ANNUAL REPORTPOŠTA SLOVENIJE GROUP AND POŠTA SLOVENIJE d. o. o.

2019

Table of Contents1. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

1.1. SIGNIFICANT OPERATING INDICATORS FOR THE POŠTA SLOVENIJE GROUP AND POŠTA SLOVENIJE D. O. O. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

1.2. STATEMENT OF THE GENERAL MANAGER OF POŠTA SLOVENIJE . . . . . . . . . . 131.3. REPORT OF THE SUPERVISORY BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . 161.4. PRESENTATION OF THE POŠTA SLOVENIJE GROUP . . . . . . . . . . . . . . . . . . 211.5. SIGNIFICANT EVENTS AT THE POŠTA SLOVENIJE GROUP IN 2019 . . . . . . . . . . 26

2. BUSINESS REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302.1. CORPORATE GOVERNANCE REPORT OF THE POŠTA SLOVENIJE GROUP . . . . . . . . 30

2.1.1. Governance of the Pošta Slovenije Group . . . . . . . . . . . . . . . . . . . . . . . . 302.1.2.  Report on the work of the Internal Audit Office within the Pošta Slovenije Group  . . 382.1.3. External auditing of the Pošta Slovenije Group . . . . . . . . . . . . . . . . . . . . . 392.1.4. Corporate governance statement of the Pošta Slovenije Group and Pošta

Slovenije d. o. o. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402.1.5.  Executive Management’s statement regarding non-financial operations   . . . . . . 46

2.2. STRATEGY OF THE POŠTA SLOVENIJE GROUP . . . . . . . . . . . . . . . . . . . . . . 472.3. PLANS OF THE POŠTA SLOVENIJE GROUP IN 2020 . . . . . . . . . . . . . . . . . . . . 492.4. SALES AND MARKETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

2.4.1. Services of the Pošta Slovenije Group . . . . . . . . . . . . . . . . . . . . . . . . . 512.4.2. Portfolio of brands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 542.4.3. Postage stamps and philatelic products at Pošta Slovenije . . . . . . . . . . . . . . . 542.4.4. Market-communication activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 542.4.5. Quality management at Pošta Slovenije . . . . . . . . . . . . . . . . . . . . . . . . . 552.4.6. Complaints and redress proceedings at Pošta Slovenije . . . . . . . . . . . . . . . . 57

2.5. POSTAL NETWORK AND TRANSPORTATION EQUIPMENT OF POŠTA SLOVENIJE . . . 582.5.1. Postal network of Pošta Slovenije . . . . . . . . . . . . . . . . . . . . . . . . . . . . 582.5.2. Postal network devices and transportation equipment of Pošta Slovenije . . . . . . 592.5.3. Security within the Pošta Slovenije Group . . . . . . . . . . . . . . . . . . . . . . . . 59

2.6. PROCUREMENT WITHIN THE POŠTA SLOVENIJE GROUP . . . . . . . . . . . . . . 612.7. INVESTMENTS AND DEVELOPMENT WITHIN THE POŠTA SLOVENIJE GROUP . . . 622.8. CORPORATE RISK MANAGEMENT WITHIN THE POŠTA SLOVENIJE GROUP . . . . . . 62

2.8.1. Overview of risk management within the Pošta Slovenije Group . . . . . . . . . . . . 622.8.2. Risk management in 2019 within the Pošta Slovenije Group . . . . . . . . . . . . . . 63

2.9. PERFORMANCE ANALYSIS OF THE POŠTA SLOVENIJE GROUP . . . . . . . . . . . . . . 662.9.1. Performance analysis of the Pošta Slovenije Group . . . . . . . . . . . . . . . . . . . 662.9.2. Performance analysis of Pošta Slovenije d. o. o. . . . . . . . . . . . . . . . . . . . . . 69

2.10. EVENTS AFTER THE END OF THE FINANCIAL YEAR . . . . . . . . . . . . . . . . . . 76

3. SUSTAINABLE DEVELOPMENT OF THE POŠTA SLOVENIJE GROUP . . . . . . . . . . 803.1. SUSTAINABILITY POLICIES AND GOALS . . . . . . . . . . . . . . . . . . . . . . . . . . 803.2. SUSTAINABLE OPPORTUNITIES AND CHALLENGES . . . . . . . . . . . . . . . . . . . . 813.3. DIALOGUE BETWEEN STAKEHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . 823.4. SUSTAINABLE DEVELOPMENT SYSTEM AND SOCIAL RESPONSIBILITY . . . . . . . . . 83

3.4.1. Partnership with employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 843.4.2. Social pillar of sustainable development . . . . . . . . . . . . . . . . . . . . . . . . 933.4.3. Environmental pillar of sustainable development . . . . . . . . . . . . . . . . . . . . 98

4. FINANCIAL REPORT OF THE POŠTA SLOVENIJE GROUP . . . . . . . . . . . . . . . 1044.1. INDEPENDENT AUDITOR’S REPORT FOR THE POŠTA SLOVENIJE GROUP . . . . . 1044.2. STATEMENT OF POŠTA SLOVENIJE D. O. O.’S EXECUTIVE MANAGEMENT REGARDING

RESPONSIBILITY AND NON-DAMAGE . . . . . . . . . . . . . . . . . . . . . . . . . 1074.3. CONSOLIDATED FINANCIAL STATEMENTS OF THE POŠTA SLOVENIJE GROUP . . 1084.3.1.  Consolidated statement of financial position  . . . . . . . . . . . . . . . . . . . . . 1084.3.2. Consolidated income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1104.3.3. Consolidated statement of comprehensive income . . . . . . . . . . . . . . . . . . 1114.3.4.  Consolidated cash flow statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 1124.3.5. Consolidated statement of changes in equity . . . . . . . . . . . . . . . . . . . . . 114

4.4. BUSINESS COMBINATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1154.5. INTRODUCTORY NOTES AND ACCOUNTING POLICIES . . . . . . . . . . . . . . . . . 118

4.5.1. Reporting entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1184.5.2.  Basis for compiling the financial statements . . . . . . . . . . . . . . . . . . . . . . 1194.5.3.  Significant accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

4.6. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF THE POŠTA SLOVENIJE GROUP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139

4.6.1. Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1394.6.2. Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1504.6.3. Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1534.6.4. Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1544.6.5. Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1564.6.6. Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1584.6.7. Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1594.6.8. Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1634.6.9. Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1634.6.10. Corporate income tax and deferred taxes . . . . . . . . . . . . . . . . . . . . . . 1644.6.11. Notes to the statement of changes in equity . . . . . . . . . . . . . . . . . . . . . 166

4.7. DETERMINATION OF FAIR VALUE AND FINANCIAL RISKS . . . . . . . . . . . . . 167

4.8. TRANSACTIONS WITH RELATED PARTIES . . . . . . . . . . . . . . . . . . . . . . . . 1744.9. EVENTS AFTER THE STATEMENT OF FINANCIAL POSITION DATE . . . . . . . . . . . 175

5. FINANCIAL REPORT OF POŠTA SLOVENIJE . . . . . . . . . . . . . . . . . . . . . . 1805.1. INDEPENDENT AUDITOR’S REPORT FOR POŠTA SLOVENIJE . . . . . . . . . . . . . 1805.2. STATEMENT OF POŠTA SLOVENIJE D. O. O.’S EXECUTIVE MANAGEMENT REGARDING

RESPONSIBILITY AND NON-DAMAGE . . . . . . . . . . . . . . . . . . . . . . . . . 1835.3. FINANCIAL STATEMENTS OF POŠTA SLOVENIJE . . . . . . . . . . . . . . . . . . . . . 1845.3.1.  Statement of financial position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1845.3.2. Income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1865.3.3. Statement of other comprehensive income . . . . . . . . . . . . . . . . . . . . . . 1865.3.4.  Cash flow statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1875.3.5. Statement of changes in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

5.4. INTRODUCTORY NOTES AND ACCOUNTING POLICIES . . . . . . . . . . . . . . . . . 1915.4.1. Reporting entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1915.4.2. Basis of preparation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1915.4.3.  Significant accounting policies  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196

5.5. NOTES TO THE FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 2085.5.1. Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2085.5.2. Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2185.5.3. Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2215.5.4. Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2225.5.5. Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2245.5.6. Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2265.5.7. Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2285.5.8. Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2325.5.9. Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2325.5.10. Corporate income tax and deferred taxes . . . . . . . . . . . . . . . . . . . . . . 2335.5.11.  Notes to the cash flow statement  . . . . . . . . . . . . . . . . . . . . . . . . . . 2355.5.12. Notes to the statement of changes in equity . . . . . . . . . . . . . . . . . . . . . 235

5.6. DETERMINATION OF FAIR VALUE AND FINANCIAL RISKS . . . . . . . . . . . . . . . 2365.7. TRANSACTIONS WITH RELATED PARTIES . . . . . . . . . . . . . . . . . . . . . . . . 2435.8. RELATED-PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2445.9. EVENTS AFTER THE STATEMENT OF FINANCIAL POSITION DATE . . . . . . . . . . . 245

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Annual report 2019

parcellocker

million p

ostal

services

24

805

of deliveries within three days

99.99%

contact

points487

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Annual report 2019

transportvehicles

5,012

electric-power

ed

delivery vehic

les

increase in revenues

15

2%

post

offices

210

space of safe

rooms800 m

2

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Annual report 2019

INTRODUCTION1POŠTA IS ABOUT PEOPLE. WORKING WITH AND FOR PEOPLE. THROUGH OUR LOGISTICS NETWORK, A NETWORK OF NEARLY 500 CONTACT POINTS AND 8,000 EMPLOYEES, WE ARE BECOMING UNPARALLELED.EVERY DAY. AT EVERY ADDRESS.

