Cetis d.d.

w w w.cet is .s i

Annual report

2 0 0 9Audited annual report

on business operations for the company Cetis, d. d. for the financial year 2009,

and audited consolidated annual report

for company Cetis, d. d. for the financial year 2009

Cetis, Graphic and Documentation service, d. d.Čopova 24, 3000 Celje - Slovenia

tel: 00386 34 278 500fax: 00386 34 278 817e-mail: [email protected]

w w w.cet is .s i

Annual report 2 0 0 9

Audited annual report

on business operations

for the company Cetis, d. d.

for the financial year 2009,

and audited consolidated annual report

for company Cetis, d. d.

for the financial year 2009

Cetis, d. d. Annual Report 2 0 0 9

2

Contents

6 Introduction 6 1. Letter from the General Manager

8 2. Report of the Cetis, d. d. supervisory board on the results of examining the audited

annual report of the company Cetis, d. d. for 2009 and the audited consolidated annual

report of the Cetis Group for 2009

14 3. Cetis Group - Presentation

14 Company Cetis, d. d., ID

14 Management and Administrative Bodies

14 Activities of Cetis Group

15 Companies of Cetis Group

15 Associate Company

16 Turning Points in the development and activities of Cetis, d. d.

16 4. Highlights in 2009 in numbers for Cetis Group

17 5. Review of important events

17 6. Corporate governance – Cetis, d. d. and Cetis Group

22 Business report 22 Business strategy of Cetis Group

23 General macroeconomic trends

25 Asset Management

25 Financial Management

26 Investments

28 Shares and shareholders

30 Sales

30 Sales of commercial printed matter

31 Sales of security printed matter

32 Sales by companies of the Group

35 Research and development

37 Production

38 Supplier relations and logistics

40 Quality Management

Cetis, d. d. Annual Report 2 0 0 9

3 41 Employees

46 Corporate social responsibility and care for the environment

46 Environmental responsibility

47 Social responsibility

50 Cetis company financial report 50 Independent auditor’s report

51 Income statement

53 Balance sheet

55 Cash flow statement

57 Statement of changes in equity

58 Statement of management responsibility

59 Summary of significant accounting policies and notes to the financial statements

67 Income statement disclosures

70 Balance sheet disclosures

84 Cash flow statement disclosures

90 Cetis group financial report 90 Independent auditor’s report

91 Consolidated income statement

92 Consolidated balance sheet

94 Consolidated cash flow statement

96 Consolidated statement of changes in equity

98 Statement of management responsibility

99 Summary of significant accounting policies and notes to the financial statements

111 Consolidated income statement disclosures

114 Consolidated balance sheet disclosures

130 Consolidated cash flow statemen disclosures

Cetis, d. d. Annual Report 2 0 0 9INTRODUCTION

4

People in Cetis create with all their talents.

Cetis, d. d. Annual Report 2 0 0 9 INTRODUCTION

5

Courage, experience and knowledge are drawn from the past.


6

1. Letter from the general manager

Dear shareholders, suppliers, business partners, and employees,

In 2009, Cetis Group had a smaller turnover compared to 2008. Cetis Group remains dedicated to its vision of being a global information integrator; new contracts entered into in the Republic of Guinea-Bissau and in Somalia in 2009 are the best proof thereof. We strive to be the best partner to companies and countries worldwide in the fields of identification, security and corporate communications, and a leading partner and consultant when dealing with the rationalization and management of costs in packaging, corporate communication systems, documents, and lottery games.

In 2009, net sales of Cetis Group reached 34 million Euros and are 5,6 % smaller when compared to net sales in 2008. In view of market trends, this was to be expected. Our business operations in 2009 were under the strong influence of the unfavourable economic situation in all markets. We took this as a challenge and tried to adjust to the new market conditions by means of better organisation, additional efforts to gain client confidence, and the application of innovative approaches. We expect that 2010 will bring even harsher market conditions. Therefore, we continue to better organise our work, to optimise and pool processes, lower productions costs, and expand in global markets.

The most important cotracts signed in 2009 include the production of passports and identity cards, and the establishment of a personalisation centre for Somalia with its head office in Dubai; and e-elections and driving licences for Guinea-Bissau: all this within our Document Selling Pillar. Within our Games-of-Chance Selling Pillar, we were awarded the printing of rubel tickets for one of the former Yugoslav Republic’s State Lotteries. We have also developed our own games systems. In terms of our Business Communication Systems Pillar, we need to mention the upgrading of card systems in the field of systematic integration for larger Slovenian business systems, and our joint development project with EMV (European Mastercard Visa). In the field of packaging, we continued to technologically upgrade and increase capacities as a precondition for market existence, and to improve our competitive position. Our biggest investments in 2009 included the purchase of a new printing machine and a machine for the application of holograms.

Market activities were directed towards buyers in the domestic market (via B2B marketing), and also in the foreign markets where we searched for resellers. We regularly take part in international tenders for governmental printing matter. However, contracts are hard to acquire, for not everything depends on a good offer. In the second half of 2009, we renewed our activities in Hungary and concluded the first contract. Furthermore, we started searching for material suppliers on the global market. Concurrently, we strive to rationalize operations by reducing delivery times for materials and thereby reducing inventories of materials. The purchasing value remained the same as in 2008. We introduced a new system of supplier appraisal, putting more emphasis on price and delivery times. We also automated our warehouse activities (which we had been planned to do for years) and thereby streamlined work in this field.

Despite negative market trends, Cetis’s parent company managed to achieve over 26 million EUR in net turnover, which is about 1,5 % better than in 2008. Within the framework of activities to optimise business operations by means of lower costs, our subsidiary Cetis-Zg established the company Cetis Direkt with its head office at the parent company’s address. This new company engages in activities connected to printing and packaging in envelopes. For the fifth year in a row, Cetis-Zg recorded positive results, and in 2009, the company made 19 % more income when compared to 2008. After management changes in 2008, and after the implementation of organisational optimisation and the optimisation of operating costs, the subsidiary Amba managed to achieve positive operating results in 2009 despite the general


7macroeconomic recession. Due to economies of scale, we closed down our representative office in Albania, however we are still present in the market with our sales agents. In the parent company Cetis d.d., we above all reorganised our production segment; it is now led by a new managing director. We are still reducing the number of employees using soft layoff methods and at the same time, we award those with high potential by investing in their further education in the field of health and safety at work.

We adjusted our corporate social responsibility to the economic situation. However, funds for this purpose have been significantly reduced in the past years. In 2009, we helped those most affected by the crisis, those who live in poverty. At time same time, we continue to financially support sports and culture, but to a lesser extent.

As already mentioned, we expect 2010 to bring even harsher economic conditions. We shall continue to strengthen client confidence, to offer quality services and products, and to try to increase sales in domestic and foreign markets. However, the company’s strategic goals remain the same we are developing solutions for individual industries, and recognising and implementing new opportunities in the field of information security.

Before concluding the financial review for 2009, I wish to emphasize that this harsh economic situation and, in some cases, financial collapse of countries influences us all, and does not leave us unaffected. Therefore, in these troubled times, when some are barely able to stay afloat, some are experiencing total collapse, others are trying to build on new foundations, and others again are looking for new challenges and opportunities, we above all nurture the desire to grow and appreciate basic values, such as trust, team work, innovation, multidisciplinarity, openness to challenges, and a further inclination towards a more professional attitude: all these are goals that Cetis and Cetis Group strive to achieve.

I wish to thank all our business partners for their trust, our employees for their hard work, understanding and innovative ideas, and our owners who support and trust us. In 2010, we shall continue to increase global sales and drastically adjust our business operations to optimise performance and efficiency.

In summation, I wish to refer to Joel A. Barker:

Vision without action is merely a dream.

Action without vision just passes time.

Vision with action can change the world.

We at Cetis believe that we can change the world. But only if we change ourselves.

March 2010 Simona Potočnik, MSc General Manager


8 1. Components of the Annual Report

In compliance with the legislation in force, the Cetis, d. d. Supervisory Board examined the legal aspects of the audited Annual Report of the company Cetis, d. d. for 2009 and the audited consolidated Annual Report of the Cetis Group for 2009 (hereinafter referred to as: the Annual Report).

The Supervisory Board established that the Management had prepared the 2009 Annual Report within legal deadline, as well as that the report contains all obligatory components required by the Companies Act currently in force (Official Gazette of the RS, no. 42/2006, as amended, hereinafter: ZGD-1).

The Annual Report comprises the following components: business report and financial report, the latter comprising a Balance Sheet, Income Statement, Statement of Other Comprehensive Income, Statement of Changes in Equity, Cash Flow Statement and explanatory accounting disclosures.

The Annual Report was audited by the selected auditor at the 14th General Meeting of the company Cetis, d. d. The auditing company ABC revizija d.o.o., Dunajska cesta 101, Ljubljana, prepared the auditor’s report for the company Cetis, d. d. on 31 March 2010 and for the Cetis Group on 12 April 2010. The company Cetis, d. d. received both on 20 April 2010.

In compliance with third paragraph of Article 272 of the ZGD-1, the Management of Cetis, d. d. submitted the prepared Annual Report together with the auditor’s reports to the Supervisory Board on 30 April 2010.

2. The method and scope of examining the managing of the company

The Supervisory Board performed its supervisory role mainly at Supervisory Board meetings. In addition, individual Supervisory Board members also exercised their right, based on first paragraph of Article 282 of the ZGD-1, which enables each Supervisory Board member to examine all bases for the Annual Report. The Supervisory Board members were regularly informed about all significant events that could, or did, affect the company’s business operations in 2009 at the Supervisory Board meetings, upon a request from Supervisory Board members or initiated by the company Management.

The Supervisory Board in 2009 had the following members:

• Ljubo Peče, President of the SB, shareholder representative,• Franc Ješovnik, shareholder representative,• Dušan Mikuš, MSc, shareholder representative,• Borut Bizaj, shareholder representative*,• Bernard Gregl, employee representative,• Marko Melik, employee representative.

In the financial year 2009, the Supervisory Board convened five meetings to perform its supervisory role, on 31 March, 29 May, 8 September, 17 November and 21 December.

2. Report of the Cetis, d. d. supervisory board on the results of examining the audited annual report of the company Cetis, d. d. For 2009 and the audited consolidated annual report of the Cetis group for 2009

*Borut Bizaj was appointed as member of the Supervisory Board by the General Meeting at the session on 7 July 2010.


93. The most important Supervisory Board resolutions

The Supervisory Board constantly monitored and adopted decisions regarding the matters most important to the company. In addition to monitoring and supervising the work of the Management and the company’s business operations, the Supervisory Board also adopted the following important resolutions, given below in chronological order:

• Resolutions adopted at the 57th meeting of the Cetis, d. d. Supervisory Board, on 31 March 2010:- The Supervisory Board took note of the unaudited financial statements for Cetis and Cetis Group

for 2008, whereby it decided to discuss and adopt them when audited;- The Supervisory Board took note of the Management report on the business operations of Cetis,

d. d. in writing for the period from 1 January 2009 to 28 February 2009, as well as of the oral Management report on the business operations of Cetis, d. d. for March 2009;

- Dušan Mikuš, MSc, was appointed as Chairman of the Audit Committee;- Rules of Procedure for the work of the audit committee were adopted;- The Supervisory Board took note of the initiative to form a nomination board and decided not to

establish such a board. • Resolutions adopted at the 58th meeting of the Cetis, d. d. Supervisory Board, on 29 May 2009:

- The Supervisory Board took note of the Management report on business operations for the company Cetis, d. d. for the period from January to March 2009;

- The Supervisory Board adopted the audited Annual Report and the audited consolidated Annual Report for the company Cetis, d. d. for the financial year 2008;

- The Supervisory Board took note of the report prepared by the Cetis, d. d. Audit Committee and unanimously adopted the resolution to propose the company ABC Revizija, d.o.o., Dunajska cesta 101, Ljubljana, to be the auditor of the company Cetis and the Cetis Group for financial year 2009;

- The Supervisory Board adopted the Report of the Cetis, d. d. Supervisory Board on the results of examining the audited Annual Report of the company Cetis, d. d. for 2008 and the audited consolidated Annual Report of the company Cetis, d. d. for 2008;

- The Supervisory Board suggested the Assembly to elect the following as the Supervisory Board members:

- Ljubo Peče, Cesta v Rošpoh 47, 2351 Kamnica- Franc Ješovnik, Ulica Veljka Vlahoviča 31, 2000 Maribor- Dušan Mikuš, MSc, Sneberska cesta 11f, 1260 Ljubljana- Anton Tropenauer, Lešane 51a, 9253 Apače.- The Supervisory Board adopted the following agenda with proposals for resolutions for the 14th

General Meeting of the company Cetis, d. d. to be held on 7 July 2009 at 10.00 at the business premises of the company’s registered office, conference room no. 608:

Agenda and proposals for resolutions:

1. Opening the General Meeting, establishing a quorum and electing the Chairman of the General Meeting and two members to count votes

Proposal for a resolution:

Quorum of the General Meeting is established. The General Meeting elects Ljubo Peče as Chairman and two members to count votes, Miro Zakrajšek and Bernard Gregl, and establishes that in order to take minutes notary Srečko Gabril is present.


10 2. The General Meeting takes note of the Annual Report on business operations for the company Cetis, d. d. for the financial year 2008 and of the audited consolidated Annual Report for the company Cetis, d. d. for the financial year 2008 and of the Supervisory Board written report on the examination of the audited Annual Report on business operations for the company Cetis, d. d. for the financial year 2008 and the audited consolidated Annual Report for the company Cetis for the financial year 2008.

3. Voting on utilisation of profit for appropriation and discharge of the Management and the Supervisory Board

Proposals for resolutions: 3.1. Profit for appropriation for the company Cetis, d. d. amounting to EUR 455.876,21 EUR in 2008 is retained and carried forward to be used in subsequent periods.

3.2. The work of the Management and Supervisory Board of Cetis, d. d. in the financial year 2008 is confirmed and approved, and the Management and Supervisory Board are discharged for 2008.

4. Appointment of Cetis, d. d. Supervisory Board members

4.1. Proposal for the General Meeting to appoint new members


The following are elected as the Supervisory Board members:

- Ljubo Peče, Cesta v Rošpoh 47, 2351 Kamnica- Franc Ješovnik, Ulica Veljka Vlahoviča 31, 2000 Maribor- mag. Dušan Mikuš, Sneberska cesta 11f, 1260 Ljubljana- Anton Tropenauer, Lešane 51a, 9253 Apače.

Mandate of the members starts on the date of election at the General Meeting and lasts for four years.

4.2. Information for the General Meeting on the extension of the Supervisory Board members’ mandates; the General Meeting takes note of the fact that on 26 April 2009 the mandate of the Supervisory Board members – employee representatives Bernardu Greglu in Marku Meliku – expired. Works Council again appointed Bernard Gregl and Marko Melik as new members of the Supervisory Board; their mandate started on 26 April 2009 and lasts for four years.

5. Auditor appointment


The General Meeting appoints as the certified auditor for the financial year 2009: ABC Revizija, d.o.o., Dunajska cesta 101, Ljubljana.


11• Resolutions adopted at the 59th meeting of the Cetis d. d. Supervisory Board, on 8 September 2009:- The Supervisory Board took note of the Management report on the business operations of Cetis,

d. d. and the Cetis Group in writing for the period from 1 January to 30 June 2009, as well as of the unaudited consolidated report on the business operations for the company Cetis, d. d. and the Cetis Group for the first half-year of 2009.

• Resolutions adopted at the 60th meeting of the Cetis, d. d. Supervisory Board, on 17 November 2009:- The Supervisory Board took note of the interim Management report for the period from January

to September 2009;- The Supervisory Board took note of the evaluation of business operations and of the Management

report for the period from January to October 2009;- The Supervisory Board took note of the proposals for Business Plans for the company Cetis, d.

d. and the Cetis Group 2010. It suggested to the Management and charged it with the task to prepare more ambitious Business Plans until the next meeting and adapt them to the current business and financial situation of the company and the Group.

• Resolutions adopted at the 61st meeting of the Cetis, d. d. Supervisory Board, on 21 December 2009:- The Business Plans for the company and the Group for 2010 were confirmed;- The Supervisory Board took note of the plan and the reasons for the acquisition of 9.125 own

company shares.

Minutes were drafted for each Supervisory Board meeting and adopted with a resolution.

4. Management reporting

Extensive reports from the Management in the financial year 2009 enabled the Supervisory Board to adequately perform its supervisory role. Management reports were in general prepared per segments operational within Cetis, with a joint and systematic overview of all business effects.

In its reports, and oral explanations when necessary, the Management presented all relevant items that affect the business operations of the joint stock company.

5. Evaluation of business operations

The Supervisory Board of Cetis, d. d. analysed movements in certain relevant financial data and indicators expressing business efficiency for the company Cetis, d. d. and established that:

• net sales revenue was generated in the amount of EUR 26.047.444, which is 1,5 % more than the year before and 15,9 % less than planned;

• the total profit or loss before taxes is 65,6 % lower than in 2008 and 80,3 % lower than planned for 2009;

• the achieved net loss amounting to EUR 664.192 contributed to reducing the profit or loss by 59,3 % compared to 2008;

• return on capital in Cetis, d. d., calculated as the ratio between total profit or loss in 2009 and the average balance of capital excluding the net profit or loss for 2009, is -2,2 %;

• return on capital in Cetis, d. d., calculated as the ratio between net profit or loss in 2009 and the average balance of capital excluding the net profit or loss for 2009, for 2009 is -2,3 %, which is 0,91 percentage point less than in 2008;

• operating expenditure amounted to EUR 28.185.248, which is 0,35 % less than in the same period the year before. Operating costs are structured as follows: 60,6 % comprises the costs of goods,


12 material and services, 26,8 % labour cost, 11,1% amortisation and depreciation expense; and 1,5 % other expenditure,

• In the Income Statement for 2009, the company Cetis, d. d. disclosed financial revenue amounting to EUR 1.235.839 and financial expenditure amounting to EUR 525.684. The surplus of financial revenue over financial expenditure, amounting to EUR 710.155, is 39,6 % lower than in 2008;

• the company Cetis, d. d. does not disclose profit for appropriation for 2009, and the loss for the current year in the financial statements was covered by capital reserves amounting to EUR 162.533 and by net profit brought forward amounting to EUR 501.659;

• basic earnings per share in 2009 amounted to EUR -3,32;• the book value of each share on 31 December 2009 was EUR 137,63 (on 31 December 2007 = EUR

143,27), which is 3,9 % less than in 2008;• the number of employees in the company Cetis, d. d. on 31 December 2009 was 344, which is 9,5

percent less than at the end of 2008.

The Supervisory Board of Cetis, d. d. analysed movements in certain relevant financial data and indicators expressing business efficiency for the Cetis Group and established that:

• net sales revenue was generated in the amount of EUR 34.381.966, which is 4,4 % less than the year before and 16,8 % less than planned;

• the total profit or loss before taxes is 87,6 % lower than in 2008 and 94,3 % lower than planned for 2009;

• the net profit amounting to EUR 109.986 represents an increase in profit or loss by 27,4 % compared to 2008;

• return on capital in the Cetis Group, calculated as the ratio between total profit or loss in 2009 and the average balance of capital excluding the net profit or loss for 2009, is 0,03 %;

• return on capital in the Cetis Group, calculated as the ratio between net profit or loss in 2009 and the average balance of capital excluding the net profit or loss for 2009, for 2009 is 0,39 %, which is 0,1 percentage point more than in 2008;

• operating expenditure amounted to EUR 36.697.368, which is 4,28 % less than in the same period the year before. Operating costs are structured as follows: 63,6 % comprises the costs of goods, material and services, 24,7 % labour cost, 9,5 % amortisation and depreciation expense; and 2,2 % other expenditure;

• In the Income Statement for 2009, the Cetis Group disclosed financial revenue amounting to EUR 1.372.155 and financial expenditure amounting to EUR 601.168. The surplus of financial revenue over financial expenditure, amounting to EUR 770.987, is 37,3 % lower than in 2008;

• The Cetis Group does not disclose profit for appropriation for 2009 and the profit for the current year was used to cover losses from previous years;

• basic earnings in the Group per parent company share in 2009 amounted to EUR 0,58;• the number of employees in the Cetis Group on 31 December 2009 was 400, which is 8,3 percent

less than at the end of 2008.

Based on the stated indicators, the Supervisory Board established that in 2009 the company Cetis, d. d., including the Group, operated below the planned results, but taking into consideration the unpredictability in the market it created an acceptable basis for business operations in 2010 and beyond by increasing its activities.


136. Independent auditor’s report

The Supervisory Board took note of the Independent Auditor’s Report and established that an unqualified opinion had been issued.

The Supervisory Board has no comments on the Auditor’s Report. The Supervisory Board establishes that the Auditor’s Report contains all the contents set out in second paragraph of Article 57 of ZGD-1.

The Supervisory Board notes that the auditor established the financial statements to be a true and fair presentation of the financial position of the company Cetis, Graphic and Documentation Services, d. d., as of 31 December 2009, and its profit or loss and cash flow for the year ended on that date in accordance with International Financial Reporting Standards. The auditor confirmed that the business report is in accordance with the audited financial statements.

Furthermore, the Supervisory Board notes that the auditor established the consolidated financial statements to be a true and fair presentation of the financial position of the Group of companies Cetis, Graphic and Documentation Services, d. d., as of 31 December 2009, and its profit or loss and cash flow for the year ended on that date in accordance with International Financial Reporting Standards. The auditor confirmed that the business report for the Group is in accordance with the audited financial statements.

7. Comments of the Supervisory Board on the Annual Report for 2009

The Supervisory Board has no comments on the Annual Report for 2009 which would represent an obstacle in adopting a decision to approve the Annual Report.

8. Approving the Annual Report for 2009

At the 63rd meeting, held on 12 May 2010, the Supervisory Board checked the Annual Report and established that:

- the Annual Report was compiled on time, - the Annual Report was compiled in accordance with ZGD-1, International Financial Reporting Standards

and the company’s Articles of Association,- the Annual Report includes all relevant data important in taking a decision with regard to adopting the report,- the financial statements and the underlying documents for the financial statements and the business

report were reviewed by a certified auditor, who submitted an unqualified opinion to the company’s business operations.

In 2009 the Supervisory Board monitored and checked the company’s business operations on the basis of oral and written information from the Management, while the final opinion was based on the Annual Report mentioned above. The Supervisory Board is of opinion that the submitted Annual Report for the company presents a fair and true financial situation of the company, and therefore approves the audited Annual Report.

The Supervisory Board approved the Annual Report for financial year 2009 within an open deadline, i.e. before one month from the date when annual reports for 2009 were submitted to the Supervisory Board expired.

Celje, 12 May 2010 President of the Supervisory Board of Cetis, d. d.

Ljubo Peče, BSc Law, signed

The present Report was adopted by a resolution at the 63rd meeting of the Cetis, d. d. Supervisory Board held on 12 May 2010.


14

3. Cetis group - presentation

Company Cetis, d. d., id Company name: Cetis, Graphic and Documentation Services, d. d.

Head Office: Čopova 24, 3001 Celje, Slovenia

Registration number: 5042208

VAT number: 24635812

VAT ID: SI24635812

Share capital: 10.015.022,53 EUR

Entered in the Companies Register at the District Court of Celje under registration number 063/10147600.

Transaction accounts: Nova LB d.d.: SI 56 0223 4001 1655 374

Banka Celje d.d.: SI 56 0600 0002 6390 798

Abanka Vipa d.d.: SI 56 05100-8000027831

Probanka d.d.: SI 56 2510 0970 4894 196

Unicredit d.d.: SI 56 2900 0000 3262 161

Telephone number: +386 3 4278 500

Fax: +386 3 4278 817

E-mail address: [email protected]

Website address: www.cetis.si

Management and Administrative Bodies

Management: Simona Potočnik, MSc, General Manager

Supervisory Board:Ljubo Peče, Chairman of the SB, shareholder-

representative

Franc Ješovnik, shareholder representative

Dušan Mikuš, MSc, shareholder representative

Borut Bizaj, shareholder representative1 Bernard Gregl, employee representative

Marko Melik, employee representative

1 On 4th January 2010, Bernard Gregl irrevocably resigned as employee representative in SB of Cetis, d. d. The Works Council nominated Brigita Banovič as employee representative for the period between 22nd February 2010 and 26th April 2013.

Activities of Cetis group Cetis group provides comprehensive solutions in the field of printed media combined with other media. It offers a wide range of security, variables, and printed commercial matter. Aside from these, the company offers services such as personalisation, documentation service, and the like. Its activities are directed towards foreign markets, especially towards the former Yugoslav markets, Africa, the Middle East, Asia, South America, and Eastern Europe.


15

2 Cetis-ZG Printing and Enveloping, Cetis Print and Cetis Direkt are subsidiaries of Cetis-ZG, Company for Trade and Services.3 Cetis Tirana was wound up at the beginning of 2009. It is no longer active.4 “DUF” Euroinvestment is an associate to Cetis-ZG.

Companies of Cetis group

Cetis-ZG,

Company for Trade and Services, d.o.o.,

Industrijska ulica 11,

10431 Sveta Nedelja,

Croatia,

e-mail: [email protected],

web page: www.cetis.hr ,

t: +385 1 333 5000,

f: +385 1 333 5001,

Manager: Matej Polutnik.

Cetis Print d.o.o.,

Breza 8,

11030 Beograd,

Serbia,


web page: www.cetisprint.rs,

t/f: +381 11 2511 913,

Manager: Milan Maksić.

3 Cetis-Tirana Sh.p.k.,

Twin Towers, Tower 1,

Blvd. Deshmoret e Kombit, Kati IV,

Tirana,

Albania,


t: +355 4 280 424,

f: +355 4 280 425,

Manager: Marko Tumpej.

Amba CO.,

Production and Trade, d.o.o.,

Čopova 24,

3000 Celje,

Slovenia,


web page: www.amba-tc.si,

t: +386 1 587 4300,

f: +386 1 586 4305,

Manager: Roman Žnidarič.

2 Cetis-ZG,

Printing and Enveloping d.o.o.,

Industrijska 11,

10431 Sveta Nedelja,

Croatia,


web page: www.cetis.hr ,

t: +385 1 333 5000,

f: +385 1 333 5001,

Manager: Luana Vozila.

Cetis Direkt, d.o.o.,

Čopova 24,

3000 Celje,

Slovenia,


web page: www.cetis.si,

Manager: Srečko Pilko.

Cetis MKD d.o.o. Skopje,

Ul. Romanija br. b. b.

Skopje,

Former Yugoslav Republic of Macedonia.

Associate 4 “DUF” Euroinvestment d. d.,

Muftije Muhameda Efendije Kurta 1,

Tuzla,

Bosna in Hercegovina.


16

The printed word has a long, 200-year tradition in Celje. The very first print-shop in Celje was opened in 1788. And it was around that time that the foundations of today’s Cetis were laid. Its predecessor was Tiskarna Družbe sv. Mohorja, and in 1949 this printing plant - Tiskarna Družbe sv. Mohorja - was transformed into the state-owned company Celjska tiskarna. Ten years later, Celjska tiskarna merged with the regional newspaper Celjski tednik under a new name Celjski tisk, but in 1965, Celjska tiskarna again became an independent company.

The company changed its name to Cetis almost a quarter of a century ago, and began realising its set objectives, and the emphasis at that time was on the production of continuous forms for mechanographic data processing. Having merged with Aero in 1971, Cetis increased the production and technological growth of all of its printing techniques, and the production of continuous forms and self-adhesive labels was also accelerated. In 1990, the employees of what was then TOZD (Temeljna organizacija združenega dela - Basic Organization of Associated Labour) Grafika in Aero decided to separate TOZD from the parent company and in the following year, Grafika became the limited liability company Cetis.

Six years later, the company’s ownership transformation was concluded. Cetis was converted into a joint-stock company and was entered into the register of companies on 13 February 1996. In 2001, the company renewed its entire graphic image, and a modern, market-oriented and technologically advanced company was formed. At a shareholders’ meeting in 2003, the shareholders confirmed the renaming of Cetis, Graphic Company, d. d. as Cetis, Graphic and Documentation Services, d. d., due to the company’s expanded activities and more varied product range. In 2007, the company thus divided into four selling pillars and adapted its business orientation, emphasizing the merger of the ‘black art’ with information technology. The slogan Culture of Business Communication was replaced with the slogan Global Information Integrator.

In EUR thousand

2008 2009 INDEX

Financial data

Net sales revenue 35.967 34.382 95,6

Net profits or loss from ordinary activities -1.168 -763 134,6

Profit / loss before tax 63 8 12,7

Profit or loss for the period 86 110 127,9

Gross profit 10.399 9.739 93,7

Capital 28.495 27.488 96,5

Total assets 54.483 49.361 90,6

Investment activities

Long-term investment 13.443 12.359 91,9

Number of employees 436 400 91,7

Indicators

Gross added value per employee 28 28 100

Net return on revenue 0,19 % 0,29 %

Net return on equity 0,26 % 0,39 %

Share (Cetis, d. d.)

Share market value as of 31st December (in EUR) 66,0 24,5 37

Basic earnings/loss per share (in EUR) 0,43 0,55 127,9

Number of companies in the Group as of 31st December 2009

3 6

Turning points in the development and activities of Cetis, d. d.

