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Annual report 2013 / Contents

CONTENTS 1. INTRODUCTION 4

1.1 Address by the Chairman of the Management Board of Pivovarna Laško, d. d. 4 1.2 Report of the Supervisory Board on the verification of the Annual Report 6 1.3 Data on the operations of the Laško Group 10 1.4 Data on the operations of Pivovarna Laško, d. d. 14 1.5 Vision, mission, values and strategic goals 19 1.6 Presentation of the Laško Group 20 1.7 Presentation of the parent company Pivovarna Laško, d. d. 23

2. BUSINESS REPORT 25

2.1 Corporate governance 25 2.2 Statement on corporate governance and compliance with the Corporate Governance Code 40 2.3 Report of the Management Board of Pivovarna Laško, d. d., on dependency according to Article 545 of the Companies ACT (ZGD-1) 44 2.4 Amended report of the Management Board of Pivovarna Laško, d. d., on dependency according to Article 545 of the Companies ACT (ZGD-1) 48 2.5 Shareholders 49 2.6 Sales and marketing 58 2.7 Supply flows 68 2.8 Quality and standards 70 2.9 Investments 77 2.10 Performance analysis 83 2.11 Risk management 88 2.12 Financing and sale of the investments 93 2.13 Overview of significant events in 2013 98 2.14 Development landmarks 109

3. SUSTAINABLE DEVELOPMENT 113

3.1 Human resources management in the Laško Group 113 3.2 Communications 117 3.3 Corporate responsibility 119 3.4 Environmental protection 120

4. FINANCIAL REPORT OF THE LAŠKO GROUP 130

5. FINANCIAL REPORT OF PIVOVARNA LAŠKO, D. D. 217

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Annual report 2013 / Introduction

Laško Group and Pivovarna Laško, d. d. 6

1.2 Report of the Supervisory Board on the verification of the Annual Report

THE SUPERVISORY BOARD APPROVED THE AUDITED ANNUAL REPORT OF THE LAŠKO GROUP AND PIVOVARNA LAŠKO, D. D. FOR 2013 AT ITS TENTH SESSION HELD ON 30 APRIL 2014.

Composition of the Supervisory Board

In the 2013 financial year, the Supervisory Board of the Company was comprised of the following members:

Capital representatives Dr Peter Groznik, Member (Chairman since 5 September 2013) Mr Goran Brankovič, Member (since 1 September 2013) Mr Jože Bajuk, Member (since 1 September 2013)

Dr Vladimir Malenković, Chairman (up to 31 August 2013) Dr Borut Bratina, Member (up to 31 August 2013) Mr Borut Jamnik, Member (up to 31 August 2013) Mr Enzo Smrekar, Member (between 1 September 2013 and 12 December 2013)

Employee representatives Mr Bojan Cizej, Deputy Chairman Mag. Dragica Čepin, Member

Composition of the Supervisory Board committees

The Audit Committee, Human Resources Committee and Documentation Review Committee operated within the Supervisory Board in 2013. A Benchmark Committee was founded at the end of 2013 and began operating in early 2014.

Audit Committee Dr Peter Groznik, Chairman (up to 5 September 2013) Mr Jože Bajuk, Chairman (since 18 December 2013) Mr Bojan Cizej, Member Mr Igor Teslić, External Member

Human Resources Committee (ceased operating as of 18 December 2013) Mr Borut Jamnik, Chairman (up to 31 August 2013) Dr Borut Bratina, Member (up to 31 August 2013) Mag. Dragica Čepin, Member

Documentation Review Committee (between 7 November 2013 and 12 December 2013) Mr Jože Bajuk, Chairman Dr Peter Groznik, Member Mr Bojan Cizej, Member Mag. Dragica Čepin, Member



Benchmark Committee (since 18 December 2013) Mr Goran Brankovič, Chairman Mag. Dragica Čepin, Member Dr Peter Groznik, Member (up to 31 March 2014) Mr Keith Miles, Member (since 1 April 2014)

Functioning of the Supervisory Board

The operations of Pivovarna Laško, d. d. and the Laško Group were monitored by the Supervisory Board of Pivovarna Laško, d. d., in accordance with the statutory provisions and the Articles of Association of Pivovarna Laško, d. d. In 2013, the Supervisory Board met at 10 regular and 4 correspondence sessions.

The Supervisory Board continuously reviewed the work of the Management Board throughout 2013. The Supervisory Board paid special attention to monitoring the key capital adequacy and solvency ratios of Pivovarna Laško, d. d., the disposal of the investments of companies in the Laško Group, especially the disposal of Mercator, d. d. shares, activities related to the restructuring of the financial liabilities of Pivovarna Laško, d. d. and Laško Group companies, cost management, material legal issues and verifying achievement of the operating results. The Supervisory Board constantly dealt with these issues which were regular items on the agenda of the Supervisory Board's sessions.

Key resolutions of the Supervisory Board in 2013

In addition to the above-mentioned issues, the Supervisory Board also discussed other current matters and adopted the following key resolutions:

7 March 2013: the Supervisory Board was briefed on the project of operational and financial restructuring of the Laško Group,

20 March 2013: the Supervisory Board approved the audited Annual Report of Pivovarna Laško, d. d. and the Laško Group for 2012,

16 May 2013: the Supervisory Board proposed the General Meeting should appoint the audit firm Ernst & Young, d. o. o., Ljubljana, as auditor of the financial statements for 2013,

14 June 2013: the Supervisory Board was briefed on the contents of the share purchase agreement for Poslovni sistem Mercator, d. d. and gave its consent to Pivovarna Laško, d. d. selling 317,498 ordinary registered shares with the MELR ticker symbol issued by Poslovni sistem Mercator, d. d., representing a 8.43% share at a fixed price of EUR 120 per share, to Agrokor, d. d., Trg Dražena Petrovića 3, Zagreb,

29 August 2013: the Supervisory Board charged the Management Board with concluding a contract on the audit of transactions conducted at Birra Peja with Ernst & Young, d. o. o., and to immediately implement such a contract,

5 September 2013: the Supervisory Board appointed Dr Peter Groznik as the Chairman of the Supervisory Board of Pivovarna Laško, d. d.,

18 November 2013: the Supervisory Board agreed to the Management Board of Pivovarna Laško, d. d., signing the Term Sheet, the contents of which materially



equal those in the Term Sheet the Supervisory Board was briefed on, and the Restructuring Agreement consistent with the concluded Term Sheet,

18 November 2013: the Supervisory Board instructed the Management Board to start looking for a strategic partner for the Company,

17 December 2013: the Supervisory Board was briefed on the report on the operating restructuring measures of the Laško Group,

17 December 2013: the Supervisory Board approved the Business Plan of the Laško Group and Pivovarna Laško, d. d. for the 2013 financial year.

Functioning of the Audit Committee

The Audit Committee met six times in 2013. The Committee discussed the findings and recommendations of the external audit firm Deloitte, d. o. o., Ljubljana based on their prior audit of the financial statements for 2012 and the audited Annual Report of the Laško Group and Pivovarna Laško, d. d., for 2012, it was briefed on the bids received from audit firms for the audit of the financial statements of the Laško Group for 2013, and proposed the Supervisory Board select the audit firm Ernst & Young, d. o. o., Ljubljana, analysed individual transactions of the Laško Group, discussed the Semi-annual report of the Laško Group and Pivovarna Laško, d. d. for 2013, and was regularly briefed on the operations of the internal audit department. The Audit Committee regularly reported to the Supervisory Board on its findings.

Functioning of the Human Resources Committee

The Human Resources Committee met twice in 2013. Pursuant to the Supervisory Board's resolution, the Supervisory Board's Human Resources Committee conducted proceedings for obtaining candidates for members of the Supervisory Board of Pivovarna Laško, d. d. - namely capital representatives as the mandates of the existing Supervisory Board capital representatives expired on 31 August 2013. At its session on 17 April 2013, the Human Resources Committee discussed the candidates for members of the Supervisory Board. On this basis, at its sixty-second session on 26 April 2013, the Supervisory Board drafted its proposal for a General Meeting resolution appointing new members of the Supervisory Board - capital representatives. The Human Resources Committee was disbanded as of 17 December 2013 pursuant to the Supervisory Board resolution adopted at its fourth session of 17 December 2013.

Functioning of the Documentation Review Committee

At its second regular session on 7 November 2013, the Supervisory Board established the Documentation Review Committee. The Committee was established due to greater diligence in the Supervisory Board's operations due to the existence of a conflict of interest with respect to two Supervisory Board members. The Committee's tasks were to review the material for individual Supervisory Board sessions and to determine whether the respective Supervisory Board members can receive the material given the conflict of interest. During its existence, from 7 November 2013 to 12 December 2013, the Documentation Review Committee conducted two correspondence sessions. The Committee was comprised of: Jože Bajuk (Chairman), Dr Peter Groznik (Member), Bojan Cizej (Member) and mag. Dragica Čepin (Member).

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1.3 Data on the operations of the Laško Group

OUR SALES STRATEGY ON FOREIGN MARKETS IS BEING SUCCESSFULLY IMPLEMENTED. IN QUANTITATIVE TERMS, SALES ON MARKETS OTHER THAN SLOVENIA HAVE GROWN BY 10.2 PER CENT.

Sales revenues and operating profit including depreciation and amortisation (EBITDA)

Sales revenues fell by 1.7% in 2013 compared to the previous year, while normalised operating profit including amortisation (EBITDA) decreased by 7.0%.

The Business report provides total net sales revenues unless expressly stated otherwise, while only revenues from continued operations are shown in the consolidated income statement.

Normalised EBIT is calculated from operating profit increased or decreased by the impact of one-off business events such as the revaluation of real estate and investment property and the formation of more significant revaluation adjustments. Normalised EBITDA is the sum of normalised EBIT and normalised depreciation.

In addition to the listed adjustments, normalised EBIT is also adjusted for the impairment of investments and accrued deferred tax receivables under this heading.

271,5 267,0

49,2 45,7

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180,0

270,0

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Return on assets (ROA) and return on equity (ROE)

Key data on the operations of the Laško Group (continued and discontinued operations)

11,212,2

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2012 2013

in%

Return on equity (ROE)

Return on assets (ROA)

(in EUR) (adjusted)* 2012 2013

Net sales revenues 271,548,163 267,020,040EBIT 21,766,861 10,530,503Normalised EBIT 29,096,657 28,085,876EBITDA 41,831,060 28,149,931

Normalised EBITDA 49,160,855 45,705,304Net interest expense1 -21,446,176 -17,406,476Net profit or loss -32,938,018 -30,157,611

Normalised earnings 13,379,599 9,798,867

Non-current assets 301,979,359 284,057,058Property, plant and equipment 194,465,281 170,065,814Current assets + deferred and accrued items 203,749,234 170,434,237Equity 87,978,879 58,213,883Non-current liabilities + accrued costs and deferred income 32,998,565 31,155,169Current liabilities including accrued costs and deferred income 384,751,149 365,122,243

Net current assets or liabilities 2 -181,001,915 -194,688,006Net financial debt 3 232,115,204 235,885,133Net financial debt less investments in

subsidiaries4 231,687,841 235,457,720

Cash flows from operating activities 42,134,920 49,985,697Cash flows from investing -8,904,359 -672,340Cash flows from financing -52,545,710 -48,497,249

Net cash flows -19,315,149 816,108



*The values of certain operating items presented herein differ from the values disclosed in the 2012 Annual Report. Adjustments to the financial statements for the past periods are reported in a special disclosure in Section 4.4.5 ADJUSTMENT OF HISTORICAL FINANCIAL STATEMENTS. Indicators

*The values of certain operating items presented herein differ from the values disclosed in the 2012 Annual Report. Adjustments to the financial statements for the past periods are reported in a special disclosure in Section 4.4.5 ADJUSTMENT OF HISTORICAL FINANCIAL STATEMENTS.

Number of employees

The employees of the Delo Group are displayed separately since the Delo Group does not fall under the same activity as the other companies in the Laško Group.

1 Interest income - interest expense2 Current assets including deferred costs and accrued income - current liabilities including 2 deferred costs and accrued income 3 (Non-current and current financial liabilities) - non-current and current investments + cash)4 (Non-current and current financial liabilities) - (non-current investments less interests in subsidiary 4 companies + current investments and cash)

(adjusted)* 2012 2013

Share of normalised EBIT in sales revenue 10.7 % 10.5 %

Share of normalised EBITDA in sales revenue 18.1 % 17.1 %Interest coverage5 1.357 1.614

Normalised earnings or loss in sales revenue 4.9 % 3.7 %

Return on equity (ROE)6 11.2 % 12.2 %

Return on assets (ROA)7 2.2 % 2.0 %Liabilities /equity8 4.748 6.807

5 Normalised EBIT/net interest expense6 Normalised net earnings or loss / average equity in the period7 Normalised net earnings or loss / average assets in the period8 (Liabilities + accruals and deferrals + provisions) /equity

(as at 31 December) 2012 2013In the Laško Group, excluding the Delo Group 1,180 1,196In the Delo Group 412 395Total 1,592 1,591Average number of employees according to hours 1,607 1,565

Net sales revenue per employee9 (EUR / employee) 168,978 170,620

9 Net sales revenue (overall operations) / average number of employees according to hours



Share of export in total sales of beverages The Laško Group

Summary of the 2014 business plan

In the past years the economic crisis has significantly changed the market landscape both on the local as well as on all key export markets for the Laško Group. The economic recession has resulted in a marked drop of purchasing power, rationalised consumption, lower customer loyalty, growth of supermarket brands, fewer impulse purchases and ever more frequent purchases of products on offer and an increase in purchases at discount supermarkets.

Despite the negative trend in sales of beverages, the Group's goal in 2014 is to retain its market share on the Slovenian market, and achieve even greater growth of sales on foreign markets and fortify the position of our leading brands on those markets. The realisation of this goal is based on a uniform approach to key customers, forming an appropriate pricing policy, ensuring sales and marketing efficiency, and introducing new products in the beverages segment.

In 2014, the Laško Group plans on selling 4.0 million hl of beer, soft drinks and water, 62.5% of which will be sold on the Slovenian market and the rest on foreign markets.

The Group expects to generate EUR 23.8 million of operating profit or an EBITDA of EUR 40.9 million on EUR 270.3 million of net sales revenue.

Investments of EUR 15 million will be spent on upgrading technological equipment, with a smaller part spent on IT development and market investments.

Due the high leveraging of the Group, priority goals include concluding the disposals process for the Mercator shares, actively marketing other financial investments and other unnecessary assets, concluding an agreement on long-term loan rescheduling, and the deleveraging of the Group partly on account of the proceeds and partly from cash flow generated by the Group's underlying activities.

In 2014, the Group's environmental goals will continue towards reducing our environmental footprint in the form of waste water and waste, as well as more rational use of energy sources. Protecting our own water sources and preventing any potential negative impacts also remains an important goal.

(in hl) 2012 2013Sale of all beverages 3,788,929 3,894,939on the markets outside Slovenia 1,221,596 1,346,026Share in % 32.2 34.6



1.4 Data on the operations of Pivovarna Laško

OUR SALES STRATEGY ON FOREIGN MARKETS IS BEING IMPLEMENTED SUCCESSFULLY. IN 2013, THE SHARE OF EXPORTS IN THE ENTIRE SALES QUANTITIES REACHED 38 PERCENT AND IS 16 PERCENT HIGHER THAN IN THE PREVIOUS YEAR.

Sales revenues and operating profit Including depreciation and amortisation (EBITDA)

Sales revenues increased by 1.3% in 2013 compared to the previous year, while normalised operating profit including amortisation (EBITDA) increased by 6.8%.

Normalised EBIT, EBITDA and net profit have been calculated in the same way as the data on the operations of Laško Group provided in Section 1.3 Data on the operations of the Laško Group herein. Return on assets (ROA) and return on equity (ROE)

89,0 90,2

14,6 15,6

0,0

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52,0

78,0

104,0

130,0

2012 2013

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Normalised EBITDA

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2012 2013in%

Return on equity (ROE)

Return on assets (ROA)



Key data on the operations of the Pivovarna Laško

*The values of certain operating items presented herein differ from the values disclosed in the 2012 Annual Report. The adjustments of the financial statements of previous periods are disclosed separately in Section 5.4.5 ADJUSTMENT OF HISTORICAL FINANCIAL STATEMENTS.

(in EUR) (adjusted)* 2012 2013

Net sales revenues 88,960,946 90,161,103EBIT 8,690,491 2,993,447Normalised EBIT 9,623,538 10,797,084EBITDA 13,634,148 7,754,446

Normalised EBITDA 14,567,195 15,558,083Net interest expense1 -13,741,037 -12,960,348Net profit or loss -17,557,389 -27,912,686Normalised earnings or loss -2,750,328 -1,967,727

Non-current assets 312,412,713 301,383,218Property, plant and equipment 46,276,123 43,937,583Current assets + deferred and accrued items 72,837,802 55,677,706

Equity 96,364,961 68,078,212Non-current liabilities + accrued costs and deferred income 4,164,129 9,013,665Current liabilities + accrued costs and deferred income 284,721,425 279,969,047

Net current assets or liabilities2 -211,883,623 -224,291,341Net financial debt3 -17,970,859 3,662,778Net financial debt less investments in

subsidiaries4 219,744,282 228,189,002

Cash flows from operating activities 15,407,650 18,857,704Cash flows from investing 5,033,916 -1,272,533

Cash flows from financing -20,485,951 -17,523,417Net cash flows -44,385 61,754

1 Interest income - interest expense2 Current assets including deferred costs and accrued income - current liabilities including 2 deferred costs and accrued income 3 (Non-current and current financial liabilities) - non-current and current investments + cash)4 (Non-current and current financial liabilities) - (non-current investments less interests in subsidiary 4 companies + current investments and cash)



Indicators

*The values of certain operating items presented herein differ from the values disclosed in the 2012 Annual Report. The adjustments of the financial statements of previous periods are disclosed separately in Section 5.4.5 ADJUSTMENT OF HISTORICAL FINANCIAL STATEMENTS. Number of employees

According to the resolution of the Supervisory Board, the Chairman and four Members of the Management Board of Pivovarna Laško have been employed part-time also by Pivovarna Union as of 1 March 2013. Share of export in total sales of beverages Pivovarna Laško

(adjusted)* 2012 2013

Share of normalised EBIT in net sales revenue 10.8 % 12.0 %

Share of normalised EBIT in net sales revenue 16.4 % 17.3 %Interest coverage5 0.700 0.833

Normalised earnings or loss in net sales revenue -3.1 % -2.2 %

Return on equity (ROE)6 -2.7 % -2.3 %Return on assets (ROA)7 -0.7 % -0.5 %Liabilities /equity8 2.998 4.2455 Normalised EBIT/net interest expense6 Normalised net earnings or loss / average equity in the period7 Normalised net earnings or loss / average assets in the period8 (Liabilities + accruals and deferrals + provisions) /equity

2012 2013

Employees as at 31 December 324 337Average number of employees according to hours 330 329

Added value per employee9

(EUR / employee) 77,511 63,456

Net sales revenue per employee10

(EUR / employee) 269,579 274,046

9 (Operating revenue - costs of goods, materials and services - other operating expense) / average number9 of employees according to hours 10 Net sales revenue / average number of employees according to hours

(in hl) 2012 2013

Sale of all beverages 942,183 1,017,145

Exports 330,213 384,324Share in % 35.0 37.8



Market share of the beer sales on the Slovenian market

Data on PILR share

*The values of certain operating items presented herein differ from the values disclosed in the 2012 Annual Report. The adjustments of the financial statements of previous periods are disclosed separately in Section 5.4.5 ADJUSTMENT OF HISTORICAL FINANCIAL STATEMENTS. Summary of the 2014 business plan

As illustrated by the macroeconomic indicators and the economic conditions in the country and the region where Pivovarna Laško sells its products, 2014 will be even more challenging from an operating viewpoint than 2013. Negative macroeconomic trends, a growing tax burden and more challenging competition will be the key challenges on the Slovenian market that Pivovarna Laško will have to face in order to achieve its goals.

Objectives have been set for 2014 that can be identified as a 4.8% increase in the quantities of beer and other beverages sold. Sales growth is planned for foreign markets where the quantities are expected to increase by nearly 16%. At the same time, the shares on the domestic market should be maintained. Over 1 million hl of all types of beverages are planned to be sold in 2014.

We plan on generating a total of EUR 90.3 million net sales revenue. We expect to generate 80% of all revenue on the Slovenian market, and 20% (or EUR 18.1 million) on foreign markets. Funds earmarked for investments of EUR 4.7 million will mainly be spent on upgrading the technological equipment, with a smaller part being spent on packaging, IT and market development.

Due to the high leveraging of the Company, priority goals include concluding the disposals process for the Mercator shares, disposing of the investments in Radenska and

(in %) 2012 2013

Pivovarna Laško, d. d. 38.1 39.0Pivovarna Union, d. d. 45.9 45.0Imported beer 16.0 16.0Total 100.0 100.0

(adjusted)* 2012 2013

Total shares issued 8,747,652 8,747,652

Normalised earnings or loss per share in EUR -0.31 -0.22Share market value on 31 December in EUR 6.99 4.01Share carrying value on 31 December

in EUR11 11.02 7.78TV shares / KV shares 0.63 0.52Market capitalisation in EUR12 61,146,087 35,078,08511 Capital at 31 December / total number of shares12 Total number of shares issued times market value per share at 31 December



Delo, actively marketing other financial investments and other unnecessary assets, concluding an agreement on long-term loan rescheduling, and the deleveraging of Pivovarna Laško, partly on account of the proceeds and partly from cash flow generated by the Company's underlying activities.

In 2014, the Company's environmental goals will continue towards reducing our environmental footprint in the form of waste water and waste, as well as more rational use of electricity and natural gas. The preservation of the water protection area, a vital resource of the Company, is a constant objective of Pivovarna Laško.



1.5 Vision, mission and strategic goals

BECOMING THE FIRST CHOICE OF CUSTOMERS OF QUALITY BRANDS, A TOP CLASS INVESTMENT FOR THE SHAREHOLDERS AND AN ATTRACTIVE EMPLOYER. STRENGTHENING THE MARKET POSITION OF THE COMPANIES IN THE LAŠKO GROUP AND THE PRODUCTION AND SALE OF INNOVATIVE, TRENDY PRODUCTS.

_LAŠKO GROUP_ _PIVOVARNA LAŠKO

Vision Becoming the first choice of the customers Becoming a leader in of quality brands in the industry, the production and sale of and on the markets where we operate, beverages, strengthening our being a top class investment for our reputation, recognition and shareholders and an attractive employer the market shares of our for staff attracted to excellence, brands on the domestic as development and team work. well as on foreign markets. Mission The brands that maintain tradition We create brands with added and direct the trends generate added value for our customers and value for our customers and shareholders, customers and shareholders. with emphasis on motivating Through responsible and the employees we preserve environmentally-friendly the market position of the operations we Laško Group companies on all major achieve top results in markets. a better world. Strategic goals Our strategic goals for the forthcoming period include to produce and sell

innovative and trendy products, maintain the market positions of our own brands on the domestic market, and recover and expand on our previously achieved positions on foreign markets. The planned cost-effectiveness will be achieved through professionally qualified employees acting as teams and in accordance with the policies of the Laško Group.



1.6 Presentation of the Laško Group

THE LAŠKO GROUP BRINGS TOGETHER PRODUCERS OF BEER, MINERAL, SPRING AND NATURAL WATER, SOFT DRINKS, SPIRITS AND OTHER ALCOHOLIC BEVERAGES, SYRUPS FOR BEVERAGE PRODUCTION, NEWSPAPER AND PUBLISHING ACTIVITIES, AS WELL AS RETAIL AND WHOLESALE TRADE.

Shareholders and their holdings as at 31 December 2013:

PIVOVARNA LAŠKO, d. d., Slovenia

RADENSKA, d. d., Radenci, Slovenia 82.058% ownership stake

An explanation of the shareholding and voting rights is provided in Section 2.5.2 OWNERSHIP STRUCTURE OF EQUITY under the Ownership structure of the equity of subsidiaries heading.

PIVOVARNA UNION, d. d., Ljubljana, Slovenia 97.928% ownership stake

BIRRA PEJA, Sh. a. Peć, Kosovo (Pivovarna Union, d. d., Ljubljana owns a 57.627% stake)

JADRANSKA PIVOVARA – Split, d. d., Croatia 99.460% ownership stake

VITAL MESTINJE, d. o. o., Slovenia 96.920% shareholding

DELO, d. d., Ljubljana, Slovenia 100% ownership stake – of that Pivovarna Laško holds an 80.834% stake and Radenska holds a 19.166% stake

LAŠKO GRUPA, d. o. o., Sarajevo, Bosnia and Herzegovina 100% ownership stake – of that Pivovarna Laško holds a 69.22% stake, Radenska holds a 15.39% stake and Pivovarna Union a 15.39% stake

FIRMA DEL, d. o. o., Laško, Slovenia 100% shareholding

LAŠKO GRUPA, d. o. o., Zagreb, Croatia 100% shareholding Pivovarna Laško draws up the consolidated Annual Report for the parent company and for the subsidiaries in the Laško Group. Due to their material irrelevance, the following companies are not included in the consolidation: Firma Del, d. o. o., Laško, Laško Grupa, d. o. o., Sarajevo and Radenska Miral, d. o. o., Radenci, Radenska, d. o. o., Zagreb

CONTROLLING COMPANY

ASSOCIATED COMPANIES



and Radenska, d. o. o., Beograd. All other subsidiaries are consolidated using the full consolidation method.

THERMANA, d. d., Laško, Slovenia

20.63% ownership stake

SLOPAK, d. o. o., Ljubljana, Slovenia 29.22% shareholding

SUBSIDIARIES



Organisational structure of the Laško Group as at 31 December 2013 An explanation of the shareholding and voting rights of Radenska is provided in Section 2.5.2 OWNERSHIP STRUCTURE OF EQUITY under the Ownership structure of the equity of subsidiaries heading.

PIVOVARNA JADRANSKA LAŠKO FIRMA LAŠKORADENSKA, d. d. UNION, d. d. PIVOVARA, d. d. VITAL, d. o. o. DELO, d. d. GRUPA, d. o. o. DEL, d. o. o. GRUPA, d. o. o.Radenci Ljubljana Split Mestinje Ljubljana Sarajevo Laško Zagreb

Ownership: 82.058% Ownership: 97.928% Ownership: 99.460% Holding: 96.92% Ownership: 100% Holding: 100% Holding: 100% Holding: 100% Num. of sh. 4,153,644 Num. of sh. 441,765 Num. of sh. 5,396,932 Num. of sh. 667,464

RADENSKA BIRRA Pivovarna Laško Pivovarna LaškoMIRAL, d. o. o. PEJA, Sh. a. Ownership Holding in Laško

Radenci Peć, Kosovo in Delo Grupa Sarajevo Holding: 100% Ownership: 57.627% I80.834% I69.22%

Num. of sh. 1,020 Num. of sh. 539,536

BIRRA Radenska Radenska PEJA, Sh. p. k. Ownership Holding in Laško

Tirana, Albania in Delo Grupa Sarajevo 100% holding I19.166% I15.39%

Num. of sh. 127,928

Subsidiary of Delo: Pivovarna Union IZBERI, d.o.o. Holding in Laško

Ljubljana Grupa Sarajevo Holding: 100% I15.39%

Subsidiary

LAŠKO GROUPas at 31 December 2013

Controlling company

PIVOVARNA LAŠKO, d. d.

Subsidiary Subsidiary SubsidiarySubsidiary Subsidiary Subsidiary Subsidiary



1.7 Presentation of the parent company Pivovarna Laško

FROM A HISTORICAL STANDPOINT, THE ORIGINS OF PIVOVARNA LAŠKO LIE IN 1825 WHEN THE MEAD AND GINGERBREAD MAKER FRANZ GEYER SET UP A BREWERY IN THE FORMER VALVASOR HOSPITAL, A BUILDING WHICH STILL EXISTS TODAY AND IS THE LOCATION OF THE SAVINJA HOTEL.

1.7.1 COMPANY PROFILE

PIVOVARNA LAŠKO, Trubarjeva 28, 3270 Laško, registered with the District Court in Celje under the registration no. Srg 95/00673 and under the application No 1/00171/00 dated -September 1995.

Abbreviated company name: PIVOVARNA LAŠKO, d. d. Organisational form: public limited company Share capital: EUR 36,503,305 Number of issued shares: 8,747,652 no par-value shares Listing of shares: Ljubljana Stock Exchange, stock exchange listing of regular shares Ticker symbol: PILR Company registration number: 5049318 Tax number: SI90355580 Activity code: 11.050 Type of business and principal activity: B E E R P R O D U C T I O N

Management Board: mag. Dušan Zorko, Chairman composition as at Marjeta Zevnik 31 December 2013 Mirjam Hočevar Gorazd Lukman Matej Oset Supervisory Board: Dr Peter Groznik, Chairman composition as at Goran Brankovič 31 December 2013 Jože Bajuk Bojan Cizej mag. Dragica Čepin Transaction accounts:

Nova Ljubljanska banka, d. d., Ljubljana IBAN SI56 0223 2002 0104 463

Hypo Alpe-Adria-bank, d. d. IBAN SI56 3300 0000 2722 975

Nova Kreditna banka Maribor, d. d. IBAN SI56 0451 5000 0909 883



Raiffeisen Krekova banka, d. d. IBAN SI56 2430 0900 0054 863

Unicredit banka Slovenije, d. d. IBAN SI56 2900 0000 1820 159

Banka Celje, d. d., Bančna skupina Celje IBAN SI56 0600 0000 1199 122

Abanka Vipa, d. d. IBAN SI56 0510 0801 2922 332

Banka Sparkasse, d. d. IBAN SI56 3400 0100 1922 773

Probanka, d. d. IBAN SI56 2510 0970 0565 280

Podravska banka, d. d., Koprivnica IBAN HR61 2386 0021 1600 120 84

Telephone: +386 3 734 80 00 Fax: +386 3 573 18 17 E-mail: [email protected] Website: http://www.pivo-lasko.si

Annual report 2013 / Business report


2 BUSINESS REPORT 2.1 Corporate governance

THE COMPANY IS MANAGED ACCORDING TO A TWO-TIER SYSTEM WHEREBY THE COMPANY IS MANAGED BY THE MANAGEMENT BOARD AND ITS OPERATIONS SUPERVISED BY THE SUPERVISORY BOARD.

The corporate governance principles of Pivovarna Laško arise from applicable legal provisions in the Republic of Slovenia, internal by-laws of the Company and established good work practices. Corporate governance is carried out according to a two-tier system whereby the Company is managed by the Management Board and its operations monitored by the Supervisory Board.

The bodies of the Company as set out in the Articles of Association of Pivovarna Laško are the General Meeting of shareholders, the Supervisory Board and the Management Board of the Company. 2.1.1 GENERAL MEETING OF SHAREHOLDERS

In accordance with the provisions of the Companies Act, the General Meeting of shareholders is the supreme body of the Company. This is where the shareholders' will is directly realised and fundamental and statutory decisions are adopted. One share represents one vote at the General Meeting. Pivovarna Laško has no shares with limited voting rights. Treasury shares do not convey voting rights at the General Meeting.

The General Meeting of shareholders is convened by the Management Board at its own initiative, at the request of the Supervisory Board or at the written request of the shareholders of the Company possessing at least a 5% equity stake in the Company. The Supervisory Board may also convene a General Meeting. Shareholders can exercise their rights arising from shares directly at the General Meeting or through their representatives.

The General Meeting decides by a majority of the votes cast (simple majority) except where otherwise provided so by law or the Articles of Association. A qualified three-quarters majority is prescribed for the following matters:

modifying the Articles of Association,

decreasing share capital (including conditional increase),

approved increase in share capital,

status changes and winding up of the Company,

exclusion of the shareholders’ preferential rights when issuing new shares,

election and early discharge of the Supervisory Board members,

other matters, if so prescribed by law or the Articles of Association.

The General Meeting decides whether to grant discharge to the Company's Management and Supervisory Board and how to use the distributable profit. By granting discharge,



the General Meeting confirms and approves the work of the Management and Supervisory Boards for the financial year. Discussions regarding the granting of discharge are carried out in parallel with discussions on the use of distributable profit. If the General Meeting does not grant discharge, it is not considered that the Management Board was given a vote of no confidence.

Whenever the General Meeting of shareholders decides that the distributable profit is to be distributed as dividends, the dividends belong to the shareholders who have been registered as owners in the central register of securities at the Central Securities Clearing Corporation on the cut-off date which shall be decided in each decision on the use of distributable profit.

Attendance at General Meetings

Those shareholders who have been entered into the share register by the end of the fourth day prior to the convocation of a General Meeting (cut-off date) and who personally, or through a representative or nominee, gave notification of their attendance to the Management Board of the Company by the end of the fourth day prior to the convocation of the General Meeting have the right to participate and vote at the General Meeting.

The Management Board members and the Supervisory Board members may attend the General Meeting even if they are not shareholders. Media representatives may also attend the General Meeting if they give notification of their attendance to the Management Board of the Company in writing within three days at the latest prior to the convocation of the General Meeting.

Convening and organising General Meetings of shareholders

A General Meeting of shareholders is convened when necessary for the benefit of the Company or when necessary in accordance with law and the Articles of Association.

One General Meeting was convened in 2013: the 21st General Meeting, which was convened on 18 May 2013 and held of 20 June 2013. The General Meeting convened on 12 November 2013 for 3 December 2013 was cancelled on 12 December 2013. RESOLUTIONS OF THE 21ST GENERAL MEETING OF SHAREHOLDERS OF PIVOVARNA LAŠKO

The following important decisions were adopted at the 21st regular General Meeting:

Resolution to Item 2: Briefing the General Meeting on the audited Annual Report for 2012 and the Report of the Supervisory Board on its verification of the Annual Report, briefing the General Meeting on the cover of net loss, briefing the General Meeting on the remuneration of the Management and Supervisory Board members and the decision concerning the discharge to be given to the Management Board and the Supervisory Board

2.1. The General Meeting is briefed on the audited Annual Report of the Laško Group and Pivovarna Laško for 2013 and the Report of the Supervisory Board on its verification of the Annual Report.



2.2. The General Meeting is briefed on the fact that as at 31 December 2012, the net loss of the Company amounts to EUR 18,510,265, which the Management Board will cover as agreed by the Supervisory Board from retained earnings (EUR 859,740), other profit reserves (EUR 232,097) and capital reserves (EUR 17,418,428). Thus the distributable profit or loss of Pivovarna Laško in 2012 amounts to EUR 0.

2.3. The General Meeting is informed of the remuneration of the Management Board and Supervisory Board members in the Company and its subsidiaries in the 2012 financial year. (note: resolutions 2.1., 2.2. and 2.3. were informative in nature and thus not subject to the General Meeting's vote)

2.4. The General Meeting grants the Supervisory Board discharge for the 2012 financial year.

2.5. The General Meeting grants the Supervisory Board discharge for the 2012 financial year.

Resolution to Item 3: Increase in share capital paid-in cash (capital injection) (note: the General Meeting did not adopt this resolution)

The Company's share capital, amounting to EUR 36,503,304.96 and divided into 8,747,652 regular freely-transferable registered no par-value shares as at the passing of the resolution, is hereby increased by no more than EUR 36,503,304.96 to amount to no more than EUR 73,006,609.92, namely by issuing new shares belonging to the same group as those already issued.

The increase in share capital by no more than EUR 36,503,304.96 shall be performed by issuing no more than 8,747,652 new regular freely-transferable registered no par-value shares in exchange for monetary contributions, at an initial share price of EUR 6.4760. The final amount of share capital increase equals the number of newly registered and paid-up shares multiplied by the proportion of one share in the share capital.

The share capital increase shall be performed in two rounds. In the first round, the shares shall be offered to all shareholders listed in the share register on the date this resolution is passed. They will be able to pay-up a number of shares proportional to their existing share in the Company's share capital. The Company's Management Board shall no later than within 30 (thirty) days of adoption of this resolution invite the Company's existing shareholders to register and pay-up new shares (first round) by way of notification in the daily press.

Shares not registered and paid-up in the first round can be offered to third persons by the Management Board upon the Supervisory Board's consent (second round).

In both rounds, existing shareholders and third persons will be able to, by providing an appropriate statement on the registration certificate, limit their registration by pre-determining the maximum ownership stake or number of shares they wish to have in the Company after completion of the capital increase pursuant to this resolution of the General Meeting.



Details on the capital increase in the two rounds shall be decided by the Management Board provided the Company’s Supervisory Board has given its agreement. The details will be provided in the prospectus.

When purchasing shares, all registrars are obligated to pay-in the full issue amount of each registered share.

The Supervisory Board is authorised to adopt the amendments to the Articles of Associations in order to adjust the text to the implemented increase in the share capital of the Company.

Resolution to Item 4: Appointing Members of the Supervisory Board (counter proposal of NLB)

4.1. The General Meeting appointed Mr Enzo Smrekar, Mesarska cesta 12, Ljubljana, as member of the Supervisory Board of the company (capital representative) for the period from 1 September 2013 to 31 August 2017. He resigned from his position on 12 December 2013.

4.2. The General Meeting appointed Dr Peter Groznik, Mesarska cesta 38, Ljubljana, as member of the Supervisory Board of the company (capital representative) for the period from 1 September 2013 to 31 August 2017.

4.3. The General Meeting appointed Mr Goran Brankovič, Onger 15, Trzin, as member of the Supervisory Board of the company (capital representative) for the period from 1 September 2013 to 31 August 2017.

4.4. The General Meeting appointed Mr Jože Bajuk, Gabrje 10, Dobrova, as member of the Supervisory Board of the company (capital representative) for the period from 1 September 2013 to 31 August 2017.

Resolution to Item 5: Appointment of the auditor for the 2013 financial year

The General Meeting appoints the audit firm Ernst & Young, Dunajska cesta 111, Ljubljana as the auditor of the Company's 2013 financial statements.

The resolutions of the General Meeting were published on the SEOnet portal and on the Company's website www.pivo-lasko.si on 21 June 2013. The minutes of the General Meeting and appendices thereto are available on the website of AJPES (Business register of Slovenia). 2.1.2 SUPERVISORY BOARD

The fundamental function of the Supervisory Board is to supervise the management of the Company’s operations. The Supervisory Board appoints and discharges the members and Chairman of the Management Board.

The composition of the Supervisory Board is determined by the Articles of Association. The Supervisory Board of Pivovarna Laško has six members, each of whom has the same rights and responsibilities unless otherwise stipulated by the Articles of Association. Four Members of the Supervisory Board elected by the General Meeting of shareholders



are capital representatives, while the other two Supervisory Board members are employee representatives and are elected by the Worker’s Council.

The Supervisory Board is appointed by the General Meeting of shareholders by a majority of the votes of the shareholders cast except for the Members of the Supervisory Board who are elected by the Worker’s Council. The Supervisory Board members are elected for a period of four years and their appointment is renewable following the expiry of their term of office. The Supervisory Board elects its own Chairman and Deputy Chairman among its members.

The Chairman convenes and chairs the sessions of the Supervisory Board and is authorised to declare its will and announce decisions adopted by the Supervisory Board. The Chairman of the Supervisory Board represents the Company in disputes with Members of the Management Board, and the Supervisory Board in disputes against other bodies of the Company and third parties, unless otherwise specified in each particular case. The Chairman of the Supervisory Board is always a representative of the shareholders. Sessions of the Supervisory Board are convened by the Chairman at his own initiative, at the initiative of any member of the Supervisory Board, or at the initiative of the Management Board. The Supervisory Board takes decisions at sessions.

Within one month of it being submitted the Annual Report, the Supervisory Board must verify the Annual Report and profit distribution proposal and draft a written report for the General Meeting, which it provides to the Management Board. If the Supervisory Board approves the Annual Report, the Annual Report is deemed adopted. Composition of the Supervisory Board Composition of the Supervisory Board as at 31 December 2012 as at 31 December 2013

Capital representatives: Capital representatives: Dr Vladimir Malenković, Chairman Dr Peter Groznik, Chairman Dr Borut Bratina Goran Brankovič Borut Jamnik Jože Bajuk Dr Peter Groznik

Employee representatives: Employee representatives: Bojan Cizej, Deputy Chairman Bojan Cizej, Deputy Chairman mag. Dragica Čepin mag. Dragica Čepin

Chairman of the Supervisory Board

Peter Groznik

Education: DSc in Finance, Kelley School of Business, Indiana University Bloomington (United States of America).

Employment: member of the Management Board of Gorenje, d. d.



Member of the Supervisory Board

Goran Brankovič

Education: BSc in Electrical Engineering, Faculty of Electrical Engineering, University of Ljubljana.

Employment: Zavarovalnica Triglav, management of subsidiaries, Assistant to the Executive Director. Jože Bajuk

Education: BSc in Law, Faculty of Law, University of Ljubljana.

Employment: Regional Director of Interenergo, Ljubljana. Bojan Cizej

Education: BSc in Food Technology, Biotechnical Faculty, University of Ljubljana.

Employment: Director of the Production and Technical Unit of Pivovarna Laško. Dragica Čepin

Education: MSc in Economy, Faculty of Economics and Business, University of Maribor.

Employment: Director of Accounting at Laško Group.

Changes in the composition of the Supervisory Board of Pivovarna Laško

At the 21st General Meeting of the shareholders of Pivovarna Laško on 20 June 2013, Enzo Smrekar, Dr Peter Groznik, Goran Brankovič and Jože Bajuk were appointed Members of the Supervisory Board of the company for the period from 1 September 2013 to 31 August 2017. After giving his irrevocable notice on 12 December 2013, the term of office of Enzo Smrekar as member of the Supervisory Board expired as of that date.

At the Supervisory Board's 1st constituent meeting on 5 September 2013, the Supervisory Board elected Dr Peter Groznik as Chairman of the Supervisory Board. COMMITTEES OF THE SUPERVISORY BOARD OF PIVOVARNA LAŠKO

1. Audit Committee

The tasks of the Audit Committee are specified in Article 280 of the Companies Act, with the key ones comprising:

monitoring the process of financial reporting and statutory audits of the annual and consolidated financial statements,

monitoring the independence, impartiality and effectiveness of the auditor of the Company's Annual Report,



submitting a proposal to the Supervisory Board for the appointment of a candidate for the Annual Report auditor,

supervising the integrity of the financial information provided by the Company,

evaluating the drafted Annual Report, including forming its proposal for the Supervisory Board.

Composition of the Audit Committee Composition of the Audit Committee as at 31 December 2012 as at 31 December 2013

Dr Peter Groznik – Chairman Jože Bajuk – Chairman Bojan Cizej Bojan Cizej Igor Teslić Igor Teslić Changes in the composition of the Audit Committee

At the Supervisory Board's 1st constituent meeting on 5 September 2013, Dr Peter Groznik resigned from his position of Chairman of the Supervisory Board and Member of the Audit Committee of the Supervisory Board. At its 4th regular session on 18 December 2013, Jože Bajuk was appointed Chairman of the Supervisory Board and Member of the Audit Committee of the Supervisory Board.

2. Human Resources Committee

The Companies Act does not define the tasks of the Human Resources Committee. In accordance with point B.2 of Appendix B to the Corporate Governance Code (Ljubljana, 8 December 2009), the Human Resources Committee is mainly responsible for:

providing assistance to the Supervisory Board and drafting proposals on criteria and candidates for the Management Board members whereby it needs to balance the skills, knowledge and experience and prepare a description of the qualifications required for each individual post,

assessing the size, composition and functioning of the Management Board at regular intervals,

providing support in evaluating the work of the Management Board and preparing reasoned grounds for the recall of individual board members if required,

providing support in the design and implementation of the remuneration system for the Management Board.

Composition of the Human Resources Composition of the Human Resources Committee as at 31 December 2012 Committee as at 31 December 2013

Borut Jamnik - Chairman / Dr Borut Bratina / mag. Dragica Čepin /



Changes to the composition of the Human Resources Committee

At its 4th regular session on 17 December 2013, the Supervisory Board adopted a resolution dissolving the Human Resources Committee as of 17 December 2013.

3. Benchmark Committee

At its 4th regular session on 17 December 2013, as at 18 December 2013 the Supervisory Board appointed a Benchmark Committee comprised of: Goran Brankovič - Chairman, mag. Dragica Čepin - Member and Dr Peter Groznik - Member.

The Benchmark Committee's primary task is to determine which companies Pivovarna Laško will benchmark its performance to. The Committee primarily deals with questions of methodology and determining the underlying benchmark criteria. The Committee defines the methods and indicators of deliverables and aims to improve strategy and strategic planning. Composition of the Benchmark Composition of the Benchmark Committee as at 31 December 2012 Committee as at 31 December 2013

/ Goran Brankovič, Chairman / mag. Dragica Čepin - Member / Dr Peter Groznik - Member Changes to the composition of the Benchmark Committee

No changes to the composition of the Benchmark Committee occurred in 2013. At its 8th regular session on 31 March 2014, Dr Peter Groznik resigned as member of the Benchmark Committee effective 31 March 2014. The Supervisory Board appointed Keith Miles as the new member of the Benchmark Committee as of 1 April 2014.

4. Documentation Review Committee

At its 2nd regular session on 7 November 2013, the Supervisory Board established the Documentation Review Committee. The Committee was established due to greater diligence in the Supervisory Board's operations due to the existence of a conflict of interest with respect to two Supervisory Board members. The Committee's tasks was to review the material for individual Supervisory Board sessions and to determine whether the respective Supervisory Board members can receive the material given their conflict of interest. During its existence, from 7 November 2013 to 12 December 2013, the Documentation Review Committee conducted two correspondence sessions. The Committee was comprised of: Jože Bajuk (Chairman), Dr Peter Groznik (Member), Bojan Cizej (Member) and mag. Dragica Čepin (Member).

Changes in the composition of the Documentation Review Committee

Since the conflict of interest with respect to Member of the Supervisory Board Goran Brankovič ceased to exist, and due to the irrevocable resignation of Member of the Supervisory Board Enzo Smrekar from the Supervisory Board, on 12 December 2013 the reason the Supervisory Board established the Documentation Review Committee ceased



to exist. As a result, on 12 December 2013, the Documentation Review Committee ceased to exist.

Changes in the supervisory boards of subsidiaries

Radenska, Radenci

At the 21st General Meeting of Radenska, mag. Dragica Čepin and mag. Brigita Oplotnik Rajh, both employed by Pivovarna Laško, were appointed Members of the Supervisory Board (capital representatives) for a term of office of four years, beginning on 14 October 2013.

At its meeting held on 7 November 2013, pursuant to the Rules of Procedure of the Worker's Council and after electing Members of the Supervisory Board (employee representatives), the Workers' Council of Radenska, appointed Frank Lipičar and Dominik Omar for a term of office of four years beginning on 9 November 2013.

Pivovarna Union, Ljubljana

On 6 September 2013, Dr Peter Groznik resigned from his position of Chairman of the Supervisory Board of Pivovarna Union. Dr Groznik continues to be a Member of the Supervisory Board of Pivovarna Union. On 18 November 2013, Dr Vladimir Malenković was appointed Chairman of the Supervisory Board of Pivovarna Union.

Delo, Ljubljana

Up to 5 October 2013, the Supervisory Board had the following composition: Robert Šega (Chairman until 30 June 2013, Deputy Chairman from 1 July 2013 to 5 October 2013), Marjeta Zevnik (Member until 30 June 2013, Chairwoman between 1 July 2013 and 5 October 2013), mag. Dragica Čepin (Member), Jure Flerin (Member) and Branimir Piano (Member).

As of 6 October 2013, the Supervisory Board has the following composition: Marjeta Zevnik (Chairwoman since 8 November 2013), mag. Dragica Čepin (Deputy Chairwoman since 8 November 2013), mag. Brigita Oplotnik Rajh (Member), Branimir Piano (Member) and Jure Flerin (Member).

Laško Grupa, Zagreb

As of 1 October 2013, Laško Grupa, Zagreb, has a three-member Supervisory Board comprised of: mag. Dragica Čepin (Chairwoman), Tatjana Fintić (Deputy Chairwoman) and Matjaž Zupin (Member). The Members of the Supervisory Board have a four-year term of office.

Laško Grupa, Sarajevo

As of 11 1 2013, Laško Grupa, Sarajevo, has a three-member Supervisory Board comprised of: Matjaž Zupin (Chairman), Pavel Teršek (Deputy Chairman) and mag. Dragica Čepin (Member). The Members of the Supervisory Board have a four-year term of office.



2.1.3 MANAGEMENT BOARD

The Management Board runs the Company and adopts business decisions independently and at its own risk and represents the Company in disputes with third parties, adopts the Company’s development strategy, ensures proper risk treatment and management, acts with due care and diligence and protects the business secrets of the Company.

The Company's Management Board is comprised of the following five members: mag. Dušan Zorko – Chairman of the Management Board, Marjeta Zevnik – Management Board member responsible for legal affairs, human resources and general affairs, Mirjam Hočevar – Management Board member responsible for finance, Gorazd Lukman – Management Board member responsible for sales and commerce and Matej Oset – Management Board member responsible for the production and technical sector.

The Chairman and the Management Board members are appointed and recalled by the Supervisory Board, whereby Members of the Management Board are appointed upon the proposal of the Chairman of the Management Board. The term of office of the Chairman and Members of the Management Board is five years. The Chairman of the Management Board and one of the Management Board members together represent and act on behalf of the Company. The Management Board may appoint a procurator.

Management Board of Pivovarna Laško

Composition of the Management Board Composition of the Management Board as at 31 December 2012 as at 31 December 2013

mag. Dušan Zorko – Chairman mag. Dušan Zorko – Chairman Marjeta Zevnik Marjeta Zevnik Mirjam Hočevar Mirjam Hočevar Gorazd Lukman Gorazd Lukman Matej Oset Matej Oset Chairman of the Management Board. - mag. Dušan Zorko

Education: Master's degree in economic sciences, VEKŠ Maribor.

Areas of expertise:

organising, coordinating and chairing the Management Board of Pivovarna Laško and coordinating the activities of the Laško Group,

carrying out tasks of strategic importance,

public relations.



Member of the Management Board responsible for legal, human resources and general affairs – Marjeta Zevnik

Education: BSc in Law, Faculty of Law, University of Ljubljana.

Areas of expertise:

carrying out tasks of strategic importance and coordinating the following areas: the legal department, HR & administration department, workplace health and safety department,

coordinating the legal, human resources and general affairs of the Laško Group.

Member of the Management Board responsible for finance – Mirjam Hočevar

Education: BSc in Mathematics Engineering, Faculty of Mathematics and Physics, University of Ljubljana.

Areas of expertise:

carrying out tasks of strategic importance and coordinating the following areas: the finance department, the accounting department, the controlling department and the IT department,

coordinating the finance, controlling, accounting and IT functions of the Laško Group.

Member of the Management Board responsible for sales and commerce – Gorazd Lukman

Education: Sales Clerk, Business Commercial College Celje.

Areas of expertise:

carrying out tasks of strategic importance and coordinating the following areas: retail and wholesale operations on the Slovenian market, export operations, marketing and development functions, sales logistics and servicing beverage pumping devices, and the sales promotion department,

coordinating the sales, marketing and development functions of the Laško Group.

Member of the Management Board responsible for the production-technical sector and procurement – Matej Oset

Education: MBA from IEDC Bled, BSc in Food Technology, Biotechnological Faculty, University of Ljubljana.

Areas of expertise:

carrying out tasks of strategic importance and coordinating the production-technical sector and procurement department,



coordinating the production-technical sector and procurement department of the Laško Group.

Changes in the composition of management boards of subsidiaries

Delo, Ljubljana

At its session on 1 July 2013, the Supervisory Board of Delo appointed Irma Gubanec, Member of the Management Board of Delo for finance, as Chairwoman of the Management Board of Delo for a term of office of 5 years. As the new Chairwoman of the Management Board was appointed, the term of office of the existing Chairwoman Marjeta Zevnik ended, after having temporarily assumed the management of Delo as Member of the Supervisory Board of Delo pursuant to paragraph 2 of Article 273 of the Companies Act.