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Annual report 2019

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Annual report 2019

1. INTRODUCTION

1.1. SIGNIFICANT OPERATING INDICATORS FOR THE POŠTA SLOVENIJE GROUP AND POŠTA SLOVENIJE D. O. O.

Key data in numbers

POŠTA SLOVENIJE GROUP 2019 2018 Index 2019/2018Net sales revenue (in EUR) 277.857.007 250.655.880 111

Added value (in EUR) 187.426.299 176.975.913 106

Gross cash flow (in EUR) 25.689.588 25.506.867 101

Operating profit (in EUR) 5.190.982 10.098.267 51

Net profit or loss of the Pošta Slovenije Group (in EUR) 65.532.990 10.400.466 630

Value of investments (in EUR) 22.747.175 26.909.238 85

Average number of employees based on hours worked* 7.306 5.924 123

Added value per employee (EUR)** 30.857 29.874 103

Equity (in EUR) 329.639.462 228.128.881 144

Total assets (in EUR) 545.870.475 307.155.029 178

Equity ratio (in %) 60,4 74,3

EBITDA margin (in %) 9,1 9,9

Return on sales (ROS in %) 23,6 4,1

Return on equity (ROE in %) 26,6 4,7

Return on assets (ROA in %) 15,4 3,5

CAPEX (capital expenditure in %) 8,2 10,7

Key: ROS = net profit or loss / net sales revenue; ROE = net profit or loss / average balance of equity; ROA = net profit or loss / average balance of assets; CAPEX = value of investments / net sales revenue.* Sum of no. of employees based on hours worked at the Pošta Slovenije Group, excluding Intereuropa and the Intereuropa Group** (Added value of the Pošta Slovenije Group excluding Intereuropa + added value of the Intereuropa Group)/ (average no. of employees of the Pošta Slovenije Group excluding Intereuropa + average no. of employees of the Intereuropa Group)

POŠTA SLOVENIJE 2019 2018 Index 2019/2018Net sales revenue (in EUR) 236.015.959 230.154.411 103

Added value (in EUR) 163.221.922 159.348.512 102

Gross cash flow (in EUR) 20.642.630 22.414.868 92

Operating profit (in EUR) 3.794.739 8.838.056 43

Net profit or loss of Pošta Slovenije (in EUR) 4.157.023 9.989.892 42

Value of investments (in EUR) 19.823.115 25.180.971 79

Average number of employees based on hours worked 5.451 5.371 101

Added value per employee (in EUR) 29.945 29.668 101

Equity (in EUR) 216.528.576 217.582.308 100

Total assets (in EUR) 326.469.033 292.721.413 112

Equity ratio (in %) 66,3 74,3

EBITDA margin (in %) 8,7 9,6

Return on sales (ROS in %) 1,8 4,3

Return on equity (ROE in %) 1,9 4,8

Return on assets (ROA in %) 1,3 3,5

CAPEX (capital expenditure in %) 8,4 10,9

Key: ROS = net profit or loss / net sales revenue; ROE = net profit or loss / average balance of equity; ROA = net profit or loss / average balance of assets; CAPEX = value of investments / net sales revenue

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Annual report 2019

2018 20182019 2019

300.000 70,0

60,0

50,0

40,0

30,0

20,0

10,0

0,0

250.000

200.000

150.000

100.000

50.000

0

Net sales revenue

PS Group Pošta Slovenije

Net

sale

s rev

enue

(in

thou

sand

EUR

)

Net sales revenue (in thousand EUR) Net sales revenue per employee (in thousand EUR)

Net

sale

s rev

enue

s per

em

ploy

ee

(in th

ousa

nd E

UR)

2018 20182019 2019

70.000 25,0

20,0

15,0

10,0

5,0

0,0

60.000

50.000

40.000

30.000

20.000

10.000

0

Net profit or loss

PS Group Pošta Slovenije

Net

pro

fit o

r los

s (in

thou

sand

EUR

)

Net profit or loss (in thousand EUR) Return on sales (ROS in %)

Retu

rn o

n sa

les -

(RO

S in

%)

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Annual report 2019

2018 20182019 2019

190.00030,5

27,5

29,0

26,0

180.000

170.000

160.000

150.000

140.000

130.000

Added value

PS Group Pošta Slovenije

Adde

d va

lue

(in th

ousa

nd E

UR)

Added value (in thousand EUR) Added value per employee (in thousand EUR)

Adde

d va

lue

per e

mpl

oyee

(in

thou

sand

EUR

)

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Annual report 2019

1.2. STATEMENT OF THE GENERAL MANAGER OF POŠTA SLOVENIJE

Dear stakeholders of the Pošta Slovenije Group – representative of our owner, business partners and co-workers,

The Pošta Slovenije Group achieved important business, development and investment milestones in different areas of operations in 2019, and this will have a significant impact on the future of the entire Pošta Slovenije Group. Individual projects that received considerable attention in 2019 and that were successfully completed are amongst our most complex and responsible projects to date. One of them is undoubtedly the completion of the purchase of a majority stake in Intereuropa in November 2019, making the Group one of the leading providers of logistics services on the markets of Southeast Europe. With the purchase of a majority stake in Intereuropa, Pošta Slovenije has made one of the most important steps in its history, as it was the Company’s largest acquisition to date. The purchase represents a strategic capital investment for Pošta Slovenije and an opportunity to enter the regional logistics services market. The integration of Pošta Slovenije and Intereuropa is the right path to become a leading, independent provider of logistics and parcel services for end-customers in the region, known for superior quality and an excellent user experience.

Standing on solid and stable ground, we gaze into the future, follow global trends in the sector and pursue the development of a modern digitalised company. Through state-of-the-art information and electronic solutions, and high-quality postal and innovative package-logistics services, we are blazing new trails with the aim of satisfying the ever-growing wishes and needs of our customers as quickly and completely as possible. Alongside all the business challenges we face, we make customer satisfaction the focus of our efforts. We are aware that we will only remain highly competitive and achieve growth if we identify and understand the needs of today’s consumer and find them the right solutions. We have proven we are up to that task many times in the past. You demonstrated your trust in us again in 2019, while we received new recognitions and awards for the high-quality performance of the postal and parcel activity.

In our relationships with our owner, employees, business partners and customers, we remain a reliable partner, who will continue to stand by its commitments in the future. We remain a reliable and high-quality provider of universal postal services throughout the territory of the Republic of Slovenia and a leading postal operator that provides comprehensive support to households and companies. We will also be an outstanding provider of comprehensive logistics services in Slovenia and one of the key providers in Southeast Europe. With the aim of responding more effectively to changes and adapting more rapidly to market conditions, we established a new organisational structure, adapted operations, developed new services and made investments, all while striving to function in an environmentally friendly and sustainable

„The future depends on what you do today.“

Mahatma Gandhi

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Annual report 2019

manner.

Even more so than in the past, we were witness to intensive social dialogue this year. As an employer, we respect previously signed commitments with social partners, which we are continuing to implement in 2020. It is in our interest to provide all employees good working conditions, and a safe and healthy work environment.

Together with Intereuropa, we believe that we will be even more successful in the future. The activities of the Pošta Slovenije Group and Intereuropa Group are complementary. Logistics and parcel services have a great deal in common with postal services. The combined experience, knowledge and years of tradition in the performance of the activities at both companies represent an excellent opportunity for the growth and development of the merged company. Through the integration process, the Pošta Slovenije Group (i.e. the merged Group) will become one of the largest logistics companies in Slovenia, while its objective is to become a leading provider of integrated logistics services across the wider region of Southeast Europe. Parcel operations and logistics services are already important pillars of Pošta Slovenije’s business and the core of its strategy. With regard to logistics transactions involving spare parts for the automotive industry, Pošta Slovenije and its subsidiary PS Logistika have already assumed a leading role on the Slovenian market and are expanding such transactions to the countries of the former Yugoslavia. For this reason, we are continuing to expand our presence on the logistics market through both organic and inorganic growth. This path of linking postal, parcel and logistics services has been taken by many postal operators around the world.

