperating

receivablesfromothersofKapitalskadruæbaequallingeUR2,043thousandandoperating

receivablesfromothersofModrazavarovalnicatotallingeUR2,874thousand.

TheGrouphasnovalueadjustmentsofreceivables.

TheGrouphasnocollateralisedreceivables.

TheGroup’sreceivablesarenotsubjecttomaterialrisk.

Breakdown of operating trade receivables by maturity

in EUR 000

31. 12. 2015 Outstanding Up to 30 daysFrom 31 to

60 daysFrom 61 to

90 daysFrom 91 to

180 daysFrom 181 to

365 days

1,227 1,203 1 1 0 0 22

Noteno.22

Cash and cash equivalents

in EUR 000

31. 12. 2015 31. 12. 2014

Bank balances and cash on hand 44,129 1,952

Call deposit 17 35,088

Total 44,146 37,040

Noteno.23

Equity

31. 12. 2015 31. 12. 2014

Share capital (000 EUR) 364,810 364,810

Number of ordinary shares 874,235 874,235

TheGrouphasnotreasuryshares.ThesharecapitalofeUR364,810thousandisdividedinto

874,235ordinary,registered,non-parvalueshares.eachsharehasthesameinterestandthe

attributedamountinthesharecapital.

135

Noteno.24

Capital surplus

in EUR 000

Capital surplus

1. 1. 2015 215,953

Increase in capital surplus 460

31. 12. 2015 216,413

In2015,thecapitalsurplusincreasedbyeUR460thousandonaccountofadditionalassets

receivedinaccordancewiththeownershipTransformationofCompaniesact.asat31

December2015,capitalsurplustotalledeUR216,413thousand.

Noteno.25

Revenue reserves

asat31December2015,theKapitalskadruæbaGroupreportednootherrevenuereserves.

Noteno.26

Financial liabilities

asat31December2015,theKapitalskadruæbaGrouphadnofinancialliabilities.

Noteno.27

Operating liabilities

in EUR 000


31. 12. 2015 31. 12. 2014 31. 12. 2015 31. 12. 2014 31. 12. 2015 31. 12. 2014

Operating liabilities to suppliers

0 0 3,412 6,169 3,412 6,169

Operating liabilities from advances

12 6 0 6 12 12

Payables to the state 0 0 131 2,792 131 2,792

Other operating liabilities

36 12 562 520 598 532

Total 48 18 4,105 9,487 4,153 9,505

long-termoperatingliabilitiesfromadvancesintheamountofeUR12thousandrelateto

securitydepositsfromthelesseeofbusinesspremisesofKapitalskadruæba.

otherlong-termoperatingliabilitiesofModrazavarovalnicaintheamountofeUR36thou-

sandcompriseliabilitiesforthepaymentofvariableremunerationoftheManagement

boardmembers.

short-termoperatingliabilitiesintheamountofeUR4,105thousandcompriseliabilities

todomesticandforeignsuppliers,liabilitiesfromadvancesreceivedandothershort-term

operatingliabilitiesmainlyincludingliabilitiestoemployees,thestateandothershort-

termliabilities.

136

in EUR 000

31. 12. 2015Maturity of up to 1 year 1 to 2 years 2 to 5 years Over 5 years Total

Operating liabilities to suppliers 3,412 0 0 0 3,412

Operating liabilities from advances 0 0 12 0 12

Payables to the state 131 0 0 0 131

Other operating liabilities 562 36 0 0 598

Total 4,105 36 12 0 4,153

Noteno.28

Liabilities included in disposal groups

in EUR 000

31. 12. 2015 31. 12. 2014

Liabilities included in disposal groups 0 92,784

liabilitiesincludedindisposalgroupstotallingeUR92,784thousandfrom2014comprise

liabilitiesfromnon-currentassetsheldforsaleinthenext12months.

Noteno.29

Provisions and long-term accrued costs and deferred revenue

in EUR 000

Provisions for pensions and similar obligations

Other provisions

Technical provisions Total

1. 1. 2015 315 10,657 127,263 138,235

Newly established during the year 17 7,813 12,237 20,067

Utilised provisions -8 0 0 -8

Reversal of provisions 0 -11 0 -11

31. 12. 2015 324 18,459 139,500 158,283

In2015,theKapitalskadruæbaGroupmadeprovisionsforseverancepayonretirementandjubi-

leeawardsintheamountofeUR17thousandandusedeUR8thousandofprovisions.at2015

year-end,provisionsforterminationbenefitsandjubileeawardsamountedtoeUR324thousand.

Provisionsforterminationbenefitsandjubileeawardsarecalculatedonthebasisofexpected

employeefluctuation,yearsofserviceandexpectedyearsuntilretirement,takingintoaccount

individualandcollectiveemploymentcontractsaswellastheCompany’sinternalregulations.