4. Highlights in 2009 in numbers for Cetis group


17

- Signing of a contract with Somalia for the delivery of passports, identity cards and for the establishment of a personalised centre for the issue of governmental documents.

- Signing of a contract with Guinea-Bissau for the implementation of e-elections, and the production of driving licences.

- Production of certificates of vehicle ownership, and registration labels for Bosnia and Herzegovina.

- Establishment of the company Cetis Direkt which engages in all activities connected to printing and packaging in envelopes.

The company Cetis, d. d. implements a transparent governance and management system, taking into account best practices and the highest business principles. Recommendations from our internal controls and auditors provide a solid foundation for effective and high-quality decision-making.

The governance and management of Cetis is based on a comprehensive set of positive relations between Management and the Supervisory Board, the shareholders and other stakeholders, and also on our mechanisms for control and supervision. Business operations comply with all legal provisions, the Rules of the Ljubljana Stock Exchange, and internal regulations.

Cetis, d. d. is managed by its Management; Management is supervised by the Supervisory Board. The management of subsidiaries and associates is performed in accordance with the provisions of their Articles of Association and Memorandum of Association.

1. Compliance with the management code for publicly traded companies

On the basis of the provisions in the Rules of the Ljubljana Stock Exchange and legislation in force, the company Cetis, d. d. hereby expresses its Statement of compliance of conduct with the Management Code for Publicly Traded Companies (Official Gazette of RS No. 118/2005 of 27.12.05 as amended, hereinafter: Code) for the period from 1 January 2009 to the adoption of this Annual Report. The Code is available to the public in Slovenian and English on the Ljubljana Stock Exchange’s web site www.ljse.si. The Company operated in compliance with the provisions of the Code that was in force before the amendments were adopted, and, in 2009, it also followed the recommendations of the Management Code for Publicly Traded Companies with the amendments applicable from 5 February, 2007, with the exceptions listed below. Some recommendations of the Code are not relevant to the Company and cannot be breached, and are therefore not explicitly exposed. The obligations of the Company and its bodies respectively will be performed if there is such a case.

5. Review of important events

6. Corporate governance – Cetis, d. d. and Cetis group


18 2. Derogations from the Management code for publicly traded companies

1.2.6. and 1.2.7.The Company treats all the shareholders equally and does not specifically encourage them to exercise their rights.

3.1.5.The Supervisory Board operates without the rules of procedure, but in accordance with legal regulations.

3.4.6. and 3.4.7.The insurance of liability for damage of the Supervisory Board members has not been established.

3.6.-3.9.With regard to the size of the Company and its organization, the Supervisory Board did not form any special committees, except for the audit committee.

4.3.The Articles of Association do not define the types of operation that require the Management to obtain the consent of the Supervisory Board.

7.1.4.Thus far, an auditor has not been present at the company General Meeting.

8.2.The Company’s shareholders are mainly legal and natural Slovenian persons and, for this reason, publications are in Slovenian. Only our annual reports are published in English.

8.6.The Company has not prepared a financial calendar for the forthcoming financial year because it is not currently possible to precisely determine the deadlines for individual publications. The Company promptly informs the shareholders of all relevant events.

8.11.The Company determines risk factors in the annual report.

8.15.5.The Company has not adopted a special bylaw that would specify the rules on trading in Company shares as the Company does not consider it necessary. In this field the legislation in force is applied.

8.17.1. and 8.17.2.The Company has not published its Articles of Association on the website, but it is available at the legal office of the Company’s registered office. The Company has posted the name and contact information of a person in charge of investor relations on its website.

The Company will also respect the recommenda-tions of the Code with the derogations described above in the future. If it appears that the Company cannot respect any of the Code’s provisions, the Management and the Supervisory Board will pre-pare a justified explanation.

3. System of internal control and risk management with regard to financial reporting

High-quality financial reporting is of crucial importance for the effective operation of the governance and management system at Cetis, d. d. The parent company’s management is responsible for risk management, its implementation, and the internal control system. Risk management is detailed further in the financial section of this report. In the first two months of 2009, the company employed, in the field of controlling and risk management, a Controlling Director. However, this person is now employed on a contractual basis (outworker).


194. Information from indents 3, 4, 6 and 9 of the sixth paragraph of Article 70 of the ZGD-1

The rules on the appointment and replacement of the members of the management or supervisory bodies are set out in the company’s Articles of Association, which comply with ZGD-1, and which are available for inspection at the company’s legal office. Amendments to the Articles of Association are adopted with a majority of at least three quarters of the share capital represented at the decision-making process.

Other relevant data with regard to the Company is presented in the sub-chapter Shares and Shareholders of this report.

5. General Meeting of the company Cetis, d. d. and shareholder rights and the exercise of those rights

The convening of a General Meeting and other matters relevant to its implementation are set out in the legislation and the company’s Articles of Association, which are available at the Company’s registered office. The Management of the company usually convenes a General Meeting annually. The General Meeting is open to all shareholders or their representatives, who are obliged to confirm their participation at least three days prior to the meeting.

The General Meeting is announced within a legal deadline, i.e. at least 30 days before it is held, in the Official Gazette of the Republic of Slovenia, and on SEOnet. The company publishes important events on the electronic communication system of the Ljubljana Stock Exchange, SEOnet, and on its web page www.cetis.si.

At its 14th meeting on 7th July 2009, 97,36 % of the stakeholders were present. The shareholders considered and adopted proposals regarding the utilization of the profit for appropriation, the discharge of the Management and the Supervisory Board, the appointment of Supervisory Board

members, the presentation of the Audited Annual Report 2007 for the financial year 2009 and the Audited Consolidated Annual Report for the company Cetis, d. d. for the financial year 2009, changes in the Articles of Association, and appointment of an auditor for 2009.

6. Company management and supervisory bodies

Management of the company Cetis, d. d. The Management of Cetis, d. d. has one member, Simona Potočnik, MSc; her mandate started on 5 August 2005. The Management is appointed by the Supervisory Board. In accordance with the company’s Articles of Association, after five years, the Management can be appointed for another mandate. The Management manages the Company by concluding contracts in the best interests of the Company, independently, and on its own responsibility.

The Management reports to the Supervisory Board on Company in and the business system. It also consults the Supervisory Board regarding important business issues, and the management of the whole group. The members of the Council and the advisers to Management are also involved in the decision-making process, ensuring high-quality and effective decision-making.

The governance and management of subsidiariesThe Management of Cetis, d. d. ensures effective management of the whole group and encourages the use of ethical business principles which comply with the legal framework of all the group’s companies. In this way the reputation of the company is upheld, which is also one of the elements of risk management. The management of subsidiaries is based on internal and external supervision and regular reporting.

Management of subsidiaries and associatesIn 2009, the following appointments occurred: Srečko Pilko was appointed Manager of the new company Cetis Direkt, d.o.o., Celje. Miroslav Njegać was appointed Manager of the new company Cetis MKD d.o.o.


20

Which makes us a lot richer.


21

Together, we create the presence here and now.

Cetis, d. d. Annual Report 2 0 0 9BUSINESS REPORT

22 Cetis provides for safe data management. With printed and electronic media, the company offers comprehensive solutions in corporate communications and security printed matter. Its purpose is to provide services that enable clients to achieve optimal results and strengthen their position in the market, and thus enable Cetis to continually grow. This is why we have been striving to combine graphic services and information technology, and to manage both.

The company’s vision is to be a Global Integrator of Information. Cetis wants to be the best partner to companies and countries worldwide in the fields of identification, security and corporate communications, and a leading partner and consultant when dealing with the rationalization and management of costs in packaging, corporate communication systems, documents, and lottery games.

• Innovation.

• Multidisciplinarity.

• Team work.

• Openness to challenge.

• Professionalism.

In Cetis, we are well aware of the importance of a modern model of strategic management aimed at increasing competitive advantage. We devote most of our attention to a policy of products and services that is in accordance with the needs and wishes of our clients. Our business strategy is to achieve the leading position in the field of high-quality commercial and security printed matter in high volumes, which is divided into four selling pillars: packaging, business communication systems, lottery games, and documents. This based on joint investments and on international action the company adapts income structure to value added. Value added is based on cost management aimed at ensuring anticipated profitability. Development is oriented towards personalization and electronic solutions, and towards comprehensive solutions achieved by combining Cetis’ marketing programmes. It is also very important to develop key human resources, that the management successfully expands into new markets, and to transfer know-how within the company itself.

Business strategy of Cetis group

Mission

Vision

Values

Strategic orientation

Business report

Cetis, d. d. Annual Report 2 0 0 9 BUSINESS REPORT

23

General macroeconomic trends

2009, was the year of one of the greatest macroeconomic crises in recent decades. From the banking sector, the crisis affected the real sector, and this caused the reduction of production volumes and financial difficulties for many companies.

In Slovenia, for the whole of 2009, GDP fell by 7,8 % in real terms. Investment activity recorded the steepest decline (-21,6 %) in 2009 as a whole, falling in all sectors. Construction investment dropped as a result of the (expected) contraction in infrastructure investment; given lower demand, investment in machinery and equipment saw significantly lower capacity utilisation than in previous years; there was also a lower need for transport equipment purchases. In both sectors, investment was adversely affected by the tightening financial conditions, which aggravated access to sources of finance. Private consumption also fell (-1,4 %), as a result of the tougher labour market situation; government consumption was thus the only consumption aggregate to increase (3,1 %). The contribution of net exports was otherwise positive, as a result of a higher decline in imports than exports. As in other countries, the change in inventories made a sizeable contribution to GDP decline last year (-3,5 p.p.). In Cetis, the decline in economic activity was mainly evident in the field of commercial programs, such as self-adhesives and other labels, packaging, some types of business communication systems, and so on.

The decline in the number of persons employed in the manufacturing sector deepened further in the last quarter of 2009. The number of persons employed in manufacturing was 27.399 lower (-12,5 %) than in the comparable quarter of 2008. Once again, It fell least in manufacturing industries oriented mainly to the domestic market (by 4.874), with the highest number of jobs lost in the manufacture of non-metal mineral products (17,6 % or 1.730 workers). In mainly and highly export-oriented industries, where 22.552 jobs were lost, the greatest contributions to the decline came from the textile and metal industries, and the manufacture of ICT, electrical, other machinery and equipment (13.678 in total). Employment dynamics were significantly impacted on by measures for subsidising full-time work and the partial subsidising of payment compensation involving approximately one third of employees in manufacturing by the end of 2009. The majority were included in the scheme for the subsidisation of full-time work, the majority in the sectors that saw the greatest declines in production last year (textiles, metals, electrical equipment, machinery, and ICT). Last year, saw similar declines in the number of employees in these sectors (with the exception of the textile industry) as in manufacturing as a whole (10,1 %). As with many manufacturing companies, Cetis fought the crisis with reorganization measures starting at the end of 2008, but most activities were carried out in 2009. At the end of 2009, the parent company employed 49 less workers (a drop from 380 to 331 employees).

In 2009, inflation in Slovenia was amongst the highest in eurozone. On average, consumer prices in the eurozone went up by 0,9 % in 2009. In Slovenia, this increase was 2,1 %, and although this is a relatively low increase, it was still third highest amongst eurozone countries. A higher increase in consumer prices was only seen in Greece and Luxembourg, whilst Ireland had the highest reduction in consumer prices (by 2,6 %). Year-on-year inflation in the eurozone, which was lower in the first half of 2009 and even negative in the summer and autumn months, was, above all, influenced by slow economic activity, and basic effects connected to past changes in oil and food prices. Non-energy industrial good price movement, which largely follows movements in passenger car, clothing and footwear, purchases of which can be postponed in the short term, was very moderate in 2009. Prices of these goods otherwise rose negligibly in the euro area as a whole, while they declined in Slovenia and some other countries. As a consequence of weak demand, service prices also recorded slower growth in both the entire euro area and Slovenia last year.

In 2009, Cetis witnessed a positive price influence in the purchasing market, predominantly due to lower crude oil prices in the first half of 2009. These have an indirect impact on paper production (energy products), but are even more evident in polypropylene and other packaging prices, this packaging being the product of the petrochemical industry, and is thus directly influenced by crude oil prices on global markets. Despite a persistent growth in crude oil prices in the second half of 2009, Cetis was not influenced by higher prices until the last quarter of 2009 due to a time lag in petrochemical products prices.


24

In the last quarter of 2009, Slovenia was in the mid-table in terms of euro area countries with regard to the deterioration of price competitiveness, whilst in 2009 as a whole, it was among the third of the Member States where deterioration was greatest. The real effective exchange rate, as measured by relative consumer prices, dropped after three months of growth and its year-on-year growth slowed down. It rose by 0,6 % q-o-q, and 2,3 % y-o-y in the last quarter as a whole, mainly due to the appreciation of the euro against the USD and GBP.

Insolvency of legal entities increased significantly in 2009. According to data collected by the Agency of the Republic of Slovenia for Public Legal Records and Related Services (AJPES), 5.252 legal entities had outstanding matured liabilities for more than five consecutive days in a month at an average daily amount of EUR 257 m in December 2009. In 2009, (December 2009 in comparison with December 2008), the number of these enterprises increased by 53,8 %, and the average daily amount of their outstanding matured liabilities by 74,3 %. The bulk (nearly one half ) of the increase in the amount of liabilities came from legal entities in construction, where outstanding liabilities almost doubled. One fifth of the total increase in the amount came from legal entities from the financial and insurance sector, where outstanding liabilities are highly concentrated in a relatively small number of legal entities. Contributing to the total outstanding matured liabilities are the distributive trades, professional, scientific and technical activities, and manufacturing. Enterprises are not only in arrears in terms of the above-mentioned payments; the share of enterprises falling behind in fulfilling their obligations to banks has also been rising in recent months. According to Bank of Slovenia data by sector on non-financial enterprises’ arrears in fulfilling obligations to banks, the share of enterprises that fall behind on payments to banks is highest in hotels and restaurants, while it is also above average in transport and storage, agriculture, real estate activities, the distributive trades, and in manufacturing.

Cetis fulfils its obligations to financial institutions in accordance with agreed repayment dates. Discrepancies between the days of operating current liabilities and the days of operating current assets from time to time cause delays in payments to suppliers. However, Cetis strives to minimise these delays and settle such liabilities on time. (Source: Slovenian Economic Mirror, January and February 2010)


25

Company operating results were lower than those achieved in 2008. However, due to business opportunities and financial circumstances, the company managed to maintain a favourable financing structure, despite a small decline in long-term financial resources. The company estimated its financial situation through the break-down and analysis of past, current and hard-to-predict future cash flows. The company took into consideration the following known principles and rules of financing:

- coherence of the extent, structure and trends in assets, as well as liabilities,- consistency of business operations by providing rational financing, reduction of financial risks and

optimal solvency, together with the appropriate financing economics,- achieving a positive financial result as a net cash flow attributable to operating activities,- the possibility of increasing financial strength through asset increase.

The company managed to abide by the above principles and rules, despite higher total revenue, whereby we need to mention that comparability is not possible due to the structure of sales and changes in prices. The company financed current business operations, to a certain extent, with its own resources and resources acquired through the adjustment of its investment policy, and the disposal of some investments. Compared to 2008, the extent of debt decreased slightly, and the structure of bank resources and other financing resources changed. Due to the prolongation of actual payment deadlines, both the extent of receivables and company liabilities towards suppliers increased.

The emphasis of the financial analysis was based on financial and capital structure, as well as on the latest estimate and provision of company creditworthiness. By determining assets not relevant to business operations, and by dynamically planning cash flow, the company managed to provide the resources and guarantees needed to ensure stable current business operations and crucial investments.

2009, was even more demanding for the company in terms of financing, and it required prompt adjustments pertaining to the new circumstances in domestic and international money and capital market.

In light of the above circumstances and the well-known situation on the market, the primary goal of the company in 2009 was to ensure permanent solvency. In doing so, the company still primarily took account of financing economics, while possibly controlling financial risks.

Compared to 2008, the debt to capital ratio did not change; in the structure of financing resources, this ratio was 61.3: 38.7. This ratio is the result of already implemented and on-going measures in the field of financing; in this respect, the company ensured that assets and resources were harmonised in terms of timetable, and it contracted a new long-term loan.

At the end of 2009, long-term assets were mainly financed through capital and long-term foreign resources. With regard to the financing structure, which is still quite balanced, those financial measures were implemented that led to an appropriate financial correction. Above all, the company used those internal measures that improved, in the short term, the level of self-financing.

In 2009, the company was less successful in managing receivables resulting from business operations in 2008. However, the company was also more efficient with regard to supplies: these were reduced in structure, in absolute value and also when compared to revenues. However, the fact remains that the result of financing in 2009 was positive and had a positive impact on the operating profit or loss of the company.

The company is well aware that because of the lower level of self-financing, regular business activities must, as soon as is possible, reach viable business operation levels, so that the re-payment of long-term liabilities is not jeopardized (the company regularly repays all of its long-term debts). The company must secure the acquisition of new or longer-term financial resources. Financial risks or individual exposure of the company are detailed in the financial report.

Asset management

Financial management


26 Scope of investments in 2008-2009

Year 2008 2009

Intangible assets 511.938 618.725

Buildings 250.699 2.007.264

Equipment 502.752 1.784.526

Total 1.265.389 4.410.515

Compared to values for 2008, the company increased investment in intangible and tangible fixed assets. Technological upgrading and an increase in capacity were a prerequisite for existence in the market and better competitiveness, especially in the field of labels and wrapping materials. The biggest investment in 2009 include: the purchase of a printing machine, a machine for the application of holograms, and real estate in Tirana. The company also invested a larger amount in intangible fixed assets, i.e. software, in the framework of both existing as well as new projects.

Despite harsher operating conditions, the company shall also continue investing in the market and in modern technology and knowledge in 2010 and in 2011. The main purpose is to ensure higher productivity, responsiveness, specialisation and the reliability of business processes and, consequently, lower costs, along with acquiring new contracts in the long run.

Cash flows – investments in 2008-2009 (non-consolidated)

Inflows (offset)

2008 2009

Property, plant and equipment 765.142 1.025.934

Financial investments 1.692.985 316.125

Total 2.458.127 1.342.059

Outflows (offset)

2008 2009

Intangible fixed assets 511.938 902.888

Property, plant and equipment 753.451 1.793.413

Financial investments 3.600

Total 1.265.389 2.699.901

Investments


27Gross added value 2008-2009

2008 2009

Gross value added in EUR thousand 10.350 9.112

Chain index 86 88

Gross value added in 2009 was lower when compared to the previous year due to higher costs of material and services on one hand, and due to partially higher or lower reductions in sales prices on the other hand.

Depending on the needs and the defined strategy, the company will invest in property, plant and equipment and other long-term assets, and will dispose of all investments not relevant to its business activities.


28 The share capital of Cetis, d. d. is divided into 200.000 registered ordinary shares bearing the CETG mark, which are traded on the Ljubljana Stock Exchange. All shares are freely transferable. The company made no changes to share capital in 2009. The Company publishes all the required information on the SEO-net portal of the Ljubljana Stock Exchange.

The number of shareholders did not change significantly in 2009. At the end of 2009, the company had 1.022 shareholders. In comparison to the end of 2008, the number of shareholders increased by one (1).

Structure of shareholders as of 31. 12. 2009:

The ten largest shareholders own 91,7 % of total shares issued in dematerialised form by the Central Securities Clearing Corporation in Ljubljana.

With the exchange of securities in 2009, the company acquired 9.125 own shares; as of 31.12.2009, the company holds 9.326 own shares for the purposes stated in the second indent of Article 240 of the Companies Act (ZGD-1).

The General Manager as the only management board member holds 100 ordinary shares, i.e. 0,05 % of all issued shares. None of the securities holders have special control rights. The voting rights of the securities holders are not limited.

At the end of 2009, the share market value was EUR 24.50, which – based on the total number of issued registered shares - was 17,8 % of book value, which at the end of 2009 was EUR 137,63. In 2009, both the book and market value of the share decreased.

Shares and shareholders

Shareholder Number of shares Percentage of share capital in %

Cetis-Graf d.d. 78.493 39,25Kovinoplastika d.d. 18.649 9,32Balanced mutual fund Infond 18.233 9,12Kapitalska družba d.d. 15.609 7,80Slovenska odškodninska družba 14.948 7,47VS Probanka Globalni naložbeni sklad 12.049 6,02Triglav naložbe d.d. 12.043 6,02Cetis, d.d. 9.326 4,66NFD Holding d.d. 3.500 1,75Impala d.o.o. 585 0,29Other legal and natural persons 16.565 8,30Total 200.000 100,00


29Movements of the market and book values of CETG shares in the years 2008 and 2009 (in EUR)

Loss per share in 2008 and 2009 in EUR

The movement of the CETG share price in 2009 in EUR

The average price of CETG shares on January 1st 2009 was 66,00 EUR; in June 2009 it was 57,90 EUR. At the end of 2009 it was 24,50 EUR.

Dividend policy

The management of the company is of the opinion that in the last two financial years, the company failed to achieve a positive result, and that it does not have undistributed profit at its disposal; therefore dividends will not be paid out until company operations significantly improve.

Depending on the market situation, management plans to realize long-term development, investment requirements, and company needs in the following years, and search for new opportunities, with the purpose of maximizing the company’s assets and the return on invested capital, and fulfil the expectations and interests of its shareholders.

2008 2009

Loss per share -2,09 -3,32

Market value of the share (31.12.)

Book valueof the share in (31.12.)

Ratio between the two

2008 66,00 143,28 46,12009 24,50 137,63 17,8


30

The sales activities of Cetis, d. d. are based on four selling pillars: documents, packaging, lottery games, and business communication systems with a common denominator – to be a global information integrator. The strategies relating to the selling pillars are well planned and divided within the parent company into security and commercial printed matter.

In the field of documents, we are directed towards developing strategic partnerships by upgrading integrated solution development. We seek possible potential for public-private partnership with public institutions, and develop comprehensive offers to support small-sized countries. We pay special attention to the development of smart card technologies. In the field of packaging, we strive to modernise production and to include consumers’ wishes regarding the development cycle of products and services, and the upgrading of packaging into special ecological and other packaging. In the field of lottery games, which is our third selling pillar, we strive to develop a global business model for lottery games, and new offers (services) in connection with other pillars. Cetis offers this model to the market with a view to promoting sales activity and advertising. The future of business communication systems lies in the systematic development of direct marketing solutions: the concentration of new service development connected to the pillar in the parent company, and the transfer of tested models to new print centres, and the standardisation of repeatable documents.

The sale of commercial printed matter includes the sale of products and services of two of our pillars: packaging and business communication systems. In 2009, the commercial printed matter pillar received 10.577.000 thousand EUR in revenue. Packaging pillar sales revenues (self-adhesive labels, non-self adhesive labels, wrapping labels, and thermo-shrinkable sleeves) amounted to 5.386.000 EUR or 51% of total sales revenue in the field of commercial printed matter. Sales revenues in the field of business communication systems, forms, direct mail printed matter and photo bags amounted to 5.191.000 EUR, i.e. 49 % of total sales revenue in the field of commercial printed matter.

Packaging pillar

Self-adhesive labels constitute 56 % of sales revenue in this field. In 2009, the company witnessed an 8 % drop in this field; however, the nominal value of production was greater. The reasons for this therefore lie above all in the great pressure to reduce sales prices and to adjust to market conditions. With the new machinery acquired at the end of 2009, Cetis can now offer better quality products, a better response time, repeated realisation, and new printing possibilities. This is evident in the company’s intensive presence on the market. With additional selling activities, the company plans to improve sales revenues in 2010.

In the field of flexible packaging (wrapping polypropylene labels and thermo-shrinkablesleeves), the company maintained its market share in the domestic market, despite good competition. However, we sold less of these products, resulting in fewer orders for flexible packaging. In foreign markets, Cetis’s existing customers bought lower quantities, and in terms of new customers, Cetis performed product testing. The latter contracts will be realised in 2010.

The company acquired new customers and managed to increase the sale of non-self adhesive labels for beer and wine. By providing high-quality products, adequate delivery times, and after-sale activities, the company will continue to increase sales in 2010.

Business communication systemsForms constitute the greatest sales group, in terms of value, in the field of commercial printed matter. They hold a 60 % share in the relevant pillar. In 2009, the sale of commercial printed matter increased by 3 % when compared to 2008. Despite the decline of forms in copies, the company acquired new contracts, mainly in SE Europe, by means of successful processing and a changed strategy of sales price formation. The company also intends to acquire new contracts on foreign markets in 2010.

In the field of direct mail, realisation was a few per cent lower than in 2008. In the segment of printing and packing of invoices in envelopes, the company retained all of its customers, and managed to acquire one new one which classifies as one of our most important customers. In the field of commercial printed matter for direct mail, the effect of recession was greatest; the number of such marketing activities declined. By changing its organisation and upgrading technology in the field of printing and packaging in envelopes at the beginning of 2010, Cetis now has new opportunities to acquire new contracts. To this end, the selling team improved and enhanced its activities.

Sales

Sales of commercial printed matter


31

Sales of photo bags are still in decline; therefore sales revenue was lower than in 2008.

In the field of commercial printed matter, the company implemented its goal strategies in individual foreign markets, where it cooperated with new sales agents, expanded its sales networks to Hungary and Bulgaria, and increased its planning activities in the domestic market.

The goals for the sale of commercial printed matter in 2010 are: to increase sales in the domestic market with existing buyers, to systematically focus on all potential clients, and actively engage in foreign markets with a view to realising planned sales.

In 2009, sales of security printed matter increased by 19 % when compared to 2008. Sales value reached 12,7 million EUR and constituted 54% of total company’s sales revenues. The extent of contracts acquired on foreign markets doubled when compared to 2008 and reached 40 % in the total structure of security printed matter. The company delivered security printed matter to 13 countries in Europe and Africa. However, the company still sells most of its security printed matter in Slovenia (60 %), Africa (16 %), Bosnia and Herzegovina (10 %).

Security printed matter covers two selling pillars: documents and lottery games, i.e. three product groups: public documents, cards and lottery games. Public documents constitute 65 % of security printed matter total sales; cards constitute 27 %, and lottery games constitute 7 %. When compared to 2008, the public documents segment reached the highest growth (40 % increase in sales); passports, driving licences and protective labels were the products that contributed most to this increase.

DocumentsIn the field of documents, the company produced Slovenian biometric passports improved with a new generation chip to store finger prints. The company continued to produce biometric passport for two African countries and visas and vehicle registration certificates for Slovenia, and it successfully concluded the development project for new driving licences in the form of a plastic card. In terms of Bosnia and Herzegovina, the company produced two million security forms and over two million security labels intended for a new Ministry of Transport project.

Forms with security protectionThe company produced health forms for Slovenia, and finished printing ballots for elections in Albania and Kosovo, and ballots for EU elections. Cetis concluded a contract for printing and supplying Slovenian vignettes for the next three years and has supplied the first six million vignettes.

CardsIn the field of plastic cards, the company continued with the issue of new health insurance cards and international health insurance cards, it personalized bank cards, and continued the concession project for tachograph cards production. For the Czech Lottery, Cetis started issuing gift cards, and for Croatia, the company produces two million health insurance cards.

Lottery gamesIn 2009, this segment continued to grow. With Cetis’s products, people in Slovenia, Serbia, Croatia, Macedonia, Monte Negro and Albania tried to find their fortune.

In Africa, the company continued with its long-term projects acquired in the preceding five years in Gabon, Burundi and Niger, and managed to acquire two new projects in Somalia and Guinea-Bissau.

Marketing and selling activities were also conducted in Central and South America. Cetis managed to position itself as a global producer of security printed matter and systemic integration. Together with local sales agents, the company is currently in the process of acquiring important projects.

Based on success in 2009, the sales plan for 2010 is very ambitious. The company decided to expand production in the groups of products where increase in sales is expected, mainly in the segments of cards and public documents. Our motto for 2010 is: creating our own trends instead of just following new ones.

Sales of security printed matter


32

2009: The most profitable yearFor Cetis Zagreb, 2009 was the most profitable year. The company achieved its best results thus far. Management predicted last year that the crisis could prove to be a good opportunity for successful companies, since in such times unsuccessful companies tend to go bankrupt. Therefore, the management planned revenue growth for 2009. Revenues grew by 19 %, and in light of the global recession, this is a great success. In the field of direct mail, Cetis Zagreb became an important market player in Croatia when the company signed a contract for T-mobile and B-net. In 2009, the company made 60 million A4 printouts for clients. This volume puts the company at top of the Croatian market.

Two new companies in 2009

Cetis Zagreb established a subsidiary in Celje. Its goal is to take over variable mail for the Slovenian market currently held by its parent company Cetis, d. d., Celje. With the parent company’s help, Cetis Zagreb is slowly becoming a leading player on the market in terms of variable mail in the former Yugoslav Republic. Primarily, the company strove to gain a leading position on the Croatian market. Now, its newest goal is to be a regional leader in the field of direct mail. To this end, Cetis Zagreb established, with a local partner, a company in Macedonia where a direct mail centre is being established. Recently, the company successfully tendered for a contract for the Macedonian Tax Administration. This contract gives Cetis Zagreb a good head start, and promises good results in its first financial year. The company is present in four countries, and this is where there its maximum potential lies.

In 2009, Cetis Zagreb acquired ISO 27000 Certificate. With this certificate, the company is implementing its goal – orientation towards clients and their security; the company’s clients know that their information is safe with Cetis, and that the company will handle their information in line with legislation.