Together we are also bigger, stronger and better. We are able to offer customers higher added value. Together, the Pošta Slovenije Group and Intereuropa Group provide all logistics services, including the organisation of door-to-door transport, the provision of air, sea and land transport services, the organisation of direct groupage lines with all European countries, warehousing and distribution on the internal markets of individual countries, and the provision of customs and shipping agency services. We are making a name for ourselves in the area of complex logistics projects and the assumption of comprehensive logistics services. We thus provide customers comprehensive logistics services through integration: parcel services in Slovenia and in the region, as well as complex logistics services. I believe that together we will recognise challenges in the sector as common opportunities and strengthen our competitiveness.

Together with various partners, we are developing ideas for state-of-the-art digital solutions. We continued to cooperate in 2019 with other European postal operators, research and development groups and start-up companies. Together with other European postal operators, we have striven to improve the quality of European postal services, and supported cross-border e-commerce, sustainable development and the Digital Europe initiative. We have expanded existing cooperation with well-known business partners in the area of information and communication technology. We are proud of our own internal research and development team, of our collaboration with start-up companies, and of our participation in European projects aimed at the development of state-of-the-art e- and i-services, primarily in the areas of education and logistics. We will further strengthen cooperation in these areas in the future.

Further growth and development. In the context of a continuously changing business environment, the now well-established decline in traditional postal services and the purchase of Intereuropa, two extensive agreements with social partners also had an impact on the operating results achieved in 2019. Pošta Slovenije’s operating results were thus lower than planned. The Pošta Slovenije Group ended the 2019 financial year with net sales revenue of EUR 277.9 million last year and an operating profit of EUR 5.2 million. Letter services accounted for 62.1% of revenues, followed by parcel services at 12.7%, logistics services at 12.5%, and merchandise and financial services at a combined 9.2% of revenues. At 122%, revenues from logistics services recorded the highest growth, followed by parcel services, which recorded 9% growth.

The Pošta Slovenije Group earmarked EUR 21.7 million in 2019 for investments that contribute to revenue growth and the improvement of work processes. We upgraded the vehicle fleet with new delivery and

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Annual report 2019

freight vehicles, motorised bicycles and bicycles, some of which are electric. We opened new business premises at the Grosuplje post office and at the Nova Gorica transhipment post office. Through a new parcel sorter, we established a sound backbone for the entire logistics process at the Ljubljana Mail Sorting and Logistics Centre. We set up a new palletising line for the folding and sorting of unaddressed direct mail in Maribor. That line includes the first real robot at Pošta Slovenije and the automated wrapping of pallets. The automated receipt of parcels makes the work of employees at the 1102 Ljubljana post office even easier.

Worthy of note amongst awards received in 2019 is the ‘Healthily and Actively into the Future’ project, through which we are ensuring the mental well-being of our employees. The aforementioned project was part of the Coups de Coeur competition organised by PostEurop for its 52 members. The best projects in the area of socially responsible companies received awards. We received such an award in the ‘Human resources’ category. Postal companies are the largest employers in many countries, and we are committed to improving occupational health. We also received a silver medal for high-quality international express mail in the form of the ‘EMS Performance Award’, and an award for highest quality Connect parcel delivery, which brought the title of ‘Partner of the Year – Parcel Union Quality’ for the second time. The Group’s ‘mojpaket.si’ online store earned the European EMOTA trust mark and the national ‘CERTIFIED SHOP®’ trust mark.

As Mahatma Gandhi said, “The future depends on what you do today.” The year 2019 thus brought important decisions for our future. We are primarily focused on parcel and logistics services, an area in which we seek to offer the latest competitive services and become the first choice for customers, particularly in Slovenia and the wider area. We are therefore shifting away from the role of a traditional national postal operator, and entering global markets with strong competition, in the logistics sector, which represents the backbone of the global economy. We will undoubtedly be forced to face the consequences of the COVID-19 pandemic, which is having a significant impact on the entire global and domestic market. We believe that we will successfully address those challenges and that we will provide high-quality services in all areas of operations, and maintain and strengthen trust in the Pošta Slovenije Group.

Boris Novak, MSc General Manager

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Annual report 2019

1.3. REPORT OF THE SUPERVISORY BOARD

Report on the work of the Supervisory Board of Pošta Slovenije d. o. o. in 2019

Pursuant to Pošta Slovenije d. o. o.’s Articles of Association, the Supervisory Board comprises six members. Four members are appointed by the Company’s founder, while two are appointed by the Company’s works council.

The Supervisory Board comprised the following members in 2019: Matjaž Šifkovič (Chairman), Dejan Kastelic (Deputy Chairman), Matjaž Fortič and Zdravko Selič (members), as well as Božidar Pograjc and Aleš Arnejčič who were elected by employee representatives. The members of the Supervisory Board are independent and take into account the Company’s objectives, to which any differing personal or individual interests are subordinated. Supervisory Board members also take all precautionary measures to avoid conflicts of interest. They possess the necessary economic and other professional-technical knowledge, which ensures the effective and professional work of the Supervisory Board. Members of the Supervisory Board also receive regular training. The Supervisory Board also worked with recognised experts in the fields of auditing, accounting, economics and human resource management (HRM) in the scope of its audit and human resource committees. Those experts serve as external committee members. A new independent member was appointed at the beginning of the year due to the resignation of the external member of the audit committee. On account of Pošta Slovenije’s intention to acquire Intereuropa d. d., the Supervisory Board also worked with an independent external advisor/expert in the valuation of companies and major investments.

The Supervisory Board met at twelve regular and five correspondence meetings in 2019. Meetings were convened in writing and the agenda determined by the Chairman of the Supervisory Board. Members performed their functions conscientiously in 2019, as they regularly attended meetings, participated in discussions and were active in the decision-making process. Zdravko Selič, Matjaž Fortič and Dejan Kastelic were all excused from one meeting of the Supervisory Board.

The Supervisory Board supervised the Company’s operations in accordance with the law and the diligence prescribed therein. At the beginning of the year, it was briefed on the activities and tasks of all organisatio-nal units and reviewed a list of orders that were expected to require the consent of the Supervisory Board in 2019. It discussed the annual report on the work of the Internal Audit Office in 2018 and approved the work plan of the Internal Audit Office for 2019.

Throughout the year the Supervisory Board was regularly briefed on interim information regarding the operations of the Company and the Pošta Slovenije Group, and regarding the operations of subsidiaries and on the purchase of Intereuropa d. d. It gave its consent to the winding up of the subsidiary PS Zavarovanja, zavarovalno zastopništvo d. o. o. according to the fast-track procedure and gave its consent to the conclusion of an agreement on the disposal of a participating interest under which Pošta Slovenije d. o. o. purchased a 5% participating interest in Feniksšped d. o. o., Brnik from Fraport Slovenija d. o. o. It also approved the merger of Feniksšped d. o. o., Brnik with PS Logistika d. o. o. The Supervisory Board issued a positive opinion regarding the conclusion of the agreement on the sale and purchase of shares in Intereuropa d. d. and the accompanying transaction documentation, and gave the Executive Management its consent to issue a mandatory takeover bid for the shares of Intereuropa d. d. and its subsidiaries.The Supervisory Board continuously monitored the work of the audit and human resource committees, and was briefed on reports regarding their work. It received quarterly information regarding the start of investment activities in connection with new proposals from the business-financial plan for 2019 in a particular quarter, and reports regarding the implementation of projects set out in Pošta Slovenije’s Strategic Development Programme. In the scope of information regarding operations, the Supervisory Board requested the submission of market research and an analysis of growth in parcel transactions for 2018, as well as an assessment of growth in parcel transactions. It also requested the submission of a set of measures to achieve plans in the parcel segment.

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Annual report 2019

It discussed the Company’s risk register for 2019, quarterly risk management reports and the assessment of key risks in 2019. The Supervisory Board was briefed on additional internal controls in the system used for corporate governance and the management of ordering processes, investments and the conclusion of legal transactions within the Pošta Slovenije Group.

It verified and confirmed the formal aspects of the Company’s annual report for the 2018 financial year, and submitted a proposal to the Company’s founder that distributable profit remain undistributed. The Supervisory Board defined the variable component of the Executive Management’s remuneration for 2018.

With regard to cooperation with social partners, the Executive Management reported regularly to the Supervisory Board on the progress of social dialogue and on negotiations with representative trade unions regarding an agreement with the latter. It gave its consent to the payment of performance bonuses for 2019 at Pošta Slovenije d. o. o. and IPPS d. o. o. In that regard, the Trade Union of Transportation and Communication Workers signed a special agreement, under which it committed to refrain from making additional requests for the payment of performance bonuses in 2020 and other requests that would result in growth in total wages for Pošta Slovenije d. o. o.