In2015,theKapitalskadruæbaGroupcreatedeUR4,993thousandofprovisionsfornon-

achievementofguaranteedreturn,eUR497thousandofprovisionsforcontingentliability

arisingfromIndemnityagreement,eUR524thousandofprovisionsfortestingtheadequacy

ofprovisions,andprovisionsintheamountofeUR1,799thousandforthedeficitofModra

zavarovalnicaKsPPsassets,whichisnotdisclosedinotheroperatingexpenses.

ReversalofotherprovisionsintheamountofeUR11thousandreferstotheprovisionsfor

onerouscontractsofKapitalskadruæba.InlinewiththeprudenceprincipletheGroupestab-

lishesprovisionsforlegalactionstartedagainstitandlegaldisputes,onthebasisofthebest

estimateofrecoverability.

137

asat31December2015,thetechnicalprovisionsofModrazavarovalnica,d.d.,comprised

mathematicalprovisionsoftheKsPPs(GuaranteefundofthefirstPensionInsurancefund)

andtheKsMR(GuaranteefundModrarenta)intheamountofeUR139,500thousand,of

whichmathematicalprovisionsoftheKsPPstotaleUR99,579thousandandoftheKsMR

eUR39,921thousand.

Table39: Present gross value of future payments of the KS PPS and the KS MR

in EUR 000

Types of payments 31. 12. 2015 31. 12. 2014

KS PPS 96,520 95,602

KS MR 39,920 27,230

Total 136,440 122,832

TotalpresentgrossvalueoffuturepaymentsofalltypesofpensionannuitiesoftheKsPPs

deviatesfromthemathematicalprovisionsoftheKsPPs,whichamounttoeUR98,735thou-

sand,bytheamountoftheprovisionsfortheequalisationofyieldexperienceintheamount

ofeUR2,215thousand.

ThetotalpresentgrossvalueoffuturedisbursementsofalltypesofKsPPspensionannui-

tiesstoodateUR96,520thousandasat31December2015.Thecalculationofthevalue

offuturedisbursementsusesannuitytablesDaV2004Randthestatutorytechnicalinter-

estrateamountingto1%.anypersoninsuredwhoacquirestherighttoannuitycanselect

oneofavailableannuityproducts,thusexercisinghis/herrightandfinalisethemethodof

enjoymentoftheright.anypersoninsuredwithmorethan2,000pointsontheirinsurance

policycanchoosebetweenpensionannuityforlifeandpensionannuitywithguaranteed

paymentperiodof5,10or15years.Ifthepersoninsureddiesbeforetheexpiryofthe

guaranteedpaymentperiod,theannuitiesarepaidtothepersonappointedbytheinsured

person(beneficiary)orhisorherheirs.apersoninsuredholdinglessthan2,000pointscan

choosetoreceiveamonthlypensionannuityoraone-offpaymentofthepensionannu-

ity,whileaninsuredpersonholdingbetween2,001and5,000pointscanopttoreceivean

annualpensionannuity.

MathematicalprovisionsoftheModrarentaGuaranteefundarecalculatedpursuanttothe

Insuranceact,technicalstandardsandtechnicalbases.Mathematicalprovisionsforthe

annuityinsuranceproductarecalculatedprospectively,separatelyforeachinsurancecon-

tract.GermanannuitytablesDaV1994Rwereappliedinthecalculation.

annuityinsurancemaybetakenoutinanumberofformats.TheclassicModrarentaispaid

outmonthlyfromtheeffectivedateofannuityinsurancetotheendoftheinsuredperson’s

lifeandcannotbeinherited.TheclassicModrarentawithguaranteeispaidoutmonthlyfrom

thebeginningofthevalidityofannuitytotheendoflife.Intheeventofaninsuredperson’s

deathpriortotheexpiryoftheguaranteeddisbursementperiod,theannuityispaidtotheir

beneficiaryorheiruntiltheexpiryoftheguaranteedperiod.

acceleratedModrarentawithfullguaranteeispaidoutfromtheeffectivedateofannuity

insuranceuntiltheendoftheinsuredperson’slife.Duringtheguaranteeddisbursement

period,theannuityishigherandispaidoutmonthly,afterwhichitconvertstoannualpay-

mentsofthesameamount.Intheeventofaninsuredperson’sdeathpriortotheexpiryof

theguaranteeddisbursementperiod,theannuityispaidtotheirbeneficiaryorheiruntilthe

expiryoftheguaranteedperiod.

138

acceleratedModrarentawithlimitedguaranteeispaidoutfromthebeginningofthevalid-

ityofannuitytotheendoflife.Theannuityishigherduringmonthlypayment,afterwhich

itconvertstoannualpaymentsofeUR12.Intheeventofaninsuredperson’sdeathpriorto

theexpiryoftheguaranteeddisbursementperiod,theannuityispaidtotheirbeneficiaryor

heiruntiltheexpiryoftheguaranteedperiod.Theguaranteedperiodisayearshorterthan

theperiodofmonthlypayments.