At its session on 28 August 2013, the Supervisory Board of Delo appointed Nada Jakopec member of the Management Board of Delo responsible for general, human resources and legal affairs for a term of office from 1 September 2013 to 30 June 2018.

Izberi, Ljubljana

As of 4 March 2013, Alojz Slavko Bogataj is the Director of Izberi, Ljubljana.

Laško Grupa, Sarajevo

As of 1 April 2013, Haris Hadžić is the Director of Laško Grupa, Sarajevo.

Birra Peja, Peć, Kosovo

As of 26 August 2013, Ernest Jusufi is Chairman of the Board of Directors of Birra Peja, Peć, Kosovo, while Virtyt Ibrahimaga is Member of the Board of Directors. As at 26 August 2013, the office of the existing Chairman of the Board of Directors Ekremo Lluka and of the existing Member of the Board of Directors Fatmir Gashi expired. 2.1.4 MANAGEMENT IN THE LAŠKO GROUP

The Laško Group consists of the parent company Pivovarna Laško, five subsidiaries in Slovenia and three subsidiaries abroad. All subsidiaries are in the majority ownership of the controlling entity (for further details, see Section 1.6 Presentation of the Laško Group.)

Members of the management and administrative bodies of the subsidiaries as of 31 December 2013:



Manag. Board Milan Hojnik

Supervisory Capital representatives: Employee representatives: Board mag. Dragica Čepin – Franko Lipičar – Chairwoman Deputy Chairman mag. Brigita Oplotnik Rajh Dominik Omar Pavel Teršek

(subsidiary of Radenska)

Manag. Board Milan Hojnik

Supervisory Board The company has no Supervisory Board.

Manag. Board mag. Dušan Zorko – Chairman Gorazd Lukman Mirjam Hočevar Marjeta Zevnik Matej Oset

Supervisory Capital representatives: Employee representatives: Board Dr Vladimir Malenković – Terezija Peterka – Chairman Deputy Chairwoman Dr Peter Groznik Primož Mlekuš Bojan Cizej

(Subsidiary of Pivovarna Union)

Executive Director Sebastjan Gergeta

Board Ernest Jusufi – of Directors Chairman mag. Dušan Zorko Mirjam Hočevar Gorazd Lukman Virtyt Ibrahimaga

RADENSKA, d. d., Radenci

RADENSKA MIRAL Radenci, d. o. o.

PIVOVARNA UNION, d. d., Ljubljana

BIRRA PEJA, Sh. a., Peć, Kosovo



(subsidiary of Birra Peja, Peć, Kosovo)

Management Board Korab Lluka (resigned)


Management Board Zlatko Bebić

Supervisory Board Capital representatives: Employee representatives: Gorazd Lukman – Goran Domljanović Chairman Pavel Teršek - Deputy Chairman

Management Board Mira Močnik


Management Board Irma Gubanec – Chairwoman Nada Jakopec

Supervisory Capital representatives: Employee representatives: Board Marjeta Zevnik – Branimir Piano Chairwoman Jure Flerin mag. Dragica Čepin - Deputy Chairwoman mag. Brigita Oplotnik Rajh

BIRRA PEJA, Sh. p. k., Tirana, Albanija

JADRANSKA PIVOVARA - Split, d. d.

VITAL Mestinje, d. o. o.

DELO, d. d., Ljubljana



(subsidiary of Delo)

Management Board Alojz Slavko Bogataj


Management Board Haris Hadžić

Supervisory Board Capital representatives: Matjaž Zupin – Chairman Pavel Teršek - Deputy Chairman mag. Dragica Čepin

Management Board mag. Dušan Zorko


Management Board Boris Matijaščić

Supervisory mag. Dragica Čepin - Board Chairwoman Tatjana Fintić – Deputy Chairwoman Matjaž Zupin

IZBERI, d. o. o., Ljubljana

LAŠKO GRUPA, d. o. o., Sarajevo

FIRMA DEL, d. o. o., Laško

LAŠKO GRUPA, d. o. o., Zagreb



2.2 Statement on corporate governance and compliance with the Corporate Governance Code

THE MANAGEMENT BOARD AND SUPERVISORY BOARD OF PIVOVARNA LAŠKO HEREBY DECLARE THAT THE COMPANY COMPLIES WITH THE PROVISIONS OF THE CORPORATE GOVERNANCE CODE.

2.2.1 COMPLIANCE OF COMPANY MANAGEMENT WITH THE PROVISIONS OF THE CORPORATE GOVERNANCE CODE

The Management Board and Supervisory Board of Pivovarna Laško hereby declare that the Company observes the provisions of the Corporate Governance Code of 8 December 2009 that entered into force on 1 January 2010 (hereinafter: the Code), with some exceptions that do not intervene in good management practices and which are explained in this Statement. The Statement is a constituent part of the Annual Report for 2013 and is also available on the Company’s website www.pivo-Laško.si.

The Statement refers to the 2013 financial year, i.e. from 1 January 2013 to 31 December 2013. No changes have occurred in the Company’s corporate governance since the conclusion of the accounting period up to the Statement’s publication.

The Code is published on the website of the Ljubljana Stock Exchange at www.ljse.si.

The explanations regarding discrepancies from individual provisions of the Code are given by the Management and Supervisory Board of the Company below:

Provision 1; The Company operates in accordance with its key objective, which is to maximise the Company’s value, and other objectives such as long-term value creation for shareholders, observance of social and environmental aspects of operations with the aim of ensuring sustainable development of the Company, even though these objectives are not stated in the Company's Articles of Association;

Provision 2; The Management of the Company is focused at realising the strategic growth objectives of the Laško Group until 2014 and the establishment of a new business model of the Group. The starting points for the growth strategy and new business model were approved by the Supervisory Board at its session on 23 April 2010; The presentation of the strategy and new business model of the Group was published on the website SEOnet of the Ljubljana Stock Exchange on 14 May 2010; the Management and Supervisory Boards of the company failed to adopt the special document entitled Corporate Governance Policy;

Provision 8 (paragraph 2) and 17.2; The Supervisory Board members did not sign individual statements regarding the fulfilment of the independence criteria as denoted in Point C.3 Annex C of the Code. Based on information available to the Company, the Members of the Supervisory Board fulfil all the criteria of independence as defined in Point C.3 Annex C of the Code;

Provision 8.7; The Rules of Procedure of the Supervisory Board do not contain any provisions regarding communications with the public in connection to decisions adopted at its sessions. The Chairman of the Management Board is, on



the basis of a decision of the Supervisory Board, authorised to communicate with the public. Important decisions of the Supervisory Board are published on the SEOnet website of the Ljubljana Stock Exchange and on the websites of the companies in the Group;

Provision 11; The Supervisory Board does not have a secretary. The tasks of the secretary of the Supervisory Board are performed by the General Sector employees;

Provision 20; The Company has not defined a Communications Strategy as a constituent part of the Corporate Governance Policy. Expert services draft Company communications and ensure transparency of operations;

Provision 21.3; The Company does not publish announcements in foreign languages.

2.2.2 MAIN CHARACTERISTICS OF THE INTERNAL CONTROL AND RISK MANAGEMENT SYSTEMS IN CONNECTION WITH THE FINANCIAL REPORTING PROCEDURE

Pivovarna Laško manages risks and implements internal control procedures at all levels. The purpose of internal controls is to ensure the accuracy, reliability, transparency and visibility of all processes and the management of risks related to financial reporting. At the same time, the internal control system establishes a mechanism for preventing irrational use of assets and contributes to cost-effectiveness.

The system of internal controls includes procedures that ensure:

transactions are recorded on the basis of credible accounting documents, based on which transactions are recorded accurately and fairly, providing a guarantee that the company disposes of its assets in an honest and fair manner;

transactions are recorded and financial statements drawn up in accordance with the applicable legislation;

unauthorised acquisition, use and disposal of company assets, which would have a material impact on the financial statements, are prevented or detected in a timely manner.

In 2013, an internal assessment of the Company was carried out by the Finance, Accounting and Controlling Department which is responsible for bookkeeping and the preparation of financial statements in accordance with applicable accounting, tax and other regulations and by the Internal audit service established on 1 October 2012. The adequacy of control operations within the scope of the information system is examined by the authorised external contractors on an annual basis. 2.2.3 EXTERNAL AUDIT

Regular external audit

To ensure consolidation and standardisation within the Laško Group, the General Meetings of Pivovarna Laško, Pivovarna Union, Radenska and Delo appointed the audit



firm Ernst & Young, Dunajska cesta 111, Ljubljana as the certified auditor for the 2013 financial year, which within the scope of auditing the financial statements reports to the Management Board, Supervisory Board and Audit Committee of the Supervisory Board on its findings. 2.2.4 DATA IN ACCORDANCE WITH POINTS 3, 4, 6, 8 and 9 of PARAGRAPH

6 of ARTICLE 70 OF THE COMPANIES ACT (ZGD-1)

Significant direct and indirect ownership of the Company's securities

Data on significant direct ownership of the Company's securities is given in Section 2.5.2 OWNERSHIP STRUCTURE OF EQUITY of this Annual Report.

Holders of securities granting specially controlling rights

The Company's Articles of Association do not contain any provisions granting holders of securities any special controlling rights.

Limitations to voting rights

The Articles of Association of the Company do not contain limitations regarding particular shares or a defined number of votes. The Articles of Association of the Company prescribe that shareholders intending to attend a General Meeting need to register at the headquarters of the Company by the end of the fourth day at the latest prior to the convocation of the General Meeting or they will not be able to attend the General Meeting or exercise their voting rights.

Company rules on the appointment and replacement of members of the management or supervisory bodies and on changes to the Articles of Association

In accordance with the Articles of Association of the Company, the Management Board may have a maximum of five members, one of whom shall be appointed the Chairman of the Management Board. The Chairman and members of the Management Board are appointed and recalled by the Supervisory Board, whereby Members of the Management Board are appointed at the Chairman of the Management Board’s recommendation. The Supervisory Board may also prematurely recall the Chairman of the Management Board or an individual Management Board member in accordance with the law.

Pursuant to the Company’s Articles of Association the Supervisory Board consists of six members of whom four are capital representatives and two are employee representatives. The Supervisory Board members – capital representatives – are appointed by the General Meeting of shareholders through a simple majority vote of the shareholders in attendance whereas the two Members of the Supervisory Board who are employee representatives are elected by the Worker’s Council. A three-quarter majority vote is required for the premature recall of a Supervisory Board member.

A three-quarter majority vote by the General Meeting is required for any amendment of the Articles of Association.

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2.3 Report of the Management Board of Pivovarna Laško on dependency according to Article 545 of the Companies Act (ZGD-1)

IN THIS REPORT PIVOVARNA LAŠKO INDICATES MEASURES TO COMPENSATE THE DAMAGE ARISING FROM HARMFUL LEGAL TRANSACTIONS BY THE FORMER MANAGEMENT BOARD OF THE COMPANY.

2.3.1 DAMAGES

As a subsidiary within a multi-level de facto group, the former Management Board of Pivovarna Laško concluded legal transactions in 2008 and 2009 which subsequently proved to be damaging. The loans given to the companies Center naložbe and Infond Holding, including interest, were never repaid. The purchase of shares of Thermana – Zdravilišče Laško by Infond Holding was implemented at an acquisition price that was higher than the assessed market value of the Thermana shares at that time. The parent company in the multi-level de facto group, namely Atka - Prima, did not compensate the damaged party, namely Pivovarna Laško, for the loss either in the relevant financial year or later.

The Management Board of Pivovarna Laško took all measures required with due diligence, namely:

Pivovarna Laško declared the outstanding receivables with default interest in the bankruptcy proceedings against Infond Holding, finančna družba, d. d. – v stečaju on 29 March 2010 amounting to EUR 1,892,319.26 and submitted a request for the establishment of a creditor’s committee. The bankruptcy proceedings are pending. On 24 September 2013, Pivovarna Laško received partial payment of EUR 89,382.56 from the bankruptcy estate.

On 10 November it declared the outstanding receivables with default interest in the bankruptcy proceedings against Center Naložbe, d. d. – v stečaju amounting to EUR 6,487,493.35, amending the declaration with the right to separate settlement, and submitted a request for the establishment of a creditor’s committee. The bankruptcy proceedings are pending. On 30 December 2013, Pivovarna Laško, d. d., received partial payment of EUR 410,236.03 from the bankruptcy estate.

The Company filed an action for damages on 12 January 2011 against the defendants: the company Atka – Prima and Boško Šrot as its co-owner and the legal representative and director of Pivovarna Laško at that time for the payment of EUR 13.3 million plus costs and interest (as at 22 January 2014, according to the interest calculation due to the partial payment from the bankruptcy estate of Infond Holding, d. d. – v stečaju, the amount at issue is EUR 16.4 million). The proceedings are pending. The witnesses were heard and then an expert in economics was appointed. Due to the partial payment from the bankruptcy estate of Infond Holding, d. d. – v stečaju, the action has been partially revoked for the amount of EUR 89,382.56. At the same time, due to the partial payment from the bankruptcy estate of Center Naložbe, d. d. – v stečaju, the action has been



partially revoked for the amount of EUR 410,236.03. The case is currently pending before continuation of the main hearing at the court of first instance.

On 3 July 2012, an application for an interim order against Atka – Prima and Boško Šrot was filed for prohibition of disposing of securities, prohibition of disposal and burdening of property and other matters relating to the previous indent. The proceedings were concluded with a final judgement in 2013, as the Celje High Court upheld the appeal of the defendants, annulled the decision of the court of first instance and rejected the proposal of the plaintiff for issuing an interim order.

On 3 July 2012, an action was brought before the court to challenge the debtor's legal actions together with an application for an interim order (together with the companies Pivovarna Union, Radenska, Delo and Fructal) due to the prohibition of the alienation or disposal of movable property and due to the prohibition of the alienation or disposal of the securities against Anica Šrot Aužner. The reason for bringing an action was the transfer of securities and property by Atka-Prima and Boško Šrot to Anica Šrot Aužner. The has resulted is damage to creditors. The court has not yet scheduled the main hearing in these litigious proceedings. The proceedings for the issue of the interim order were concluded with a final judgement in 2013, in which the court of second instance rejected the defendant's appeal and confirmed the order of the court of first instance issuing the interim order.

The possibility exists that Pivovarna Laško will file additional lawsuits in the future for damages since the entire scope of damages suffered is not yet known. Two potential damages exist according to the currently known facts:

The pledge of 345,304 RARG shares of Radenska, whose owner is Pivovarna Laško, to secure a loan from NKBM granted to the company Center Naložbe in the amount of EUR 6,250,000 on 12 March 2009. In this transaction, Pivovarna Laško acted as the lienee based on the loan agreement on the pledge of book-entry securities of 5 June 2009. The carrying amount of the pledged RARG shares as at 31 December 2012 amounts to EUR 3,637,650. On 22 November 2011, Pivovarna Laško received the judgement of the Maribor District Court allowing the payment of claims from the value of the pledged shares and authorising the enforcement on the pledged shares in order to repay the claim in the amount of EUR 7,349,552.25 and statutory default interest. On 11 January 2012, Pivovarna Laško received the enforcement order from the Maribor District Court allowing the proposed enforcement by entering the enforcement decision into the register of KDD for the 345,304 RARG pledged shares, the sale of these shares, and repayment of the creditor (NKBM) from the proceeds of the sale. Once the shares are sold in the enforcement proceedings and NKBM is paid from the resulting amount, Pivovarna Laško will incur a loss or damages. The amount of damages Pivovarna Laško will incur as a result of this damaging transaction cannot be assessed at this moment in time since the actual amount of damages will be known when the shares are sold in the enforcement proceedings of NKBM against Pivovarna Laško. Thus Pivovarna Laško as the legal entity incurring damages will subsequently file a claim for damages.



Comfort letter dated 31 December 2008 and 10 January 2009; Pivovarna Laško received a letter from Perutnina Ptuj on 23 November 2009 in which the latter indicated that based on the loan agreement with the companies Infond Holding and Center Naložbe, and the comfort letter of 31 December 2008 signed by the former Director of Pivovarna Laško, Boško Šrot, it had been paying liabilities on the behalf of Pivovarna Laško. Since the companies had ceased repaying the loans, Perutnina Ptuj demanded payment in the approximate amount of EUR 11 million from Pivovarna Laško based on the comfort letter. Pivovarna Laško did not acknowledge the claim as it was not acquainted with the existence of the comfort letter of 31 December 2008 nor with the circumstances and business relationships among the legal persons involved. Perutnina Ptuj filed a lawsuit for the enforcement of the aforementioned claim; Pivovarna Laško received the lawsuit on 15 February 2011 in which Perutnina Ptuj demands payment in the amount of EUR 10,116,488.71 plus interest and costs from the defendant, Pivovarna Laško. The plaintiff stated in the lawsuit that it had suffered damages since the defendant had failed to fulfil the obligations stemming from the comfort letter of 10 January 2009. Pivovarna Laško responded to the lawsuit and repudiated the claim in full, seeing no grounds for the plaintiff’s claim. By order of 22 November 2011, the Court allowed the intervention by former Director of Pivovarna Laško, Boško Šrot in the interest of the defendant Pivovarna Laško. The Court of first instance has not yet decided the claim. If Perutnina Ptuj succeeds with the lawsuit, Pivovarna Laško will be at a disadvantage and suffer a loss.

2.3.2 SETTLEMENT CLAIMS

On 6 January 2014, Pivovarna Laško received two settlement claims pursuant to paragraph 1 of Article 542 of the Companies Act (ZGD-1) filed by Pivovarna Union dated 31 December 2013 and Radenska dated 30 December 2013. The companies prepared interim balance sheets on the loss sustained during the period of the contractual group: Pivovarna Union for the period from 11 April 2012 to 26 April 2012 and Radenska for the period from 6 February 2012 to 26 April 2012. Pivovarna Laško concluded a Controlling agreement and Agreement organising a contractual group dated 27 November 2011, which were approved by the General Meetings of all companies. With effect as of 26 April 2012, Pivovarna Laško terminated both agreements in accordance with paragraph 1 of Article 539 of the Companies Act, this being one of the conditions one of the crediting banks gave to all three companies in order to restructure their financial liabilities. In its letters dated 13 February 2014, Pivovarna Laško rejected both settlement claims since they contained no appendices showing the net loss calculation confirmed by auditors.

The dependency reports of Pivovarna Union and Radenska state that due to the uncertainty concerning the corrections of the financial statements, the companies have not yet obtained the respective auditor's reports on the losses sustained for the period of the contractual group. As a result, they have not yet issued the relevant settlement claims to the controlling entity, namely Pivovarna Laško. The settlement claims will be provided when the uncertainty concerning the auditors' reports are explained and the settlement claims can be calculated unequivocally.

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2.5 Shareholders

PIVOVARNA LAŠKO, A PUBLIC LIMITED COMPANY OWNED BY MORE THAN 7,000 DOMESTIC AND FOREIGN SHAREHOLDERS, HAS BEEN TREADING DOWN THE PATH OF DEVELOPMENT WITH THE FUNDAMENTAL OPERATING ORIENTATION: TO OFFER CONSUMERS THE HIGHEST QUALITY BEER AND ENSURE EXCELLENT MARKET SUPPLY.

Since 1995, Pivovarna Laško has been organised as a public limited company. At the end of the 2013 financial year, it had 7,047 shareholders, which is 162 shareholders or 2.2% less than at the end of 2012. Number of shareholders

2.5.1 PILR SHARES ON THE STOCK EXCHANGE

In 2013, there was no significant trading in Pivovarna Laško (PILR) shares on the Ljubljana Stock Exchange. As in recent years, there was little interest in PILR shares also in 2013, as the average value of the share at the end of 2013 was lower than at the beginning of the same year. Such movements of the share value are also the result of the challenging economic situation. 2.5.2 OWNERSHIP STRUCTURE OF EQUITY

As of 31 December 2013, the share capital of the Company amounts to EUR 36,503,305 and is divided into 8,747,652 no par-value shares all of which have been paid in full. These are all ordinary and registered shares issued in uncertificated form bearing the PILR and PILH ticker symbols.

2011 2012 2013Shareholders at 31 December 7,492 7,209 7,047

Chain index / 96.2 97.8



Ownership structure of the equity of Pivovarna Laško

Ownership structure of the equity of Pivovarna Laško as at 31 December 2013

Ownership structure of the equity of Pivovarna Laško as at 31 December 2012

23,5%

7,1%

7,0%

7,0%22,5%

15,0%

17,9%DUBT, d. d.

Kapitalska družba, d. d.

Hypo Alpe-Adria-Bank, AG - fiduciaryaccount

Probanka, d. d.

Other legal entities

Individuals

Foreign entities

23,5%

7,1%

7,0%

7,0%26,4%

13,7%

15,3%NLB, d. d.

Kapitalska družba, d. d.

Hypo Alpe-Adria-Bank, AG

Probanka, d. d.

Other legal entities

Individuals

Foreign entities

(in %) 2011 2012 2013

Legal entities 71.3 71.0 67.1

Individuals 13.6 13.7 15.0Foreign entities 15.1 15.3 17.9

Total 100.0 100.0 100.0



Major shareholders of Pivovarna Laško

On 20 December 2013, NLB transferred to Družba za upravljanje terjatev bank, d. d., Ljubljana (the Banking Asset Management Company - BAMC) its total holding of 2,056,738 PILR shares, accounting for a 23.512% stake in the company.

As at 31 December 2013, the ten biggest shareholders possessed a total of 6,154,377 shares or 70.4% of total share capital, the same as at 31 December 2012.

(at 31 December 2013) no. of shares in % position

DUBT, d. d. 2,056,738 23.512 1.Kapitalska družba, d. d. 617,488 7.059 2.Hypo Alpe-Adria-Bank, AG - fiduciary account 615,515 7.036 3.

Probanka, d. d. 614,911 7.029 4.GB, d. d. Kranj 542,448 6.201 5.

Skagen Kon-tiki Verdipapirfond 499,286 5.708 6.NFD1, mešani fleksibilni podsklad - jug 439,557 5.025 7.Abanka, d. d. 285,463 3.263 8.

Banka Celje, d. d. 252,500 2.886 9.Banka Koper, d. d. 230,471 2.635 10.Total - 10 largest shareholders 6,154,377 70.355

Other minority shareholders 2,593,275 29.645Total - all shareholders 8,747,652 100.000


NLB, d. d. 2,056,738 23.512 1.Kapitalska družba, d. d. 617,488 7.059 2.

Hypo Alpe-Adria-Bank, AG 615,515 7.036 3.

Probanka, d. d. 614,911 7.029 4.

GB, d. d. Kranj 542,448 6.201 5.Skagen Kon-tiki Verdipapirfond 499,286 5.708 6.

NFD1, delniški podsklad 439,557 5.025 7.

Abanka, d. d. 285,463 3.263 8.

Banka Celje, d. d. 252,500 2.886 9.

Banka Koper, d. d. 230,471 2.635 10.Total - 10 largest shareholders 6,154,377 70.355

Other minority shareholders 2,593,275 29.645

Total - all shareholders 8,747,652 100.000



Ownership structure of the equity of subsidiaries

Biggest shareholders of Radenska (according to the excerpt from the Central Securities Clearing Corporation (KDD))

* The ownership of DBS of 11.853% of the shares of Radenska is also registered with the Central Securities Clearing Corporation (KDD). In substance, this regards a redemption right, whereby under the contract, the voting rights arising from the ownership lie with the temporary seller, that is, Pivovarna Laško, which as at 31 December 2013 had a total of 93.911% of the voting rights. For further information, see Section 5.4.6 NOTES TO INDIVIDUAL ITEMS IN THE FINANCIAL STATEMENTS, Financial investment into the subsidiary Radenska.

As at 31 December 2013, the ownership stake of the parent company, Pivovarna Laško in Radenska amounted to 82.058% and was the same as at 2012 year-end.


Pivovarna Laško, d. d. 4,153,644 82.058 1.*DBS, d. d. 600,000 11.853 2.

Slovenijales, d. d. 22,062 0.436 3.

Radenska, d. d., Radenci 19,236 0.380 4.

Slatnar Sonja 2,063 0.041 5.4 F, d. o. o. 1,820 0.036 6.

Žnidar Robert 1,527 0.030 7.

Vrankar Anton 1,500 0.030 8.

Potočnik Marko 1,451 0.029 9.

Camlek Marija 1,164 0.023 10.Total - 10 largest shareholders 4,804,467 94.915

Other minority shareholders 257,389 5.085



Pivovarna Laško, d. d. 4,153,644 82.058 1.*DBS, d. d. 600,000 11.853 2.

Slovenijales, d. d. 22,062 0.436 3.

Radenska, d. d., Radenci 19,236 0.380 4.

Slatnar Sonja 2,063 0.041 5.Vrankar Anton 1,500 0.030 6.

Potočnik Marko 1,451 0.029 7.

4 F, d. o. o. 1,260 0.025 8.

Camlek Marija 1,164 0.023 9.

Molj Bojan 1,162 0.023 10.Total - 10 largest shareholders 4,803,542 94.897





Biggest shareholders of Pivovarna Union

As at 31 December 2013, the ownership stake of the parent company Pivovarna Laško in Pivovarna Union increased from 97.922% to 97.928%.


Pivovarna Laško, d. d. 441,765 97.928 1.May Alexander 3,652 0.810 2.

Skandij, d. o. o 384 0.085 3.

Potočnik Marko 118 0.026 4.

Pintar Nina 100 0.022 5.Molj Bojan 94 0.021 6.

Srakar Drago 86 0.019 7.

Pivovarna Union, d. d. 69 0.015 8.

MIF Invest, d. d. 60 0.013 9.

Slatnar Sonja 50 0.011 10.Total - 10 largest shareholders 446,378 98.950


Total - all shareholders 451,114 100.000


Pivovarna Laško, d. d. 441,740 97.922 1.May Alexander 3,652 0.810 2.

Skandij, d. o. o 384 0.085 3.

Potočnik Marko 118 0.026 4.

Pintar Nina 100 0.022 5.Molj Bojan 94 0.021 6.

Srakar Drago 86 0.019 7.

Pivovarna Union, d. d. 69 0.015 8.

MIF Invest, d. d. 60 0.013 9.

Slatnar Sonja 50 0.011 10.Total - 10 largest shareholders 446,353 98.945


Total - all shareholders 451,114 100.000



Ownership interests in Jadranska pivovara – Split

As at 31 December 2013, the ownership stake of the parent company Pivovarna Laško and of other minority shareholders in Jadranska pivovara – Split is the same as on the last day in 2012.

Ownership interests in Vital Mestinje

As at 31 December 2013, the ownership stake of the parent company Pivovarna Laško and of other minority shareholders in Vital Mestinje remains unchanged compared to the previous year.

Ownership interests in Delo

As at 31 December 2013, the ownership stake of the parent company Pivovarna Laško and of other shareholders in Delo remains unchanged compared to the previous year.


Pivovarna Laško, d. d. 5,396,932 99.460 1.Other minority shareholders 29,285 0.540 2.Total - all shareholders 5,426,217 100.000

(at 31 December 2013) in % position

Pivovarna Laško, d. d. 96.920 1.

Other shareholders 3.080 2.Total - all shareholders 100.000


Pivovarna Laško, d. d. 539,536 80.834 1.Radenska, d. d., Radenci 127,928 19.166 2.Total - all shareholders 667,464 100.000



Balance of shares and stakes of the Management Board members of Pivovarna Laško in the share capital of the Company as at 31 December 2013

Balance of shares and stakes of the Supervisory Board members of Pivovarna Laško in the share capital of the Company as at 31 December 2013

The other Members of the Supervisory Board were not holders of PILR (Pivovarna Laško) shares as at 31 December 2013. Increase in the share capital

On 20 June 2013, the General Meeting of Pivovarna Laško discussed increasing the share capital of the Company by cash contributions, but the resolution was not adopted.

Authorised and conditional capital

The General Meeting of the Company did not take any decisions regarding the conditional increase in share capital or regarding authorised capital in 2013. 2.5.3 SHARES

The shares of Pivovarna Laško with the PILR ticker symbol have been quoted on the regulated securities market of the Ljubljana Stock Exchange since 1 February 2000 as ordinary shares. As of 31 December 2013, the share capital of the Company amounts to EUR 36,503,305 and is divided into 8,747,652 no par-value shares. 8,611,481 shares bearing the PILR symbol and 136,171 shares bearing the PILH symbol were registered in the central register of the Central Securities Clearing Corporation (KDD) in Ljubljana as at 31 December 2013.

(shareholder) Membership No. of shares Participation in %

mag. Dušan ZorkoChairman of the

Management Board 3,019 0.0345

Marjeta ZevnikMember of the


Mirjam HočevarMember of the


Mirjam HočevarMember of the


Matej OsetMember of the


Total 11,481 0.1313

(shareholder) Membership No. of shares Participation in %

Bojan CizejMember of the

Supervisory Board 3,180 0.0364

mag. Dragica ČepinMember of the

Supervisory Board 3,413 0.0390Total 6,593 0.0754

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2.5.4 FINANCIAL CALENDAR FOR 2014

General Meeting Expected to take place between June and August 2014.

Dividend entitlement If the General Meeting decides to distribute dividends, the shareholders who have

been entered into the Central Securities Depository maintained by the KDD on the reporting date determined in the decision on the use of net profit, will be entitled to dividends.

Dividend payment No later than 60 days after adoption of the resolution to pay out the dividends. ANNUAL REPORT

The Company should publish the Annual Report within four months at the latest following the conclusion of the financial year, namely by 30 April. HALF-YEARLY REPORT

The Company should publish a half-yearly report for the first six months of the financial year as soon as possible and no later than two months following the end of this period, namely by 31 August. OTHER QUARTERLY REPORTING

The Company should also publish quarterly reports on the first three and nine months of operations (quarterly reporting). The quarterly reports are to be published no later than two months following the end of quarterly accounting period (31 May and 30 November).



2.6 Sales and marketing

IN ACCORDANCE WITH OUR FIVE-YEAR BUSINESS STRATEGY AND THE UTILISATION OF THE SYNERGIES OF THE JOINT PERFORMANCE OF ALL COMPANIES IN THE GROUP WE SUCCESSFULLY MAINTAIN OUR MARKET SHARES ON THE DOMESTIC MARKET AND ACHIEVE AMBITIOUSLY SET SALES OBJECTIVES ON FOREIGN MARKETS.

2.6.1 SALES OF THE LAŠKO GROUP

In 2013, the Laško Group (Pivovarna Laško, Pivovarna Union, Radenska, Vital and Birra Peja) sold 2.8% more than in 2012, which was in line with the plan. The growth of supermarket brands was noted in all beverage segments.

2013 was characterised by negative macroeconomic indicators. Greater unemployment, additional tax burdens and a decline in purchasing power have all influenced greater saving. The economic situation has a great impact on customer expectations and changes in purchasing habits. Customers are ever more cautious, while prices are impacting purchasing decisions more and more. Customer attitudes to brands have changed and are becoming much more rational. Changes in the consumption structure reveal a growth in the discount supermarket segment and customer inclination towards supermarket brands.

The economic situation has brought about changes in retail and has completely transformed the business environment. Payment indiscipline is on the rise; retailers are reducing the number of different products offered and are above all maintaining lower inventory levels, while more and more products are sold in various promotions.

Despite more difficult operations, we have successfully maintained our market shares on the domestic market and have achieved ambitiously set sales objectives on foreign markets in accordance with our five-year business strategy and the utilisation of the synergies of the joint performance of all companies in the group. Quantitative sales of the Laško Group on the domestic market and on foreign markets

Index Index(in hl) Sales in 2013 2013/2012 2013/2013 plan

Beer 2,231,923 104.9 100.8

Water 1,075,870 98.3 96.4Soft beverages 587,144 103.6 103.1

Other alcoholic beverages 2 0.7 /

Total 3,894,939 102.8 99.9



MARKETING AND DEVELOPMENT

BEER

Laško Group

In 2013, most emphasis was placed on sponsoring the largest sports event in Slovenia - the Eurobasket championship. Activities included sports and music events organised in Slovenia, Croatia and Bosnia and Herzegovina through the BasketPartyBus. We also took advantage of our sponsoring of Eurobasket 2013 by organising points of sale promotions. We organised co-marketing activities together with retailers and food & drink establishments.

At the Laško Group level we organised the "Vrni se" ("Return me") project aimed at encouraging customers to purchase returnable packaging. Communications were mainly focused on points of sale in cooperation with retailers. This project represents the continuation of the Laško Group's corporate social responsibility, combining environmental guidelines and a consumer-friendly offering. We launched a new product on the Slovenian market in June - a user-friendly ergonomic case for 10 returnable bottles. At the REGPACK regional competition, our new case was declared best packaging in the region, while we were also awarded the WORLDSTAR award for best packaging.

We also took part in the prestigious international quality competition Monde Selection, where the Laško Zlatorog and Union ale were awarded gold medals, while Radler even received the large gold medal.

Pivovarna Laško

As part of our sponsoring of the Eurobasket championship we redesigned the Zlatorog bottle and can in Slovenia and Croatia and organised a competition, thus strengthening the brand's position and positive image with its customers.

We designed a new corporate TV spot with the "Full of Pride" slogan, and organised a billboard campaign with the "Proud of" catchphrase, thus emphasizing all the advantages of the Laško brand (sponsoring, the Pivo in cvetje festival, quality), and the quality awards we have received. This advertising campaign ran from May to the end of August. In addition to Zlatorog, our media activities also included: a competition, Malt, Light, Radler and the "Gremo v hribe" ("Off to the mountains") project. In June we launched the redesigned corporate website www.lasko.eu.

In Italy we organised a brief marketing campaign using the "Laško, Spirito Creativo" slogan; the campaign ran in June and July.

In Croatia and Bosnia and Herzegovina we repeated the "Moj trenutak, moj užitak" campaign, comprised of TV and FaceBook campaigns. The campaign ran in May and June 2013.

Other major projects that were provided media support include: Pivo in cvetje – the complete media mix, Sarajevo Film Festival, sponsoring and activation projects (RK Celje, NK Maribor).



Pivovarna Union

Most of the marketing activities, including the competition that was held between April and October 2013, were geared towards the Eurobasket championship. In addition, we ran a new corporate TV campaign for Pivovarna Union, thus improving brand recall. Advertisements were also published in the media, on the Internet and CL.

In the shandy segment we modified the design of Union's alcohol-free lemon-elderflower Radler, and marketed the product through a CL and TV campaign aimed at younger customers. At the end of the year we drafted and tested the redesigned brand for this shandy segment.

In late 2013, preparations were under way at Pivovarna Union to celebrate the brewery's 150th anniversary. Thus in December we launched a special promotional packaging of specialist beer with an anniversary motif as the introduction to communications in 2014. We also launched the project of organising our own pub in the old malt facility, which will be opened in autumn 2014.

NON-ALCOHOLIC BEVERAGES

Pivovarna Union

In early 2013 we launched the new Sola Ananas (pineapple) product in a plastic bottle, supported by BB ads, promotion and sampling. In June we added a new cola flavour product to the successful range of Sola ice teas, supported by a small advertising campaign and points of sale activities. We organised a prize competition entitled "Z dobro družbo se daleč pride" for the complete range of ice teas, which were advertised through the caps of Sola products, as well as through BB, Internet, FB and bus advertisements.

During the Eurobasket 2013 championship we launched redesigned Sola peach and cranberry products with basketball players Dragić and Blažič on the label, which were received well by customers. We began the new school year with the "Sola ni šala" campaign that ran on BB and the TV.

We developed a modified Sola Ice Tea Peach product for the Albanian market, comprising a new design and flavour adapted to the market. This product is produced under licence by Birra Peja.

Radenska

A new advertising campaign "VSE ZA ORO" was organised for the Ora group of products, aiming to re-launch the Ora brand and the new flavour, Ora Red. The complete Ora brand was advertised on the TV, Internet and radio, with emphasis on the new flavour. The new Ora flavour was also supported at points of sale with tastings and customer give-aways. In 2013, a few FB activities were organised, attracting a somewhat younger target group. The "Pisma Dedku Mrazu" application was one of the most successful.

Pepsi Cola – in 2013 we focused on retail BTL activities, digital and radio advertisements. We promoted the new global Pepsi slogan ("LAJF JE MOJ") and visuals. We ran three



radio campaigns linked to our sponsoring deals. Throughout the year we constantly promoted sales through sales activities at all major supermarkets.

In May we launched the new apple and kiwi ACE Radenska flavour. The product received support in the form of print advertising, tastings at supermarkets and events promotion.

Vital

At Vital we completely redesigned the Frupi juice drink range (flavours include apple, orange, peach and pineapple), switching to a one-litre packaging instead of the existing two-litre packaging. Despite the significant drop in sales of juice drinks in Slovenia, the first sales results of the redesigned range (the range has been on the shelves since September 2013) are encouraging.

Two flavours (lemon - 1.5l and apple - 1l) were removed from the syrup range of products and replaced with two new flavours in one-litre packaging.

Due to the severely limited funds, communication activities were focused on FB activities and point of sale trade marketing.

WATER

Laško Group

Tailored marketing activities were carried out for all brands of water and flavoured water, in accordance with the annual plan and the goals. Each brand addressed its customers in its own tone of communication, both in the media and at points of sale, depending on the funds available.

The project aimed at ensuring the active and visible exposure of each brand of water at points of sale was carried out throughout the year at all major supermarkets and is one of the largest common projects of the water group of products of the Laško Group. We also carried out the group promotion of products and new water brands by handing out free samples during the Eurobasket championship, while we presented the "Story of the bottle" containing environmental contents on PET materials to schools and kindergartens at educational workshops.

Radenska

Radenska Classic and Radenska Light; during the winter sports and Eurobasket championship we ran advertisements featuring water sources on the Slovenian National Television and in print media. In September we began activities aimed at celebrating the 180th anniversary of discovering the first spring, which encompassed print advertisements, online advertisements, fed advertisements; BB at Bonacca. We also organised sales promotions at points of sale.

We ran Radenska Naturelle advertisements on TV and Radenska Classic advertisement in the press, at events and on special billboards outside schools.



In 2013 we designed and implemented projects focused on the new Radenska IN brand. We supported the brand through an ALT campaign and BLT activities which focused on point of sale promotional activities.

We launched a new flavour (OAZA blackcurrant white tea) and advertised it in print, on FB and on the online portal, and provided support through point of sale activities.

Pivovarna Union

We drafted a new strategy and redesigned the ZA brand, and designed a new product - Za Jazzy, which was also supported in communication terms. In the main season we conducted promotional and sales activities in both the retail and horeca segments.

A mini advertising campaign ran for the Zala brand during the Eurobasket championship, supported by parallel promotional activities in city centres, on FB, competitions and through a presence and public activation at major events.

Pivovarna Laško

In November 2013 we launched the Oda spring water with a updated brand graphic image and a new packaging, the result of the project team's one year of efforts. The new Oda brand plastic bottles represent our transition to a so-called lighter shorty HDPE cap and have resulted in a reduction of the weight of both types of bottles by more than 25%. This significantly impacts a smaller carbon footprint (less raw materials and energy consumed) and a lower quantity of waste - as a company devoted to sustainability, this is one of the ways we reduce our environmental footprint.

The launch of the updated brand with its repositioning in the mainstream segment was supported with a small ATL and BTL communications campaign - TV, print, outdoor and online advertisements, and points of sale and event promotion activities. 2.6.2 SALES OF THE LAŠKO GROUP ON THE DOMESTIC MARKET

Laško Group

In 2013, despite a major fall in private consumption on the Slovenian market, we succeeded in retaining sales at last year's levels and even exceeded the annual plan. According to the Retail panel (Nielsen), 2013 saw a decline in the value of beer sales in the Slovenian market of 5.2 percentage points compared to 2012. In value terms, sales of beer brands fell by 7.9 percentage points, while sales of supermarket brands of beer (not counting discount supermarkets) grew by 14.1 percentage points. In the beer category, the greatest decline (19.8 percentage points) was recorded in the category of beer mixtures (shandy). The market's decline is also reflected in the sales of water, ice teas and fruit beverages. Despite the decline in private consumption in Slovenia we retained and even fortified the market positions of Laško Group brands.

Changes include strong competition among retailers, while even recognised brand are investing more in promotions and providing greater price discounts. Due to the ever greater price sensitivity of customers, generating huger added value for the customer while at the same time competing with the low prices of supermarket brands and the brands of other competitors proved challenging.



In our work we constantly strive to improvements since we work in an environment where it counts to be more responsive and different from others. We adapt to the market through attractive sales and marketing activities, the responsiveness and efficiency of our sales teams in the field, and by introducing new concepts and products in all categories. We actively communicate with all supermarkets and other customers on a day-to-day basis. We work together with our key customers in preparing the most effective activities for our customers, loyalty programmes, we provide final consumers with added value activities, we have introduced innovative promotional material, equipment, etc. We are focused on finding the best solution for each sales channel and aim to provide consumers with the right range of products and an interesting shopping experience.

In 2013 we focused on introducing the new standards of Laško Group products on the domestic market, as well as the PIA concept of product presence, visibility and activation at points of sale. Both were designed based on the strategic positioning of our brands, their value and quantitative sales, market position, market shares and other research. Clear and transparent standards apply to the Group's products and are the basis for high-quality points of sale implementation. Quantitative sales of the Laško Group on the domestic market

Pivovarna Laško

Sales of Pivovarna Laško on the domestic market grew by 3.4% compared to 2012, and exceeded the plan by 7.5%. Growth has been recorded in the beer segment and also in the water segment.

Pivovarna Union

Sales of Pivovarna Union on the domestic market fell by 4.4% compared to 2012, and fell behind the plan by 1.5%. Most of the drop in sales in the beer segment was recorded in the segment of beer mixes, where we managed to increase our market share despite the significant general decline in this segment. The segment of flavoured water also recorded a major fall.

Radenska

Sales of Radenska on the domestic market grew by 1.7% compared to 2012, but fell behind the plan by 0.5%. The most important segment is mineral water, where growth

Index Index(in hl) Sales in 2013 2013/2012 2013/2013 plan

Beer 1,304,794 101.9 102.8Water 857,134 98.2 98.8

Soft beverages 386,983 93.5 97.8Other alcoholic beverages 2 1.4 /

Total 2,548,913 99.3 100.6



was recorded compared to last year. We also recorded significant growth of the segment of spring waters, while the flavoured water and soft drinks segments recorded a decline.

Vital Mestinje

Sales of Vital on the domestic market fell by 5% compared to 2012, and fell behind the plan by 5.5%. The lower quantities sold are the result of abandoning some supermarket brands due to their insufficient added value. The positive results of the optimisation of the product range and re-branding of the Frupi syrups are still showing. 2.6.3 SALES OF THE LAŠKO GROUP ON FOREIGN MARKETS

Sales of the Laško Group by country - foreign markets

Laško Group

In 2013, the Laško group continued its intensive sales approach to foreign markets and at the end of the year we recorded excellent results. On foreign markets, the Laško Group sold 1.346 million hl of beverages in 2013, which is 10% more than in 2012. Despite the harsh economic conditions that also marked our export markets, 2013 was a very successful year. More intensive work and the continuation of the strategy of fostering joint participation on the markets outside Slovenia increased sales in the beer segment as well as in the segment of non-alcoholic beverages.

In 2013, sales continued to be organised at the Group level, so that the heads of markets from individual members of the Laško Group cover individual markets for all Group companies, which contributed to streamlining of the organisation. Sales promotion and the launch of new products on foreign markets are performed in cooperation with the Group marketing department. On the Croatian market the Laško Group has a presence through its company Laško Grupa, Zagreb, whose primary activity is promoting sales and being intensively involved in sales to exporters and Croatian customers. Also in Bosnia and Herzegovina the Group has its own company, Laško Grupa, Sarajevo, which coordinates the activities with the importers and principals. Since 2012, Birra Peja has also been part of the Laško Group.

The Group's export strategy consists of selling products through exporters we have established long-term business relationships with. We have also been developing partnerships with key customers on individual markets, thus ensuring the clear visibility of our brands. Supermarket or private brands also represent a significant portion of our sales on foreign markets.

Pivovarna Laško

In 2013, Pivovarna Laško sold 384.3 thousand hl of all beverages on foreign markets, exceeding last year's figure by 16%. The sale of beer is the most important and more beer was sold on most foreign markets compared to 2012. Despite the difficult conditions in the region, a decline in purchasing power and a decline in beer consumption, we exceeded our goals.



ITALY

Laško Group

Italy is the Laško Group's most important foreign market. In 2013, the Group sold 373.4 hl of beverages on the Italian market, 14.7% more than last year. The Laško Group sold most beer on the Italian market. We also sold large amounts of water and some soft drinks.

The growth in beer sales compared to the previous year is the result of intensive cooperation with importers. Most growth was the result of our enhanced presence in supermarkets and discount supermarkets, as well as greater investments in brand marketing, advertising and sales promotion. A lot of attention was placed on the recognisability of Laško Group beer brands. Increased sales of supermarket brands are also the consequence of improved production processes and a more flexible approach with regard to the range of products. The results achieved are the result of intensified activities, a constant market presence as well as active cooperation with importers and sub-distributors.

Pivovarna Laško

In 2013, Pivovarna Laško sold 120.1 thousand hl of beer on the Italian market. In 2013 we succeeded in growing sales of our own brands, which is the result of our intensified presence on the supermarket segment of the Italian market and increased marketing activities aimed at ensuring greater market visibility of our brands. Pivovarna Laško provides Danish brewery Royal Unibrew with beer manufacturing and filing services with respect to the Ceres Top Pilsner beer, which is only sold on the Italian market.

CROATIA

Laško Group

In 2013, the Laško Group exported 15.4% more beverages to the Croatian market than in the previous year, and 7.4% more than planned. The beer market recorded a decline of nearly 5%, although sales of non-returnable, mainly PET packaging is on the rise, accounting for about 35% of retail beer sales. Until 1 July 2013 we were subject to high customs duties on water imports, which impacted the value of Radenska sold. Also this year, the extremely aggressive approach of domestic water fillers can be felt, reflected in many offers and enormous investments in marketing communications. The competition remains strong also in the soft drinks segment. Adequate support activities focused on the largest customers and at promoting our products (campaigns, publications in catalogues and leaflets, palette exposure) within the scope of the marketing budget.

In Pivovarna Union we did not only concentrate on sales of products of the Group in 2013, but also filled vast amounts of Bavaria beer for the Croatian market, mainly as a result of beginning filling kegs in 2013.

Pivovarna Laško

Compared to 2012, Pivovarna Laško achieved a 32% growth of sales on the Croatian market, thus exceeding the plan for 2013. Growth in sales of supermarket brands was



also recorded on the Croatian market; we also achieved growth in this segment thanks to our cooperation with the Konzum supermarket chain. Sales of our own brands are at last year's levels, which is a very good result considering the general decline of the market.

BOSNIA AND HERZEGOVINA

Laško Group

Laško Group recorded a 41% growth in its sales on the market of Bosnia and Herzegovina compared to 2012, which is 18% more than planned. Beer sales grew by 50% compared to last year. Sales of non-alcoholic beverages were also up on last year. As on other foreign markets, sales of beer in PET packaging are also on the rise in Bosnia and Herzegovina, to which the Laško Group has adapted. This decision was one of the key factors in sales growth.

An important factor for the increase in sales is the continuation of our concept of market activities, which began in 2011. All the distributors sell the entire range of products of the Group and thus our coverage and distribution have significantly improved.

In addition to selling Laško Group products, in 2013, Pivovarna Union filled Bavaria beer for the market of Bosnia and Herzegovina.

Pivovarna Laško

In 2013, Pivovarna Laško increased beer sales on the market of Bosnia and Herzegovina by 21% compared to 2012.

KOSOVO

Laško Group

In 2013, the Laško Group sold 3.4% more on the market of Kosovo than in 2012, which was more than planned. Beer and water sales remained at the 2012 level, while plans were exceeded in the non-alcoholic beverages segment, recording 18.8% growth.

In 2012, Birra Peja became a subsidiary of the Union Group and consequently part of the Laško Group. Birra Peja exports Pivovarna Union products to the market of Kosovo, and continued to produce Sola peach ice tea under licence for the markets of Kosovo, Macedonia and Albania in 2013. Birra Peja also continues to bottle Laško Zlatorog beer sold on the markets of Kosovo, Macedonia and Montenegro. In addition, Birra Peja also sells its own brand beer and Akull spring water on the market of Kosovo.

The growth in sales in 2013 compared to 2012 is mainly the result of the growth in sales of Laško beer and Sola soft drinks. Sales of Radenska mineral water fell short of the plan due to the new competition of domestic water bottlers who are entering the market with very low prices. The growth in sales of Sola soft drinks is the result of systematically purchasing shelf space at all points of sale, direct marketing at the shelf and co-marketing activities with the favourite crisps on the market of Kosovo, Patos.



Pivovarna Laško

In 2013, Pivovarna Laško recorded a 31% growth in its exports to Kosovo compared to 2012. Only a part of the product range of Pivovarna Laško is exported to Kosovo, especially for the horeca segment, while the remaining products are filled by Birra Peja under licence.

OTHER MARKETS

Laško Group

In 2013, the Laško Group sold 3.6% more than in the previous year. Other markets represent 15.6% of the total sales on foreign markets. Sales on the markets of Austria, Serbia, Hungary, Macedonia and Montenegro were actively promoted. Other markets where the Laško Group also sold its products included Malta, China, the USA, Canada, the Czech Republic, Sweden, Slovakia, Albania, Greece, Germany, Switzerland, France, Great Britain, Chile, Latvia, Australia, Romania, Poland, the Netherlands, the UAE and Libya.

In addition to selling Laško Group products, in 2013, Pivovarna Union filled Bavaria beer for the markets of Serbia and Bosnia and Herzegovina.

Pivovarna Laško

Compared to 2013, Pivovarna Laško achieved a 14% growth of sales on other markets. In addition, Pivovarna Laško sold its products on the markets of Austria, Hungary, Montenegro, the USA, and Canada.



2.7 Procurement

GOOD AND CORRECT RELATIONS AMONG GROUP COMPANIES, A COMMON AND UNIFIED APPROACH AND CONSTANT COMMUNICATION WITH OUR SUPPLIERS REPRESENT THE PATH WE PLAN TO CONTINUE TO FOLLOW IN 2014.

We continued coordinated activities of the purchase offices of the Laško Group in 2013. Such cooperation has allowed us to achieve great synergy effects in the past. Good and correct relations among Group companies, a joint and unified approach and ongoing communication represent the path we intend to nurture and continue to follow. To further improve the effects of procurement, the goal should be to centralise the procurement activities of all Laško Group companies and apply a unified approach to our suppliers.

In 2013, the supply of all types of materials was good. In general, the supply in 2013 was better than in the past few years, which most likely reflects lower consumption in this part of Europe.

The offer of all basic raw materials in 2013 was good and there were even some surpluses of particular raw materials. Interestingly, we noted that the prices of most raw materials (malt, corn) were very high in 2013. A very special situation pertains to hops. Since both breweries exclusively use Slovene hops we are dependent on the situation in Slovenian hop growing that in recent years was based on speculation and a failure to comply with the contractual provisions. Traditionally, long-term contracts were concluded based on the fact that hop production is a long-term process of investing into cultivars. Slovenia mainly produces aromatic sorts of hops that give Slovenian beer its specific flavour. In 2013, the inventories of our several-year-old hops fell. Hops production was below average, and prices increased by 10%.