With the aim of ensuring the success of operations, it discussed a range of measures to raise the level of performance of the Pošta Slovenije Group, and gave special attention to the active monitoring of the operations of subsidiaries and activities in connection with corporate governance within the Pošta Slovenije Group. The Supervisory Board also gave the Executive Management the necessary consent to adopt decisions at the general meetings of subsidiaries with regard to changes in status and capital.

In order to monitor operating costs, the Supervisory Board tasked the Executive Management with drafting a half-yearly analysis of maintenance costs for all line devices used for the sorting and folding of unaddressed direct mail. Based on an assessment of the management and functioning of the corporate security system, the Supervisory Board was briefed on key findings and proposed improvements to the functioning of Pošta Slovenije d. o. o.’s corporate security system.

It gave its consent to the business-financial plan of the Pošta Slovenije Group and Pošta Slovenije d. o. o. for 2020, with projections for 2021 and 2022, and approved the proposed Strategic Development Programme of the Pošta Slovenije Group for the period 2020 to 2025.

At the request of the Executive Management, the Supervisory Board consented to the conclusion of legal transactions for which the Executive Management requires its consent. It discussed information regarding major projects that were/are in progress, in particular with regard to IT support for processes, the reor-ganisation of the Pošta Slovenije Group, the project to consolidate the area of IT services for the market within the Pošta Slovenije Group (PosiTa) and the OPT PIS project. The Supervisory Board was briefed on the effects of certain previously implemented projects and projects that will be implemented in the future. Due to a change to the Articles of Association of Pošta Slovenije d. o. o., the Supervisory Board adopted new Rules of Procedure of the Supervisory Board of Pošta Slovenije d. o. o. In terms of its transparent functioning, it also adopted an indicative plan of the work of Pošta Slovenije d. o. o.’s Supervisory Board in 2019. Pursuant to the Corporate Governance Code for State-Owned Enterprises, the Supervisory Board assessed the effectiveness of its work in accordance with recommended best practices. Based on the af-orementioned self-assessment, the Supervisory Board adopted an action plan, under which it committed to take the initiative to function proactively to improve areas that did not achieve the highest level in the scope of the self-assessment of the Supervisory Board’s work in 2019. In terms of the independence of its members, the Supervisory Board assesses that all members worked independently in 2019 (all members submitted statements of independence that were published on the Company’s publicly accessible website). The Supervisory Board also took all precautionary measures to avoid conflicts of interest. If a member of the Supervisory Board disclosed a potential conflict of interest, the Supervisory Board managed that conflict of interest appropriately and adopted the necessary measures.

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Annual report 2019

Proposed resolution on the use of distributable profit

In accordance with the International Financial Reporting Standards, the distributable profit of Pošta Slovenije d. o. o. amounted to EUR 16,521,707 as at 31 December 2019, as confirmed by the certified auditor. The Executive Management’s proposal not to distribute distributable profit is in line with the provisions of Articles 230 and 282 of the Companies Act. The Executive Management and the Supervisory Board therefore recommend that Pošta Slovenije d. o. o.’s sole owner adopt a resolution leaving distribu-table profit undistributed.

Assessment of cooperation with the Executive Management

The Executive Management and Supervisory Board enjoyed a proper relationship in 2019, while mutual cooperation between the members of the Supervisory Board and Executive Management was adequate and at an appropriate level for corporate communication. That allowed the Supervisory Board to adopt competent decisions in accordance with the law and relevant authorisations. The Executive Management submitted the requisite documents, data and information to the Supervisory Board in a timely manner, as well as reports and materials, such that the members of the Supervisory Board were well-prepared for discussions and decision making at meetings.

The Executive Management operated in accordance with the powers and authorisations vested in it by the law and the Company’s Articles of Association, and took into account and complied with the re-commendations issued by the Supervisory Board. The Supervisory Board was briefed on the work of the Executive Management during the financial year primarily via reporting by that body at the Supervisory Board’s meetings and indirectly through the reports of the Supervisory Board’s audit and human resource committees. The Supervisory Board assesses that communication with the Executive Management was appropriate for the effective performance of its supervisory function, as the Executive Management regularly informed the Supervisory Board and the latter’s Chairman about the most significant events and sought advice regarding the most important issues at the Company, such as strategy, planning, the course of major transactions, etc.

Opinion regarding the work of the Executive Management

The Company’s Executive Management continued its work in 2019 in the following composition: Boris Novak, MSc (General Manager), Andrej Rihter, MSc (member) and Vinko Filipič (member).

In monitoring the operations of Pošta Slovenije d. o. o. during 2019, the Supervisory Board gave particular attention to the effectiveness and efficiency of operations, and to restructuring activities, taking into account current and expected changes in the business environment in which the Company operates. The Supervisory Board assesses that Pošta Slovenije d. o. o.’s Executive Management performed well in 2019 and achieved the majority of its key objectives. It expects the Executive Management to ensure that the necessary activities in connection with the restructuring of operations will be carried out promptly and efficiently again next year in accordance with its competences and responsibilities.

Work of the Supervisory Board’s audit and human resource committees

The Supervisory Board’s audit committee functioned in the following composition in 2019: Matjaž Fortič (chair), Zdravko Selič and Božidar Pograjc (members), and Katarina Sitar Šuštar (external member).

The audit committee met at eight regular meetings in 2019. At its first meeting, the audit committee defined its work priorities in 2019 and drafted a detailed work plan. Because 2019 was the first full year that the audit committee functioned in the above-described composition, priority tasks focused on briefing the committee on the work of the Internal Audit Office, the Accounting and Finance Division and the Corporate Security and Control Division, and on established whistleblowing procedures. The audit committee’s work priorities in 2019 also included the establishment of appropriate communication with the external auditor

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Annual report 2019

and the monitoring of the latter’s independence, as well as the monitoring of adaptations to the new accounting standard for leases. The audit committee also drafted a training plan for its members.The audit committee discussed the unaudited and audited annual report for 2018, and was briefed on the Executive Management’s proposal regarding the distribution of profit and on the report in accordance with the methodology of Pošta Slovenije’s cost model. It discussed information regarding operations and reports on the profitability of specific services at every meeting. It was briefed on the draft business-finan-cial plan of the Pošta Slovenije Group and Pošta Slovenije for 2020, with projections for 2021 and 2022. As required, the audit committee discussed problems in the operations of individual subsidiaries and in specific segments of operations, and reports on certain major projects.

The audit committee met with the statutory auditor three times without the Executive Management present: following the completion of the preliminary phase of the audit and following the completion of the final phase of the audit of the financial statements for 2018, and prior to the start of the preliminary audit for 2019. The audit committee regularly assessed the auditor’s independence in the provision of audit services. In 2019, the audit committee addressed changes to the policy regarding the provision of non-audit services and the formulation of guidelines for ensuring the independence of the external auditor. Both documents, however, are still in draft form. Also in draft form are guidelines for monitoring the quality of the statutory auditor’s work. Those guidelines were drawn up by the audit committee in 2019.

The audit committee was briefed on the report on the work of the Internal Audit Office in 2018 at its first meeting and submitted that report to Pošta Slovenije’s Supervisory Board. The audit committee proposed that the Supervisory Board give its consent to the annual work plan of the Internal Audit Office for 2019. The aforementioned plan was supplemented during the year by the revised work plan of Internal Audit Office for 2019. The audit committee proposed that the Supervisory Board give its consent to the revised plan. It was briefed on the quarterly reports of the Internal Audit Office during its meetings and on the content of individual internal audits, as required. The audit committee met with the head of the Internal Audit Office, without the Executive Management present. It was briefed on the proposed measures and conditions for selecting an external assessor of the internal audit function, and on the final selection of the provider of that service. The assessment will be carried out in 2020.

In the area of risk management at Pošta Slovenije d. o. o., the audit committee was continuously briefed on interim risk management reports and on the risk register, which was prepared during the drafting of the business plan for 2020.

In accordance with its established work priorities, the audit committee was briefed on the organisation and functioning of the following key processes, areas and departments: the Internal Audit Office, the corporate risk management process, the Accounting and Finance Division, the whistleblowing system, the Strategy and Project Department, and the post-calculation methodology.

The members of the audit committee participated in a total of 50 hours of training organised by SDH, the SDA and the Slovenian Institute of Auditors in 2019.

The chair of the audit committee reported regularly on the work of the committee at meetings of the Supervisory Board. At the beginning of the year, the audit committee drafted a report on its work during the previous year and drew up a work plan for 2019. The audit committee performed a self-assessment in February 2020.

The Supervisory Board’s human resource committee comprised the following members: Matjaž Šifkovič (chair), Zdravko Selič and Aleš Arnejčič (members), and Jasna Brovč Potokar (external member). For the purpose of reporting on its work and other matters at meetings of the Supervisory Board (and in the scope of its competences), the human resource committee prepares materials and proposed resolutions for the Supervisory Board, but may not adopt decisions regarding matters that fall within the competences of the Supervisory Board.