Liability adequacy

Modrazavarovalnicacheckstheadequacyofliabilitiesarisingfromtheconcludedinsurance

contractsorthesufficiencyofestablishedmathematicalprovisionsbyperformingthelaT

−liabilityadequacyTest.Thesechecksarelimitedtoannuityinsurancecontracts.Thetest

involvesthesettingofthebestliabilityestimateasthesumofthepresentvalueofexpected

cashflows(paymentsofannuitiesandinsurancecompany’scosts).Thisestimateiscom-

paredtothevalueofmathematicalprovisionsdeterminedaccordingtotherulesstatedin

insurance-technicalbasesfortherespectiveinsurance.

Theliabilityadequacytestcarriedoutperindividualinsurancecontractbytakingintoaccount

themonthlydynamicsreliedonthefollowingassumptions:

�� theexpectedmortalitywassetaccordingtoGermanannuitymortalitytablesD1994R,

which,giventhepastexperience,suitablyindicatetheactualmortality;

�� earlyterminationswerenotexpected,astheyarenotpossibleaccordingtotheprovisions

ofinsurancecontracts;

�� theexpectedcostsequaltheaccruedcosts;

�� thediscountratewasdeterminedbasedontheyieldcurveofsloveniandebtsecurities.

TheliabilityadequacyTestasat31December2015showedthatmathematicalprovisions

forKsPPsareadequate,whereasadeficitofeUR524thousandwasdeterminedforKsMR.

Change in interest rates/return

Table40: Change in interest rates/return for the KS PPS as at 31 December 2015

in EUR 000

Change in returnIncrease in return

by 0.25 percentage pointDecrease in return

by 0.25 percentage point

Change in liabilities (provisions) -2,928 3,084

Table41: Change in interest rates/return for the KS PPS as at 31 December 2014

in EUR 000





Table42: Change in interest rates/return for the KS MR as at 31 December 2015

in EUR 000




Change in liabilities (provisions) -519 539

139

Table43: Change in interest rates/return for the KS MR as at 31 December 2014

in EUR 000





Change in mortality

Table44: Change in mortality as at 31 December 2015 for KS PPS

in EUR 000

Change in mortalityIncrease in mortality

probability by 10%Decrease in mortality

probability by 10%


a10%increaseinmortalityprobabilitywouldresultinadecreaseinliabilitiesbyeUR3,194

thousand.Thechangeintheamountofliabilitiesduetothechangeinmortalitywascalcu-

latedbasedontheDaV2004Rannuitytables.

Table45: Change in mortality as at 31 December 2014 for the KS PPS

in EUR 000



probability by 10%


a10%increaseinmortalityprobabilitywouldresultinadecreaseinliabilitiesbyeUR3,093



Table46: Change in mortality as at 31 December 2015 for KS MR

in EUR 000



probability by 10%


a10%increaseinmortalityprobabilitywouldresultinadecreaseinliabilitiesbyeUR244



Table47: Change in mortality as at 31 December 2014 for the KS MR

in EUR 000



probability by 10%


a10%increaseinmortalityprobabilitywouldresultinadecreaseinliabilitiesbyeUR126



140

Off-balance sheet receivables

Inseptember2015,accordingtotheCommissionDecisionsa.26379of19september2012,Kapitalskadruæbareceivedfromelan,d.o.o.,repaymentofstateaidintheamountofeUR6,954thousandandrecogniseditasassetandrevenueintheincomestatement.TheCom-panypostedoff-balancesheetliabilitytoelan,d.o.o.,intheamountofeUR6,457thousand,forthecontingentliabilityarisingfromtherepaymentoftherefundedstateaidthatwouldhappeniftheGeneralCourtoftheeuropeanUniondeclaredthesaiddecisionnullandvoid.

17.3.3 Managingrisksarisingfromfinancialassets

allriskstowhichtheGroupisexposed,andtheriskmanagementmeasuresandcriteria,aredescribedinchapter17.2accountingpolicies.ItisestimatedthattheGroupisnotexposedtocredit,market(interestrate,currency,price)andliquidityriskarisingfromfinancialassets.

Creditrisk

Creditriskisrelatedtoinvestmentsindebtinstruments(investmentsinbonds,treasurybills,commercialpapers,certificatesofdeposit,deposits,cashassets)andentailsthepossibilityofinvestmentsbeingonlypartlyrepaidornotatall.assets’andbusinesspartners’creditrat-ingisdeterminedbyratingsassignedbystandard&Poor’s,fitchandMoody’s,andin-houseanalyses.Thehighestexposureequalsthebookvalueoffinancialinstruments.equitysecuri-

tiesareexemptfromtheanalysis,becausetheydonotentaildirectcreditrisk.