The agricultural production in 2013 was below that in 2012, while the quantities of beer-making barely of an appropriate quality for malt were below average in some parts of Europe. The main issue was the high protein content, which negatively impacts beer stability. As a result, the prices of malt sky-rocketed in 2013. Being a commodity exchange product, the situation with corn continued in the first half of 2013, while prices began falling in the second half of the year, recording a 25% year-on-year drop. In terms of maize meal procurement we are still 100% tied to the Serbian market, where prices are still 20% below those in the EU. In the final quarter of 2013 we began purchasing beer-making barley, which is expected to replace most of the corn meal used in the future.

The 2014 forecasts are more favourable, as lower prices of raw materials are expected on the global market. However, agriculture is highly weather-dependent.

Sugar is a very important raw material for the Laško Group. Since last year we have been very successfully procuring it through a purchase consortium led by Mercator. They ensure the relevant quantities, quality, timely deliveries and an acceptable price. We will continue to purchase sugar in such a fashion in 2014. In the final quarter of 2013, sugar prices fell significantly, resulting in major savings for the Group. We have already secured even more favourable conditions for 2014.



In terms of packaging materials, the 2013 prices were stable and contractually agreed. Major fluctuations were only recorded with respect to materials tied to the petrochemical industry, oil prices and dollar fluctuations. The prices of preforms, foils and PVC caps were harmonised with the ICES or Plats index for the relevant material on a monthly or quarterly basis. At 2013 year-end, granulate prices were very favourable.

The prices of labels, cardboard, glue and other strategic materials were agreed in contracts and stable; furthermore, on the annual level there were no increases compared to 2012.

Global trends on the market of PET granulates were slightly more favourable in 2013. In individual months we recorded a slight increase in the price of granulates at the beginning of the year, followed by a decrease. The average purchase price in 2013 was 2% lower than the comparable price in 2012.

In 2013, we recorded a significant shift on the energy market (electricity, gas). Lower prices in 2013 translated into significant savings.

Despite the general economic situation, the deepening of the crisis in Slovenia and our continued efforts to resolve the solvency position of the Laško Group, we have succeeded in retaining the trust of our suppliers. Worsening liquidity, payment delays and the uncertainty concerning our future raised concerns among our suppliers. We are faced with the fact that more and more suppliers require instruments to secure receivables and are setting authorised debt limits. Due to the good relationships with our suppliers we have now secured normal supply conditions. In 2013, we managed to additionally extend or at least maintain long payment deadlines with the vast majority of our suppliers.

The joint cooperation of the procurement departments of Laško Group companies continues, which in the past has generated goods results and resulted in certain synergies. Good and correct relationships among the Group’s members, a joint and unified approach and ongoing communications form the path we intend to follow also in 2014.

In 2013, we were successful in managing costs by reducing and optimising inventories, replacing certain materials with alternatives and securing longer payment deadlines. In 2013, we managed to retain the costs of supplied materials at the level recorded in 2012.

With regard to the activities to preserve a human-friendly environment, we will make significant efforts to use ecologically suitable materials which preserve the natural environment. In the procurement processes this predominantly involves handling various types of packaging comprised of a variety of materials and the collection and recycling thereof. Priority must be given to the use of lighter packaging, the use of all types of packaging with the addition of recycled materials and similar. Raising environmental awareness is a constituent part of our operations.



2.8 Quality and standards

THE NON-CONFORMITIES IDENTIFIED DURING OUR INTERNAL QUALITY AND SAFETY ASSESSMENT WERE FOLLOWED BY SUITABLE CORRECTIVE ACTIONS THAT ELIMINATED THE RISKS OF NON-CONFORMITIES OR MITIGATED THEM TO AN ACCEPTABLE LEVEL.

An internal quality and safety assessment was carried out in 2013 in all Group companies in accordance with the legislation in force and with our internal by-laws. Any non-conformities identified were followed by suitable corrective actions that eliminated the risks of non-conformities or mitigated them to an acceptable level.

In the area of individual supplier control, the technologists and representatives of quality control and procurement conducted several reviews of our suppliers of raw materials and intermediate goods. The quality control departments of Pivovarna Union and Pivovarna Laško also perform quality control of raw materials and the final products of Birra Peja.

Based on quality reviews of our distribution centres we have intensively begun resolving issues that are not visible during the process itself (hidden defects). These issues include broken handles of plastic bottles used in the non-alcoholic programme and the poor image of returnable bottles due to wear and tear. 2.8.1 PIVOVARNA LAŠKO

We controlled input materials in accordance with the plan of control of malt, corn meal, hops and barley. We reached an agreement with the supplier Sladovny Soufflet to provide a pre-sample before each delivery, which will be approved or rejected in light of the result of our analyses. We also have such arrangements in place with Malteurope, supplier of light malt, and they have proved appropriate. We also visited our corn meal suppliers in May 2013, namely Agroposlovi, Žitko and Granexport (Serbia). Occasionally, minor deviations in terms of fat content are still found with respect to corn meal supplier Žitko. No major deviations were recorded during our laboratory control of intermediate materials such as bottle caps and labels. However, in light of the notifications received from the bottling plant, in 2013 we did issue some warnings and file some complaints with our intermediate materials suppliers due to deviations from the agreed standards.

Control of individual phases and in-process control

In terms of process control we continue to constantly monitor the oxygen content of our final products. Together with the staff of the bottling plant we have managed to optimise the oxygen content while filling certain PET and other packing (e.g. 0.25 l), which were most at issue in the past.

In terms of our control of individual phases, most deviations were noted with respect to the microbiological control on line ST1; in addition, we spent a lot of time and conducted many controls on filling Malt beverages.



The tanks of beer that are filled in Pivovarna Laško and then transported to the filling plant Dines duo in Zagreb were also subject to our control of individual phases, mostly with respect to microbiological and chemical testing.

In 2013 we introduced the quick swab method, which are also sampled by heads of shifts of the bottling plan in addition to the laboratory. This method has been proven successful and effective, as the results are quickly obtained and clear for the employees charged with production line cleanliness to see. As a result, production line cleanliness is better controlled, which is also important due to the ageing of the bottling equipment.

In 2013 we increased the frequency of microbiological control of fermenting and maturing beer.

Control of finished products

In 2013 we continued to maintain a Q (SAP) inventory of products which are most sensitive in terms of safety (e.g. spring water, Malt, Radler, PET beer).

We organised fifty-five regular tastings in 2013, and took 477 samples of beer and other beverages. The tasting group is comprised of 14 members. All of them participate in the Flavoractiv scheme, which is used to verify each taster's ability to determine when beer is of an insufficient sensory quality. We also organised Sensory Training in 2013: Descriptone Flavour Profiling (FlavorActive)).

Control of drinking water

Control of drinking water is performed according to the plans defined in internal and legislative rules. In 2013 we re-acquired the waterway management certificate (Codex alimetarius CAC/RCP 1-1969, Rev. 4-2003). As part of the assessment of our waterway HACCP system, one non-conformity was identified, which has since been resolved. There were no issues in terms of ensuring safe drinking water with respect to the Laško water system. In future we will continue to control the quality of drinking water at all 12 water systems according to the plan.

Complaints

In 2013 there were no major quality complaints; some complaints were received relating to individual items rather than whole batches. In most cases the reason for a complaint was inadequate storage of beer on the market that caused a change in the sensory properties of the beer.

Food safety, management standards

As part of the HACCP system management and control we performed the forecast number of internal reviews and organised training for employees and external contractors. Other activities also progressed as planned.

We re-certified the HACCP system in October. No non-conformities were discovered, and we also received fewer recommendations than the year before. In October we also underwent a food safety audit, which had no comments.



We also successfully underwent LVA assessment for the Hofer supermarket chain. We gained the same number of points as last year (95).

There were no product safety complaints in 2013.

Activities geared towards ISO 9001 and 14001 standards were intensively implemented in all areas.

Other

In 2013 we gave two lectures (presentations), namely at the EBC1 congress in Luxembourg and at the Academy organised at the 20th anniversary of microbiology studies2. 1 KOČAR, Nataša, OSET, Matej, KOŠIR, Iztok Jože, RASPOR, Peter: The effect of

successive use of lager yeast starter culture on sugar uptake dynamics from wort. 2 KOČAR, Nataša: Kje je moč mikrobiologa v živilski branži najbolj potrebna?

In 2013 we also received confirmation from the Ministry of Education, Science, Culture and Sport with respect to the project we applied with in the Research voucher public tender entitled "Vpliv zaporedne kvasovke spodnjega vrenja na njeno fiziološko stanje pri proizvodnji piva" (cooperation with the Biotechnology Faculty of the University in Ljubljana). The project began on 1 July 2013 and will be completed by the end of 2014. 2.8.2 PIVOVARNA UNION, LJUBLJANA and BIRRA PEJA, PEĆ, KOSOVO

ISO 9001, ISO 14001 and IFS standards

The assessments of conformity with the ISO 9001, 14001 and IFS standards were successfully completed in October, and as regards the IFS standard again at the higher level. Based on the findings and recommendations of the external assessments we will begin introducing key process indicators, which will be one of the gauges of our performance in the future.

The Birra Peja brewery has been certified according to two standards, namely ISO 9001 and HACCP, whose validity was successful proven last year and this year. In March of last year, internal assessment was undertaken before the external review.

Input, in-process and final control

A lot of attention was placed on the control of the suppliers of basic raw materials and intermediate materials. In 2013 we visited corn meal suppliers in Croatia and suppliers of caps and labels. These visits have improved our suppliers' understanding of our quality requirements.

In 2013 we had problems with a supplier of raw materials used in non-alcoholic beverages. The aroma was not typical and we successfully negotiated a refund. Early in the year we noted the presence of red grains in the malt of one of our suppliers, which can cause "gushing" (excessive foaming of beer). We also quickly resolved this issue in agreement with the supplier.



Any deviations determined during in-process and final control are resolved as they arise. Last year the microbiological results of in-process product testing were slightly higher than in 2012, while the results of the chemical testing were at the same level. Based on the analysis results of technology water we replaced the nanofiltration and KRO3 modules in the water preparation facility. In 2013 we gradually began using beer-making barley, which is now the main raw material used in our brand products, in addition to malt.

Birra Peja continued producing soft drinks and introduced a new own brand product exclusively for the Albanian market. A review of the production including analysis and tasting of samples confirmed that the production of our soft drinks under licence by Birra Peja last year was successful.

Process control means monitoring control devices and processes in the production and remote warehouses. Especially the latter is important as it involves testing products immediately before they are sold to the final customer. Issues include broken handles of plastic bottles used in the non-alcoholic programme and the poor image of returnable bottles due to their wear.

Due to the instability of the colour of cranberry flavour ice tea, its sale on the market of Kosovo did not go ahead. After the development department amended the formulation, the stability is now satisfactory. Last year, in agreement with the development and sales department, we prolonged the shelf life of some products for commercial reasons.

In 2013 we organised two taster training sessions. In June we organised internal training for 15 tasters, while FlavorActiva training was organised in November. We are now also included in Internetaster ring tastings. Accordingly, we will receive unidentified samples six times a year which the tasters will have to detect.

Last year we organised 167 beer and 53 BAP tastings.

Beer:

we continue to organise samplings of unfiltered beer once a week,

we have organised over 15 tastings of Slovenian breweries,

last year we made significant progress in terms of development complaints (barley, beer stability, NF).

Soft drinks range:

We determined the appropriateness of final products twenty-five times due to their deviation from our internal standards,

We tasted forcing test samples 5 times,

We tested out-of-date samples 12 times.

Complaints

The complaints index is below last year's for all product ranges with the exception of Zala canisters. The reason for this were ageing canisters, since sales had been falling for some time and no new canisters had been purchased.



Food safety

Both companies follow the HACCP principles, which is also a legal requirement in Slovenia. The Food Safety Agency verified samples of our products on the market and had no comments.

The HACCP team met 17 times. We discussed risks in introducing new products in terms of extending use-by-dates in light of the IFS standards, as well as the risk of sabotage.

There were no complaints due to the safety of products. 2.8.3 RADENSKA

Management standards

An integrated system of quality management has been introduced at Radenska that combines quality management, environmental and energy management, food (product) safety and safety and health at work.

We recognise customer and consumer requirements in accordance with a process approach in accordance with the ISO 9001 : 2008 requirements.

The HACCP system is an integral part of our management system used to determine, assess and monitor risks relating to the safety of final products, and thus our customers and consumers. We introduced QM index and customer complaints monitoring in the SAP system in 2013.

We are striving to constantly reduce product-related complaints. In 2013 there were no product withdrawals or recalls due to health hazards.

The Company has acquired the relevant environmental permit. The environmental permit focuses on the Company's sustainable development. It is supported by IS0 14001 : 2004 standard requirements and by implementing the environmental goals and programmes for 2013, as well as in the long-term.

In 2013 we noted no extraordinary circumstances or complaints from the nearby inhabitant or any other groups of interested public.

We are gradually integrating ISO 50001 requirements in our management system, in accordance with our abilities.

We ensure the workplace health and safety of all employees in accordance with applicable legislation and BS OHSAS 18001 requirements.

The introduced system of innovation has already born fruit. In 2013, four innovative ideas were presented to improve the production process. All have already been put in place.

Internal assessments have confirmed the findings of the external audits of the integrated system of quality management + HACCP and the system of environmental management by the certification body (SIQ) and also by the assessments of our customers and



partners (Hofer, Pepsi) who audited us according to the requirements of the IFS standard. We retained our A supplier rating and even improved our result compared to last year.

Input, in-process and final control

There were 18 complaints to our suppliers recorded in 2013. These complaints resulted in us returning the complete shipment to the supplier. Many more warnings were issued with respect to the quality of the supplied materials.

The quality control department of Radenska has three laboratories, all of which aim to ensure the quality and safety of our products. Before releasing a product to the market, we generally perform at least a minimal analysis, which is used to confirm the health safety and compliance of products.

We monitor the microbiological conformity and quality of our products through indices. The following goal was set for 2013: both indices (NMV and BP) should be above 75. We actually exceeded this goal:

NMV: 92.81 and BP: 93.63,

with only some particular sub-indices standing out, especially the cleanliness of production lines, where the aseptic line stood out.

Most non-conformities determined as a result of monitoring line technology processes relate to the age of the lines. Consequently, many interventions into the technology processes are needed, which impact quality:

imprecise CO2 dosing in the carbonated NMV and BP programmes – high process instability,

unstable processes in terms of brix and citric acid parameters,

non-compliance of the technology regime of line cleaning - insufficient line cleaning and thus an after-taste in products,

most microbiology deviations relate to initial bottling due to the line being inadequately prepared.

Inspection and other reviews

In 2013, official inspection reviews failed to determine any major non-conformities.

We were warned of our non-compliance with Regulation (EC) No. 1924/2006 of the European Parliament and of the Council dated 20 December 2006 on nutrition and health claims made on foods with respect to the Radenska Plus Body Shape label; the warning referred to the general health clam "bodyshape" and the nutrition claim "enriched with l-carnitine". The non-conformities were rectified and the proceedings were halted.

The inspection authorities also warned us of the non-conformity of the Pepsi Cola and Hofer Cola labels with the Rules on nutritional labelling of foodstuffs. The deficiencies of the product labels were rapidly rectified and the proceedings halted.



PepsiCo conducted three audits, twice by PepsiCo representative Mr Thedy, and once by the authorised accreditors AIB. No major deviations were identified in any of the three audits.

Hofer performed a review according to the IFS standard. The final assessment was very good, excellent even.

An audit was performed by IKC (the Institute for the control and certification of organic products). No non-conformities were found.

An inspection of our compliance with regulations governing packaging that comes into contact with food was performed (FCM). No non-conformities were found.

Two audits were performed in the field of the safety of drinking water. No non-conformities were found.

Complaints

In 2013 we began recording complaints in the SAP IT system. This allows us to continuously and systematically record and resolve complaints. The number of complaints is at the level of 2012. 2.8.4 VITAL MESTINJE

Last year we introduced more stringent control of input raw materials and increased the frequency of final product sampling, thus ensuring the greater safety and quality of our products.

In terms of microbiology, we partly began using pre-prepared culture media. This saves time, allowing us to focus on additional analyses (using enrichment culture media). We are beginning to use luminometers in controlling line and surface cleanliness, allowing us to immediately assess the hygiene and cleaning efficiency.

In the quality controls process we began using an oximeter to monitor oxygen levels in water and beverages as we are currently investigating the possibility of using nitrogen to reduce the content of oxygen in our final products, which will enhance their quality.

There were no complaints, withdrawals or recalls.



2.9 Investments

THE OBJECTIVE OF THE INVESTMENT AND MAINTENANCE PROJECTS IS TO ACHIEVE OPTIMAL PERFORMANCE OF THE FILLING LINES AND EFFECTIVE CONTROL OF THE USE OF FUNDS IN MAINTENANCE.

Laško Group's strategic orientation in the area of production, maintenance, investments, energy and ecology is based on the achievement of optimal productivity, balance between adaptability and performance of individual parts of the production process, the achievement of synergy effects between the companies in the Group, the integration of information technology into production processes, potential modular extensions of a certain set of production and focusing on investments with the return on invested capital as high as possible. Thus, this development and innovation orientation in all areas of beverage production was also continued in 2013. Furthermore, the sustainable development objectives were also consistently achieved.

In 2013, we succeeded in producing and filling the entire range of products in the Laško Group and at the same time introduced some very important novelties that confirmed our development orientation and the innovativeness of the Group’s development teams. It has been established that the quality standards of the companies in the Group exceeds the norms and standards of the suppliers who also supply their products and services to globally renowned companies in our industry.

Irrespective of the obsolescence of certain parts of our production equipment and limited investments, we have achieved a rather optimistic objective of securing optimum maintenance costs. We carried out all preventive maintenance works to ensure the smooth operation of production capacities during the seasonal months.

In 2013, we tried to ensure improved utilisation of capacities and at the same time merge production programmes where possible and to provide the basis for future investments in individual companies in the Group by optimising the time necessary for the realisation of orders in the sales department, inventories and logistic processes, which is in accordance with the policy of optimising and rationalisation of production lines.

We continued to optimise the use of materials and raw materials and strived for all savings defined in our 2013 plan.

The projects of energy management and the establishment of complete control over the use of individual energy products enable us to achieve lower specific use of individual energy products and consequently lower costs although the prices of energy products depend on the stock market conditions. Energy and environment optimisation of production processes was performed in a certain part in cooperation with renowned Slovenian institutes and well established providers of such services. 2.9.1 INVESTMENTS IN PIVOVARNA LAŠKO

The following investment projects were carried out and successfully finalised in 2013:

New ST3 labelling format - paper-backed label: the project was completed in February 2013;



Purchase of the Kalinšek facility: finalised in February 2013;

Separation of beer and yeast VMF /start-up of a membrane filter head: completed in May 2013;

Manufacture of tools for 10 x 0.5 l cases / first deliveries of new cases: the project was completed in May 2013;

From January to December we delivered a total of 250,000 new 10 x 0.5 l cases. The first marketing tests involving the new packaging were carried out. At the REGPACK 2013 competition, our new case was declared the best packaging in the region.

Reconstruction of pressure tanks - acceptance of road tankers: the project was completed in June 2013.

Reconstruction of the PET bottling line - new plastic bottle design for "Oda": completed in June 2013.

New plastic bottle design (1.5 l and 0.5 l) was developed and approved. Due to their new modern design, new cap and much lighter weight (one-quarter reduction in weight) the new plastic bottle meets all market requirements as well as optimum production parameters demanded by modern times.

The new Oda plastic bottles were introduced on the market in December 2013 after the completion of the project of modification of all machinery in the PET bottling line to suit the new plastic bottle design.

Purchase of the Slimšek facility: finalised in June 2013.

Refurbishment of the pumping devices plant: completed in August 2013.

Introduction of the "Energy Management" project, which is expected to be completed in 2014.

Introduction of the "Rational use of biogas" project. The project was completed in December 2013 with the installation of a new biogas burner on K2 steam boiler.

Along with all other planned projects, activities involving reconstruction of the ST2 bottling line - dry part continued over the entire year. In addition to replacement of obsolete equipment, the project, once completed, will enable products being packaged in the new 10 x 0,5l cases.

In August we completed preparatory work on all technical, technological and economic parameters and submitted the order to Krones, our general supplier of equipment. Equipment will be delivered in January 2014 and the installation is expected to be finished in April 2014.

SPTE 400 kWe + 500 kWe – October 2013.

A building permit for SPTE installation project was obtained in July. Construction and installation work was completed before the end of 2013. Start-up of the first 400 kWe phase will follow after successful technical inspection and issue of the operating permit in February 2014; start-up of the second phase - 500 kWe is expected in May 2014.

Eco project - pilot tests of beer press residue degradation.



Using the pilot device installed on the Pivovarna Laško purifying plant, beer press residue degradation tests continued from March until November 2013 as planned. The results show beer press residue degradation of up to 60%, with energy potential of approx. 100 m3bio-gas per ton of beer press residue, which could be generated from the substrate with relevant investment in a reactor.

Some of the funds earmarked for investments were used for the purchase of refundable packaging and equipment used in sales promotion (coolers, pumping devices, etc.).

Some funds were also earmarked for the purchase of IT equipment and equipment used for various business functions.

For investment projects and capital investments in the production and technical equipment as well as commercial and IT departments in 2013, we spent a total EUR 3,574,900, which accounts for 86.52% of the funds planned for investments. 2.9.2 INVESTMENTS IN THE UNION GROUP

In 2013, we made the following investments:

purchase of the bottling line control for S5 refundable bottle, which is the crucial element in ensuring faultless products. Both devices were fixed and installed in the bottling line so that the control of filled bottles is fully functional and ensures control of the filling levels, labelling and bottle caps.

Reconstruction of the cans line to 18 pack pallets and Duess for export services is completed. The line enables additional packaging and stacking of 18 cans on trays and stacking of half-pallets to pallets.

Reconstruction of technological lines for beer during fermentation process; this allows for additional flexibility of beer lines and tanks.

Final implementation of the MEPIS system for production monitoring. The system is operational and the first data is available. The project will be accepted into production at the beginning of 2014 after elimination of minor defects and optimisation of its operation.

Modification of the production line to internally constructed case 10 on the existing equipment on the S4 line. In cooperation with KHS we began the project of renovation of the dry part of the bottling line and signed a contract for equipment supply and installation. The renovation is expected to be completed in January or February 2014.

A porch was constructed over the forklifts parking and loading area.

Purchase of 10-ka cases and bottles required that we reallocate assets earmarked for renovation of the PET bottling line and postpone the latter to the next year.

We purchased and installed a new air compressor for preparation of technical compressed air. The compressor was installed as the main compressor in the compressed air system. Due to its specific energy characteristics the compressor will provide savings on electricity consumption in 2014 and future years.



We successfully completed renovation of the façade of bottling plant I and II, replaced old opaque glass and constructed two prefabricated openings for delivery of machinery. By doing so we met requirements set by external inspections and improved the plant's appearance.

We strengthened the back plate of the fermentation plant and prevented further leakage in the fermentation plant.

Some of the funds earmarked for investments were used for the purchase of refundable packaging and equipment used in sales promotions (coolers, pumping devices, etc.).

The project "Filter for the Pall" beer was completed. The filter is operating as expected and meets all the required technical parameters. Official acceptance of the filter into production is expected in the beginning of 2014.

Some of the investments in the Union Group included the purchase of IT equipment and equipment used for various business functions.

Birra Peja, Peć, Kosovo

Increased capacities of the bottling machine from 8,000 to 12,000 cans per hour.

Increased capacities of the tunnel pasteurisation machine from 8,000 to 12,000 cans per hour.

New programmes for palletisation for packaging of beer bottles 0.33l 1/24 and 1/12; and 0.5l bottle 1/12.

Purchase of a machine for strength control of Heuft cans.

Upgrading of the washing machine by fitting a de-aeration system enabling the use of aluminium labels.

We upgraded the filling control system on the can and PET filing line with an additional control of can pressure.

We are currently drafting plans for a filling line for cans and plastic bottles.

In accordance with the medium-term investment plan, the remaining projects are pending implementation, while some are in the bids collection phase. 2.9.3 INVESTMENTS AT RADENSKA

In 2013, Radenska spent EUR 1,529,700 on investments and purchases of property, plant and equipment, which is 84.75% of the budget. We also spent EUR 55,530 on completing (implementing) some investment projects still from 2012 and an additional EUR 116,956 on purchasing refrigerators (the Hladno project), which was agreed within the Laško Group but was not forecast in the 2013 investment plan.

Below we describe the major investment projects and purchases of property, plant and equipment by Radenska in 2013:

We purchased and replaced the aged control devices for the filling level and airtightness on the Sidel-2 and TPO-2 filling lines. The old control devices were



obsolete and occasionally broke down. By their replacement we have also removed two devices that emitted radiation, thus improving the level of product control.

Implementation of the energy review and optimising the use and monitoring of energy sources. This project was launched in 2012. In early 2013 we completed the energy review and immediately implemented certain measures. We also began establishing an IT system for energy management and installed meters of energy usage at major users of the most important energy sources. This project continues in 2014.

We completed the project of procuring devices used in preparing the Naturelle natural mineral water which began in 2012. We introduced filter formation in mid-2013. This ensures the faultless preparation of NMV Radenska Naturelle for all packaging units.

We replaced part of the aged pallet conveyors used to transport empty and full packaging on the TPO-1 filling line. The old conveyors caused delays during the filling process, as well as a lot of waste due to empty packaging falling off the conveyors.

In accordance with the Energy review findings and in an aim to fulfil HACCP standard requirements we were forced to replace and regulate the aged or inappropriate lighting of part of the production and warehousing facilities (insufficient luminance, lack of light protection in accordance with HACCP requirements, energy inefficient lights). Thus we replaced the lighting in the Aseptika, PPET, UPET and Pločevinke filling facilities (approx. 2,000 m2) and in Warehouse 3 (approx. 3,200 m2). This will result in annual savings of 130 MWh of electricity (approx. EUR 11,000).

Due to the water ingress from the flat roof of the caps warehouse (approx. 460 m2) we repaired the roof and its covering (insulation + SICA lining). We were also forced to replace part of the 40 year-old attic of the filling hall due to ageing. In 2013 we replaced approx. 1,900 m2 of a total 6,800 m2. We expect to replace the rest over the following two years. The wooden attic is fairly weathered and the load-bearing elements and screws no longer keep the roofing in place. As a result, water ingress has set in the insulation, and the risk exists that the roof could be uncovered in case of heavy wind. The existing roofing will remain as it is in good condition.

In light of the fact that the average age of our forklifts is 15 years, we decided to purchase a new 4.5 ton forklift, which we expect to take delivery of in early 2014. This forklift will be driven by electricity, in contrast to our existing similar forklifts, which run on gas. Electrical forklifts are cheaper to operate due to energy costs and are more appropriate for the food industry.

Radenska's purchase of the blowing and filling bloc for the Sidel-2 filling line is its largest investment project in 2013. Although this investment was not planned for 2013, it had to be made due to issues in filling plastic bottles using the existing blowing machine on this line. The existing blowing machine was 20 years old. In 2013 we experienced difficulties regulating the furnace of the aforementioned blowing machine and the control valves of the blowing machine. The electronic



controls of the machine itself are also dated and obsolete. Due to these issues there were several market complaints in 2013 (as a result of the plastic bottles bursting).

After obtaining bids for the blowing machine and inspecting references we noted that in approximately 70% to 80% of cases, blowers are sold together with filling machines as monobloc devices. In light of the fact that both the blowing machine subject to replacement and the filling machine with rinsing device are 20 years old, we decided to replace both. The filling-blowing monobloc will have the following advantages:

no need for air transport between the blower and filler,

no need for a rinsing device (thus reducing energy and water usage),

higher energy efficiency compared to a "standard" solution,

one job position will become obsolete.

Since no funds were earmarked for this investment in 2013, we transferred funds from other investments which will thus remain unfulfilled or only partially fulfilled. We will also transfer part of the funding for this project into our 2014, 2015 and 2016 investment plans since the scope of our annual investment plans does not allow us to undertake major investments in only one annual plan. Alongside high-quality bottle production, replacing the blowing and filling bloc on this line will also significantly reduce energy used per bottle produced, also allowing us to blow lightweight plastic bottles.

Our purchases of property, plant and equipment mainly relate to replacements of obsolete equipment, while some market investments were also made.

In 2013, we spent EUR 237,452 on purchases of returnable packaging compared to a plan of EUR 194,750, recording an excess of 22.4%. This excess represents approximately 50,000 pieces of extra returnable one-litre bottles purchased. This was caused by issues in ensuring the necessary quantities of returnable packing in 2013. Due to low return rates of empty packaging from the market we experienced difficulties in filling returnable bottles and were thus forced to purchase a greater number of new bottles than planned. 2.9.4 INVESTMENTS AT VITAL MESTINJE

Due to its absolute obsolescence, the existing washing system was replaced with a new one, ensuring microbiologically sustainable and rational production.

In the PET line, our own know-how and implementation now allows us to bottle syrups up to 65°Bx. We also carried out all the necessary works on this line on our own.

The three-litre line of syrups was also additionally automated as we implemented certain applications allowing a greater quality and economy of operations.

Some minor items of property, plant and equipment were purchased for control needs (an Oxi meter, laboratory scales). A new forklift was purchased for the warehouse.



Together with the local community we concluded the pending investment in the parking lot.

2.10 Performance analysis

AT THE LAŠKO GROUP, THE 2013 FINANCIAL YEAR WAS CHARACTERISED BY SEARCHING FOR SOLUTIONS AND TACKLING THE LIQUIDITY PROBLEMS RESULTING FROM THE NON-STRATEGIC FINANCIAL INVESTMENTS MADE IN THE PAST. THE REORGANISATION, DIVESTMENT AND RESCHEDULING WILL BRING NEW FOUNDATIONS FOR FURTHER DEVELOPMENT.

2.10.1 PERFORMANCE OF THE LAŠKO GROUP (CONTINUED AND DISCONTINUED OPERATIONS)

Notes to the income statement of the Laško Group

In 2013 the Laško Group generated EUR 267 million of net sales, which is 1.7% less than in the previous year.

In the structure of sales revenues, the revenues generated on the domestic market account for 86.8% of total sales revenue (domestic market includes the markets of Slovenia and Kosovo, the registered seat of Birra Peja). Compared to the previous year, the sales revenue on the domestic market dropped by 3.7%. Sales revenues generated on foreign markets account for 12.2% of total sales revenue, which is an increase of 14.6% compared to 2012. The biggest share of revenues on foreign markets is generated on the markets of former Yugoslavia, in particular in Croatia.

Operating expenses of the Laško Group in the amount of EUR 265.2 million represent a 3.3% increase over the previous year. The costs of materials and services fell slightly and account for 60.9% of total operating expenses.

The costs of services, which account for 25.2% of total operating expenses, amounted to EUR 66.9 million, which is a reduction of 4.6% compared to 2012. Majority of the costs of services are costs of sales (34%), followed by marketing costs (33%), transportation costs (12.5%), costs of repair and overhaul (7%) and other costs. The costs of services incurred in 2013 are not inclusive of costs of consultants regarding financial debt restructuring (legal and financial consultations) amounting to EUR 1,2 million. The reason for this is the fact that these costs are tied to the total amount of borrowings to be repaid in accordance with debt rescheduling. In 2013, the costs incurred are recognised as a reduction in financial liabilities measured at amortised cost. Subsequently they will be recognised in profit or loss in line with the repayments of the total amount of relevant borrowings in 2014 and 2015.

Labour costs totalling EUR 50.1 million are slightly lower than in 2012 (a decrease of EUR 1.3 million or 2.4%). This reduction is primarily the result of salary reductions in the Delo Group. Due to reduction in severance payments, other labour costs also fell.

Write-offs amounting to EUR 34 million represent an increase of 14% compared to 2012 as a result of revaluation of property and brands to lower fair values. The Laško Group recognised EUR 9.8 million of revaluation operating expenses on account of



property revaluation, and EUR 5.5 million of revaluation operating expenses on account of revaluation of brands. In 2013 the depreciation costs decreased by EUR 2.4 million or 12.2%, as a consequence of a low investment activity in recent years and consequently an amount of fixed assets that were already written-off.

In 2013, other operating expenses increased by as much as 72.5% or EUR 5,2 million. Majority of the increase in other operating expenses relates to underpayment of water concession fee in the period from 2005 to 2013 amounting to EUR 5.6 million. Of the total amount paid, 75% relates to the liability of the controlling company Pivovarna Laško and 25% to Radenska.

In the 2013 financial year the Laško Group generated an EBIT of EUR 10.5 million and an EBITDA of EUR 29.1 million. In 2013 the Group recognised certain one-off business events such as revaluation of property, investment property and brands; setting up of additional provisions as well as other events; depreciation not accounted for as a result of discontinuing an operation; and gains and losses from disposal of investment property. All these events negatively impacted the operating profit and EBITDA to the total amount of EUR 17.6 million. The normalised EBITDA adjusted by the effects of these business events amounts to EUR 28.1 million, which is a decrease of EUR 1 million compared to the previous year, while EBITDA amounts to EUR 45.7 million, a decrease of EUR 3.5 million compared to 2012.

In 2013 the Laško Group earned EUR 51.3 million of financial loss. The majority of the amount of financial revenue of EUR 6.9 million (77.2%) resulted from derecognition of non-performing loans issued in the past to Infond Holding and Center naložbe, that is the income from the bankruptcy estate of both companies amounting to EUR 5.3 million. In comparison, the Group recognised financial income from dividends in the amount of EUR 6.7 million in 2012, of which dividends paid by Poslovni sistem Mercator amounted to EUR 5.3 million.

Financial expenses for interest from bank borrowings amounted to EUR 17.9 million, while financial expenses from impairment of investments amounted to EUR 39.8 million.

In the 2013 financial year, the Laško Group generated a net operating loss of EUR 30.2 million. The normalised net operating profit of the Laško Group for 2013 equals EUR 9.8 million, which is EUR 3.6 million less than in the previous year.

Notes to the statement of financial position of the Laško Group

At the end of 2013, the assets of the Laško Group amounted to EUR 454.5 million. Long-term assets decreased by EUR 17.9 million, while short-term assets reduced by EUR 33.8 million. The reduction of short-term assets was mainly the result of reduced available-for-sale financial assets.

Compared to 2012, total capital of the Laško Group in the amount of EUR 58.2 million decreased by EUR 29.8 million or 33.8%. This reduction is mainly due to the net loss of the financial year amounting to EUR 30.2 million and changes in other comprehensive income totalling EUR 3.8 million; capital attributed to the non-controlling interests was increased by the amount of the resulting difference.



Short-term and long-term liabilities of the Laško Group amounting to EUR 396.3 on the last day of the year have reduced by EUR 21.5 million or 5.1% compared to the previous year. On the last day of the year, borrowings from banks total EUR 333.6 million. The Group repaid EUR 27.4 million of borrowings in 2013.

On the last day of the year, the surplus of short-term liabilities over short-term assets amounts to EUR 194.7 million, which has resulted in a high degree of liquidity risk. Compared to the last day of 2012, this surplus has increased further by EUR 13.7 million.

At the end of April 2014 the Laško Group signed a Restructuring and standstill Agreement with creditor banks. More information is included in the Section 2.13.2SUBSEQUENT EVENTS- Signing of the Restructuring and Standstill Agreement. 2.10.2 PERFORMANCE OF PIVOVARNA LAŠKO

Notes to the income statement of Pivovarna Laško

In 2013, Pivovarna Laško generated EUR 90.2 million of net sales revenues, which is 1.3% more than in 2012. The reason was a 3% quantity increase in sales on the Slovene market, and as much as 16% increase on foreign markets. Since the share of the products with lower added value has been increasing, the revenues generated on the domestic market are at the level of revenues recorded in the previous year. Compared to 2012, we recorded a 15% increase in revenues generated on foreign markets.

Operating expenses of Pivovarna Laško in 2013 were 10% higher than in 2012 and amounted to EUR 88.4 million. The additional provisions set aside for the payment of water concession fee for the 2005-2013 period in the amount of EUR 4.2 million, and provisions amounting to EUR 1 million on account of the settlement claim of Radenska for the settlement of losses that arose during the validity of the contractual group in accordance with Article 542 of the Companies Act, contributed most to the total increase in costs. Compared to the previous year, costs of services increased by 3%. The revaluation operating expenses were significantly higher as a result of the valuation assessment of property and investment property in 2013. Labour costs have decreased compared to the previous year.

Costs of materials amounting to EUR 26.2 million increased by 5.2% over the comparable period of the previous year and account for almost one-third of operating expenses. Costs of energy resources dropped by 10% or EUR 0.3 million despite increased production compared to the previous year.

Costs of services account for 21.7% of total operating expenses and amounted to EUR 19.2 million, which is an increase of 3% over the previous year. Majority of these costs are marketing costs totalling EUR 8.9 million. The costs of services incurred in 2013 are not inclusive of costs of consultants regarding financial debt restructuring (legal and financial consultations) amounting to EUR 0.8 million. The reason for this is the fact that these costs are tied to the total amount of borrowings to be repaid in accordance with debt rescheduling. In 2013, the costs incurred are recognised as a reduction in financial liabilities measured at amortised cost. Subsequently they will be recognised in profit or loss in line with the repayments of the total amount of relevant borrowings in 2014 and 2015.



Labour costs of EUR 10.5 million are 5.4% less than in 2012 due to the reassignment of the Members of the Management Board as from 1 March 2013 to part-time employment in Pivovarna Union, and reduced wages of newly employed workforce.

In 2013 the write-offs amounting to EUR 6.4 million increased by 14%; depreciation is lower mainly due to lower level of investments in recent years and of already written-off fixed assets. Revaluation operating expenses for fixed assets are significantly higher since in 2013, the assessment of property was conducted that resulted in impairment of certain fixed assets.

In 2013 the Company recognised certain one-off business events such as provisions amounting to EUR 5.3 million, impairments of property and investment property, which negatively affected the current performance, as well as certain events that had a positive effect on the Company's performance. The normalised EBIT adjusted by EUR 7,8 million of the effects of these business events amounts to EUR 10,8 million, which is an increase of EUR 1.2 million compared to the previous year.

Normalised EBITDA totalling EUR 15.6 million has increased by EUR 1 million compared to the previous year.

In 2013 the Laško Group incurred a financial loss amounting to EUR 37 million. Financial income of EUR 1.1. million is lower compared to the previous year mainly since dividends were not paid by the subsidiary Pivovarna Union and as a result of a significantly reduced dividend payment by Radenska.

Financial expenses exceed financial revenues by EUR 37 million. Financial expenses for interest paid on bank borrowings amounted to EUR 13 million. Majority of the interest was paid to banks and partly also to companies in the Laško Group. In 2013 a total EUR 25 million of investments were permanently impaired, which is EUR 4.4 million more than in the previous year. Financial expenses were recognised also on account of impairment of the investments in Pivovarna Union (EUR 7.2 million), in Delo (EUR 6 million), in the Poslovni sistem Mercator shares (EUR 10.2 million), in Probanka shares (0.8 million) and investments in Elektro Gorenjska shares (EUR 0.7 million).

Due to the negative financial result, in 2013 the Company incurred a net loss amounting to EUR 27.9 million. The net loss for 2013 is EUR 10.3 million higher than the net loss of the 2012 financial year. The normalised net operating loss of the Laško Group for 2013 equals EUR 2 million, which is EUR 0.8 million less than in the previous year.

Notes to the Statement of Financial Position of Pivovarna Laško

At the end of 2013, Pivovarna Laško assets amounted to EUR 357 million, which is a decrease of 7.3% compared to 2012. This decrease is mainly due to reduction in long-term investments in subsidiaries (EUR 13.2 million) and fixed assets, which reduced by EUR 2.3 million. We invested less in the fixed assets than their total amortisation and depreciation cost.

Short-term assets amounting to EUR 55.6 million decreased by 23.6% or EUR 17.2 million compared to the previous year. Available-for-sale financial assets in the amount of EUR 26.3 million account for the majority of short-term assets and have decreased



compared to the previous year by EUR 11.6 million or 30.6%. This reduction is mainly due to the impairment of the Mercator shares to the lower quoted price. Short-term loans decreased by EUR 1.2 million or 40.3%, while short-term operating receivables increased by EUR 0.9 million.

Compared to the previous year, the capital of the Company (EUR 68.1 million) decreased by 29.4% or EUR 28.3 million. The majority of the change in equity is a result of the loss generated in the current year of EUR 27.9 million.

As at 31 December 2013, total financial liabilities of Pivovarna Laško amounted to EUR 257.5 million, which is a reduction of EUR 4.4 million or 1.7% compared to the previous year.

On the last day of 2013, net indebtedness as the difference between debt and investments amounts to EUR 4 million, which is a decrease of EUR 21.7 million compared to the previous year.



2.11 Risk management

THE LAŠKO GROUP HAS IMPLEMENTED A SYSTEMATIC PROCESS OF RECOGNISING AND ASSESSING RISKS THE GROUP COMPANIES ENCOUNTER IN REALISING THEIR STRATEGY AND OPERATING GOALS.

The Management Board, the responsible departments and heads thereof, as well as all key employees in the companies who have been defined as persons responsible for particular risks are responsible for actively managing and controlling risks in the Laško Group.

In order to ensure better and timely recognition of risks and in order to adopt the correct and effective measures that can prevent or at least mitigate the identified risks, in 2013 the Laško Group established a systematic process of identifying and assessing the risks Group companies encounter in realising their strategy and operating goals.

Without a doubt, the establishment of the internal audit service represents a significant milestone in this process. With respect to risk management, the internal audit service provides counselling, a systematic approach to and an appropriate methodology for recognising and assessing risks and thus helps the Management Board manage and control risks.

In 2013, a risk analysis was completed for all Group companies, a risk register was established, a Risk management committee was established and the persons responsible for particular risks were defined, which serves as the basis for establishing a systematic process of risk recognition and management.

Key risks in 2013

The negative impacts of the economic recession were even more pronounced in 2013 than in 2012, having a significant impact on the operations of all Laško Group companies, which were thus exposed to all types of risks even more.

Financial risks, especially liquidity risk, the risk of changes in the fair value of financial investments, credit, capital and market risk most impacted the operations of Group companies in 2013. The liquidity risk was especially pronounced mainly as a result of delayed payments from our customers, which had a significant impact on the solvency and repayment of due liabilities of all Group companies.

In 2013, the risk of non-implementation of the projected Strategy of the Laško Group by 2016 was more pronounced, as we have already noted deviations from the projections, while some activities relating to Group restructuring have also begun.

The Management Board focused most on these risks in forming its measures and activities.



2.11.1 BUSINESS RISKS

Business risks are associated with the overall business operations and core business of Laško Group companies. In 2013, procurement risk and retail risks remained the most significant business risks.

Procurement risks

are important due to the exposure to prices of raw materials, which are dependent on the harvest of individual crops which slightly reduces the impact of globalisation.

In 2013 we continued to tap into the procurement synergies of purchasing the same or similar materials for all Group companies to the greatest possible extent. Furthermore, we verified, assessed and selected suppliers based on the already introduced standards and organisational guidelines which have already been proven effective.

In addition to the requisite quality and supply terms, in selecting suppliers, payment terms were also of specific importance. At the same time, some materials were purchased on commodity exchanges, resulting in savings stemming from the fixing of purchase prices for a specified period.

Market risks

Mainly on account of the negative impact of the recession and decline in purchasing power on all our strategic markets, in 2013 we recorded a decline in the demand for our product range.

On the domestic market, these risks have increased further due to the appearance of competitive providers who are offering consumers products at a lower price point. This of course dictated several of our activities with retailers and distributors, which resulted in good quantities sold, but a lower financial result due to the number of offers and discounts offered. 2.11.2 OPERATING RISKS

Operating risks are associated with the implementation and monitoring of business processes and activities of the Laško Group and the costs incurred during the implementation of the business processes.

After expiry (termination) of the contractual group, Laško Group companies acted as a de facto group. This resulted in a deviation from the defined Strategy and the aforementioned ability to make use of synergies, especially in the area of reducing certain operating expenses.

Risk of deviations from the Strategy

is closely connected to other business and price risks, as well as to financial and interest rate risks and the risk of changes to the fair value of financial investments.



Risks associated with the production process

encompass the risk of disturbed processes in the production capacities due to potential major breakdowns. This risk is estimated to be moderate and was mostly neutralised through regular preventive routine maintenance, regular annual repairs and the replacement of worn parts with new ones.

Due to a lack of funds, investments in production remained less than optimal in 2013. We expect these risks to grow even further as time progresses.

Risks related to employee safety

and producing safe products: as in previous years, this risk was mitigated through various standards, such as ISO 9001, HACCP, ISO 14001, NSF and IFS.

In 2013, we particularly focused on the following operating risks and implemented the relevant activities:

regulatory risks(changes to regulations in various areas, such as in the area of food production, consumer health protection, taxes and excise duties, etc.). In 2013, the relevant departments focused most efforts on negotiating and resolving issues relating to the Water Act (concessions for using water) and sugar tax,

environmental risks related to the ineffective use of all forms of energy, non-optimal functioning of business processes and embedded technologies, which we attempted to manage by implementing investments in accordance with the business plan, ensuring regular servicing and through austerity measures, and

HR risks due to a lack of adequate personnel and healthy members of staff. These risks were mainly mitigated with the planned and timely filling-in for employees as well as through informing all employees of the importance of health through various training sessions and in cooperation with healthcare providers (health check-ups, "manager" check-ups, etc.).

2.11.3 FINANCIAL RISKS

Financial risks are risks that may negatively influence the ability to generate financial revenue, control financial expenses, to preserve the value of financial assets and to control financial liabilities.

All the risk management activities in the Laško Group focus on the unpredictability and illiquidity of financial markets, that have increased under the conditions of the financial crisis, and attempt to minimise the potential negative effects on the financial stability and performance of the Group. The finance department predominantly deals with financial risks while the sales department is also involved in credit risk management.

Long-term stability of the Group’s operations dictates concurrent and detailed monitoring and assessment of financial risks. In 2013, the Company continued to follow the objective of achieving stable operations and reducing exposure to individual risks to a sustainable level. The companies are unable to fully hedge all risks, but can reduce or avoid risks from materialising with timely measures. To this end, the companies continuously recognise and assess risks, taking the relevant measured depending on the



target risk exposure. Risk management measures have been built into our day-to-day operations. All recognised risks have been recorded in the risks register, which is amended as needed. Particularly significant among financial risks faced by the Group are liquidity risk, risk related to the decrease in investment fair value, credit risk and to some extent also interest rate risk. The exposure to particular types of financial risks and measures for protection against them are implemented and evaluated based on the impacts on cash flows.

Liquidity risk

With regard to financial risks, monitoring liquidity risk which means the risk of loss due to short-term and long-term insolvency is of particular significance. The Group, and especially Pivovarna Laško, discloses an excess of current liabilities over current assets, signifying the existence of a significant liquidity risk in particular in the parent company. To avoid liquidity issues, Group companies manage their liquidity risk, design and implement a policy of regular liquidity management including the planning of cash outflows and sufficient inflows both on an annual and a monthly level.

By securing relevant credit lines for short-term cash flow balancing in the form of revolving credits and agreed overdraft facilities, the Company has so far successfully managed to secure coverage of potential daily liquidity shortcomes. However, in view of deteriorating conditions on financial markets and continuing financial crisis, it will become progressively more difficult to successfully manage the liquidity risk. On 29 July 2013 the Company signed a debt rescheduling agreement with all creditor banks extending maturity of all borrowings until 30 April 2014 at the earliest. After activities spanning nearly a year, we managed to come to an agreement with the banks on the long-term financial restructuring of Pivovarna Laško, Pivovarna Union and Radenska until 2016, which also contains the significant milestones relating to the disposal of financial investments as part of the companies' restructuring.

Monitoring of the fundamental financing and liquidity ratios pursuant to Article 14 of the Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act, which prescribes criteria under which an entity is deemed insolvent, is particularly important and necessary in ensuring effective liquidity risk management. Regular monitoring of an entity's liquidity position is of particular importance as it ensures timely response and helps avoid the unfavourable consequences of an emerging liquidity crisis.

In 2013 we continued activities related to disinvestment of all our investments that are not of crucial importance for the core activity in order to achieve a sustainable level of debt. Until the divestment process is completed, the Group will continue to experience a rather difficult liquidity situation. In view of the aforementioned and difficult situation on financial markets and the entire economic environment, we have assessed the Group's exposure to liquidity risk as very high and requiring special attention.

The risk of changes in fair value

The risk of changes in fair value of financial investments, property, plant and equipment and investment property is undoubtedly also an important financial risk. In should be highlighted that financial investments are increasingly difficult to sell at desirable prices



compared to the purchase price a few years ago when most of them were acquired. The risk can be observed in the segment of financial expenses where financial expenses from impairment and write-offs are disclosed. In 2013, the Group recorded EUR 59.9 million of impairments of financial assets; Pivovarna Laško recorded EUR 30.3 million, Pivovarna Union EUR 19.2 million, Radenska EUR 7.6 million and Delo EUR 2.8 million. Impairments are predominantly the result of a drop in the value of strategically most important investments such as Mercator, Probanka, Rudnik Velenje and others.

Credit risks

include all those risks resulting in the decline of the Company’s economic benefits due to insolvency of the Company’s business partners (customers) and failure to meet their contractual obligations. To this end, the receivables from our business partners, wholesalers and retailers, are regularly monitored. In addition, we actively manage receivables, rapidly implement collection procedures by reminding customers, collecting receivables via telephone or in the field, as well as debt recovery through an external agent and through the courts. The receivables from export buyers are secured with bank guarantees and partly via the SID insurance company, and we only operate under the system of advance payments with some customers. Also on the domestic market the receivables from final users are partly secured with bank guarantees, mortgages on immovable property and bonds. Business with less credit-worthy customers is made on the basis of advance payments and immediate payments so that the risk of non-payment for the purchased goods is avoided to some extent.

Receivables due from our major wholesalers on the local market are only partly collateralised and subsequently, there is a large credit risk exposure to this particular segment. Over the entire 2013 financial year the payment discipline of our major buyers worsened, which caused constant difficulties ensuring the current daily liquidity of the Group. Our largest customers are especially prone to payment delays, generating additional liquidity difficulties for our companies. It is believed that there is a considerable risk of spreading late-payment culture also in 2014, which is the result of the financial crisis in all the segments of the economy. The management believes that the credit risk is increasing due to fierce economic conditions.

Interest rate risk

is the risk of a possible change in the reference interest rate on the financial market, mainly due to euro borrowings linked to a variable interest rate (EURIBOR). In 2013 a decreasing tendency of EURIBOR has continued, which had a positive impact on borrowing costs linked to a variable interest rate (EURIBOR). Towards the end of the year the reference interest rate rose slightly, however this had no major impact on interest paid. However, a minimal growing trend has been noted in 2014. Financing under variable interest rate conditions represents one-third of all the Group's financing while the other two-thirds represent borrowings with a fixed interest rate. Interest rate hedging of long-term debt at variable interest rate is doubtlessly sensible however, majority of the Company's borrowings mature within a period of 12 months. We have agreed and signed a contract for long-term financial debt rescheduling until 31 December 2016 with the banks, and hence we will monitor developments on financial



markets and take appropriate action at the right time. We have assessed the Company's interest rate risk as rather high but manageable.

More information on the financial risks of the Laško Group is provided in the Financial Report, Section 4.4.7 FINANCIAL INSTRUMENTS AND RISKS. 2.12 Financing and sale of the investments

DESPITE ITS OTHERWISE STABLE OPERATIONS IN TERMS OF ITS CORE ACTIVITY, WHICH ARE COMPARABLE TO OTHER COMPANIES IN THE INDUSTRY, THE LAŠKO GROUP WILL BE ABLE TO ACHIEVE A SUSTAINABLE LEVEL OF DEBT BY SUCCESSFULLY DISPOSING OF ITS ASSETS AND POTENTIALLY BY A STRATEGIC OWNER ENTERING ITS BEVERAGE AND BEER ACTIVITY.