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Annual report 2019

The human resource committee held three regular meetings in 2019, where it was briefed on reports on the implementation of resolutions from its previous meetings, on the organisational structure of employees at Pošta Slovenije d. o. o., on the presentation of the Human Resource Department and the presentation of the organisation of business units, on internal acts governing the rights of members of the Executive Management, on information regarding the duties and work tasks of the Executive Management’s authorised representatives and advisers, and deputy directors, on the presentation of the future organi-sational structure (REORG project) and on the selection of level B1 to B3 staff in the scope of the REORG project. The human resource committee also reviewed the Pošta Slovenije Group’s internal act governing the GDPR, verified the appropriateness of the content of individual employment contracts of members of the Executive Management, deliberated the criteria for calculating the variable element of remuneration of members of Pošta Slovenije d. o. o.’s Executive Management, and proposed that the Supervisory Board adopt new criteria and weights for setting the criteria of strategic expectations for 2019.

All members regularly attended the meetings of the human resource committee in 2019. The members of the Supervisory Board who are not members of the committee were briefed on the latter’s work in the form of minutes of the committee’s meetings. The chair of the human resource committee also provided regular reports on the committee’s work at meetings of the Supervisory Board.

Auditor’s report

The Supervisory Board carefully examined the auditor’s report, which includes the latter’s positive opinion. Given the content and additional information available to it, the Supervisory Board finds that the auditor performed its work professionally and in line with valid legislation and business practices. The Supervisory Board has no remarks regarding the auditor’s report.

Position of the Supervisory Board with regard to the annual report for the 2019 financial year

The Supervisory Board carefully examined the annual report of Pošta Slovenije d. o. o. and the Pošta Slovenije Group for the 2019 financial year, as submitted by the Company’s Executive Management. The annual report was compiled in a clear and transparent manner, and the Supervisory Board assesses that it presents a true and fair picture of the Company’s assets and liabilities, and of its financial position and operating results in 2019. The Supervisory Board has no comments that would in any way inhibit its decision to approve the annual report. The Supervisory Board therefore approved the annual report of Pošta Slovenije d. o. o. and the Pošta Slovenije Group for the 2019 financial year pursuant to the third paragraph of Article 282 of the ZGD-1. The 2019 annual report was approved by the prescribed deadline, i.e. one month from its submission to the Supervisory Board by the Company’s Executive Management.

The Supervisory Board compiled the report on the verification of the annual report of Pošta Slovenije d. o. o. and the Pošta Slovenije Group for the 2019 financial year and the proposal on the distribution of profit for the financial year in accordance with the provisions of the ZGD-1. That report is intended for Pošta Slovenije d. o. o.’s sole owner.

Matjaž ŠifkovičChairman of the Supervisory Board

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Annual report 2019

1.4. PRESENTATION OF THE POŠTA SLOVENIJE GROUP

In addition to the controlling company Pošta Slovenije d. o. o., the Pošta Slovenije Group comprised the following subsidiaries as at 31 December 2019:

• EPPS d. o. o. – 100% participating interest,• PS Moj paket d. o. o. – 100% participating interest,• IPPS d. o. o. – 100% participating interest,• PS Logistika d. o. o. – 100% participating interest, • Intereuropa d. d. (part of the Group since 13 November 2019) – 72.13% participating interest, and

the following subsidiaries:• Interagent d. o. o., whose sole owner is Intereuropa d. d., • Interzav d. o. o., in which Intereuropa holds a 71.28% participating interest,• Intereuropa RTC d. d., Sarajevo, in which Intereuropa holds a 95.77% participating interest,• AD Intereuropa logističke usluge, Belgrade, in which Intereuropa holds a 73.62% participating

interest,• Zetatrans A.D., Podgorica, in which Intereuropa holds a 69.27% participating interest,• Intereuropa Global Logistics Service Albania, shpk, Durrës, whose sole owner is Intereuropa

d. d., • Intereuropa, logističke usluge d. o. o., Zagreb, in which Intereuropa holds a 99.96%

participating interest,• Intereuropa sajam d. o. o., Zagreb, in which Intereuropa holds a 51% participating interest,• Intereuropa Kosova L.L.C., Prishtina, in which Intereuropa holds a 90% participating interest,• Intereuropa Skopje DOO, Skopje, in which Intereuropa holds a 99.56% participating interest,• TOV TEK ZTS, Uzhhorod, in which Intereuropa holds an 89.93% participating interest,• TOV Intereuropa – Kiev, Ukraine, whose sole owner is Intereuropa d. d.,

• APS PLUS d. o. o. – 55% participating interest, andthe associate Športna loterija d. d. – 20% participating interest.

Also part of the Pošta Slovenije Group in 2019 were Feniksšped d. o. o., Brnik and PS Zavarovanja d. o. o. After purchasing the participating interest of the company’s other owner Fraport Slovenija, d. o. o., Pošta Slovenije merged Feniksšped, d. o. o., Brnik with PS Logistika d. o. o. on 23 September under the relevant merger ag-reement. PS Zavarovanja d. o. o. was wound up on 3 September 2019 according to the fast-track procedure.

Pošta Slovenije d. o. o. Company name: Pošta Slovenije d. o. o. Registered office: Maribor Business address: Slomškov trg 10, 2000 MariborTelephone: +386 2 449-20-00Fax: +386 2 449-21-11Email: info@posta.siWebsite: www.posta.siRegistration no.: 5881447000VAT ID no.: SI25028022Legal organisational form: limited liability companyOwnership: Republic of SloveniaYear of establishment: 1994Share capital: EUR 121,472,482 Principal activity: 53.100 – Provision of universal postal servicesDetails of registration: Maribor District Court, registration no. 10940000

Activity The key area of the Company’s operations and its principal activity is the provision of universal postal services, while other postal and courier services, IT services, logistics and financial services and the sale of merchandise also play an important role at the Company. Pošta Slovenije also performs a number of other

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Annual report 2019

activities.

EPPS Elektronsko pismo Pošte Slovenije d. o. oEPPS was established in December 1998. The company’s total equity amounts to EUR 7,310,974, while its share capital amounts to EUR 1,231,972. The company is 100% owned by Pošta Slovenije (hereinafter: Pošta or PS). The company’s registered office is in Ljubljana at Stegne 13a.

The company’s activities include: the preparation, design, printing or printout of addressed mail, insertion of promotional material, submission of postal items for delivery, drafting and sending printed and electronic invoices, accredited electronic archiving and 3D printing.

PS Zavarovanja, zavarovalno zastopništvo, d. o. o.PS Zavarovanja, which was 100% owned by Pošta Slovenije, was established in June 2013. The company was deleted from the companies register on 3 September. The company’s total equity amounted to EUR 31,460, while its share capital amounted to EUR 7,500. The company’s registered office was at Letališka cesta 32 in Ljubljana.

The company’s activity was the marketing of insurance services within the postal network, primarily via postal counters, and the provision of expert advice in the selection of insurance products. The company was wound up according to the fast-track procedure and deleted from the companies register on 3 September.

PS Moj paket, direktna prodaja d. o. o.PS Moj paket, which is 100% owned by Pošta Slovenije, was established in February 2013. The company’s total equity is EUR 774,482, while its share capital amounts to EUR 221,979. The company’s registered office is at Partizanska cesta 54 in Maribor.

The company’s activity is online retail trade through dedicated sales channels for business and private customers (B2C and B2B), and merchandise sales at postal outlets.

IPPS Invalidsko podjetje Pošte Slovenije, proizvodnja in storitve d. o. o.IPPS was established in April 2015 and is 100% owned by Pošta Slovenije. The company’s total equity is EUR 260,459, while its share capital amounts to EUR 100,000. The company’s registered office is at Zagrebška cesta 106 in Maribor.

Its activity is that of a sheltered undertaking. It also provides services to support the controlling company’s operations. IPPS is one of the largest employers of disabled persons in Slovenia and provides a safe work environment for vulnerable groups of employees.

PS Logistika, logistične storitve, d. o. o.PS Logistika, which is 100% owned by Pošta Slovenije, was established in August 2015. The company’s total equity is EUR 14,290,994, while its share capital amounts to EUR 100,000. The company’s registered office is in Ljubljana at Brnčičeva ulica 45. The subsidiary Feniksšped was merged with PS Logistika on 23 September 2019 under the relevant merger agreement.

The company’s activity comprises logistics services, in particular warehouse logistics. In terms of warehouse capacities, the company is one of the largest in Slovenia. It provides logistics, transportation and forwarding services, and various supplementary warehouse services (e.g. packaging, labelling and declaration services). Following the merger with Feniksšped, the company has a branch office in Serbia that performs the same activity of the parent company, i.e. international forwarding.