Table48: Exposure of financial assets to credit risk, excluding any collateral as at 31 December 2015

in EUR 000

Financial asset group

Secure investments − high rating of

the borrower

Medium secure investments −

medium rating of the borrower

Less secure investments Total

Financial assets at fair value through profit or loss

778 12,909 13,059 26,746

Financial assets held to maturity 20,155 76,212 2,111 98,478


Loans 0 800 119,739 120,539

Cash and cash equivalents 0 0 44,146 44,146

Total 32,356 192,523 200,305 425,184

Table49: Exposure of financial assets to credit risk, excluding any collateral as at 31 December 2014

in EUR 000

Financial asset group

Secure investments − high rating of

the borrower

Medium secure investments −

medium rating of the borrower

Less secure investments Total


542 11,626 11,104 23,273

Financial assets held to maturity 13,417 56,462 201 70,080


Loans 0 19,830 96,982 116,812

Cash and cash equivalents 16 2,540 34,485 37,040

Total 30,117 198,080 161,272 389,469

141

financialassetswereclassifiedintothestatedgroupsbasedoncreditratings.secureassets

compriseallassetswiththecreditratingaaatoa-,mediumsecureassetsincludeassets

withthecreditratingbbb+dobbb-,whereaslesssecureassetscomprisetheassetswith

creditratingunderbbb-andassetswithoutacreditratingassignedbyarenownedrating

agency.lesssecureassetsmainlyincludeassetsofslovenianissuers.

loansrepresentdepositsinbanksinslovenia.Depositsareclassifiedintotheratingclassof

thebankwithwhichtherespectivedeposithasbeenmade.

Table50: Geographical concentration of credit exposure of financial assets

in EUR 000

Region 31. 12. 2015 31. 12. 2014

Slovenia 323,394 307,063

Other countries 101,790 82,406

Total 425,184 389,469

Theshareoffinancialassetsexposedtocreditriskinsloveniadecreasedfrom79%to76%

in2015.

Currencyrisk

Table51: Currency structure of financial assets

in EUR 000

Currency 31. 12. 2015 31. 12. 2014

Assets denominated in EUR 994,345 1,080,161

Assets denominated in USD 141,636 130,898

Assets denominated in other currencies 5,177 6,002

Total 1,141,158 1,217,061

on31December2015,87.1%offinancialassetsweredenominatedineuros,12.4%inUs

dollarsand0.5%inothercurrencies.

Table52: Currency risk of financial assets as at 31 December 2015

in EUR 000

USD exchange rate fluctuation in % Impact on the income statement Impact on capital

+/- 10% +/- 428 +/- 13,736

Table53:Currencyriskoffinancialassetsasat31December2014

in EUR 000

USD exchange rate fluctuation in % Impact on the income statement Impact on capital

+/- 10% +/- 159 +/- 12,931

Interestraterisk

Interestrateriskisrelatedtoinvestmentsthatrespondtochangesinmarketinterestrates.

Theseincludeassetsofwhichrevenuesarerelatedtothevariableinterestrateaswellas

assetsofwhichinterestincomeisrelatedtoafixedinterestrate,buttheirmarketvalue

142

changesuponthechangeinthemarketinterestrates.owingtothedecreaseininterestrates

theassetswereexposedtoreinvestmentrisk.Theexposuretointerestrateriskisregularly

measuredbythemodifieddurationindicator.

Table54: Sensitivity analysis of investments according to changes in market interest rates as at 31 December 2015 −

change in interest rates by 50 basis points

in EUR 000

Financial asset groupChange in

interest rateSensitivity of

interest incomeImpact on fair value Total


+/- 0.5% +/- 3 -/+ 598 -/+ 595

Financial assets held to maturity +/- 0.5% +/- 0 +/- 0 +/- 0

Available-for-sale financial assets +/- 0.5% +/- 4 -/+ 3,959 -/+ 3,955

Loans and receivables +/- 0.5% +/- 0 +/- 0 +/- 0

Total +/- 7 -/+ 4,557 -/+ 4,550

Table55: Sensitivity analysis of investments according to changes in market interest rates as at 31 December 2014 −

change in interest rates by 50 basis points

in EUR 000

Financial asset groupChange in

interest rateSensitivity of

interest incomeImpact on fair value Total


+/- 0.5% +/- 0 -/+ 1,121 -/+ 1,121

Financial assets held to maturity +/- 0.5% +/- 0 +/- 0 +/- 0

Available-for-sale financial assets +/- 0.5% +/- 12 -/+ 4,888 -/+ 4,876

Loans and receivables +/- 0.5% +/- 0 +/- 0 +/- 0

Total +/- 12 -/+ 6,009 -/+ 5,997

Thecalculationofthesensitivityofinterestincomewasmadebytakingintoaccountthe

investmentssubjecttovariableinterestrate,whereastheimpactonfairvaluewascalculated

bytalkingintoaccounttheinvestmentssubjecttofixedinterestrate.Ifmarketinterestrates

changeby50basispoints,thevalueofthefund’sassetswouldchangebyeUR4,550thou-

sandasat31December2015.