With regard to procurement, 2009 was quite stable. Printed matter and envelopes retained stable prices. The price of paper, being the core component for printed matter and envelopes, was in decline. However, at the beginning of 2010, price started to rise. However, since, in 2009, the company did not pressure its suppliers to decrease prices due to the fall in paper value, the company does not expect its suppliers to raise prices in 2010.

With regard to envelopes procurement, Cetis Zagreb established a great working relationship with the manufacturer in 2009 - the company purchased one third of its production volume. This manufacturer is now Cetis Zagreb’s supplier of paper, which indicates strategic cooperation.

Difficult year for HR

With regard to human resources, the company faced many problems. Four of its employees left the company on sick and maternity leave. Statistics shows that the number of employees increased; however, in reality, the company has one employee less than at the end of 2008. Four employees are absent, and three new employees were taken on. In 2009, the company had 25 employees, but only 21 are active.

Distributive trade

An important share in total revenues is held by distributive trade. In Croatia, Cetis Zagreb is a sales agent for Cetis, d. d. and Cetis Graf d. d. In 2009, Cetis Zagreb managed to sell the largest volume of the parent company’s products since its establishment in 1991 – over 30 % more. This is due to the company’s active engagement on the market, and a contract signed with a company dealing in self-adhesive labels and thermo-shrinkable sleeves.

The company conducts its business operations in two profit centres performing two very different activities. The direct mailing profit centre (PC mailing) is a production unit and its goal is to bring profit. The other profit centre is distributive trade (PC trade), and its goals is to place as many Cetis’s products as possible. Profit is not the priority. Trade is still brings in higher profit than direct mail. However, according to the company’s plans, this should change in 2011.

Sales by companies of the group

CETIS ZG


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Plans for 2010

In 2010, Cetis Zagreb plans to invest in colour variable printing. This will give the company an advantage over its competitors, and bring more satisfactory results for its clients. The company wishes to consolidate and stabilize its operations in 2010. Significant growth in 2009 resulted in discrepancies in organisation and human relations. The company has to find its equilibrium and then grow and create strategic alliances. Croatia is becoming a market where price and quality are most important, and therefore the company has nothing to fear.

The company will use streamlined technology, know-how and lower costs with regard to certain business processes on one hand, and favourable procurement on the other (due to a greater scale of operations), and this will bring profit in the future. And once former Yugoslav countries become EU Member States, the company’s goal is to establish the biggest direct mail centre in the Balkans and take advantage of globalisation. These are company’s goals for the future and solid motivators.

The business results at the end of 2009 confirmed that Amba did well in all of its areas of work. For the first time in the last five years, the company achieved positive results – it had a net profit of 95.771 EUR after tax, and this is a good foundation to build on.

The global economy faced disturbances. Financial crisis and economic recession caused great shifts in all segments. We witnessed numerous changes connected, above all, to developments in global markets. In 2009, companies in general fought to retain orders, production and their revenues. Despite measures, including searching for new buyers, the company could not prevent the decrease in the realization of both revenues and production quantities.

Sales revenues decreased by almost 23 % when compared to 2008. Production volume decreased by 24 %. The decrease in sales revenues is mainly due to the decrease in number of orders resultant on the contraction in market. The company was also more cautious with regard to maintaining stock with buyers, and it also terminated cooperation with some of buyers as it could not negotiate favourable price, or could no longer bear the risks connected to the poor liquidity of these buyers. In 2009, there was a significant change in the sales structure relating to markets. The company suffered a severe decrease in sales on two very unfavourable markets (in terms of price), i.e. in Croatia and the Czech Republic, while the company managed to strengthen its position in Italy. It also managed to retain volume of sale on the demanding Austrian market where in the future an increase in sales is expected. On the Slovenian market, where Amba realizes half of its sales, there was a 20% decrease in sales, mainly due to lower prices and partly due to a decrease in the number of orders.

Savings in procurement and in services

The Chairman of the Board of one of Amba’s biggest buyers in Slovenia said that 2009 was the year of procurement. Amba took notice of that ²hint,² and continued with an active procurement policy which was based on the company’s goal: there must be at least two confirmed suppliers for all crucial materials. In this respect, Amba cooperated with its parent company through which Amba’s procurement is carried out. The company had a number of negotiations with potential suppliers, it carried out testing and, at the end, confirmed materials and concluded contracts with suppliers. New suppliers brought numerous advantages: the company was less dependent on a limited number of suppliers; it had more flexibility in the field of supplies; better supply conditions; and lower input material prices. However, it is hard to estimate how much Amba saved on its activities in the field of procurement. 2009 was a successful year in terms of procurement. This is shown by a decreased share of material costs in the company’s final results; when compared to 2008, this share is significantly better. When compared to 2008, the company managed to lower costs of material by 32 %. In light of a 24 % decrease in production, this is proving to be a good result.

The company was also active in the field of service cost reduction. It managed to reduce costs by 5 %, not

AMBA


34

taking into account rents. Amba reduced costs by means of the optimisation of existing services and the acquisition of new partners. These activities shall also continue in the future.

With regard to human resources, Amba managed to solve the problems connected to the termination of a number of employment contracts in the preceding two years. Therefore, it did not have major difficulties due to the decreased number of employees. At the end of 2009, Amba had 33 employees. Difficulties related to a smaller number of employees were evident during the summer vacation and during the winter when many employees are on sick leave.

Production in the light of two development-investment projects

With regard to production, the company had difficulties assuring quality. This was mainly due to poor investments in the past. Because of a reduction in stock, there was an increase in the volume of waste material. The company prepared plans to reduce the costs of complaints and waste in the production process. In terms of production, two investment-development projects were carried out. Because of those two projects, Amba can now manufacture more diverse products. They include investment in a corona treatment device for foils, and laser perforation device for foils. Both projects were successfully concluded and the first deliveries were realised.

In 2009, the company had many difficulties with regard to operating liquidity and the price of financial sources. With regard to finances, the company managed to fulfil most of its obligations, and to extend its long-term loan. This was due to a successful disposal of real estate at the location of manufacturing activity. The company negotiated a long-term lease with the new owners, and this allows the company to perform its business activities smoothly. In this way, the company reduced the financing costs that were previously hindering business operations. In 2009, Amba had difficulties recovering its receivables, and faced strict payment terms with regard to its suppliers. The company expects to negotiate better payment terms with its suppliers on the basis of its new credit ratings, comparable to the payment terms which the company offers its buyers.

Plans for the future

Amba has big plans for the new decade. It must retain its position as the most important Slovenian manufacturer of flexible packaging. In 2010, the company will focus on business processes, rationalisation and optimisation. In the field of sales, the company will continue its path: buyers, product quality, and service suitability come first. Sales activities will be directed into the more stable Western markets. An important starting point is to improve cooperation with existing buyers in Austria and to enter the German market. On the Slovenian market, the company expects a stable increase in sales (when compared to 2009). It will strive to retain the confidence of existing buyers and look for new opportunities.

Management will continue to do all that is in their power to safeguard the company from market pressure, to strengthen the company’s position in the market, and to fulfil the expectations of Amba’s owners, business partners and employees.


35

The Research and development division (R&R) is based on the close relationship between graphic and IT development. This enables Cetis to offer state-of-the-art technological solutions for its product pillars. With its experience and know-how, Cetis is a good partner to governments and companies in the field of systemic integration and project management. Being a global information integrator, the company directs its R&R efforts to the development old stable partnerships in third world countries undergoing democratisation: population censii, e-elections, the establishment of central registers, the production of personal identity documents, the personalization of personal identity documents, and identity management.

Achievements in 2009

Integrated solutions for countries

• Driving licences for Slovenia.• The systemic integration into the framework of biometric passports, visa and residence permits of

an African state; the development of all these products, and IT infrastructure development for the personalization of and entry of data; managing a project to build a factory; the commencement of production; education and know-how transfer.

• The Preparation of a project and the infrastructure required to produce and issue public documents, also for an African state.

• The development of integrated solutions case studies to support democratic processes (population census, e-elections, establishment of central registers, production of personal identity documents, personalization of personal identity documents, identity management).

Development of packages and services

For bigger Slovenian business systems (insurance companies and trading companies), the R&R division produced forms, developed variable printing, data digitalisation services, and stored and safely destroyed documents containing personal data.

Innovative products, services and knowledge transfer

• The company developed a new way of producing plates for lamination and intaglio printing, used to produce documents. The system was improved with a faster manufacturing process with a longer useful plate life.

• The company also uses thermocromic dyes to produce protective elements for security printed mat-ter.

• With regard to polycarbonate, the development brought new protective elements, such as multi-purpose dyes, transparent windows, hologram polycarbotate, and so on.

• R&R optimised the production of the multi-layer protection of passports’ data pages (CSM – Cetis Security Multilayer).

• With the National Institute of Chemistry Ljubljana, the company cooperates on a joint project entitled Materials and Structures for optically variable protective elements.

Development in the field of smart cards and integrated card systems

The company upgraded the Slovenian health insurance card with a new application for personalization and a web-based application supporting the system. With its strategic partner for EMV (European Mastercard Visa) card systems, Cetis engaged in the development of integrated solutions in this new field. This includes the development of web-based applications with supporting infrastructure in the field of smart cards (Pošta.net). This is the development and implementation of Elliptic Curve Cryptography, i.e. the final cryptographic algorithm that enables users to access the latest security and cryptographic technologies transparently. With regard to cards, this is reflected in the production of transparent and semi-transparent card combinations.

Research and development


36

Integrated systems Integrated systems facilitate work, supervision of this work, movements in the target population. This segment includes civil service activities and the usage of data for commercial and internal purposes. Together with its partners, Cetis offers the preparation of comprehensive solutions in the field of sales and support services, data processing and the production and personalization of bank cards. In 2009, such a system was realised for an African country.

Establishment of a public keys system

Cetis also offers the establishment of Public Keys Infrastructure (PKI). Within these systems, data can be accessed only by duly authorised persons or institutions with a private key. CSCA and CVCA are systems that guarantee the credibility of data. This system is a component part of every integrated solution for a country. It involves personalization, which is a part of integrated solutions.

Plans for the future

The development is strategically directed towards e-solutions, specialization of products and services, personalization and comprehensive solutions on the basis of pooling individual production programmes. The company will also strive to develop strategic partnerships in the field of global integrated solutions development. The goal is to establish cooperation with research and development institutions. This is already the case in the system of Centre of Excellence in Nanotechnology and with the National Institute of Chemistry Slovenia. Innovative procedures for material processing are being implemented, with the emphasis on protection, safeguarding and digitalisation models. The company will continue to invest in the development of a comprehensive range of products supporting democratic processes in third world countries, in the development of smart cards technology and the development of web-based application for smart cards, such as identity cards and health insurance cards.

Information Technology support

The Research and Development of Integrated Solutions Division R&D ISD is active in the field of research, development and support of innovative solutions in the field of information technology, in line with the vision of the company.

In 2009, the following important projects were concluded or begun:

• In 2009, much was achieved with regard to the introduction of new technologies in the field of server equipment by means of server infrastructure virtualization.

• The establishment of a wireless network in the company in line with all safety standards.• Preparations for the start-up of a logistic information system for storage automation.• Remote access to business e-mail for all employees.• The centralized printing project continued. Results are evident, above all, with regard to lower print-

ing costs and the rationalization of consumable material procurement.

Through the service centre “ME ServiceDesk” intended to monitor all requests regarding IT support to all users within the company, the Integrated Solutions Team processed more than 1.300 requests from employees.

R&R ISD worked with the Slovenian government on upgrading the following services in the field of comprehensive services for security printed matter:

• the renewal and transfer to electronic exchange of data when ordering Slovenian second-generation health insurance cards,

• the commencement of the production of new driving licences,• the transfer to a new generation of biometric passports (which store owner’s finger prints on a chip), • the establishment of a system for the production, numbering and control over Slovenia vignettes.

R&R ISD underwent a quality evaluation by the following competent institutions: the issuer of credit and payment cards, lottery organisations, central banks, health organisations and authorised auditing firms.


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Highlights in 2009

In 2009, the focus was on improving the processes of production for all Cetis selling pillars. To this end, Operational Excellence Team was set up. This team has the following tasks: to list all processes for product groups, to define control methods and control cards, to permanently monitor and verify norms and to prepare and revise working instructions. The team is also engaged in improving processes to raise productivity and reduce material consumption and errors in production.

The goal was to reduce material consumption by 2 %. This goal was partly achieved; however, reduction of material consumption remains an important goal in 2010.

Despite disproportionate capacity usage, the company managed to implement the production of driving licences and Slovenian vignettes. Within the business communication centre, a new company Cetis Direkt was established. Its goal is to reduce the costs of production and maintenance with the help of new technology.

Within the packaging pillar, investment in a new printing machine was implemented. This investment provided production with additional capacity and better possibilities for the further development of this pillar. In the packaging production, a production visualization project started. This project brings a new alignment of machinery which improves the movement of material and introduces tables with specified key indicators. The purpose is to inform employees of deviations from goals and to introduce visualization of production as a whole.

Production has one additional advantage – its employees. With Matrix of Knowledge, the company measures the knowledge of all its employees. Based on its findings, a plan for further education is prepared.

The production segment introduced a new incentive to submit proposals entitled Where does the shoe pinch? Anonymously, employees can submit their proposals, complaints, opinions and thoughts regarding possible improvements within the company. Rules on proposals for innovation were also renewed. In 2010, the production segment plans to perfect these rules.

To improve production visualization, working environment, and create a positive work atmosphere, the company introduced a 5S system5 for a good and clean environment. First steps were taken at the end of 2009, and the work continues in 2010.

Based on an analysis, the company saw its opportunity mainly lay in improvements in work organisation and in preparation for work. To this end, more attention was given to the monitoring of production standstills, process control and the preparation of work orders prior to their submission to production. Positive effects are already evident in the visualization of production and a greater emphasis has been placed on work preparation.

Plans for 2010

In 2010, Cetis will continue to achieve goals set in 2009. It will continue to reorganise its packaging selling pillar and also other pillars, to introduce a more effective and stimulating remuneration of employees, and to reorganise the Dyes division into Work preparation division.

Production

5 5S

5 5S method comes from Japan. It includes five steps, beginning with the letter S in Japanese (Seiri; Seiton; Seiso, Seiketsi, Shitsuke). These words have the fol-lowing meaning: sorting, organising, cleaning, standardising, maintaining.


38 This new division will:

• implement the 5S methods (better facilitated work, greater productivity, better working environment, fewer errors, improved security).

• Implement the SMED system1 of rapid exchange with a view to reduce preparation by 15 % in 2010. Preparation of documentation with the purpose to better control work processes, to standardize, to educate employees at different workplaces, to prepare a control plan and working instructions.

• Ideas management. In 2009, the company received 24 ideas for improvement. In 2010, its goal is to receive 100 such ideas.

In 2010, Cetis will devote most of its attention to measures to improve, to better satisfy its buyers, and to strengthen confidence in the company.

After several years of economic growth, 2009 brought an uncertain economic situation. Most of the companies faced aggravated business operations, and recovery after the financial and economic crisis will take longer than predicted by economists. Companies tend to deliver faster now. Successful companies offer their products and services in the shortest possible time. The questions as to how one can deliver more effectively, at lower costs, and to stay at the forefront, are still very important.

Supply chain management means managing the flow of materials and services, costs and payments. In this respect, timely and accurate information is very important. At the very beginning of production, it is very important to procure appropriate materials with timely delivery and in sufficient quantities. Management is also very important in terms of stock reduction and accurate production planning. Logistics, being part of the supply chain, contributes, with modern information solutions to the following goal: the right product, at the right time, at the right place, at an appropriate price.

Orders and receipts in the last two years

2008 2009

Total number of orders 3774 4374

Total number of receipts 12.432 11.685

Purchasing value in EUR 10.417.097 10.478.545

Purchasing value remains at the level from 2008. Despite the lower prices of most raw materials, the unchanged purchasing value indicates that in terms of the purchasing structure, more expensive materials for printed matter with value were predominant. The company received more orders, and this brought breaking-down. At the same time, the company reduced the number of receipts. This indicates more purchasing of fixed assets, computer hardware and software and services that are not the subject of receipt. Total Purchasing for Amba is conducted outside Cetis’s information system.

Supplier relations and logistics

6 SMED comes from the English language and means »single minute exchange of die«. It is intended to save every minute of time when exchanges at the machine are made.


39Movements of prices of raw material and monitoring of the most favourable market price

Savings in purchasing costs were a priority in 2009. In the second half of 2009, the price of raw material decreased on average by 15 %. With some materials – PVC, PC materials, dyes and cardboard - the reduction exceeded 15 %. The company found new suppliers and thereby managed to reduce the price of raw materials. Currently, the company has two or three confirmed suppliers of basic raw materials (with the exception of printed matters of value). Procurement was carried out under most favourable market prices.

Monitoring of material inventory and optimal ordering

The same attention given to raw material prices was dedicated to the monitoring of the material inventory. In general, the inventory was reduced, however, the number of orders and transport costs increased. The company continuously strives to optimise ordering, i.e. to accurately plan production and timely delivery, which are very difficult to achieve.

Relations with suppliers and complaints

In 2009, the company carried out supplier evaluation based on a changed methodology. More emphasis was put on prices, delivery terms, and complaints and their resolution. Consequently, a new classification of suppliers was made: A – reliable, B – acceptable, and C – conditional.

A B C

2008 24 48 4

2009 20 52 1

This table includes all the suppliers and subcontractors with a minimum of 6 supplies a year. Despite the changed criteria, the structure has remained more or less the same through the years. Somewhat more suppliers fall into class B. Only the top 20 suppliers are informed of the results of the evaluation.

Each year, the company monitors the satisfaction of its suppliers. Only the strategically most important suppliers take part in this analysis are. The evaluation of supplier satisfaction is good feedback that helps determine the ‘right’ purchasing strategy with regard to individual suppliers, and is a solid source of information for improvement. Generally speaking, evaluations for 2009 were positive, with the exception of compliance with agreed payment terms.

Compared to 2008, there were fewer complaints filed – 67 total. Complaints are dealt with promptly and at the end of 2009, 94 % of complaints were solved.

Storage transport service

In 2009, the number of employees in this segment was reduced to 27 (- 4 employees). Movement of raw material to production and logistics was facilitated at the end of 2008 when materials were moved from the Bukovžlak warehouse to the Čopova location. With this measure, the company saves approx. 100.000 EUR per year. Throughout 2009, preparations for warehouse automation were underway, including the marking of locations with bar codes and the renovation of shelves.


40

Cost of transport in EUR

Domestic market 155.428. (+6,7 % compared to 2008)

Abroad 160.201 (+15 % compared to 2008)

Raw material 55.498 (-26,7 % compared to 2008)

Postal services 18.063 (-15,5 % compared to 2008)

Costs of transport amounted to 420.142 EUR in 2009, i.e. 98,3 % of costs incurred in 2008 (427.239 EUR) or 88,3 % of costs incurred in 2007 (475.635 EUR). With regard to transport abroad, there was an increase in the transport of printed matter of value (Macedonia, Bosnia, Monte Negro, Serbia, etc.) and printed matter for elections (Albania, Kosovo). This also brought higher costs. With regard to raw material, there is a significant reduction in costs due to the relocation of the Bukovžlak warehouse. Costs of postal services were also lower, mainly due to the termination of the health programme (prescriptions, doctor’s referrals).

The safety and quality of products and services are the fundamental aims of Cetis’ business operations. Cetis takes the following quality standards into consideration when assessing its business operations:

• Certified ISO 9001:2008 Quality Management System.• Certified ISO 14001:2004 Environmental Management System.• OHSAS 18001 Occupational safety and health system.• Visa/Mastercard certified system for ensuring physical and logical safety.• CQM – (Card Quality Management) Mastercard standard ensuring the quality of bank cards.• Certified system of information security pursuant to ISO 27001:2005.

Good evaluations by independent institutions and business partners prove that the company is applying adequate management systems, which are also regularly maintained and improved. In 2009, the company successfully re-certified the evaluation of the quality management system in accordance with the new ISO 9001:2008 and the control evaluation of the environmental management system in accordance with ISO 14001:2004.

The suitability and effectiveness of the quality management system and environmental management system is verified through management controls and internal evaluations which are conducted by the company in line with the annual plan. Internal evaluations enable the company to detect any discrepancies early and to identify possible improvements in processes, and the system as a whole.

Most of the products are verified and tested for compliance and reliability in the company’s laboratory. Criteria for verification and testing are in line with international standards. Cetis’s priority is to ensure the high quality and reliability of its products and services.

High-tech products and services require superior quality control. For this reason, Cetis takes due account of, and uses all technological possibilities to attain the highest quality in all aspects of products and services. The main goal is to constantly improve all the business and production processes.

In 2010, the company plans the complete renewal of documentation related to quality management and environmental management systems; the implementation of re-certification evaluation in accordance with ISO 14001 and control evaluations in accordance with ISO 9001; target-oriented performance of internal evaluations in all processes; establishment of process control; and preventive activities intended to curtail different cases of poor quality.

Continuous changes in the environment and the ever-growing demands of buyers and business partners place new challenges before the company. The company will succeed with joint efforts, the good work of each employee, and continuous improvements in all business processes. This will enable the company to be competitive on demanding global markets, to satisfy its buyers and successfully conduct its business operations.

Quality management


41

In 2009, the company carried out a significant reorganisation in the field of HR. With a view to streamlining business operations, management was reduced and units were functionally merged.

Company’s new macro-organisation

At the same time, the company reformed job descriptions, taking into account newly defined competences for individual posts. HR will continue to train employees, for it is the knowledge and experience of each individual, with its useful value, that brings success to the company as a whole. In the second half of 2009, the company employed and trained new employees to satisfy the needs of the new vignette project.

Plans for 2010

Due to unfavourable results and due to streamlining operations and reducing costs, the company will continue to terminate employment contracts. The company will put more emphasis on the reduction in numbers of sick leaves and on training of its employees in the field of health care and prevention of diseases.

Number of employees per organisational unit (OU)

OU2008 2009

IND 08/09Number of employees

%Number of employees

%

Management 10 2,63 4 1,16 40,00

Commercial department 40 10,53 37 10,76 92,50Finance, economics, legal and HR department

17 4,47 18 5,23 105,88

Research and development 33 8,68 35 10,17 106,06

Production 242 63,68 216 62,79 89,26

Total 380 100,00 344 100,00 90,53

ManagementGeneral Manager

Simona Potočnik, MSc

Commercial Department

Director

GREGOR MLAKAR

Research & Development

Director

MILAN KERIČ

Finances, Economicsand Legal and HR

department

Director

SREČKO GORENJAK

Production

Director

DAVORIN DOBOČNIK

Employees


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For the purpose of comparison with 2008, units that merged (Security and commercial printed matter, Cetis New Technologies, Business Integrations and Human Resources Management, Research and Development of Graphic Technologies) and their employees are pooled in a new organization adopted on March 1st 2009.

The reduction in the number of employees (soft layoffs – termination of fixed-term employments, registration at the Employment Service of Slovenia) continues. At the end of 2009, the company employed 344 workers; 37 with fixed-term employment. In 2009, the company terminated 80 employment contracts.

Number of employees

1. Plan for 2009 – as of 31.12.2009 276

2. Situation on 31.12.2008 380

3. New employments by 31. 12. 2009 44

4. Termination by 31. 12. 2009 80

5. Situation on 31. 12. 2009 344

6. Fluctuation rate 18,87

7. Decrease by 31. 12. 2009 since 01. 01. 2009 -36

8. Deviation from the plan as of 31. 12. 2009 68

Educational structure of employees

Level of education2008 2009

Number % Number %

II. Primary school 83 21,84 65 18,90

III. Qualified workers 7 1,84 7 2,03

IV. Qualified workers 115 30,26 99 28,78

V. Secondary education 98 25,79 96 27,91

VI. Higher education 26 6,84 29 8,43

VII. University degree 45 11,84 42 12,21

VIII. Master’s degree 6 1,58 6 1,74

Total 380 100 344 100

In 2009, 7 employees (with contracts for further education) concluded their education: four of them succeeded at the higher education level, two at university degree level, and one at master’s degree level. The company has 18 pending contract on further education. Investment into education amounted to 7.856,25 EUR in 2009.

Educational structure of employees in the Cetis Group

Number

Level of education 2009 2008

I. 6 6

II. Primary school 66 84

III. Qualified workers 8 8

IV. Qualified workers 109 125

V. Secondary education 123 125

VI. Higher education 31 28

VII. University degree 49 52

VIII. Master’s degree 8 8

Total 400 436


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In 2009, the number of workers with lower levels of education decreased. However, the number of workers with higher education levels increased.

Average salary compared to average in Slovenia

2008 2009

Average monthly gross salary in Cetis 1.233,93 1.336,68

Average monthly gross salary in Slovenia 1.391,14 1.435,16

Deviations from the national average in % -11 -6,86

Average gross salary in the industry

2008 2009

Average monthly gross salary in Cetis 1.233,93 1.336,68

Average monthly gross salary in the industry in Slovenia 1.211,65 1.246,08

Deviations from the average in the industry in % 1,81 6,78

Labour costs in the revenues structure in % 31,73 28,17

Average monthly gross salary in Slovenia in 2009 was 1.435,16 EUR, while in Cetis average monthly salary was 1.336,68 EUR. Labour costs in the revenues structure was 28,17 %. Compared to salaries in the industry as a whole, the average monthly salary in Cetis is 6,78 % higher. In the printing and associated services industry, the average monthly gross salary is 1.246,08 EUR.

Costs of education and training

Type of education 2008 2009 IND 08/09

Seminars 73.315,23 43.733,80 59,65

Computer science 7.519,50 666,44 8,86

Foreign languages 404,35 280,80 69,44

Fairs and conferences 26.581,58 15.622,43 58,77

Education for quality 4.038,55

Safety at work 1.298,31

In-house education 4.838,10

Evening school 11.600,68 7.856,26 67,72

Scholarships 14.571,99 9.931,73 68,16

Total 133.993,33 88.266,42 65,87

Investments into education and training amounted to 88.266,42 EUR, i.e. 255 EUR per employee. The company continued to invest in education and training to compensate for a lack of competences at workplaces, thus putting emphasis on in-house education and training (4.838,10 EUR) and on education for quality (4.038,55 EUR).


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Statistical data on employees

2008 2009

Number of employees 380 344

Share of women 42,10 % 43,60 %

Share of men 57,90 % 56,40 %

Average age of females 41,91 let 41,07 let

Average age of males 42,15 let 41,71 let

Average period of employment of female employees 21,92 let 20,67 let

Average period of employment of male employees 21,49 let 20,82 let

Share of permanently employed 87,90 % 89,20 %

Share of temporarily employed 12,10 % 10,80 %

Fluctuation rate 18,63 % 18,87 %

Share of women in management 43,59 % 35,42 %

New employments 31 44

Terminations of employment 87 80

The Share of women in the company was 43,60 %, and 35,42 % work in the management structure. Age structure and period of employment decreased slightly when compared to 2008. This is mainly due to new employment and the reduction in the number of older employees. Fluctuation rates did not change significantly. However, it is still relatively high due to fixed-term employments.

Overview of sick leave per month in %

Sickness benefits chargeable to the company

Reimbursed sickness benefits

Total

January 4,08 3,66 7,74

February 3,14 3,23 6,37

March 3,23 3,03 6,26

April 4,62 2,74 7,36

May 3,25 2,55 5,80

June 3,12 2,28 5,40

July 2,44 2,76 5,20

August 2,63 2,63 5,26

September 3,85 1,92 5,77

October 3,58 2,82 6,40

November 3,01 3,24 6,25

December 3,51 3,12 6,63

Average 2009 3,37 2,83 6,20

Average 2008 4,11 2,16 6,27


45

In 2009, absence due to sick leave chargeable to the company was reduced by 0,74 %. Reimbursed sickness benefits over 30 days is higher by 0,67%. However, the share of employees on a longer sick leave increased. The company regularly monitors sick leave. It conducts interviews with those absent for a longer period of time. Some sick leaves are due to injuries at work or injuries that occur on the way to work. However, this trend has been in decline in recent years. This shows that a lot is done with regard to health and safety at work, predominantly with regard to the training of employees in relation to safe and healthy working conditions.

Injuries at work in the last two years

2008 2009

On the way to work 4 4

At work 11 9

Total 15 13

It is impossible to avoid injuries at work. Because of new technological processes, training and verifications regarding safety at work, the number of injuries is decreasing. However, there are still too many cases of injuries at work that are mainly due to workers’ imprudence and non-compliance with basic rules regarding health and safety at work. At their workplaces, workers must be concentrated, rested, and disciplined; they must perform their assignments in a way that does not threaten their safety and health, and the safety and health of their co-workers. Workers must also respect obligatory safety measures (instructions on safe work) and use obligatory safety equipment. Their direct superior is responsible for the supervision over compliance with these requirements and for sanctions in cases of non-compliance.

(Source: Annual Report of VZD - Occupational Safety and Health Chamber - and VPP - Fire Safety)


46

Environmental responsibilityA responsible, healthy attitude towards the natural environment is one of the conditions for a healthy working environment. The Company is well aware of this and it therefore observes the strict environmental guidelines defined in its environmental policy. Cetis is not a heavy polluter of the environment. Nevertheless, it has been working actively to minimise the effects of its business activities on the natural environment. To this end, the company is raising environmental awareness and educating its employees, taking into account environmental aspects when acquiring and introducing new technology.