2.12.1 FINANCING IN THE LAŠKO GROUP

The general financial and economic crisis which has been present in the Slovenian business environment since 2008 is also reflected in the constant difficulties in ensuring current liquidity, both within the Laško Group and even more in the parent company Pivovarna Laško.

We have been experiencing difficulties managing current liquidity for some years. As usual, the liquidity situation was the worst in the first three months when our sales were lower due to the seasonal impact. The payment discipline of our customers is also usually worse in this period. In 2013, the negative seasonal impact also influenced June due to the bad weather. It was only in late June and July that slightly better quantitative sales were recorded. In terms of liquidity management, the most significant issue is the payment indiscipline of our major customers, who account for over 70% of our total revenue. On average, our receivables are paid in 70 days, while some wholesalers take even longer. In the first quarter, both breweries had commitments according to the loan agreements concluded with the banks in accordance with the loan rescheduling agreement up to 31 March 2013, which was agreed in 2012. After this date, the loan agreements were prolonged to 30 September 2013, then to 30 April 2014 in light of the sales process for the investment in Mercator, which was initially expected to be completed by that date. On 28 February 2014 the buyer and sellers modified the sales agreement for Mercator, and inter alia concluded an Annex to the Sales Agreement changing the share price from EUR 120 to EUR 86, and extending the deadline for closing of the sale to 30 June 2014.

In 2013, the Laško Group has reduced its exposure to banks by repaying net principal of EUR 27.4 million, of which EUR 2.9 million was repaid by Pivovarna Laško, EUR 12.4 million by Pivovarna Union, EUR 6.2 million by Radenska, with the difference being repaid by the remaining Laško Group companies.

The inter-Group debt remains at the same level as at 2012 year-end, meaning that Pivovarna Laško has outstanding loans due to Radenska and Pivovarna Union of EUR 42.4 million, while the debt of Pivovarna Union to Radenska amounts to EUR 1.1 million.



In 2013, the Laško Group recorded EUR 18 million of liabilities due to banks on account of interest and financing costs, generating an EBITDA of EUR 28.2 million, normalised to EUR 41.9 million. Most interest (EUR 10.8 million) was paid by Pivovarna Laško, which generated an EBITDA of EUR 7.8 million (normalised to EUR 15.6 million).

We concluded an Agreement on the long-term restructuring of the Laško Group by the end of 2016 with the banks; this agreement also defines the major divestment milestones.

In accordance with the terms of the Agreement on the sale and purchase of shares (SPA) for Mercator, three Laško Group companies, namely Pivovarna Laško, Pivovarna Union and Radenska concluded an Escrow Agreement with the lienors on 29 July 2013. In order for the Laško Group to be able to ensure its liquidity during the whole sales process, all crediting banks of Pivovarna Laško, Pivovarna Union and Radenska agreed to reschedule all loans to no earlier than 30 April 2014, when the transaction was expected to close at the latest.

Accordingly, by 29 July 2013, both the loan agreements extending the financing of all crediting banks of Pivovarna Laško, Pivovarna Union and Radenska to 30 April 2014, as well as the Escrow Agreement, were signed, thus fulfilling one of the SPA conditions.

The framework bilateral annex extending the loans until 30 April 2014 commits all three companies to implementing operational and financial restructuring measures. The agreement was finally signed after nearly a year of efforts invested in concluding a framework agreement on the restructuring of the companies up to 2016. Deleveraging from the proceeds of the disposal of MELR shares is one of the key milestones of the financial restructuring of the Laško Group, as referred to in the Term Sheet concluded at the end of December 2013, as well as in the Restructuring Agreement concluded by the crediting banks of Pivovarna Laško, Pivovarna Union and Radenska.

In close cooperation with the banks, since February 2013 the management of the Laško Group has prepared for implementation of the operational and financial restructuring of the Laško Group. In cooperation with legal experts, Laško Group's financial advisers analysed 17 various financial restructuring scenarios from a financial, tax and legal perspective as part of the Group's operational and financial restructuring. The crediting banks expect the Laško Group to deleverage to a sustainable level as soon as possible. As a result, the Management Board of the company continues to dispose of its shares in companies not part of its core activity in accordance with the operational and financial restructuring project. On 1 September 2013, the Company began selling its share in Radenska, and on 1 October 2013 also its share in Birra Peja. The financial restructuring scenario also foresees the capital increase of Pivovarna Laško as a significant milestone. A transparent and competitive two-round process of capital increase of Pivovarna Laško will maximise value for all stakeholders of the Laško Group, including its owners and creditors, and will at the same time allow its tradition and development to continue, its brands to survive and develop, and jobs to be retained. The process of searching for a strategic investor for the beer production activity requires the responsible decision-making of both the Company's owners and creditors, and will also require more time due to the corporate approvals needed in order to harmonise the restructuring strategy



with the operational strategy and legal requirements; this is also reflected in the agreed milestones. 2.12.2 SALE OF THE INVESTMENTS OF THE LAŠKO GROUP

In 2013, the Laško Group continued activities related to the divestment of financial investments and other assets not necessary for its operations. Pursuant to the operational and financial restructuring plan of the Laško Group, in order to deleverage the Group as planned and ensure its widely recognised brands and jobs are retained, in addition to divestment, we began selling investments that comprise our core activity - namely our investments in Radenska and Birra Peja - in September 2013. The disposals process of both companies is being managed by the M&A advisers, UniCredit Banka Slovenije.

Activities relating to the sale of our 79.25% stake in Večer continued in 2013. In January, the CPO prolonged the deadline for the sale of the company to 31 March 2013, which was again prolonged to 31 July 2013. A sales agreement was concluded with a potential buyer containing several suspensive conditions, which however remained unfulfilled by the cut-off date. As a result, negotiations with thus customer fell through in early April. Delo continued negotiations aiming at the sale of ČZP Večer with other potential buyers. In June 2013, a two-month exclusivity agreement was signed with one of the buyers who in the past expressed its interest in acquiring Večer. The buyer performed a due diligence review but decided not to continue the procedure. On 26 July 2013, Delo addressed a request to the Agency of the Republic of Slovenia for Protection of Competition for another extension of the deadline for the sale of 79.24% share in Večer; however, the request was rejected.

Delo will continue its efforts to sell or alienate its share in Večer, and will continue discussions with potential buyers of Večer in order to ensure early completion of the sale and payment of consideration, and thus elimination of the non-compliance with competition rules.

The sale of Delo was temporarily halted in 2012 after we failed to receive any binding offer fulfilling the tender requirements. In light of the sales process of Večer we will also continue the sales process for Delo. As part of the Laško Group restructuring process, the sale of Delo is being managed by the M&A advisers, namely UniCredit CAIB, which began sales efforts on 1 September 2013 by sending a teaser to potential buyers. An IM was sent in December to those who agreed to signing an NDA. The non-binding proposals arrived in March 2014.

Sale of the shares of Mercator On 14 June 2013, the consortium of sellers comprised of Pivovarna Laško, Pivovarna Union, Radenska, NLB, Nova KBM, Gorenjska banka, Prvi faktor – Faktoring, Banka Koper, Hypo Alpe-Adria Bank, NFD, Banka Celje, and NFD holding concluded with Agrokor an Agreement on the sale of a 53.12% share in Mercator.

The signing of the sales agreement is the result of an extensive procedure led by the London team of international investment bank ING Bank N.V. The process was performed in compliance with international good practice with the aim of involving all



potential investors. Transparency of the process as well as maximising benefits for all Mercator's stakeholders were ensured.

In accordance with the sales agreement, members of the consortium were to receive EUR 120 per share, or proceeds of EUR 240 million for their 53% share. Laško Group companies would receive proceeds of EUR 105.5 million for their 23.34% share.

Closing of the transaction, resulting in the proceeds being paid, is tied to several conditions, including obtaining the relevant regulatory approvals, the rescheduling of Mercator's debt, and Laško Group companies concluding an Escrow Agreement with the crediting banks with collateral on MELR shares. The transaction was expected to close no later than by the end of April 2014.

On 28 February 2014, the sales consortium concluded an Annex to the Sales Agreement for the 53.12% share in Mercator (MELR) to Agrokor, which, inter alia, reduces the share price from EUR 120 to EUR 86 and extends the closing date to 30 June 2014. This means that the Laško Group will participate in the sale in the same scope, namely with:

317,498 MELR shares owned by Pivovarna Laško (PL),

464,390 MELR shares owned by Pivovarna Union (PU),

96,952 MELR shares owned by Radenska (RA).

In light of the new sales price of EUR 86 per share, the Laško Group will receive proceeds of EUR 75,580,240. The individual Laško Group companies will receive the following sums:

Pivovarna Laško (PL) EUR 27,304,828,

Pivovarna Union (PU) EUR 39,937,540,

Radenska (RA) EUR 8,337,872.

One of the conditions for successfully closing the transaction is signing the Annex to the Escrow Agreement (EA) no later than by 15 May 2014.

Disposal of the investment in Radenska began pursuant to the project of the operational and financial restructuring of the Laško Group on 1 September 2013, while the disposal of the investment in Birra Peja began on 1 October 2013. In September, a teaser was sent to potential investors in Radenska, followed by an IM. In December, management pitches were organised for potential investors at Radenska's headquarters. In January and February 2014, due diligence reviews and negotiations with the investors that provided binding bids were underway.

Birra Peja, Peć A teaser was sent to potential investors in Birra Peja in October, while the IM as sent to qualifying investors in January 2014. Non-binding bids were received in March.

The disposal of Jadranska pivovara – Split closed unsuccessfully in December 2012 as no party expressed its serious interest. In 2013 we began selling-off the remaining production equipment and the remaining assets of Jadranska pivovara. A sales agreement for the production equipment was concluded with a broker; some of the



production equipment was sold, with the proceeds being received by the end of May 2014.

The sales broker NLB began activities for the sale of the share in Thermana already in 2012, beginning with searching for and contacting potential buyers of the target company; however, no bids were received. The broker believes there is currently no interest in the market to purchase a majority stake in Thermana.

In 2013, the Laško Group continued activities related to the divestment of assets not necessary for its operations, namely:

Pivovarna Laško: the Hum hotel in Laško, the "Tri lilije" sports hall in Laško and the warehouse at Letališka 32, Ljubljana. The warehouse was actually sold and the transaction closed in late December 2013,

Pivovarna Union: the "Center Bellevue" development and plots of land, and warehouses in Maribor,

Radenska: the commercial building in Radenci,

while both breweries also began selling their holiday capacities and have already sold a part thereof.

The Group will intensively continue all sales processes, and as a result, all divestment activities are continuing rapidly also in 2014.



2.13 Overview of significant events in 2013

IN 2013 WE RECEIVED THE JUDGEMENT OF THE SUPREME COURT OF THE REPUBLIC OF SLOVENIA FINDING THAT THE DECISION OF THE CPO FROM 2011, WHICH PREVENTED LAŠKO GROUP COMPANIES FROM ALIENATING THEIR SHARES IN MERCATOR, WAS UNLAWFUL.

2.13.1 EVENTS DURING THE REPORTING PERIOD

Agreement reached with banks on loan restructuring

Laško Group activities relating to the bank loan restructuring are described in Section 2.12.1 FINANCING IN THE LAŠKO GROUP.

Procedures relating to the disposal of Laško Group investments

Laško Group activities relating to the disposal of its investments are described in Section 2.12.2 SALE OF THE INVESTMENTS OF THE LAŠKO GROUP.

Compensatory actions against Atka-Prima / Boško Šrot

In early 2011, compensatory actions were filed at the relevant courts against the defendants Atka-Prima and Boško Šrot, demanding the defendants pay damages to the plaintiffs relating to the damages incurred by the plaintiffs as a result of transactions effected in 2008 and 2009. The following actions were filed: by Pivovarna Laško on 12 January 2011 for the payment of EUR 13,336,488.76 plus costs and interest; by Pivovarna Union for the payment of EUR 51,662,307.74 plus costs and interest; by Radenska for the payment of EUR 46,238,893.69 plus costs and interest, by Delo for the payment of EUR 8,003,311.06 plus costs and interest, and by Fructal for the payment of EUR 10,784,720.85 plus costs and interest (the latter were all filed on 15 February 2011). These proceedings are all pending.

Compensatory actions against the Republic of Slovenia, the CPO and the then director of the CPO - now CPA

On 14 September 2012, Pivovarna Laško, Pivovarna Union and Radenska (hereinafter referred to as: the Laško Group companies) filed a compensatory action against the Republic of Slovenia (the Competition Protection Office) (hereinafter referred to as: CPO) and the director of the CPO. In the opinion of the Laško Group companies, the reason for the action was the unlawful prevention of the sale of the shares of Mercator owned by the Laško Group companies by the CPO in 2011. Because of the decision of 26 April 2011 taken by CPO, the Laško Group companies were not able to accept the binding offer of Agrokor for the purchase of the shares of Mercator owned by the Laško Group companies in 2011 since the above-mentioned decision prevented the Laško Group companies from disposing of their shares of Mercator. The Laško Group companies believe that the CPO unlawfully prevented the conclusion of the aforementioned transaction with Agrokor, which consequently resulted in damages arising to the Laško Group companies of a total EUR 59.2 million up to the date the action was filed (of that, Pivovarna Laško incurred damages of EUR 21,877,385.84 plus costs and interest, Pivovarna Union damages of EUR 31,322,586.77 plus costs and interest, and Radenska, damages of EUR 6,157,355.78 plus costs and interest).



On 14 October 2013 we received the judgement of the Supreme Court of the Republic of Slovenia ruling that the aforementioned CPO decision dated 26 April 2011 is unlawful. The judgement of the Supreme Court was forwarded to the court dealing with the plaintiffs' actions.

Infond Holding

Bankruptcy proceedings were instigated against the debtor Infond Holding at the end of 2009. In the bankruptcy proceedings, Laško Group companies have reported the following claims: Pivovarna Laško: EUR 1,892,319.26, Pivovarna Union: EUR 28,107,482.28, Radenska: EUR 17,062,078.14 and Delo: EUR 6,771,147.94, amounting to a total of EUR 53,833,027.62. The bankruptcy proceedings are still pending.

The first interim division of the bankruptcy estate was performed on 24 September 2013. Pivovarna Laško received EUR 89,382.56, Pivovarna Union EUR 1,485,332.23, Radenska EUR 805,916.99 and Delo EUR 319,831.10. The bankruptcy proceedings are still pending.

Center naložbe

Bankruptcy proceedings were instigated against the debtor Center naložbe at the end of 2009. In the bankruptcy proceedings, Laško Group companies have reported the following claims: Pivovarna Laško: EUR 6,487,493.35, Pivovarna Union: EUR 19,991,859.46, Radenska,: EUR 26,414,066.45 and Delo: EUR 547,784.42, amounting to a total of EUR 53,441,203.68.

The first interim division of the bankruptcy estate was performed on 30 December 2013. Pivovarna Laško received EUR 410,236.03, Pivovarna Union EUR 1,695,898.66, Radenska EUR 1,670,291.01 and Delo EUR 34,639.10. The bankruptcy proceedings are still pending.

Action of Era Good

On 13 January 2012, we received a lawsuit from the plaintiff Era Good against the defendants Pivovarna Laško, Pivovarna Union and Radenska for the payment of compensation in the total amount of EUR 958,356.00 (Pivovarna Laško EUR 509,749.55, Pivovarna Union EUR 348,458.24 and Radenska EUR 100,148.21) together with default interest. The plaintiff in its lawsuit asserts that the rebate policy established by the Laško Group was discriminatory and constituted an abuse of its dominant position under the Prevention of the Restriction of Competition Act (ZPOmK-1). The rebate policy of the Laško Group allegedly placed the defendant at a competitive disadvantage, causing damage to the defendant. In this matter, the Ljubljana District Court issued a decision on 3 July 2012 dismissing the plaintiff's action in full. The plaintiff brought an appeal against the decision to which all the defendants responded on 26 October 2012. On 12 March 2013, the plaintiff withdrew its appeal against the first instance ruling.

Action of minority shareholders in Jadranska pivovara – Split

On 4 April 2012, Jadranska pivovara - Split received the action of twenty-eight minority shareholders challenging the resolution of the General Meeting of Jadranska pivovara



adopted on 24 February 2012 on the exclusion of the minority shareholders. On 13 February 2013, Jadranska pivovara received the judgement of the court of first instance recognising the claim of two shareholders and finding the resolution on the exclusion of the minority shareholders void. Jadranska pivovara appealed the judgement. On 10 July 2013, Jadranska pivovara received the judgement of the Zagreb High Court annulling the decision of the court of first instance and deciding the case should be re-examined.

On 3 December 2013, Jadranska pivovara received the judgement of the court of first instance, which again recognised the claim of the two shareholders and found the resolution on the exclusion of the minority shareholders void. Jadranska pivovara appealed the judgement.

Denationalisation requests in Radenska

The court proceedings are taking place before the Administrative unit Gornja Radgona in compliance with the Denationalisation Act and in the non-contentious proceedings before the District Court in Novo mesto pursuant to the Enforcement and Criminal Actions Act. The beneficiaries are demanding restitution of property, company, trademarks and mineral springs that were nationalised during the nationalisation process, and the payment of damages.

The Gornja Radgona Administrative unit issued a decision on 27 June 2012, which rejected the request for the privatisation of the nationalised company Zdravilišče Slatina Radenci, Höhn and Comp., public trading company in Radenci with a 48% stake owned by Wilhelmina Höhn Šarič. With the supplementary decision issued on 31 August 2012 the Zdravilišče Slatina Radenci, Höhn and Comp., public trading company is corrected and renamed Kuranstalt Sauerbrun Radein AG. The claim was lodged by the legal successor dr. Rudolf Höhn Šarič on 4 May 1993. In the appeal proceedings, the Ministry of Economic Development and technology on 25 February 2013 rejected the appeal against the decision of the Administrative unit Gornja Radgona as being unjustified. The beneficiary lodged a lawsuit and the proceedings continue before the Administrative Court of the Republic of Slovenia.

Non-contentious proceedings for the return of property pursuant to the Enforcement and Criminal Actions Act are taking place before the District Court in Novo mesto. The motion was filed on 20 December 2010 for the benefit of beneficiaries, grandchildren of dr. Anton Šarič. The Novo mesto District Court in issued an order, which was received on 19 June 2013, dismissing the request for the return of nationalised property. An appeal was filed with the Ljubljana High Court, which was rejected and the decision of the Novo mesto District Court upheld. The latter also rejected the return of the nationalised property. This matter is thus res iudicata as concerns regular legal remedies.

Action of Perutnina Ptuj against Pivovarna Laško

The plaintiff filed a claim against Pivovarna Laško on 31 December 2010 at the District Court of Celje demanding payment of EUR 10,116,488.71 plus costs and interest. The plaintiff justified its claim by stating that the legal representative of Pivovarna Laško signed a comfort letter on 10 January 2009 and thus allegedly committing to fulfil the



obligation of Perutnina Ptuj to Poslovni sistem Mercator on account of loan contracts. The proceedings are pending.

Enforcement proceedings of NKBM against Pivovarna Laško

Pursuant to the agreement on the pledge of book-entry securities concluded on 5 June 2009 between Nova kreditna banka Maribor (NKBM) as the creditor, Center Naložbe as the debtor and Pivovarna Laško as the lienor, Pivovarna Laško pledged to NKBM 345,304 shares of Radenska (ticker symbol: RARG) as collateral for a loan raised by Center Naložbe with NKBM. The aforementioned agreement on the pledge of book-entry securities was signed by the former director Boško Šrot on behalf of Pivovarna Laško.

On 22 November 2011, Pivovarna Laško received the judgement of the Maribor District Court allowing the enforcement on the pledged shares to repay the claim in the amount of EUR 7,349,552.25 plus costs and interest from 29 July 2011 in the commercial dispute between NKBM as the plaintiff and Pivovarna Laško as the defendant. The court thus allowed the enforcement against the 345,304 RARG pledged shares, ruling that the the defendant Pivovarna Laško is obligated to allow the sale of these shares and repay the claim from the proceeds of the sale. The judgement became final and enforceable on 8 December 2011.

Pursuant to the aforementioned judgement and the enforcement motion of NKBM, on 22 December 2011 the court issued an enforcement order whereby the court approved the proposed enforcement against the pledged RARG shares by selling the shares and repaying the creditor from the proceeds. So far the RARG shares have not been sold in the enforcement procedure. NKBM proposed deferred enforcement and accordingly on 28 October 2013 the court ruled for the enforcement to be postponed until 1 October 2014.

The action of MIP against Pivovarna Laško

On 21 March 2013 we received from the Celje District Court the action of MIP, Gornji Vakuf, Uskoplje, for the payment of EUR 1,135,481.43. In the action, the plaintiff demands the payment of damages for loss of income of EUR 1,085,481.43 alleged to have arisen as a result of the unlawful withdrawal of Pivovarna Laško from the sales agreement, as well as damages for the loss of reputation in the amount of EUR 50,000.00. On 22 April 2013 we replied to the action stating that the plaintiff's claim was unfounded. The court of first instance has not ruled on this matter yet.

The action Pivovarna Laško against MIP

On 25 September 2012, Pivovarna Laško filed an action against MIP demanding payment of EUR 200,975.51 plus costs and interest due to the failure to pay for the goods that Pivovarna Laško sold and supplied to the defendant, as well as the payment of EUR 245,316.75 plus costs and interest due to packaging not returned, for a total of EUR 446,292.26 plus costs and interest. On 23 April 2013 we received the reply of the defendant stating that the claim of Pivovarna Laško is unjustified. The court of first instance has not ruled on this matter yet.



CEN ADRIA, d. o. o. – v stečaju, Matulji (Croatia)

In 2006 Pivovarna Laško filed an application for enforcement against Cen Adria, Metulj, demanding payment of outstanding invoices totalling Kn 857,292.53 (euro equivalent of 114,764.73) inclusive of the legally prescribed default interest. Cen Adria appealed against the enforcement ruling and currently the case is proceeding in the same way as in the case of an appeal against payment order in litigious proceedings. In 2006, during the above proceedings, Cen Adria filed a counter action against Pivovarna Laško and Jadranska pivovara - Split, Vranjic, demanding payment of damages totalling Kn 25,000,000.00 (euro equivalent of approx. 3,346,720.21), which Cen Adria allegedly incurred due to untimely termination of the Contract on Business Cooperation (Ugovor o poslovnoj suradnji).

In 2012, bankruptcy proceedings were instigated against Cen Adria.

In the case of Pivovarna Laško against Cen Adria, on 8 November 2013 Pivovarna Laško received the judgement of the court of first instance awarding Pivovarna Laško the total amount of Kn 1,688,990.71 (EUR 221,361.82). Cen Adria appealed the judgement.

Non-litigious proceedings for the judicial verification of monetary compensation

The applicants, namely Skandij, d. o. o. (384 PULG shares; amount at issue: EUR 211,084.80), Enlux, d. d. (22 PULG shares; amount at issue: EUR 12,093.40), Marko Potočnik (118 PULG shares; amount at issue: EUR 64,864.60 and 1451 RARG shares; amount at issue: EUR 30,819.24), BPH, d. o. o. (169 PULG shares; amount at issue: EUR 3,589.56), Sonja Slatnar (2,063 RARG shares; amount at issue: EUR 39,197.00 and 50 RARG shares; amount at issue: EUR 24,344.00), Javna razsvetljava, d. d. (22 PULG shares; amount at issue: EUR 12,093.40), Mif Invest, d. d. (50 PULG shares; amount at issue: EUR 24,344.00), and Nina Pintar (100 PULG shares, amount at issue: EUR 44,700.00) filed a request for the judicial verification of monetary compensation paid for the shares of Pivovarna Union and the shares of Radenska against Pivovarna Laško as the defendant. The applicants request the court defines appropriate compensation for the purchase of all PULG and RARG shares owned by the applicants, while some applicants also demand that Pivovarna Laško as the main shareholder be required to purchase their PULG and/or RARG shares and conclude the relevant sales agreement. In our replies to the applications we objected to them in full.

The cases of Enlux, Skandij, Marko Potočnik, Javna razsvetljava, BPH, Mif Invest and Sonja Slatnar are now final. We (Pivovarna Laško) have purchased or will purchase the shares of the aforementioned applicants.

Potential settlement obligation according to paragraph 1 of Article 542 of the Companies Act (ZGD-1)

Pivovarna Laško as the controlling entity concluded a control agreement with its subsidiaries Pivovarna Union and Radenska on 27 December 2011, thus establishing a contractual group. The control agreement concluded between Pivovarna Union and Pivovarna Laško was in force between 11 April 2012 and 26 April 2012, while the control agreement concluded between Radenska and Pivovarna Laško was in force between 6



February 2012 and 26 April 2012. In accordance with paragraph 1 of Article 539 of the Companies Act, on 26 April 2012, Pivovarna Laško sent written notice of termination of both Control Agreements as this was the fundamental condition one of the banks required Pivovarna Laško, Pivovarna Union and Radenska to fulfil in order for their financial liabilities to be rescheduled. Pursuant to paragraph 542 of the Companies Act, the controlling entity must settle any annual loss incurred by the subsidiary unless the loss is settled from other profit reserves that were credited with profit generated during the contract's validity.

On 6 January 2014, Pivovarna Laško received the settlement claims of its subsidiaries, namely Pivovarna Union and Radenska pursuant to paragraph 1 of Article 542 of the Companies Act. The subsidiaries' settlement claims demanded Pivovarna Laško repay the losses they sustained during the validity of the contractual group.

With its letter dated 13 February 2014, Pivovarna Laško rejected the settlement claims due to the fact that the claimed amounts had not been proven (For further information, see Section 2.3.2 SETTLEMENT CLAIMS of this Annual Report).

Criminal investigation ref. no. KP 53791/2010

On 9 March 2012, Pivovarna Laško received the decision of the Ljubljana High Court allowing, pursuant to the appeal of the district state prosecutor, the criminal investigation which the Ljubljana District Court had already suspended on 3 June 2011. These criminal proceedings are being conducted against Marko Pogačnik, Tomaž Toplak, Boško Šrot, Igor Bavčar, Pivovarna Laško and Istrabenz as the suspects. Marko Pogačnik and Tomaž Toplak are suspected of abuse of office pursuant to Article 244 of the CC, Igor Bavčar and Boško Šrot are suspected of fraud pursuant to Article 217 of the CC in conjunction with Article 25 of the CC, while the legal entities are suspected of fraud pursuant to Article 217 of the CC in conjunction with Article 25 of the CC on account of the alleged actions of Boško Šrot and Igor Bavčar. In the case of Pivovarna Laško, the purchase of Mercator shares from SOD on 30 August 2005 is at issue. The investigation is still pending.

Criminal proceedings ref. no. X K 59294/2010

These criminal proceedings refer to two groups of crimes - on the one hand to actions related to the conclusion of loan agreements with Infond Holding and Center Naložbe, and on the other hand to actions related to the sale of Istrabenz shares (ticker symbol: ITBG). Initially the proceedings were merged; however, now the court has ordered the proceedings be separated, namely against Boško Šrot as the defendant and Igor Bavčar as the co-defendant for crimes according to Article 240/I of the Criminal Code (KZ-1).

On 7 March 2013, Pivovarna Laško brought a claim for damages against Boško Šrot, Igor Bavčar and the other defendants due to crimes relating to the sale of a lot of ITBG shares in 2007. The claim for damages demands repayment of lost profit of EUR 25,490,616.16, plus statutory default interest, due to the sale of a lot of ITBG shares at an excessively low price. On 19 July 2013, the court of first instance issued its guilty verdict, while Pivovarna Laško's claim for damages was referred to the civil court.



Criminal proceedings ref. no. X K 6155/2013

On 29 November 2013, we received notification of the Ljubljana District Court concerning the pre-trial hearing in the criminal proceedings against Boško Šrot, Matjaž Rutar, Vesna Rosenfeld and the legal entity Atka-Prima as suspects of crimes according to 244/II of the Criminal Code, and others.

On 17 January 2014 we informed the court of the course of the claims against Boško Šrot and the legal entity Atka-Prima for damages, and that we would not claim damages in the criminal proceedings due to the fact that claims for damages had already been lodged against Boško Šrot and the legal entity Atka-Prima. On 24 February 2014, we lodged claims for damages against Vesna Rosenfeld (Pivovarna Union: EUR 23.2 million) and Matjaž Rutar (Pivovarna Laško EUR 2.3 million, Pivovarna Union EUR 36.8 million, Delo EUR 8.9 million, Radenska EUR 2.4 million).

Changes to the composition of the Management Board of Delo

At its session of 1 July 2013, the Supervisory Board of Delo appointed Irma Gubanec, Member of the Management Board of Delo for finance, as Chairwoman of the Management Board of Delo for a term of office of 5 years. As the new Chairwoman of the Management Board was appointed, the term of office of the existing Chairwoman Marjeta Zevnik ended, after having temporarily assumed the management of Delo in September 2012 as Member of the Supervisory Board of Delo pursuant to paragraph 2 of Article 273 of the Companies Act.

At its session on 28 August 2013 the Supervisory Board of Delo appointed Nada Jakopec member of the Management Board of Delo responsible for general, human resources and legal affairs for a term of office from 1 September 2013 to 30 June 2018.

General Meeting of shareholders of Pivovarna Laško

On 20 June 2013, the 21st General Meeting of shareholders of Pivovarna Laško. was held. The General Meeting was briefed on the audited Annual Report for 2012 and the Report of the Supervisory Board on its verification of the Annual Report, on the cover of net loss, on the remuneration of the Management and Supervisory Board members and granted discharge to the Management Board and the Supervisory Board. The resolution on the capital increase with cash contributions proposed by the Management Board and the Supervisory Board failed to receive sufficient support to be adopted. Due to the expiry of the office of the existing Members of the Supervisory Board, new Members of the Supervisory Board (capital representatives) were appointed as of 1 September 2013, namely Peter Groznik, Jože Bajuk, Enzo Smrekar and Goran Brankovič. The General Meeting appointed Ernst & Young as the auditor for 2013. The resolutions of the General Meeting were published on the SEOnet portal and on the Company's website www.pivo-lasko.si on 21 June 2013. The minutes of the General Meeting and appendices thereto are available on the website of AJPES (Business register of Slovenia).



General Meeting of shareholders of Pivovarna Union

On 23 July 2013, the 21st General Meeting of shareholders of Pivovarna Union was held. The General Meeting was briefed on the audited Annual Report for 2012 and the Report of the Supervisory Board on its verification of the Annual Report and of the Management Board's report on transactions with related parties on the remuneration of the Management and Supervisory Board members and granted discharge to the Management Board and the Supervisory Board. Under item 3 of the agenda (General Meeting's consent to the Sales agreement for shares in Poslovni sistem Mercator), the General Meeting adopted a resolution pursuant to Article 330 of the Companies Act, namely that it had been briefed on the elements and contents of the Sales agreement for shares in Poslovni sistem Mercator (MELR), and that it consented to Pivovarna Union selling to Agrokor 464,390 MELR shares, representing a 12.33% stake in Mercator for EUR 120 a share. The General Meeting appointed Ernst & Young as the auditor for 2013.

The resolutions of the General Meeting were published on the Company's website www.pivo-union.si on 23 July 2013. The minutes of the General Meeting and appendices thereto are available on the website of AJPES (Business register of Slovenia).

General Meeting of shareholders of the subsidiary Radenska

The 21st General Meeting of the shareholders of Radenska was held on 30 August 2013. The General Meeting was briefed on the audited Annual Report for 2012 and the Report of the Supervisory Board on its verification of the Annual Report and of the Management Board's report on transactions with related parties, on the remuneration of the Management and Supervisory Board members and granted discharge to the Management Board and the Supervisory Board. The General Meeting adopted a resolution on distributing EUR 302,557.20 as dividends of EUR 0.06 gross per share, with the remaining distributable profit of EUR 197,442.80 being posted to retained earnings. Due to the expiry of office of two Members of the Supervisory Board, the General Meeting appointed Ms Dragica Čepin and Ms Brigita Oplotnik Rajh as Members of the Supervisory Board (capital representatives) as of 14 October 2013. The General Meeting appointed Ernst & Young as the auditor for 2013.

The resolutions of the General Meeting were published on the Company's website www.radenska.si on 30 August 2013. The minutes of the General Meeting and appendices thereto are available on the website of AJPES (Business register of Slovenia).

Beginning of the sales process for shares in Radenska, Delo and Birra Peja

More information on the course of the sales process for shares in Radenska, Delo and Birra Peja can be found in Section 2.12.2 SALE OF THE INVESTMENTS OF THE LAŠKO GROUP of this Annual Report.

Filing criminal charges

On 25 October 2013, Pivovarna Laško filed criminal charges against the former director of Pivovarna Laško, Boško Šrot. Pivovarna Laško believes that reasons exist to suspect that the actions of the former director Boško Šrot, who pledged 345,304 RARG shares with NKBM pursuant to the pledge agreement of book-entry securities dated 5 June 2009 constitute an abuse of office or trust in an economic activity, a crime referred to in



Article 240 of the Criminal Code (KZ-1). The amount of damages Pivovarna Laško will incur as a result of this damaging transaction cannot be assessed at this moment in time (the actual amount of damages will be known when the shares are sold in the enforcement proceedings of NKBM against Pivovarna Laško - see event Enforcement of NKBM against Pivovarna Laško); thus Pivovarna Laško as the legal entity incurring damage will subsequently file a claim for damages.

Convocation of the General Meeting of shareholders of Pivovarna Laško

On 11 November 2013, the Supervisory Board of the Company convened the 22nd General Meeting of shareholders expected to take place on 13 December 2013 in order to inform shareholders of the conflict of interest existing with respect to members of the Supervisor Board Goran Brankovič and Enzo Smrekar, both of whom took office on 1 September 2013.

On 2 December 2013, member of the Supervisory Board of Pivovarna Laško Goran Brankovič forwarded to Pivovarna Laško a notice and documentation explaining that he is no longer director of Presad as of 30 November 2013. He terminated his employment with Presad on the same date. On 12 December 2013 Pivovarna Laško received notice of Enzo Smrekar's irrevocable resignation as member of the Supervisory Board of Pivovarna Laško, effective as of 12 December 2013.

After receiving the resignation of Enzo Smrekar and considering the potential conflict of interest of Mr Brankovič had ceased to exist, at its correspondence session of 12 December 2013, the Supervisory Board resolved to cancel the 22nd General Meeting of Pivovarna Laško, which had been scheduled for 13 December 2013.

Change in significant ownership stakes in Pivovarna Laško

On 20 December 2013, NLB transferred to Družba za upravljanje terjatev bank, d. d., Ljubljana (the Banking Asset Management Company - BAMC) its total holding of 2,056,738 PILR shares, accounting for a 23.51% share. Pivovarna Laško was informed of this by the BAMC on 9 January 2014. Pivovarna Laško received notification of the transfer (purchase) of the shares in Pivovarna Laško from NLB on 9 January 2014. Through this transfer, the BAMC has become the largest shareholder in Pivovarna Laško.

2.13.2 SUBSEQUENT EVENTS

Disposal of Mercator shares

On 14 June 2013, the consortium of sellers of the stake in Poslovni sistem Mercator (hereinafter: Mercator) comprised of Pivovarna Laško, Pivovarna Union, Radenska, NLB, Nova KBM, Gorenjska banka, Prvi faktor – Faktoring, Banka Koper, Hypo Alpe-Adria Bank, NFD, Banka Celje, and NFD holding (hereinafter: consortium of sellers) concluded with Agrokor, d. d. (hereinafter: Agrokor) an Agreement on the sale and purchase of a total 53% share in Mercator (hereinafter: SPA).

One of the conditions for fulfilling the SPA was the restructuring of Mercator's debt. This condition should have been fulfilled by 31 January 2014. On 31 January 2014, before expiry of the deadline, the buyer issued a statement to the consortium of sellers



extending the joint debt restructuring condition and thus the validity of SPA until 4 February 2014.

On 3 February 2014, the buyer issued another statement regarding a change in joint debt restructuring condition and extended the deadline and thus validity of the SAP until 28 February 2014.

On 28 February 2014, the consortium of sellers and Agrokor agreed and concluded an annex to the SPA. Inter alia, the annex redefines the price (now EUR 86 a share) and extends the deadline for transaction closing (now 30 June 2014).

The closing of the transaction is tied to the fulfilment of certain suspensive conditions. One of these is acquiring the necessary approvals of the Laško Group decision-making bodies.

At its 7th session held on 6 March and 12 March 2014, the Supervisory Board of Pivovarna Laško together with the Supervisory Board of Pivovarna Union was briefed on the contents of annex no. 1 to the share purchase agreement for Poslovni sistem Mercator, as well as on the basis and explanation of the sale. As the 7th session progressed, the Supervisory Board of Pivovarna Laško, separately from the Supervisory Board of Pivovarna Union, consented to the sale of 317,498 MELR (Poslovni sistem Mercator) shares to the company Agrokor, d. d., Trg Dražena Petrovića 3, Zagreb, representing a 8.43% stake in Poslovni sistem Mercator, at the fixed price of EUR 86 per share.

Furthermore, at its session held on 14 March 2014, the Supervisory Board of Pivovarna Laško consented to the Management Board's proposal that Pivovarna Laško, as the majority owner of Pivovarna Union, votes at the mandatory General Meeting of Pivovarna Union in accordance with Article 330 of the Companies Act in favour of the resolution allowing Pivovarna Union to sell 464,390 ordinary registered shares with the MELR ticker symbol issued by Poslovni sistem Mercator, representing a 12.33% share at a fixed price of EUR 86 per share, to Agrokor, d. d., Trg Dražena Petrovića 3, Zagreb. Pivovarna Union adopted the aforementioned resolution on 15 April 2014.

On 11 March 2014, the Supervisory Board of Radenska consented to the sale of Mercator shares to Agrokor at a price of EUR 86 per share, as did the Supervisory Board of Pivovarna Union on 14 March 2014.

After obtaining the aforementioned consent, all internal consents of the decision-making bodies of the Laško Group have been obtained for the sale of Mercator sharers owned by Laško Group companies to Agrokor.

Public auction for the sale of ČZP Večer shares

A public auction for the sale of shares of ČZP Večer was held on 28 February 2014 at 12 noon in the premises of Delo. The Committee determined that the security required for participation in the auction had not been paid within the set deadlines. Consequently, the auction was unsuccessful.



The subject of the public auction was a lot of 202,788 (79.24% interest) of ordinary nominal shares of ČZP Večer (VEMG), held by Delo. The starting price at the auction was EUR 3,098,000.00.

Delo will continue its efforts aimed at fulfilment of provisions of the Competition Protection Office of the Republic of Slovenia, Ref. No. 306-195/2008-57 of 23 September 2009 ordering it to dispose of 191,943 shares (75%) and successful completion of the sale of the ČZP Večer shares.

Settlement claims of Pivovarna Union and Radenska in accordance with Article 542 of the Companies Act (ZGD-1)

On 23 April 2012, Pivovarna Laško received the letters entitled "Settlement claim pursuant to paragraph 1 of Article 542 of the Companies Act", both dated 22 April 2014 and sent by Pivovarna Union and Radenska. In the letters, the aforementioned companies inform Pivovarna Laško of the unaudited amounts of their settlement claims aimed to cover the losses of both companies generated during the contractual group with Pivovarna Laško as the controlling entity. The unaudited amount of the claim of Pivovarna Union for the period from 11 April to 26 April 2012 amounts to EUR 0 (nil), while the unaudited amount of the claim of Radenska for the period from 6 February to 26 April 2012 amounts to EUR 1,044,183.99. An overview of the calculations was attached to the letters.

On 23 April 2014, Pivovarna Laško replied to the letters of Pivovarna Union and Radenska informing both companies that it has been informed of their claims. At the same time, both companies were requested to provide confirmation of the amounts by auditors.

In light of the aforementioned, provisions of EUR 1,044,183.99 have been disclosed in the financial statements of Pivovarna Laško for the financial year ended 31 December 2013.

Signing of the restructuring and standstill agreement

At the end of April 2014, Pivovarna Laško, Pivovarna Union and Radenska signed a Debt Rescheduling and Standstill Agreement with all of the 18 creditor banks. The Agreement defines important financial restructuring milestones, whereas final maturity of the majority of the Company's borrowings has been rescheduled to the end of 2016.

The project of determining the concept of operational and financial restructuring of companies continued over the entire 2013 period, with close participation of all companies involved, creditors, and consultants. The aim was to define an agreement that will on the one hand ensure financial stability of the Laško Group through long-term reprogramming of its borrowings and through deleveraging of the Group to a sustainable level of indebtedness, and on the other hand, to ensure fulfilment of creditors' expectations for rapid deleveraging and simultaneous maximising of the value for the owners. This will ensure the Laško Group of companies a sustainable development of quality brands and preservation of jobs.



A total of 17 various scenarios of the Group's restructuring plan were prepared and following the analysis from the financial, fiscal and legal points of view, the concept which provided the basis for the signed Agreement, was dully selected.

The Agreement regulates the Group's commitments to creditors until the end of 2016. In addition to deleveraging through repayments to creditors from the cash flow from the Group's principal activity, the Agreement sets important deleveraging milestones from the consortium sale of Mercator and processes for disposal of Radenska, Birra Peja and Delo, all of which began in 2013.

One of the key milestones for all stakeholders, including creditors, the Company and the owners, is the capital increase of Pivovarna Laško. After a transparent process of finding the investor, the capital increase will be discussed by the owners at the Annual General Meeting of Pivovarna Laško.

The first significant milestone is repayment of borrowings with the proceeds from sale of Mercator by the end of July 2014. The next milestone is the end of 2014, when repayment of borrowings is planned from the consideration received for disposal of investments in auxiliary activities. The third key milestone is deleveraging from additional injection of capital, planned for mid-2015.

If the first milestone is not fulfilled, the third one should be met at the earliest opportunity. In this case the restructuring would not be terminated, however the majority of creditor banks (85% of liabilities are due to creditor banks), may opt for a different option or solution. Non-compliance with the provisions of the Agreement, the amortisation plan based on the cash flow from the primary activity and deleveraging milestones, will terminate the agreement only, if so desired by the majority of creditors. 2.14 Development milestones

187 YEARS HAVE PASSED SINCE THE VERY BEGINNING AND PIVOVARNA LAŠKO HAS GROWN OUT OF A LOCAL BREWERY TO A LEADING BEER PRODUCER AND TOGETHER WITH THE COMPANIES IN THE GROUP IT IS ALSO THE LEADING PRODUCER OF MINERAL AND NATURAL WATERS AND NON-ALCOHOLIC AND OTHER DRINKS ON SLOVENE MARKET.

1825

Historical beginnings of Pivovarna Laško. A producer and seller of honey and gingerbread, Mr Franz Geyer, establishes a crafts brewery in the former Valvasor Špital, whose building still stands today.

1838

The brewery is bought by Mr Heinrich August Uhlich who begins to export beer to India and Egypt.

1867

Mr Anton Larisch constructs the largest brewery of the time in Lower Styria at the bottom of St. Kristof and Šmihel.



1889

The brewery is purchased by an extremely nationally oriented brewer from Žalec, Mr Simon Kukec. As a novelty, he brews light and dark thermal beer as well as Ležak and Porter beer which is later renamed to Dark Laško beer. The Laško pivo brand becomes increasingly more validated and is also sold in Egypt and Budapest.

1924

The brewery brews its final beer. The Ljubljana Brewery Union secretly buys up the majority of its shares and ceases production. The closing of the Laško brewery has more than just a material effect. The innkeepers warmly welcome the initiators of the brewery’s reopening.

1929

The representatives of innkeeper cooperatives decide to construct a catering shareholding brewery in Laško.

1938

After many complications and severe opposition by the competition, they open the shareholders’ brewery Pivovarna Laško and present the new Laško beer under the trademark Zlatorog. Drinkers of the beer like the beer so much that German occupiers allow maintenance of the Laško beer brand due to the quality of the beer.

1944

Because of the bombing of the railway bridge the brewery was also hit and demolished. After World War II production in the brewery began again already in 1946 and was officially established in 1947.

Since World War II Pivovarna Laško has constituted a single company the entire time. Particularly after 1960, the Company recorded an extraordinary development in sales: from 60,000 hl to 1,300,000 hl.

1990

After harmonisation with the provisions of the Companies Act, the organisation of the socially owned company is entered into the court register on the basis of the court decision No Srg 23/90 of 31 May 1990.

1991

In accordance with the provisions of the Companies Act, the Company is transformed into a public limited company in mixed ownership. On 30 September 1991 the share capital and social capital of the company is assessed and a division of shares implemented.

1995

At the first General Meeting of shareholders on 20 April 1995, Pivovarna Laško is subject to ownership transformation into a joint stock company with known owners. The



Company was entered into the court register with decision no. Srg 673/95 of 8 September 1995. The Company becomes a public limited company with more than 15,000 shareholders.

2000

Capital connections with Radenska, Radenci, Jadranska Pivovara, Split, and Vital, Mestinje, represent one of the most significant turning points in the Company history. A new business strategy for development begins.

2002

The Company succeeds with a public takeover bid of Pivovarna Union, Ljubljana. It obtains 47.86% of all its shares.

2003

Continuation of capital investments. The Company gains a 24.98% share in Delo, Ljubljana. The Company becomes its largest owner.

2004

In December, the Company obtains additional 27,011 shares (5.98% of the assets) of the public limited company Union Ljubljana. Pivovarna Laško becomes a 53.85% owner of all shares of Union.

2005

In February the Company buys the entire ownership stake namely 186,400 shares of the issuer Pivovarna Union, Ljubljana from Interbrew Central European Holding B. V., Netherlands, thus becoming the majority owner with a 95.17% stake of the company.

In May, the Competition Protection Office issues consent for the announced concentration of the companies Pivovarna Laško and Pivovarna Union.

2006

Transfer of 106,950 newly issued shares of Poslovni sistem Mercator, Ljubljana, from Slovenska odškodninska družba to Pivovarna Laško. After the aforementioned transfer, the public limited company Pivovarna Laško owns 317,498 MELR shares or a 8.34% stake in Mercator.

2007

The takeover bid for the buyout of shares of the company Delo, časopisno in založniško podjetje, Ljubljana. The acquirers Pivovarna Laško, Radenska, and Talis now possess a total of 628,044 shares, representing a 94.09% stake in the target company.

2008

A takeover bid for the purchase of shares of Pivovarna Laško was published in February. The acquirers, Infond Holding, Maribor, Cestno Podjetje Maribor, Fidina, Ljubljana and Koto, Ljubljana, acquire a total of 4,818,151 shares, representing a 55.08% stake in the



target company. The acquirers offer EUR 88.00 per PILR share and 2,488 shareholders of Pivovarna Laško accept the takeover bid. As at 31 December 2008, Infond Holding is the majority owner of the company Pivovarna Laško with a 52.97% stake.

2009

In the period from August to September 2009, the creditor banks, namely NLB, Hypo Alpe-Adria-Bank, Abanka, Banka Celje, Gorenjska Banka, Probanka, Nova kreditna banka Maribor and Banka Koper were acquiring shares of Pivovarna Laško (PILR) held by the company Infond Holding and pledged as insurance for the bank loans. The banks thus acquired significant ownership stakes in Pivovarna Laško. As of 5 August 2009, Infond Holding, Maribor is no longer the majority owner of Pivovarna Laško.

2010

On 23 April 2010, the Supervisory Board confirms the bases of the new business model and reorganisation of the Laško Group that has been prepared and submitted by the Management Board and also confirms the bases for the growth strategy of the Laško Group up to 2014. The new business model envisages the restructuring of the Pivovarna Laško Group into a contractual group and afterwards into a unified company.

In their letter dated 18 August 2010, the creditor banks (some at the same time the owners) of Pivovarna Laško responded and requested amendments to the strategy in terms of the disposal of all Mercator shares owned by the Laško Group. As a result, the Group presented a newly amended strategy of the Pivovarna Laško Group to 2014, which includes the sale of the complete 23.34% ownership stake in Mercator. The strategy was approved by the Supervisory Board of Pivovarna Laško at its 22nd regular meeting of 27 September 2010.

2013

On 20 December 2013, NLB transferred to Družba za upravljanje terjatev bank, d. d., Ljubljana (the Banking Asset Management Company - BAMC) its total holding of 2,056,738 PILR shares, accounting for a 23.51% share. Pivovarna Laško was informed of this by the BAMC on 9 January 2014. Pivovarna Laško received notification of the transfer (purchase) of the shares in Pivovarna Laško from NLB on 9 January 2014. Through this transfer, the BAMC has become the largest shareholder in Pivovarna Laško.

Annual Report 2013 / Sustainable development


3 SUSTAINABLE DEVELOPMENT 3.1 Human resources management in the Laško Group

THROUGH THE REORGANISATION AND OPTIMISATION OF BUSINESS PROCESSES, IMPROVED TECHNOLOGICAL EQUIPMENT OF THE COMPANIES AND IMPROVED EDUCATIONAL STRUCTURE, THE GROUP HAS SYSTEMATICALLY OPTIMISED THE NUMBER OF EMPLOYEES IN RECENT YEARS.

Managing successful teams that create leading brands with added value for customers and shareholders requires the right people.

The Laško Group is aware of the importance of its key staff, and thus implements programmes aimed at motivating and stimulating our employees to fulfil the goals set by the Laško Group. As a result, in 2013, some major steps were taken in our human resources strategy. We enhance the knowledge and skills of our employees through practical work, training and a culture that rewards people for taking responsibility and achieving results. The collective agreement for the industry adopted in 2012 provides the basis for focused management and rewarding employees based on their performance. In 2013, we conducted an annual performance review of all employees, thus establishing the conditions allowing the transition to the new employee bonuses system. This has empowered management employees and underscored their responsibility for achieving the set goals. We reached agreement with employee representatives on the system for determining the variable part of wages in 2014.

As a socially responsible company we are aware of the importance of developing young talents. As a result, Pivovarna Laško, Pivovarna Union and Radenska again in 2013 published a competition and selected ten of the best students to receive our company scholarships. 3.1.1 EMPLOYMENT POLICY

Through the reorganisation and optimisation of business processes, improved technological equipment of the companies and improved educational structure, we have systematically optimised the number of employees in recent years. We observe the strategies of individual companies and the entire Group and individual workloads and complexity of the work process in this endeavour. The good cooperation developed with our employees over the years and strict respect for the labour law are of key importance. 3.1.2 HUMAN RESOURCES DEVELOPMENT

Human resources development, both in the professional and personal sense, it key for achieving the Company's goals. The Group ensures development of our staff after the need to develop additional know-how and skills has been identified. Employees can acquire additional know-how and skills through:

� the transfer of best practices and know-how within the Group,

external training aimed at acquiring specific expert skills not available within the Group,



a combination of internal and external training.

3.1.3 NUMBER OF EMPLOYEES

Number of employees per Laško Group as at 31 December 2013

Note: *Pivovarna Laško and Pivovarna Union share the same Chairman and Members of the Management Board, which are all employed part-time in each of the companies. In both companies, the number of employees as at 31 December 2013 equals the actual number of employees, while five employees have been deducted from the grand total for the Laško Group. The share is calculated under the assumption that Members of the Management Board are employed part-time.

The Laško Group employs 1,591 employees, one less than in 2012. Employees in the Group's beverage companies prevail.