Feniksšped, podjetje za mednarodno špedicijo, uvoz-izvoz in notranjo trgovino d. o. o.Feniksšped was established in March 1991. Pošta Slovenije held a 95% participating interest in the company,

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Annual report 2019

and became the company’s sole owner following the purchase of a 5% participating interest from Fraport Slovenija d. o. o. The company’s registered office was at Zgornji Brnik 130a, 4210 Brnik. Pošta Slovenije merged the company with PS Logistika on 23 September under the relevant merger agreement. The accounting date of the merger was 30 June 2019. The company’s total equity amounted to EUR 383,175 on the accounting date of the merger, while its share capital amounted to EUR 97,668.

The company’s activities were forwarding and other transport-related activities, including forwarding and agency transactions, primarily with regard to organising international and domestic transport services and representation in customs clearance proceedings. As an equal link in the Expeditors Global Network, Feniksšped provided its customers global door-to-door transportation services, including other logistic services required for the complete execution of a transaction. PS Logistika d. o. o. succeeded the afore-mentioned company in the provision of the above-described services following the merger.Feniksšped had a branch office in Serbia, which following the merger continues to perform the same activity of the parent company, i.e. international forwarding.

Intereuropa, Globalni logistični servis d. d.Intereuropa is a joint-stock company, whose shares are traded on the stock exchange. Pošta Slovenije completed the purchase of a 72.13% participating interest in Intereuropa on 13 November 2019. The company’s total equity is EUR 87,227,628, while its share capital amounts to EUR 27,488,803. The company’s registered office is in Koper at Vojkovo nabrežje 32.

The company’s activities include forwarding and other transport-related activities.

Interzav, organizacija za opravljanje zavarovalnih poslov d. o. o.The company’s share capital amounts to EUR 12,518.99. Its registered office is in Koper. Activities of the company: other activities auxiliary to insurance and pension funding.

Interagent, pomorska agencija d. o. o.Interagent Shipping Agency, LLC The company’s share capital amounts to EUR 100,150.00. Its registered office is in Koper. Activities of the company: forwarding and other transport-related activities.

Intereuropa RTC d. d., Sarajevo The company’s share capital amounts to BAM 15,544,600.00. Activities of the company: interna-tional forwarding, warehousing, transhipment and transport.

AD Intereuropa logističke usluge, Belgrade The company’s share capital amounts to EUR 3,792,491.22. Activities of the company: other trans-port-related services.

Zetatrans A.D., Podgorica The company’s share capital amounts to EUR 10,508,791.81. Activities of the company: other transport-related activities.

Intereuropa Global Logistics Service Albania shpk, Durrës The company’s share capital amounts to ALL 3,600,000. Activities of the company: shipping agency, forwarding, logistics and transport services.

Intereuropa, logističke usluge d. o. o., Zagreb The company’s share capital amounts to HRK 111,581,000. Activities of the company: transport-re-lated and ancillary services.

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Annual report 2019

Intereuropa sajam d. o. o., ZagrebThe company’s share capital amounts to HRK 60,500.00. Activities of the company: transport-re-lated and ancillary services.

Intereuropa Kosova L.L.C., Prishtina The company’s share capital amounts to EUR 152,500.00. Activities of the company: other trans-port-related activities.

Intereuropa Skopje DOO, Skopje The company’s share capital amounts to MKD 40,591,600. Activities of the company: other trans-portation-related activities.

TOV TEK ZTS, Uzhhorod The company’s share capital amounts to UAH 5,296,340. Activities of the company: other trans-port-related support activities.

TOV Intereuropa – Kiev, Ukraine The company’s share capital amounts to UAH 89,704,507. Activities of the company: other trans-port-related support activities.

APS PLUS, napredne poštne storitve d. o. o.APS PLUS was established in September 2015. The company’s total equity is EUR 567,490, while its share capital amounts to EUR 1,004,916. Pošta Slovenije holds a 55% stake in the company while Mikrografija d. o. o. holds a 45% stake. The company’s registered office is in Ljubljana at Cesta v Mestni log 81.

The company’s activity is the daily digitalisation of incoming and internal mail for businesses and public institutions.

Športna loterija in igre na srečo d. d.The company’s total equity is EUR 12,478,072, while its share capital amounts to EUR 4,000,000. Pošta Slovenije holds a 20% participating interest in Športna loterija. Its participating interest is the maximum allowable ownership stake that may be held by a single shareholder in a company whose core activity is games of chance. Other owners of the company are national sports associations (e.g. the Slovenian Olympic Committee and the Slovenian Ski Association, etc.). Pošta Slovenije also cooperates commercially with Športna loterija in the sale of games of chance and sports betting at counters in Pošta Slovenije branches. The company’s registered office is in Ljubljana at Dunajska cesta 22.

The company’s activity is the organisation and sale of games of chance.

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Annual report 2019

Figure 1: Companies in the Pošta Slovenije Group with the participating interest held by Pošta Slovenije

100%

72.13%

100%

100%

100%

55%

PS Group

20%

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Annual report 2019

1.5. SIGNIFICANT EVENTS AT THE POŠTA SLOVENIJE GROUP IN 2019

• At the Mail Sorting and Logistics Centre (hereinafter: MSLC) in Ljubljana, we officially put into use our new parcel sorting device. That new device is not merely a parcel sorter; it represents the entire backbone of the logistics process at the Ljubljana MSLC.

• A dimensioning, weighing and scanning (DWS) system began functioning at the 1102 Ljubljana post office in September. That system facilitates the automated receipt of parcel shipments.

• In March, we began implementing one of projects that is crucial for the continued success of Pošta Slovenije’s operations. In the scope of the OptBIS (Optimisation of the business-information system) project, we will thoroughly overhaul operations and establish new information support in the areas of accounting, finance, treasury, controlling, personnel, salaries, purchasing, fixed assets, invoicing and sales.

• As part of the optimisation of the postal network, we transformed five post offices into contracted post offices (from 2012 until the end of 2019, we had thus transformed a total of 138 post offices and closed another 67).

• In 2019, we used 57 electric delivery vehicles made by Paxster, with a freight capacity of 200 kilograms. The aforementioned vehicles are ideal for adapting the jobs and easing the work of disabled postmen and women. At the same time, we further enhance our status as an environmentally friendly company.

• At the international PARCEL+POST EXPO 2019 exhibition, we participated in the presentation of Kivi Com’s solution (http://Direct4.me), which was selected amongst the finalists during the Innovation & Start-up Day event as an example of good practice in the area of new alternative parcel delivery.

• At the Hewlett Packard Enterprise (HPE) Global Partner Summit 2019, we signed an important memorandum on the PS research cloud, based on which we will further enhance cooperation with HPE.

• European postal operators from the 28 PostEurop member countries drafted a special declaration in which we presented our efforts to improve the quality of European postal services, and our support of cross-border e-commerce, sustainable development and the Digital Europe initiative.

• During the meeting of members of the Parcel Connect network, we received an award for the highest quality Connect parcel delivery service. We were thus awarded the title of ‘Partner of the Year – Parcel Union Quality’ for the second time.

• At the meeting of the EMS Cooperative, we received the silver ‘EMS Performance Award’ for superior quality in the provision of international express mail services.

• We received first prize in the Coups de Coeur competition in the ‘Employees’ category for the ‘Healthily and Actively into the Future’ project, through which we are ensuring the mental well-being of our employees. PostEurop organised that competition for its members.

• The 1290 Grosuplje delivery post office began operating in new premises in July, while the new premises of the 5102 Nova Gorica transhipment post office were opened in October.

• A Slovenian stamp with an image of the bearded reedling was victorious at the competition to select the most beautiful EUROPA series stamp of 2019.

• A greeting stamp in the form of a heart, which depicts a serenade in a mischievously modern way, took first place in the ‘Most Creative Stamp’ category at the traditional Asiago International Awards for Philatelic Art and placed second in the ‘Most Original Stamp Design’ category at the Nexofil Awards.

• In May 2019, we signed an agreement on the purchase of 72.13% of all issued shares of Intereuropa d. d.

• In November, we successfully completed the purchase of a majority shareholding in Intereuropa d. d. In accordance with the law, that purchase was followed by the acquisition of an additional participating interest through a mandatory takeover bid for the remaining shares of that company.

• We drafted the Energy Efficiency Strategy, which defines the guidelines, measures and financial commitments of the Pošta Slovenije Group with regard to the management of the energy efficiency system (real estate, equipment, vehicle fleet, etc.).

• We formally established a research and development team in March, and continued our work with start-up companies (Locodels) and in the following European projects: X5gon (development of an open educational platform), COG-LO (development of cognitive logistics), Edison Winci (contactless

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charging of electric vehicles) and Mestna logistika (City Logistics).

Subsidiaries:

• The subsidiary PS Zavarovanja, zavarovalno zastopništvo, d. o. o. was wound up and deleted from the companies register in September 2019.