Implementation of environmental goals and programmes in 2009

• The company started with separate collection of waste process water and thereby reduced the mer-cury emissions in the waste water.

• Cetis removed type R22 cooling devices and reduced the threat of emissions of dangerous substanc-es in the air.

• The quantity of municipal waste was reduced by 12 %.

Plans for 2010

• Acquisition of an environmental permit for plants that cause emissions into water.• Reduction of municipal and dangerous waste by 5 %.

Long-term goals

The company’s long-term goals are to continually reduce the quantity of waste and raise the environmental awareness of its employees.

Environmental investments in recent years

Environmental investments in recent years Investments in EUR

Introduction of CTP technology 400.000

Introduction of flexo CTP technology 117.892

Construction of a warehouse for hazardous waste 330.000

Total 847.892

Volume of municipal waste in the last two years

2008 2009

Municipal waste in tons 94,1 82,5

Corporate social responsibility and care for the environment


47In 2009, the company managed to reduce the volume of municipal waste by 11,6 tons, i.e. 12%.

Volumes of hazardous waste (in kg)

2008 2009 Differ. in%

Adhesives 1.790 2.847 59

Fixers 130 675 419

Developers 3.590 3.542 -1

Waste water 7 14.372

Total 20.474 43.293 111

The volume of hazardous waste increased in 2009 because of great quantities of waste dyes (write-offs) and a separate collection of mercury polluted water.

Packaging

Cetis generates waste packaging which is not considered municipal waste and is also an insignificant share of waste packaging from direct imports. In 2009, the Company generated 109.1 tonnes of waste paper packaging nationwide. The Company’s waste does not burden the environment, as the waste packaging is recycled, in line with national legislation. When compared to 2008, Cetis produced more waste packaging due to an important contract with one of its African partners.

Air emissions

The advanced technological equipment and the Company’s dedication to using non-hazardous process materials have resulted in minimum air emissions. Heating is based on natural gas, which is considered an environmentally-friendly form of heating.

Electricity in kWh Natural gas in Sm3 Water in m3

2008 6.776.730 211.731 15.782

2009 7.257.990 228.836 18.163

Preventive and corrective measures

Most of the corrective measures are oral and are due to minor inconsistencies in waste separation, labelling waste containers, and so on. Written corrective and preventive measures are issued when significant potential inconsistencies or repeated smaller inconsistencies are discovered.

Environmental communication

Pursuant to the Rules on Environmental Management, the company keeps internal and external records on environmental communication. Periodically, and in the annual report, Cetis’s employees and business partners are informed of the company’s environmental activities and of the implementation of major projects or investments. The established channels of communication, such as notice boards, electronic mail and meetings, are used to regularly inform employees of the company’s environmental activities. Employees are also constantly trained in the field of environmental protection and safety at work, with the purpose of improving organisational culture in terms of higher environmental awareness. Each individual at Cetis is obliged to implement the company’s environment protection policy and to act in accordance with its provisions. 7 Company didn’t monitor volumes of hazardous waste water in 2008, because it wasn’t neccessary.


48 Social responsibility As with many other companies, Cetis had to struggle with the difficult economic situation in 2009. Therefore, cost-effectiveness was even more important. In line with this strategy, the company had to significantly limit the funds intended for socially useful activities. Cetis is still involved in various socially useful programmes and initiatives, yet to a much lesser extent when compared to previous years.

Cetis continues to sponsor sports teams. For several years, the Company has been a sponsor of the Pivovarna Laško Handball Club, the Kladivar Athletics Club, Celje Women’s Handball and other sport associations and clubs. This was also the case in 2009. Other donations in 2009 were mainly made to individuals in distress.

Cetis supports the physical activity of its employees; within the company, we organise sports associations and the company supports them financially every year. However, in 2009 the company had to reduce the amount of these funds. In the light of the well-being of its employees and to raise awareness regarding the importance of health for the quality of life, Cetis introduced a new event three years ago – Health Day. Every year, at its employee new-year party, the company announces the best employees and presents them with jubilee awards.


49

We drink from the cup of the presence; therefore, we look forward to the future.

Cetis, d. d. Annual Report 2 0 0 9FINANCIAL REPORT

50

Cetis company financial report

Independent auditor’s report

Cetis, d. d. Annual Report 2 0 0 9 FINANCIAL REPORT

51

in EUR

Notes Achieved in 2009 Achieved in 2008

1. REVENUE 2 26.047.444 25.668.580

2. Cost of goods sold 3 -1.323.866 -1.985.530

3. Production costs 3 -16.610.399 -16.204.229

4. Cost of goods sold and production costs -17.934.266 -18.189.759

A. GROSS PROFIT 8.113.178 7.478.821

5. Other income (from operations) 4 790.280 1.054.091

6. Distribution costs 3 -3.857.703 -3.696.083

7. Administrative expenses 3 -6.115.045 -6.195.312

8. Other expenses (from operations) 3 -278.234 -202.331

= Other income, expenses and costs (5+6+7+8) -9.460.702 -9.039.634

B. OPERATING PROFIT OR LOSS EXCLUDING FINANCE COSTS -1.347.524 -1.560.813

9. Finance income 5 1.235.839 2.375.754

10. Finance cost 5 -525.684 -1.199.722

C. NET FINANCE COSTS 710.155 1.176.033

D. PROFIT (LOSS) BEFORE TAX -637.369 -384.780

12. Income tax expense 6 -26.823 -32.248

E. PROFIT (LOSS) FOR THE PERIOD -664.192 -417.028

Basic and diluted earnings (loss) per share (in EUR) 24 -3,32 -2,09

Income statement (IFRS)


52

Statement of other comprehensive income

in EUR

2009 2008

Net profit or loss for the period -664.192 -417.028

Other comprehensive income in the period: 534.680 -1.917.176

Gains on revaluation of intangible assets and property, plant and equipment

Available-for-sale financial assets 534.680 -1.917.176

Gains and losses from currency translation differences for financial statements of companies abroad

Actuarial gains and losses of programs with defined benefits

Other components of comprehensive income

Total other comprehensive income for the period 534.680 -1.917.176

Total comprehensive income for the period -129.512 -2.334.204

Attributable to:

- majority owners

- minority interest


53

v EUR

Notes 31 December 2009 31 December 2008

ASSETS

Property, plant and equipment 8 16.814.841 16.691.900

Intangible assets 9 2.152.467 1.619.591

Investment property 10 429.226 203.129

Investments in group companies 11 3.615.411 3.615.411

Investments in associates 12 2.600 7.560

Available-for-sale investments 13 11.094.674 12.282.154

Loans 14 44.876 333.995

Non-current operating receivables 15

Deferred tax assets 16 535.307 741.136

Total non-current assets 34.689.401 35.494.876

Available-for-sale assets 17 2.296.668 2.381.259

Inventories 18 2.591.327 2.852.416

Current investments at fair value 19

Short-term loans 20 12.736 897.061

Operating and other receivables 21 5.318.330 4.179.217

Cash and cash equivalents 22 2.930 955.896

Total current assets 10.221.991 11.265.850

TOTAL ASSETS 44.911.391 46.760.726

Balance sheet as at 31 December 2009


54

in EUR


EQUITY

Issued capital 10.015.023 10.015.023

Share premium account 17.550.359 17.859.379

Reserves (legal and statutory) 2.027.420 1.926.717

Retained earnings 455.876

Treasury shares -1.025.918 -26.001

Fair value reserve -1.041.797 -1.576.477

Total equity 23 27.525.088 28.654.518

Borrowings 25 5.567.754 6.064.130

Non-current operating liabilities based on prepayments 26 3

Provisions 27 877.175 1.010.093

Deferred tax liabilities 16 5.744 26.135

Total non-current liabilities 6.450.673 7.100.362

Borrowings 25 4.221.784 5.730.199

Operating and other liabilities 28 6.713.847 5.275.648

Total current liabilities 10.935.631 11.005.846

Total liabilities 17.386.304 18.106.208

TOTAL EQUITY AND LIABILITIES 44.911.391 46.760.726


55

in EUR (w/o cents)

2009 2008

A. Cash flows from operating activities

a) Profit / loss before tax -637.369 -384.780

Income tax and other taxes not included in operating expenses -26.823 -32.247

-664.192 -417.027

b) Adjustments for

Depreciation and amortisation (+) 2.898.691 3.430.248

Operating revenue from revaluation of investment and financing items (-) -250.664 -251.477

Operating expenses from revaluation of investment and financing items (+) 90.589 78.118

Finance revenue, excl. finance revenue from operating receivables (-) -257.004 -2.352.772

Finance expenses, excl. finance expenses from operating receivables (+) 497.291 1.156.919

2.978.903 2.061.036

b) Changes in net current assets (and accruals, provisions and

deferred tax receivables and liabilities) of operating Balance Sheet items

Opening less closing operating receivables -2.058.826 2.601.507

Opening less closing deferred costs and accrued revenue -5.251 -4.178

Opening less closing deferred tax receivables

Opening less closing assets (groups for disposal) for sale 85.108 -2.296.668

Opening less closing inventories 261.089 455.652

Closing less opening operating debts 2.125.090 -3.056.150

Closing less opening accrued costs/expenses and deferred revenue, and provisions -119.337 -361.674

Closing less opening deferred tax liabilities

287.873 -2.661.511

c) Excess operating proceeds or excess operating expenditure (a+b) 2.602.584 -1.017.502

B. Cash flow from investing activities

a) Proceeds from investing activities

Interest received and shares in profit received, relating to investing activities 236.130 764.068

Proceeds from sale of intangible assets 63.358

Proceeds from sale of property, plant and equipment (PPE) 1.025.934 808.548

Cash flow statement (IFRS)


56

in EUR (w/o cents)

2009 2008

Proceeds from sale of investment property

Proceeds from sale of long-term investments 2.465.687

Proceeds from sale of short-term investments 316.125

1.641.547 4.038.303

b) Expenditure in investing activities

Purchase of intangible assets -902.888 -511.938

Purchase of property, plant and equipment -1.793.413 -753.451

Purchase of investment property

Purchase of long-term investments -3.600

Purchase of short-term investments

-2.699.901 -1.265.389

c) Excess proceeds from investing activities or excess expenditure from investing activities (a+b)

-1.058.354 2.772.914

C. Cash flow from financing activities

a) Proceeds from financing activities

Proceeds from paid-up capital

Proceeds from increase in long-term financial liabilities

Proceeds from increase in short-term financial liabilities 1.769.912

1.769.912

b) Expenditure in financing activities

Interest paid in relation to financing activities -492.408 -690.039

Repayment of capital

Repayment of long-term financial liabilities -496.376 -2.380.627

Repayment of short-term financial liabilities -1.508.414

Dividends and other shares in profit paid

-2.497.198 -3.070.666

c) Excess finance proceeds or excess finance expenditure (a+b) -2.497.198 -1.300.754

Č. Cash at end of period 2.930 955.895

x) Cash for the period (sum of Ac, Bc and Cc excesses) -952.966 454.658

y) Cash at beginning of period 955.895 501.237


57

Issued

capital Share

premium

Legal and statutory reserves

Treasury shares

Retained earnings

Fair value reserve

Total equityl

A1.

Balance at the end of the previous reporting period, at 31 December 2007 10.015.023 17.859.379 1.900.717 -26.001 898.906 340.699 30.988.723

A2.

Opening balance for reporting period, at 1 January 2008 10.015.023 17.859.379 1.900.717 -26.001 898.906 340.699 30.988.723

B1. Changes in equity

B2.

Total comprehensive income in the reporting period, at 31 December 2008 -417.028 -1.917.176 -2.334.204

Entry of net profit or loss -417.028 -417.028

Gain on the revaluation of investments -1.917.176 -1.917.176


B3. Movements in equity 26.001 -26.001

Allocation of part of net profit to form additional reserves pursuant to AGM decision 26.001 -26.001

C.

Closing balance of reporting period, at 31 December 2008 10.015.023 17.859.379 1.926.718 -26.001 455.877 -1.576.477 28.654.519

1.

Balance at the end of previous reporting period, at 31 December 2008 10.015.023 17.859.379 1.926.717 -26.001 455.876 -1.576.477 28.654.517

A2.

Opening balance of reporting period, at 1 January 2009 10.015.023 17.859.379 1.926.717 -26.001 455.876 -1.576.477 28.654.517

B1. Changes in equity -999.918 -999.918

Purchase of treasury shares and own business shares -999.918 -999.918

B2.

Total comprehensive income for the reporting period at 31 December 2009 -664.192 534.680 -129.512

Entry of net profit or loss -664.192 -664.192

Gain on the revaluation of investments 534.680 534.680


B3. Movements in equity -309.019 100.703 208.316

Allocation of part of net profit to form additional reserves pursuant to AGM decision 100.703 -100.703

Covering loss as deductible equity component -309.019 309.019

C.

Closing balance for reporting period, at 31 December 2009 10.015.023 17.550.359 2.027.420 -1.025.918 -1.041.797 27.525.088

The Management of Cetis d. d. approves the financial statements and notes thereto for the financial year ended 31 December 2009.

Statement of changes in equity (IFRS)


58 The Management is responsible for the preparation of financial statements, thus presenting a true and fair view of the state of affairs at the end of the financial year, and of profit or loss for the period.

The Management confirms that suitable accounting policies have been consistently applied, and that the accounting estimates are reasonable and prudent. The Management also confirms that the financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements have been prepared on a going concern basis.

The Management recognises its responsibility for keeping proper accounting records, the adoption of appropriate measures for the safeguarding of the Company’s assets, and the prevention and detection of fraud, and other irregularities.

March 2010 Simona Potočnik, MSc General Manager

Statement of management responsibility


591. Company profile

Registered office and legal form, countryCetis, Graphic and Documentation Services, d. d. is a company with its registered office at Čopova 24, Celje, Slovenia. The Company was entered as a joint stock company in the Register of Companies at Celje District Court on 13 February 1996 under entry No 95/00923, and on 25 November 2003 under entry No 1/01476/0. The share capital of the Company as at 31 December 2009 amounts to EUR 27.525.000, and is divided into 200.000 ordinary, no-par value registered shares, including treasury shares, issued as dematerialised securities at the Central Securities Clearing Corporation (KDD) in Ljubljana. The shares (designated as CETG) are traded on the entry market of the Ljubljana Stock Exchange.

Nature of operations and relevant activitiesThe Company’s core business is the provision of comprehensive solutions in the field of communication using printed and other types of media. Our corporate vision places Cetis as the Slovenia’s leading company with appropriate developmental, investment and marketing activities, and the best qualified staff, looking ahead to an increased market share both domestically and internationally. The Company offers a programme of diversified printed matter, such as security, variable and commercial printed matter: graphic design, including accessory services, such as, the document personalisation, the implementation of microchips or magnetic tapes, archiving, identity management, consultancy, project management, and other services.

Parent CompanyFact SheetCetis, d. d. is the parent company of the Cetis Group, for which consolidated financial statements are prepared.

2. Basis for the preparation of financial statements

Statement of compliance2009’s financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB), and the

interpretations of the IFRS Interpretations Committee (IFRSIC), as adopted by the European Union.The Management approved the financial statements as on 22 March 2010.

Basis for measurement2009’s financial statements have been prepared on a historical cost basis, except for the following items that are measured at fair value:

• financial instruments at fair value through profit or loss,

• financial instruments at fair value through equity or through financial assets available for sale.

The methods applied to measure fair value are as follows.

Functional and presentation methodThe financial statements are presented in euros, i.e. the functional currency for the Cetis d. d. company. All accounting information presented in euros is rounded to the nearest thousand.

Use of estimates and judgementsThe preparation of financial statements in accordance with International Financial Reporting Standards (IFRS) requires the Management to give the judgements, estimates and assumptions affecting the application of accounting policies, and the reported assets, liabilities, income, and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions need to be reviewed on a regular basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, and in any future periods affected.

Information concerning significant risk assessment and critical judgement, which the Management prepared during the process of applying accounting policies, and which have the most significant impact on the amounts presented in the financial statements, are described in the following notes:

• Point 16 – utilisation of tax losses• Points 26 and 27 – provisions and contingen-

cies

Summary of significant accounting policies and notes to the financial statements


60

• Point 29 – valuation of financial instruments.

3. Relevant accounting principles applied

The accounting policies stated below were consistently applied by the Company to all the periods presented in the enclosed financial statements.

a) Foreign currency

Transactions denominated in a foreign currency are translated into the Company’s functional currency, using the exchange rate effective on the transaction date.

Assets and liabilities expressed in a foreign currency are translated into EUR on the date of the event, and at the end of the accounting period, using the reference exchange rate (ECB) of the Bank of Slovenia.

Monetary assets and liabilities stated in a foreign currency on the balance sheet date are translated into the functional currency at the applicable exchange rate. Foreign exchange gains or losses are the differences between the amortised cost in the functional currency at the beginning of the period, adjusted by the amount of effective interest and the payments made during the period, as well as the amortised cost expressed in a foreign currency and translated at the exchange rate applicable at the end of the period. Non-monetary assets and liabilities stated in a foreign currency and measured at fair value are translated into the functional currency at the exchange rate effective on the date when the fair value was set. Foreign exchange gains and losses are recognised in the Income Statement.

b) Financial instruments

Non-derivative financial instrumentsNon-derivative financial instruments include investments in equity and debt securities, trade and other receivables, cash and cash equivalents, borrowing and loans, operating and other liabilities.Non-derivative instruments are initially recognised at fair value, increased by costs directly attributable to the transaction. Subsequent to the initial recognition, non-derivative financial instruments are measured as follows. Cash and cash equivalents are comprised of cash in hand and on demand deposits. Bank overdrafts that are repayable on demand and form an integral part of cash management are included as a component of cash and cash equivalents in the Cash Flow Statement.The accounting of finance income and finance costs is discussed in Point k) – Finance income and finance costs.

Financial assets available for saleCompany investment in equity securities and certain debt securities are classified as available-for-sale financial assets. Subsequent to the initial recognition, these investments are measured at fair value. Changes in fair value, except for impairment loss, are recognised directly in equity. When an investment is derecognised, the related gain or loss in equity is transferred to the profit or loss. When accounting for regular purchases, or the sale of financial assets, the amount is recognised or reversed, respectively, taking into consideration the date of payment.

Investments at fair value through profit or lossAn instrument is classified at fair value through profit or loss if it is held for trading, or is designated as such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the company is able to manage such investments and make purchase and sales decisions based on their fair value. Upon initial recognition, the attributable costs of a transaction are recognised in profit or loss when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and a change in fair value is recognised in profit or loss.

OtherOther non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

Share capitalOrdinary sharesOrdinary shares form an integral part of share capital.

Share buybacksWhen treasury shares are repurchased, the amount of consideration paid, including directly attributable costs, and excluding the potential tax effect, is recognised as a change in equity. The shares bought back are classified as treasury shares and deducted from equity. Upon sale of the treasury shares, the amount received is recognised as an increase in equity; a transaction’s surplus or loss is recognised in equity.

c) Property, plant and equipment

Items of property, plant and equipment are recognised at cost, less accumulated depreciation and accumulated impairment loss. As of the date of transition to IFRS, property, plant and equipment were stated at their historical cost as estimated on 1 January 2005.

Cost includes expenditure that is directly attributable to the acquisition of an asset. The cost of property, plant or equipment produced by


61

the Company itself is comprised of material costs, direct labour costs and other costs that can be directly attributed to bringing the asset into the use it was intended, as well as the costs of dismantling and removal from the location where it was used, and restoring such a location. Purchased software that is integral to the functionality of related equipment is capitalised as part of that equipment. Borrowing costs related to the purchase of and/or the construction of property are recognised in the profit or loss as incurred.

Parts of an item of property, plant and equipment with different rates of obsolescence are accounted for separately.

Gains or losses from the disposal of property, plant and equipment are determined as the difference between the income generated from the disposal of an asset and its book value, and are disclosed

in the Income Statement among “other operating income,” or “other operating expenses”.

Subsequent costs related to property, plant and equipmentThe cost of replacing a part of an item of property, plant and equipment is recognised in the book value of the asset if it is probable that future economic benefits linked to the asset will flow to the company, and if its historical cost can be reliably measured. All other costs, such as day-to-day servicing, are accounted for in profit or loss when incurred.

DepreciationDepreciation is calculated on a straight-line basis over the useful life of each asset. Land and assets in the process of acquisition are not depreciated.

Depreciation rates are based on the useful life of the assets, as follows:

In years min. In years max.

Investment property 7 40

Buildings 7 40

Equipment for graphic activity 3 20

Laboratory equipment 3 10

Vehicles 5 8

Telephony 3 5

Furniture 5 6

Typewriters, computer equipment 3 8

Computer equipment for fire safety 3 3

Measurement and control appliances 4 6

Useful life is determined and examined in accordance with the Rules on Accounting and Finance. Depreciation methods, Useful Life and Residual Value, are reviewed as on the reporting date, in accordance with the Rules on Accounting and Finance.

d) Intangible assets

Research and development Expenditure on research activities in order to obtain new scientific and professional knowledge and understanding is recognised in the Income Statement as part of Expenditure when incurred.Development activities embody plans or designs for the production of new or substantially improved products and processes. Development Expenditure is recognised if: it can be reliably measured; the product or process is technically and operationally feasible; there is potential for future economic benefits; the Company has adequate resources for the completion of development, and; it intends to

use or sell such assets. Recognised expenditure is comprised of materials costs, direct labour costs, and other costs which can be directly attributed to readying the asset for its intended use. Borrowing costs related to asset development and other expenditure are recognised in the Income Statement when incurred. Capitalised development expenditure is measured at cost, less accumulated amortisation and incurred impairment losses.

Other intangible assetsOther intangible assets acquired by the Company with finite useful lives are disclosed at historical cost reduced by accumulated depreciation and the current impairment losses.

Subsequent expenditureSubsequent expenditure related to intangible fixed assets is capitalised only when it increases the future economic benefit arising from the specific asset to which it is related. All other expenditure is recognised in the Income Statement as expenses when incurred.


62

Amortisation Amortisation is calculated on a straight-line basis over the useful life of intangible assets. Amortisation of assets begins when the asset is available for use. The estimated useful life for the current and comparative periods is accounted for as follows.

Amortisation rates are based on the useful life of assets:

In years min In years max

Intangible assets 3 10

e) Investment property

Investment property is property owned in order to generate rent or increase the value of a long-term investment, or both. Investment property there-fore creates cash flow which is highly independent of other assets owned by the Company. Invest-ment property is defined as:

- land, owned to increase the value of a long-term investment, not for sale in the near fu-ture as part of regular business operations,

- land for which the Company has not deter-mined its future use;

- buildings owned or on lease, which are leased out on the basis of a single or multiple opera-tional lease,

- vacant building owned to be leased out on the basis of single or multiple operational lease,

- in cases when, with regard to asset deter-mination, a part of property is investment property and the remainder a tangible fixed asset, where they cannot be sold separately, the whole asset is determined as investment property if the part which is a tangible fixed asset is insignificant; otherwise, the whole asset is recognised as a tangible fixed asset. Whether the proportion is significant or not is determined by the competent employee for the area.

Recognised value measurementThe Company measures investment property based on a historical cost model.The historical cost of purchased investment property comprises its purchase price and all directly attributable costs. Directly attributable costs include, for example, attributable fees for legal services, tax on property transfer, and other costs of the transaction.The historical cost of a property constructed within the Company is comprised of its cost to the date when construction or development was completed. On that date, the property becomes investment property.

DisposalsInvestment property ceases to be recognised upon disposal, or when it is permanently withdrawn from use and no future economic benefits can be expected from its disposal.Profit or loss from the discontinuation or disposal of investment property has to be established as the difference between net gains upon disposal and the book value of assets, and recognised in the Income Statement.

Depreciation Investment property is depreciated at the same rate as investments used by the company. The method of determining their useful life is the same as that used to determine the useful life of property, plant and equipment.

f) Subsidiaries and associates

Long-term financial investment in the equity of subsidiaries and associates is valued according to historical cost. Participation in profit is recognised when the Company has obtained the right to have it paid out.

g) Inventories

Inventories are measured at historical cost or net realisable value, whichever is lower. The cost of inventories is based on the First-In-First-Out method (FIFO), and includes expenditure incurred in acquiring inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. In terms of finished products and work in progress, cost includes an appropriate share of production overheads based on the normal use of production assets. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and estimated costs of sale.The realizable value of individual inventories is primarily checked as on the Balance Sheet date. All inventories older than one year are assessed to have a realizable value of zero. In terms of raw material inventories, subsidiary discrepancy accounts are prepared and attributed to operational expenses from the revaluation of current assets, and the product and goods inventories of subsidiary discrepancy accounts are attributed to operational expenses.

h) Asset impairment

Financial assetsOn the reporting date, the Company assesses the value of a financial asset in order to evaluate objective signs of asset impairment. A financial asset is considered to be impaired if objective


63

evidence indicates that one or more events have had a negative effect on the estimated future cash flow arising from that asset.An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of its estimated future cash flow, discounted at the original effective interest rate. An impairment loss in respect of a financial asset available for sale is calculated with reference to its current fair value.Significant financial assets are evaluated for impairment on an individual basis. Remaining financial assets are collectively assessed for impairment, within groups that share similar credit risk characteristics.Impairment losses are recognised in the Income Statement for the period. Any current loss in respect of a financial asset which was not recognised directly in equity is transferred to profit or loss.An impairment loss is reversed if the reversal can be objectively related to an event occurring after the impairment loss was recognised. When accounting for financial assets measured at amortised cost and financial assets available for sale that are debt instruments, reversal of impairment is recognised in profit or loss. For financial assets available for sale that are equity securities, impairment losses can not be reversed directly in profit or loss.

Non-financial assetsAt each reporting date, the Company assesses the residual book value of non-financial assets, excluding inventories and deferred tax liabilities, in order to establish whether there is objective indication of asset impairment. If there is such an indication, then the asset’s recoverable amount is estimated. For intangible assets that have indefinite useful lives and are not yet available for use, impairment is estimated at each reporting date.The recoverable amount of an asset or cash-generating unit is its value in use or its fair value, less sales cost, whichever is higher. In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money, and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the group of assets that generates cash inflows from continued use that are largely independent of the cash inflows resultant on assets or groups of assets (“cash-generating units”). An impairment is recognised if the book value of an asset or a cash-generating unit exceeds its recoverable amount. Impairment is recognised in profit or loss. Losses that are recognised for a cash-

generating unit due to impairment are distributed to the assets in a unit (groups of units) in proportion to the book values of the individual assets in a unit.In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount of an asset. An impairment loss is reversed only to the extent that the asset’s book value does not exceed the book value that would have been determined, net depreciation or amortisation, if no impairment loss had been recognised in previous periods.

i) Employee benefits

Other long-term employee benefits

The net liability of the Company generated with regard to long-term employee benefits is the sum of future benefits that employees have gained in return for work carried out in the current and previous periods. Thus calculated, the sum of benefits is discounted in order to determine its present value, and then reduced by the fair value of all related assets. Any actuarial gains and losses are recognised in the profit or loss in the period in which they occur.

Short-term employee benefits

Liabilities for short-term employee benefits are measured on an undiscounted basis and are accounted for when the employee’s work related to a short-term return is provided.A liability is disclosed as an amount for which payment in the form of a premium is expected, due twelve months after the period of work is completed, or according to the programme of profit distribution, if the company has a current legal or constructive obligation to make such payments because of employee performance in the past and this liability can be reliably measured.

j) Provisions

Provisions are recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of factors which create economic benefits will be required to settle the obligation. Provisions are determined by discounting expected future cash flows at a pre-tax interest rate that reflects current market assessments of the time value of money and, if required, the risks specific to the liability.

Warranties for products and services


64

A provision for product and service warranties is recognised when the underlying product or service is sold. This provision is based on historical warranty data and an assessment of all possible outcomes against their associated probabilities.

k) Revenue

Revenue from products sold

Revenue from product sales is measured at fair value of the consideration received or the related receivables, net returns and price reductions, trade discounts and volume rebates. Revenue is recognised when the significant risk and reward of ownership is transferred to the buyer, when recovery of the consideration and the associated costs is probable, and the possible return of goods can be estimated reliably, and when there is no further management involvement with the sold goods, and the revenue can be reliably measured.Transfers of risk and reward vary and are dependent on the individual terms of the contract of sale. For the sale of goods, transfer usually occurs when the product is received at the customer’s warehouse; however, for some international shipments, transfer occurs upon loading onto the relevant carrier.

Supplied services revenue

Revenue from services rendered is recognised in the Income Statement in proportion to the stage of completion of the transaction as at the reporting date. The stage of completion is assessed by reference to surveys of work performed.