According to the decision of the Supervisory Board, as of 1 March 2013, the Chairman and Members of the Management Board of Pivovarna Laško are also employed part-time by Pivovarna Union. At the same time, their employment contracts were re-defined; they now envisage a lower fixed salary component and a newly introduced variable component which is paid providing the clearly defined targets are met. Number of temporary and permanent employees

Share in %

Pivovarna Laško, d. d.*5 members of the

Management Board 337 21.0Radenska, d. d., Radenci 204 12.8

Pivovarna Union, d. d., Ljubljana*5 members of the

Management Board 378 23.6Jadranska pivovara - Split, d. d. 11 0.7Vital Mestinje, d. o. o. 34 2.1Delo, d. d., Ljubljana 381 23.9Izberi, d. o. o., Ljubljana 14 0.9Birra Peja, Sh. a., Kosovo 206 12.9Laško Grupa, d. o. o., Hrvaška 31 1.9Total 1,591 100.0

Number of employees

(number of employees Differenceas at 31 December) 2011 2012 2013 2013-2012Permanent employment 1,329 1,279 1,282 3Temporary employment 280 288 273 -15Part time employment 21 24 29 5Interns 2 1 7 6Total 1,632 1,592 1,591 -1



Eighty percent of employees are employed for an indefinite period of time. Most temporary employees are employed by Birra Peja. Compared to the previous year, the share of employees on temporary employment contracts fell by 15 in 2013. Twenty-nine employees, mainly disabled workers, are employed for a definite period of time.

Educational structure of employees

As at 31 December the educational structure of employees was as follows: Number of employees by level of education

Age structure of employees

As at 31 December 2013 the actual age structure of employees was as follows: Number of employees by age category

3.1.4 EMPLOYEE SATISFACTION

In 2013, employees of the Laško Group enjoyed further benefits such as:

payment of contributions to the additional voluntary pension scheme for all employees on permanent employment contracts,

holiday accommodation at reasonable prices in Laško Group facilities located at the seaside, in the mountains and thermal spas. Employees can make use of the holiday accommodation of various Group companies,

Difference(education as at 31 December) 2011 2012 2013 2013-2012Primary school 204 201 195 -6Vocational school 397 355 349 -6Comprehensive school 511 515 539 24College 126 130 139 9University 355 351 330 -21Masters' Degree 36 34 33 -1Doctor's Degree 3 6 6 0Total 1,632 1,592 1,591 -1

Difference(age as at 31 December) 2011 2012 2013 2013-2012

Younger than 30 112 101 122 21Between 30 and 40 467 422 374 -48Between 41 and 50 588 606 578 -28Between 51 and 60 447 433 487 54Older than 60 18 30 30 0Total 1,632 1,592 1,591 -1



awareness raising and health and safety at work training, a pleasant working environment and regular medical checks.

In addition, the employees were able to cooperate and provide useful proposals at the level of the organisational unit and at the level of the company as a whole. To this end, so-called suggestion boxes have been introduced where employees can post their suggestions and comments. 3.1.5 EDUCATION AND TRAINING

Education and training is aimed at acquiring specific competences of the staff that are relevant to the successful operations of our companies. Therefore, the available funds have been spent on targeted seminars, courses and additional educational programmes. Courses on IT, foreign languages, environmental protection, legislation and other specific skills in various work areas have been provided to our employees.

In 2013 we applied to the tender of the Slovene Human Resources Development and Scholarship Fund for financing the establishment of competence centres for the 2012 - 2015 period. Pivovarna Laško was selected as the entity responsible for the Beverage production competence centre which brings together 17 companies in the industry, including Pivovarna Union, Radenska and Vital Mestinje. The aim of the project is to raise the competences of key human resources in the beverage industry and ensure greater competitiveness and fortify our market position. As part of this project, employees participated at conferences and seminars both in Slovenia and abroad. In 2013, 22 microbiology, IT, project management and customer interest and expectation recognition training sessions were organised. Internal training was also organised as part of the project, enabling the exchange of knowledge, experience and industry best practices. 3.1.6 SAFETY AND HEALTH AT WORK

Employees are regularly made aware of the importance of safe and healthy working conditions and are also provided such conditions. They are also regularly provided with the prescribed protective equipment and means of protection. Regular checks of posts, the control of using working and protective clothes and the emphasis placed on potential threats related to a post play an important role in the prevention of accidents at work. Regular training courses focusing on safety and health at work are often provided as well as regular medical checks.

Compared to 2012 the number of workplace injuries has fallen. The reason mainly lies in more frequent verifications that employees use personal protective equipment, and the more frequent warning of dangers, as well as in changes to the manner of hiring employees (tenders, interviews).

In 2013, seven Pivovarna Laško employees were involved in workplace accidents, four less than in 2012.



3.2 Communications

IN 2013, PIVOVARNA LAŠKO CONTINUED TO IMPLEMENT ITS COMMUNICATION STRATEGY BASED ON SYSTEMATIC, TWO-WAY COMMUNICATION OF THE COMPANY WITH ITS INTERNAL AND EXTERNAL ENVIRONMENT. IN ADDITION, COMMUNICATION THROUGH SOCIAL NETWORKS CONTINUED.

In 2013, Pivovarna Laško continued its communication strategy of systematic two-way communication between the Company and its internal and external environment. The team of Pivovarna Laško provides communications in accordance with the plan and adapts the tactics and tools to interests of various groups of the public that impact the operations of the Company. 3.2.1 COMMUNICATIONS WITH INVESTORS

In accordance with the law, Pivovarna Laško continues to provide investors and potential investors with sufficient, accurate and timely information, thus complying with the Company’s information disclosure policy which encompasses business performance in the past and strategic development of the Company in the future.

Since the shares of Pivovarna Laško are quoted on the Ljubljana Stock Exchange, the Company is legally obligated to publish the prescribed information on the website of the aforementioned stock exchange (seonet.ljse.si), and to also publish this information on the website of the Company (pivo-lasko.si).

Communication with investors and potential investors was performed through regular General Meetings of shareholders, press conferences organised for the purpose of reporting on interim and annual operating results, individual meetings of representatives of the Company with representatives of investment companies, and the announcement of interim and annual reports in printed media and on the Company’s web site. 3.2.2 COMMUNICATIONS WITH THE MEDIA

Intensive media communication activities were implemented in 2013. Pivovarna Laško regularly informs the media of the activities of the Company, its business operations, plans and strategic guidelines via press releases. Media relations are based on planned, two-way cooperation, timely and concurrent responses to the questions of journalists in accordance with applicable standards of the public relations profession. 3.2.3 COMMUNICATIONS WITH CUSTOMERS

In 2013, for the fifth year in a row, operators were available at the 080 1825 toll-free telephone number that accepts customer orders for all Laško Group products. The call centre located in the Distribution Centre of the Laško Group in Ljubljana takes orders for all distribution channels (trade, catering and institutions). In its five years of operation, the call centre has established itself well among customers who see it as a key tool for ordering products which is now easier and more user-friendly than before. We also communicate with our customers through the field representatives of our sales department and at one-on-one customer meetings.



3.2.4 COMMUNICATIONS WITH EMPLOYEES

Communications with employees are based on healthy mutual relationships and are one of the essential elements for attaining good business results of the Company. The proper implementation of internal communication plans provides for the sufficient information, motivation and satisfaction of employees. Pivovarna Laško concurrently informs employees of relevant information and of press releases. At the highest frequency points in the Company, bulletin boards are available and in recent years information provision via the Internet has been gaining importance. The Intranet systems of Pivovarna Laško and of the Laško Group are also important internal communication tools. The use of this new tool has increased alongside the increased needs for mutual communications between different organisational departments and mixed project teams. The Intranet provides interested persons with shared access to specific documents. As a communication tool it has significantly contributed to the increased effectiveness of business processes.

In five years after resuming the publication of the Pivovarna Laško newsletter “Laško brewer” which is intended for employees of Pivovarna Laško and colleagues in the Laško Group and also available to other interested persons, the newsletter has established itself as one of the key information tools for informing the internal and other interested groups of the public. At the end of 2013, the newsletter's design was upgraded in order to provide continuity with the online application which will be released in 2014. Employees can receive it in electronic format; printed copies are available at five points within the Company and at two points in other subsidiaries, while printed copies are also provided to Pivovarna Laško retirees, the press and representatives of other segments of the public. The newsletter is also available as a file on the Pivovarna Laško website.



3.3 Corporate social responsibility

DESPITE THE CHALLENGING ECONOMIC ENVIRONMENT, IN 2013 WE CONTINUED TO SUPPORT SPORTS AND CULTURAL PROJECTS AND PROJECTS THAT REDUCE THE ENVIRONMENTAL FOOTPRINT OF THE COMPANIES, NAMELY BY REDUCING AND STREAMLINING THE USE OF NATURAL RESOURCES AND ENERGY.

Social responsibility is one of the most important traditional values adopted in the companies of the Laško Group. In 2013 we continued implementing projects that ground the Laško Group companies in their environment despite the challenging economic environment. We continued to reduce the net weight of plastic bottles and support recycling projects, thus contributing to reducing the burden on the environment. We also continued projects aimed at reducing the environmental footprint of the companies by reducing and rationalising the use of natural resources and energy.

Laško Group companies remained some of the most important Slovenian sponsors of top sports in 2013 and thus contributed to the achievements of the Slovenian team, other Slovene sports teams and individual athletes at various competitions. For example, in 2013, Laško Group companies were involved in the success of Slovenia's national football team and the Maribor Football Club, in organising the European Basketball Championship, in the success of the Slovenian national basketball team, Slovenian Nordic sportsmen and sportswomen, the success of the Celje Pivovarna Laško Handball Club, in organising major running and cycling marathons, and many other projects. We successfully continued our cooperation with the largest film festival in the region (the Sarajevo Film Festival).

In 2013, Pivovarna Laško continued to organise one of the most visited tourist events in Slovenia – Pivo in cvetje (Beer and Blossoms) Festival that we have managed to give new impetus and added value in terms of the content for the numerous guests who have been coming to this event for decades. We celebrated our 50th anniversary in 2013. The Zlatorog long-distance trail of pride has been well accepted by hikers, and we continued being patron to Slovenian contemporary music that received overwhelming response among the musicians.

The companies of the Laško Group continue to actively support civil society organisations at the local or national level.



3.4 Environmental protection

ONE OF THE GOALS OF THE LAŠKO GROUP IS TO INCREASE THE NUMBER OF BEVERAGE UNITS SOLD IN RETURNABLE GLASS BOTTLES, WHICH ENSURE EXCELLENT QUALITY. THE USE OF SUCH PACKAGING SIGNIFICANTLY CONTRIBUTES TO REDUCING THE VOLUME OF WASTE, RAW MATERIALS AND ENERGY SOURCES USED.

All Laško Group companies are aware of the importance of environmental protection and sustainable development. Despite the fact that less funds are available to invest in technology and thus also in environmentally more advanced systems, we are constantly seeking for ways to supplement our existing technology processes aimed at improving environmental and costs efficiency, something which is of great importance in the modern business environment. To this end we are implementing the relevant technical and organisational measures and are recording constant progress in using fewer natural resources, energy and hazardous substances.

We can also declare that the operations of the Group companies fully comply with all requirements provided by law. The external assessments of our environmental management systems and other quality systems have revealed no non-conformities, only some recommendations that can help us improve our existing systems.

One of the goals of the Laško Group is to increase the share of beverage units sold in returnable glass bottles, which currently stands at 40%. We all realise that returnable glass bottles are more sustainable from several aspects, including social, economic and environmental aspects. Glass bottles preserve quality excellently and are economical for the consumer, something that is especially important today.

To this end we have and continue to implement several projects. One such project is the "Radi vračamo" project, which includes the market launch of our new case for ten bottles, which began development as early as in 2007. The use of glass packaging significantly contributes to reducing the volume of waste, raw materials and energy sources used.

We are also making progress in using recycled PET containers for beverages, which can only be achieved by using the best technology available and following the vision of environmental responsibility, thus contributing to the strengthening of our brands.

In addition to constant improvements aimed at saving all raw materials, protecting our water sources and effective energy management, we will strive to harmonise reporting, search for synergies and exchange our experience in best environmental practices. 3.4.1 ECOLOGICAL REPORT OF PIVOVARNA LAŠKO

The Company's sustainable development in terms of environmental management is a constituent part of the Company's management, which can only be achieved through a concerted effort of all employees. We regularly implement the following environmental activities: we measure and monitor our impact on the environment, introduce the best technology available into our technology procedures ensuring efficient use of materials



and energy and a reduction in emissions and waste, while we design our production and products in a manner that mitigate the negative environmental impacts.

At Pivovarna Laško, specific long-term improvements to the functioning of the anaerobic waste treatment plan have resulted in major progress in our use of renewable energy sources. The biogas produced from waste water represent an important energy source used for heating.

Our production companies are committed to investments in the environmentally most advanced products and solutions, and pay green taxes, while at the same time we expect a response from the relevant state institutions which could introduce refunds for environmental investments.

Due to corrosion and leakage, we performed challenging repair to the MAB tank of the anaerobic waste treatment plant. During the six months of repairs, our rate of obtaining biogas from waste water dropped. As a source of heat energy for the production of steam in the boiler room, the biogas generated in the waste water treatment plant amounted to 318,000 m3 or 11 % of the total natural gas consumption. The anaerobic waste water treatment plant of Pivovarna Laško continues to ensure adequate treatment of the entire quantities of waste technological water. As an authorised measurement provider, the Institute of Public Health Maribor regularly performs monitoring of influx and outflux of the treatment plant and establishes a high level of purification in accordance with the applicable regulations.

We have begun establishing the ISO 14001 standard, and we are expecting the first assessments and certifications to take place in 2014. Thus will result in improved process implementation, records, goals and a systemic approach to our environmental activities.

We provided the Slovenian Environmental Agency with all the relevant reports in a timely manner and regularly paid green taxes. In May, a regular annual environmental inspection was carried out that confirmed our very good environmental status. Only one measure was requested relating to establishing records on drafting the Annual Report for cooling devices that contain more than three kilograms of harmful substances to the environment.

The needs of the technological processes were completely met with the energy installations in line with the relevant norms. At the same time, monitoring of emissions and measurements have proved that the relevant processes are managed within the framework stipulated by law.

The specific use of electricity for production and other processes amounts to 12.3 kWh per hl of beer, representing a drop of 12% compared to the previous year. Specific consumption of natural gas totalled 2.7 Sm3 per hl of sold beer and is thus 9.5% lower than in the previous year.

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In the second half of the year we launched a new plastic bottle for the Oda mineral water. This bottle was designed as part of the brand renewal and is 25% lighter than the previous plastic bottle, representing a significant saving in the materials used in their production and in logistics. As a result, the new plastic bottle is more environmentally-friendly with a significantly smaller CO2 footprint.

The annual use of chemicals is presented in the following two tables.

Annual use of chemicals

Specific use of chemicals (annually)

In the area of water sources we acquired environmental permission for using the Lurd water source for technology purposes. In 2014 we plan to acquire environmental permissions for all our needs for technology water.

In terms of hydrology, 2013 was one of the most favourable in our region. Due to the relatively favourable winter, the conditions in reservoirs under our management have improved, resulting in no difficulties in quantity terms. We are of course aware of the fact that the conditions will deteriorate in the future. Due to this, as new well was drilled at Trije studenci, which will supply the Trije studenci public water supply. This public water supply has been subject to the greatest expansion in recent years.

After several years of negotiations with land owners, the public water supply at Jagoče was replaced and a new pumping stations constructed. This has significantly improved the quality of the water supply. This area is now provided water from the Laško public supply system.

A new water reservoir with a water preparation facility was constructed in Jurklošter. The surroundings of the reservoir have also been organised. This investment will enhance the reliability of supply. The water reservoir and renovated pipeline also contribute to greater water safety of the area.

Unit of measure 2013 2012 Index 13/12

Sodium hydroxide, 35% NaOH kg 327,879 310,250 105.7Nitric acid, 50% HNO3 kg 46,604 55,599 83.8Sulphuric acid, 96 % H2SO4 kg 48,040 47,560 101.0Lubricants kg 26,900 31,915 84.3

(kg / hl) Target 2013 2013 Index 13/12 Target 2014

Caustic soda, 35% NaOH 0.35 0.32 101.3 0.30Nitric acid, 50% HNO3 0.05 0.05 114.8 0.06Sulphuric acid, 96 % H2SO4 0.06 0.05 96.0 0.05



After many years, last year we finally obtained environmental permissions for most of the reservoirs under our management. We are currently obtaining the remaining permissions, which we expect to be issued this current year. 3.4.2 ECOLOGICAL REPORT OF PIVOVARNA UNION, LJUBLJANA

In the course of its ordinary activities, Pivovarna Union places great attention to environmental concerns. Its environmental policy is committed to the constant improvement of environmental management and prevention of pollution as well as compliance with statutory requirements related to environmental management. For many years the company has focused on efficient use of raw materials and energy sources and protecting natural resources, which is reflected in the declining trends of the past several years. We are aware that we need to protect the environment while remaining competitive in a more and more difficult economic environment. In light of the reduced scope of investments that could contribute to more sparing use of raw materials and energy, this is the main focus of those responsible. In recent years we have more intensively focused on in-process measures and have thus taken a systematic approach to determining so-called KPIs (key process indicators), which not only reflect the value in a certain moment or period, but which we also hope reflect our progress. In addition to our own awareness of the importance of such measures for continuing the favourable trends of materials usage, this is also motivated by the requirements of various standards and assessments (ISO 9001, 14001, IFS), which provide an independent and external view of our performance.

This is also one of the reasons for us introducing CSRE systems (target monitoring of energy usage) at Pivovarna Union, and the MEPIS system (product monitoring system) at Laško Group companies. The latter will allow us to monitor the most important ratios of each Group company, and on the other hand we will be able to compare the companies according to the same criteria, allowing us to upgrade and optimise processes.

In 2013, Pivovarna Union continued to operate in accordance with all environmental legislation and standards.

In 2013 the administrative proceedings for the change of our environmental permit (EP) concluded - resulting in us no longer needing to reduce the emissions of the beer-making facility. These emissions concern volatile organic compounds from the must and cooking vats. Had this not been the case we would have had to control these emissions with purification devices, which would translate into higher costs. Due to the changes to the EP, the deadlines for compliance of our airborne emissions from the burning devices have been shifted into 2017, allowing us to amend our investment plan accordingly.

Since the emissions of surface-active substances (SAS) were exceeded in 2012, we analysed the reasons and occurrence of SAS in our waste water; on this basis we remedied the cause for the elevated emissions. As a result, the 2013 parameters of waste water monitoring at Pivovarna Union were satisfactory.



In 2013 we also conducted measurements of noise emissions into the environment; after minor technical measures were implemented at a minimal cost (reworking of the ventilation channels from the production plant), the noise emissions into the environment complied with the relevant legislation.

During its audit of excise duties, the Customs Administration also audited our green taxes reporting in 2013. The Customs Authorities demanded we establish records and archive the data that serves as the basis for reporting on green taxes paid for waste packaging. Pivovarna Union established the required records.

In 2013 we rationalised our use of chemicals compared to the previous use. We managed to reduce the quantities used on account of introducing single phase washing in the filtration plant, significantly reducing the use of cleaning agents and waste water generated. In addition to introducing single phase washing we also changed the washing frequency; the microbiological and cleanliness indicators remained as favourable as before. However, due to the ageing devices and issues with transport conveyors, our use of lubricants has significantly increased. Annual use of chemicals

In past years we recorded a declining trend of water use as a result of various measures. However, in 2013, we used more water than in the previous year. It should be said that the growth index mirrors the index of beverage quantities bottled. Despite the implemented measures, our use of water per unit of beverage produced has remained at the level of 2012. The underlying causes for this halt in the declining use trend include abandoning the recuperation process due to microbiological issues and more precipitation (8 thousand m3). Abandoning recuperation resulted in a loss of about 20 thousand m3 of water.

The current ratios are significantly impacted by the number of products and size of production batches, which however cannot be shown due to the existing manner of data monitoring. Thus in 2014 we will introduce reporting which will significantly more precisely define the ratios and success of each particular process and in-process activity.

Unit of measure 2013 2012 Index 13/12

Sodium hydroxide, 25% NaOH kg 924,772 1,016,825 90.9Nitric acid, 50% HNO3 kg 72,460 73,234 98.9Hydrochloric acid, 30% HCl kg 301,112 398,795 75.5Lubricants kg 28,262 18,896 149.6Single-phase CIP detergent, (Calgonit SN 588)

kg 7,612 10,002 76.1

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transform the natural wealth of this environment, natural mineral waters to marketable, attractive, quality and successful products.

Since our rational use of raw materials and energy sources is closely linked to operating costs, the benefits are magnified.

Environmental activities are linked to fulfilling the environmental goals of previous years and the current goals in 2013. The objectives were geared towards reducing the environmental burden of waste water and waste and streamlining energy consumption. Some programmes aimed at reaching the goals (especially those linked to investments) have been slightly scaled down or postponed to future operating (investment) periods due to the ongoing cost-cutting project of the Group. Traditionally, the environmental objectives are geared towards the protection of water resources, reduction of environmental burden related to waste water, good waste management and reduction of emissions to the air and streamlining of energy consumption. The projects covering environmental protection activities in 2013 were:

activities in wells (revised ordinance on the protection of water protection zones, determination of the circle of potential contaminants, measures against polluters);

cooperation with local and state authorities in the field of legislative matters;

protection of water resources - compliance with the law;

regulating the overall image of wells and investment maintenance of the surroundings and equipment of wells; also in compliance with the law;

activities to obtain concessions for the extraction of natural mineral, spring and tap water;

use of recycled PET materials;

reduction and optimisation of packaging materials;

energy reviews and implementing the relevant findings (monitoring and optimising energy sources, processes and equipment);

monitoring of natural mineral water, drinking and technological waters and waste water;

renovation/replacement of the deteriorated doors at the filling facilities;

inspection and replacement of deteriorated parts of the compressed air and CO2 networks;

records of the quantities of pumped water and the use of CO2;

seeking new technological solutions to reduce waste quantities;

measurements and, if necessary, remediation of noise in the production area.

In 2014, our principal environmental goals remain unchanged. We especially expect to focus more on activities related to the results of the energy review and equipment replacement. In 2013 we replaced the lighting of approximately 5,200 m2 production and water-housing facilities. In early 2014 we will replace our oldest plastic bottle-



blowing machine with a combined blowing and filling bloc and compressor. We expect these two projects to result in significant energy savings and reduction in our environmental footprint. In the field of logistics we also made a first but significant step towards reducing our environmental footprint. In 2014 we will take delivery of our first large (4.5 ton) electric forklift. Currently, all such large forklifts at Radenska exclusively run on gas. In the future - funds permitting - we expect to continue to replace gas forklifts with their environmentally more friendly electric counterparts.

Preserving the water protection area, a vital resource of our Company, remains constant objective of Radenska. Use of significant energy sources

Also in 2013, the regular annual environmental inspection was successfully conducted. It was established that the plant operates in line with the environmental legislation and the environmental permit issued. We provided an additional explanation of our management and supervision of the VČM-1 well for which we have a concession, as well as an explanation on our use of the water from wells where the relevant concession is still pending.

In 2014 we expect to resolve the issue of concessions and water rates which we applied for in 2004, but have as yet not received the concession deeds (like many other applicants). In light of our discussions with the Ministry of Agriculture and the Environment held in 2013 we expect to be obligated to pay concession fees also for the past, albeit calculated at an adjusted formula.

In light of the finding of the environmental inspector from 2012 (inappropriate measurement location for two gas boilers) and some minor changes compared to the issued EP, we received a modified EP in November 2013 and now comply with all regulations, environmental standards and requirements.

In 2013, in accordance with Article 14 of the Rules on radioactive waste and spent fuel management (Official Gazette of the RS, no. 49/2006), we transferred the ownership of one spent device used to monitor the level of bottle filling to the Agency for Radioactive Waste.

In 2013 ZVD Ljubljana inspected our remaining radiation sources and issued the relevant inspection report. We also acquired an inspection report for the X-ray machine used to control the level of filling in cans.

Cumulative Cumulative Cumulative Index Index Spec. indexUnit figure figure figure Use Use Use per piece

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Water used m3 167,161 165,767 186,125 89.1 100.8 98.2

Waste water m3 146,617 146,157 158,499 92.2 100.3 97.7Electricity MWh 9,279 9,263 9,508 97.4 100.2 97.6

Natural gas Sm3 854,439 851,832 916,689 92.9 100.3 97.7



Waste

In Radenska, waste is managed in accordance with the legislation and the recommended sequence is observed: separate waste collection, quantity reduction, reuse, processing and disposal.

A special press and a device for grinding plastic waste are used to reduce the volume of waste foil and paper.

Waste PET-material generated during production is recycled by us. All waste plastic is sold to companies that deal with the recycling of such materials.

The system of separate waste collection has been introduced in all production plants, technological facilities as well as in the warehouses and in business buildings. Thus the volume of municipal waste has been reduced. 3.4.4 ENVIRONMENTAL PROTECTION IN VITAL MESTINJE

In the area of environmental protection, the company constantly ensures the fulfilment of the requirements defined in the environmental permit. This essentially means implementing the prescribed number of monitorings of waste and cooling water, carefully managing other types of waste and appropriate record keeping. 3.4.5 ECOLOGY IN DELO, LJUBLJANA

Delo has elaborated a waste management plan that is constantly supplemented and upgraded in compliance with the permanent policy of providing conditions to meet the requirements of the environmental legislation and to satisfy the regulations governing waste water, waste and clean air. Waste raw materials are recycled, while materials harmless to the environment and humans are used in production. In 2012, a noise protection wall was set up in the eastern part of the Printing Centre that borders the residential area. Thus the noise impact on the environment has decreased by 10 dB.

The Printing Centre also shifted to the system of renting cleaning cloths that are washed and re-used in 2012. This has reduced the number of cleaning cloths by more than a half. In the middle of the year , most printed matter shifted to improved newsprint. This results in an increased share of recycled paper used in our products.

In the field of technology, the Printing Centre has continued searching for solutions that are more energy efficient. Due to a change introduced in the technological process of magazine production one phase was abandoned - sewing. This is reflected in reduced electricity consumption and decreased quantity of waste.

In the process of making printing forms, chemicals are currently used to develop them. In autumn tests started in the printing works to enable this phase without the application of these chemicals. Plates without chemicals are to replace the old ones in one or two years.

Annual report 2013 / Financial report – Contents


ANNUAL REPORT OF THE LAŠKO GROUP AND PIVOVARNA LAŠKO, D. D.,

FOR 2013

4 FINANCIAL REPORT

OF THE LAŠKO GROUP

C O N T E N T S

4.1 Statement of management responsibilities 131 4.2 Independent auditor's report 132 4.3 Audited consolidated financial statements of the Laško Group 134 4.3.1 Consolidated statement of financial position 134 4.3.2 Consolidated profit or loss account 136 4.3.3 Consolidated statement of other comprehensive income 138 4.3.4 Consolidated statement of changes in equity in 2013 139 4.3.5 Consolidated statement of changes in equity in 2012 140 4.3.6 Consolidated statement of cash flows 141 4.4 Notes to consolidated financial statements 143 4.4.1 General data 143 4.4.2 Statement of compliance with IFRS 143 4.4.3 Use of new and renewed IFRS and IFRIC interpretations 143 4.4.4 Significant accounting policies 146 4.4.5. Adjustment of the historical financial statements 160 4.4.6 Notes to individual items of the financial statements 162 4.4.7 Financial instruments and financial risk 199 4.4.8 Segment reporting 205 4.4.9 Related party transactions 207 4.4.10 Remuneration of the Members of the Management Board and Supervisory Board and those with individual contracts of employment 209 4.4.11 Commitments 212 4.4.12 Costs of the auditor 215 4.4.13 Subsequent events 215

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4.3 Audited financial statements of the Laško Group for the year ended 31 December 2013 compiled under IFRS

4.3.1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF THE LAŠKO GROUP AT 31 December 2013

*The values of certain items presented in these financial statements differ from those reported in the Annual Report 2012. Adjustments to the historical financial statements are reported in a special disclosure in Section 4.4.5 ADJUSTMENT OF HISTORICAL FINANCIAL STATEMENTS.

Accounting policies and notes form an integral part of these financial statements and should be read in conjunction with them.

(adjusted)* (adjusted)*

(in EUR) Notes31 December

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2012

ASSETS

Long-term assets 284,057,058 301,979,359 309,415,815Intangible assets 1 72,409,028 78,549,980 87,017,785Property, plant and equipment 2 170,065,814 194,465,281 180,695,007Investment property 3 5,847,085 7,199,033 9,117,703Long-term investments in the subsidiaries 4.A 427,413 427,413 364,803Financial assets available for sale 4.C 1,207,647 1,249,643 1,239,563Long-term financial lease receivables 4.D 287,276 421,340 -Long-term borrowings 5 283,544 436,335 11,079,110Long-term operating receivables 2,196,510 13,198 877,146Long-term deferred tax liabilities 7 31,332,741 19,217,136 19,024,698

Short-term assets less short-term deferred and accrued items 169,578,146 203,370,586 248,064,577Non-current assets held for sale 8 9,208,603 6,570,939 8,960,939Inventories 9 21,918,999 24,287,198 22,079,914Long-term operating receivables 10.A 52,960,981 46,897,886 46,730,029Short-term tax credits - overpayment of income tax 10.B 351,495 1,329,252 407,636Financial assets available for sale 11 75,658,238 112,630,152 143,271,798Short-term loans 12 6,475,107 9,466,544 5,110,497Cash and cash equivalents 13 3,004,723 2,188,615 21,503,764

Short-term accruals and prepaid expenditu 14 856,090 378,648 525,337

Total short-term assets 170,434,236 203,749,234 248,589,914

TOTAL ASSETS 454,491,294 505,728,593 558,005,729



4.3.1 CONSOLIDATED STATEMENT OF FINANCIAL POSITION OF LAŠKO GROUP AT 31 DECEMBER 2013

( c o n t i n u a t i o n )




201331 December

20121. January

2012

EQUITY 58,213,883 87,978,879 113,795,895

Equity of the owners of non-controlling interest 16 9,804,281 7,164,310 7,032,584

Equity of the owners of the controlling interest 15 48,409,602 80,814,569 106,763,311Share capital 36,503,305 36,503,305 36,503,305Share premium 30,993,977 55,681,553 78,908,924Profit reserves 3,650,331 3,650,331 3,650,331Revaluation reserves 5,701,570 9,655,319 10,907,339Retained earnings (72,940) 875,016 4,442,227Net profit or loss (28,354,042) (25,562,592) (27,669,598)Translation reserve (12,599) 11,637 20,783

LIABILITIES 396,277,411 417,749,714 444,209,834

Provisions and long-term accrued costs and deferred income 17 13,929,628 6,904,389 7,068,763Provisions for retirement benefits and anniversary bonuses 17.A 5,293,279 4,904,442 4,785,771Other provisions 17.B 8,587,422 1,898,251 2,282,992Long-term accrued costs and deferred revenue 17.B 48,927 101,696 -

Long-term liabilities 17,225,540 26,094,176 40,536,520Long-term financial liabilities 18 17,225,540 26,093,882 40,532,009Long-term operating liabilities - 294 4,511

Short-term liabilities 358,968,014 377,287,617 388,171,256Liabilities for non-current assets held for sale 1,090,807 - -Short-term operating liabilities 19 40,130,797 37,943,110 36,777,184Short-term income tax payable 20 - 353,494 2,963,742Short-term financial liabilities 21 317,746,410 338,991,013 348,430,330

Short-term accrued cost and deferred income 22 6,154,229 7,463,532 8,433,295

Total short-term liabilities 365,122,243 384,751,149 396,604,551

TOTAL EQUITY AND LIABILITIES 454,491,294 505,728,593 558,005,729



Accounting policies and notes form an integral part of these financial statements and should be read in conjunction with them. 4.3.2 CONSOLIDATED INCOME STATEMENT OF LAŠKO GROUP

FOR THE PERIOD 1 JANUARY TO 31 DECEMBER 2013

(adjusted)*

(in EUR) Notes 2013 2012

Net sales revenues 23.A 266,877,399 271,386,948Change in inventories of products and work in progress (114,014) (152,370)Capitalised own products and services - 211,714Other operating income 23.B,C 8,388,258 5,644,089Costs of goods, materials and services 23.D (167,445,183) (166,811,670)Employee benefit costs 23.D (49,508,915) (50,887,703)Amortisation of intangible assets and depreciation of property, plant and equipment 23.D (17,619,428) (20,064,199)Revaluation operating expenses 23.D (15,384,781) (9,718,509)Provisions 23.D (1,356,003) (801,307)Other operating expenses 23.D (12,108,482) (6,590,812)OPERATING PROFIT OR LOSS 11,728,851 22,216,181

Financial income 23.F 6,859,708 7,473,277Financial expenses 23.F (58,005,512) (53,929,485)PROFIT OR LOSS BEFORE TAX (39,416,953) (24,240,027)

Taxes 24 9,712,608 834,901NET PROFIT OR LOSS OF THE YEAR FROM CONTINUED OPERATIONS (29,704,345) (23,405,126)

Discontinued operations - Jadranska pivovarna Split (453,266) (2,541,655)NET PROFIT OR LOSS OF THE YEAR FROM DISCONTINUED OPERATIONS 25 (453,266) (2,541,655)

NET PROFIT OR LOSS FOR THE YEAR (30,157,611) (25,946,781)

Share of non-controlling interests in net profit /loss (1,803,568) (384,188)Share of the controlling interests in net profit /loss (28,354,043) (25,562,593)

Total net profit / loss per share of the controlling interest (28,354,043) (25,562,593)Net profit/loss per share 27 (3.25) (2.93)Diluted net profit/loss per share (3.25) (2.93)

Total net profit / loss per share of the non-controlling interest (1,803,568) (384,188)Net profit/loss per share (0.21) (0.04)Diluted net profit/loss per share (0.21) (0.04)



4.3.2 CONSOLIDATED INCOME STATEMENT OF LAŠKO GROUP FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013




(adjusted)*


Net profit /loss per share from discontinued operations (453,266) (2,541,655)Net profit/loss per share (0.05) (0.29)Diluted net profit/loss per share (0.05) (0.29)

Net profit /loss per share from continued operations (29,704,345) (23,405,126)Net profit/loss per share (3.40) (2.68)Diluted net profit/loss per share (3.40) (2.68)



4.3.3 CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME OF LAŠKO GROUP FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013



(adjusted)*(in EUR) 2013 2012

Net profit or loss for the period (30,157,611) (25,946,781)

Other comprehensive incomeFinancial assets available for sale (93,136) 10,431Gains/losses from revaluation of property (3,434,740) 305,678Deferred tax on account of revaluation (137,965) (1,292,900)Translation reserve (24,236) -Other - 474,983TOTAL OTHER COMPREHENSIVE INCOME THAT WILL BE RECLASSIFIED TO PROFIT AND LOSS AT A FUTURE DATE (3,690,077) (501,808)

Unrealised actuarial gains / losses from post-employment benefits (155,344) -Deferred tax on unrealised actuarial gains / losses 22,592 -

TOTAL OTHER COMPREHENSIVE INCOME THAT WILL NEVER BE RECLASSIFIED TO PROFIT OR LOSS (132,752) -

OTHER COMPREHENSIVE INCOME (3,822,829) (501,808)

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (33,980,440) (26,448,589)



4.3.4 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY OF LAŠKO GROUP FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013


Total capital Capital

Share Share Legal Reserves for Treasury Total profit Retanined Net Revaluation Translation of the cont- of non-cont- TOTAL

(in EUR) capital premium reserves treasury shares shares reserves earnings profit or loss reserve reserve rolling interest roling interest CAPITAL

OPENING BALANCE AT 1 January 2013 36,503,305 55,681,553 3,650,331 341,170 (341,170) 3,650,331 875,016 (25,562,592) 9,655,319 11,637 80,814,569 7,164,310 87,978,879

Transactions with owners Disposal of treasury shares (interests) - - - - - - - - - - (39,063) (39,063)Payment of dividends - - - - - - (621,758) - - (621,758) 4,504,470 3,882,712Other changes - - - - 59,275 59,275 293,543 - - - 352,818 - 352,818

Total transactions with owners - - - - 59,275 59,275 (328,215) - - - (268,940) 4,465,407 4,196,467

Changes in comprehensive income Net profit or loss for the year - - - - - - - (28,354,042) - - (28,354,042) (1,803,569) (30,157,611)Fixed assets revaluation reserve - - - - - - - - (3,462,085) - (3,462,085) 27,345 (3,434,740)Investment revaluation reserve - - - - - - - - (81,112) - (81,112) (12,024) (93,136)Tax on individual items of comprehensive income - - - - - - - - (94,399) - (94,399) (20,974) (115,373)Other - - - - - - - - (132,896) (24,236) (157,132) (22,448) (179,580)

Total changes in comprehensive income in 2013 - - - - - - - (28,354,042) (3,770,492) (24,236) (32,148,770) (1,831,670) (33,980,440)

Movements within equityAppropriation of the remaining net profit based on decision of the General Meeting - (24,687,576) - - - - (875,016) 25,562,592 - - - -Utilisation of reserves for treasury shares and interests - - - (59,275) - (59,275) - - - (59,275) - (59,275)Other - - - - - - 255,275 - (183,257) - 72,018 6,234 78,252

Total movements in equity - (24,687,576) - (59,275) - (59,275) (619,741) 25,562,592 (183,257) - 12,743 6,234 18,977CLOSING BALANCE At 31 December 2013 36,503,305 30,993,977 3,650,331 281,895 (281,895) 3,650,331 (72,940) (28,354,042) 5,701,570 (12,599) 48,409,602 9,804,281 58,213,883



4.3.5 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (ADJUSTED)* OF LAŠKO GROUP FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2012



Total capital Capital

Share Share Legal Reserves for Treasury Total profit Retanined Net Revaluation Translation of the cont- of non-cont- TOTAL

(in EUR) capital premium reserves treasury shares shares reserves earnings profit or loss reserve reserve rolling interest roling interest CAPITAL

Opening balance at 1 January 2012 / reported 36,503,305 78,908,924 3,650,331 467,504 (467,504) 3,650,331 15,504,846 (27,669,598) 10,907,339 20,783 117,825,930 7,647,527 125,473,457Retrospective adjustments - - - - - - (11,062,619) - - - (11,062,619) (614,943) (11,677,562)OPENING BALANCE at 1 January 2012 / adjusted* 36,503,305 78,908,924 3,650,331 467,504 (467,504) 3,650,331 4,442,227 (27,669,598) 10,907,339 20,783 106,763,311 7,032,584 113,795,895

Transactions with owners Disposal of treasury shares (interests) - - - - 35,766 35,766 - - - 35,766 - 35,766Payment of dividends - - - - - - - - - - (368,429) (368,429)Other changes - - - - 90,568 90,568 - - - - 90,568 1,000,000 1,090,568

Total transactions with owners - - - - 126,334 126,334 - - - - 126,334 631,571 757,905

Changes in comprehensive income Net profit or loss for the year - - - - - - - (25,562,592) - - (25,562,592) (384,188) (25,946,780)Fixed assets revaluation reserve - - - - - - 11,794 - 293,884 - 305,678 - 305,678Investment revaluation reserve - - - - - - - - 9,592 - 9,592 839 10,431Tax on individual items of comprehensive income - - - - - - - - (1,258,412) - (1,258,412) (34,488) (1,292,900)Other - - - - - - - - 566,138 (9,146) 556,992 (82,010) 474,982

Total changes in comprehensive income in 2012 - - - - - - 11,794 (25,562,592) (388,798) (9,146) (25,948,742) (499,847) (26,448,589)

Movements within equityLoss settlement - (23,227,371) - - - - (4,442,227) 27,669,598 - - - -Utilisation of reserves for treasury shares and interests - - - (126,334) - (126,334) - - - (126,334) - (126,334)Other - - - - - - 863,222 - (863,222) - - - -

Total movements in equity - (23,227,371) - (126,334) - (126,334) (3,579,005) 27,669,598 (863,222) - (126,334) - (126,334)CLOSING BALANCE At 31 December 2012 36,503,305 55,681,553 3,650,331 341,170 (341,170) 3,650,331 875,016 (25,562,592) 9,655,319 11,637 80,814,569 7,164,310 87,978,879



4.3.6 CONSOLIDATED CASH FLOW STATEMENT OF LAŠKO GROUP FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013


(in EUR) 2013 2012

OPERATING PROFIT 10,530,503 22,216,180Adjustments for:Elimination of other operating revenue (1,247,728) (2,515,861)Depreciation of PPE and investment property 16,628,040 19,118,592Amortisation of intangible assets 991,238 778,868Long-term assets written-off 17,217,096 10,045,492Short-term assets written-off 1,640,139 448,009Net movements in provisions 7,421,311 (77,244)Translation reserve - (15,871)Foreign exchange differences from operations (8,439) 37

Total adjustments 42,641,657 27,782,022

MOVEMENTS IN WORKING CAPITALInventories and non-current assets held for sale 758,828 970,877Operating and other receivables (9,131,507) (688,278)Operating and other liabilities 5,186,216 (2,010,048)

Total movements in working capital (3,186,463) (1,727,449)

NET CASH FLOWS FROM OPERATING ACTIVITIES 49,985,697 48,270,753

Cash flows from operating activitiesCash from operating activities 49,985,697 48,270,753Disbursements for taxes - (6,135,833)

OFFSETTING CASH FLOWS FROM OPERATING ACTIVITIES 49,985,697 42,134,920

Cash flows from investing activities Acquisition of property, plant and equipment (11,677,203) (9,601,663)Gains /losses from disposal of PPE 274,358 4,211Acquisition of intangible assets (380,364) (689,469)Acquisition / disposal of financial assets 3,929,018 (5,114,019)

Disposal of non-current assets and liabilities held for sale 315,000 -Interest received 613,960 702,086Dividends and capital profits received 6,252,891 5,794,495

NET CASH FLOWS FROM INVESTING (672,340) (8,904,359)



4.3.6 CONSOLIDATED CASH FLOW STATEMENT OF LAŠKO GROUP FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013



(in EUR) 2013 2012

Cash flows from financing activity Interest paid (18,387,798) (20,749,463)Repurchase of treasury shares - 114,292Capital increase 78,252 1,000,000Increase / decrease in financial debt (30,148,640) (32,604,397)Dividends paid to the owners (39,063) (306,142)

NET CASH FLOWS FROM FINANCING (48,497,249) (52,545,710)

NET INCREASE / DECREASE IN CASH AND CASH EQUIVALENTS

816,108 (19,315,149)

Cash and cash equivalents at the beginning of year 2,188,615 21,503,764Cash and cash equivalents at the end of year 3,004,723 2,188,615



4.4 Notes to the consolidated financial statements

4.4.1 GENERAL DATA

Pivovarna Laško is a public limited company, registered with the District Court in Celje under the decision No Srg 95/00673 and under the application No 1/00171/00. It is classified as a large company and as such is subject to regular annual audit of its financial statements. The principal activity of the Company is the production and sale of beer, malt and waters. The Company is also engaged in wholesale and retail trade.

Pivovarna Laško (hereafter: the Company) is the controlling entity of the Laško Group (hereafter: the Group) with its registered seat in Slovenia at Trubarjeva ulica 28, 3270 Laško, Slovenia.

The Company’s ordinary shares are quoted on the Ljubljana Stock Exchange under the “PILR” designation. The Company’s share capital totals EUR 36,503,304.96 and is represented with 8,747,652 ordinary freely negotiable registered no-par-value shares. There are no limitations on the payment of dividends or other distributions of equity. 4.4.2 STATEMENT OF COMPLIANCE WITH IFRS

The financial statements have been compiled in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union, and provisions of the Companies Act. 4.4.3 USE OF NEW AND AMENDED IFRS AND IFRIC INTERPRETATIONS

a) Standards and interpretations that entered into force during the reporting period

In the period under review, the following amendments to the existing standards issued by the International Accounting Standards Board (IASB) were applicable as adopted by the EU:

Amendments to IFRS 1 "First-time adoption of IFRS" – Severe hyperinflation and removal of fixed dates for first-time adopters: the amended standard was adopted by the EU on 11 December 2012 (effective for annual periods beginning on or after 1 January 2013),

Amendments to IFRS 1 "First-time adoption" – Government Grants; the amended standard was adopted by the EU on 4 March 2013 and is effective for annual periods beginning on or after 1 January 2013,

Amendments to IFRS 7 "Financial instruments: Disclosures" – Offsetting Financial Assets and Financial Liabilities; the standard was adopted by the EU on 13 December 2012 and is effective for annual periods beginning on or after 1 January 2013,

Amendments to IAS 1 "Presentation of financial statements" – Presentation of Items of Other Comprehensive Income; the standard was adopted by the EU



on 5 June 2012 and is effective for annual periods beginning on or after 1 July 2012),

Amendments to IAS 12 "Income Taxes" – Deferred Tax: Recovery of Underlying Assets; the standard was adopted by the EU on 11 December 2012 and are effective for annual periods beginning on or after 1 January 2013),

Amendments to IAS 19 "Employee benefits"- Revision of Post-employment Benefits; the amended standard was adopted by the EU on 5 June 2012 and is effective for annual periods beginning on or after 1 January 2013),

Amendments to a number of standards "IFRS Improvements over the period 2009 to 2011" , according to the annual IFRS improvement project encompassing IFRS 1, IAS 1, IAS 16, IAS 32 and IAS 34, which is aimed primarily at elimination of discrepancies and clarification of wording. The amended standards were adopted by the EU on 27 March 2013 and are effective for periods beginning on or after 1 January 2013,

IFRIC 20 "Stripping Costs in Production Phase of a Surface Mine". The standard was adopted by the EU on 11 December 2012 and is effective for annual periods beginning on or after 1 January 2013.

The adoption of these amendments to the existing standards led to no changes in the accounting policies of the Group.

b) Standards and representations issued by the IASB and adopted by the EU that have not entered into force yet

On the date of the approval of these financial statements, the following standards, amendments and interpretations were issued and adopted by the EU, but which are not yet effective:

IFRS 10 "Consolidated financial statements", adopted by the EU on 11 December 2012 and effective for annual periods beginning on or after 1 January 2014),

IFRS 11 "Joint arrangements", adopted by the EU on 11 December 2012 and effective for annual periods beginning on or after 1 January 2014,

IFRS 12 "Disclosure of interests in other entities", adopted by the EU on 11 December 2012 and effective for annual periods beginning on or after 1 January 2014,

IAS 27 (amended in 2011) "Separate financial statements" was adopted by the EU on 11 December 2012 and is effective for annual periods beginning on or after 1 January 2014,

IAS 28 (amended in 2011) "Investments in associates and joint ventures" was adopted by the EU on 11 December 2012 and is effective for annual periods beginning on or after 1 January 2014,

Amendments to IFRS 10 "Consolidated financial statements", IFRS 11 "Joint Arrangements" and "IFRS 12 "Disclosure of Interests in Other Entities" –



Transition Guidance, were adopted by the EU on 4 April 2013 and are effective for annual periods beginning on or after 1 January 2014,

Amendments to IFRS 10 "Consolidated financial statements", IFRS 12 "Disclosure of Interests in Other Entities" and IAS 27 "Separate Financial Statements" – Investment Entities, were adopted by the EU on 20 November 2013 and are effective for annual periods beginning on or after 1 January 2014),

Amendments to IAS 32 "Financial instruments: Presentation" – Offsetting Financial Assets and Financial Liabilities; the standard was adopted by the EU on 13 December 2012 and is effective for annual periods beginning on or after 1 January 2014,

Amendments to IAS 36 "Impairment of Assets"- Recoverable Amount Disclosure for Non-Financial Assets, were adopted by the EU on 19 December 2013 and are effective for periods beginning on or after 1 January 2014,

Amendments to IAS 39 "Financial Instruments: Recognition and Measurement- Novation of Derivatives and Continuation of Hedge Accounting, were adopted by the EU on 19 December 2013 and are effective for periods beginning on or after 1 January 2014.

c) Standards and interpretations issued by IASB but which have not yet been adopted by the EU

Currently, the IFRS as adopted by the European Union do not considerably differ from those adopted by the International Accounting Standards Board (IASB) with the exception of the following standards, amendments to the existing standards and interpretations which were not confirmed for use on 30 April 2014.

IFRS 9 "Financial Instruments" and subsequent amendments The effective date has so far not been determined,

Amendments to IAS 19 "Employee Benefits"- Defined Benefit Plans: Employee Contributions are effective for annual periods beginning on or after 1 July 2014,

Amendments to a number of standards "Improvements to IFRS over the period 2010 to 2012" stemming from the annual IFRS improvements projects that encompass IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38, mainly in order to eliminate discrepancies and misinterpretations, are effective for annual periods beginning on or after 1 July 2014,

Amendments to a number of standards "Improvements to IFRS over the period 2011 to 2013" stemming from the annual IFRS improvements projects that encompass IFRS 1, IFRS 3, IFRS 13 and IAS 40, mainly in order to eliminate discrepancies and misinterpretations, are effective for annual periods beginning on or after 1 July 2014,

IFRIC 21 "Levies" The interpretation sis effective for annual periods beginning on or after 1 January 2014.



The Group has assessed that the adoption of these standards, amendments and interpretations will not have a significant impact on the Group’s consolidated financial statements during the period of their initial application.

At the same time, the accounting for the hedging of risks associated with the portfolio of financial assets and liabilities, the principles of which the EU has not yet adopted, still remains unregulated.

The Group assesses that the accounting of risk hedging in connection with the portfolio of financial assets and liabilities in accordance with the requirements of IAS 39: "Financial Instruments: Recognition and Measurement" would not have a significant impact on the consolidated financial statements of the Group, if applied as at the reporting date. 4.4.4 SIGNIFICANT ACCOUNTING POLICIES

Basis of preparation

The financial statements have been compiled under IFRS, the Companies Act, other acts and the Accounting Manual of Pivovarna Laško, and are expressed in euro. When disclosing and measuring the items, the provisions of the standards were directly applied, with the exception of the items where standards provide a choice between several valuation methods.

The financial statements have been prepared taking into account historical costs except for the financial assets, non-current assets held for sale (or assets and related liabilities of the disposal group), property and investment property carried at revalued amount or fair value. The valuation of assets and liabilities is presented in detail in individual sections below.

When selecting the accounting policies and when deciding on their use and in the compilation of these financial statements, the Pivovarna Laško Management Board took into consideration the following three requirements:

Financial statements are understandable when they are easily understood by users,

Information is relevant if it assists the user in making economic decisions,

Information is essential if its omission or untrue statement could have an impact on economic decisions of the users.

The accounting policies presented below were consistently applied in all of the periods presented.

Going concern assumption

As at 31 December 2013, the Group's short-term liabilities exceed the amount of its short-term assets by EUR 194,688,007.

At the end of April 2014, Pivovarna Laško, Pivovarna Union, and Radenska signed a Debt Rescheduling and Standstill Agreement with all of the 18 creditor banks. The



Agreement defines important financial restructuring milestones, whereas final maturity of the majority of the Company's borrowings has been rescheduled to the end of 2016.

The project of determining the concept of operational and financial restructuring of companies continued over the entire 2013 period, with close participation of all companies involved, creditors, and consultants. The aim of the project was to define an agreement that will on the one hand ensure financial stability of the Laško Group through long-term reprogramming of its borrowings and through deleveraging of the Group to the sustainable level of indebtedness; and, on the other hand, to ensure fulfilment of creditors' expectations for rapid deleveraging and simultaneous maximising of the value for the owners. This will ensure the Laško Group of companies a sustainable development of quality brands and preservation of jobs.

A total of 17 various scenarios of the Group's restructuring plan were prepared and following the analysis from the financial, fiscal and legal points of view, the concept that provided the basis for the signed Agreement, was dully selected.


One of the key milestones for all stakeholders, including creditors, the Company and the owners, is capital increase of Pivovarna Laško. After a transparent process of finding the investor, the capital increase will be discussed by the owners at the Annual General Meeting of Pivovarna Laško.


If the first milestone is not fulfilled, the third one should be met at the earliest opportunity. In this case the restructuring would not be terminated, however the majority of creditor banks (85% of liabilities are due to creditor banks), may opt for a different option or solution. Non-compliance with the provisions of the Agreement, the amortisation plan based on the cash flow from the primary activity and deleveraging milestones, will terminate the agreement only, if so desired by the majority of creditors.

The Management of the controlling entity of the Laško Group have assessed that the use of the going concern assumption in the preparation of the financial statements for the year ended 31 December 2013 is appropriate.