• At the end of March, the subsidiary IPPS completed the implementation of a pilot project to automate demanding physical tasks, and started up a robotic line for palletising bundles of unaddressed direct mail and the automated wrapping of pallets at the Mail Sorting and Logistics Centre in Maribor.

• The subsidiary Feniksšped d. o. o., Brnik was merged with the subsidiary PS Logistika d. o. o. on 23 September under the relevant merger agreement.

• The subsidiary PS Moj paket earned the national ‘CERTIFIED SHOP®’ trust mark and the European EMOTA trust mark for its ‘mojpaket.si’ online store.

• The subsidiary EPPS began to produce hybrid mail at its Zagreb branch office in 2019.• The subsidiary APS PLUS expanded its activities to fully paperless operations, and the mass capture

and physical storage of business documentation.

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BUSINESS REPORT2

EVERY SHIPMENT HAS ITS OWN STORY.WE CONTINUOUSLY INTERTWINE THE STORIES OF INDIVIDUALS AND COMPANIES, AND GIVE THEM A SPECIAL TOUCH.

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Annual report 2019

2. BUSINESS REPORT2.1. CORPORATE GOVERNANCE REPORT OF THE POŠTA SLOVENIJE

GROUP

2.1.1. Governance of the Pošta Slovenije Group

Pošta Slovenije

In accordance with the Companies Act (ZGD-1I), Pošta Slovenije is governed by its founder, the Republic of Slovenia (hereinafter: the RS), which exercises its founder’s rights via Slovenski državni holding d. d. (hereinafter: SDH). The Company’s decision-making bodies are its Supervisory Board and Executive Management.

In accordance with Pošta Slovenije’s Articles of Association (hereinafter: the Articles of Association), the Supervisory Board comprises six members, four of whom are appointed by the founder, and two of whom are elected by Pošta Slovenije’s works council. Members of the Supervisory Board are elected for a term of four years, and may be re-elected. The Chairman and Deputy Chairman of the Supervisory Board are elected from the Supervisory Board’s members, who are appointed by the founder.

The competences of the Supervisory Board (hereinafter: the SB) are set out in Article 15 of the Articles of Association. The Supervisory Board adopts decisions at regular and correspondence meetings. The Supervisory Board’s work method is set out in the relevant rules of procedure. The Supervisory Board has appointed audit and human resources committees.

The Supervisory Board comprised the following members in 2019:• Matjaž Šifkovič, Chairman,• Dejan Kastelic, Deputy Chairman,• Matjaž Fortič, and• Zdravko Selič;

and employee representatives:• Božidar Pograjc, and • Aleš Arnejčič.

Matjaž ŠifkovičMr Šifkovič was born in Kranj in 1967. He holds a master’s degree in business.He has been employed at Petrol d. d., Ljubljana since 1988. The first year, he worked in the Ljubljana–Kranj Retail Regional Unit. After 1998, he worked as a controller-financial auditor, employed in the trade and retail sector at Petrol d. d., Ljubljana’s headquarters. He has also worked on the markets of Southeast Europe at subsidiaries in Croatia, Bosnia and Herzegovina, Serbia and Kosovo. After 2009, he served as Director of the Maribor-Murska Sobota and Ljubljana-Kranj Retail Regional unit. He has been the Director of Retail Sales for all of Slovenia since 2015. He carries out the following tasks on a daily basis in his position as Director of Point of Sale Organisation and Management: the drafting of strategic guidelines for the continued development of Petrol’s retail network, the optimisation of business processes with a focus on employees and customers, the drafting of high-quality work processes for employees taking into account the principles of simplicity and efficiency, the implementation of project activities and the imple-mentation of digital solutions at points of sale with the aim of introducing new methods of cooperation with the customer in the purchase process, the introduction of new methods for delivering value to the customer, the development and administration of models for managing points of sale, and the transfer of best practices to the markets of Southeast Europe. Mr Šifkovič began his term of office as a member of Pošta Slovenije d. o. o.’s Supervisory Board in November 2018, and assumed the functions of Chairman of the Supervisory Board and chair of the latter’s audit committee.

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Dejan KastelicMr Kastelic was born in Celje in 1977, and earned a bachelor’s degree in electrical engineering. He began his business career as a system administrator at Amis, the first alternative provider of broadband services, and became technical director of the group in 2004, a function he held until 2009. Over the next three years, he accumulated management knowledge at the global giant IBM, where in his first year he managed integration services for the Slovenian market. During the next two years, he served as head of technical personnel for Central Europe, the Middle East and Africa. In 2012, his business career led him back to the telecommunications sector. He joined the Telekom Austria Group, which today operates under the A1 brand, and for the next five years, until the beginning of 2017, he served as Chief Technology Innovation Officer (CTIO) for Serbia, Slovenia and Bulgaria. In 2017, he joined the Ooredoo Group from Qatar, where he represents the group’s interests and investments as Chief Technology Innovation Officer (CTIO) for its largest branch, Indosat Ooredoo in Indonesia. He is also a member of the Supervisory Board of the subsidiary ISPL in Singapore.In addition to in-depth knowledge and international experience in the areas of technology, IT services, the digitalisation of operations and finance, he has a strong sense for working with people. Mr Kastelic is known in the business world as an agent for change and a solver of problems using agile approaches, with a strong desire for continuous improvement and innovation, and the ability to formulate self-sufficient management teams.Mr Kastelic began his term of office as a member of Pošta Slovenije d. o. o.’s Supervisory Board in November 2018, and assumed the function of Deputy Chairman of the Supervisory Board.

Matjaž FortičMr Fortič was born in Ljubljana in 1959. He holds a bachelor’s degree in electrical engineering. He began his career in 1984 as a system analyst at Iskra Avtomatika. In 1989, he co-established the company, Xenon forte, which provided information services. He continued his career in Austria in 1991 at Artaker GmbH in Vienna (information and printing solutions), where he was the regional sales manager for the Balkans and served as director of Artaker’s branch office in Slovenia. He returned to Slovenia in 1996 and served as the director of sales and marketing at Iskra Vega. From 2000 to 2004, Mr Fortič served in management positions in the area of IT at RCL and DISS. He served as director of Iskrateling (a member of the Iskratel Group) from 2005 to 2009. After that, he worked on various projects through his own consultancy company, Forta. From 2013 to 2015, Mr Fortič served as the director of Avto Šerbinek in Maribor. In 2015, he returned to Xenon forte, where he remains executive director. Mr Fortič served as member and Chairman of the Supervisory Board of Datalab d. d. He was awarded certification by the Slovenian Directors’ Association in 2017. He is an expert in the digitalisation of operations, information support, and the management and optimisation of processes and documents. He also has a great deal of experience and references as the head of sales and in the management of relations with partners and customers. He began his term of office as a member of Pošta Slovenije d. o. o.’s Supervisory Board in November 2018, and assumed the function of chair of that body’s audit committee. He is a member of the Slovenian Directors’ Association.

Zdravko SeličMr Selič was born in Ljubljana on 25 December 1956 and holds a bachelor’s degree in economics. He began his career at Slovenijales zunanja trgovina, where he was responsible for exports of furniture to the US. He has been employed at Tehnoimpex since 1992 as the head of exports of industrial metal products. Since 1997 Mr Selič has been the director of Tehno Mobil d. o. o., which operates in the mobile telecom-munications sector. In November 2019, he began his term of office as President of the Management Board of Delo Prodaja d. d. During his career, he also served as a member of the Supervisory Board of Slovenska odškodninska družba. He has been a member of Pošta Slovenije d. o. o.’s Supervisory Board since 8 November 2018, as well as a member of the aforementioned body’s audit and human resource committees.

Božidar PograjcMr Pograjc was born in 1970 in Zagorje ob Savi. He was employed by PTT following the completion of secondary school. After the transformation of PTT in 1995, he continued his work in the same position as postman at the newly established Pošta Slovenije d. o. o., where he is still employed today. He first served

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as the President of the Trbovlje BU’s trade union, and has always been a passionate advocate of workers’ rights. He is currently the president of Pošta Slovenije d. o. o.’s works council, a position to which he was elected for the second time in January 2016. He is currently in his fourth term of office as a member of the works council. He has a great deal of experience working on the Supervisory Board, where he began his third term of office in January. Mr Pograjc is in the process of completing his higher education degree. He is a member of the Slovenian Directors’ Association.

Aleš ArnejčičMr Arnejčič was born in 1970 in Gorišnica. After graduating from the secondary school of economics in 1991, he began his professional career at PTT as a postman. Following the transformation of the aforemen-tioned company in 1995, he continued his career at the newly established Pošta Slovenije d. o. o., initially as a postman and then as a postal counter worker. He is currently a labour organiser at the Ptuj post office. He was first elected to Pošta Slovenije d. o. o.’s works council in 2011, and was re-elected to a new term of office in January 2016. During his new term of office, he was also elected employee representative on Pošta Slovenije d. o. o.’s Supervisory Board. He is a member of the Slovenian Directors’ Association.