Rental income

Rental income is recognised in income on a straight-line basis over the term of the lease.

l) Finance income and costs

Finance income comprises interest income on funds invested (including financial assets available for sale), dividend income, gains from the disposal of available-for-sale financial assets and changes in the fair value of financial assets held for trading through profit or loss, which are recognised in the Income Statement. Interest income is recognised as it accrues profit or loss, using the effective interest method. Dividend income is recognised in the Income Statement on the date that the shareholder’s right to receive payment is exercised; in the case of quoted securities, this is usually the ex-dividend date.Finance costs are comprised of interest expenditure on borrowing, dividends on preference shares

classified as liabilities, foreign currency losses, changes in the fair value of financial assets at fair value through profit or loss, financial asset impairment loss, and hedge instruments loss that is recognised in the Income Statement. All borrowing costs are recognised in the Income Statement, using the effective interest method.Exchange gains and losses are disclosed in net amounts.

m) Corporate income tax

Corporate tax is comprised of current and deferred tax. Corporate tax is recognised in the Income Statement, except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.Current tax is the expected tax payable on the taxable profits for the financial year, using taxation rates enacted or substantively enacted as at the reporting date, and any adjustment to tax payable in respect of previous years.Deferred tax is recognised using the balance sheet liabilities method, taking into consideration temporary differences between the book value of assets and the liabilities for financial reporting purposes, and the amount used for taxation purposes. All temporary differences are taken into consideration. Deferred tax is recognised as the amount expected to be paid upon reversal of temporary differences, in compliance with laws enacted or substantively enacted on the reporting date.The Company offsets deferred tax assets and liabilities if it is legally entitled to offset recognised assessed tax assets and liabilities, and if they refer to corporate income tax that belongs to the same tax authority in relation to the same taxable unit; or different taxable units that are intended for the settlement of assessed tax assets and tax receivables with the difference, or either simultaneously realise the assets and settle the liabilities.A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which a deferred tax asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the taxation benefit related to an asset will be realised.Additional income tax that arises from the distribution of dividends is recognised at the time the liability to pay the related dividend is recognised.

n) Basic earnings per share

The Company presents basic earnings per share (EPS) data for its ordinary shares. The basic earning per share is calculated by dividing the profit or


65

loss attributable to ordinary shareholders by the weighted average number of ordinary shares in the business year. Diluted earnings per share equal basic earnings per share as the Company does not have preferential shares or convertible bonds.

Segment reportingA segment is a distinguishable component of an enterprise engaged in providing products or services (business segment), or products and services within a particular economic environment (geographical segment), and that is subject to risks and returns that are different from those of other segments. The Company’s segment reporting is based on each business segment.Inter-segment pricing is determined on an arm’s length basis.Segment profit or loss, assets and liabilities include items directly attributable to a segment, as well as those that can be allocated to a segment on a reasonable basis. Unallocated assets include in-vestments, whereas unallocated liabilities include capital.

4. Determination of fair value

The Company’s accounting policies and disclosures require the determination of fair value in numerous cases, for both financial and non-financial assets and liabilities. Fair values for certain groups of assets have been determined for measurement and/or reporting purposes based on the methods described below. Where required, further information about assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

a) Property, plant and equipment

The fair value of property is the estimated value for which the property could be exchanged on the appraisal date and following adequate marketing between a willing buyer and a willing seller in an arm’s length transaction, wherein the parties had each acted knowledgeably, prudently and without compulsion. The market value of items of plant and equipment is based on the offered market price of similar items.

Intangible assetsThe fair value of intangible assets is determined as the expected present value of estimated future cash flows originating from their use and eventual sale.

b) Inventories

The fair value of an inventory is determined on the basis of its estimated selling price in the ordinary course of business reduced by the estimated costs

of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventory item.

c) Investments in equity and debt securities

The fair value of financial assets at fair value through profit or loss, held-to-maturity investments and available-for-sale financial assets is determined with reference to their quoted bid price as on the reporting date. The fair value of held-to-maturity investments is determined for disclosure purposes only.

d) Operating and other receivables

The fair value of operating and other receivables is calculated as the present value of future cash flows, discounted at the market rate of interest as on the reporting date.

e) Non-derivative financial liabilities

Fair value, which is specified for reporting purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases, the market interest rate is determined by reference to similar lease agreements.

5. Financial risk management

This section deals with the Company and its exposure to certain risks, its objectives, policies and procedures for risk measurement and management, and its equity management. Other quantitative disclosures are indicated below.Management is entirely responsible for establishing the Company’s risk management framework.Risk management policies are designed to identify and analyse risks that can pose a threat to the Company, on the basis of which adequate restrictions and controls are determined, as well as monitored risks and compliance with restrictions. Risk management policies and systems are subject to regular review, and provide updated information on market conditions and the activities of the Company. Through training, risk management standards and procedures, the Company endeavours to develop a disciplined and constructive environment within which all employees are aware of their roles and obligations.

Credit riskCredit risk is the risk of suffering financial loss when any of the Company’s clients or parties to a financial instrument contract fails to meet their contractual obligations. Credit risk mainly occurs in relation to the Company’s trade receivables and investment securities.Operating and other receivables


66

The Company’s exposure to credit risk is mainly dependent on individual client characteristics. The demographics of the Company’s client base, as well as payment risk in terms of the branch of industry or country in which a client operates, do not have such a great impact on credit risk. Approximately 3.5% of the Company’s revenue may be attributed to sales transactions with one client alone. In geographical terms, there is no credit risk concentration. The Company shapes its credit policy, according to which a creditworthiness analysis of each new client is made, before the Company offers them its standard payment and delivery terms and conditions. The Company review includes any exterior assessments, if available, and also, in certain cases, bank references. Purchase limits – determined in the form of a maximum outstanding amount – are separately set for each client and reviewed every three months. Any transactions with a client not meeting standard creditworthiness are carried out solely through advance payments.Goods ownership is usually retained until those goods have been paid for in full. In the event of non-payment for goods, the Company’s claim is therefore secured. The Company requires no surety for operating and other receivables.The Company determines a value adjustment for the amount of impairment, which represents the amount of estimated losses arising from operating and other receivables and investments. The main elements of this value adjustment are a special portion of the loss related to individual key risks, and the total loss, formed for groups of similar assets due to incurred losses not yet defined. The value adjustment for the total amount of loss is determined by taking into account historical data related to payment statistics for similar financial resources.Value adjustments for trade receivables are made on the basis of an analysis with regard to recovering each receivable. Adjustment is based on receivables which remain unpaid 90 days after maturity. Total past-due gross trade receivables as on 31 December 2009 amounted to EUR 470.413, and receivables that were not yet due amounted to EUR 4.706.732.

GuaranteesIn accordance with its policy, the Company solely provides financial guarantees or sureties to subsidiaries fully owned by the parent company. The amount of guarantees is evident in the off-balance-sheet records.

Liquidity riskLiquidity risk is the risk arising from the Company’s inability to meet its financial obligations when they fall due. The Company manages to ensure the highest possible liquidity by always having sufficient liquid assets available to settle obligations within set time limits, both under normal and stressful circumstances, without incurring unacceptable loss or risking harm to the Company’s reputation.

The valuation of products and services is based on activities aimed at monitoring the Company’s cash flow needs and optimising the investment return. As of 31 December 2009, the Company had credits lines based on the current account principle with domestic banks totalling EUR 950.000, based on revolving loan at the amount of EUR 2.450.000; the interest rate on that date was between 4,55% and 7% per year.

Market riskMarket risk is the risk that changes in market prices, such as exchange rates, interest rates and equity instruments may affect the Company’s revenue or the value of financial instruments. The objective of market risk management is the management and control of market risk exposure within reasonable limits, whilst optimising profit.The Company trades in financial instruments and assumes financial obligations with the aim of managing market risk. All transactions are carried out in compliance with the Company’s policy. In order to reduce fluctuations in profit or loss to the lowest possible level, the Company makes sustained efforts to use the appropriate measures for risk protection.

Currency riskThe Company is not exposed to currency risk. The Company concludes the majority of purchasing deals in its functional currency. The volume of business not concluded in the Company’s functional currency, i.e. USD, GBP and CHF is negligible. As far as sales and borrowing are concerned, transactions are carried out in euros.

Interest rate riskThe Company is exposed to interest rate risks, since variable interest rates apply to the majority of its financial liabilities. The Company has, to date, had no specific protection against interest rates changes. This is favourable for the Company in a period of low interest rates linked to Euribor.

Capital managementThe Management decided to retain a large volume of capital in order to maintain the confidence of investors, creditors, and the market, and for the Company’s sustainable development. The Supervisory Board monitors the return on equity defined by the Company as net profit or loss, divided by average equity, less net profit for the business year.A minor change occurred in the reporting year with regard to the Company’s capital management, which has to be adjusted according to the current and anticipated scale of operations, and/or new circumstances.Neither the parent company nor its subsidiaries were subject to capital requirements determined by external bodies.1. Segment reporting


67Sales revenue stated under ‘Other’ is comprised of revenue from material, merchandise and fixed assets sales.

in EUR

Breakdown per segment

Security printed matterCommercial printed

matterOther Total

2009 2008 2009 2008 2009 2008 2009 2008

Net sales revenue

13.812.202 10.644.403 9.576.902 12.104.910 2.658.340 2.919.687 26.047.444 25.669.000

Net profit or loss

-714.553 -647.237 -495.446 -736.044 -137.525 -177.533 -1.347.524 -1.560.813

Assets by business segment

12.522.779 12.795.179 14.241.015 14.550.792 3.434.913 3.509.630 30.198.706 30.855.601

Unallocated assets

14.712.685 15.905.125

Total assets 12.522.779 12.795.179 14.241.015 14.550.792 3.434.913 3.509.630 44.911.391 46.760.726

Total liabilities 7.209.740 7.508.270 8.198.981 8.538.471 1.977.583 2.059.467 17.386.304 18.106.208

Investments 1.717.659 524.731 1.953.337 596.728 471.142 143.930 4.142.138 1.265.389

Amortisation and depreciation

1.202.027 1.422.453 1.366.956 1.617.626 329.708 390.169 2.898.691 3.430.248

The Company’s business in 2009 was primarily in Europe, which is why it has not reported by geographical segment.

Revenue

in EUR

Sales revenue by type 2009 2008

Sale of products on the domestic market 15.911.731 17.775.669

Sale of services on the domestic market 550.676 601.806

Sale of products on foreign markets 7.570.518 4.831.316

Sale of services on foreign markets 447.939 285.561

Sale of material and merchandise on the domestic market 867.052 1.277.103

Sale of material and merchandise on foreign markets 425.334 815.720

Gains from investment property 98.765 55.020

Other rental revenue on the domestic market 175.430 26.386

Total 26.047.444 25.668.580

Sales revenue in 2009 also includes revenue from the sale of products and services to group companies, totalling EUR 1.762.000. The Company did not generate any revenue from associates.Expenses

Income statement disclosures


68

in EUR

Expenses by primary type, change in value of inventories 2009 2008

Cost of goods and materials sold 1.323.866 1.985.530

Cost of materials and services used 15.768.641 13.509.867

Labour costs 7.560.556 8.480.289

Amortisation and depreciation 2.898.691 3.430.248

Other expenses (from operations) 524.535 521.196

Change in inventories of finished products, work in progress and semi-manufactured products

108.959 356.354

Total (operating) expense 28.185.248 28.283.484

Costs charged by subsidiaries in 2009 amounted to EUR 194.790; no costs were incurred in connection with our associates.

In this reporting period, the Company adjusted the estimated useful life of its property, plant and equipment weighted to the expected wear and tear of individual items of equipment. The change in accounting estimate was recognised with the reduction of depreciation for the current period at the amount of EUR 167.994.

Labour costs in EUR

2009 2008

Gross wages and salaries 5.462.284 6.091.527

Pension insurance cost 701.813 778.270

Cost of other social insurance 403.194 447.392

Other labour cost 993.264 1.163.100

Total labour costs 7.560.556 8.480.289

Wages and salary costs are accounted for in compliance with internal rules and regulations governing wages and other emoluments, the Decree on the amount of costs recognised as deductible expenditure, and individual employment contracts.

Other labour costs are comprised of meal and travel allowances, holiday, retirement and anniversary bonuses.

In 2009, the Company also allocated EUR 210.176 for supplementary pension insurance, jointly with employees, who voluntarily contributed 1,615% of their gross wages for the same purpose. In 2008, the Company paid EUR 236.044 for this purpose, under the same terms.

Other operating revenue in EUR

Other revenue type 2009 2008

Gain in disposal of fixed assets 187.306 251.477

Income from reversal of provisions 124.869 187.937

Reversal of trade receivables and inventories revaluations 145.484 181.625

Indemnities, subsidies and grants received 72.406 16.196

Other 260.215 416.856

Total 790.280 1.054.091

Net finance income/finance costs


69

in EUR

2009 2008

Interest income 69.038 245.951

Share-based income 208.942 537.769

Income from sale of investments 957.859 1.584.605

Other finance income 7.429

- change in fair value of investments through profit and loss

7.429

- other

Total finance income 1.235.839 2.375.754

Interest expense 386.948 755.121

Foreign exchange losses 11.981 10.041

Other finance costs 126.755 2.281

Finance costs arising from impairment 432.278

Total finance costs 525.684 1.199.721

Total net finance income 710.155 1.176.033

Tax

in EUR

2009 2008

Current tax

Deferred tax 26.823 32.248

Total 26.823 32.248

Effective corporate income tax rates

in EUR

2009 2009 2008 2008

Total profit or loss before tax -637.369 -384.780

Tax effects:

- tax at general tax rate 21,0 % -133.847 22,0 % -84.652

- tax exempt income 13,9 % -88.586 74,7 % -287.598

- non-deductible expenditure -12,4 % 79.216 -28,7 % 110.321

- tax relief 1,0 % -6.300 2,3 % -8.815

- tax loss -26,6 % 169.502 -74,0 % 284.710

- other changes to the tax base -1,1 % 6.837 -4,8 % 18.282

Total tax expense -4,2 % 26.823 -8,4 % 32.248

Deferred taxes recognised directly in equity

in EUR

2009 2008

Investments 260.449 -419.063

Total 260.449 -419.063

Disclosure of auditor fees

Total auditing costs amounted to EUR 28.769 in 2009. The value of the contract to audit 2009’s financial statements amounts to EUR 11.400. The audit of financial statements was performed by ABC revizija d.o.o. auditing firm; other audits were performed by other auditing firms. Property, plant and equipment


70

In 2009, the Company invested EUR 3.780.766 in property, plant and equipment. Accounts payable for the purchase of property, plant and equipment amounted to EUR 461.804 at the end of 2009.

Movements in property, plant and equipment

in EUR

Land Buildings EquipmentOther

equipmentPPE in

progressPrepay-

mentsTotal

Cost

Balance at 1 January 2008 1.220.109 14.730.612 39.767.838 27.603 350.800 64.842 56.161.805

Transfer to investment property

-470.633 -470.633

Transfer to available-for-sale assets

-84.591 -84.591

Acquisitions in the period 181.906 768.961 950.867

Acquisitions of investments in progress

753.451 753.451

Transfers of investments in progress

-950.867 -950.867

Disposals 223.251 4.874.109 43.405 5.140.766

Reclassification

Balance at 31 December 2008

1.220.109 14.218.633 35.662.689 27.603 68.794 21.437 51.219.265



-568.116 -568.116

Transfer to available-for-sale assets

Acquisitions in the period 11.024 721.575 26.837 759.437


3.780.766 3.780.766


-732.753 -732.753

Disposals 5.862.129 446 5.862.575

Reclassification


1.220.109 13.661.541 30.522.136 27.157 3.116.807 48.274 48.596.024

in EUR

Balance sheet disclosures


71


equipmentPPE in

progressPrepay-

mentsTotal

Value adjustment

Balance at 1 January 2008 7.671.423 28.466.101 36.137.524

Depreciation 414.131 2.748.793 3.162.923


267.504 267.504

Disposals 56.563 4.449.015 4.505.578

Reclassification


7.761.487 26.765.878 34.527.365


Depreciation 389.591 2.114.200 2.503.791


316.627 316.627

Disposals 4.933.346 4.933.346

Reclassification


7.834.451 23.946.732 31.781.183

Book value



1.220.109 6.457.146 8.896.811 27.603 68.794 21.437 16.691.900



1.220.109 5.827.090 6.575.404 27.157 3.116.807 48.274 16.814.841

Disposals made in 2009 are, in the main, comprised of the sale of commercially and technically outdated, yet still functional machinery.

The company has secured its long-term borrowing with mortgages on real property, liens on movable assets, and a lien on long-term financial investment, all of which were accounted for in off-balance-sheet records at an amount equalling debt as at 31 December 2009.


72

Intangible assets

Movements in intangible fixed assets

in EUR

Long-term

deferred costsi

Long-term property

rights

Intangible assets in progress

Long-term deferred costs

and accrued income

Total

Cost

Balance at 1 January 2008 303.454 2.812.457 16.497 3.132.409

Acquisitions in the period 329.162 329.162

Acquisitions of investment in progress 511.938 511.938

Transfers from investment in progress -329.162 -329.162

Disposals 1.782 1.782

Balance at 31 December 2008 303.454 3.139.837 199.273 3.642.565




543.350 543.350

Transfers from investments in progress -559.074 -559.074

Disposals 315.101 315.101

Balance at 31 December 2009 371.326 3.375.589 183.550 299.886 4.230.352

Value adjustment

Balance at 1 January 2008 136.573 1.620.858 1.757.431

Amortisation 18.647 248.677 267.325


Balance at 31 December 2008 155.220 1.867.753 2.022.973


Amortisation 22.438 347.575 370.013

Disposals 315.101 315.101


Book value


Balance at 31 December 2008 148.234 1.272.084 199.273 1.619.591


Balance at 31 December 2009 193.668 1.475.362 183.550 299.886 2.152.467

Long-term property rights are mainly comprised of the purchases of computer software for the information system. Development costs are the recognised costs of projects that prove to be feasible in terms of project completion and eligible for use or sale. The aim


73

is to complete the project, sell and/or use it.In 2009, the Company invested EUR 543.350 in long-term property rights stated under acquisitions in the period as investment in progress. Deferred development costs are recorded for the public documents project.

In accordance with the Accounting Principles Code, the Company classifies costs which are directly related to obtaining a business deal amongst ‘long-term prepayments and accrued income’ and form a part of intangible assets. These are previously lost assets that can only be treated as assets under the assumption that in the continuation of the business process they will be included in the sales value of business effects, and through this transformed into liquidity. Long-term deferred costs are charged to business effects in periods longer than one year; they are depreciated on a straight-line basis.

Investment property

As of 1 December 2009, the Company reclassified a part of its fixed assets as investment property leased out in 2009. The Company measures investment property based on a historical cost model. Investment property is depreciated at the same rate as real property used by the company. The method for determining their useful life is the same as that used to determine the useful life of property, plant and equipment.

The fair value for investment property as at 31 December 2009 cannot be determined. The total area of the real property owned by the company measures 20.113 m2; investment property, comprising production, warehousing and office premises, as well as the corresponding functional area of the facility, is 1.110 m2.

The amount of income arising from investment property is disclosed under No 2.

Movements in investment property

in EUR

Building Total

Cost

Balance at 1 January 2008




Disposals

Balance at 31 December 2008 470.633 470.633

Balance at 1 January 2009 470.633 470.633

Transfer from fixed assets 568.116 568.116



Disposals

Balance at 31 December 2009 1.038.750 1.038.750

Value adjustment


Depreciation 267.504 267.504

Disposals




Transfer from fixed assets 317.145 317.145



74

in EUR

Building Total

Book value





Investments in group companies

in EUR

Breakdown per type 2009 2008

Cetis Zagreb 1.690.629 1.690.629

Cetis Tirana 5.236 5.236

Amba 1.919.546 1.919.546

Total 3.615.411 3.615.411

Companies in the group are:CETIS – ZG, Poduzeče za trgovino i usluge, d.o.o., Industrijska 11, Sveta Nedelja, Croatia, measured at cost. AMBA CO d.o.o., Čopova 24, 3000 Celje, measured at cost. The Company compiles a consolidated financial statement for the above two companies – Cetis-ZG, d.o.o. and Amba CO, both 100% owned by the parent company. The subsidiaries submit monthly business reports to the parent company; the latter conducts analyses and performs an annual internal audit. Both companies are audited and included in consolidated statements.Shares in the company CETIS – TIRANA Sh.p.k.,R.r. Deshmoret e4, Shkurit.P.7, Tirana, Albanija are valued at cost. It is also 100% owned by Cetis, d. d. and all business transactions are included in the financial statements of Cetis. Cetis Tirana acts solely as an intermediary in acquiring business, and has the status of a small enterprise in compliance with local legislation, and is therefore not obliged to prepare its own financial statements.

Movement in investments in group companies

in EUR

CostValue adjustment

(impairmentNet amount

Balance at 1 January 2008 3.615.411 3.615.411

Acquisition



Acquisition


Investments in associates

Associated companies:Cetis MKD Skopje, in which the Company holds a 26% stake, was established in 2009. Investment is measured at cost.

Druckman Hungary, in which the Company holds a 33% stake, has not been in operation for several years, we have formed a value adjustment for the investment, and in March 2010, the company received information on company dissolution.Lotaria Nacionale SH.A Rruga Kavajes, Porta Kry Esore, Misto Mame, Tirana was sold in 2009.


75

in EUR


Cetis MKD Skopje 2.600

Lotaria Nacionale SH.A Rruga Kavajes, Porta Kry Esore, Misto Mame,Tirana – 46.6% ownership

7.560

Druckman Ipari Kereskedelmi es Szolgaltto Korlatolt, Budapest, Hungary

Total 2.600 7.560

Information on the companies where the parent company, by itself or through a person acting for the Company, participated in capital with a share of at least 20 %, is disclosed in the chapter Financial Report for Cetis Group, under item 1. Group Profile.

Investments available for sale

Amongst investments available for sale, 76,6 % are valued at the initially recognised amount, i.e. at cost.

in EUR


Available-for-sale investments 11.094.674 12.282.154

Movements in available-for-sale investments


(impairment)Net amount


Acquisition

Transposition 1.731.434 1.731.434

Sale 32.500 32.500

Change in fair value -2.433.039 -2.433.039



Acquisition 1.000 1.000

Transposition

Sale 1.944.315 1.944.315

Change in fair value 756.503 668 755.835

Balance at 31 December 2009 11.095.342 668 11.094.674

Loans granted

in EUR


Loans granted 44.876 333.995

Loans granted as at 31 December 2009 include loans to employees for the purchase of apartments, construction, and deposits granted.


76 Movements in loans




Increase

Repayments

Transposition 1.186.637 1.186.637

Transfer to short-term loans 29.429 29.429

Exchange rate differences



Increase 17.538 17.538

Repayments

Transposition

Sale 293.921 293.921




Non-current operating receivables

in EUR

2009 2008

Other non-current operating receivables for associates

Total

Movements in non-current operating receivables


(impairment)Net

amount


Transposition 877.939 877.939

Long-term commodity loans abroad 515.641 515.641



Transposition

Long-term commodity loans abroad



77

Deferred tax assets and liabilities

in EUR

Tax assets Tax assetsTax

liabilitiesTax

liabilitiesAssets-liabilitiesi

31

December 2009

31 December

2008

31 December

2009

31 December

2008

31 December

2009

31 December

2008

Investments 266.193 445.198 5.744 26.135 260.449 419.063

Receivables 57.076 49.186 57.076 49.186

Inventories

Provisions for retirement bonus

148.039 179.554 148.039 179.554

Other provisions

Tax loss 63.999 67.199 63.999 67.199

Total 535.307 741.137 5.744 26.135 529.563 715.002

The Company used a 20% tax rate in deferred tax accounting.

Deferred tax liabilities are based on surpluses arising from the revaluation of available-for-sale investments, measured at fair value through equity.

Deferred tax assets are based on provisions for anniversary and retirement bonuses, tax loss and temporary differences arising from accounting for income tax on receivables, and other provisions recognised for taxation purposes in subsequent periods.

The Company recognised deferred tax assets for the tax loss based on the estimate that, in the coming years, taxable profits will be available against which the deferred tax assets can be used in the future. In periods of tax loss utilisation, a decrease in deferred tax assets will represent a corresponding decrease in profits. The unused tax loss records as at 31 December 2009 amounted to EUR 2.309.387.

Movements in temporary differences in 2008

in EUR

1 January

2008

Recognised under income/

expenses

Recognised under equity

31 December 2008

Investments -110.466 13.666 515.863 419.063

Receivables 52.230 -3.044 49.186

Inventories

Provisions for retirement bonuses, and other

208.328 -28.773 179.554

Other provisions

Tax loss 81.296 -14.097 67.199

Total 231.387 -32.248 515.863 715.002


78


in EUR

1 January

2009

Recognised under income/

expenses


31 December 2009

Investments 419.063 -158.614 260.449

Receivables 49.186 7.890 57.076

Inventories

Provisions for retirement bonuses, other

179.554 -31.420 148.133

Other provisions -93 -93

Tax loss 67.199 -3.200 63.999

Total 715.002 -26.823 -158.614 529.563

Assets held for sale

Amongst other non-current assets, the Company lists the company SNLS GABON, in which it is a 93,63 per cent holder of issued shares. The investment is valued at cost. The investment was not sold in 2009 due to the political situation in Gabon. Activities related to the sale of the investment continue in 2010.

in EUR


Property, plant and equipment 84.591

Other non-current assets 2.296.668 2.296.668

Total 2.296.668 2.381.259

Inventories

in EUR


Material 1.377.652 1.543.578

Work in progress 522.764 242.255

Products 674.382 1.063.850

Merchandise 16.530 2.733

Total 2.591.327 2.852.416

For 2009, the Company wrote off assets at the amount of EUR 182.259 in relation to materials and products which were no longer usable. The largest product write-offs were related to documents, labels, wrapping, and lottery tickets as a result of the use of inadequate materials and of replacing existing documents with new documents. The Company managed to reduce the related costs, in part, through claims concerning the materials, which is reflected in production costs.

An inventory surplus of EUR 35.669 and a material assets deficit of EUR 31.729 were recorded in 2009.

Value adjustments are accounted for per type of inventory and movement. No new value adjustments were required, other than those made in previous periods. Value adjustments were reduced by EUR 82.249. When examining material, product and merchandise inventories showing no change for more than 12 months, the Company applied the same policies as in preceding years.


79

Current investments at fair value

in EUR


Current investments

Total

In the reporting year, the Company shows no current investments based on fair value.

Movements in current investments

in EUR

CostValue

adjustment (impairment))

Net amount

Balance at 1 January 2008 2.162.775 6.492 2.156.283

Transfer to non-current assets -1.731.434 -1.731.434

Sale

Change in fair value until transfer -424.849 -424.849



Transfer to non-current assets

Sale

Change in fair value until transfer


Short-term loans

in EUR


Short-term loans 568.200

Short-term deposits 300.000

Current portion of long-term loans 12.736 28.861

Total 12.736 897.061

Operating and other receivables

in EUR


Current trade receivables 4.287.593 3.716.360

Current operating receivables from group companies 819.405 126.174

Current operating receivables from associates 13.540

Current operating receivables from third parties 205.935 309.603

Current prepayments 5.398 13.540

Total 5.318.331 4.179.217


80

Cash and cash equivalents

in EUR


Cash in banks, cheques, and cash in hand 2.930 1.996

Deposits in banks 953.900

Total 2.930 955.896

Equity

Total equity consists of issued capital, share premium account, legal and statutory reserves, retained earnings, treasury shares (deducted from equity), and fair value reserve. The Company issued 200.000 no par value shares registered at the Central Securities Clearing Corporation (KDD).

in EUR


Share capital 10.015.023 10.015.023

Total 10.015.023 10.015.023

Capital reserve at the amount of EUR 17.550.359 is comprised of a simplified reversal of share capital by withdrawing shares amounting to EUR 2.215.195, and a general capital value adjustment amounting to EUR 15.335.164.

Share premium account

in EUR


Simplified reduction in share capital by withdrawing shares 2.215.195 2.215.195

General capital value adjustment 15.335.164 15.644.184

Total 17.550.359 17.859.379

Reserves

in EUR


Legal reserves 1.001.502 1.709.277

Reserves for treasury shares 1.025.918 26.001

Treasury shares -1.025.918 -26.001

Statutory reserves 191.439

Total 1.001.502 1.900.717

In December 2009, the Company acquired 9.125 treasury shares amounting to EUR 999.918 for the purposes set out in the second indent of Article 247 of the Companies Act (ZGD-1); shares offered for sale to company or associated company employees (4,56% of all issued shares). On 31 December 2009, the Company reported an ownership of 9,326 shares designated CETG (4,66 % of all issued shares). The shares are recognised at cost as a deductible item in equity.

The fair value reserve in 2009 increased as a result of a rise in stock exchange quotations. The accumulated reserve arising from value adjustment surpluses in long-term financial investments is negative, amounting to EUR 1.302.246. Pursuant to this, the Company formed deferred receivables at the amount of EUR 260.449.


81

Establishing profit for appropriation

in EUR

Item 2009 2008

A. NET PROFIT FOR THE BUSINESS YEAR -417.028

B. NET LOSS FOR THE BUSINESS YEAR -664.192

C. NET PROFIT FROM PREVIOUS PERIODS 455.877 872.905

Č. REDUCTION IN CAPITAL RESERVES 309.019

D. REDUCTION IN RESERVES FROM PROFIT

E. INCREASE IN RESERVES FROM PROFIT -100.704

1. increase in legal reserves

2. increase in statutory reserves

3. increase in reserves for treasury shares and own business shares -100.704

F. PROFIT FOR APPROPRIATION (A-B+C+D-E) 455.877

G. ACCUMULATED LOSS (A-B+C-D+E)

Basic earnings per share

in EUR

2009 2008

Basic earnings in EUR -664.192 -417.028

Weighted average number of ordinary shares 190.674 199.799

Basic earnings per share in EUR -3,48 -2,09

Net loss per share is calculated by dividing the basic net loss for the year by the weighted average number of shares. The diluted loss per share is identical, as the Company holds neither any preference, nor convertible shares. Borrowings

Borrowing is comprised of long-term and short-term borrowing, including the current portion of long-term borrowing.