Marketrisk

Marketriskrepresentsthepossibilityofthevalueofequitysecuritiestochangeduetothe

changesinmarketindexesandmarketpricesofspecificequityinstruments.Thebetaindi-

catoriscalculatedforequitysecurities,asameasureofsystematicrisk.Thevalueatrisk

indicator(VaR)isalsomonitored.

Table56: Market risk of the equity securities portfolio as at 31 December 2015

in EUR 000

Index change in % Impact on the income statement Impact on capital

+/- 10% +/- 1,707 +/- 57,794

143

Table57: Market risk of the equity securities portfolio as at 31 December 2014

in EUR 000

Index change in % Impact on the income statement Impact on capital

+/- 10% +/- 1,861 +/- 48,160

Thetabletakesintoaccounttheinvestmentsinequityinstrumentsexcludinginvestment

couponsrelatedtobonds.Theeffectintheincomestatementisevidentunderequitysecu-

ritiesmeasuredatfairvaluethroughprofitorloss,andtheeffectonequityisevidentunder

investmentsinafsequityinstruments.

Table58: Financial instruments in terms of marketability

in EUR 000

Financial instrument 31. 12. 2015 31. 12. 2014

Securities traded on the regulated market 926,909 905,978




Securities not traded on the regulated market 49,564 157,231


Financial assets held to maturity - 0


Total 976,473 1,063,209

attheendof2015,assetstradedonregulatedstockmarketsaccountedfor95%offinancial

instrumentsor78%ofallassetsoftheGroup.available-for-salefinancialassetsnottraded

onregulatedmarketincludenon-marketableshares,stakesandinvestmentcoupons.

Liquidityrisk

liquidityriskrepresentsthepossibilityofliabilitiesnotbeingsettleduponmaturity.Riskis

managedbydailymonitoringoftheinflowsandoutflows,andprecisematchingofmaturity

ofassetsandliabilities.asat31December2015,theGrouprecordedatotalofeUR1,038,701

thousandofsurplusofexpectednon-discountedcashinflowsoveroutflows.

Table59: Expected actual non-discounted cash flows as at 31 December 2015

Item Up to 1 yearFrom 1 to

5 years Over 5 years No maturity

in EUR 000

Total

Investments in securities 42,311 131,630 129,752 703,981 1,007,674

- at fair value through profit or loss 8,164 14,893 3,745 31,910 58,711

- held-to-maturity 10,793 37,448 70,822 0 119,062

- available-for-sale 23,354 79,289 55,186 672,071 829,901

Loans and deposits 63,818 57,996 0 0 121,814

Cash and cash equivalents 44,146 0 0 0 44,146

Operating receivables 6,144 103 0 0 6,247

144


5 years Over 5 years No maturity

in EUR 000

Total

Total assets 156,418 189,729 129,752 703,981 1,179,881

Operating liabilities 4,105 48 0 0 4,153

Financial liabilities 0 0 0 0 0

Liabilities of PPS and MR Guarantee Funds

14,157 38,991 83,879 0 137,027

Total liabilities 18,262 39,039 83,879 0 141,180

Difference 138,156 150,691 45,873 703,981 1,038,701

Table60: Expected actual non-discounted cash flows as at 31 December 2014

in EUR 000


5 years Over 5 years No maturity Total

Investments in securities 49,463 106,435 131,675 828,561 1,116,133

- at fair value through profit or loss 7,209 13,974 4,216 29,603 55,002

- held-to-maturity 7,536 27,812 51,035 0 86,384

- available-for-sale 34,717 64,649 76,424 798,958 974,748

Loans and deposits 110,165 9,743 0 0 119,908

Cash and cash equivalents 37,040 0 0 0 37,040

Operating receivables 2,384 53 0 0 2,437

Total assets 199,052 116,231 131,675 828,561 1,275,519

Operating liabilities 9,487 18 0 0 9,505

Financial liabilities 0 0 0 0 0

Liabilities of PPS and MR Guarantee Funds

12,550 32,543 92,905 0 137,999

Total liabilities 22,037 32,561 92,905 0 147,504

Difference 177,014 83,670 38,770 828,561 1,128,015

shares,stakesandinvestmentcouponsaredisclosedunderitemwithoutmaturity.