Table 1: Composition of the Supervisory Board and its committees in 2019

Name and surname

Function (Chairman, Deputy Chairman, member)

First appointment to function

Completion of function/term of office

Shareholder/employee representative

Participation in Supervisory Board sessions with respect to total number

Gender Nationality Year of birth

Matjaž Šifkovič

Chairman of the Supervisory Board and

chair of the human resource committee

8 November 2018 8 November 2022 Shareholder representative 17/17 Male Slovene 1967

Dejan Kastelic Deputy-Chairman of the Supervisory Board 8 November 2018 8 November 2022Shareholder

representative 16/17 Male Slovene 1977

Matjaž Fortič

Member of the Supervisory Board

and chair of the audit committee

8 November 2018 8 November 2022 Shareholder representative 16/17 Male Slovene 1959

Zdravko Selič Member of the Supervisory Board 8 November 2018 8 November 2022Shareholder

representative 16/17 Male Slovene 1956

Božidar Pograjc

Member of the Supervisory Board 12 January 2016 12 January 2020

Employee representative 17/17 Male Slovene 1970

Aleš Arnejčič Member of the Supervisory Board 12 January 2016 12 January 2020Employee

representative 17/17 Male Slovene 1970

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Annual report 2019

Name and surname

Level of education Professional profile

Independence in accordance with Article 23 of the Code

Exis-tence of conflicts of interest

Membership on supervisory bodies of other companies

Membership on com-mittees (e.g. audit, human resource)

Chairman / member

Participation in committee sessions with respect to total number

Matjaž Šifkovič

Holds a master’s

degree in business

Organisation of the work of business

processes, strategic management and

project development

Yes No No Human resource committee Chair 3/3

Dejan Kastelic

Holds a bachelor’s degree in electrical

engineering

Technology and the development of IT ser-

vices, digitalisation of operations, M&A and

corporate restructuring

Yes NoYes; Indosat

Singapore Pte. Ltd.

/ / /

Matjaž Fortič

Holds a bachelor’s degree in electrical

engineering

Digital transformation, IT support, process

optimisation Yes No No Audit committee Chair 8/8

Zdravko Selič

Holds a bachelor’s degree in

economics

Organisation of sales and the procurement

function, corporate restructuring

Yes No No Human resource and audit committees Member

3/3 – human resource

committee; 6/8 – audit committee

Božidar Pograjc

Holds a degree in

economics / Yes No No Audit committee Member 8/8

Aleš Arnejčič

Holds a degree in

economics / Yes No NoHuman resource

committee Member 3/3

Table 2: External committee members (e.g. audit and human resource)

Name and surname Committee

Participation in committee sessions with respect to total number

Gender Nationality Level of education Year of birthProfessional profile

Membership in supervisory bodies of unaffiliated companies

Maja Zaman Groff

External member of the audit

committee until 31 January 2019

1/1 Female SloveneHolds a doctorate

in management and organisation

1972

Auditing (external and

internal), financial

accounting

Supervisory Board: no; Management Board: no; audit committee: Triglav,

zdravstvena zavarovalnica d. d.,

HSE d. o. o.

Katarina Sitar Šuštar

External member of the audit

committee from 1 February 2019

7/7 Female Slovene Master’s of business (MBA) 1971

Auditing (external and

internal), financial

accounting

No

Jasna Brovč Potokar

External member of the human

resource committee

3/3 Female Slovene

Holds a bachelor’s degree in organisation

and management of human resources and

educational systems

1957

Human resource

manager and director at

BP VISION d. o. o.

No

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Annual report 2019

The Executive Management comprises from one to three members. Those persons were as follows in 2019: the General Manager and two other members. All members of the Executive Management are appointed to a five-year term of office by the Supervisory Board and may be re-appointed. Whenever the Executive Management comprises two or three members, the Company is represented by the General Manager and one other member of the Executive Management. Otherwise it is represented by the sole member of the Executive Management.

The Executive Management provides the founder comprehensive reports on the Company’s operations at least four times a year, and is obliged to report to the Supervisory Board at a minimum quarterly on the business policy, the Company’s financial operations, on its profitability and solvency, and on other significant indicators regarding the Company. The Executive Management comprised the following members in 2019:

• Boris Novak, MSc, General Manager,• Andrej Rihter, MSc, member, and• Vinko Filipič, member.

The members of Pošta Slovenije’s Executive Management also served as members of the supervisory boards of other companies in 2019, as follows: Boris Novak, MSc was a member of the Supervisory Board of Športna loterija d. d., while Andrej Rihter, MSc was a member of the Supervisory Board of Sava pokojninska družba d. d.

Boris Novak, MSc, General Manager

Mr Novak was born in 1963. He received his bachelor’s degree from the Faculty of Law at the University of Ljubljana. He completed his master’s studies while working and received a master’s degree in the field of science from the Faculty of Government and European Studies. His professional career started in 1983, when he began working in different organisational units within the police. In 2004 he became an Undersecretary at the Ministry of the Interior of the Republic of Slovenia, after which he served as Assistant to the Director of the Criminal Police Directorate within the General Police Directorate of the Ministry of the Interior of the Republic of Slovenia. In 2006 he was employed as a consultant to the General Manager of EPPS d. o. o., and later became consultant to Pošta Slovenije’s Executive Management for complex legal issues in the areas of postal regulation, competition protection and safety. In 2008 he established the Corporate Security and Control Sector at Pošta Slovenije and became the aforementioned sector’s Director. At the end of 2011 he continued his work in the position of consultant to Pošta Slovenije’s Executive Management.

He has served as Chairman and member of the Supervisory Board of ČZP Večer d. d., Chairman and member of the Supervisory Board of Dravske elektrarne d. o. o. and Deputy Chairman and member of the Supervisory Board of EPPS d. o. o., and Chairman, Deputy Chairman and member of the Supervisory Board of PBS d. d. He is currently a member of the Supervisory Board of Športna loterija d. d. and the Chairman of Intereuropa d. d.’s Supervisory Board. He is a member of the Slovenian Directors’ Association via Pošta Slovenije’s corporate membership in the aforementioned body.

On 15 May 2012 the Supervisory Board of Pošta Slovenije d. o. o. appointed him General Manager of Pošta Slovenije for a period of five years. On 15 March 2017 he was appointed to a new term of office for the next five-year period. His new term of office began on 16 May 2017.

Andrej Rihter, MSc, member of the Executive Management

Mr Rihter was born in 1970. He graduated from the Faculty of Maritime Studies and Transport at the University of Ljubljana, where he then completed his master’s degree while working. He is currently enrolled in postgraduate doctoral studies at the Faculty of Logistics of the University of Maribor.

His career began in the wood processing industry, in the development department at Gorenje GLIN. He

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started working at Pošta Slovenije (or PTT as it was called at the time) in 1993, first as a postman, and later as a counter clerk and a delivery controller. He was a post office manager from 1998 to 2002, and then became the Deputy Director of the Ljubljana Organisational Unit. In 2008 he became a management consultant for logistics, and was soon appointed Director of the Ljubljana Mail Sorting and Logistics Centre. In 2009 he became the Director of the Celje Organisational Unit, and in 2012 the Executive Management’s representative for economic affairs. He remained in this position until his appointment as Deputy General Manager of Pošta Slovenije and later as a member of the Executive Management.

He is a member of the Managers’ Association of Slovenia and the Slovenian Logistics Association. He was appointed as a lecturer at the Faculty of Maritime Studies and Transport at the University of Ljubljana, and a senior lecturer at the Faculty of Logistics at the University of Maribor. He has received professional training at numerous seminars in Slovenia and abroad, where he has also contributed professional papers. He has published several professional articles in the field of logistics. He is a member of the Slovenian Directors’ Association via Pošta Slovenije’s corporate membership in the aforementioned body. Mr Rihter is a member of the Supervisory Board of Slovenski državni gozdovi, d. o. o. and Deputy Chairman of Intereuropa d. d.’s Supervisory Board. He is also a member of the Executive Board of the Chamber of Commerce and Industry of Slovenia (Trade Department) and a member of the general meeting of the same organisation.

His first five-year term of office as Pošta Slovenije’s Deputy General Manager began on 12 August 2015. He has served as a member of the Executive Management since 16 May 2017.

Vinko Filipič, member of the Executive Management

Mr Filipič was born in 1971. He received a degree from the Faculty of Economics and Business in Maribor. He began his professional career at Pošta Slovenije in 1996 as a senior postal operations specialist, and continued as Head of the Marketing Department and later as the Director of Marketing. In addition to his regular work, Mr Filipič has taught marketing at the Post, Economics and Telecommunications Vocational School in Ljubljana for several years. He has received professional training at numerous seminars in Slovenia and abroad, wher