Long-term borrowing

in EUR


Bank loans 5.567.754 6.064.130

The largest single loan is for financing equipment, totalling EUR 2.000.000, with a 3-year repayment period.

Short-term borrowings

in EUR


Current portion of long-term loans from banks repayable within one year

2.496.377 2.590.627

Short-term bank loans 1.375.407 1.900.000

Other short-term loans 350.000 1.239.572

Total 4.221.784 5.730.199


82

Loan repayments

in EUR

Breakdown per typeTotal repayment

2009Interest 2009 Principal 2009

Short-term loans up to 1 year 8.310.708 191.136 8.119.572

Long-term loans, 1 to 5 years 1.462.079 184.496 1.277.583

Long-term loans with maturity longer than 5 years

1.313.043 1.313.043

Total 11.085.830 375.632 10.710.199

in EUR

Breakdown per typeTotal repayment

2008Interest 2008 Principal 2008


Long-term loans, 1 to 5 years 1.980.449 575.038 1.405.411

Long-term loans with maturity longer than 5 years

1.313.044 1.313.044

Total 8.126.096 724.641 7.401.455

The Company makes no distinction between interest on long-term loans by maturity, and therefore interest covers the period from 1 to 5 years.

Non-current operating liabilities

in EUR


Long-term operating liabilities arising from prepayments 3.780

Total 3.780

Provisions

in EUR


Provisions for warranties 64.089 70.764

Provisions for legal actions 8.350 28.736

Provisions for other costs

Provisions for anniversary bonuses 234.043 233.250

Provisions for retirement bonuses 570.693 677.343

Total 877.175 1.010.093

Movements in provisions

in EUR

Breakdown per type31 December

2008Made Used Reversed

31 December 2009

Provisions for warranties 70.764 41.422 48.098 64.089

Provisions for legal actions 28.736 20.386 8.350

Provisions for other costs

Provisions for anniversary bonuses 233.250 18.846 18.053 234.043

Provisions for retirement bonuses 677.343 106.651 570.693

Total 1.010.093 60.267 124.703 68.483 877.175


83Provisions are formed in accordance with contracts, legal bases, and expert opinions. The Company reviewed the provisions already made, took account of changes, and decreased total provisions for the purpose of long-term deferred expenses and provisions for long-term accrued costs.

Retirement and anniversary bonus provision

On the basis of a calculation for each employee using the projected unit method, prepared by a certified actuary, the Company reduced provisions for retirement obligations and anniversary bonuses at the amount of EUR 105.857.

Operating and other liabilities

in EUR


Short-term trade payables 4.876.644 3.986.937

Short-term trade payables to group suppliers 75.371 19.025

Current operating liabilities based on prepayments 601.788 308.246

Short-term payables to employees 494.982 531.693

Short-term payables to state and other institutions 199.287 230.839

Other short-term payables 465.776 195.131

Total 6.713.847 5.271.871

The bases for trade and other liabilities are the original documents that define an event in terms of time and substance.

Off-balance sheet record

in EUR


Mortgages 8.064.130 8.865.579

Other bank guarantees, liens granted and shares 2.498.899 7.498.191

Tax loss 2.309.387 1.547.473

Investment and other reliefs 79.244 49.243

Other 76.725 76.725

Total 13.028.385 18.037.211


84 The Cash Flow Statement was prepared using the indirect method, incorporating data from the Balance Sheet as at 31 December 2009 and 31 December 2008, from 2009’s Income Statement, and the additional data required for the adjustment of inflows and outflows to ensure an adequate breakdown of major items.

Financial instruments risk management

Risk exposure and management

Currency risks in the Company with regard to the euro were almost entirely excluded. Almost all foreign transactions outside the EMU were made in EUR.

The Company is aware of the importance attributed to the regular control and management of the financial risk to which the Company is exposed, and views it as a relevant precondition for successful operations and achieving strategic goals. In 2009, interest rate risk was predominant (high interest rates for new debt). The analysis of these risks resulted in an estimate that interest rate risk was higher due to the new Company short-term borrowings and/or or guarantees issued. The Company also expects these risks to increase in the future as a result of the operations of the parent company and its subsidiaries.

All long-term debt is denominated in euros. Interest rates are based on market principles governing the price of money in the European and local banking market. Interest rate risk has not been hedged thus far, as the Company assessed that the fixed interest rates offered are still above variable rates, and that long-term interest rate change will allow more favourable costs of financing during the borrowing period.

Interest rate risk increased due to the total amount of loans and change in interest rates. The interest rate level was assessed to be acceptable for all long-term loans taken, with its contractually agreed variability, and taking into account their maturity. The downward trends are favourable. The Company’s exposure to interest rate risk is otherwise estimated to be high.

Property and related risk in 2009 was systematically and analytically assigned to insurance companies.

Liquidity risk is low at Cetis in the short term as a result of efficient asset management, adequate credit lines for regulating cash flow, satisfactory financial flexibility, and good access to the necessary financial resources, whereby the Company takes into account the circumstances in the financial environment and financial markets.

Cash flow statement disclosures


85

Financial instruments – credit risk

in EUR


Available-for-sale financial assets 11.094.674 12.282.154

Financial assets at fair value through profit or loss

Loans granted 57.611 1.231.056

Current and non-current receivables 5.318.330 4.179.217

Cash and cash equivalents 2.930 955.896

Total 16.473.545 18.648.323

The highest credit risk exposure for deposits or loans as at the reporting date by geographical region was as shown in the table below:

Book value

in EUR 2009 2008

Domestic 57.611 662.370

Other European countries 568.200

Other regions – Africa

Total 57.611 1.230.570

The highest credit risk exposure for trade receivables at the reporting date by geographical region was as follows:

Book value

in EUR 2009 2008

Domestic 3.695.472 3.093.559

Euro zone countries 352.443 451.789

Other European countries 1.127.977 331.206

Other regions – Africa 142.438 302.298

Total 5.318.330 4.179.217

The highest credit risk exposure for trade receivables at the reporting date by type of customer was as follows:

Book value

in EUR 2009 2008

Wholesale customers 1.178.318 1.117.217

Customers, end users 4.140.012 3.062.000

Total 5.318.330 4.179.217


86

Impairment losses

Trade receivables as at the reporting date:

Gross Impairment Gross Impairment

in EUR 2009 2009 2008 2008

Non-past-due 4.847.915 3.330.897

Past due 0-30 days 211.561 515.000 4.000

Past due 31-120 days 164.654 7.264 212.189 15.000

Past due 121-365 days 57.761 56.656 123.000 37.000

More than one year 758.328 657.971 705.466 652.059

Total 6.040.219 721.891 4.886.552 708.059

in EUR 2009 2008

Balance at 1 January 708.059 926.000

New value adjustments 103.133 58.207

Written-off value adjustments -54.096 -55.395

Paid written-off value adjustments -35.205 -220.753

Balance at 31 December 721.891 708.059

Currency risk

EUR USD GBP CHF DKK

31.12.2009

Trade receivables 5.279.256

Accounts payable -4.861.033 -100.913 -11.135 -116.087

Secured bank loans

Balance sheet gross exposure 418.223 -100.913 -11.135 -116.087

EUR USD GBP CHF DKK

31.12.2008

Trade receivables 4.006.651

Accounts payable -3.977.743 -4.763 -32.582 -977

Secured bank loans

Balance sheet gross exposure 28.908 -4.763 -32.582 -977

The Company is not exposed to any specific currency risks.


87

Liquidity risk

Book Contractual Up to 6 From 6 to From 1 to From 2 to Over 5

31 December 2009 value cash flow months 12 months 2 years 5 years years

Transaction account (TRR) overdraft

617.407 -620.918 -620.918

Secured short-term bank loans 758.000 -760.138 -551.856 -208.282

Secured long-term bank loans 8.064.130 -8.423.368 -1.344.478 -1.334.882 -2.721.373 -3.022.635

Other loans 350.000 -350.595 -350.595

Accounts payable and other liabilities

6.713.847 -6.713.847 -6.713.847

TOTAL 16.503.384 -16.868.866 -9.581.694 -1.543.164 -2.721.373 -3.022.635

3-month Euribor 31 December 2009 0,700


Book Contractual Up to 6 From 6 to From 1 to From 2 to Over 5

31.12.2008 value cash flow months 12 months 2 years 5 years years

Transaction account (TRR) overdraft

Secured short-term bank loans 8.655.000 -9.321.000 -1.482.000 -1.432.000 -2.696.000 -3.711.000

Secured long-term bank loans 1.240.000 -1.330.000 -351.000 -979.000

Other loans 5.275.651 -5.275.651 -5.275.651


15.170.651 -15.926.651 -7.108.651 -2.411.000 -2.696.000 -3.711.000

TOTAL



Interest rate risk

As at the reporting date, loan contracts concluded by Cetis, d. d. were with fixed and variable interest rates.

Instruments with a fixed interest rate 2009 2008

Instruments with a fixed interest rate 12.736 2.090.960

Financial assetsFinancial liabilities

1.084.187 889.571

Difference -1.071.451 1.201.389

Sensitivity analysis for instruments with a fixed interest rate

A change in interest rates by one percentage point as at the reporting date would result in an increase or decrease in equity of EUR 912.

Instruments with a variable interest rate 2009 2008

Instruments with a fixed interest rate

Financial assetsFinancial liabilities

8.711.606 10.904.757

Difference -8.711.606 -10.904.757


88

Sensitivity analysis of cash flow for instruments with a variable interest rate

A change in interest rates by one percentage point at the reporting date would result in an increase or decrease in equity of EUR 9.556.

Interest rates used to determine fair value.

2009 2008

Cash, loans, deposits 0,05 % - 7,015 % 0,1 % - 7,015 %

Fair value

Overview of fair value and book value of assets and liabilities

in EUR

NoteBook value

31 December 2009

Fair value 31 December

2009

Book value 31 December

2008

Fair value 31 December

2008

Available-for-sale investments 11.094.674 11.094.674 12.282.154 12.282.154

Loans granted 44.876 44.876 333.995 333.995


Investments at fair value through profit and loss

Operating and other receivables 5.318.330 5.318.330 4.179.217 4.179.217

Short-term loans 12.736 12.736 897.061 897.061

Cash and cash equivalents 2.930 2.930 955.896 955.896

Long-term borrowings -5.567.754 -5.567.754 -6.064.130 -6.064.130

Short-term borrowings -4.221.784 -4.221.784 -5.730.199 -5.730.199

Operating and other liabilities -6.713.847 -6.713.847 -5.271.871 -5.271.871

Total -29.839 -29.839 1.582.123 1.582.123

Testing financial investments in terms of possible impairment

The company performed no investment impairment. Upon acquiring an investment in mutual funds and other investment companies, the Company classifies them as long-term investments if the intention is to own such investment for more than one year. If such investment is listed on the stock exchange, it is entered in the books at fair value; if the investment is not listed, it is valued at cost. When an investment in mutual funds and other investment companies is valued at cost, it is tested five years from the date of acquisition in order to determine if the investment should be impaired.

Such investment is usually impaired if the purchase value in a period of five successive years exceeds the realisable value on the balance sheet cut-off date. When valued at fair value through capital, it is checked five years from the date of acquisition for the probability that such investment needs to be impaired. An investment is usually impaired when its fair value in five successive years is continuously lower than the investment purchase value. Impairment is performed in compliance with IAS 39.

For all other financial investments valued at fair value through capital, verification of possible impairment was performed on the Balance Sheet date, comparing the percentage of decrease in the fair value of a financial investment in the period from the date of its recognition up to the Balance Sheet cut-off date, as well as relative change in the Slovenian Share Index (SBI 20). The amount of investment revaluation that would have to be performed after checking for possible impairment is insignificant.

Loans granted and obtained are valued on the basis of recalculating the repaid value using the effective interest rate, which is the same as the contractual interest rate. Accordingly, the contractual interest rate is used in calculation.

In terms of trade and other receivables, fair value impairment is taken into account for the purpose of claim recovery. In view of their short-term nature, operating and other liabilities are not discounted.


89

Other disclosures

Disclosure by groups of persons: members of the Management and Supervisory Board. Total remuneration received by groups of persons for the performance of functions or duties in the financial year 2009:

- Management EUR 118.717;- Supervisory Board EUR 21.093.

Gross management member remuneration

Gross management member remuneration in EUR

in EUR

Name and surname of Management member

Fixed part of remu-

neration*

Variable part of re-

munerationProfit share

Stock option and other

remuneration

Other remu-neration of

Management members

Total

Management 111.853 111.853

Simona Potočnik 111.853 111.853

* Receipts on the basis of salary, holiday and anniversary bonuses.

Gross management member remuneration - continuation

in EUR

Name and surname ofManagement member

Reimburse-ment of costs

Other remuneration

(insurance premiums)

Other remuneration

(commissions)

Other additional

remunerationTotal

Simona Potočnik 6.671 193 6.864

Gross remunerations of Supervisory Board members

in EUR

Name and surname of Supervisory Board member

Fixed part of remu-

neration*

Reimburse-ment of

costs

Variablepart of

remunera-tion

Participationin profit

Stock option

and other remunera-

tions

Other re-muneration

of Board member

(benefits)

Total

Total 20.169 924 21.093

Borut Bizaj 1.963 184 2.147

Bernard Gregl 2.325 2.325

Franc Ješovnik 2.992 222 3.214

Marko Melik 2.928 2.928

Dušan Mikuš** 4.723 296 5.019

Ljubo Peče** 5.237 222 5.459

*Remuneration from meeting fees.**Includes remuneration from Supervisory Board commissions.

Related-party transactions

The transactions between the Company and related parties were based on contracts of sale, whereby market prices of products and services were used.

Events after the balance-sheet date

No important events occurred after the balance sheet date.


90

Cetis group financial report

Independent auditor’s report


91

in EUR

Notes 2009 2008

1. REVENUE 1 34.381.966 35.966.704

2. Cost of goods sold 2 -2.814.796 -4.912.989

3. Production costs 2 -21.828.442 -20.654.578

4. Cost of goods sold and production costs 2 -24.643.238 -25.567.567

A. GROSS PROFIT 9.738.728 10.399.137

5. Other income (from operations) 3 1.552.204 1.202.812

6. Distribution costs 2 -5.163.218 -5.777.094

7. Administrative expenses 2 -6.697.817 -6.704.880

8. Other expenses (from operations) 2 -193.095 -287.480

= Other income, expenses and costs (5+6+7+8) -10.501.925 -11.566.642

B. OPERATING PROFIT OR LOSS EXCLUDING FINANCE COSTS -763.197 -1.167.505

9. Finance income 4 1.372.155 2.425.353

10. Finance cost 4 -601.168 -1.195.008

C. NET FINANCE COSTS 770.986 1.230.345

D. PROFIT (LOSS) BEFORE TAX 7.789 62.840

11. Income tax expense 5 -102.197 -12.393

E. NET PROFIT AFTER TAX 109.986 75.233

Profit attributable to minority interest -11.065

Profit attributable to majority owner 109.986 86.298

Basic and diluted earnings per share (in EUR) 22 0,55 0,38

Statement of comprehensive income

in EUR

2009 2008

Net profit or loss for the period 109.986 75.233

Other comprehensive income in the period:

Gains on revaluation of intangible assets and property, plant and equipment

Gains on revaluation of available-for-sale financial assets 534.680 -1.917.176

Gains and losses from currency translation differences for financial statements of companies abroad

-9.018 -118.555

Actuarial gains and losses of programs with defined benefits


Total other comprehensive income for the period 525.662 -2.035.731

Total comprehensive income for the period 635.648 -1.960.498

Attributable to:

- majority owners 635.648 -1.971.580

- minority interest 11.083

Consolidated income statement


92

in EUR


ASSETS

1. Property, plant and equipment 8 19.699.237 22.407.618

2. Intangible assets 9 3.022.390 2.489.411

3. Investment property 7 429.226 203.129

4. Investments in group companies

5. Investments in associates 10 1.274.796

6. Investments available for sale 11 11.099.910 13.442.599

7. Loans 12 58.301 333.995

8. Non-current operating receivables 13

9. Deferred tax assets 14 537.266 742.717

SA. Total non-current assets 36.121.125 39.619.470

0. Non-current assets held for sale 15 2.296.668 2.381.259

1. Inventories 16 3.439.807 3.750.321

2. Current investments at fair value 17

3. Short-term loans 18 145.513 1.073.867

4. Operating and other receivables 19 7.094.215 6.616.581

6. Cash and cash equivalents 20 263.642 1.041.656

SB. Total current assets 13.239.845 14.863.684

S. TOTAL ASSETS 49.360.970 54.483.154

Consolidated balance sheet


93

in EUR


EQUITY

1. Issued capital 21 10.015.023 10.015.023

2. Share premium 21 17.538.831 17.859.379

3. Reserves (legal and statutory) 21 2.032.352 1.926.717

4. Retained earnings from previous periods 21 183.200

Retained earnings for the period 21 86.298

5. Treasury shares 21 -1.025.918 -26.001

6. Fair value reserve 21 -1.041.797 -1.576.477

(Consolidated) equity revaluation adjustment -35.677 -26.659

- from capital -36.909 -27.811

- from profit 1.232 1.152

Minority interest capital 4.900 53.382

KO.A Total equity 27.487.715 28.494.863

1. Borrowings 23 7.559.636 8.769.779

2. Non-current operating liabilities 24 5.379 26.432

3. Provisions 25 925.823 1.069.966

- for guarantees 64.089 70.764

- for lawsuits 8.350 28.736

- for anniversary bonuses and retirement bonuses 849.095 947.344

- other long-term provisions 4.289 23.122

5. Deferred tax liabilities 14 5.744 310.195

KO.B.a) Total non-current liabilities 8.496.582 10.176.372

1. Borrowings 23 4.627.149 8.615.088

2. Operating and other liabilities 26 8.749.523 7.196.831

KO.B.b) Total current liabilities 13.376.672 15.811.919

KO.B Total liabilities 21.873.254 25.988.291

KO. TOTAL EQUITY AND LIABILITIES 49.360.970 54.483.154

Off-balance sheet assets (liabilities) 27 14.257.113 23.172.182


94

in EUR

2009 2008

A. Cash flows from operating activities

a) Net profit or loss

Profit / loss before tax -451.054 131.110

Income tax and other taxes not included in operating expenses -207.486 51.484

-658.540 182.594

b) Adjustments for

Depreciation and amortisation 3.541.901 4.087.321

Operating revenue from revaluation of investment and financing items -510.023 -244.918

Operating expenses from revaluation of investment and financing items 100.442 78.118

Finance revenue, excl. finance revenue from operating receivables -351.410 -2.352.772

Finance expenses, excl. finance expenses from operating receivables 710.184 1.547.486

3.491.094 3.115.235

c) Changes in net current assets (and accruals, provisions and deferred tax receivables and liabilities) of operating Balance Sheet items

Opening less closing operating receivables -2.120.732 2.557.204

Opening less closing deferred costs and accrued revenue -44.178 -4.178

Opening less closing deferred tax receivables

Opening less closing assets (groups for disposal) for sale 85.108 -2.296.668

Opening less closing inventories 337.601 440.511

Closing less opening operating debts 3.069.775 -3.759.499

Closing less opening accrued costs/expenses and deferred revenue, and provisions

-200.976 -366.626

Closing less opening deferred tax liabilities

1.126.599 -3.429.256

d) Excess operating proceeds or excess operating expenditure(a + b + c)

3.959.152 -131.427

B. Cash flow from investing activities

a) Proceeds from investing activities

Interest received and shares in profit received, relating to investing activities 329.970 767.977

Proceeds from sale of intangible assets 80.409

Proceeds from sale of property, plant and equipment (PPE) 3.856.008 3.161.201

Consolidated cash flow statement


95

in EUR

2009 2008

Proceeds from sale of investment property

Proceeds from sale of long-term investments 28.343 2.531.322

Proceeds from sale of short-term investments 324.760

4.619.490 6.460.500

b) Expenditure in investing activities

Purchase of intangible assets -938.992 -511.938

Purchase of property, plant and equipment -2.135.132 -995.200

Purchase of investment property

Purchase of long-term investments -228.324 -129.766

Purchase of short-term investments

-3.302.449 -1.636.904

c) Excess proceeds from investing activities or excess expenditure from investing activities (a + b)

1.317.042 4.823.596

C. Cash flow from financing activities

a) Proceeds from financing activities

Proceeds from paid-up capital 142.740

Proceeds from increase in long-term financial liabilities 1.537.922

Proceeds from increase in short-term financial liabilities 1.772.130

142.740 3.310.052

b) Expenditure in financing activities

Interest paid in relation to financing activities -663.706 -1.061.076

Repayment of capital

Repayment of long-term financial liabilities -3.712.442 -5.408.029

Repayment of short-term financial liabilities -1.579.807

Dividends and other shares in profit paid -237.097 -1.499.179

-6.193.052 -7.968.284

c) Excess financing proceeds or excess financing expenditure (a + b)

-6.050.312 -4.658.232

Č. Cash at end of period 263.642 1.041.655

x) Cash for the period (sum of Ac, Bc and Cc excesses) -774.118 33.937

y) Cash at beginning of period 1.037.756 1.007.718


96

in EUR

Issued capital

Share premium


Treasury shares

Retained profit

Fair value reserve

Consolidated equity

revaluation adjustment

Majority owner capital

Minority interest capital

Total equity

A1. Balance at the end of previous reporting period, at 31 December 2007 10.015.023 17.859.379 1.900.716 -26.001 306.284 340.699 30.396.100 30.396.100

A2. Opening balance for reporting period, at 1 January 2008 10.015.023 17.859.379 1.900.717 -26.001 306.284 340.699 30.396.100 30.396.100


B2. Total comprehensive income for the reporting period at 31 December 2008 -27.745 -1.917.176 -26.659 -1.971.580 11.083 -1.960.497

Entry of net profit or loss 86.299 86.299 -11.065 75.234

Change in surplus from revaluation of investments -1.917.176 -1.917.176 -1.917.176

Gains and losses from translation of financial statements of companies abroad (currency translation)

-114.044 -26.659 -140.703 22.148 -118.555

B3. Movements in equity 26.001 -9.041 16.960 42.299 59.259

Allocation of part of net profit to form additional reserves pursuant to AGM decision

26.001 -26.001

Other movements in equity 16.960 16.960 42.299 59.259

C.Closing balance for reportingperiod, at 31 December 2008

10.015.023 17.859.379 1.926.718 -26.001 269.498 -1.576.477 -26.659 28.441.480 53.382 28.494.862

A1. Balance at the end of the previous reporting period, at 31 December 2008 10.015.023 17.859.379 1.926.718 -26.001 269.498 -1.576.477 -26.659 28.441.480 53.382 28.494.862

Retroactive adjustments -329.363 -329.363 -329.363

A2.Opening balance for reportingperiod, at 1 January 2009

10.015.023 17.859.379 1.926.718 -26.001 -59.865 -1.576.477 -26.659 28.112.117 53.382 28.165.499

B1. Changes in equity -999.918 -105.143 -1.105.061 -48.482 -1.153.543

Entry of called-up share capital 4.900 4.900

Purchase of treasury shares and own business shares -999.918 -999.918 -999.918

Other movements in equity -105.143 105.143 -53.382 51.761

B2. Total comprehensive income for the reporting period at 31 December 2009 109.985 534.680 -9.018 635.647 635.647

Entry of net profit or loss 109.985 109.985 109.985

Gain on the revaluation of investments 534.680 534.680 534.680


-9.018 -9.018 -9.018

B3. Movements in equity 105.634 55.023 -159.890 -159.890


100.703 -100.703

Covering loss as deductible equity item -320.547 320.547

Other movements in equity 4.931 -164.821 -159.890 -159.890

C. Closing balance for reporting period, at 31 December 2009 10.015.023 17.538.832 2.032.352 -1.025.919 -1.041.797 -35.677 27.482.813 4.900 27.487.713

Consolidated statement of changes in equity


97

in EUR

Issued capital

Share premium


Treasury shares

Retained profit

Fair value reserve

Consolidated equity

revaluation adjustment

Majority owner capital

Minority interest capital

Total equity

A1. Balance at the end of previous reporting period, at 31 December 2007 10.015.023 17.859.379 1.900.716 -26.001 306.284 340.699 30.396.100 30.396.100

A2. Opening balance for reporting period, at 1 January 2008 10.015.023 17.859.379 1.900.717 -26.001 306.284 340.699 30.396.100 30.396.100


B2. Total comprehensive income for the reporting period at 31 December 2008 -27.745 -1.917.176 -26.659 -1.971.580 11.083 -1.960.497

Entry of net profit or loss 86.299 86.299 -11.065 75.234

Change in surplus from revaluation of investments -1.917.176 -1.917.176 -1.917.176


-114.044 -26.659 -140.703 22.148 -118.555

B3. Movements in equity 26.001 -9.041 16.960 42.299 59.259


26.001 -26.001

Other movements in equity 16.960 16.960 42.299 59.259

C.Closing balance for reportingperiod, at 31 December 2008

10.015.023 17.859.379 1.926.718 -26.001 269.498 -1.576.477 -26.659 28.441.480 53.382 28.494.862

A1. Balance at the end of the previous reporting period, at 31 December 2008 10.015.023 17.859.379 1.926.718 -26.001 269.498 -1.576.477 -26.659 28.441.480 53.382 28.494.862

Retroactive adjustments -329.363 -329.363 -329.363

A2.Opening balance for reportingperiod, at 1 January 2009

10.015.023 17.859.379 1.926.718 -26.001 -59.865 -1.576.477 -26.659 28.112.117 53.382 28.165.499

B1. Changes in equity -999.918 -105.143 -1.105.061 -48.482 -1.153.543

Entry of called-up share capital 4.900 4.900

Purchase of treasury shares and own business shares -999.918 -999.918 -999.918

Other movements in equity -105.143 105.143 -53.382 51.761

B2. Total comprehensive income for the reporting period at 31 December 2009 109.985 534.680 -9.018 635.647 635.647

Entry of net profit or loss 109.985 109.985 109.985

Gain on the revaluation of investments 534.680 534.680 534.680


-9.018 -9.018 -9.018

B3. Movements in equity 105.634 55.023 -159.890 -159.890


100.703 -100.703

Covering loss as deductible equity item -320.547 320.547

Other movements in equity 4.931 -164.821 -159.890 -159.890

C. Closing balance for reporting period, at 31 December 2009 10.015.023 17.538.832 2.032.352 -1.025.919 -1.041.797 -35.677 27.482.813 4.900 27.487.713

The Management of Cetis approves the consolidated financial statements and notes thereto for the financial year ended 31 December 2009.


98 The Management is responsible for the preparation of consolidated financial statements, thus presenting a true and fair view of the state of affairs at the end of the financial year, and of profit or loss for the period.

The Management confirms that suitable accounting policies have been consistently applied, and that the accounting estimates are reasonable and prudent. The Management also confirms that the consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements have been prepared on a going concern basis.

The Management recognises its responsibility for keeping proper accounting records, the adoption of appropriate measures for the safeguarding of the Company’s assets, and the prevention and detection of fraud, and other irregularities.

April 2010 Simona Potočnik, MSc, General Manager

Statement of management responsibility


99

1. Group profile

The Group’s core business is the provision of comprehensive solutions in the field of communications through printed media and other types of media. The corporate vision is of the company as the leading company of its type in Slovenia, with appropriate developmental, investment and marketing activities and the best qualified staff, looking ahead to increase its market share outside Slovenia as well. The Company offers a programme of diversified printed matter, such as security, variable and commercial printed matter, graphic design, including accessory services, such as the personalisation of documents, the implementation and personalisation of micro chips or magnetic tapes, archiving, identity management and consultancy, project management, and other services.

The Group’s consolidated financial statements for the year that ended on 31 December 2009 are for the Company and its subsidiaries, as well as the Group’s stakes in associates. Consolidation for the companies Cetis Print, d.o.o., Beograd, Cetis direkt, d.o.o., Celje and Cetis-Zg, Printing and Enveloping, d.o.o., Sveta Nedelja was performed on the basis of the simultaneous consolidation method.

The group comprises

Cetis, d. d.

Parent company

sharein equity

Company equityin EUR

Company profit or

lossin EUR

Cetis-ZG, d.o.o., Zagreb 100 % 2.327.436 504.458

Cetis Print, d.o.o., Beograd (100% owned by Cetis-ZG, d.o.o.) 100 % 117.351 -8.356

AMBA Co., d.o.o., Ljubljana 100 % 622.775 213.619

La Societe Nationale des Loteries Sportives (SNLS), Gabon 93,63 %

Cetis Direkt, d.o.o. Celje (100% owned by Cetis-ZG, d.o.o., Zagreb) 100 % 129.283 -717

Cetis MKD, d.o.o. Skopje (51% owned by Cetis d. d. and Cetis-Zg d.o.o. 51 % 10.000

Cetis-Zg Printing and Enveloping, d.o.o. Sveta Nedelja (100% owned by Cetis-ZG, d.o.o.)