Consolidation

Subsidiaries in which the Group’s indirect or direct equity is larger than half of voting rights or the Group can in any other way influence their operation, are considered consolidated. They are consolidated in the Group’s financial statements from the day



when the Group assumes a controlling interest and their consolidation ends when the Group no longer holds a controlling interest in those entities. All intragroup transactions including receivables and liabilities between the Group’s companies are eliminated for the purpose of consolidation. Any impairments of investments in subsidiaries are also eliminated in the consolidation. Impairment of the investment in subsidiary Delo to its estimated value is reflected in the consolidated financial statements as an impairment of the brands recognised on acquisition. Dividends received from subsidiaries were also eliminated. For the purpose of ensuring consistent and correct data for the needs of the Group’s consolidation and financial reporting, accounting policies of the subsidiaries were harmonised with the controlling company’s policies.

The Group uses the purchase method for the accounting of the takeovers. The acquisition cost of the takeover is assessed as the fair value of assets and capital instruments issued and assumed liabilities on the day of transaction, inclusive of expenses directly attributable to the takeover. Assumed assets, liabilities and commitments attached to a takeover are initially recorded at fair value on the day of the transaction irrespective of the size of the non-controlling interest. The surplus of the acquisition price over fair value of the Group’s interest in net assets of the acquiree is recorded as goodwill. If the cost is lower than the fair value of the net assets of the acquiree, the difference is recognised through profit or loss as an impairment loss.

The Group accounts for transactions with the owners of the non-controlling interest in the same way as those made with external partners. Gains and losses attributable to the minority holders are disclosed in the profit or loss of the Group.

Reporting currency

a) Functional and reporting currency

The items presented in the separate financial statements of individual Group companies are denominated in the currency of the primary environment – the country where the individual company operates (this currency is the so-called "functional currency"). The consolidated financial statements are presented in euro, which is also the functional and reporting currency of the parent company (Pivovarna Laško).

b) Transactions and balances

Foreign currency transactions are converted into the reporting currency using the exchange rate prevailing on the day of the transaction. Gains and losses arising from these transactions and from the conversion of cash and liabilities, denominated in a foreign currency, are recognised in the profit or loss.

Exchange rate differences arising from debt securities and other monetary financial assets are recognised at fair value and are included in the gains or losses from transactions with foreign currencies. Exchange rate differences from non-monetary items such as securities held for trading are reported as an increase or decrease in fair value. Exchange rate differences from available-for-sale securities are included in the revaluation reserve.



c) Group companies

Separate financial statements of income and cash flows of foreign subsidiaries are translated into the reporting currency of the controlling entity using the average exchange rate, whereas separate financial statements of financial position are translated into the reporting currency using the exchange rate prevailing on 31 December 2013. On disposal of a foreign subsidiary, exchange rate differences realised on disposal are recognised in the profit or loss as gains or losses from disposal.

The use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the carrying amounts of assets and liabilities of the Group as well as the reported income and expenses for the period.

Management estimates include among others: determination of the useful life and residual value of property, plant and equipment, as well as intangible assets; allowances made for inventories and receivables; assumptions material to the actuarial calculation of defined employee benefits; assumptions used in the calculation of potential provisions for lawsuits, as well as assumptions and estimates relating to impairment of goodwill. Regardless of the fact that management duly considers all factors that may impact the preparation of these assumptions, the actual consequences of business events may differ from those estimates. In the process of making accounting estimates, management makes judgements while considering potential changes in the business environment, new business events, new and additional information that may be available, as well as experience.

Key estimates and assumptions as at the day of the statement of financial position that are associated with future operations and which could result in significant adjustment of the book values of assets and liabilities are presented below.

Information on significant estimates about uncertainty and critical judgements in applying accounting policies that have the most significant impact on the amounts recognised in the financial statements is presented in the following notes:

The Group assesses on an annual basis whether there are any indications of impairment of an individual cash-generating unit. If any such indications exist, the recoverable amount of non-financial assets is determined as the present value of future cash flows, based on the estimate of expected future cash flows from the cash-generating unit and determination of the relevant discount rate.

Defined benefit obligations include the present value of termination benefits on retirement and jubilee awards. They are recognised on the basis of the actuarial calculation approved by the management. The actuarial calculation is made by using assumptions and estimates effective at the time of the calculation, and may, as a result of future changes, differ from actual assumptions applicable at that future time. This applies primarily to determination of the discount rate, assessment of employee turnover, mortality assessment, as well as assessment of the increase in salaries. Due to the complexity of the actuarial calculation and the long-term nature of the item, defined benefit obligations are sensitive to changes in the above estimates and assessments.



A provision is recognised when the Group has present obligations (legal or constructive) as a result of past events, a reliable estimate can be made of the amount of obligation, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Contingent liabilities are not recognised in the financial statements as their actual existence will be confirmed only upon the occurrence or non-occurrence of one or more uncertain future events not entirely within the control of the Group. The management of the Group continually assess contingent liabilities to determine whether an outflow of resources embodying economic benefits has become probable. In this case, a provision is recognised in the financial statements of the period in which the change in probability occurs.

Recognition of revenue

Revenue is measured at the fair value of the consideration received or receivables for the sale of products, goods or services during the ordinary operations of the Group. Revenue is presented exclusive of value added tax and excise duties, rebates and reimbursements.

Revenue from the sale of products, merchandise and materials is recognised if all of the following conditions are fulfilled:

All the significant risks and rewards of ownership of the object of sale are transferred to the buyer;

The seller loses the management and control over what is covered by the sale;

Amount of revenue can be reliably measured;

A high degree of certainty is attached to the flow of economic benefits related to the transaction;

The expenses incurred with respect to transaction can be reliably measured.

Other categories of revenue are recognised based on the following criteria:

Interest income is recognised as the income of the period to which they pertain, in accordance with the applicable interest rate and when the degree of certainty attached to the flow of economic benefits is high;

Dividend income is recognised when the right to receive payment is established;

Revenue from royalties is recognised on the basis of the provisions of the licence agreements.

Intangible assets

Intangible assets with a finite useful life acquired individually (not within a business combination) and which are not created within the Group are measured under the cost model i.e. they are disclosed at cost less any accumulated depreciation and accumulated impairment losses. They are amortised according to the straight-line method in the period of their estimated expected useful life periods (patents, brands, licences 5 years; software 3 years). Estimates of expected functional life periods and the amortisation method are checked on the preparation of financial statements; any changes of estimates



of the categories mentioned are considered in the future periods rather than retrospectively.

Intangible assets with indefinite useful lives acquired individually (not within a business combination) and not generated within the Group are disclosed at cost less any potential impairment losses.

An item of intangible assets is recognised as an asset only when it is probable that future economic benefits will flow to the Group and the cost of an assets can be reliably measured.

Intangible assets are derecognised upon their disposal or when no future economic benefits are expected from their further use. Gains or losses arising from derecognition of an item of intangible assets are recognised in the profit or loss of the period of derecognition.

a) Goodwill

Goodwill represents the excess of the cost of the acquisition over the Group's interest in the net fair value of the identifiable assets and contingent liabilities of the acquiree on the acquisition date. Goodwill arising upon the acquisition of subsidiaries is recognised as an item of intangible fixed assets. Goodwill is checked, tested for impairments and measured at the initial value decreased by cumulated impairments on an annual basis. Gains and losses on disposal of a subsidiary include the present value of goodwill of the disposed entity. At 31 December 2013, the Group carried out impairment test of goodwill relating to the investment in the Union Group. According to the results of goodwill tests, its value had not changed as compared to the previous year.

b) Patents, brands and licences

Expenditures for the acquisition of patents, brands and licences are capitalised and amortised using the straight-line amortisation method during their “useful life periods” (amortisation period). If the useful life period cannot be determined, such assets are not amortised; instead, they are tested for impairment on an annual basis.

If revaluation is required, the value of intangible assets needs to be estimated and written-off to the amount of the assets replacement values. The useful life periods of brads are not determinable and therefore the impairment test has to be carried out every year. The valuations provided by certified business appraisers or by the management provide the basis for impairment recognition.

The useful lives of other intangible assets range from 3 to 10 years.

c) Other intangible assets

Whenever software applications are not considered a constituent part of the relevant computer hardware, they are accounted for as the items of intangible assets. Other intangible assets are disclosed at cost less any accumulated amortisation and accumulated impairment losses. The useful life period of other intangible assets is 10 years.



Property, plant and equipment

Land and buildings in use are accounted for using the revaluation models and are disclosed at revalued amount at the date of the revaluation, less any subsequent accumulated depreciation or impairment losses. The revaluation is made with sufficient regularity to ensure that the carrying amount of the assets does not differ materially from their fair value at the reporting date.

Appreciation of land and buildings is recognised or accumulated as the revaluation surplus in other comprehensive income except when the previous revaluation of the same land and buildings recognised in profit or loss is reversed; in this case the appreciation to the amount of the prior revaluation of the assets is recognised in profit or loss. The revaluation of land and buildings in excess of the previously appreciated amount recognised in the revaluation surplus of the same land and buildings is recognised in profit or loss.

Production facilities, machinery, all types of equipment, reusable packaging and small tools are recognised under the cost model and are disclosed at their cost less accumulated depreciation and accumulated impairment losses.

The items of property, plant and equipment being acquired are measured at cost less any impairment loss. The cost of an item of property, plant and equipment includes the relevant borrowing costs in accordance with the adopted accounting policy. They are classified under the relevant categories of property, plant and equipment, to which they will belong when completed and made available for use. Depreciation of the items of property, plant and equipment begins in the month following the month when the assets are made available for their use.

Land is not depreciated.

The depreciation of buildings is recognised in profit or loss, while the reversal of the relevant revaluation surplus is simultaneously recognised in retained earnings. On derecognition of buildings, the attributable amount of revaluation surplus is reclassified directly to retained earnings.

Depreciation is calculated using the straight-line method (except for land and property, plant and equipment being acquired, which are not depreciated) and is recognised so that the cost or the revalued amount of the property, plant and equipment less any residual value is written-off in the period of its estimated functional life period. The estimates of expected functional life period, their residual values and the depreciation method are checked on the preparation of financial statements; any changes in estimates of those categories are accounted for in future periods rather than retrospectively. The expected functional life periods of individual groups of assets are as follows:

Buildings 10 – 66 years Plant and machinery 5 – 14 years Hardware and software 3 years Motor vehicles 3 – 9 years Other equipment 3 – 20 years Reusable packaging (barrels, bottles, crates) 4 – 5 years



Cost of borrowings raised to finance the purchase of land, the construction of buildings and the purchase of equipment, are attributed to the asset's cost until the day the asset is brought to its working condition. Costs incurred in relation to property, plant and equipment increase their cost providing they increase future benefits arising from the assets in excess of the originally assessed benefits; however costs that allow the extension of the useful life of the assets initially decrease their accumulated depreciation. The extension of the useful life of an asset of property, plant and equipment relates to the extension of its originally determined useful life during which the asset is depreciated. All other repair and maintenance costs are included in profit or loss of the financial year when they are incurred.

The items of property, plant and equipment are derecognised upon their disposal or when no future economic benefits are expected from their further use. Gains or losses arising from derecognition of an item of property, plant and equipment are recognised in the profit or loss of the period of derecognition.

Investment property

Investment property is property owned by the Company for the purpose of earning rent or increasing the value of the property in the long-term. On their initial recognition, they are measured at cost, whereas subsequently they are measured using the fair value model (depreciation is not calculated), which means that the increase or decrease in their fair value is recognised in the profit or loss of the period in which these changes occurred.

An investment property is derecognised on its disposal or final termination of its use, when no future economic benefits are expected from the asset on its disposal. Gains and losses on disposal of investment property are recognised in the profit or loss of the period in which the asset is derecognised.

Impairment of property, plant and equipment, and intangible assets

On preparation of the financial statements, all items of property, plant and equipment, and intangible assets are checked for any signs of impairment. If there are indications of impairment, the asset's recoverable amount is assessed. When the recoverable amount of an individual asset cannot be established, the recoverable amount of a cash-generating unit to which the asset belongs is assessed.

The recoverable amount of the asset is the higher of its fair value decreased by the costs to sell or its value in use. The latter is assessed as the present value of discounted future cash flows associated with the financial asset taking into account the pre-tax discount rate that reflects the current market estimate of the time value of money and specific risks related to the assets that were not considered in the assessment of future cash flows.

The asset (or a cash-generating unit) is impaired to its recoverable amount if its value in use is lower than its carrying amount. Impairment is immediately recognised in profit or loss except when the asset is carried under the revaluation model; in this case the impairment is disclosed as a decrease in the revaluation surplus.



In the event of impairment reversal the value of the asset (or a cash-generating unit) is increased to its new assessed recoverable amount but only to the extent that the new recoverable amount does not exceed the amount at which the assets would be valued if no impairment was recognised. Impairment reversal is immediately recognised in profit or loss except when the asset is carried under the revaluation model; in this case the impairment is disclosed as an increase in the revaluation surplus.

Investments into the associated companies

Associated companies are companies in which the Group holds between 20% and 50% of the voting rights, and in which it has a significant influence on their business, but does not control them. Significant influence is the power to participate in the financial and operating policy decisions of the investee but does not include control or joint control over those policies.

In consolidated financial statements, profits and losses, as well as the assets and liabilities of the associated companies are accounted for using the equity method unless they are classified as non-current assets held for sale in accordance with IFRS 5. Under the equity method, the investment in an associate is initially recognised in consolidated financial statement at cost; however, its later measurement depends on related interests of the investor in profit, losses and other comprehensive income of the associated company arising after the acquisition date.

If the investor’s share in losses or negative other comprehensive income of the associated company is equal to or higher than the value of its stake in the associated company (carrying amount of the financial investment into the associated company including any long-term shares that are in fact a part of net financial investments of the investor in the associated company), the investor no longer recognises its share in further losses. When the investor's share is decreased to zero, further losses are defined and the liability recognised only to the extent that the investor has incurred a legal or constructive obligation or made payments on behalf of the associate company.

On the acquisition of an investment, any potential difference between the investment's cost and the investor’s stake in the net fair value of the identifiable assets, liabilities or contingent liabilities in consolidated financial statements of the investor are accounted for as goodwill and contained in the carrying amount of the financial investment in accordance with IFRS 3. The amortisation of that goodwill is not allowed and as such is not included in the determination of the investor’s share of the profits or losses of the associated company.

Any potential negative difference between the cost and the investor’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities in consolidated financial statements of the investor is immediately recognised in profit or loss.

In the determination of whether it is necessary to recognise any additional impairment loss with respect to the investor’s net investment in the associated company, the provisions of IAS 39 or IAS 28 are taken into account. Furthermore, the entire carrying amount of the investment is tested as an asset in accordance with IAS 36; its carrying amount is compared to the recoverable amount (the higher of its fair value less costs to sell or value in use).



Gains and losses from transactions between the investor (and its consolidated subsidiaries) and the associated company are recognised in the investor’s consolidated financial statements only to the extent of unrelated investors’ interests in the associate. The investor’s interest in the profits or losses of the associated company arising from these transactions is eliminated from the investor’s consolidated financial statements.

Loans and deposits issued, monetary items

Financial assets such as loans and deposits issued and monetary items are initially measured at fair value on the date of their issue or placement.

After initial measurement they are disclosed at amortised cost using the effective interest method less any impairment losses.

Financial assets available for sale

Available-for-sale financial assets are initially measured at their fair value on the date of acquisition. This fair value is usually equal to the asset's cost; however, sometimes adjustments are needed.

After the initial recognition, the financial assets available for sale are measured at fair value in the statement of financial position, whereas changes in fair value are recognised under other comprehensive income excluding the assets' impairments and interest that are recognised by using the effective interest rate and exchange rate differences.

The best evidence of an asset's fair value is normally its quoted prices on an active market. If these are not available, valuation techniques are applied that as far as possible take account of market inputs including the most recent arm's length market transactions, reference to the current fair value of another instrument that has substantially similar characteristics, and discounted cash flow analysis.

If the fair value of a financial asset available for sale cannot be reliably measured, the asset is carried at its cost taking into consideration any impairment losses.

On derecognition of an available-for-sale financial asset or its permanent impairment, the cumulative other comprehensive income is reclassified to the profit or loss of the period in which the asset is derecognised or permanently impaired.

Derivatives

Derivative financial instruments are applied in interest rate hedging. They comprise interest options and interest swaps.

Derivative financial instruments are initially recognised at cost on the day of the contract; subsequently, they are measured at fair value on the reporting date. Gains and losses arising from changes in fair value are immediately recognised in profit and loss unless they are applied in the hedging of risks.



Non-current assets held for sale or assets of disposal groups (and related liabilities)

Non-current assets held for sale or assets of disposal groups (and liabilities associated with the non-current assets) are those non-current assets or liabilities for which it is reasonably assumed that their carrying amount will be settled predominantly through their sale rather than their further use. This condition is deemed to have been complied with only if the sale is highly probable and if the assets or group of assets (and liabilities associated with them) are in the condition that makes the sale possible. The management needs to be committed to the closing of the sale process within a year from the asset's reclassification to non-current assets held for sale or to the assets of disposal group (and the associated liabilities).

The assets (and associated liabilities) related to the subsidiary for which it is planned that the controlling influence will be lost, are reclassified to the group of assets (and associated liabilities) for disposal irrespective of whether the controlling company is planning to keep the minority stake after the sale or not.

Non-current assets held for sale and assets of disposal groups are measured at the lower of carrying amount or fair value less costs to sell.

Inventories

Inventories of raw materials and consumables are disclosed at the lower of cost and net realisable value; declining values of inventories are accounted for using the weighted average cost method. Net realisable value is the estimated selling price less the estimated costs of completion and the estimated costs necessary to make the sale.

Inventories of finished products, semi-finished products and work in progress are valued at their production costs. Production costs are direct costs of materials and raw materials (labour, production services, depreciation ...) and indirect costs of production (costs of materials and raw materials, labour, services and depreciation that are accounted for in the production process but cannot be directly linked to emerging products and services).

Inventories of raw materials, materials, spare parts, products and merchandise are written-off on the basis of inventory records, customer complaints and returns and other records or upon a proposal of a responsible person (also damaged products, ullage and breakages) that requires the decision of the Management Board of the company. The inventories are written-off in full if the sale is permanently discontinued or their use is forbidden. The Group examines the serviceability of the inventory of materials and spare parts with no movement over a period of more than 12 months, 2 years or 3 years and if necessary, their value is impaired. An impairment loss of 25% is recognised for inventories with no movement over a period of more than 12 months, 50% impairment loss is recorded for inventories with no movement over a period of more than 2 years, whereas inventories with no movement over a period of more than 3 years are fully impaired.



Operating receivables

On initial recognition, operating receivables are recognised at fair value; subsequently they are measured at amortised cost using the effective interest rate method less any impairment loss.

Impairments of individual operating receivables are made when there is objective evidence that the recovery of the full amount due is impossible. The impairment loss is the difference between the carrying amount and the present value of estimated future cash flows discounted at the effective interest rate. The impairment loss is recognised in profit or loss.

Cash and cash equivalents

Cash and cash equivalents reported in the cash flow statement comprise cash on hand, sight deposits at banks and investments into the money market instruments without bank overdrafts. Bank overdrafts are included under short-term financial liabilities in the statement of financial position.

Share capital

Ordinary shares are classified as capital. Transaction costs directly associated with the issue of new shares which are not associated to the acquisition of a company are reported as a decrease in capital. Any surplus over the fair value of amounts paid in excess of the carrying amount of newly issued shares is recognised as capital surplus paid-in.

Treasury shares

When the Group repurchases treasury shares, the amount paid inclusive of net transaction costs is deducted from total capital as treasury shares until these shares are removed, reissued or sold. The Group is required to create reserves for treasury shares in that same amount. Reserves for treasury shares are released when the Group disposes of or removes its treasury shares, crediting the source from which they were created. Upon the sale of treasury shares, the difference between their selling price and carrying amount is accounted for in equity with no impact on the profit or loss. Treasury shares are used for the purposes defined in Article 247 of the Companies Act.

Dividends

Until approved by the General Meeting of shareholders, proposed dividends are accounted for as retained earnings.

Provisions

Provisions are recognised when the Group has present legal or constructive obligations as a result of past events, it is highly likely that the liabilities will have to be settled and a reliable estimate of the liability can be made. Provisions may not be set aside to cover future losses from operations.

The amount of provisions is the best estimate of the outflows expected to be required to settle the present obligation at the reporting date taking into account the related risks



and uncertainties. If the provisions are measured at the amounts of future cash flows required for the settlement of present obligations, and the time value of money is important, provisions are discounted to their present value.

Provisions for retirement benefits and jubilee awards

In accordance with the statutory requirements and the collective agreement, the Group is obligated to pay jubilee awards and termination benefits on retirement. These employee benefits are measured using the method of accounting, which requires that an actuarial liability is assessed on the basis of the expected salary increase from the valuation date until the anticipated retirement of an employee. This means that benefits are accrued in proportion with the work performed. The assessed liability is recognised as the present value of expected future expenditure. Anticipated salary increase and employee turnover are also considered as part of the measurement.

Unrealised actuarial gains or losses of the current year from termination benefits are recognised in equity, whereas unrealised actuarial gains or losses based on the actuarial calculation of current employee benefits and interest are recognised in profit or loss. Current employee benefit costs and interest expense associated with jubilee awards are recognised in profit or loss as actuarial gains or losses.

The net liabilities of the Group in connection with long-term benefits for years of service, except for pension schemes, are equal to the earnings which employees have obtained in exchange for their service during current and previous periods. Such liabilities are calculated using the projected unit method and are discounted to their present values.

Operating liabilities

Operating liabilities comprise suppliers credits for purchased merchandise or services and liabilities to employees, the state, owners or others. Liabilities are recognised in books of account if it is likely that economic benefits will decrease due to their settlement and the amount required for their settlement can reliably be measured. They are initially recognised at fair value; subsequently they are measured at amortised cost using the effective interest rate method.

Financial liabilities

Initially, financial liabilities are recognised at fair value exclusive of any attributed transaction costs. In subsequent periods, financial liabilities are measured at amortised cost using the effective interest rate method. Any differences between receipts (exclusive of transaction costs) and liabilities are recognised in profit or loss over the entire period of the financial liability.

Discontinued operation

A discontinued operation is a component of a group that either has been disposed of, or reclassified as held for sale (disposal group) and:

it represents a separate major line of business or geographical area of operation;



is part of a single coordinated plan to dispose of a separate major lines of business or geographical areas of operations or

is a subsidiary acquired exclusively with a view to resale.

Corporate income tax

The amount of corporate income tax reported in the statement of comprehensive income is the sum total of current and deferred tax.

Current tax is accounted for on the basis of taxable profit of the current year. In the statement of comprehensive income, the amount of taxable profit can differ from pre-tax profit on account of income and expenses taxed or fiscally recognised in other taxable periods or on account of income and expenses that will never be taxed or fiscally recognised. Current amounts of corporate income tax is accounted for at the tax rate of 17% applicable to all commercial companies registered in Slovenia. In Croatia, the registered seat of Laško Grupa, d.o.o. Zagreb, the applicable corporate income tax rate is 20%. In Kosovo, the registered seat of Birra Peja, the applicable corporate income tax rate is 10%.

Deferred tax assets and liabilities

Deferred tax is accounted for under the liability method based on temporary differences between the carrying amounts of assets and liabilities and their corresponding tax amounts disclosed in the financial statements. In principle, deferred tax liabilities are recognised on the basis of all temporary differences whereas deferred tax assets are only recognised to the amount of temporary differences for which taxable profits will be available in the future against which these temporary differences can be utilised. Deferred tax is calculated using the tax rates (and tax legislation) as prescribed by applicable legislation on the reporting date, which are expected to be used at the time when the deferred tax asset is realised or a liability for deferred tax is settled.

Deferred tax assets are verified when annual accounts are drawn up and are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary difference can be utilised.

Current and deferred taxes are recognised in profit or loss except when they refer to the items recognised in other comprehensive income or equity; in such cases the current and deferred tax are recognised in other comprehensive income or directly in equity.

Segment reporting

Business segments manufacture products and render services which are in terms of risks and benefits different from the products and services of other segments. Regional (geographic) segments provide products or services within a specific economic environment which are exposed to risks and benefits which differ from those in other economic environments.



4.4.5 ADJUSTMENT OF HISTORICAL FINANCIAL STATEMENTS

a) Adjustments to the statement of financial position of Laško Group at 1 January 2012

b) Adjustments to the statement of financial position of Laško Group at 31 December 2012

c) Adjustments to the income statement of Laško Group for the year ended 31 December 2012

The Laško Group adjusted its historical financial statements on account of the following:

deferred tax assets were decreased on account of impairment of loans issued to Center naložbe and Infond Holding in total EUR 19,950,000 as at 1 January 2012

pursuant to the opinion of the Tax Authorities, deferred tax assets were increased by EUR 8,272,441 on account of impairment of investments in companies in which the Group holds more than 8% interest as at 1 January 2012.

(reported) (adjusted)(in EUR) 1. January 2012 Adjustment 1. January 2012

AssetsDeferred tax assets 30,702,257 (11,677,559) 19,024,698

CapitalRetained earnings 15,504,846 (11,062,618) 4,442,228Equity of the owners of non-controlling stake 7,647,526 (614,942) 7,032,584

(reported) (adjusted)

(in EUR)31 December

2012 Adjustment31 December

2012

AssetsDeferred tax assets 23,903,459 (4,686,323) 19,217,136

CapitalShare premium 66,744,172 (11,062,619) 55,681,553Net profit for the year (32,346,133) 6,783,541 (25,562,592)Equity of the owners of non-controlling stake 7,571,555 (407,246) 7,164,309


(in EUR)31 December

2012 Adjustment31 December

2012

Deferred tax (5,920,803) 6,991,237 1,070,434Net profit or loss for the year (32,938,018) 6,991,237 (25,946,781)

Total comprehensive income for the year (33,439,826) 6,991,237 (26,448,589)



The effect of aforementioned retrospective adjustments is reported in table format in relation to the statements of financial position as at 1 January 2012 and 31 December 2012, and as at 31 December 2012 in relation to the income statement and statement of other comprehensive income.

Deferred tax assets on account of impairment of loans issued to Center naložbe and Infond Holding were reduced under the principle of due diligence, prudence and conservative approach to disclosure of deferred tax assets and final tax recognition by the tax authorities of expenditure resulting from impairment losses. In any case, the management of the group companies will use all legally available means to demonstrate that expenditure on account of impairment losses should be recognised for tax purposes as it is assessed that justifiable reasons exist for such treatment.



4.4.6 NOTES TO INDIVIDUAL ITEMS IN THE FINANCIAL STATEMENTS

1 Intangible assets

Licences Propertyand other rights and Intangible

2013 intangible long-term assets Brand Goodwill assets deferred costs being acquired Total

COST

1 January 2013 56,649,152 17,197,382 11,543,366 234,083 407,268 86,031,251

Direct acquisitions - - 84,106 135,000 148,350 367,456Transfers from investments in progre - - 324,308 - (324,308) -Impairment of the brand (5,438,046) - - - - (5,438,046)Disposals, reductions - - (96,047) - - (96,047)31 December 2013 51,211,106 17,197,382 11,855,733 369,083 231,310 80,864,614

ACCUMULATED AMORTISATION

1 January 2013 - - 7,317,475 163,796 - 7,481,271

Amortisation - - 973,206 18,032 - 991,238Disposals - - (16,923) - - (16,923)31 December 2013 - - 8,273,758 181,828 - 8,455,586

CARRYING AMOUNT

31 December 2013 51,211,106 17,197,382 3,581,975 187,255 231,310 72,409,028

1 January 2013 56,649,152 17,197,382 4,225,891 70,287 407,268 78,549,980

Licencesand other Intangible

2012 intangible Property assets Brand Goodwill assets rights being acquired Total

COST

1 January 2012 65,138,432 17,197,382 10,741,580 234,083 387,463 93,698,940

Direct acquisitions - - - - 797,715 797,715Transfers from investments in progre - - 782,833 - (777,910) 4,923Impairment (8,489,280) - (21,001) - - (8,510,281)Transfer from property, plant and equipment - - 27,890 - - 27,890Disposals - - (11,154) - - (11,154)31 December 2012 56,649,152 17,197,382 11,520,148 234,083 407,268 86,008,033


1 January 2012 - - 6,535,391 145,764 - 6,681,155

Amortisation - - 760,838 18,032 - 778,870Transfer from property, plant and equipment - - 180 - - 180Disposals - - (2,152) - - (2,152)31 December 2012 - - 7,294,257 163,796 - 7,458,053

CARRYING AMOUNT

31 December 2012 56,649,152 17,197,382 4,225,891 70,287 407,268 78,549,980

1 January 2012 65,138,432 17,197,382 4,206,189 88,319 387,463 87,017,785



All intangible assets are measured under the cost model. Major items of intangible assets are brands and goodwill the value of which is verified on an annual basis to determine whether there is any need for impairment. The fair value of brands was verified as at 31 December 2013. Verification of the fair value of brands was performed by a certified business appraiser registered with the Slovenian Institute of Auditors. The method of the present value of expected free cash flows was used in assessing the value of these brands.

Following valuation assessment of Delo in the consolidated financial statements, the Group recognised impairment loss on the Delo brands in the amount of EUR 5,438,046 in 2013. As at 31 December 2013, total value of the Delo Group brands amounts to EUR 4,455,692.

The verification of the value of the brands and goodwill of Pivovarna Union and their potential impairment was based on the valuation assessment of Pivovarna Union by a certified business appraiser. Based on this assessment, the Pivovarna Union brands appreciated in value in 2013. However, in line with the adopted accounting policy whereby intangible assets are measured at cost less any impairment losses, the appreciation in the value of brands was not recognised. As at 31 December 2013, the value of Pivovarna Union brands amounts to EUR 46,461,058 and the value of goodwill to EUR 17,197,380.

Valuation of Pivovarna Union, Ljubljana

Valuation of the investment in Pivovarna Union as at 31 December 2013, was made by a certified business appraiser, registered with the Slovenian Institute of Auditors. The most important elements and findings of the valuation procedure are: The subject of the valuation was assessment of the recoverable amount of the

investments in a 97.93% equity interest in Pivovarna Union, Ljubljana, as at 31 December 2013, for the purpose of reporting required under IAS 36 i.e. verification of potential investment impairment. The assessed investment in the subsidiary is measured at cost.

The present value of future cash flows expected to be derived from the asset's continued use (in this case investment into a subsidiary) and its disposal at the end of its useful life, was used in the valuation performed in compliance with the requirements of IAS 36.

The company as a whole was identified as the asset with indefinite useful life, while taking into account the relevant equity interest.

Pursuant to provisions of IAS 36, the projected cash flow method was used for the investment assessment:

- based on reasonable and acceptable assumptions that provide the management's best estimate of the circumstances prevailing in the remaining useful life of the asset, while primary emphasis should be devoted to external sources;

- based on the most recent financial projections adopted by the management, exclusive of the assessed future cash flows expected from future restructuring of the asset, improvements to or the asset's enhanced performance. The projections



based on these assumptions should cover the period of no more than five years unless a prolonged period is justified;

- assessed for longer period than the one covered by the most recent forecasts, through extrapolation of projections based on those forecasts using the stable or declining growth rate for future periods unless the increasing percentage is justified. The rate of growth should not exceed the average long-term percentage growth of products in the sector or the country (countries) where the entity operates or the markets in which the asset is used, unless the higher percentage is justified;

- variability of assumptions used in cash flow projection is assessed through the verification of the reasons for differences between past cash flow projections and the actual cash flows, and the actual past profit or loss.

The appraiser based its projections on the 2014 plan of projections for the period 2015-2018, while taking into account the business cycle, macroeconomic circumstances and circumstances prevailing in the industry sector.

The appraiser based its assessment of future cash flows on assumptions used in the assessment of the market value of the majority equity interest for reporting purposes that complies with all the requirements of IAS 36.

The appraiser based its assessment of the required rate of return on assumptions used in the assessment of the market value of the majority equity interest for reporting purposes that complies with all the requirements of IAS 36.

The assessment of investments including the investment in the capital of Pivovarna Union, took into account the market value of investments in 57.63% equity interest in Birra Peja, and 100% ownership of Birra Peja and Akull brands since these assets are currently actively sold by the company. Costs of disposal were also taken into account.

The recoverable amount of the investment in Pivovarna Union was considered its value in use. The value in use was assessed as the present value of the future cash flows expected to be derived from the assets, while not considering the indebtedness. Detailed projections of future free cash flows were made for the 2014-2019 period (the usual 5-year period was extended due to utilisation of tax losses), whereas the residual amount was based on the perpetuity growth model with cash flows growing at an assumed constant rate i.e. average 2% annual growth rate. The residual value accounts for 64% of the total equity amount. The weighted average cost of capital (WACC) in the 2014-2019 period of 9.0% was taken into account, with effective tax rate of 8.5%, whereas the WACC of 8.8% was taken into account in the residual value (effective tax rate of 17%). The pre-tax weighted average cost of capital of 10.0% was applied in the assessment of the recoverable value. Based on the sensitivity analysis, a 1 percentage point increase of the weighted average cost of capital or a 1 percentage point decrease in the residual's growth would result in a 20.4% decrease of the assessed value in use of the investment in Pivovarna Union, and consequently also its carrying amount.

The assessed value in use of the investment in 97.92% equity investment in Pivovarna Union, using the above assumptions as at 31 December 2013 for the purpose of



impairment testing in accordance with IAS 36 requirements, is equal to the value in use i.e. EUR 162,127,755, which corresponds to EUR 367 per share.

Estimated value of Delo, Ljubljana

The valuation of Delo which also included the assessment of its brands was carried out by a certified business appraiser registered with the Slovenian Institute of Auditors.

Valuation of the investment in Delo, as at 31 December 2013, was made by a certified business appraiser, registered with the Slovenian Institute of Auditors. The most important elements and findings of the valuation procedure are: The subject of the valuation was the majority stake of the company (80.83%)

enabling the majority owner to influence the process of adopting decisions by management bodies as well as to influence the formation of strategy and business decisions concerning investments, borrowings and similar. Furthermore, the majority owner may also implement status changes.

The company's market value is equal to the present value of expected free cash flows since in accordance with the general financial assumption the company's value equals the sum of future benefits which it brings to its owners.

The method of the present value of future cash flows expected excluding debt was used in assessing the value of the company. Under this method, the present value of cash flows without payment of interest and principal (the value of total capital) is assessed first; subsequently, all financial liabilities of the company are deducted to arrive to the equity capital of the company. The resulting value is additionally adjusted for any contingencies, premiums or discounts.

The assessment of future returns takes into account the 2014-2016 strategic plan and future potential of the company, based on its performance to date and results of the sector's analysis. As the 2014-2019 strategic plan was assessed as being optimistic, it was considered as such in the valuation.

Some of the assessed value was derived from investments whose market value was assessed in the amount of EUR 4.0 million. Costs of investment disposal (2% of the market value of the investment in Večer) were also taken into account. Accordingly:

- the market value of the investment in 79.24% equity share in Večer was assessed using the liquidation method, assuming disposal of the brand and activity) as at 30 September 2013 in the amount of EUR 3,100 thousand.

- the market value of a 100% equity investment in Izberi was assessed under the present value of future cash flows to EUR 475 thousand.

The investment in property, apartments and holiday facilities was accounted for as surplus assets. The value of these assets was assessed by the certified appraiser of property to EUR 267 thousand. The costs of disposal in the amount of 5% and shift in the sale were also considered.

The control premium of 0% was taken into account since future return projections for an average majority strategic owner were made at inception, while



a 15% discount on account of the lack of liquidity was considered based on the analysis of a variety of factors that impact liquidity and marketability of the share or equity interest.

In line with the provisions of IAS 36, the assessed fair value (market value for the majority owner) was reduced by the costs of sale equal to approx. 2% of the value of equity interest i.e. the market value).

In view of the anticipated sale of the investment in Delo, the investment's recoverable amount is considered the fair value less costs to sell. The fair value less costs to sell was assessed using the present value of the future cash flows method, excluding the debt. Detailed projections of future free cash flows were made for the 2014-2019 period, whereas the residual amount was based on the perpetuity growth model with cash flows growing at an assumed constant rate i.e. average 2% annual growth rate. The residual value accounts for 62% of the total equity amount. The weighted average cost of capital (WACC) in the 2014-2019 period of 12.5% was taken into account, with effective tax rate of 8.5%, whereas the WACC of 12.1% was taken into account in the residual value (effective tax rate of 17%). Based on the sensitivity analysis, a 1 percentage point increase of the weighted average cost of capital or a 1 percentage point decrease in the residual's growth would result in a 19.4% decrease of the assessed fair value less costs to sell of the investment in Delo, and consequently also its carrying amount.

Based on the aforementioned assumptions, the fair value less costs to sell of an 80.83% equity investment in Delo as at 31 December 2013 for the reporting purposes in compliance with IAS 36, equals EUR 14,297,704 or EUR 26.50 per share.

Brand pledging

In order to secure its borrowings from banks, the controlling company, Pivovarna Laško, pledged some of its brands in the amount of EUR 50,000,000 that are an integral part of the Group's assets. In accordance with the accounting standards, these brands are not disclosed in the financial statements. The brands of the parent company Pivovarna Laško were assessed by a certified business appraiser in 2010 and again in 2012. The brands of the Pivovarna Union and Delo subsidiaries have been pledged also within the scope of pledges on the investments in these companies. The Group pledged 440,295 (97.60%) of shares of its subsidiary Pivovarna Union and 667,444 (100%) shares of subsidiary Delo as collateral against long-term and short-term borrowings from banks. Total amount pledged equals EUR 173,991,991.



2. Property, plant and equipment

Production and Other Fixed

2013 plant plant Small Advances Assets

(in EUR) Land Buildings Machinery equipment tools for FA being acquired Total

COST

1 January 2013 52,360,802 109,549,619 375,417,980 53,757,599 25,819,897 - 1,049,911 617,955,808

Direct acquisitions 30,879 37,741 233,148 924,368 238,108 239,566 8,749,437 10,453,247New additions - - - 193,146 - - (193,146) -Transfers from investments in prog 244,800 588,257 2,220,202 780,788 2,833,362 - (6,667,409) -Acquisition - re-activated - - - - 94,155 - - 94,155Revaluation (7,302,003) (5,600,358) - - - - (738,073) (13,640,434)Reclassifications (2,246,046) (2,157,965) (2,697,903) (190,134) - - - (7,292,048)Disposals (206,648) (102,332) (992,821) (3,933,780) (2,048,668) - - (7,284,249)

31 December 2013 42,881,784 102,314,962 374,180,606 51,531,987 26,936,854 239,566 2,200,720 600,286,479

ACCUMULATED DEPRECIATION

1 January 2013 - 26,648,663 331,870,802 43,705,014 21,266,048 - - 423,490,527

Additions - - - 120,396 94,155 - - 214,551Depreciation - 2,892,606 8,169,447 3,061,364 2,504,623 - - 16,628,040Revaluation - (3,233,464) - 4,466 - - - (3,228,998)Disposals - (21,558) (962,335) (3,873,576) (2,025,986) - - (6,883,455)

31 December 2013 - 26,286,247 339,077,914 43,017,664 21,838,840 - - 430,220,665

CARRYING AMOUNT

31 December 2013 42,881,784 76,028,715 35,102,692 8,514,323 5,098,014 239,566 2,200,720 170,065,814

1 January 2013 52,360,802 82,900,956 43,547,178 10,052,585 4,553,849 - 1,049,911 194,465,281



Compared to the last day of 2012, the value of property, plant and equipment of the Group decreased by EUR 24,399,467, which is mainly the result of the relevant depreciation expense in the amount of EUR 16,628,040. Based on valuations performed by a certified appraiser of property, the revaluation of property to lower fair values in the amount of EUR 10,411,436, also significantly contributed to this reduction. Another factor impacting this reduction is reclassification of property, plant and equipment of Jadranska pivovara in the amount of EUR 7,101,914 to non-current assets held for sale in compliance with IFRS 5, and write-off of certain items of property, plant and equipment in the amount of EUR 399,808. In 2013, the Group spent EUR 10,453,247 on capital expenditure, EUR 6,174,793 or 37% less than the total amount of depreciation expense.

The disposal of property, plant and equipment relates to the sale and write-off of such assets. Property, plant and equipment amounting to EUR 296.072 have been acquired under finance lease. The items of property, plant and equipment are measured under the revaluation model, whereas equipment and low value assets are measured at cost.

Gains in the amount of EUR 470.703, which the Group realised on disposal of property, plant and equipment is reported as an item of revaluation operating expenses, whereas EUR 50,775 of losses realised on disposal of those assets is reported as the revaluation operating expense.

Production and Other Fixed

2012 plant plant Small Assets

(in EUR) Land Buildings Machinery equipment tools being acquired Total

COST

1 January 2012 45,633,181 101,985,292 348,608,576 46,988,325 23,871,489 3,748,380 570,835,243

Direct acquisitions - - - - - 10,400,442 10,400,442Transfers from investments in prog 23,446 560,007 5,995,128 2,962,985 2,219,434 (11,761,000) -Acquisition - re-activated - - - - 30,855 - 30,855Reclassifications - - - 66,582 - - 66,582Transfer to investment property and PPE (36,335) (592,820) (1,540) - - - (630,695)Transfers 6,741,000 2,541,843 11,412,695 1,931,189 - 762,108 23,388,835Transfers from investments in progress - 128,272 495,100 1,106,623 370,024 (2,100,019) -Disposals (490) (66,103) (3,865,761) (3,159,179) (671,905) - (7,763,438)

31 December 2012 52,360,802 104,556,491 362,644,198 49,896,525 25,819,897 1,049,911 596,327,824


31 December 2011 - 19,002,394 315,159,748 37,056,535 18,921,559 - 390,140,236Reclassifications - - (2,442,472) 2,442,472 - - -1 January 2012 - 19,002,394 312,717,276 39,499,007 18,921,559 - 390,140,236

Additions - - - - 30,855 - 30,855Depreciation - 2,937,154 9,741,365 3,626,134 2,980,268 - 19,284,921Reclassifications - - - 66,582 - - 66,582Transfer to use - - 369,536 (369,536) - - -Transfer to investment property and PPE - (243,220) (180) - - - (243,400)Disposals - (40,793) (3,730,977) (2,978,247) (666,634) - (7,416,651)

31 December 2012 - 21,655,535 319,097,020 39,843,940 21,266,048 - 401,862,543

CARRYING AMOUNT

31 December 2012 52,360,802 82,900,956 43,547,178 10,052,585 4,553,849 1,049,911 194,465,281

1 January 2012 45,633,181 82,982,898 35,891,300 7,489,318 4,949,930 3,748,380 180,695,007



The Group pledged property, plant and equipment whose carrying amount as at 31 December 2013 amounted to EUR 101,300,944, as collateral for short-term and long-term borrowings. The carrying amount of pledged property totals EUR 89,161,836 and the carrying amount of pledged equipment equals EUR 12,139,107. As at 31 December 2013 the Group discloses liabilities for the acquisition of property, plant and equipment in the amount of EUR 1,829,011. 3. Investment property

2013(in EUR) Land Buildings Total

COST

1 January 2013 776,343 6,422,690 7,199,033

Revaluation - appreciation / impairment (493,172) (801,329) (1,294,501)Reclassifications (transfer from assets for sale) 1,221,666 (1,221,666) -Decrease in value - (57,447) (57,447)31 December 2013 1,504,837 4,342,248 5,847,085

CARRYING AMOUNT

31 December 2013 1,504,837 4,342,248 5,847,085

1 January 2013 776,343 6,422,690 7,199,033


COST

1 January 2012 1,214,099 8,861,531 10,075,630

Appreciation in value - - -Transfer from property, plant and equipment 36,335 592,821 629,156Revaluation - appreciation / impairment (90,145) (115,060) (205,205)Disposals (188,565) (579,089) (767,654)Decrease in value (195,381) (1,446,673) (1,642,054)31 December 2012 776,343 7,313,530 8,089,873


1 January 2012 - 957,927 957,927

Depreciation - 408 408Disposals - (310,715) (310,715)Transfer from property, plant and equipment - 243,220 243,22031 December 2012 - 890,840 890,840

CARRYING AMOUNT

31 December 2012 776,343 6,422,690 7,199,033

1 January 2012 1,214,099 7,903,604 9,117,703



Investment property is measured at fair value. As at 31 December 2013, the investment property valuation was assessed by the certified property appraiser, who assessed their value at EUR 5,847,085. As a result of the revaluation of property to lower fair value, their value was reduced by EUR 1,294,501 and this reduction was recognised in the profit or loss.

Investment property also includes property which is not used for carrying out the basic activity but is leased out by the Group. As at the last day of 2013, investment property comprises the following: the "Tri lilije" sports arena, Hotel Hum catering facilities, holiday facilities, office building in Radenci and facilities in Boračevo, Petanjci and Sarajevo. During the process of ownership transformation into the property of Pivovarna Laško, holiday facilities in Croatia which include holiday home at "Ičići" and holiday facilities in Barbariga, were recognised at the amount of EUR 0 i.e. the ownership transformation was not successful. Accordingly, in 2013 Pivovarna Laško and DSU signed an Agreement on regulation of mutual relationships, that specifies ownership share in the aforementioned investment property. The certified appraiser of property on 1 May 2013 assessed the market value of full ownership rights to the above property. Pivovarna Laško's investments in the renovation of the above property were assessed at EUR 530,100. The property held in Croatia is in the process of disposal.

The Group realised gains of total EUR 144.695 and losses in the amount of EUR 356,755 on account of the investment property.

In 2013, the sales processes of the following property continued: catering facilities, Hotel Hum, the "Tri Lilije" sports arena, the office building in Radenci and holiday facilities. The activities of the sale of investment property continue. The companies will be selling the property not critical for the operations to ensure the solvency.

Investment property in the amount of EUR 4.316.042 have been pledged as collateral for long-term and short-term borrowings raised from banks.



4. Long-term investments

4. A. Long-term investments in the subsidiaries

Data on the subsidiaries

In accordance with IAS 27, the Group measures long-term investments in the subsidiaries according to the cost model.

Due to their material irrelevance, the following companies are not included in the consolidation: Firma Del, d. o. o., Laško, Laško Grupa, d. o. o., Sarajevo and Radenska Miral, d. o. o., Radenci, Radenska, d. o. o., Zagreb and Radenska, d. o. o., Beograd. All other subsidiaries are consolidated using the full consolidation method.

Long-term investments in subsidiaries increased in 2013 by EUR 10,790 for additional acquisition of Pivovarna Union shares, and decreased by EUR 9,921,952 of impairment loss. These amounts are reported in the separate financial statements of the Group

Share in(in EUR) Equity 2013 2012

INTERESTS IN GROUP COMPANIES

In Slovenia:Radenska Miral Radenci, d. o. o. 100.00 % 182,589 182,589Firma Del, d. o. o., Laško 100.00 % 7,427 7,427

190,016 190,016

Abroad:Radenska, d. o. o., Zagreb 100.00 % 4,907 4,907Radenska, d. o. o., Beograd 100.00 % 250 250Laško Grupa, d. o. o., Sarajevo 100.00 % 232,240 232,240

237,397 237,397

Total 427,413 427,413

Percentage Total value Profit/

holding of equity loss(in EUR) Activity Country in equity 31 Dec 2013 2013

Subsidiaries

Radenska, d. d., Radenci beverage production Slovenia 87.090 % 62,454,656 (3,685,486)

Union Group beer Slovenia 97.928 % 73,986,221 (5,948,512)and beverages production

Vital Mestinje, d. o. o. beverage production Slovenia 96.920 % 3,508,710 51,295

Delo Group newspaper and Slovenia 100.000 % 13,821,643 (1,218,518)publishing

Firma Del, d. o. o., Laško beer Slovenia 100.000 % 15,254 (104)

Jadranska Pivovara - Split, d. d. beer production Croatia 99.460 % (2,033,796) (1,355,943)

Laško Grupa, d. o. o., Zagreb trade intermediation Croatia 100.000 % (102,111) (130,143)

Laško Grupa, d. o. o., Sarajevo trade intermediation Bosnia and Herzegovina

100.000 % 163,603 6,724



companies, however during the consolidation, they were eliminated from the consolidated financial statements of the Group. There was no change in the value of long-term investments in subsidiaries included in the consolidation as compared to the last day of the previous year. 4. B. Long-term investments into associated companies

Data on the associated companies

Investments into associated companies are measured under the equity method. The value of investments either increases or decreases depending on the attributed profit or loss. Revaluation to higher fair value in accordance with IFRS is not recognised. Fair value of investments traded on an organised market is their quoted price on the Ljubljana Stock Exchange, whereas fair value of other investments is determined on the basis of value assessments.

As at 31 December 2013, long-term investments in the Group's associates include a 20.63% holding in Thermana, Laško comprising a total of 645,003 shares, and a 29.22% holding in Slopak, Ljubljana. Based on the valuation of both investments performed in the past, as at 31 December 2013 their value equals nil. The valuation of the two investments was not re-assessed as at 31 December 2013 since the assumptions used in the two valuations made in the past had not changed in 2013.

Investment in the associate Thermana

The Group holds a total of 645,003 shares of Thermana, accounting for 20.63% equity holding. The original purchase value of the investment equalled EUR 6,897,921. Based on the outcome of the investment valuation, in 2009 the Group recognised investment impairment in the amount of EUR 5,303,921. In 2010 the investment was impaired by further EUR 1,594,000 i.e. its total remaining value. The impairment was recognised based on the valuation made in 2009 and verification of the operating projections used. At the same time, Thermana contracted additional debts in 2010 that negatively affected cash flows in the years that followed. In 2013 Thermana incurred net loss in the amount of EUR 1,209,934. As at 31 December 2013, total assets of Thermana amounted to EUR 74,512,360, and liabilities totalled EUR 48,303,826. The ratio between foreign and own assets equals 65 : 35.

In 2010, the Management issued a mandate for the sale of Thermana to NLB. An agreement on the implementation of the sale was prepared in 2010 and forwarded to



Associate

Thermana, d. d., Laško health resorts Slovenia 20.630 % 26,208,534 (1,209,934)hotels and similar accommodation

Slopak, d. o. o., Ljubljana waste packaging Slovenia 29.220 % 818,374 366,486handling



owners of more than 50% of the investment. The process for acquiring consent of subscribers was carried out in February 2011. On 28 February 2011, the agreement was signed and harmonised between NLB, Pivovarna Laško and Zavarovalnica Triglav which together represent 44.85% ownership stake in Thermana. Coordinating activities with the remaining potential signatories to the agreement on the implementation of the sale of shares continued in 2011.

Pivovarna Laško signed the Agreement on the joint sale of the Thermana shares (a 51.96% stake) on 10 October 2011. NLB as the sales broker commenced sales activities. A public tender for the sale of the investment was published in the newspaper Delo on 28 November 2011 and in December, a public invitation together with a teaser was sent to over 100 funds and 100 companies from the sector.

In 2012, further contacts were made with potential buyers. Nobody expressed the intention to buy and therefore the sale by the broker was stopped due to current lack of interest in the purchase of the majority stake in Thermana.

Investment into the associated company Slopak, Ljubljana

As of 31 December 2013, the Group holds a 29.22% stake of the Slopak Company. In 2011, the investment was fully impaired due to negative operating result and poor financial position. 4. C. Available-for-sale financial assets

Movements of available-for-sale financial assets

Compared to the previous year, the value of financial assets available for sale decreased by EUR 41,996 due to their revaluation to new fair values as at 31 December 2013.