145

17.4 oTHeRDIsClosURes

InformationontheManagement

ThenamesofthemembersoftheManagementboardandotherbodiesarestatedinthe

introductorypartoftheannualReport,underthesectionCorporateProfileofKapitalska

druæbaandModrazavarovalnica.nooperatingreceivablesandlong-orshort-termliabilities

tothemembersoftheManagementboardandsupervisoryboardofKapitalskadruæbawere

recordedin2015.

ReceiptsofthemembersoftheManagementBoard,SupervisoryBoardandstaffwithmanagementcontractsofKapitalskadruæba

In2015,remunerationspaidforthecarryingoutofresponsibilitiesanddutiesofmembers

oftheManagementboard,supervisoryboardandemployeeswithindividualcontractsof

employmentforwhichthetariffsectionofthecollectiveagreementdoesnotapply,amounted

toeUR888thousand.

Remunerationsbycategoryofbeneficiariesarepresentedinthetablebelow.

Table61: Remunerations by category of beneficiaries in 2015

in EUR 000

Category of beneficiaries Amount

Members of the Management Board 284

Members of the Supervisory Board 122

Employees with management contract 482

Total 888

noadvances,loansorcollateralwereapprovedbytheCompanyin2015.

ReceiptsofthemembersofthemanagementandsupervisorybodiesofKapitalskadruæba

ReceiptsofthemembersoftheManagementboardareregulatedbytheZsDH-1.Pursuant

toarticle51(5)oftheZsDH-1,thesameconditionsandcriteriaasapplytothemembersof

theManagementboardofslovenskidræavniholding,d.d.,applytothemembersofthe

ManagementboardofKapitalskadruæbabymutatismutandisapplicationofarticle46(7)

oftheZsDH-1,thereceiptsoftheManagementboardmembersaresetbythesupervi-

soryboard,withoutconsideringtheprovisionsoftheactgoverningtheremunerationof

managersofcompanieswithmajorityownershipheldbytheRepublicofsloveniaorself-

governinglocalcommunities.TheemploymentcontractsmadewiththeManagement

boardmembersareconsistentwiththelegalbasis.ThebasicpayoftheManagement

boardmembersissetasamultipleof5oftheaveragegrosssalarypaidintheKapital-

skadruæbaGroupinthepreviousbusinessyear,butitmaynotexceed95%ofthebasic

payofthePresidentoftheManagementboardofslovenskidræavniholding,d.d.,which

ispublished.allbonusesareincludedinthebasicpay.Thebasicpayisrevisedannually

whendataontheaveragesalaryintheKapitalskadruæbaGroupinthepreviousyearare

published.Therevisedbasicsalaryisapplicablefrom1Julyofthecurrentyear.Thebasic

payofthemembersoftheManagementboardofKapitalskadruæbawascalculatedand

paidin2015inlinewiththeaforementionedcriteria.Pursuanttothecontract,themem-

bersoftheManagementboardareentitledtoattendtrainingathomeandabroadofup

to15daysperyearpaidbyKapitalskadruæba,asspecifiedintheadoptedbusinessand

financialPlanofKapitalskadruæba.

146

Table62: Receipts of the members of the Management Board of Kapitalska druæba in 2015

EUR

Name and surname Fixe

d in

com

e

Varia

ble

inco

me

Bonu

ses

Cost

re

imbu

rsem

ent

Insu

ranc

e pr

emiu

ms

(PDP

Z)

Part

icip

atio

n in

pro

fit

Optio

ns

Oth

er re

war

ds

Oth

er p

aym

ents

Tota

l

Bachtiar Djalil (President)

125,114 8,285 55 2,355 2,819 - - - 791 139,419

Dr Boris ÆnidariË (Member since 23 November 2015)

2,830 - - 61 165 - - - 85 3,141

Anja Strojin ©tampar, MSc. (Member until 30 November 2015)

118,858 15,597 750 3,094 2,819 - - - 791 141,909

Total 246,802 23,882 805 5,510 5,803 - - - 1,667 284,469

fixedincomeincludesgrosssalary.Variableincomeincludesperformancebonus,which

equalsupto30%oftheannualbasicgrosssalaryforthebusinessyear,takingintoaccount

theperformancecriteria.Costreimbursementsincludereimbursementofmeal/travel/accom-

modationexpenseanddailyallowance.bonusesincludecollectiveaccidentinsurancepre-

miumsand/oracompanycar.Insurancepremiums(PDPZ)representpaymentsforvoluntary

supplementarypensioninsurance.otherpaymentsincludepayforannualleave.