100 % 2.740 -68

Company La Societe Nationale des Loteries Sportives, Gabon is classified to non-current assets available for sale and is not active, thus no consolidated financial statements were prepared as at 31 December 2009, and consequently the company was not included in consolidated financial statements. The conclusion was that the statements, due to the inactivity of the company, compared to 2007 when the Company assessed the importance of the investment share, did not share. Therefore according to Group policies, the investment represents an insignificant share and does not need to be included in the consolidated financial statements.

Associates

CompanyOwnership

share in%

Company’s own capital

(in EUR)

Company profit or loss

(in EUR)

Druckman, Hungary – the company is not active 33 %

Duf Euroinvestment d. d. Tuzla 27 % 559.337 57.875

Summary of significant accounting policies and notes to the financial statements


100

2. Basis for preparation of consolidated financial statements

a) Statement of compliance

The 2009 consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and the interpretations by the IFRS Interpretations Committee (IFRSIC), as adopted by the European Union.

The Company Management approved the consolidated financial statements on 7 April 2010.

b) Basis for measurement

2009’s consolidated financial statements were prepared on a historical cost basis, except for the following cases that were measured at fair value:

• financial instruments at fair value through profit or loss,

• available-for-sale financial assets• investment property.The methods used to measure fair value are described below.

c) Functional and presentation currency

The consolidated financial statements are presented in euros (EUR), i.e. the functional currency of the Company.

d) Use of estimates and judgements

The preparation of consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) requires the Management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts for assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions need to be reviewed on a regular basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised, and in any future periods affected.

3. Relevant accounting principles applied

The accounting policies set out below have been applied consistently by Group companies for all periods presented in these consolidated financial statements.

a) Basis for consolidationSubsidiariesSubsidiaries are entities, indirectly or directly controlled by the parent company. Control exists

when the parent company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. When assessing the impact, the existence and effect of potential voting rights that are currently exercisable or convertible should be considered. The financial statements for subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases, based on the full consolidation method. When required, the accounting policies of subsidiaries have been modified or adapted to those of the Group.

Associates and joint ventures (jointly controlled entities accounted for using the equity method)Associates are those entities in which the parent company has indirectly or directly a significant influence, but not control, over the financial and operating policies. A significant influence exists if a parent company indirectly or directly holds from 20 to 50 per cent of votes in another entity.

Associates are accounted for using the equity method. Upon initial recognition, they are measured at historical cost. The Group’s investment comprises goodwill established upon acquisition, and net value of losses incurred due to impairment. The consolidated financial statements include the Group’s share in profits and losses of associates, calculated using the equity method, after the alignment of accounting policies, from the date that significant influence commences until the date that it ceases. When the Group’s share of losses in a jointly controlled entity exceeds its share in the entity, the book value of that share (including all long-term investments) is reduced to nil, and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of a jointly controlled entity.

Transactions eliminated on consolidationAny balances, income and expenses, and unrealised gains and losses arising from intra-group transactions, are eliminated in the preparation of the consolidated financial statements. Unrealised gains arising from transactions with jointly controlled entities are eliminated to the extent of the Group’s interest in the associate. Unrealised losses are eliminated in the same manner as unrealised gains, providing that there is no evidence of impairment.

b) Foreign currency

Transactions in foreign currencyAny transactions disclosed in foreign currency are converted into the relevant functional currency of Group companies at the exchange rate applicable on the date of transaction.


101

Assets and liabilities expressed in a foreign currency are translated into EUR on the date of the event, and at the end of the accounting period, using the reference exchange rate (ECB) of the Bank of Slovenia.

Monetary assets and liabilities stated in a foreign currency on the balance sheet date are translated into the functional currency at the applicable exchange rate. Foreign exchange gains or losses are the differences between the amortised cost in the functional currency at the beginning of the period, adjusted by the amount of effective interest and payments made during the period, as well as the amortised cost expressed in a foreign currency and translated at the exchange rate applicable at the end of the period. Non-monetary assets and liabilities stated in a foreign currency and measured at fair value are translated into the functional currency at the exchange rate effective on the date when the fair value was set. Foreign exchange gains and losses are recognised in the Income Statement.

Foreign entitiesAssets and liabilities of foreign entities are translated into EUR at the exchange rate effective on the balance sheet date. Revenues and expenses of foreign entities are translated into EUR at average exchange rates effective on the date of conversion.

c) Financial instruments

Non-derivative financial instrumentsNon-derivative financial instruments include investments in equity and debt securities, trade and other receivables, cash and cash equivalents, borrowing and loans, operating and other liabilities.

Non-derivative instruments are initially recognised at fair value, increased by costs directly attributable to the transaction. Subsequent to the initial recognition, non-derivative financial instruments are measured as follows.

Cash and cash equivalents are comprised of cash in hand and on demand deposits. Bank overdrafts that are repayable on demand and form an integral part of cash management are included as a component of cash and cash equivalents in the Cash Flow Statement. The accounting of finance income and finance costs is discussed in Point m) – Finance income and finance costs.

Financial assets available for saleThe Group’s investments in equity securities and certain debt securities are classified as available-for-sale financial assets. Subsequent to the initial

recognition, these investments are measured at fair value. Changes in fair value, except for impairment loss, are directly recognised in equity. When an investment is derecognised, the related gain or loss in equity is transferred to profit or loss.

Investments at fair value through profit or lossAn instrument is classified at fair value through profit or loss if it is held for trading, or is designated as such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the Group is able to manage such investments, as well as make purchase and sales decisions based on their fair value. Upon initial recognition, the attributable costs of a transaction are recognised in profit or loss when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and a change in fair value is recognised in profit or loss.

OtherOther non-derivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses.

Share capitalOrdinary stocks or sharesOrdinary stocks or shares form an integral part of share capital.

Share buybacksWhen treasury shares are repurchased, the amount of consideration paid, including directly attributable costs, and excluding the potential tax effect, is recognised as a change in equity. The shares bought back are classified as treasury shares and deducted from equity. Upon sale of treasury shares, the amount received is recognised as an increase in equity; a transaction’s surplus or loss is recognised in equity.

d) Property, plant and equipment

Presentation and measurementItems of property, plant and equipment are recognised at cost, less accumulated depreciation and accumulated impairment loss. At the date of transition to IFRS, property, plant and equipment were carried at their hypothetical cost at 1 January 2005.

Cost includes expenditure that is directly attributable to the acquisition of an asset. The cost of self-constructed assets includes the cost of materials, direct labour costs and any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the


102

assets and restoring the site on which they are located. Purchased software that is integral to the functionality of related equipment is capitalised as part of that equipment. Borrowing costs related to the purchase of and/or the construction of property are recognised in the profit or loss as incurred.

Parts of an item of property, plant and equipment with different useful lives are accounted for as separate items of property, plant and equipment.Gains and losses on disposal of an item of property, plant and equipment are determined as the difference between the proceeds from disposal of the item compared to the carrying amount, and are recognised among ‘other operating income’ in the Income Statement.

Subsequent costs related to property, plant and equipmentThe cost of replacing a part of an item of property, plant and equipment is recognised in the book value of the item if it is probable that future economic benefits related to that part will flow to the Group, and its purchase value can be reliably measured. All other costs, such as day-to-day servicing, are accounted for in profit or loss when incurred.

DepreciationDepreciation is calculated on a straight-line basis over the useful life of each asset. Land is not depreciated.


In years min. In years max.

Investment property 20 40

Buildings 20 40

Equipment for graphic activity 3 20

Laboratory equipment 3 10

Vehicles 5 8

Telephony 3 5

Furniture 5 6

Typewriters, computer equipment 3 8

Computer equipment for fire safety 3 3

Measurement and control appliances 4 6

Useful life is determined and examined in accordance with the Rules on Accounting and Finance.

Depreciation methods, Useful Life and Residual Value, are reviewed as on the reporting date, in accordance with the Rules on Accounting and Finance.

e) Intangible assets

GoodwillGoodwill (badwill) arises upon the acquisition of subsidiaries, associates and joint ventures.

Acquisitions as from date of transition to IFRS.

In acquisitions made on or after 1 January 2006, goodwill is defined as the surplus or difference

between the purchase price and the Group’s share in the net fair value of identified assets, liabilities and contingent liabilities of the acquired company. If the surplus is negative (badwill), it is directly recognised in the Income Statement.

Subsequent measurementGoodwill is carried at cost, reduced by any accumulated impairment losses. For the recipient of investments calculated on the basis of the equity method, the book value of goodwill is included in the investment book value.

Research and developmentExpenditure on research activities in order to obtain new scientific and professional knowledge and understanding is recognised in the Income Statement as part of Expenditure when incurred.


103

Development activities embody plans or designs for the production of new or substantially improved products and processes. An expense for development is recognised if it can be reliably measured, if the product or process is technically and operationally feasible, if there is a potential for future economic benefits, if the Group has adequate resources for the completion of development, and if it intends to use or sell such assets. Recognised expenditure is comprised of materials costs, direct labour costs, and other costs which can be directly attributed to readying the asset for its intended use. Borrowing costs related to asset development and other expenditure are recognised in the Income Statement when incurred. Capitalised development expenditure is measured at cost, less accumulated amortisation and incurred impairment losses.

Other intangible assets

Other intangible assets acquired by the Group, which have finite useful lives, are measured at cost, less accumulated depreciation expense and incurred impairment losses.

Subsequent expenditure

Subsequent expenditure related to intangible assets is capitalised only when it increases the future economic benefits arising from the specific asset to which it relates. All other expenditure is recognised in the income statement as expenditure when incurred.

Amortisation

Amortisation is calculated on a straight-line basis over the useful life of intangible assets. Amortisation of assets begins when the asset is available for use. The estimated useful life for the current and comparative periods are accounted for as follows.


In years

min

In years max.

Intangible assets 3 10

f) Investment property

Investment property is property owned in order to generate rent or increase the value of a long-term investment, or both. Investment property therefore creates cash flow which is highly independent of

other assets owned by the Company. Investment property is defined as:

• land owned to increase the value of a long-term investment, and not for sale in the near future as part of regular business operations,

• land for which the Company has not determined its future use;

• building owned or on financial lease, which is leased out on the basis of a single or multiple operational lease;

• vacant building owned on the basis of single or multiple operational lease,and

• in cases when, with regard to asset determination, a part of property is investment property and the other part a tangible fixed asset, where they cannot be sold separately, the whole asset is determined as an investment property if the part which is a tangible fixed asset is insignificant; otherwise, the whole asset is recognised as a tangible fixed asset. Whether the proportion is significant or not is determined by the competent employee for the area.

Recognised value measurement

The Company measures investment property based using an historical cost model.The historical cost of purchased investment property is comprised of its purchase price and all directly attributable costs. Directly attributable costs include, for example, attributable fees for legal services, tax on property transfer, and other costs of the transaction.The historical cost of a property constructed by the Company is comprised of its cost to the date when construction or development was completed. On that date, the property becomes investment property.

Disposals

Investment property ceases to be recognised upon disposal, or when it is permanently withdrawn from use and no future economic benefit can be expected from its disposal.Profit or loss from the discontinuation or disposal of investment property has to be established as the difference between net gains upon disposal and the book value of assets, and recognised in the Income Statement.

Depreciation

Investment property is depreciated at the same rate as real property used by the company. The method for determining its useful life is the same as that used to determine the useful life of property, plant and equipment.


104

g) Leased assets

Leases, whereby the Group assumes all of the essential risks and rewards of ownership, are classified as finance leases. Upon initial recognition, the leased asset is measured at an amount equal to the fair value or the present value of the minimum sum of lease payments, whichever is lower. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

h) Inventories

Inventories are measured at historical cost or net realisable value, whichever is lower. The cost of inventories is based on the First-In-First-Out method (FIFO), and includes expenditure incurred in the acquisition of inventories, production or conversion costs, and other costs incurred in bringing them to their existing location and condition. In terms of finished products and work in progress, cost includes an appropriate share of production overheads based on the normal use of production assets.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and estimated costs of sale.The realizable value of individual inventories is primarily checked as on the Balance Sheet date. All inventories older than one year are assessed to have a realizable value of zero. For raw material inventories, subsidiary discrepancy accounts are prepared and attributed to operational expenses from the revaluation of current assets, and the product and goods inventories of subsidiary discrepancy accounts are attributed to operational expenses.

i) Asset impairment

Financial assetsA financial asset is assessed by the Group at each reporting date to determine whether there is any objective sign that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flow arising from that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of its estimated future cash flow, discounted at the original effective interest rate. An impairment loss in respect of a financial asset

available for sale is calculated with reference to its current fair value.

Significant financial assets are evaluated for impairment on an individual basis. Remaining financial assets are collectively assessed for impairment within groups that share similar credit risk characteristics.

All impairment losses are recognised in the Income Statement for the period. Any current loss in respect of a financial asset which was not recognised directly in equity is transferred to profit or loss.

An impairment loss is reversed if the reversal can be objectively related to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and financial assets available for sale that are debt instruments, reversal of impairment is recognised in profit or loss. For available-for-sale financial assets that are equity securities, an impairment loss cannot be reversed through profit or loss.

Non-financial assetsAt each reporting date, the book value of the non-financial assets of the Group, other than inventories and deferred tax assets, is examined to discover any indication of impairment. If there is such an indication, then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite useful lives, or that are not yet available for use, the recoverable amount is estimated at each reporting date.

The recoverable amount of an asset or cash-generating unit is its value in use or its fair value, less sales cost, whichever is higher. In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessment of the time value of money, and the risks specific to the asset. For the purpose of impairment testing, assets are grouped together into the group of assets that generates cash inflows from continued use that are largely independent of the cash inflows resultant on assets or groups of assets (“cash-generating units”). The goodwill acquired in a business combination is, for the purpose of impairment testing, allocated to cash-generating units that are expected to benefit from the synergy of the combination.

An impairment is recognised if the book value of an asset or a cash-generating unit exceeds its recoverable amount. Impairment is recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are first allocated to reduce the book value of any goodwill allocated


105

to the units and then to reduce the book value of other assets in the unit (group of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each balance sheet date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s book value does not exceed the book value that would have been determined, net depreciation or amortisation, if no impairment loss had been recognised in previous periods.

j) Employee benefits

Other long-term employee benefitsThe net liability of the Group that arises in connection with long-term employee benefits is a sum of future benefits paid to employees in exchange for their work performed in the current and previous periods. Any actuarial gains and losses are recognised in the profit or loss in the period in which they occur.

Short-term employee benefitsLiabilities for short-term employee benefits are measured on an undiscounted basis and are accounted for when the employee’s work related to a short-term return is provided.

The liability is disclosed at the amount for which payment is expected in the form of a premium, payable within twelve months after the expiry of the period of performing the work, or a profit distribution scheme, if the Group has a present legal or constructive obligation to make such payments due to previous work performed by the employee and such obligation can be measured reliably.

k) Provisions

A provision is recognised if, as a result of a past event, the Group has current legal or constructive obligations that can be estimated reliably, and it is probable that an outflow of factors enabling economic benefits will be required to settle the obligation. Provisions are determined by discounting expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Warranties for products and servicesA provision for product and service warranties is recognised when the underlying product or service is sold. This provision is based on historical warranty data, and an assessment of all possible outcomes against their associated probabilities.

l) Revenue

Revenue from products soldRevenue from product sales is measured at fair value of the consideration received or the related receivables, net returns and price reductions, trade discounts and volume rebates. Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer; when certainty exists regarding recovery of the consideration and the associated costs or possible return of goods, and when there is no further Group involvement with the products sold; and when the level of revenue can be reliably measured.

Transfers of risk and reward vary and are dependent on the individual terms of the contract of sale. For the sale of goods, transfer usually occurs when the product is received at the customer’s warehouse; however, for some international shipments, transfer occurs upon loading onto the relevant carrier.

Supplied services revenue Revenue from services rendered is recognised in the Income Statement in proportion to the stage of completion of the transaction as at the reporting date. The stage of completion is assessed with reference to surveys of work performed.

Rental incomeRental income is recognised in income on a straight-line basis over the term of the lease.

m) Finance income and finance costs

Finance income comprises interest income on funds invested (including financial assets available for sale), dividend income, gains from the disposal of available-for-sale financial assets and changes in the fair value of financial assets held for trading through profit or loss, which are recognised in the Income Statement. Interest income is recognised as it accrues through profit or loss, using the effective interest method.

Dividend income is recognised in the Income Statement on the date that the shareholder’s right to receive payment is exercised; in the case of quoted securities, this is usually the ex-dividend date.


106

Finance costs are comprised of borrowing costs, dividends on preference shares classified as liabilities, foreign currency losses, changes in the fair value of financial assets at fair value through profit or loss, and impairment losses recognised on financial assets that are recognised in the Income Statement. All borrowing costs are recognised in the Income Statement, using the effective interest method.

Exchange gains and losses are disclosed in net amounts.

n) Income tax

Corporate tax is comprised of current and deferred tax. Corporate tax is recognised in the Income Statement, except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable profits for the financial year, using taxation rates enacted or substantively enacted as at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised using the balance sheet liabilities method, taking into consideration temporary differences between the book value of assets and the liabilities for financial reporting purposes, and the amount used for taxation purposes. All temporary differences are taken into consideration. Deferred tax is recognised as the amount expected to be paid upon reversal of temporary differences, in compliance with laws enacted or substantively enacted on the reporting date.

The Group offsets deferred tax assets and liabilities if it is legally entitled to offset recognised assessed tax assets and liabilities, and if they refer to corporate income tax that belongs to the same tax authority in relation to the same taxable unit; or different taxable units that are intended for the settlement of assessed tax assets and tax receivables with the difference, or either simultaneously realise the assets and settle the liabilities.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which a deferred tax asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the taxation benefit related to an asset will be realised.

Additional income tax that arises from the distribution of dividends is recognised at the

time the liability to pay the related dividend is recognised.

o) Basic earnings per share

The Group presents basic earnings per share data for its ordinary shares. The basic earning per share is calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares in the business year. Diluted earnings per share are identical, as the Group holds neither any preference nor convertible shares.

p) Segment reporting

A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and returns that are different from those of other segments.

The Group’s segment reporting is based on business segments.

Inter-segment pricing is determined on an arm’s length basis.

Segment profit or loss, assets and liabilities include items directly attributable to a segment, as well as those that can be allocated to a segment on a reasonable basis. Unallocated assets include investments, whereas unallocated liabilities include capital.

4. Determination of fair value

A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes for groups of assets based on the methods below. When applicable, further information on the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. a) Property, plant and equipment

The fair value of property, plant and equipment recognised as a result of a business combination is based on market values. The fair value of property is the estimated value for which the property could be exchanged on the appraisal date, and following


107

adequate marketing between a willing buyer and a willing seller in an arm’s length transaction, wherein the parties had each acted knowledgeably, prudently and without compulsion. The market value of items of plant and equipment is based on the offered market price of similar items.

b) Intangible assets

The fair value of intangible assets is determined as the expected present value of estimated future cash flows originating from their use and eventual sale.

c) Inventories

The fair value of inventories in business combinations is determined on the basis of their expected sales value achieved in ordinary business operations, reduced by the estimated cost of completion and the estimated costs of sale and an adequate margin related to the work for completion and sale of inventories.

d) Investment in equity and debt securities

The fair value of financial assets at fair value through profit or loss, held-to-maturity investments and available-for-sale financial assets is determined with reference to their quoted bid price as on the reporting date. The fair value of held-to-maturity investments is determined for disclosure purposes only.

e) Operating and other receivables

The fair value of operating and other receivables is calculated as the present value of future cash flows, discounted at the market rate of interest as on the reporting date.

f) Non-derivative financial liabilities

Fair value, which is specified for reporting purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest as on the reporting date. For finance leases, the market interest rate is determined with reference to similar lease agreements.

5. Financial risk management

The Group is exposed to the following risks arising from financial instruments:• credit risk• liquidity risk• market risk.

This section deals with the Group and its exposure to the above risks, its objectives, policies and procedures for risk measurement and management, and its equity management.

Management is entirely responsible for designing the framework for the Group’s risk management.

Risk management policies are designed to identify and analyse risks that can pose a threat to the Group. On this basis, appropriate restrictions and controls are determined, and risks are monitored and restrictions considered. Risk management policies and systems are subject to regular review, and updated information regarding market conditions and the activities of the Group is therefore regularly communicated. The Group endeavours, through training, risk management standards and procedures to develop a disciplined and constructive environment in which all employees are aware of their role and obligations.

Credit riskCredit risk is the risk of suffering financial loss when any of the Group’s clients or parties to a financial instrument contract fail to meet their contractual obligations. Credit risk mainly occurs in relation to the Group’s trade receivables and investment securities.

Operating and other receivablesThe Group’s exposure to credit risk mainly depends on individual client characteristics. The demographics of the Group’s client base, as well as payment risk in terms of the branch of industry or country in which a client operates does not have such a strong impact on credit risk. Approximately 2.5% of Group’s revenues may be attributed to sales transactions with one client alone. In geographical terms, there is no credit risk concentration.

The Group shapes its credit policy on the basis of a creditworthiness analysis of each new client, which is made before the Group offers them its standard payment and delivery terms and conditions. The client review includes any external evaluations, if available, and in certain cases, bank references. Purchase limits – determined in the form of a maximum outstanding amount – are separately set for each client and reviewed every three months. Any transactions with a client not meeting the standard creditworthiness test are carried out solely through advance payments.

Ownership is retained in goods until they have been paid for in full. In the event of non-payment for goods, the Group’s claim is therefore secured. As for operating and other receivables, the Group requires no surety.


108

The Group forms value adjustments for the amount of impairment, representing the amount of estimated losses arising from trade and other receivables, as well as investments. The main elements of these value adjustments are a special portion of the loss related to individual key risks, and the total loss, formed for groups of similar assets due to incurred losses not yet defined. The value adjustment for the total amount of loss is determined by taking into account historical data related to payment statistics for similar financial resources.

Value adjustments for trade receivables are made on the basis of an analysis with regard to recovering each receivable. Adjustment is based on receivables which remain unpaid 90 days after maturity.

InvestmentsThe Group reduces its credit risk exposure through investments in the liquid securities of contractual parties with adequate credit ratings.

GuaranteesIn accordance with its policy, the Group provides financial guarantees or sureties solely to subsidiaries fully owned by the controlling company. As of 31 December 2009, the Group records granted guarantees under off-balance sheet items.

Liquidity riskLiquidity risk is the risk arising from the Group’s inability to meet its financial obligations when they fall due. The Group manages to ensure the highest possible liquidity by always having sufficient liquid assets available to settle its obligations within the set time limits, both under normal and stressful circumstances, without incurring unacceptable losses or risking harm to the Group’s reputation. The valuation of products and services is based on activities aimed at monitoring the Group’s cash flow needs and optimising the return on investments. The Group also ensures it has sufficient cash (sight deposits) to cover operating expense for a period of 60 days, including servicing financial liabilities; the latter excludes any potential consequences of unpredictable extraordinary circumstances, such as natural disasters.

Market riskMarket risk is the risk resultant on changes in market prices, such as exchange rates, interest rates and equity instruments that may affect the Group’s revenues or the value of financial instruments. The objective of market risk management is the management and control of market risk exposure within reasonable limits, whilst optimising profit.

The Group trades in financial instruments, and assumes financial obligations, both with the aim of managing market risks. All these transactions are carried out in compliance with the Group’s policies. In order to reduce fluctuations in profit or loss to the lowest possible level, the Group makes sustained efforts to use accounting treatment for risk protection purposes.

Currency riskThe Group is exposed to currency risk in the spheres of both purchasing and sales - namely in transactions in currencies that are not functional currencies of Group companies. The Group conducts most of its transactions in EUR, HRK, USD, RSD, GBP, CHF, CFA and DKK. As far as borrowing is concerned, transactions are carried out in euros. The Group has undertaken no special hedging against currency risks.

Interest rate riskThe Group is exposed to interest rate risks, since a variable interest rate applies to most of its financial liabilities. The Group has thus far had no specific hedging against changes to interest rates.

Capital managementThe Management Board has made a decision to keep a large volume of capital, in order to maintain the confidence of investors, creditors and the market, and the sustainable development of the Group. The Supervisory Board monitors the return on equity defined by the Group as basic earnings divided by average equity, less net profit for the financial year.During the reporting year, no change related to capital management occurred in the Group.

Neither the parent company nor its subsidiaries were subject to capital requirements determined by external bodies.


109

6. Segment reporting

in EUR

Breakdown per segment

Security printed matterCommercial printed

matterOther Total

2009 2008 2009 2008 2009 2008 2009 2008

Net sales revenue 13.812.202 10.644.403 17.595.656 17.403.751 2.974.109 7.918.550 34.381.966 35.966.704

Net profit or loss -714.553 -647.237 17.374 186.353 -66.018 -130.117 -763.197 -591.000

Assets by business segment

12.522.779 12.795.179 18.927.454 19.274.750 5.534.072 8.970.626 36.984.304 41.040.555

Unallocated assets 12.374.706 13.442.599

Total assets 12.522.779 12.795.179 18.927.454 19.274.750 5.534.072 8.970.626 49.359.010 54.483.154

Total liabilities 7.209.740 7.508.270 11.193.071 12.575.346 3.468.484 5.721.669 21.871.295 25.805.285

Investments 1.717.659 524.731 1.299.121 882.875 285.668 397.395 3.302.449 1.805.000

Amortisation and depreciation

1.202.027 1.422.453 1.792.767 1.790.318 508.278 907.029 3.503.072 4.119.800

Sales revenue stated under ‘Other’ is comprised of revenue from material, merchandise and fixed assets sales.

The Group does business mainly in Europe, which is why it does not report by geographical segment.


110

Parallel connection between these three dimensions is a compass enabling us to make links in order to advance and develop in time.


1111. Revenue

in EUR

Sales revenue by type 2009 2008

Sale of products on the domestic market 20.383.880 20.402.237

Sale of services on the domestic market 627.587 738.031

Rental revenue on domestic market 167.914 87.998

Sale of products on foreign markets 7.619.769 6.532.279

Sale of services on foreign markets 398.985 375.638

Sale of material and merchandise on the domestic market 4.758.497 1.229.498

Sale of material and merchandise on foreign markets 425.334 6.601.023

Total 34.381.966 35.966.704

2. Expenses

in EUR

Expenses by primary type, change in value of inventories 2009 2008

Cost of goods and materials sold 3.772.385 4.912.989

Cost of materials and services used 19.567.267 18.265.283

Labour costs 9.049.670 10.126.638

Amortisation and depreciation 3.503.072 4.119.800

Other expenses (from operations) 803.594 621.112

Change in inventories of finished products, work in progress and semi-manufactured products

1.380 291.198

Total (operating) expense 36.697.368 38.337.020

Labour costs

in EUR

2009 2008

Gross wages and salaries 6.324.966 7.430.561

Pension insurance cost 832.719 797.756

Cost of other social insurance 747.019 580.758

Other labour cost 1.144.966 1.317.564

Total labour costs 9.049.670 10.126.639

Consolidated income statement disclosures


112 The costs of wages and salaries are accounted for in compliance with collective agreements, internal rules and regulations governing wages and other emoluments, the Decree on the amount of costs recognised as deductible, and individual employment agreements. Other labour costs comprise those of meal allowances, commuting allowances, holiday bonuses, retirement bonus, and payroll tax.

3. Other operating revenue

in EUR

Other revenue type 2009 2008

Gain in disposal of fixed assets 446.665 268.835

Reversal of impairment of property, plant and equipment 95.091

Income from reversal of provisions 124.869 187.937

Reversal of trade receivables and inventories revaluations 411.871 212.409

Indemnities, subsidies, and grants received 111.662 16.299

Other 457.137 422.241

Total 1.552.204 1.202.812

4. Net finance income/finance costs

in EUR

2009 2008

Interest income 75.469 248.940

Share-based income 312.585 562.771

Foreign exchange gains 1.195 15.741

Income from sale of investments 957.859 1.584.605

Other finance income 25.047 13.297

- change in fair value of investments through profit or loss

- other 25.047 13.297

Total finance income 1.372.155 2.425.353

Interest expense 451.145 732.266

Foreign exchange losses 16.810 28.182

Loss in disposal of investments

Other finance costs 133.213 2.281

Finance costs arising from impairment 432.278

Total finance costs 601.168 1.195.008

Total net finance income 770.987 1.230.345


1135. Tax

in EUR

2009 2008

Current tax 180.663 83.871

Deferred tax (from Income Statement) -282.860 -96.264

Total -102.197 -12.393

Effective corporate income tax rates in EUR

2009 2009 2008 2008

Total profit or loss before tax -57.385 61.625

Tax effects:

Tax at general tax rate 21,00 % -12.051 22,0 % 13.558

Adjustment for tax rate from other tax territories 10,04 % -5.764 -13,0 % -8.000

Tax exempt income 159,85 % -91.729 -466,6 % -287.540

Tax increased income -3,32 % 1.907 4,0 % 1.818

Non-deductible expenses -159,42 % 91.485 209,5 % 129.091

Losses for which nodeferred tax is recognised

99,56 % -57.135 -74,3 % -45.760

Tax relief 42,78 % -24.551 -34,6 % -21.340

Tax loss -70,49 % 40.449 364,9 % 224.840

Other changes to tax base 78,08 % -44.807 -30,9 % -19.060

Total tax expense 178,09 % -102.197 -20,1 % -12.393

Deferred taxes recognised directly in equity in EUR

2009 2008

Property, plant and equipment 26.590

Investments -183.511 515.876

Total -183.511 542.466

6. Disclosure of auditor fees

Total auditing costs of the Group amounted to EUR 38.090 in 2009. The value of the contract to audit 2009’s financial statements amounts to EUR 20.720. The auditing of financial statements was performed by ABC revizija d.o.o. and Revizija Uzor d.o.o. auditing firms; other audits were performed by other auditing firms.