(in EUR) 2013 2012

Other investments in shares and interests at cost 808,179 773,181Other investments in shares and interests at fair value 399,468 476,462

Total 1,207,647 1,249,643

(in EUR) 2013 2012

Balance at 1 January 1,249,643 1,239,563

Changes during the year:Revaluation - 31,150Impairment (41,996) -Sale - (21,070)

Balance at 31 December 1,207,647 1,249,643



4. D. Long-term financial lease receivables

Long-term financial lease receivables refer to the production equipment for the Bandidos brand which was leased under a finance lease to a business partner from Belarus. The value of the aforementioned receivable on the last day of 2013 amounted to EUR 287,276. Long-term financial lease receivables mature on 15 October 2015. 5. Long-term loans issued

Compared to the previous year, long-term loans issued decreased by EUR 152,791 mainly due to the repayments of loans.

Other long-terms loans issued primarily refer to long-term housing loans granted by the Group to its employees. The interest rate on average equals a 6-month EURIBOR + 1%. The repayment period is 20 years. The last repayment is due in 2024. In 2013, the Group did not grant any new loans.

The loans granted by Radenska and Pivovarna Union to the Center naložbe in the past amounting to EUR 17,100,000 are also disclosed under long-term loans issued. These were fully impaired in 2009. 6. Long-term operating receivables

Long-term operating receivables increased in 2013 by EUR 2,183,312. The increase of EUR 2,190,784 relates to receivables due from the state on account of overpaid concession fee for pumping of water over the period from 2005 to 2013. The receivable was recognised by the Group pursuant to amendment to the Waters Act; the decision of the relevant state authority has not been issued by the date of the financial statements approval.

(in EUR) 2013 2012

Long-term financial lease receivables 287,276 421,340

Total 287,276 421,340

(in EUR) 2013 2012

Long-term loans to others 283,544 436,335Long-term loans to Infond Holding and Center Naložbe 17,100,000 17,100,000Less impairments (17,100,000) (17,100,000)

Total 283,544 436,335

(in EUR) 2013 2012

Long-term operating receivables due from others 2,196,510 13,198

Total 2,196,510 13,198



7. Long-term deferred tax assets

Long-term deferred tax assets and liabilities are calculated on the basis of temporary differences, using the liability method and by applying the 17% tax rate.

As of 31 December 2013, the Group discloses long-term deferred tax assets amounting to EUR 31,332,741, an increase of EUR 12,115,605 over the previous year. Long-term deferred tax assets increased in 2013 mainly on account of investment impairment, increase in tax losses and on account of the conversion of previously impaired receivables to new, higher corporate tax rate of 17%. Movement of deferred tax assets

As at 31 December 2013, deferred tax assets are disclosed related to financial investment impairment amounting to EUR 41,840,138, related to the employees, severance grants, jubilee awards and holiday leave not taken in the amount of EUR 660,211 and related to provisions in the amount of EUR 131,871 and other amounting to EUR 4,372,662.

As at 31 December 2013, deferred tax assets on account of tax losses incurred by Jadranska pivovara Split in the amount of EUR 24,305,517 were not included in the deferred tax assets of the Group since the subsidiary no longer expects taxable profits to be available in the future against which tax losses could be utilised. Taking into account the 20% tax rate, the deferred tax assets would amount to EUR 4,861,103. Furthermore, deferred tax assets in the amount of EUR 587,937 on account of the 10% tax loss incurred by Birra Peja in total EUR 5,879,368, was also not recognised by the Group.

(in EUR) 2013 2012

Long-term deferred tax assets 47,004,882 34,689,619Long-term deferred tax liabilities (15,672,141) (15,472,483)

Net long-term deferred tax assets 31,332,741 19,217,136

Fair valueLiabilities to (financial

(in EUR) Provisions employees assets) Other Total

DEFERRED TAX ASSETS1 January 2012 reported 89,643 1,005,184 43,435,979 1,941,677 46,472,483Retrospective adjustments - - (11,677,559) - (11,677,559)1 January 2012 adjusted* 89,643 1,005,184 31,758,420 1,941,677 34,794,924

Changes in the income statement (39,665) (238,907) (6,485,745) (282,110) (7,046,427)Changes in the statement of comprehensive income - - (50,114) - (50,114)Adjustments for 2012 - - 6,991,236 - 6,991,23631 December 2012 49,978 766,277 32,213,797 1,659,567 34,689,619

Changes in the income statement 81,893 (104,249) 9,541,085 2,708,691 12,227,420Changes in the statement of comprehensive income - (1,817) 85,256 4,404 87,843

31 December 2013 131,871 660,211 41,840,138 4,372,662 47,004,882



Deferred tax assets that impact the profit or loss increased by EUR 12,227,420 compared to the previous year. Deferred tax assets recognised on account of investment impairment recognised in 2013 increased by EUR 9,626,341, an increase of EUR 2,794,988 is due to the increase in tax losses and other items, whereas deferred tax assets on account of employee benefits decreased by EUR 106,066. Movement of deferred tax liabilities

As at 31 December 2013, deferred tax liabilities amounted to EUR 15,672,141 and were recognised on account of revaluation of the Pivovarna Union brands (EUR 9,292,212) and the newspaper Delo brands (EUR 807,505), and on revaluation of property owned by the Group in the amount of EUR 5,145,461. In the statement of financial position, deferred tax assets are decreased by the amount of deferred tax liabilities. 8. Non-current assets held for sale

As of 31 December 2013, the value of non-current assets held for sale equals EUR 9,208,603. The amount of non-current assets held for disposal includes the investment into ČZP Večer of EUR 3,098,000, which the Group intends to dispose of. Furthermore, pursuant to IFRS 5 (discontinued operations), total assets of subsidiary Jadranska pivovara Split, in the amount of EUR 6,110,603 are also included in the group of assets held for disposal. As at the last day of 2012, the assets of the aforementioned subsidiary amounted to EUR 7,171,512 and were reported under the items of individual groups of assets. Of total amount, majority related to the items of property, plant and equipment in the amount of EUR 7,101,914.

Fair value Fair value(land (financial Fair value

(in EUR) buildings) assets) (brands) Other Total

DEFERRED TAX LIABILITIES1 January 2012 4,181,901 737 11,159,946 427,638 15,770,222

Changes in the income statement (62,718) - (1,103,630) 40,725 (1,125,623)Changes in the statement of comprehensive income 828,662 (737) - - 827,925Changes in equity (41) - - - (41)31 December 2012 4,947,804 - 10,056,316 468,363 15,472,483

Changes in the income statement 76,352 - 43,401 (41,400) 78,353Changes in the statement of comprehensive income 121,346 - - - 121,346Changes in equity (41) - - - (41)

31 December 2013 5,145,461 - 10,099,717 426,963 15,672,141

(in EUR) 2013 2012

Property held for sale - 770,939Other non-current assets held for sale 9,208,603 5,800,000

Total 9,208,603 6,570,939



In 2013, the Group disposed of a business and storage facilities in Ljubljana, resulting in a EUR 770,939 decrease in the non-current assets of disposal groups.

Investment in Večer, Maribor

a) Process of a sale of 79.243% stake in Večer, Maribor

The subsidiary Delo acquired a 59.2395% stake in the ČZP Večer in 2008, thus becoming the 79.2376% owner of the aforementioned company. The newspaper Delo does not have voting rights from the ownership of ČZP Večer shares surpassing 19.9% pursuant to Article 44 of the Prevention of Restriction of Competition Act, therefore this investment is not included in the consolidation.

With the decision of 23 September 2009, the Competition Protection Office requested from the newspaper Delo to finally dispose of the shares of the Večer Company to eliminate the effects of the prohibited concentration. Initially, the deadline for the enforcement of the decision was one year; however, it can be extended upon a written request by the newspaper Delo.

On 16 December 2011, the acquirer, 3Lan informed the seller Delo, prior to the completion of the transaction, that it withdrew from the contract. After the failure to continue the sale process, the Committee for the sale of the Večer Company, adopted a decision on 24 January 2012 that the sale to potential acquirer 3Lan had failed. The Competition Protection Office was notified and asked in writing to extend the deadline for the sale of shares and at the same time the Delo committed to publish an international tender for the sale of the shares no later than 15 March 2012. The Competition Protection Office adopted a decision on 27 February 2012 to extend the deadline for the disposal of the shares of Večer up to and including 31 December 2012.

On 15 March 2012, the Delo and Večer, published a public tender for a sale of 79.23% of shares of Večer. At the beginning of May 2012, the Committee was informed of the fact that no non-binding offer to purchase the shares of the Večer Company had been received by the set deadline (7 May 2012).

In October 2012, a due diligence of the Večer publishers was carried by one of the potential buyers and the management pitch. The negotiations are under the way to conclude a sales contract with one of the buyers. Since it was not possible to sell the shares of Večer by 31 December 2012, the Management Board requested that the Competition Protection Agency extends the deadline. The Competition Protection Agency agreed and extended the deadline until 31 March 2013.

In February 2013, a sales agreement inclusive of several suspensive conditions was signed with the buyer. In March 2013 the Competition Protection Agency extended the deadline for the sale of shares until 31 July 2013. On 10 April 2013, the Delo publishers, the owner of the interest in Večer, received a notification of the buyer failing to meet one of the suspensive conditions from the Contract for the sale of shares in ČZP Večer, resulting in an unsuccessful completion of the sale process. KPMG consultants and sale mediators began as early as in May 2013 to search for new potential buyers. In June 2013, a two-monthly exclusivity agreement was signed with one of the buyers who in the past



expressed his interest in the acquisition of Večer; the buyer had performed due diligence review.

On 26 July 2013 the Delo publishers addressed a request to the Republic of Slovenia Agency for Protection of Competition for another extension of the deadline for the sale of 79.24% share in Večer; however, the request was rejected. Despite of this, the Delo publishers continued activities aimed at the sale or disposal of its share in Večer. Discussions continued with potential buyers of Večer as well as negotiations for early completion of the sale and payment of consideration, and thus elimination of discrepancy with the competition rules. In January 2014, two non-binding proposals were received. One of the bidders subsequently informed all those concerned that he was exercising 90-days moratorium on the bid. Another bidder only expressed his interest but did not provide any other information requested in the tender.

At a public auction for the sale of a block of shares of ČZP Večer, held on 28 February 2014 at 12 noon on the premises of the Delo publishers, the Committee determined that the security required for participation in the auction had not been paid within the set deadlines. Consequently, the auction was unsuccessful. The subject of the public auction was a block of 202,788 (79.24% interest) of ordinary nominal shares of ČZP Večer (VEMG), held by the Delo publishers. The starting price at the auction was EUR 3,098,000.00.

The Delo publishers will continue its efforts aimed at fulfilment of provisions of the Competition Protection Office of the Republic of Slovenia, Ref. No. 306-195/2008-57 of 23 September 2009 and successful completion of the sale of the ČZP Večer shares.

b) Assessment of the value of investment in shares of ČZP Večer

The assessment of the investment in ČZP Večer was performed as at 31 December 2013 by a certified property appraiser of companies registered with the Slovenian Institute of Auditors from the P&S Company.

The company’s market value was assessed using the liquidation method under the assumption of the joint sale of the brand and the optimum number of employees. Accordingly, for financial reporting purposes in accordance with IFRS 5, the value of the 79.24% holding in ČZP Večer as at 31 December 2013 equals EUR 3,098,000 or EUR 15.28 per share.

Based on the investment assessment using the liquidation method, in 2013 the Group recognised investment impairment in the amount of EUR 2,702,000.



9. Inventories

The value of inventories decreased by EUR 2,368,199 or 9.8% compared to the previous year. This reduction relates mainly to the fall in the value of inventories of raw materials and materials in the amount of EUR 2,297,728 The carrying amount of inventories does not exceed their realisable value.

In 2013, inventory allowances of total EUR 40,373 were recognised due to the write-off of obsolete inventories. Inventory surpluses and deficits

The regular physical stock count established inventory surpluses amounting to EUR 12,194 and deficits amounting to EUR 33,098. 10. A. Short-term operating receivables

As of 31 December 2013, the Group reports short-term operating receivables of EUR 52,960,981, which is an increase of EUR 6,063,095 compared to the last day of the previous year.

(in EUR) 2013 2012

Material and raw materials 12,677,894 14,975,622Work in progress 2,461,296 2,457,754Products 6,280,074 6,358,201Merchandise 463,705 495,621Inventory advances 36,030 -

Total 21,918,999 24,287,198

(in EUR) 2013 2012

Inventory surplus 12,194 29,705Inventory deficit (33,098) 84,583

(in EUR) 2013 2012

Short-term trade receivables: On domestic market 49,293,009 46,453,732 On foreign markets 5,636,987 3,391,475Less impairments (5,944,770) (6,238,132)Total 48,985,226 43,607,075

Short-term operating receivables due from others 3,681,733 5,832,023Tax credit for excess corporate tax payment 15,192 -Advances 1,485,828 454,124Less impairments (1,206,998) (2,995,336)

Receivables at 31 December 52,960,981 46,897,886



The reported value of short-term operating and other receivables reflects their fair value. Allowances for short-term operating receivables

Allowances made on account of trade receivables fell by EUR 293,362 in 2013 compared to the previous year. While allowances were increased on account of new allowances recognised in the amount of EUR 729,369, they decreased on account of receivable write-offs in the amount of EUR 578,730 and by the amounts recovered based on legal action in the amount of EUR 444,001.

Trade receivables in the amount of EUR 12,512,969 are collateralised by the guarantees, sureties and mortgages received.

As at 31 December 2013, the borrowings raised by the Group are collateralised by trade receivables in the amount of EUR 20,860,000. 10. B. Short-term receivables for excess payment of corporate income tax

Short-term receivables for excess payment of corporate income tax refer mainly to excess income tax prepayments calculated on the basis of the liabilities of the Group for 2012. Income tax prepayment of EUR 48,472 were paid for the Union Group and EUR 303,023 was paid by Radenska. 11. Short-term available-for-sale financial assets

(in EUR) 2013 2012


Collected written-off receivables (444,001) (148,748)Final write-off of receivables (578,730) (529,577)Formation of allowance 458,827 647,639Increase in allowances 189,567 (38,960)Interest transfer to disputed 80,975 -Other - 19,417


(in EUR) 2013 2012

Tax credit for excess corporate tax payment 351,495 1,329,252

Total 351,495 1,329,252

(in EUR) 2013 2012

Short-term available-for-sale financial assets - at fair value 74,738,430 100,954,761Short-term available-for-sale financial assets - at cost 919,808 11,675,391

Total 75,658,238 112,630,152



As at the last day of 2013, the value of short-term financial assets available for sale equals EUR 75,658,238, which is a reduction of EUR 36,971,914 compared to the previous year. The decrease is the result of investment impairment to lower fair values.

The Group discloses the following investments under financial assets available for sale: investment into Poslovni sistem Mercator (23.34%) amounting to EUR 72,064,880 (quoted price as at 31 December 2013 was EUR 82.00), investment into shares of Elektro Maribor amounting to EUR 2,402,901 (5.74%), investment into shares of Premogovnik Velenje amounting to EUR 919,808 (7.09%), investment into shares of Elektro Gorenjska amounting to EUR 270,648 (1.6%) and the investment into shares of Ceste mostovi Celje (5.49%) whose value as at 31 December 2013 equalled zero as a result of impairment. Pursuant to the Bank of Slovenia decision of 17 December 2013 on extraordinary measures for termination of all qualified liabilities of Probanka in order to cover the bank's losses, in December the Group deleted its ownership of Probanka shares and at the same time derecognised the investment in Probanka from the books of accounts of Pivovarna Laško.

1. Investment in Poslovni sistem Mercator, Ljubljana

As at 31 December 2013, the Group was the owner of 878,840 MELR shares or 23.34% stake of Poslovni sistem Mercator (Pivovarna Laško 8.43%, Pivovarna Union 12.33% and Radenska 2.57%), which taking into account a market value of EUR 82 per share as at 31 December 2013, amounts to EUR 72,064,880. Fair value of the investment as at 31 December 2013 was by EUR 74,191,942 lower compared to the initial cost of the investment in the amount of EUR 146,256,904 or EUR 166.42 per share. The management estimates that the drop in the quoted price presents a permanent impairment and therefore, total amount of the impairment loss is recognised as an item of financial expense.

Procedures in the sale of a 23.43% stake in PS Mercator, Ljubljana

In line with the strategy adopted in 2012 the companies in the Laško Group continued to pursue activities aimed at a sale of the Group's 23.34% stake in Mercator. Consequently, at the end of October 2012 a new Contract for joint sale of shares of Poslovni sistem Mercator was agreed between the companies of the Laško Group and other entities interested in the sale of Poslovni Mercator shares. The agreement was signed by the sellers who are together the majority owner of shares in Mercator. In January 2013, a teaser was issued on the basis of which procedures for direct sale of shares began. The non-binding proposals arrived in February. On a proposal from the financial consultant in the sales process the consortium invited 4 bidders to continue the process. The selected bidders were invited to conduct a due diligence of the company and submit binding offers by the deadline set for May 2013. Following completion of due diligence of Mercator, binding proposals were issued by two potential investors. While a financial investor proposed only capital increase of Mercator, Agrokor offered to pay EUR 106 per one MELR share.

A contract for sale and acquisition of a joint 53% stake in Mercator was signed on 14 June 2013 between the consortium of sellers and the buyer Agrokor who paid EUR 120 per one MELR share. The signing of the sale agreement is a result of an extensive procedure led by the London team of international investment bank ING Bank N.V. The



process was performed in compliance with international good practice with the aim of involving all potential investors. Transparency of the process as well as maximising benefits for all Mercator's stakeholders were ensured. The buyer provided bank guarantees to the amount of 7.5% of total consideration. The Escrow Agreement for release of collateral was signed on 29 July 2013 by the creditor banks, lienors of the Mercator shares. Bilateral agreement signed on 29 July 2013 specify maturity date of the majority of borrowings on 30 April 2014 as well as milestones set for the implementation of the restructuring project. The transactions is expected to be completed by no later than the end of March 2014.

On 30 December 2013 the buyer informed the sellers that he had successfully obtained consent of the regulator in Serbia and that he was waiving the competition condition of obtaining regulators' consents in Croatia and Bosnia and Herzegovina, since at the time their consents had not been issued.

Thus the suspensive conditions other than the condition of rescheduling Mercator's debts had been fulfilled.

The restructuring of the Mercator debt condition should in accordance with SPA be fulfilled by no later than 31 January 2014. If the condition is not met and the buyer does not waive the said condition or there is no other agreement between the parties, the SPA is terminated automatically and the transaction will not take place. Since by 31 January 2014 the condition was not fulfilled, the buyer on the eve of 31 January 2014 issued a statement to the consortium of sellers extending the joint debt restructuring condition and thus the validity of SPA until 4 February 2014. On 3 February 2014 the buyer issued another statement regarding a change in joint debt restructuring condition and extended the deadline and thus validity of the SAP until 28 February 2014. The statement was valid if confirmed by the consortium of sellers by 2 p.m. on 5 February 2014. The consortium of sellers approved the statement within the set deadline.

Since October 2013, negotiations had been ongoing between the buyer and major creditors of Mercator (CoCom banks) regarding joint debt restructuring and conditions for the change in the ownership of Mercator, that would be acceptable to the CoCom banks.

The CoCom banks asked the buyer to secure EUR 250 million of additional funds to Mercator; of that EUR 200 million to be allocated for repayment of creditors and EUR 50 million for working capital. To secure the funding of Mercator as required by the CoCom banks and the time needed to sign the documentation for joint debt restructuring, the buyer proposed a reduction in the price and extension of the long stop date (LST).

As a result of negotiations between the buyer, sellers and creditor banks, Agrokor proposed an Annex to the Sale contract of 14 June 2013, amending some of the core elements of the original contract, namely: the bid price for one MELR share is fixed at EUR 86; transaction completion date is set as 30 June 2014 under condition that Mercator and its creditors bank reach an agreement on long-term joint debt restructuring by 31 May 2014, taking into account the fact that the buyer will assume part ownership of Mercator.



Members of the management boards of the consortium signed an appendix to the sale contract for the price of EUR 86 per MELR share inclusive of a suspensive condition relating to consent to be obtained from the relevant supervisory boards and the annual General Meeting of shareholders of Pivovarna Union. Another suspensive condition is also signing of a new Escrow Agreement.

2. Impairments of the available-for-sale financial assets

In 2013, impairment of the shares of Poslovni sistem Mercator (MELR) is disclosed as financial expense totalling EUR 28,122,912; impairment of the shares of Elektro Maribor (EMAG) totalling EUR 4,325,223; impairment of the shares of Elektro Gorenjska (EGKG) amounting to EUR 676,620; impairment of Premogovnik Velenje shares (PLVG) amounting to EUR 3,080,192; and of the shares of Probanka (PRBR) totalling EUR 767,001. Pursuant to the Bank of Slovenia decision issued in 2013, the total amount of Probanka shares was deleted from the books of account of the Laško Group. Movement of short-term financial assets available-for-sale

As a collateral for long-term and short-term borrowings from banks, the Group pledged: 878.840 shares (23.34%) of Poslovni sistem Mercator (MELR), 1,922,321 shares (5.74%) of Elektro Maribor, and 270,648 shares of Elektro Gorenjska or 1.6% of all the shares totalling EUR 74,738,429. 12. Short-term loans issued

As at 31 December 2013, the Group reports EUR 6,320,902 of short-term deposits, EUR 79,774,733 of short-term loans issued, and EUR 79,621,763 of impairment loss recognised on the loans issued. In 2009, the Laško Group (the Fructal Group was also included – the value of the loan issued was EUR 9,400,000) granted loans to companies

(in EUR) 2013 2012


Changes during the year:Impairment (30,789,259) (30,532,516)Revaluation (6,182,655) (22,065)Transfer from reserves - (87,065)


(in EUR) 2013 2012

Short-term deposits 6,320,902 9,054,667Interest on loans to others 21,598 221,639Less impairments - interest (20,363) -Short-term loans 79,774,733 83,239,515Less impairments (79,621,763) (83,049,277)

Balance at 31 December 2012 6,475,107 9,466,544



that were then its parent companies), namely the short-term loan of total EUR 92,050,000 of which EUR 54,250,000 was granted to Infond Holding and EUR 37,800,000 to Center naložbe. In 2009, the Group recognised impairment loss on account of loans issued and disclosed financial expenses as a result of the publication of insolvency and the introduction of bankruptcy proceedings against both related companies. In 2013, the companies of the Laško Group received EUR 3,391,018 as repayment of loans issued from bankruptcy estate of Center naložbe - in bankruptcy and Infond Holding - in bankruptcy. At the same time the Laško Group recognised financial income on account of reversal of previously impairments, and the balance of short-term loans issued and the relevant impairment loss were also reduced.

Movement of short-term loans issued

The interest rate on short term deposits ranges from 1.66 to 3.62% whereas for short-term loans issued the agreed interest rate is 5.5%. The disclosed value of short-term loans reflects their fair value.

13. Cash and cash equivalents

Cash at bank, cheques and cash on hand reflect their fair value. Compared to the last day of 2012, cash increased by EUR 816,108 in 2013. 14. Short-term accruals and prepaid expenditure

Short-term accruals and prepaid expenditure refer to short-term deferred costs or expenses and short-term revenues not charged.

Opening Closing balance Adjustment New balance Adjustment

1. January original loans Repayments 31 December of the closing(in EUR) 2013 balance 2013 in 2013 Impairment 2013 balance

Short-term deposits 8,988,000 - 30,278,902 32,946,000 - 6,320,902 -Short-term loans 83,240,254 (83,050,015) 848,731 4,314,252 (3,428,252) 79,774,733 (79,621,763)

Total 92,228,254 (83,050,015) 31,127,633 37,260,252 (3,428,252) 86,095,635 (79,621,763)

(in EUR) 2013 2012

Cash at bank 2,804,329 2,012,931Cash in hand and cheques 73,326 29,740Cash in foreign currency 65,246 61,523Cash in transit 61,822 84,421

Total 3,004,723 2,188,615

(in EUR) 2013 2012

Deferred cost and accrued income 856,090 378,648

Total 856,090 378,648



15. Equity of the owners of the controlling stake

The capital of the Group consists of called-up capital, share premium, profit reserves, retained earnings or accumulated loss, surplus from the revaluation of financial assets classified as assets of disposal group and also transitionally undistributed profit for the financial year or the outstanding loss for the financial year.

Share capital is shown as shareholders’ equity (capital from stakes or capital contribution). Share capital is divided into called-up share capital and uncalled share capital. Uncalled share capital is deductible from share capital.

Called-up capital of the Group is defined in the Articles of Association and equals EUR 36,503,305. It is divided into 8,747,652 ordinary transferable nominal no-par-value shares. Each share gives its owner a voting right at the annual General Meeting of Shareholders and the right to participate in the profit.

As at 31 December 2013, share premium amounted to EUR 30,993,977. In the past, share premium was created from the surplus of capital paid-in based on two capital injections that exceeded the nominal value of paid-in shares and on the basis of the general capital revaluation adjustment. The value of the surplus amount of capital paid-in amounted to EUR 79,231,564 and the value of the general capital revaluation adjustment totalled EUR 23,146,157. In the past, share premium was used to cover losses totalling EUR 71,383,744.

The reserves include legal reserves of EUR 3,650,331, reserves for treasury shares of EUR 281,895 and treasury shares as deductible amounting to EUR 281,895. Legal reserves may be used exclusively to cover losses and for capital injections. In 2013, the value of reserves remains unchanged. Treasury shares are composed of the PILR, RARG and PULG shares. On the last day of 2011, the Group's treasury shares comprised 19,891 of PILR shares, 85 PULG shares and 19,236 RARG shares. The value of PILR shares as of 12 December 2013 amounts to EUR 79,763 and the value of the shares owned by the subsidiaries amounts to EUR 202,132. Pivovarna Laško holds no treasury shares as at 31 December 2013. In 2013, reserves for treasury shares decreased due to the revaluation totalling EUR 59,275.

Total amount of retained earnings (adjusted by the effect of deferred tax) of EUR 875,016 as at 31 December 2012, was in the financial year 2013 used to cover losses incurred in 2012. The amount of retained earnings increased in 2013 on account of derecognition of liabilities for unpaid dividends relating to the previous years in the amount of EUR 293,543 and depreciation on account of the previous revaluation of property, which resulted in a decrease of the revaluation surplus. On the other hand, retained earnings were decreased by the effect of 6.82% reduction in the equity share of Radenska for the benefit of non-controlling interests in the amount of EUR 621,758, as the difference between the investment value and the attributed capital.

Revaluation surplus decreased by revaluation of property to lower fair value amounting to EUR 3,462,085, by revaluation of investments amounting to EUR 81,112, by actuarial losses from post-employment benefits amounting to EUR 132,896, by deferred tax amounting to EUR 94,399, and by depreciation expense resulting from revaluation of property in the mount of EUR 183,257.



The capital of the Group in 2013 decreased by translation reserves related to exchange rate differences on translation of foreign operations in the amount of EUR 24,236. 16. Equity of the owners of non-controlling interests

On the last day of 2013, the capital of the non-controlling interests amounts to EUR 9,804,281 and compared to 2012 it increased by EUR 2,639,971. This increase is the result of a 6,82% increase in the equity interest of Radenska for the benefit of a lienor Nova Kreditna banka Maribor in the amount of EUR 4,504,470. On the other hand, the non-controlling interest was reduced by the net loss of the financial year amounting to EUR 1,803,569 and by changes in other comprehensive income of total EUR 28,101. 17. Provisions and long-term accrued costs and deferred income

Majority of other provisions (61.6%) amounting to EUR 8,587,422 as at 31 December 2013, are provisions for underpaid concession fees for the period from 2005 to 2013 in the amount of EUR 5,576,805. The concession fee is payable by Pivovarna Laško and Radenska over a period of 30 years in equal annual payments increased by the attributive interest. Some of the provisions amounting to EUR 1,340,000 relate to contractual bonds, whereas EUR 1,500,000 relates to liabilities arising from legal action brought against the Group by Kajo. The remaining amount of provisions was set aside for assessed liabilities from the outcome of legal actions. Majority of the latter were set aside based on assessments and opinions of the legal counsel.

Long-term accruals and deferred income mainly refer to the exemptions in respect of the payment of contributions for the disabled above the quota.

Provisions are established for estimated liabilities with regard to the payment of termination benefits and jubilee awards such as long-term benefits for years of service. As at the reporting date, the provisions were discounted to the present value.

When calculating potential liabilities with regard to the retirement benefits the provisions of the Decree on the levels of reimbursed work-related expenses and of certain income not to be included in the tax base are taken into consideration. If the amount of the retirement benefit exceeds the amount from the Decree on the levels of reimbursed work-related expenses and of certain income not to be included in the tax base, the employer needs to pay the 16.1% contributions on the excess amount.

Overview of additional assumptions:

(in EUR) 2013 2012

Other provisions 8,587,422 1,898,251Provisions for retirement benefits and anniversary bonuses 5,292,495 4,904,442Provisions for the disabled above the quota 49,711 101,696

Total 13,929,628 6,904,389



Growth of average wages in the Republic of Slovenia is assumed to be 0.5% annually in 2014, 1% in 2015 and 3.0% in further years, which represents the estimated long-term growth of wages;

The calculation takes into consideration the growth of amounts of the retirement benefits and jubilee awards in the Decree on the levels of reimbursed work-related expenses and of certain income not to be included in the tax base as assumed in the previous indent for the growth of the average wage in the Republic of Slovenia (it is an assumption that the bases will be changing in accordance with the growth of the average wage in the Republic of Slovenia since we are not aware of the actual intention of the legislator concerning the amounts in the Decree on the levels of reimbursed work-related expenses and of certain income not to be included in the tax base);

The calculation of liabilities from severance payments is tied to the years of pensionable service of each individual employee;

The selected discounted interest rate is 4.10% annually, which equals the return on 10-year corporate bonds with high credit rating in the Eurozone at the end of November 2013 increased by add-on concerning the local risk.

Based on actuarial calculation, the Group recognised in the profit or loss unrealised actuarial gains on account of severance payments in the amount of EUR 139,806, current employee benefit costs amounting to EUR 130,010, and interest expenses in the amount of EUR 147,588. Regarding jubilee awards, the Group recognised in the profit or loss current employee benefit costs, interest expense and actuarial gains totalling EUR 93,077.

A change in actuarial assumptions would only have an insignificant impact on the amount of provisions and hence adjustment for 2012 was not accounted for. Movement of provisions and accruals and deferred income

In 2013 the Group additionally set aside provisions for retirement benefits and jubilee awards of total EUR 671,269, whereas provisions in the amount of EUR 283,216 were reversed.

Compared to the previous year, other provisions increased by EUR 7,105,753. Majority of the increase relates to establishment of provisions for payment of water concession fee for the period from 2005 to 2013 amounting to EUR 5,576,805; of the total amount due,

Termination Disabledbenefits Jubilee workers above

(in EUR) on retirement awards the quota Other Total

At 1 January 2013 3,230,717 1,673,725 101,696 1,898,251 6,904,389

Provisions transfer JP - - - (396,071) (396,071)Increase 417,405 253,864 51,831 7,105,753 7,828,853Decrease - utilisation (122,429) (160,787) (103,816) (20,511) (407,543)

At 31 December 2013 3,525,693 1,766,802 49,711 8,587,422 13,929,628



EUR 4,209,805 is payable by Pivovarna Laško, and EUR 1,367,000 by Radenska. These provisions were recognised by the Group pursuant to the amendments to the Waters Act adopted in 2013 however, by the date of the financial statements approval, the governing body's decree regulating the aforementioned levies for the past periods had not been issued. The increase also relates to provisions set aside in the amount of EUR 1,340,000 for bonuses to legal counsel representing Radenska in the denationalisation process. The basis for establishment of these provisions was the contract agreed between the legal counsel and the company. Other provisions decreased in 2013 on account of transfer of provisions created for legal actions of Jadranska pivovara to liabilities relating to the assets of disposal group in the mount of EUR 396,071, and reversal of provisions set aside for legal actions amounting to EUR 20,511.

Long-term accruals and deferred income decreased in 2013 on account of utilisation of exemption for disability pension insurance for disabled persons in the amount of EUR 103,816, and increased on account of the exemption of payment of contributions for the disables amounting to EUR 63,237. 18. Long-term financial liabilities

Maturity of long-term borrowings from banks

Movement of long-term borrowings from banks

(in EUR) 2013 2012

Long-term bank borrowings 68,740,558 80,907,079Other long-term financial liabilities 18,132 126,592Long-term borrowings from other companies 30,835 27,172Total 68,789,525 81,060,843

Transfer to short-term financial liabilities (51,563,985) (54,966,961)

Total 17,225,540 26,093,882

(in EUR) 2013 2012

Maturity from 4 to 6 years - 2,727,869Maturity from 2 to 4 years 4,666,743 12,944,872Maturity from 1 to 2 years 12,853,122 10,267,377Short-term amounts of long-term borrowings 51,274,965 54,966,961

Total 68,794,830 80,907,079

Transfer toKFO and Principal Amounts

Principal amount Short-term Repayments amount maturing Long-term

(in EUR) 1. January 2013 part of FO in 2013 2013 in 2014 amounts

Long-term bank borrowings 77,023,189 1,979,811 6,248,548 68,794,830 51,274,964 17,519,866

Total 77,023,189 1,979,811 6,248,548 68,794,830 51,274,964 17,519,866



As at 31 December 2013 the Group reported EUR 68,794,830 of long-term borrowings. Of that, EUR 51,274,964, which matures in 2014 (mostly on 30 April 2014) is recognised under short-term borrowings. Pursuant to applicable contracts, EUR 12,893,122 of borrowings mature within a period of two years, whereas further EUR 4,666,743 of long-term borrowings mature within four years.

The Group pledged 707,321 Elektro Maribor shares (2.11% interest), 464,390 MELR shares (12.33% interest), and 350 shares (19.77% interest) of Birra Peja. The carrying amount of pledged shares equals EUR 238,992,831 as at 31 December 2013. Long-term financial liabilities of the Group are additionally collateralised with pledged movable and immovable property with carrying amount of EUR 14,377,381 as at 31 December 2013.

The disclosed value of long-term financial liabilities reflects their fair value.

On average, the interest rate for long-term loans in 2012 ranged from 4.48% to 4.72% fixed rate or 6-month euribor increased by 4.8 percentage point. The disclosed value of long-term financial liabilities reflects their fair value.

Long-term borrowings are fully collateralised by securities, mortgages and pledged property (detailed notes under Short-term financial liabilities). 19. Short-term operating liabilities

Compared to the previous year, short-term operating liabilities amounted to EUR 40,130,797 as at 31 December 2013, an increase of EUR 2,187,687 over the previous year. Supplier payables increased by EUR 2,782,758, payables to the state for the increase in excise duty rose by EUR 1,087,209, whereas payables to employees, payables for advances and other short-term trade liabilities of the Group decreased by EUR 1,724,258.

Major share of trade liabilities (60.17%) represent supplier payables in the amount of EUR 24,145,665.

(in EUR) 2013 2012

Short-term liabilities to Group companies as suppliers 131,671 89,693Short-term operating liabilities to other suppliers 24,013,994 21,231,236Short-term operating liabilities to others: to employees 3,164,002 3,470,349 to the state 10,067,951 8,980,742Short-term liabilities from advances 174,670 485,472Other short-term liabilities 2,578,509 3,685,618

Total 40,130,797 37,943,110



Maturity structure of trade payables

20. Short-term corporate tax payable

As at the last day of 2013, none of the Group companies reported corporate income tax liabilities. In its profit and loss account the Union Group reports corporate income tax payable for the financial year 2013 in the amount of EUR 1,609,371. However, the liability was offset against excess amount of tax prepayments for the same period. 21. Short-term financial liabilities

Movements in short-term bank borrowings

(in EUR) 2013 2012

Not-past due 19,739,909 7,139,418From 1 to 30 days past due 2,551,490 2,683,517From 31 to 60 days past due 342,394 1,389,466From 61 to 90 days past due 82,605 2,419,471From 91 to 180 days past due 1,393,334 -From 181 to 360 days past due 661 -Due and outstanding in excess of 360 days 35,272 7,689,057

Total 24,145,665 21,320,929

(in EUR) 2013 2012

Short-term income tax payable - 353,494

Total - 353,494

(in EUR) 2013 2012

Short-term amounts of long-term financial liabilities 51,563,985 54,966,961 of that banks 51,274,964 - of that leasing 289,021 -Interest payable on borrowings 2,406,050 2,634,838Short-term borrowings from the Group - 1,074Short-term bank borrowings 264,773,071 280,066,666Other short-term financial liabilities (996,696) 1,321,474

Total 317,746,410 338,991,013

Short-term Outstanding

New amounts Transfer from Repayments and amount

Principal amount borrowings long-term long-term renegotiated 31 December

(in EUR) 1 January 2013 in 2013 liabilities borrowings in 2013 2013

Short-term bank borrowings 283,873,356 21,344,296 51,274,964 2,047,011 42,491,592 264,773,071

Total 283,873,356 21,344,296 51,274,964 2,047,011 42,491,592 264,773,071



As at 31 December 2013, short-term financial liabilities of the Laško Group total EUR 317,746,410, of which EUR 316,048,035 relates to borrowings raised from banks. Compared to the last day of the previous year, short-term borrowings from banks decreased by EUR 18,985,592.

The Group pledged 667,444 shares (100%) of the Delo, 4,745,107 shares (93.74%) of Radenska, 440,295 shares (97.60%) of Pivovarna Union, 414,450 shares (11.00%) of Poslovni sistem Mercator, 1,215,000 shares (3.63 %) of Elektro Maribor, 270,648 shares (1.6 %) of Elektro Gorenjska, 645,003 shares (20.6%) of Thermana, and 202,788 shares (79.24 %) of ČZP Večer. According to data from separate financial statements of group companies as at 31 December 2013, the carrying amount of pledged shares equals EUR 262,864,135. Some of the short-term liabilities are collateralised with mortgage and pledges of movable property and investment property. The carrying amount of pledged immovable and movable property and investment property as at 31 December 2013 is EUR 82,915,574. In addition, borrowings from banks are collateralised with receivables amounting to EUR 20,860,000 as at 31 December 2013, and by pledges of Pivovarna Laško brands amounting to EUR 50,000,000. As at 31 December 2013, total value of outstanding short-term borrowings from banks collateralised with shares, mortgage, pledges of movable property and investment property, equals EUR 316,048,035. All of the Group's borrowings from banks are collateralised.

The average effective interest rate for the short-term borrowings ranges as fixed from 4.65 to 5.26% (Birra Peja 9.5%) or as variable 1- to 6-month EURIBOR increased by 4.4 to 4.5 percentage points.

The disclosed value of short-term financial liabilities reflects their fair value.

An debt restructuring and standstill agreement was signed with the banks on 30 April 2014. Detailed information is included in Section 4.4.13 SUBSEQUENT EVENTS. 22. Short-term accruals and deferred income

The liabilities related to the holiday entitlement not taken, severance pay for redundant workers, excise duty on unsold products kept in the warehouse and other short- term deferred revenues are disclosed under short-term accruals and deferred income. Compared to the previous year, short-term accruals and deferred income decreased by EUR 1,309,303. In spite of the derecognition of liabilities for guarantees issued to Nova Kreditna banka Maribor in 2009 amounting to EUR 3,637,650 for borrowings raised by Center naložbe, Pivovarna Union and Delo recorded an increase in short-term accruals and deferred income in total EUR 2,328,347. A dispute began at the District Court in Maribor regarding the aforementioned guarantees between Nova Kreditna banka Maribor as the lienor and Pivovarna Laško as the debtor. The court ruled in favour of the lienor and the enforcement order became final in 2011. Although by the date of the Annual Report's approval the enforcement had not been exercised, as at 31 December

(in EUR) 2013 2012

Short-term accrued cost and deferred income 6,154,229 7,463,532

Total 6,154,229 7,463,532



2013 the Group derecognised accruals and deferred income amounting to EUR 3,637,650 23. Operating revenues and expense

Operating revenues and expenses relate to continuing operations, therefore to the companies of the Laško Group excluding Jadranska pivovara Split. The result of the latter was recognised as the profit or loss from discontinuing operations in compliance with IFRS 5. 23. A. Net sales revenues

Compared to the previous year, net sales revenues decreased by EUR 4,509,549 or 1.7%. Net sales on the local market decreased by EUR 8,998,075, whereas net sales revenue in foreign markets increased by EUR 4,488,526. The Group generated 86.79% of total sales revenue on the local market and 13.2% on foreign markets in 2013.

The biggest share of revenues on foreign markets is generated on the markets of former Yugoslavia in particular in Croatia, but also the share of sales on the EU markets has been on the increase. 23. B. Other operating revenues (including revaluation operating revenues)

(in EUR) 2013 2012

Revenue from the sale of products and services on domestic market 225,209,963 235,462,588Revenue from the sale of products and services on foreign market 34,866,062 30,696,525Revenues from the sale of material and merchandise on domestic market 6,418,170 5,163,620Revenues from the sale of material and merchandise on foreign market 383,204 64,215

Total 266,877,399 271,386,948

(in EUR) 2013 2012

Net sales on the domestic market 231,628,133 240,626,208Net sales on foreign markets 35,249,266 30,760,740

Total 266,877,399 271,386,948

(in EUR) 2013 2012

Reversal of provisions 129,640 658,470Other operating income 7,010,890 4,384,030Revaluation operating revenue from short-term assets 581,599 280,849Revaluation operating revenue from long-term assets 666,129 320,740

Total 8,388,258 5,644,089



Other operating revenues amount to EUR 8,388,258 and compared to the previous year they increased by EUR 2,744,169. This includes revenues related to the excess payment of water concession fee for the period from 2005 to 2013 in the amount of EUR 2,189,775, revenue from disposal of fixed assets, recovery of receivables for which allowances were made in previous years, revenues from reversal of provisions and received subsidies.

In addition to the above, in 2012 other operating revenue included positive effect i.e. negative goodwill from integration of Birra Peja in the consolidation in the amount of EUR 2,534,344. 23. C. Costs and other operating expenses

Compared to 2012, operating expenses increased by EUR 8,420,001 in 2013. Revaluation operating expenses increased by EUR 5,251,609 resulting from revaluation of property to lower fair values, whereas other operating expenses increased by EUR 5,481,111. Majority of the increase in other operating expenses relates to underpayment of water concession fee in the period from 2005 to 2013 amounting to EUR 5,576,805. Of the total amount, 75% relates to the liability of the controlling company Pivovarna Laško and 25% to Radenska. The costs of materials and merchandise increased by EUR 3,213,187, costs of provisions rose by EUR 554,696, and current assets' impairments increased by EUR 322,631.

Compared to the previous year, the costs of services of the Laško Group decreased by EUR 2,579,674, employee benefit costs fell by EUR 1,377,788, and costs of amortisation and depreciation decreased by EUR 2,444,771. The costs of services incurred in 2013 are not inclusive of costs of consultants regarding financial debt restructuring (legal and financial consultations) amounting to EUR 1,213,839. The reason for this is the fact that these costs are tied to the total amount of borrowings to be repaid in accordance with debt rescheduling. in 2013, the costs incurred are recognised as a reduction in financial liabilities measured at amortised cost. Subsequently they will be recognised in profit or loss in line with the repayments of the total amount of relevant borrowings in 2014 and 2015.

(in EUR) 2013 2012

Costs of merchandise sold (Horeca) 2,007,509 2,066,300Costs of materials, raw materials and merchandise 98,656,990 95,385,012Cost of services 66,780,684 69,360,358Depreciation 17,619,428 20,064,199Revaluation operating expense from long-term assets 14,326,240 8,982,599Revaluation operating expense from short-term assets 1,058,541 735,910Payroll costs 36,613,598 37,238,547Social security contributions on salaries 6,383,610 6,955,433Other labour costs 6,511,707 6,693,723Costs of provisions 1,356,003 801,307Other operating expenses 12,108,482 6,590,812

Total 263,422,792 254,874,200



23. D. Costs by functional group

Production Costs General and2013 of products and Selling administrative

(in EUR) merchandise sold expenses expenses Total

Costs of merchandise sold (Horeca) - 2,007,509 - 2,007,509merchandise 96,835,405 436,556 1,385,029 98,656,990Cost of services 20,040,956 36,169,566 10,570,162 66,780,684Depreciation 13,773,422 1,792,486 2,053,520 17,619,428Revaluation operating expense from long-term assets 888,901 2,896,790 10,540,549 14,326,240Revaluation operating expense from short-term assets 61,775 258,868 737,898 1,058,541Employee benefit costs 31,242,553 7,913,713 10,352,649 49,508,915Costs of provisions 16,003 - 1,340,000 1,356,003Other operating expenses 2,619,427 385,155 9,103,900 12,108,482

Total 165,478,442 51,860,643 46,083,707 263,422,792

Production Costs General and2012 of products and Selling administrative

(in EUR) merchandise sold expenses expenses Total

Costs of merchandise sold (Horeca) - 2,066,300 - 2,066,300merchandise 90,443,393 3,234,689 1,706,930 95,385,012Cost of services 22,701,614 36,139,425 10,519,319 69,360,358Depreciation 15,647,954 2,005,173 2,411,072 20,064,199Revaluation operating expense from long-term assets 130,257 16,005 8,836,337 8,982,599Revaluation operating expense from short-term assets 3,462 442,994 289,454 735,910Employee benefit costs 31,951,883 8,157,408 10,778,412 50,887,703Costs of provisions 142,151 64,474 594,682 801,307Other operating expenses 2,436,463 552,754 3,601,595 6,590,812

Total 163,457,177 52,679,222 38,737,801 254,874,200



23. E. Financial income and expense

In 2013 the Laško Group earned EUR 6,859,247 of financial income. Majority of the amount (77.2%) resulted from derecognition of non-performing loans issued in the past to Holding and Center naložbe, that is the income from bankruptcy estate of both companies amounting to EUR 5,296,036. In comparison, the Group recognised financial income from dividends in the amount of EUR 6,712,171 in 2012, of which dividends paid by the Poslovni sistem Mercator amounted to EUR 5,273,046. No dividends were paid in 2013 by the Poslovni sistem Mercator.

Financial expenses of the Laško Group exceed financial revenues by EUR 51,145,804. Financial expenses for interest from bank borrowings amounted to EUR 17,888,061 while financial expenses from impairment of investments amounted to EUR 39,785,214.

Financial expenses resulting from the impairment of investments relate mainly, namely in the amount of EUR 28,122,912, to MELR share impairment. In addition, the following investments were also impaired in 2013: investment in shares of Elektro Maribor in the amount of EUR 4,325,223, investment in RVLG shares of Rudnik Velenje in the amount of EUR 3,102,464, in shares of Elektro Gorenjska in the amount of EUR 676,620, and in the Probanka shares in the amount of EUR 767,001. The latter investment was pursuant to the Bank of Slovenia decision deleted from the Group's books of account.

(in EUR) 2013 2012

FINANCIAL INCOME less foreign exchange differences 6,859,247 7,470,518Financial income from shares in the profits 486,002 6,712,171Financial income from loans 565,235 480,204Financial income from operating receivables 511,806 255,706Financial income from disposal of securities 168 211Financial income from reversal of investment impairment in a subsidia 5,296,036 22,226

FINANCIAL EXPENSE less foreign exchange differences (58,003,585) (53,914,548)Financial expenses due to impairment and write-offs of investments (39,785,214) (33,067,019)Financial expenses from financial liabilities (17,888,061) (20,821,180)Financial expenses for operating liabilities (330,310) (26,349)

FOREIGN EXCHANGE RATE DIFFERENCES on financing (1,466) (12,178)Foreign exchange losses (1,927) (14,937)Foreign exchange gains 461 2,759

Net financial expenses (51,145,804) (46,456,208)



24. Tax on continued operations

*The values of certain items presented in these financial statements differ from those reported in the Annual Report 2012. Adjustments to the historical financial statements are reported in a special disclosure in Section 4.4.5 ADJUSTMENT OF HISTORICAL FINANCIAL STATEMENTS. From continuing operations the Group discloses corporate tax expense amounting to EUR 1,609,371 and deferred tax totalling EUR 11,321,979.

In 2013, the positive tax basis and consequently corporate tax liability is reported only by Pivovarna Union, whose tax basis amounts to EUR 9,396,794.

The income tax of the Group differs from the theoretical tax amount which would arise if the basic tax rates of the domestic country were used. The tax base is calculated as a difference between taxable revenues and taxable expenses at the level of each individual company in the Group. If taxable expenses exceed taxable revenues, the Company will show a tax loss which can be covered by future taxable income. The following companies in the Laško Group generated uncovered tax loss as at 31 December 2013 that will be covered by future taxable income: Pivovarna Laško in the amount of EUR 23,467,051, Jadranska pivovara – Split in the amount of EUR 24,305,517 and Birra Peja in the amount of EUR 5,879,368.

The tax base is reduced by tax deductions related to:

Fiscal benefits for research and development;

Fiscal benefits for voluntary supplementary pension insurance;

Fiscal benefits for the employment of disabled persons and

Fiscal benefits deductions for donations.

The tax authorities may, at any time within a period of five years after the end of the year for which a tax assessment was due, carry out an inspection of the Company's operations, which may lead to assessment of additional tax liabilities, default interest and penalties regarding corporate income tax or other taxes and levies. The management of the Company is not aware of any circumstances that could result in a significant tax liability.

Deferred tax which affects profit or loss is shown in the table of movements in deferred tax assets and in the table of movements in deferred tax liabilities.


Current tax on continued operations (1,609,371) (2,204,513)Deferred tax from continued operations 11,321,979 3,039,414

Total 9,712,608 834,901



24. A. Tax on discontinued operations

24. B. Tax from continued and discontinued operations

*The values of certain items presented in these financial statements differ from those reported in the Annual Report 2012. Adjustments to the historical financial statements are reported in a special disclosure in Section 4.4.5 ADJUSTMENT OF HISTORICAL FINANCIAL STATEMENTS. 25. Discontinued operation

Profit or loss account from discontinued operations

The Group discloses the effects of the discontinued operations of Jadranska pivovara Split (due to the discontinuance of an operation in accordance with IFRS 5)

(in EUR) 2013 2012

Deferred tax from discontinued operations 905,442 (1,968,980)

Total 905,442 (1,968,980)


Current tax (1,609,371) (2,204,513)Deferred tax 12,227,421 1,070,434

Total 10,618,050 (1,134,079)

(in EUR) 2013 2012

Discontinued operationNet sales revenues 142,641 161,215Other operating income 478,849 1,312,310Costs of goods, materials and services (211,677) (785,060)Employee benefit costs (547,691) (422,353)Amortisation of intangible assets and depreciation of property, plant and equipment (986,814) (47,680)Provisions - (196,366)Other operating expenses (73,657) (471,385)OPERATING PROFIT OR LOSS (1,198,349) (449,319)

Financial income 7,142 7,915Financial expenses (167,501) (131,271)PROFIT OR LOSS BEFORE TAX (1,358,708) (572,675)

Income tax -Deferred tax 905,442 (1,968,980)NET PROFIT OR LOSS OF THE YEAR FROM DISCONTINUED OPERATIONS (453,266) (2,541,655)



26. Exchange rate differences

Exchange rate differences from operations and financing considered in the profit or loss are as follows:

27. Net loss per share

Net loss per share is calculated by dividing net revenue which belongs to the shareholders by the weighted average number of shares on the market during the year, with the exception of the average number of treasury shares. 28. Changes in other comprehensive income

29. Dividend per share

The controlling company Pivovarna Laško did not pay out dividends in 2013 (2012: no dividend paid). However, dividends were paid by Radenska. Accordingly, EUR 39,063 of dividends was paid to the non-controlling interests. 30. Business combinations - acquisition of a dominant influence

No business combinations occurred in 2013.