Table63: Receipts of the members of the Supervisory Board of Kapitalska druæba in 2015

EUR


d in

com

e

Varia

ble

inco

me

Cost

re

imbu

rsem

ent

Insu

ranc

e pr

emiu

ms

Fees

Part

icip

atio

n in

pro

fit

Optio

ns

Oth

er re

war

ds

Oth

er p

aym

ents

Tota

l

Samo Lozej (Chairman of the Supervisory Board)

20,790 - - - - - - - - 20,790

Cirila Surina Zajc (Member of the Supervisory Board since 1 February 2015 and Deputy Chair of the Supervisory Board since 23 November 2015)

16,607 - 864 - - - - - - 17,471

Dr Boris ÆnidariË11 (Member of the Supervisory Board since 1 February 2015 and Deputy Chair of the Supervisory Board from 5 March 2015 to 22 November 2015, Member of the Management Board since 23 November 2015)

17,247 - 59 - - - - - - 17,306

Aldo Ternovec (Member of the Supervisory Board and Deputy Chair of the Supervisory Board until 31 January 2015)

3,199 - 83 - - - - - - 3,282

Aleksander Mervar, MSc. (Member of the Supervisory Board)

18,875 - 433 - - - - - - 19,308

11WhileDrborisænidariËisoccupyingtheofficeofthememberofManagementboard,hisfunctioninthesupervisoryboardissus-pended.

147


d in

com

e

Varia

ble

inco

me

Cost

re

imbu

rsem

ent

Insu

ranc

e pr

emiu

ms

Fees

Part

icip

atio

n in

pro

fit

Optio

ns

Oth

er re

war

ds

Oth

er p

aym

ents

Tota

l

Stanislav SeniËar (Member of the Supervisory Board)

19,526 - 722 - - - - - - 20,248

Ladislav RoæiË, MSc. (Member of the Supervisory Board)

20,640 - - - - - - - - 20,640

Ana Bilbija (Member of the Supervisory Board until 31 January 2015)

3,007 - 104 - - - - - - 3,111

Total 119,891 - 2,265 - - - - - - 122,156

fixedreceiptsofthesupervisoryboardmembersincludepaymentfortheperformanceof

functioninthesupervisoryboard(basicandextrapayforparticipationinthesupervisory

boardcommittees)andsessionfeesforattendingthemeetingsofthesupervisoryboardand

itscommittees.Costreimbursementsincludereimbursementoftravelexpenses.

In2015,themembersofmanagementandsupervisorybodiesreceivednoreceiptsfortasks

performedinsubsidiariesofKapitalskadruæba.

ReceiptsofthemembersoftheManagementBoard,SupervisoryBoardandstaffwithmanagementcontractsofModrazavarovalnica

In2015,theremunerationreceivedbythemembersoftheManagementboard,supervisory

boardandemployeeswithindividualemploymentcontractswhoarenotsubjecttothetariff

partofthecollectiveagreementtotalledeUR652thousand.

In2015,Modrazavarovalnicaapprovednoadvancepaymentsorloanstothemembersofthe

managementandsupervisorybodiesnorassumedanyliabilitiesontheirbehalf.

Table64: Gross receipts in 2015 by category, Modra zavarovalnica

in EUR 000

Category of beneficiaries Amount

Members of the Management Board 315

Members of the Supervisory Board 77

Employees with management contract 260

Total 652

ReceiptsofthemembersofthemanagementandsupervisorybodiesofModrazavarovalnica

Table65: Receipts of the members of the Management Board of Modra zavarovalnica in 2015

EUR

Name and surname Fixed incomePast due

payments Bonuses

Allowance for annual

leaveCost reim-bursement

Insurance premiums

(PDPZ) Total

Borut Jamnik 118,858 34,989 1,871 791 4,833 2,819 164,161

Matija Debelak 112,915 31,907 99 791 2,290 2,819 150,821

148

fixedremunerationincludesgrosssalaries.outstandingpaymentsincludepart2ofthe

variableremunerationfor2011and2012andpart1ofthevariableremunerationfor2014.

Reimbursementsofcostsincludemealand/ortravelallowancesand/orotherreimburse-

mentsoftravelexpenses(dailyallowances,mileageexpenses,costsofovernightstays,

parking,taxi).bonusesincludecompanycarandbonusesarisingfromcollectiveaccident

insurance.Insurancepremiums(PDPZ)representpaymentsforvoluntarysupplementary

pensioninsurance.

Table66: Receipts of the members of the Supervisory Board of Modra zavarovalnica in 2015

EUR

Name and surname Fixed income Monthly feeCost

reimbursement Total

Branimir ©trukelj 3,905 0 0 3,905

Aleπ Groznik 3,630 11,495 466 15,591

Bojan ZupanËiË 2,805 10,450 0 13,255

Dario RadeπiË 3,905 10,450 1,066 15,421

Goran Bizjak 3,630 10,450 277 14,357

Marino Furlan 3,080 10,450 604 14,134

Thefixedincomecomprisesthefeesforattendanceatsupervisoryboardmeetings.

Monthlyremunerationincludesthemonthlyreceiptfortheperformanceofthesuper-

visoryboardmemberfunction.Costreimbursementsincludereimbursementoftravel

expenses.