114 7. Investment property

in EUR

2009 2008

Land

Buildings 429.226 203.129

Total 429.226 203.129

Movements in investment property

in EUR

Building Total

Cost


Additions

Disposals

Transfer from property, plant and equipment 470.633 470.633

Other transfers



Additions

Disposals


Other transfers


Value adjustment









Consolidated balance sheet disclosures


115

v EUR

Building Total

Book value



Book value



As of 1 January 2009, Group companies reclassified a part of their fixed assets as investment property leased out in 2009. The company measures investment property based on an historical cost model. Investment property is depreciated at the same rate as real property used by the Group. The method for determining their useful life is the same as that used to determine the useful life of property, plant and equipment.

The fair value for investment property as at 31 December 2009 cannot be determined. The total area of real property owned by the Company, which reclassified a part of the real property, measures 20.113m2; the investment property, comprising production, warehousing and office premises, as well as the corresponding functional area of the facility, is 1.690m2.

The amount of income arising from investment property is disclosed under No 1.

8. Property, plant and equipment

Disposals made in 2009 are, in the main, comprised of the sale of commercially and technically outdated, yet still functional machinery.

The Group secured its long-term borrowings with mortgages on real property, pledged plant and equipment, and liens on long-term investments, all of which are recognised in off-balance sheet records.


116

Movements in property, plant and equipment

in EUR


equip-ment

Investmentin progress

Prepay-ments

Total

Cost


Transfer to investment property -470.633 -470.633

Transfer for available-for-sale assets -84.591 -84.591

Adjustment to the opening balance 45.972 45.972

Acquisitions in the period 181.906 922.478 1.104.384

Change to investment in progress 753.451 753.451

Transfers 197.837 -1.148.704 -950.867

Disposals 693.631 786.317 4.906.223 43.405 6.429.577

Reclassification

Balance at 31 December 2008 3.216.533 16.683.862 38.594.657 27.236 68.807 21.299 58.612.393


Calculation 1 January 2009 as per 31 December 2009 exchange rate

57.137 57.137


Transfer for available-for-sale assets

Adjustment to the opening balance

Acquisitions in the period 11.024 980.760 26.837 1.018.622

Change to investment in progress 3.780.766 3.780.766

Transfers -732.753 -732.753

Disposals 1.618.472 1.313.822 5.887.773 446 8.820.513

Reclassification

Balance at 31 December 2009 1.598.060 14.812.949 33.744.781 26.790 3.116.820 48.136 53.347.537

Value adjustment



Exchange rate differences -948 -948

Depreciation 525.072 3.278.170 3.803.241


Disposals 207.000 4.473.779 4.680.779

Transfers

Reclassification

Balance at 31 December 2008 7.937.748 28.267.026 36.204.775


Exchange rate differences -581 -581

Adjustment to the opening balance

Depreciation 447.825 2.631.060 3.078.885


117

in EUR


equip-ment

Investmentin progress

Prepay-ments

Total

Transfer to investment property 316.627 316.627

Disposals 379.128 4.939.024 5.318.152

Transfers

Reclassification

Balance at 31 December 2009 7.689.818 25.958.481 33.648.300


Balance at 31 December 2008 3.216.533 8.746.114 10.327.631 27.236 68.807 21.299 22.407.618


Balance at 31 December 2009 1.598.060 7.123.131 7.786.300 26.790 3.116.820 48.136 19.699.237

Property, plant and equipment acquired under financial lease

in EUR


Equipment 32.597 63.814

9. Intangible assets

Long-term property rights mainly include computer software for the renovation of business information systems. Development costs are the recognised costs of projects that prove to be feasible for project completion and eligible for use or sale. The purpose is to complete the project and sell or use it in view of the probability of economic benefits, and the ability to reliably measure the costs attributable to the respective intangible asset.


118

Movements in intangible assets

in EUR

GoodwillLong-term

deferred costs

Long-term property

rights

Intangible assets in progress

Long-term deferred

costs and accrued income

Total

Cost

Balance at 1 January 2008 627.437 303.455 2.897.095 140.027 3.968.013





-329.162 -329.162


Reclassification -964 -964

Balance at 31 December 2008 627.437 303.455 3.298.737 322.803 4.552.431




Exchange rate differences -2.848 -2.848

Transfers of investments in progress -559.074 -559.074

Disposals 315.101 315.101

Balance at 31 December 2009 627.437 371.327 3.567.483 307.079 299.886 5.173.211

Value adjustment


Amortisation 18.647 276.879 295.526




Amortisation 22.438 366.750 389.188

Disposals 315.101 315.101


Book value


Balance at 31 December 2008 627.437 148.110 1.377.346 322.803 2.475.697


Balance at 31 December 2009 627.437 193.545 1.594.444 307.079 299.886 3.022.390


11910. Investments in associates

Associates include:

- Druckman Hungary, in which the Company holds a 33% stake, for which it has made value adjustment for the entire investment, since the associate has not operated for several years and is not disclosed in movement in investments. After 2009’s financial statements were closed, the parent company received official documentation on removal of the aforementioned mentioned company.

- DUF Euroinvestment d.d. Tuzla, in which the Group has 27% share and which is consolidated based on equity method.

in EUR


Druckman, Hungary – not active

DUF Euroinvestment d.d., Tuzla 1.274.796

Total 1.274.796

Movements in investments in associates

in EUR

Cost Net amount



Attribution of proportional share of profit/loss 15.626 15.626

Transfer to investment in associates 1.259.170 1.259.170


Associated company Lotaria Nacionale SH.A. Rruga Kavajes, Porta Kry Esore, Misto Mame, Tirana was sold in 2009.

11. Investments available for sale

in EUR


Investments available for sale 11.099.910 13.442.599


120 Movements in available-for-sale investments

in EUR



Balance at 1 January 2006 12.998 -172 12.826


Disposal -2.230 172 -2.058

Change in fair value 723 723



Disposal -4.718 -4.718

Change in fair value 438 438


Transfer from short-term investments 1.731.434 1.731.434

Transfer to group companies 128.650 128.650

Acquisition

Disposal 32.500 32.500

Change in fair value -2.433.039 -2.433.039


Transfer to investment in associates 1.259.170 1.259.170


Disposal 1.944.315 1.944.315

Change in fair value 756.503 668 755.835

Balance at 31 December 2009 11.100.578 668 11.099.910

12. Loans

in EUR


Loans 58.301 333.995

Loans granted as at 31 December 2009 include loans to employees for the purchase of apartments, construction, and deposits granted.


121

Movements in loans

in EUR



Balance at 1 January 2006 661 661

Increase 770 770

Repayments 93 93

Transfer to short-term loans 36 36



Increase 500 -301 199

Repayments 221 221

Transfer to short-term loans 32 32


Balance at 1 January 2008 1.550.061 -301.150 1.248.911

Increase

Transfer to assets held for sale 1.186.637 -301.150 885.487

Repayments



Increase 30.963 30.963

Disposal 293.921 293.921



13. Non-current operating receivables

in EUR


Other non-current operating receivables for associates

Total

Movements in non-current operating receivables

in EUR




Transfer to non-current assets held for sale 877.939 877.939

Long-term commodity loans abroad 515.641 515.641



Transfer to non-current assets held for sale



122

14. Deferred tax assets and liabilities


in EUR

Assets Liabilities Assets-liabilities

31 December 2009

31 December 2008

31 December 2009

31 December 2008

31 December 2009

31 December 2008

Property, plant and equipment 284.410 -284.410

Investments 266.193 445.198 5.744 26.135 260.449 419.063

Assets 57.076 49.186 57.076 49.186

Inventories

Provisions for retirement bonus 149.998 181.135 149.998 181.135

Other provisions

Tax loss 63.999 67.199 63.999 67.199

Total 537.266 742.718 5.744 310.545 531.522 432.173

The Group used a 20% tax rate in terms of deferred tax accounting. Deferred tax liabilities are based on surpluses arising from the revaluation of available-for-sale investments, measured at fair value through equity.

Deferred tax assets are based on provisions for anniversary bonuses and retirement bonuses, tax loss, and temporary differences arising from accounting for income tax on investments, receivables, inventories and other provisions to be recognised for tax purposes in subsequent periods.

The Group recognised deferred tax assets for tax loss based on the estimate that taxable profits will be available in the coming years, against which deferred tax assets can be used in the future.

In periods of tax loss utilisation, a decrease in deferred tax assets will represent a corresponding decrease in profits.


in EUR

1 January

2008Recognised under income/expenses

Recognised under equity31 December

2008

Property, plant and equipment -439.000 128.000 26.590 -284.410

Investments -111.061 14.000 515.876 419.063

Receivables 52.410 -3.224 49.186

Inventories

Provisions for retirement bonus 210.012 -28.877 181.135

Other provisions

Tax loss 80.642 -13.443 67.199

Total -206.997 96.456 542.466 432.173


123


in EUR

1 January 2009Recognised

under income/expenses


31 December 2009

Property, plant and equipment -284.410 284.410

Investments 419.063 -183.511 235.552

Receivables 49.186 7.890 57.076

Inventories

Provisions for retirement bonus 181.135 -31.043 150.092

Other provisions -93 -93

Tax loss 67.199 21.696 88.895

Total 432.173 282.860 -183.511 531.522

15. Non-current assets held for sale

in EUR


Tangible assets 84.591

Investment SNLS Gabon 2.296.668 2.296.668

Total 2.296.668 2.381.259

The investment in the company SNLS GABON is recognised amongst other non-current assets, and in which the parent company is a 93,63 per cent holder of issued shares. The investment is valued at cost. The investment was not sold in 2009 due to the political situation in Gabon. Activities related to the sale of the investment continue in 2010.

16. Inventories

in EUR


Material 1.661.240 1.971.919

Work in progress 562.127 266.650

Products 849.941 1.180.803

Merchandise 366.499 330.950

Total 3.439.807 3.750.321

For 2009, the Group wrote off assets related to materials and products which were no longer usable. The largest product write-offs related to labels, plastic cards and wrappings, as well as documents, as a result of using inadequate material.

Value adjustments are accounted for per type of inventory and movement. When reviewing inventories in warehouses storing items under complaint, inventories of materials, products and merchandise that showed no movement for more than 12 months, the Group applied the same policies as in preceding years.

17. Current investments at fair value

in EUR


Current investments

Total


124

Movements in current investments at fair value

in EUR

Cost Value

adjustment (impairment)

Net amount

Balance at 1 January 2008 2.162.775 6.492 2.156.283

Reclassification to non-current investments (EU Commission Regulation) -1.731.434 -1.731.434

Disposal

Change in fair value until transfer -424.849 -424.849


Disposal

Change in fair value until transfer


18. Short-term loans

in EUR


Short-term loans 30.788 615.239

Short-term deposits 101.989 429.766

Current portion of long-term loans 12.736 28.861

Total 145.513 1.073.867

19. Operating and other receivables

in EUR


Current trade receivables 6.784.019 6.107.095

Current operating receivables from associates 14.000

Current operating receivables from third parties 304.799 415.629

Current prepayments 5.398 80.461

Total 7.094.215 6.617.185

20. Cash and cash equivalents

in EUR


Cash in banks, cheques and cash in hand 263.642 87.756

Deposits in banks 953.900

Total 263.642 1.041.656


12521. Equity

The total equity of the Group consists of issued capital, totalling EUR 10.015.023; share premium accounts amounting to EUR 17.538.831; legal and statutory reserves, totalling EUR 2.032.352; treasury shares (deducted from equity) in the amount of EUR 1.025.918; and a fair value reserve, which is negative, amounting to EUR 1.041.797. Profit for the period, generated by the Group, shall be used to cover the losses generated by the Group in the previous period.

The Group issued 200.000 unit shares, subscribed with the Central Securities Clearing Corporation (KDD).

in EUR

Share capital 2009 2008

Share capital 10.015.023 10.015.023

Total 10.015.023 10.015.023

Capital reserves at the amount of EUR 17.538.831 correspond to a simplified reversal of share capital by withdrawing shares amounting to EUR 2.215.195 and general capital value adjustment amounting to EUR 15.323.636.

in EUR

Share premium accounte 2009 2008

Simplified reduction in share capital by withdrawing shares 2.215.195 2.215.195

General capital value adjustment 15.323.636 15.644.184

Total 17.538.831 17.859.379

in EUR

Legal and statutory reserves 2009 2008

Legal reserves 1.006.434 1.709.277

Reserves for treasury shares 1.025.918 26.001

Statutory reserves 191.439

Total 2.032.352 1.926.717 The Group’s fair value reserve in 2009 increased because of a growth in exchange quotations. The accumulated reserve arising from value adjustment surpluses in long-term financial investments is negative, amounting to EUR 1.041.797. Pursuant to this, the Group formed deferred receivables at the amount of EUR 260.449.

Capital value adjustment relates to currency differences arising from, and including financial statements of, subsidiary companies abroad in consolidated financial statements.Minority interest capital includes shares of minority interest in the subsidiary company Cetis MKD, Skopje.


126 In December 2009 the parent company acquired 9.125 treasury shares amounting to EUR 999.918 for the purposes set out in second indent of Article 247 of the Companies Act (ZGD-1); shares offered for sale to company or associate company employees. (4.56 % of all issued shares). At 31 December 2009, the Group reported ownership in 9.326 shares designated CETG (4.66 % of all issued shares). The shares are recognised at cost as a deductible item in equity.

Establishing profit for appropriation

in EUR

Item 2009 2008

A. NET PROFIT FOR THE BUSINESS YEAR 109.986 86.299

B. NET LOSS FOR THE BUSINESS YEAR

C. PROFIT OR LOSS FROM PREVIOUS PERIODS INCL. ADJUSTMENTS -59.865 306.284

OTHER CHANGES -269.964 -97.084

Č. REDUCTION IN CAPITAL RESERVES 320.547

D. REDUCTION IN RESERVES FROM PROFIT

E. INCREASE IN RESERVES FROM PROFIT -100.703 -26.001

1. Increase in legal reserves

2. Increase in statutory reserves

3. Increase in reserves for treasury shares and own business

shares-100.703 -26.001

F. PROFIT FOR APPROPRIATION 269.498

G. ACCUMULATED LOSS

In 2009, the Company, in order to ensure uniform accounting policies for the Group, corrected errors from previous periods. The adjustments in the Group were recognised as adjustment for previous periods. According to International Accounting standards, correction of an error is not included in the profit or loss in the period in which error was discovered.

22. Basic earnings per share

Net earnings per share are calculated by dividing basic net earnings per share by the weighted average number of shares as denominator. Diluted earnings per share are identical, as the Group holds no preferential or convertible shares.

in EUR

2009 2008

Basic earnings in EUR 109.986 75.233

Weighted average number of ordinary shares 190.674 199.799

Basic and diluted earnings per share in EUR 0,58 0,38


12723. Borrowings

Borrowing is comprised of long- and short-term borrowings, including the current portion of long-term borrowings.

Long-term borrowings

in EUR


Bank loans 7.559.636 8.769.779

Short-term borrowings

in EUR


Current portion of long-term bank loans repayable within 1 year 2.496.377 5.474.767

Short-term bank loans 1.780.772 1.900.321

Other short-term loans 350.000 1.240.000

Total 4.627.149 8.615.088

Repayment of borrowings

in EUR

Breakdown per typeTotal

repayment2009

Interest2009

Principal2009


Long-term loans 1 to 5 years 2.756.276 322.404 2.433.872

Long-term loans with maturity longer than 5 years 1.313.043 1.313.043

Total 15.104.462 612.853 14.491.609

Breakdown per typeTotal

repayment2008

Interest2008

Principal2008


Long-term loans 1 to 5 years 3.874.449 899.038 2.975.411

Long-term loans with maturity longer than 5 years 1.313.043 1.313.043

Total 10.020.095 1.048.641 8.971.454


128 24. Non-current operating liabilities

in EUR


Non-current operating liabilities based on prepayments

Long-term operating liabilities arising from finance lease contracts 5.379 26.432

Total 5.379 26.432

25. Provisions

in EUR


Provisions for warranties 64.089 70.764

Provisions for legal actions 8.350 28.736

Provisions for other costs 4.289 23.122

Provisions for anniversary bonuses 253.572 246.456

Provisions for retirement bonuses 595.523 700.888

Total 925.823 1.069.966

Movements in provisions

in EUR

Breakdown per type31 December

2008Made Used Reversed

31 December 2009

Provisions for warranties 70.764 41.422 48.098 64.089

Provisions for legal actions 28.736 20.386 8.350

Provisions for other costs 23.122 8.407 27.239 4.289

Provisions for anniversary bonuses

246.456 26.088 18.053 920 253.572

Provisions for retirement bonuses

700.888 1.286 106.651 595.523

Total 1.069.966 77.202 124.703 96.642 925.823

The Group reviewed the provisions made, taking account of changes and decreased total provisions for the purpose of long-term deferred expenses and provisions for long-term accrued costs.

Provisions are made on the basis of contracts, legal bases, and expert opinions.

Retirement and anniversary bonus provision

On the basis of a calculation for each employee, using the projected unit method and prepared by a certified actuary, the provisions for retirement bonuses and anniversary bonuses were reduced by EUR 98.249.


12926. Operating and other liabilities

in EUR


Short-term trade payables 6.706.272 5.626.725

Current operating liabilities based on prepayments 603.114 314.000

Short-term payables to employees 565.061 611.370

Payables to state and other institutions 384.471 347.088

Other short-term payables 490.605 297.648

Total 8.749.523 7.196.831

The bases are the original documents that define an event in terms of time and substance.

27. Off-balance sheet record

in EUR


Mortgages 8.716.858 14.000.550

Other bank guarantees, liens granted and shares 3.074.899 7.498.191

Tax loss 2.309.387 1.547.473

Investment and other reliefs 79.244 49.244

Other 76.725 76.725

Total 14.257.113 23.172.183


130 The Cash Flow Statement was prepared under the indirect method, using data from the Balance Sheet as at 31 December 2009 and the Balance Sheet as at 31 December 2008, and data from the 2009 Income Statement, as well as the additional data required for the adjustment of inflows and outflows and for an adequate breakdown of major items.

28. Financial instruments - risk management

Risk exposure and management

Currency risk in the Group with regard to the Euro was almost entirely excluded. Almost all foreign transactions outside the EMU were made in EUR. Some future transactions are linked to USD, but the sales prices and changes thereof are linked to the USD/EUR ratio, set in the contracts (currency clause).

The Group is aware of the importance attributed to the regular monitoring and management of financial risks to which the Company is exposed to in markets, and views it as a relevant precondition for successful operations and achieving strategic goals. In 2009, interest rate risk was predominant (high interest rates for new debt). The analysis of these risks resulted in an estimate that interest rate risk was higher due to the new short-term borrowings of the Company or guarantees issued. The Group expects these risks to increase in the future as a result of the operations of the parent company and its subsidiaries.

All the Group’s long-term debts are denominated in euros. Interest rates are based on market principles governing the price of money in the European and local banking market. Interest rate risks have not been hedged thus far, as the Company assesses that interest rate fixations offered are still above variable rates, or that long-term changes in interest rates will allow more favourable finance costs during the whole borrowing period.

Interest rate risk increased due to the total amount of loans and interest rate change. The interest rate level was assessed to be acceptable for all long-term loans taken, with its contractually agreed variability, and taking into account their maturity, especially if downward trends are favourable. The Group’s exposure to interest rate risk is estimated to be high.

Property risks and related risks in 2009 were systematically and analytically assigned to insurance companies.

Liquidity risk is low in the Group in the short term as a result of efficient asset management, adequate credit lines for regulating cash flow, satisfactory financial flexibility, and, still, access to the necessary financial resources, whereby the Group takes into account the circumstances in the financial environment and financial markets.

Consolidated cash flow statemen disclosures


131

Financial instruments – credit risk

The highest credit risk exposure at the reporting date was as follows:

Book value

in EUR 2009 2008

Available-for-sale financial assets 12.228.994 13.442.599

Financial assets at fair value

Loans 203.814 1.407.995

Current and non-current trade receivables 7.094.215 6.616.581

Cash and cash equivalents 322.686 1.041.656

Total 19.849.709 22.508.831

The highest credit risk exposure for borrowings at the reporting date by geographical region

Book value

in EUR 2009 2008

Domestic 203.814 839.795

Other European countries

Other regions – outside EU 568.200

Total 203.814 1.407.995

Credit risk exposure

Book value

in EUR 2009 2008

Receivables 7.094.215 6.616.581

Total 7.094.215 6.616.581

Impairment losses

Operating receivables at the reporting date:

Gross Impairment Gross Impairment

in EUR 2009 2009 2008 2008

Non-past-due 6.337.307 5.289.150

Past due 0-30 days 322.734 759.400 4.010

Past due 31-120 days 298.295 7.264 441.800 15.020

Past due 121-365 days 356.382 414.763 242.400 151.050

More than one year 1.002.050 800.526 1.166.011 1.112.100

Total 8.316.768 1.222.553 7.898.761 1.282.180


132

Movements in value adjustments due to impairment of trade receivables in the period:

v EUR 2009 2008

Balance at 1 January 1.283.668 1.514.810

New value adjustments 144.051 74.910

Written-off value adjustments -163.419 -55.019

Paid written-off value adjustments -49.714 -251.033

Balance at 31 December 1.214.586 1.283.668

Currency risk

Currency risk exposure was based on nominal amounts

EUR HRK USD GBP CHF RSD

31 December 2009

Trade receivables 6.348.800 10.748.460 5.839.902

Trade payables -5.993.562 -9.245.802 -100.913 -11.135 -116.087 -4.586.508

Secured bank loans -653.001

Balance Sheet gross exposure -297.763 1.502.658 -100.913 -11.135 -116.087 1.253.394

EUR HRK USD GBP CHF RSD DKK

31 December 2008

Trade receivables 5.112.000 8.990.935 3.247.282

Trade payables -3.977.743 -4.449.971 -4.763 -32.582 -891.945 -977

Secured bank loans -13.086

Balance Sheet gross exposure

1.121.171 4.540.964 -4.763 -32.582 2.355.337 -977

Sensitivity analysis

A 10 per cent increase in the value of the euro against the HRK, USD, GBP, CHF, RSD and DKK at 31 December would result in a decrease in equity and profit or loss by EUR 5.273. This analysis assumes that all other variables, interest rates in particular, remain unchanged.

Interest rate risk

At the reporting date, loan contracts concluded by the Group were with both fixed and variable interest rates.

Book value

in EUR 2009 2008

Instruments with fixed interest rate

Financial assets 202.584 2.279.080

Financial liabilities -2.246.451 -3.171.172

Difference -2.043.867 -892.092


133

Book value

in EUR 2009 2008

Instruments with variable interest rate

Financial assets

Financial liabilities -9.940.334 -14.214.799

Difference -9.940.334 -14.214.799

Payment risk

Liabilities including estimated interest payments with regard to contractual maturity

in EUR

31 December 2009 Book valueContractual

cash flowUp to 6

months 6 to 12 months

1 to 2 years

2 to 5 years

Over5 years

Secured bank loans 10.668.539 -11.059.604 -2.589.972 -1.881.126 -3.418.990 -3.169.515

Other loans 1.518.246 -1.580.448 -350.869 -1.229.579


8.749.523 -8.749.523 -8.749.523

TOTAL 20.936.307 -21.389.574 -11.690.364 -3.110.705 -3.418.990 -3.169.515

3-month EURIBOR 31 December 2009

0,707


0,993

in EUR

31 December 2008 Book valueContractual

cash flowUp to 6

months 6 to 12 months

1 to 2 years

2 to 5 years

Over5 years

Secured bank loans 13.086.043 -14.360.540 -4.276.000 -1.827.061 -3.569.240 -4.688.239

Other loans 2.399.571 -2.551.000 -351.000 -2.200.000


7.011.636 -7.011.636 -7.011.636

TOTAL 22.497.250 -23.923.176 -11.638.636 -4.027.061 -3.569.240 -4.688.239


4,684


4,707


134

Sensitivity analysis of fair value for instruments with fixed interest rate

A change in interest rates by one percentage point on the reporting date would result in an increase or decrease of the equity by EUR 912.

Sensitivity analysis of cash flow for instruments with a variable interest rate

A change in interest rates by one percentage point at the reporting date would result in an increase (decrease) of the equity and profit or loss by EUR 10.552.

29. Fair value

Overview of fair value and book value of assets and liabilities

in EUR

Book value 31

December 2009Fair value 31

December 2009Book value 31

December 2008Fair value 31

December 2008

Investments available for sale 11.099.910 11.099.910 13.442.599 13.442.599

Loans 58.301 58.301 333.995 333.995


Operating and other receivables 7.094.215 7.094.215 6.616.581 6.616.581

Current investments at fair value through profit or loss

Short-term loans 145.513 145.513 1.073.867 1.073.867

Cash and cash equivalents 263.642 263.642 1.041.656 1.041.656

Long-term borrowings 7.559.673 7.559.673 -8.769.779 -8.769.779

Short-term borrowings 4.627.149 4.627.149 -8.615.088 -8.615.088

Operating and other liabilities 8.749.523 8.749.523 -7.196.831 -7.196.831

Total 39.597.926 39.597.926 -2.073.000 -2.073.000

Available-for-sale investments are measured at fair value and depend on recognition of the investment at the rate applicable on 31 December 2009.

Loans and borrowings are measured at amortised cost calculated using the method of effective interest rate that does not differ from the contractual interest rate. Accordingly, the contractual interest rate is used in calculation.

In terms of trade and other receivables, fair value impairment is taken into account for the purpose of claim recovery. Receivables are not discounted, due to their short-term nature.

The same applies to trade and other payables that are not discounted owing to their short-term nature.

Testing financial investments in terms of possible impairment

The Group performed no impairment of financial investments. Upon acquiring an investment in mutual funds and other investment companies, the Group classifies them among long-term investments if the intention is to own such investment for more than one year. If such investment is listed on the stock exchange, it is entered in the books at fair value; if the investment is not listed, it is valued at cost. When an investment in mutual funds and other investment companies is valued at cost, it is tested five years from the date of acquisition in order to determine if the investment should be impaired.

Such investment is usually impaired if the purchase value in a period of five successive years exceeds the realisable value on the balance sheet cut-off date. When valued at fair value through capital, it is checked five years from the date of acquisition for the probability that such investment needs to be impaired. An


135

investment is usually impaired when its fair value in five successive years is continuously lower than the investment purchase value. Impairment is performed in compliance with IAS 39.

For all other financial investments valued at fair value through capital, verification of possible impairment was performed on the Balance Sheet date, comparing the percentage of decrease in the fair value of a financial investment in the period from the date of its recognition up to the Balance Sheet cut-off date, as well as relative change in the Slovenian Share Index (SBI 20). The amount of investment revaluation that would have to be performed after checking for possible impairment is insignificant.

30. Related-party transactions

Relationships between related companies

Transactions between the Group and related parties are based on contracts of sale, whereby market prices of products and services were used.

Other disclosures

Disclosures of remuneration of key management personnel per group: members of the Management and Supervisory Board. Total remuneration received by groups of persons for the performance of functions or duties in the financial year: - Management EUR 298.496;- Supervisory Board EUR 21.093.

Gross management members’ remuneration

in EUR

Name and surname of Management member

Fixed part of remuneration*

Variable part of remuneration

Participation in profit

Stock option and other re-munerations


Management member

Total

Management 280.956 280.956

Simona Potočnik 111.853 111.853

Matej Polutnik 74.374 74.374

Roman Žnidarič 84.667 84.667

Milan Maksić 10.062 10.062

* receipts on the basis of salary, holiday bonus and anniversary bonus

Gross management member remuneration- continued

in EUR

Name and surname of management member

Reimbursement of costs

Other remuneration

(insurance premiums)

Other remuneration

(commissions)

Other additional

remunerationTotal

17.347 193 17.540

Simona Potočnik 6.671 193 6.864

Matej Polutnik 5.781 5.781

Roman Žnidarič 3.751 3.751

Milan Maksić 1.144 1.144


136

Gross remunerations of Supervisory Board members

in EUR

Name and sur-name of Super-visory Board member

Fixed part of remu-

neration*

Reimburse-ment of

costs

Variable part of

remunera-tion

Participation in profit

Stock option and other

remunera-tions


Management members

Total

Total 20.169 924 21.093

Borut Bizaj 1.963 184 2.147

Bernard Gregl 2.325 2.325

Franc Ješovnik 2.992 222 3.214

Marko Melik 2.928 2.928

Dušan Mikuš** 4.723 296 5.019

Ljubo Peče** 5.237 222 5.459

*Remuneration from meeting fees.**Includes remuneration from Supervisory Board commissions.

Events after the balance-sheet date

No important events occurred after the Balance Sheet date.

Issued by : Cetis, d. d.Edited by: Tamara Belšak, Juno, new times communication Design by: Cetis, d. d.Photos by: Cetis archive Printed by: Cetis, d. d.

w w w.cet is .s i

Izdal : Cetis, d. d.Tekst uredila: Tamara Belšak, Juno, komuniciranje za nove čase Oblikovanje: Cetis, d. d.Fotografije: Arhiv Cetisa Tisk: Cetis, d. d.

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