Related-partytransactions

In2015,theKapitalskadruæbaGroupmadenosignificanttransactionswithitsrelatedparties

thatwereconcludedunderotherthannormalmarketconditions.

Disclosurerelatedtothepensionschemes

on6november2015,KapitalskadruæbareceivedfromtheMinistryoflabour,family,social

affairsandequalopportunitiestheDecisionapprovingamendmentsandsupplementsto

theoccupationalPensionInsurancescheme,no.1032-5/2013-26,dated30october2015.

TheamendmentsandsupplementstotheoccupationalPensionInsuranceschemereferto

decreasingthemanagementfeeintermsofnetvalueoftheassetsundermanagement.The

provisionsoftheoccupationalPensionInsuranceschemewillstartbeingappliedwiththe

entryintoforceoftheRulesonManagementofthefundforCompulsorysupplementary

PensionInsuranceschemeoftheRepublicofslovenia,whichdependsontheacquisitionof

approvalofthesecuritiesMarketagency,butnolaterthanin90daysoftheservingofthe

decisionapprovingthepensionschemeamendmentstothefundmanager.on4December

2015,KapitalskadruæbafiledwiththesecuritiesMarketagencyarequestforapprovalofthe

amendmentstotheRulesonManagementofthefundforCompulsorysupplementaryPen-

sionInsuranceschemeoftheRepublicofslovenia.

on1January2016theactamendingandsupplementingthePensionandDisabilityInsur-

anceactenteredintoforce(officialGazetteoftheRs,no.102/2015;ZPIZ-2b).article38(2)

oftheZPIZ-2bstipulatesthatKapitalskadruæbahastoaligntheoccupationalPension

InsuranceschemeandtheoccupationalPensionPaymentschemewiththeprovisions

oftheZPIZ-2bwithintwelvemonthsoftheentryintoforceoftheZPIZ-2b.Untilthenew

pensionschemestartsbeingapplied,theprovisionsofthepensionschemesvalidatthe

timeofentryintoforceoftheZPIZ-2bshallbeapplied.Whenthenewpensionscheme

149

isestablished,theGuaranteefundoftheCompulsorysupplementaryPensionInsurance

fund(KssoDPZ)shallbeliquidatedandoccupationalpensionsshallbepaidaspartialsur-

rendervalue.

Significanteventsafterthedateofthestatementoffinancialposition

on28January2016,theGeneralCourtoftheeuropeanUniondecidedtofullyrejectthe

claimoftheRepublicofsloveniatodeclaretheCommissionDecisionsa.26379of19sep-

tember2012onthemeasuresinfavourofelan,d.o.o.,nullandvoid.Withthisjudgement

thecontingentliabilityofKapitalskadruæbaceaseduntiltherepaymentoftherefundedstate

aid,whichiswhyKapitalskadruæbaderecognisedoff-balancesheetliabilitytoelan,d.o.o.,

intheamountofeUR6,457thousand.

TheamendmenttothePensionandDisabilityInsuranceactZPIZ-2benteredintoforceon1

January2016,introducingchangesalsoforKapitalskadruæba.accordingtotheamendment,

occupationalpensionsshallbepaiddirectlyfromtheCompulsorysupplementaryPension

Insurancefund,whiletheGuaranteefundoftheCompulsorysupplementaryPensionInsur-

ancefundshallceasetoexist.UponthetransferofthefundsfromKssoDPZtosoDPZ,the

managementfeechargedbyKapitalskadruæbashallincrease,becausenomanagementfee

waschargedforKssoDPZ.

on2february2016,theCreditors’Committeeconsistingofordinarycreditorsadopteda

resolutionthatthesharecapitalofPomurskemlekarne,d.d.,decreasefromeUR1.4million

tozeroandthatallexistingsharesbedeleted.Theresolutionwillbecomefinalaftercompul-

sorysettlementhasbeenfinallyapproved.

on31December2015,Kapitalskadruæbaheldanequityinvestmentinthesharesofsava,d.

d.,valuedateUR255thousand.on12february2016,theCreditors’Committeeofsava,d.

d.,adoptedaresolutionthatthesharecapitalofsava,d.d.,decreasefromeUR14.1millionto

zeroandthatallexistingsharesbeinvalidated.Theresolutionwillbecomefinalaftercompul-

sorysettlementhasbeenfinallyapproved.Ifthedecisionapprovingcompulsorysettlement

becomesfinal,Kapitalskadruæbawilllosethefullvalueofinvestmentinsharesofsava,d.d.

sincetheendof2015untilthepreparationoftheannualReport,Modrazavarovalnica

recordednosignificanteventsthatcouldinfluenceitsfinancialstatementsfor2015.

consolidated annual report of the kad group - domov lp skupine kad... · kad kapitalska druæba...

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