(in EUR) 2013 2012

Foreign exchange differences from operations 8,439 (1,257)Foreign exchange differences from financing (1,698) (166)

Total net cash flow 6,741 (1,423)

(in EUR) 2013 2012

Total loss of the controlling interest (28,354,043) (25,562,593)Number of ordinary shares issued 8,747,652 8,747,652Treasury shares 19,891 19,891Weighted number of ordinary shares issued 8,727,761 8,727,761

Net loss per share (3.25) (2.93)Diluted net loss per share (3.25) (2.93)

(in EUR) 2013 2012

Financial assets available for sale (93,136) 10,431Gains/losses from revaluation of property (3,434,740) 305,678Deferred tax on account of revaluation (137,965) (1,292,900)Translation reserve (24,236) -Other - 474,983Unrealised actuarial gains / losses from post-employment benefits (155,344) -Deferred tax on unrealised actuarial gains / losses 22,592 -

OTHER COMPREHENSIVE INCOME (3,822,829) (501,808)



4.4.7 FINANCIAL INSTRUMENTS AND RISKS

31. Financial risk

31. A. Credit risk

The carrying amount of financial assets represents exposure to credit risk.

Credit risk exposure

Credit risk comprises all risks having an effect on decreasing the economic benefits of the Group due to the insolvency of business partners, both customers and borrowers, which could lead to non-fulfilment of their contractual liabilities. To this end, the receivables are constantly monitored by business partner and maturity and the collection, reminders and charging interest on arrears and also the recovery through enforcement of judicial decisions contribute to better payment discipline of the Group's customers. The Laško Group manages the credit risk also by collateralising its receivables on foreign markets. Receivables from more risky partners on the domestic and foreign markets are additionally collateralised by bank guarantees and mortgages, and by insuring them with the SID insurance undertaking. When such security cannot be provided with certainty, business is conducted on the basis of advance payments.

Receivables due from our major wholesalers on the local market are only partly collateralised and subsequently, there is a large credit risk exposure to this particular segment. Over the entire 2013 financial year the payment discipline of our major buyers worsened, which caused constant and daily liquidity problems. Major delays in payments have been noted from our largest customers. The management believes that the credit risk is increasing due to fierce economic conditions. Maturity of trade receivables

(in EUR) 2013 2012

Issued loans 6,758,651 9,902,879Investments 287,276 434,538Receivables less receivables due by state and advances given 51,281,913 44,757,180 thereof trade receivables 48,985,226 43,607,075Cash and cash equivalents 3,004,724 2,188,615

Total 61,332,564 57,283,212

(in EUR) 2013 2012

Not-past due 30,567,614 25,474,299Up to 30 days 11,379,196 10,943,218From 31 to 60 days past due 1,587,206 2,511,940From 61 to 90 days past due 1,478,521 3,065,674Maturity more than 90 days 9,917,459 7,850,076

At 31 December 54,929,996 49,845,207



Compared to the last day of 2012, the balance of trade receivables increased by EUR 5,084,789 or 10.2%. The increase was recorded primarily with regards to receivables that have not yet matured, which is partly due to increased scope of sales and partly due to extension of contractually agreed payment terms and conditions. In terms of maturity, 55.7% of all receivables has not yet matured. Most of matured receivables are in the group of maturity up to 30 days (20.7%) and those with maturity in excess of 90 days (18.1%). A legal action was started against most of receivables with maturity exceeding 90 days and allowances were recognised and charged to profit or loss. Detailed monitoring of receivables that have matured and appropriate response ensure efficient credit risk management.

The Group received guarantees amounting to EUR 12,512,969 for trade receivables. 31. B. Liquidity risk

With regard to financial risks, monitoring liquidity risk, which is the risk of loss due to short-term and long-term insolvency, is of particular significance. To avoid problems with the current liquidity, the Group manages the liquidity risk, drafts and implements a policy of regular liquidity management including the planning of cash outflows and sufficient inflows. The controlling entity Pivovarna Laško is exposed to the highest liquidity risk. By securing relevant credit lines for short-term cash flow balancing in the form of revolving credits and agreed overdraft facilities, the parent has so far successfully managed to secure coverage of potential daily liquidity shortcomes. However, in view of deteriorating conditions on financial markets and continuing financial crisis, it will become progressively more difficult to successfully manage the liquidity risk. Pivovarna Union, Birra Peja and Delo publishers are also exposed to liquidity risk.

On 29 July 2013, management boards of Pivovarna Laško, Pivovarna Union and Radenska signed a debt rescheduling agreement with all creditor banks extending maturity to 30 April 2014 at the earliest, and subsequently also a long-term debt Restructuring Agreement until 31 December 2016. Currently procedures for securing the disposal of investments are pursued actively as part of the companies' restructuring which is expected to be completed by 2016.

Monitoring of fundamental financing and liquidity ratios pursuant to Article 14 of the Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act, prescribing criteria under which an entity is deemed solvent, is particularly important and necessary to ensure effective liquidity risk management. Regular monitoring of an entity's liquidity position is of particular importance as it ensures timely response and helps to avoid unfavourable consequences of an emerging liquidity crisis.

To attain sustainable level of financial debt, in 2013 the Laško Group of companies continued activities aimed at debt restructuring including deleveraging of all investments which are not crucial for the performance of the Group's principal activity. Until the debt restructuring process is completed, the controlling company will continue to experience a rather difficult liquidity situation. In view of the aforementioned and difficult situation on financial markets and the entire economic environment, we have assessed the Group's exposure to liquidity risk as very high and requiring special attention.



The results of the Group’s operations are good and positive; however, due to negative financing cash flow being the result of high interest expenses and the impairment of investments, the Group has been incurring loss for several successive years.

As at the last day of 2013, the Group's short-term liabilities exceed the amount of short-term assets by EUR 194,688,007; the ratio between short-term assets and short-term liabilities of 0.47 reflects a very high liquidity risk.

In accordance with the adopted five-year strategy of operations of the Laško Group, procedures for the sale of all non-strategic investments began to intensify already in 2010. Procedures for the sale of a 79.25% stake in the newspaper company Večer, a 23.34% stake in Poslovni sistem Mercator, a 57.63% stake in Birra Peja and a 100% stake in the Delo publishers and all other investments and property not required for business, continued in 2013.

Since it is possible that until a successful disposal of investments the Laško Group could face serious liquidity issues, and since the controlling entity will continue to face these issues even in the event of successful disposal of those investments, the Restructuring Agreement was negotiated and signed by the creditor banks, which specifies in detail individual milestones in the implementation of the adopted debt rescheduling plan until the end of 2016. Maturity structure of supplier payables

Maturity of short-term financial liabilities to banks

(in EUR) 2013 2012

Not-past due 19,739,909 7,139,418From 1 to 30 days past due 2,551,490 2,683,517From 31 to 60 days past due 342,394 1,389,466From 61 to 90 days past due 82,605 2,419,471From 91 to 180 days past due 1,393,334 7,689,057From 181 to 360 days past due 661 -Maturity more than 360 days 35,272 -

Total 24,145,665 21,320,929

2014 2014(in EUR) Principal Interest Total

January - March 4,706,410 3,891,559 8,597,969April - June 299,529,124 1,564,833 301,093,957July - September 6,969,831 187,810 7,157,641October - December 5,131,691 118,016 5,249,707

Total 316,337,056 5,762,218 322,099,274



Maturity of long-term financial liabilities to banks

A Debt Restructuring and Standstill Agreement was signed with the banks on 30 April 2014. Detailed information is included in Section 4.4.13SUBSEQUENT EVENTS 31. C. Interest rate risk

Interest rate risk is the risk of a possible change in the reference interest rate on the financial market, mainly due to borrowings linked to a variable interest rate (EURIBOR). In 2013 a decreasing tendency of EURIBOR has continued, which had a positive impact on borrowing costs linked to a variable interest rate (EURIBOR). Towards the end of the year the reference interest rate rose slightly, however this had no major impact on interest rates. Financing under variable interest rate conditions represents two-thirds of all the Group's financing while the other one-third represent borrowings with a fixed interest rate. Interest rate hedging of long-term debt at variable interest rates is sensible however, majority of the Group's borrowings mature in a period of less than 12 months. The Group has already agreed and signed a contract for long-term financial debt rescheduling until 31 December 2016. The management have assessed the interest rate risk as rather high but manageable.

If the average interest rate increased by 1%, and the indebtedness remained at the same level, expenses would increase by EUR 3,486,951 and in the event of a 1.5% increase in the average interest rate, expenses would increase by EUR 5,230,427.

If the average interest rate decreased by 1%, and the indebtedness remained at the same level, financial expense would decrease by EUR 3,486,951 and by EUR 5,230,427 if the average interest rate decreased by 1.5%.

The Group issues loans and deposits at fixed interest rates.

(in EUR) 2013 2012

Maturity from 4 to 6 years - 2,727,869Maturity from 2 to 4 years 4,666,743 12,944,872Maturity from 1 to 2 years 12,853,122 10,331,702Short-term amounts of long-term borrowings 51,274,965 51,018,746

Total 68,794,830 77,023,189

Averageinterest Difference

(in EUR) Interest rate in % Interest

Actual financial expense for interest paid 17,888,061 5.13 -Expenses resulting from 1% increase in interest rates 21,375,012 6.13 3,486,951Expenses resulting from 1% decrease in interest rates 14,401,110 4.13 (3,486,951)Expenses resulting from 1.5% increase in interest rates 23,118,488 6.63 5,230,427Expenses resulting from 1.5% decrease in interest rates 12,657,634 3.63 (5,230,427)



31. D. Price risk

The Group is exposed to price risks on the downstream side and on the upstream side.

On the downstream side, a risk is the increase of retail prices compared to the declining purchasing power of the population. The retail prices are also affected by the trade margin, the level of excise duty and value added tax. With regard to the situation in the country, there is a potential risk of increasing excise duty on alcohol and alcoholic beverages – beer, the introduction of excise duty on sweet drinks and increased rate of value added tax. All these risks can result in increased retail prices. This increase can cause a shift of focus of consumers to cheaper products, the substitutes of our products (e.g.: shift from beer to wine since there is no excise duty on wine and is thus relatively cheaper) or a shift to shopping abroad where these duties are lower. Each drop in sales of the beer on the domestic market by 1% represents the decrease in revenues by EUR 560,000 compared to the revenues in 2013. The Company has no influence on this risk, which is assessed as significant.

Risks on the upstream side due to the exposure to the prices of input materials that depend on the individual harvest of barley, maize and hops are assessed as moderate since the impact is slightly reduced by globalisation. However, global inflation pressures of oil, poor harvests, climate changes, currency fluctuations and similar could gain in importance. The risks are minimised by including all the adequate suppliers into the supply chains within the Laško Group and thus ensure optimal prices and smooth supply. 31. E. Foreign exchange risk

Foreign exchange risk is insignificant since the majority of contracts concluded by the Group with the suppliers is expressed in EUR and therefore the changes in exchange rates have little or no direct effect on our prices. The same applies to our products that are invoiced in EUR. 31. F. Capital management

The main purpose of the management of the Group’s equity is to ensure, as far as possible, the best credit rating and capital adequacy to finance the operations and to maximise the value for the owners.

Calculation of the ratio between net financial liabilities and equity (gearing ratio) As at 31 December

(in EUR) 2013 2012

Financial liabilities 334,971,950 365,084,895Cash 3,004,724 2,188,615Net financial liabilities 331,967,226 362,896,280

Capital 58,213,883 87,978,879Gearing ratio (in %) 570.25 412.48



The ratio between net financial liabilities and equity indicates that the Laško Group is over-indebted. 31. G. The risk of changes in fair value of financial instruments

The risk of changes in fair value of financial investments, property, plant and equipment and investment property is undoubtedly also an important financial risk. Investments are increasingly more difficult to dispose of at desirable prices that would not be significantly lower than their historical costs. The risk arises in relation to financial expenses for investments write-off and impairment, which in 2013 amounted to EUR 39,785,214. Due to increasingly difficult economic conditions there is a risk that values of certain investments will decline further in 2014.

Fair value measurement of assets and liabilities (fair value hierarchy) at 31 December

The Group measures fair value of assets and liabilities in the statement of financial position according to the following fair value hierarchy:

level 1: assets and liabilities whose fair value is determined based on market inputs (without adjustments) observed on active stock markets,

level 2:assets and liabilities whose fair value is determined based on inputs other than quoted market prices that are observable directly or indirectly,

level 3: assets and liabilities whose fair value is determined based on valuation techniques using unobservable inputs.

Difference Difference Fair value Difference - impact on - impact on

on - impact on surplus from liability for

(in EUR) 31 December 2013 investments revaluation deferred tax

Market value of MELR at 31 December 2013 72,064,962Price increase by 20% 86,477,954 14,412,992 11,962,784 2,450,209Price decrease by 20% 57,651,970 (14,412,992) (11,962,784) (2,450,209)Price increase by 5% 75,668,210 3,603,248 2,990,696 612,552Price decrease by 5% 68,461,714 (3,603,248) (2,990,696) (612,552)

2013 2012(in EUR) Level 1 Level 2 Level 3 TOTAL Level 1 Level 2 Level 3 TOTAL

Asset at fair value 72,064,962 124,397,584 12,281,539 208,744,085 100,187,760 169,109,454 7,814,502 277,111,716Financial assets available for sale 72,064,962 - 3,072,936 75,137,898 100,187,760 - 1,243,563 101,431,323PPE at fair value (property) - 118,910,499 - 118,910,499 - 161,910,421 - 161,910,421Investment property - 5,487,085 - 5,487,085 - 7,199,033 - 7,199,033Non-current assets held for sale - - 9,208,603 9,208,603 - - 6,570,939 6,570,939

Assets at cost including fair value disclosure 3,004,723 - 55,743,877 58,748,600 2,188,615 - 53,509,954 55,698,569Issued loans and deposits - - 6,758,651 6,758,651 - - 9,902,879 9,902,879Trade receivables - - 48,985,226 48,985,226 - - 43,607,075 43,607,075Cash 3,004,723 - - 3,004,723 2,188,615 - - 2,188,615

Liabilities measured at cost including fair value disclosure - - 357,581,895 357,581,895 - - 382,204,981 382,204,981

Borrowings - - 333,567,901 333,567,901 - - 360,973,745 360,973,745Short-term trade payables - - 24,013,994 24,013,994 - - 21,231,236 21,231,236



4.4.8 SEGMENT REPORTING

32. Segment reporting

32. A. Business segments

Business segments are divided into four parts and are presented separately for the segments of beer, other drinks, newspaper and publishing activities and other activities.

The other segment contains the sale of services, by-products and merchandise. This segment includes all investments that fall outside the core business of the Group. The liabilities of the other segment include the value of financial liabilities as of 31 December 2012 that the Group assumed for the financing of investments (including the loans granted to the companies Center Naložbe and Infond Holding the value of which was completely impaired in 2009 following the non-settlement of financial liabilities).

2013 Other(in EUR) Beer beverages Publishing Other Total

Net sales by segments 142,632,178 51,974,583 46,306,836 25,963,802 266,877,399

Net sales revenues 142,632,178 51,974,583 46,306,836 25,963,802 266,877,399

Profit or loss from operations 31,736,179 (2,173,981) (4,629,216) (13,204,134) 11,728,848Net financial expenses (51,145,804)Profit or loss before tax (39,416,956)Income tax (1,609,371)Tax 11,321,979Profit or loss for the year (29,704,349)

Assets by segment 177,643,154 77,750,558 17,857,133 112,831,963 386,082,808Brands 46,461,058 - 4,750,048 - 51,211,106Goodwill 17,197,380 - - - 17,197,380

Liabilities by segment 202,166,938 9,241,849 49,593,387 135,275,237 396,277,411Investments 6,948,364 2,464,789 341,779 1,065,771 10,820,703

Costs not impacting cash flows 9,965,654 4,997,039 1,892,982 763,753 17,619,428

2012 Other(in EUR) Beer beverages Publishing Other Total

Net sales by segments 152,634,930 59,427,001 50,082,894 9,242,123 271,386,948

Net sales revenues 152,634,930 59,427,001 50,082,894 9,242,123 271,386,948

Profit or loss from operations 27,253,762 299,552 (7,839,801) 2,502,668 22,216,181Net financial expenses (46,456,208)Profit or loss before tax (24,240,027)Income tax (2,204,512)Tax 3,039,414Profit or loss for the year (23,405,126)

Assets by segment 187,344,704 75,552,731 36,187,829 132,797,348 431,882,612Brands 46,460,507 - 10,188,094 - 56,648,601Goodwill 17,197,380 - - - 17,197,380

Liabilities by segment 212,678,767 45,133,683 52,487,125 107,450,139 417,749,714Investments 5,009,862 4,394,560 1,020,743 772,992 11,198,157

Costs not impacting cash flows 12,702,178 4,285,652 2,894,212 182,157 20,064,199



Sales by geographic segments are disclosed under Note 32. B. 32. B. Geographical segments

Net sales revenues on foreign markets were mainly realised on the markets of former Yugoslavia and the assets on foreign markets relate exclusively to the assets on the markets of former Yugoslavia.

(in EUR) 2013 2012

Net salesSlovenia 231,628,133 240,626,209Foreign market 35,249,266 30,760,739

Total 266,877,399 271,386,948

AssetsSlovenia 348,128,253 392,976,853Foreign market 37,954,556 43,592,083Brand (Slovenia) 51,211,106 56,648,601Goodwill (Slovenia) 17,197,380 17,197,380

Total 454,491,295 510,414,917

Investments Slovenia 10,030,238 10,139,686Foreign market 790,465 1,058,471

Total 10,820,703 11,198,157



4.4.9 RELATED PARTY TRANSACTIONS

33. Related party transactions

33. A. Sale to related companies

33. B. Purchases from related companies

33. C. Operating receivables and liabilities – related companies

33. D. Loans acquired from the companies of the Laško Group

(in EUR) 2013 2012

Subsidiaries 71,566 248,499Other related parties 168,160 9,000

Total 239,726 257,499

(in EUR) 2013 2012

Subsidiaries 516,498 566,813Associates 511,469 382,177Other related parties 85,724 64,550

Total 1,113,691 1,013,540

(in EUR) 2013 2012

Trade receivables due from related companies Subsidiaries 54,592 -Associates 13,737 -

Total 68,329 -

Trade payables to related companies Subsidiaries 65,504 63,627Other related parties 65,059 39,045

Total 130,563 102,672

(in EUR) 2013 2012

Other related parties 13,255 50,977

Total 13,255 50,977



33. E. Financial income of the companies in the Laško Group

33. F. Financial expenses of the companies in the Laško Group

33. G. Guarantees issued to the related companies

(in EUR) 2013 2012

Other related parties 37,222 -

Total 37,222 -

(in EUR) 2013 2012

Other related parties - 1,451

Total - 1,451

(in EUR) 2013 2012

Subsidiaries 871,921 2,000,000

Total 871,921 2,000,000



4.4.10 REMUNERATION OF MEMBERS OF THE MANAGEMENT AND SUPERVISORY BOARDS AND THE EMPLOYEES WITH INDIVIDUAL CONTRACT OF EMPLOYMENT

The Group is managed by the management boards and supervisory boards whose remuneration is presented in the tables below:

(in EUR) 2013 2012

MANAGEMENT BOARDFixed remuneration 1,396,240 1,383,515 Other receipts (benefits) 58,945 66,132 Jubilee awards 1,536 2,060 Termination benefits - 142,841

Total 1,456,721 1,594,548

OthersFixed earnings Jubilee

(in EUR) earnings (benefits) awards Total

MANAGEMENT BOARDDušan Zorko 197,932 9,403 - 207,335Milan Hojnik 134,255 3,684 - 137,939Mira Močnik 90,274 6,115 - 96,389Sebastjan Gergeta 24,200 - - 24,200Boris Matijaščić 79,635 - - 79,635Zlatko Bebić 50,910 - - 50,910Marjeta Zevnik 171,932 4,283 - 176,215Irma Gubanec 123,600 3,914 - 127,514Mirjam Hočevar 141,932 11,645 - 153,577Gorazd Lukman 141,932 9,118 - 151,050Nada Jakopec 32,000 937 - 32,937Slavko Alojz Bogataj 61,114 4,566 - 65,680Bogdan Romih 4,592 53 - 4,645Matej Oset 141,932 5,227 1,536 148,695

Total 1,396,240 58,945 1,536 1,456,721

(in EUR) 2013 2012

INDIVIDUAL CONTRACTS OF EMPLOYMENT Fixed remuneration 2,962,207 3,342,996Other receipts (benefits) 115,910 152,479Variable remuneration (incentive pay) 91,400 85,274Jubilee awards 5,007 2,919Termination benefits 20,492 36,321

Total 3,195,016 3,619,989



(in EUR) 2013 2012

SUPERVISORY BOARD'S AUDIT COMMITTEEAttendance fees 14,271 12,902

Total 14,271 12,902

(in EUR) 2013 2012

SUPERVISORY BOARD'S AUDIT COMMITTEEPeter Groznik 5,040 5,435Bojan Cizej 4,760 3,770Igor Teslić 4,921 3,697

Total 14,721 12,902

(in EUR) 2013 2012

SUPERVISORY BOARD'S HR COMMITTEEAttendance fees 8,320 13,965

Total 8,320 13,965

(in EUR) 2013 2012

SUPERVISORY BOARD'S HR COMMITTEEBorut Jamnik 3,440 5,655Borut Bratina 2,440 4,155Dragica Čepin 2,440 4,155

Total 8,320 13,965

(in EUR) 2013 2012

SUPERVISORY BOARD'S COMMITTEE FOR MATERIAL REVIEWAttendance fees 1,729 -

Total 1,729 -

(in EUR) 2013 2012

SUPERVISORY BOARD'S COMMITTEE FOR MATERIAL REVIEWPeter Groznik 426 -Bojan Cizej 426 -Dragica Čepin 426 -Jože Bajuk 451 -

Total 1,729 -

(in EUR) 2013 2012

MANAGEMENT BOARD OF BIRRA PEJA Attendance fees 12,000 18,000

Total 12,000 18,000



(in EUR) 2013 2012

MANAGEMENT BOARD OF BIRRA PEJA Ekrem Lluka 3,500 6,000Fatmir Gashi 3,500 6,000Mirjam Hočevar 2,000 6,000Ernest Jusufi 1,500 -Virtyt Ibrahimaga 1,500 -

Total 12,000 18,000

(in EUR) 2013 2012

SUPERVISORY BOARD MEMBERS OF THE LAŠKO GROUPBrigita Oplotnik Rajh 6,714 -Bojan Cizej 31,800 34,695Dragica Čepin 52,457 46,878Borut Bratina 11,573 19,889Peter Groznik 37,426 41,600Mirjam Hočevar 11,150 13,925Borut Jamnik 11,083 19,045Andrej Kebe - 1,500Franko Lipičar 15,300 15,125Goran Brankovič 6,062 -Vladimir Malenković 30,201 44,539Enzo Smrekar 4,658 -Dominik Omar 14,200 13,925Terezija Peterka 15,070 14,020Primož Mlekuš 13,850 13,420Jože Bajuk 5,670 -Pavel Teršek 14,200 13,650Marjeta Zevnik 10,114 5,866Robert Šega 15,502 11,227Branimir Piano 15,850 8,878Jure Ferlin 15,850 8,878Bojan Košak - 1,500Marjan Mačkošek - 2,500

Total 338,730 331,060



4.4.11 CONTINGENT LIABILITIES AND ASSETS

The Management Boards of the Laško Group of companies do not expect any significant losses from contingencies described below.

A lawsuit brought against Pivovarna Laško by MIP

On 21 March 2013 the Group received a lawsuit brought against the controlling company by MIP, Gornji Vakuf, Uskoplje, which was lodged at the Celje District Court by the plaintiff's attorney Matej Erjavec, Ljubljana, demanding payment of damages amounting to EUR 1,135,481.43.

The damages relate to the loss of profits incurred by the plaintiff due to unjustified withdrawal from the Sales contract worth EUR 1,085,481.43, and damages for the loss of reputation in the amount of EUR 50,000.00.

On 22 April 2013 the Group issued a defence plea stating that the plaintiff's claim was unfounded. The court of first instance has not ruled on this matter yet.

Lawsuit brought by Perutnina Ptuj for payment of EUR 10,116,488.71 plus costs and interest

The plaintiff filed a claim against Pivovarna Laško on 31 December 2010 at the District Court of Celje demanding payment of EUR 10,116,488.71 inclusive of the legally prescribed default interest. The plaintiff justified its claim by stating that the legal representative of Pivovarna Laško signed a comfort letter on 10 January 2009 and thus allegedly committing to fulfil the obligation of Perutnina Ptuj to Poslovni sistem Mercator on account of loan contracts. This refers to two loan contracts which Perutnina Ptuj signed with the Poslovni sistem Mercator: one on 24 January 2008 amounting to EUR 5,000,000.00 and the second one on 27 February 2008 for EUR 15,000,000. According to representations made by the plaintiff, the disputed amount relates to a part of the loan which, as alleged by the plaintiff, should be paid by Pivovarna Laško. The plaintiff further states that Pivovarna Laško has only partly fulfilled its obligations referred to in the comfort letter; namely, through its business partners it secured cash amounting to EUR 11,864,476.50 to Perutnina Ptuj as a settlement of the loan. The latter is allegedly demonstrated by the account of payments made by Infond Holding and Center naložbe. Perutnina Ptuj is also suing for the remaining amount. The defence statement was submitted within the set deadlines. The court issued a ruling on 22 January 2011 allowing incidental intervention by Boško Šrot, former director of Pivovarna Laško, for the defendant Pivovarna Laško. The court has so far not fixed the date for hearing.

Lawsuit by NKBM claiming payment of EUR 6,570,542.25 inclusive of the legally prescribed default interest.

NKBM filed an application for enforcement against Pivovarna Laško on 1 April 2010 based on the Contract No. 36/2009 for pledges of RARG shares concluded on 25 March 2009 between NKBM as the creditor, Center naložbe as the debtor and Pivovarna Laško as the lienee. The Contract was signed on behalf of Pivovarna Laško by its former director Boško Šrot. The application for enforcement relates to recovery of EUR



6,570,542.25 inclusive of the legally prescribed default interests through the sale of 345,304 RARG shares, owned by Pivovarna Laško. These shares were pledged by Pivovarna Laško as collateral for borrowings raised by Center naložbe from NKBM. The District Court issued a ruling on 6 April 2010 allowing the application for enforcement. Pursuant to timely filling of an appeal against the ruling, the court issued a decision on 16 February 2011 annulling the ruling that allowed the enforcement and referred the case to be decided by the District Court of Maribor pursuant to the rules applicable to legal procedures. The District Court in Maribor issued its decision on 14 June 2011 that the application for enforcement by the creditor, currently the plaintiff NKBM of 1 April 2010 be deemed withdrawn and the proceedings under reference II Pg 547/2011 to be closed. The decision closing the proceedings became final on 2 July 2011. Based on the District Court of Maribor ruling, on 4 July 2011 the plaintiff refunded Pivovarna Laško the costs of proceedings amounting to EUR 10.208,00.

Further to the lawsuit by NKBM of 29 July 2011, the District Court of Maribor on 17 November 2011 issued a ruling allowing enforcement of the pledged 345,304 RARG shares of Radenska for repayment of receivables totalling EUR 7,349,552.25 inclusive of the legally prescribed default interest. The defendant, Pivovarna Laško must allow the sale of the aforementioned securities and settlement of receivables from the proceeds of the sale. The judgement is final. Based on final and enforceable ruling, the court at the application of NKBM against Pivovarna Laško allowed enforcement of the pledged RARG shares. So far the RARG shares have not been sold in the enforcement procedure.

NKBM proposed deferred enforcement and accordingly on 28 October 2013 the court ruled for the enforcement to be postponed until 1 October 2014.

Legal action by CEN ADRIA, d.o.o. - in bankruptcy, Matulji (Republic of Croatia)

In 2006, Pivovarna Laško filed an application for enforcement against Cen Adria, demanding payment of outstanding invoices totalling Kn 857,292.53 (euro equivalent of 114,764.73) plus costs and interest. Cen Adria appealed against the enforcement ruling and currently the case is proceeding in the same way as in the case of an appeal against payment order in legal proceedings.

In 2006, during the above proceedings, Cen Adria filed a counter action against Pivovarna Laško and Jadranska pivovara Split, Vranjic, demanding payment of damages totalling Kn 25,000,000.00 (euro equivalent of approx. 3,346,720.21), which Cen Adria allegedly incurred due to untimely termination of the Contract on Business Cooperation (Ugovor o poslovnoj suradnji). During the proceedings and upon the appeal of Pivovarna Laško, the Commercial Court issued a decree on lack of jurisdiction and referred the case to the Commercial Court in Split (the registered seat of the second defendant). Cen Adria appealed against the decision of the Commercial Court in Rijeka. The High court in Zagreb subsequently ruled the court in Rijeka as having territorial jurisdiction.

In 2012, bankruptcy proceedings were instigated against Cen Adria. The main hearing of both these cases was held on 17 January 2013 at the Commercial Court in Rijeka.

Jadranska pivovara - Split and Pivovarna Laško both believe that Cen Adria's claim for a counter action is unfounded since Jadranska pivovara - Split terminated the disputed



Contract on Business Cooperation in compliance with the contractual terms and conditions.

In the case of Cen Adria against Pivovarna Laško and Jadranska pivovara - Split, the main hearing was held on 24 April 2013, 26 September 2013, and 27 November 2013. The next hearing is scheduled for 24 April 2014.

Denationalisation requests in Radenska, Radenci

Nationalisation of property denationalisation Šarič

The proceedings are taking place before the Gornja Radgona Administrative unit in accordance with the Denationalisation Act and in non-contentious proceedings before the Novo mesto District Court pursuant to the Enforcement and Criminal Actions Act. The beneficiaries are demanding restitution of property, company, trademarks and mineral springs that were nationalised during the nationalisation process, including payment of damages. The Administrative unit Gornja Radgona issued a decision on 27 June 2012, which rejected the request for the privatisation of the nationalised company Zdravilišče Slatina Radenci, Höhn and Comp., public trading company in Radenci with a 48% stake owned by Wilhelmina Höhn Šarič. With the supplementary decision issued on 31 August 2012 the Zdravilišče Slatina Radenci, Höhn and Comp., public trading company is corrected and renamed Kuranstalt Sauerbrun Radein AG. The claim was lodged by the legal successor dr. Rudolf Höhn Šarič on 4 May 1993. In the appeal proceedings, the Ministry of Economic Development and technology on 25 February 2013 rejected the appeal against the decision of the Administrative unit Gornja Radgona as being unjustified. The beneficiary lodged a lawsuit and the proceedings continue before the Administrative Court of the Republic of Slovenia.

On 5 December 2012, the Administrative Unit in Gornja Radgona appointed the expert to produce an expert opinion concerning the value of the company Zdravilišče Slatina Radenci, Hohn and Comp., inclusive of labels and brand wherever the word Radenska is a registered brand name and the three hearts, two hearts and one heart are registered labels, as well as the movable property. Buildings and land are not subject to the expert opinion.

Non-contentious proceedings for the return of property pursuant to the Enforcement and Criminal Actions Act are taking place before the District Court in Novo mesto. The motion was filed on 20 December 2010 for the benefit of beneficiaries, grandchildren of dr. Anton Šarič.

The beneficiaries carried out the entry into the land register in the form of a seal indicating a dispute on all land parcels that are subject of the dispute; notices of dispute have also been placed on 13 brands of Radenska at the Slovenian Intellectual Property Office.

The first main hearing was held at the District Court in Novo mesto on 25 March 2013. In addition to the promoters, 11 members of the opposing party were also present, i.e. representatives of Terme Krka, State Attorney, three municipalities, Slovenske železnice and others. After an additional naming of all the proxies, the judge ended the trial. The District Court in Novo mesto issued an order, which was received on 19 June 2012,



dismissing the request for the return of nationalised property. The Court also set the value of the subject matter of the dispute to EUR 34,200,000.00. The counter party appealed to the Higher Court in Ljubljana against the decision. The Higher Court in Ljubljana rejected the appeal (the decision was received by Radenska on 27 March 2014), and upheld the first instance decision rejecting the claim for restitution of nationalised property. This makes the procedure final. There is a possibility of beneficiaries lodging a request for a review at the Supreme Court.

The management of the controlling Company Pivovarna Laško expect the resolution process of the aforementioned proceedings related to Radenska to be time consuming. Since the management of the controlling company Pivovarna Laško expect no significant future losses from those proceedings, it has assessed that as at 31 December 2013 Pivovarna Laško has no need to set aside any provisions in this regard. 4.4.12 COSTS OF THE AUDITOR

The cost of the audit of the Laško Group performed by Ernst & Young, d. o. o. for the year 2013 amounted to EUR 93,600. 4.4.13 SUBSEQUENT EVENTS

Events that occurred after the end of the financial year in the Laško Group are described in section 2.13.2 SUBSEQUENT EVENTS



The project of determining the concept of operational and financial restructuring of companies continued over the entire 2013 period, with close participation of all companies involved, creditors, and consultants. The aim of this process was to define an agreement that will on the one hand ensure financial stability of the Laško Group of companies through a long-term debt rescheduling and deleveraging of the Group's debts to a sustainable level and, on the other hand, give the creditors an assurance of expected repayments while maximising the value for the owners. This will ensure a sustainable development of quality brands and preservation of jobs in the Laško Group.







If the first milestone is not fulfilled, the third one should be met at the earliest opportunity. In this case the restructuring would not be terminated, however the majority of creditor banks (85% of liabilities are due to creditor banks), may opt for a different option or solution. Non-compliance with the provisions of the Agreement, the amortisation plan based on the cash flow from the primary activity and deleveraging milestones, will terminate the Agreement only, if so decided by the majority of creditors.

Public auction for the sale of ČZP Večer shares

A public auction for the sale of shares of ČZP Večer was held on 28 February 2014 at 12 noon in the premises of Delo. The Committee determined that the security required for participation in the auction had not been paid within the set deadlines. Consequently, the auction was unsuccessful.

The subject of the public auction was a block of 202,788 (79.24% interest) of ordinary nominal shares of ČZP Večer (VEMG), held by the Delo publishers. The starting price at the auction was EUR 3,098,000.00.

The newspaper Delo will continue its efforts aimed at fulfilment of provisions of the Competition Protection Office of the Republic of Slovenia, Ref. No. 306-195/2008-57 of 23 September 2009 ordering the disposal of 191,943 shares (75%) and successful completion of the sale of the ČZP Večer shares.

Annual report 2013 / Financial report – Pivovarna Laško, d. d. / Contents


ANNUAL REPORT OF THE LAŠKO GROUP AND PIVOVARNA LAŠKO, D. D.,

FOR 2013

5 FINANCIAL REPORT

OF PIVOVARNA LAŠKO, D. D. C O N T E N T S

5.1 Statement of management responsibilities 218 5.2 Independent auditor's report 219 5.3 Audited separate financial statements of Pivovarna Laško, d. d. 221 5.3.1 Statement of financial position 221 5.3.2 Income statement 223 5.3.3 Statement of other comprehensive income 224 5.3.4 Statement of changes in equity in 2013 225 5.3.5 Statement of changes in equity in 2012 226 5.3.6 Statement of cash flows 227 5.3.7 Loss settlement of the financial year 228 5.4 Notes to the separate financial statements 229 5.4.1 General data 229 5.4.2 Statement of compliance with IFRS 229 5.4.3 Use of new and amended IFRS and IFRIC interpretations 229 5.4.4 Significant accounting policies 232 5.4.5. Adjustment of the historical financial statements 243 5.4.6 Notes to individual items of the financial statements 245 5.4.7 Financial instruments and financial risk 282 5.4.8 Related party transactions 288 5.4.9 Remuneration of the members of the Management and Supervisory Boards and employees with individual contracts of employment 293 5.4.10 Contingent liabilities and assets 295 5.4.11 Costs of the auditor 297 5.4.12 Subsequent events 297

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5.3 Audited financial statements of Pivovarna Laško for the year ended 31 December 2013 compiled under IFRS

5.3.1 STATEMENT OF FINANCIAL POSITION OF PIVOVARNA LAŠKO AT 31 DECEMBER 2013

*The values of certain items presented in these financial statements differ from those reported in the Annual Report 2012. The adjustments of the historical financial statements are disclosed separately in Section 5.4.5 ADJUSTMENT OF HISTORICAL FINANCIAL STATEMENTS.




201331 December

20121 January

2012

ASSETS

Non-current assets 301,383,218 312,412,713 324,155,648Intangible assets 1 938,015 1,231,781 1,395,064Property, plant and equipment 2 43,937,583 46,276,123 49,161,657Investment property 3 4,315,710 5,652,938 6,538,066Long-term investments in the subsidiaries 4.A 224,526,224 237,715,141 245,016,537Financial assets available for sale 4.C 241,655 241,655 241,655Long-term loans 5 376 404 3,310Long-term financial lease receivables 6 533,230 590,416 751,266Long-term deferred tax assets 7 26,890,425 20,704,255 21,048,093

Short-term assets less short-term deferred and accrued items 55,643,989 72,837,802 85,159,806Non-current assets held for sale 8 - 4,408,589 4,408,589Inventories 9 6,937,658 7,832,087 8,544,047Short-term operating receivables 10.A 20,154,988 19,229,883 20,735,181Financial assets available for sale 11 26,305,484 37,909,041 50,026,401Short-term loans 12 1,888,641 3,162,738 1,105,738Cash and cash equivalents 13 357,218 295,464 339,850

Short-term accruals and prepaid expenditure 14 33,717 - 49,527

Total short-term assets 55,677,706 72,837,802 85,209,333

TOTAL ASSETS 357,060,924 385,250,515 409,364,981



5.3.1 STATEMENT OF FINANCIAL POSITION OF PIVOVARNA LAŠKO AS AT 31 DECEMBER 2013






201331 December

20121 January

2012

EQUITY 68,078,212 96,364,961 113,243,068

Equity 15 68,078,212 96,364,961 113,243,068Share capital 36,503,305 36,503,305 36,503,305Share premium 24,760,570 52,087,131 64,675,034Profit reserves 3,730,094 3,789,369 3,907,178Revaluation reserve 3,084,243 3,985,156 4,279,902Retained earnings - - 3,877,649

LIABILITIES 288,982,712 288,885,554 296,121,913

Provisions and long-term accrued costs and deferred income 6,636,075 1,349,459 1,421,397Provisions for retirement grants and jubilee awards 16.A 1,333,160 1,259,169 1,088,909Other provisions 16.A 5,253,988 - -Long-term accrued costs and deferred revenue 16.B 48,927 90,290 332,488

Long-term liabilities 2,377,590 2,814,670 25,289,353Long-term financial liabilities 17 2,377,590 2,814,670 25,289,353

Short-term liabilities less short-term accrued and deferred items 18 279,239,347 279,969,563 263,928,111Short-term operating liabilities 18.A 24,101,331 20,840,233 21,177,290Short-term financial liabilities 18.C 255,138,016 259,129,330 242,750,821

Short-term accrued costs and deferred income 19 729,700 4,751,862 5,483,052

Total short-term liabilities 279,969,047 284,721,425 269,411,163

TOTAL EQUITY AND LIABILITIES 357,060,924 385,250,515 409,364,981



5.3.2 INCOME STATEMENT OF PIVOVARNA LAŠKO FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013



(adjusted)*(in EUR) Notes 2013 2012

Net sales revenues 20.A, B. 90,161,103 88,960,946Change in inventories of products and work in progress 407,541 (542,453)Other operating revenue 20.C 825,109 979,573Costs of goods, materials and services 20.D (63,508,789) (61,972,847)Employee benefit costs 20.D (10,453,650) (11,015,764)Amortisation of intangible assets and depreciation of property, plant and equipment 20.D (4,760,999) (4,943,657)Revaluation operating expense 20.D (1,624,784) (666,771)Provisions 20.D (1,044,184) (262,006)Other operating expenses 20.F (7,007,901) (1,846,530)OPERATING PROFIT OR LOSS 2,993,446 8,690,491

Financial income 21 1,083,314 9,535,307Financial expenses 21 (37,898,288) (34,009,554)PROFIT OR LOSS BEFORE TAX (33,821,528) (15,783,756)

Tax 5,208,846 1,258,347NET PROFIT OR LOSS OF THE YEAR FROM CONTINUED OPERATIONS (28,612,682) (14,525,409)

Discontinued operation 699,996 (3,031,980)NET PROFIT OR LOSS OF THE YEAR FROM DISCONTINUED OPERATIONS 699,996 (3,031,980)

TOTAL PROFIT OR LOSS FOR THE YEAR (27,912,686) (17,557,389)

Net profit /loss per share from continued operations: Net loss per share (3.2709) (1.6606)Diluted net loss per share (3.2709) (1.6606)

Net profit /loss per share from discontinued operations: Net loss per share 0.0800 (0.3466)Diluted net loss per share 0.0800 (0.3466)

Net loss per share:Net loss per share 24 (3.1909) (2.0072)Diluted net loss per share (3.1909) (2.0072)



5.3.3 STATEMENT OF OTHER COMPREHENSIVE INCOME OF PIVOVARNA LAŠKO FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013



(adjusted)*(in EUR) Notes 2013 2012

Net profit or loss for the year (27,912,686) (17,557,389)

Other comprehensive incomeFinancial assets available for sale - (3,345)Gains/losses from revaluation of property 25 (741,111) 201,543Deferred tax on account of revaluation 25 71,638 366,796

TOTAL OTHER COMPREHENSIVE INCOME THAT WILL BE RECLASSIFIED TO PROFIT AND LOSS AT A FUTURE DATE (669,473) 564,994

Unrealised actuarial gains / losses from post-employment benefits 25 1,622 -Deferred tax on unrealised actuarial gains / losses 243 -

TOTAL OTHER COMPREHENSIVE INCOME THAT WILL NEVER BE RECLASSIFIED TO PROFIT OR LOSS 1,865 -

OTHER COMPREHENSIVE INCOME (667,608) 564,994

TOTAL COMPREHENSIVE INCOME FOR THE YEAR (28,580,294) (16,992,395)



5.3.4 STATEMENT OF CHANGES IN EQUITY OF PIVOVARNA LAŠKO FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013


Reserves for Other Total

Share Share Legal treasury reserves profit Retained Net Revaluation TOTAL

(in EUR) capital premium reserves shares from profit reserves earnings profit or loss surplus CAPITAL

OPENING BALANCE at 1 January 2013 36,503,305 52,087,131 3,650,331 139,038 - 3,789,369 - - 3,985,156 96,364,961

Transactions with owners Other changes - - - - - - 293,544 - - 293,544

Total transactions with owners - - - - - - 293,544 - - 293,544

Changes in comprehensive income Net profit or loss for the year - - - - - - - (27,912,685) - (27,912,685)Fixed assets revaluation reserve - - - - - - - - (741,111) (741,111)Tax on individual items of comprehensive income - - - - - - - - 71,881 71,881Other (actuary) - - - - - - - - 1,622 1,622

Total changes in comprehensive income in 2013 - - - - - - - (27,912,685) (667,608) (28,580,293)

Changes in equityLoss settlement - (27,326,561) - - (59,275) (59,275) (526,849) 27,912,685 - -Utilisation of reserves for treasury shares and interests - - - (59,275) 59,275 - - - - -Other - - - - - - 233,305 - (233,305) -

Total movements in equity - (27,326,561) - (59,275) - (59,275) (293,544) 27,912,685 (233,305) -CLOSING BALANCE at 31 December 2013 36,503,305 24,760,570 3,650,331 79,763 - 3,730,094 - - 3,084,243 68,078,212



5.3.5 STATEMENT OF CHANGES IN EQUITY OF PIVOVARNA LAŠKO (ADJUSTED*) FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2012



Reserves for Other Total

Share Share Legal treasury Treasury reserves profit Retained Net Revaluation TOTAL

(in EUR) capital premium reserves shares shares from profit reserves earnings Profit or loss surplus CAPITAL

Opening balance at 1 January 2012 / reported 36,503,305 64,675,034 3,650,331 265,166 (8,319) - 3,907,178 - - 4,279,902 109,365,419Retrospective adjustments - - - - - - - 3,877,649 - - 3,877,649OPENING BALANCE at 1 January 2012 / adjusted* 36,503,305 64,675,034 3,650,331 265,166 (8,319) - 3,907,178 3,877,649 - 4,279,902 113,243,068

Transactions with owners Repurchase of treasury shares (interests) - - - - (134,140) - (134,140) - - - (134,140)Financial assets available for sale - - - - 142,459 - 142,459 - - - 142,459

Total transactions with owners - - - - 8,319 - 8,319 - - - 8,319

Changes in comprehensive income Net profit or loss for the year - adjusted* - - - - - - - - (17,557,389) - (17,557,389)Fixed assess revaluation reserve - - - - - - - - - 201,543 201,543Investment revaluation reserve - - - - - - - - - (3,345) (3,345)Tax on individual items of comprehensive income - - - - - - - - - 366,796 366,796

Total changes in comprehensive income in 2012 - - - - - - - - (17,557,389) 564,994 (16,992,395)

Changes in equityLoss settlement - (12,587,903) - - - (232,097) (232,097) (4,737,389) 17,557,389 - -Utilisation of reserves for treasury shares and interests - - - (126,128) - 232,097 105,969 - - - 105,969Other - - - - - - - 859,740 - (859,740) -

Total movements in equity - (12,587,903) - (126,128) - - (126,128) (3,877,649) 17,557,389 (859,740) 105,969CLOSING BALANCE at 31 December 2012 - adjusted* 36,503,305 52,087,131 3,650,331 139,038 - - 3,789,369 - - 3,985,156 96,364,961



5.3.6 CASH FLOW STATEMENT OF PIVOVARNA LAŠKO FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013



OPERATING PROFIT 2,993,447 8,690,491Adjustments for:Property impairment 20.D 1,161,834 -Elimination of revaluation operating expenses from fixed assets

20.D, 20.F 1,490,268 -

Depreciation of PPE and investment property 20.D 4,525,464 4,708,418Amortisation of intangible assets 20.D 235,535 235,238Long-term assets written-off - 525,788Short-term assets written-off 20.D 312,825 420,028Net movements in provisions 16.A 5,288,239 (71,938)

Total adjustments 13,014,165 5,817,534

MOVEMENTS IN WORKING CAPITALInventories and non-current assets held for sale 8.9 894,429 725,148Operating and other receivables 6.,10.A (1,214,462) 1,242,726Operating and other liabilities 18.A,19 3,170,125 (1,068,249)

Total movements in working capital 2,850,092 899,625

NET CASH FLOWS FROM OPERATING ACTIVITIES 18,857,704 15,407,650

Cash flows from investing activities Acquisition of property, plant and equipment 2 (3,649,999) (1,225,613)Gains /losses from disposal of PPE 2 (136,971) -Acquisition of intangible assets 1 58,231 (71,956)Acquisition / disposal of financial assets 4.A,11 1,057,890 (3,203,822)

Disposal of non-current assets and liabilities held for sale 8 315,002 -Interest income 21 225,823 157,354Dividends and capital profits received 21 857,491 9,377,953

NET CASH FLOWS FROM INVESTING (1,272,533) 5,033,916

Cash flows from financing activity Interest paid 21 (13,095,024) (14,536,832)Purchase of treasury shares - 114,292Increase / decrease in financial debt 17,18.C (4,428,393) (6,063,411)

NET CASH FLOWS FROM FINANCING (17,523,417) (20,485,951)



5.3.6 CASH FLOW STATEMENT OF PIVOVARNA LAŠKO FOR THE PERIOD FROM 1 JANUARY TO 31 DECEMBER 2013


Accounting policies and notes form an integral part of these financial statements and should be read in conjunction with them. 5.3.7 LOSS SETTLEMENT OF THE FINANCIAL YEAR

The net loss of 2013 in the amount of EUR 27,912,685 was covered by retained earnings amounting to EUR 526,849, other profit reserves in the amount of EUR 59,275, and share premium in the amount of EUR 27,326,561.


NET INCREASE / DECREASE IN CASH AND CASH EQUIVALENTS

61,754 (44,385)

Cash and cash equivalents at the beginning of year 13 295,464 339,850Cash and cash equivalents at the end of year 13 357,218 295,464

(in EUR) 2013

Net loss for the year (27,912,685)

Loss settlement: Other profit reserves used to cover net loss 59,275Loss settlement from retained earnings 526,849Share premium used to cover net loss 27,326,561

ACCUMULATED LOSS AT 31 DECEMBER -



5.4 Notes to separate financial statements

5.4.1 GENERAL DATA

Pivovarna Laško is a public limited company, registered with the District Court in Celje under the decision No Srg 95/00673 and under the application No 1/00171/00. It is classified as a large company and as such is subject to regular annual audit of its financial statements. The principal activity of the Company is the production and sale of beer, malt and waters. The Company is also engaged in wholesale and retail trade.

Pivovarna Laško (hereinafter referred to as: the Company) is the parent company of the Laško Group with its headquarters in Slovenia: Trubarjeva ulica 28, 3270 Laško, Slovenia.

The Company’s ordinary shares are quoted on the Ljubljana Stock Exchange under the “PILR” designation. The Company’s share capital totals EUR 36,503,304.96 and is represented with 8,747,652 ordinary freely negotiable registered no-par-value shares. There are no limitations on the payment of dividends or other distributions of equity. 5.4.2 STATEMENT OF COMPLIANCE WITH IFRS

The separate financial statements have been drawn up in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union and provisions of the Companies Act. 5.4.3 USE OF NEW AND AMENDED IFRS AND IFRIC INTERPRETATIONS

a) Standards and interpretations that entered into force during the reporting period

In the period under review, the following amendments to the existing standards issued by the International Accounting Standards Board (IASB) were applicable as adopted by the EU:

Amendments to IFRS 1 "First-time adoption of IFRS" – Severe hyperinflation and removal of fixed dates for first-time adopters: the amended standard was adopted by the EU on 11 December 2012 (effective for annual periods beginning on or after 1 January 2013),

Amendments to IFRS 1 "First-time adoption" – Government Grants; the amended standard was adopted by the EU on 4 March 2013 and is effective for annual periods beginning on or after 1 January 2013,

Amendments to IFRS 7 "Financial instruments: Disclosures" – Offsetting Financial Assets and Financial Liabilities; the standard was adopted by the EU on 13 December 2012 and is effective for annual periods beginning on or after 1 January 2013,

Amendments to IAS 1 »Presentations of financial statements« – Presentation of items of other comprehensive income; the amendment was adopted by the EU



on 5 June 2012 and is effective for annual periods beginning on or after 1 July 2012,

Amendments to IAS 12 "Income Taxes" – Deferred Tax: Recovery of Underlying Assets; the standard was adopted by the EU on 11 December 2012 and is effective for annual periods beginning on or after 1 January 2013),

Amendments to IAS 19 »Employee benefits« – Post-employment Benefits were adopted by the EU on 5 June 2012 and are effective for annual periods beginning on or after 1 January 2013,

Amendments to a number of standards "IFRS Improvements over the period 2009 to 2011" , according to the annual IFRS improvement project encompassing IFRS 1, IAS 1, IAS 16, IAS 32 and IAS 34, which is aimed primarily at elimination of discrepancies and clarification of wording. The amended standards were adopted by the EU on 27 March 2013 and are effective for periods beginning on or after 1 January 2013,

IFRIC 20 "Stripping Costs in Production Phase of a Surface Mine". The standard was adopted by the EU on 11 December 2012 and is effective for annual periods beginning on or after 1 January 2013.

The adoption of these amendments to the existing standards led to no changes in the accounting policies of the Group.

b) Standards and representations issued by the IASB and adopted by the EU that have not entered into force yet

On the date of the approval of these financial statements, the following standards, amendments and interpretations were issued and adopted by the EU, but which are not yet effective:

IFRS 10 "Consolidated financial statements", adopted by the EU on 11 December 2012 and effective for annual periods beginning on or after 1 January 2014,

IFRS 11 "Joint arrangements", adopted by the EU on 11 December 2012 and effective for annual periods beginning on or after 1 January 2014,

IFRS 12 "Disclosure of interests in other entities", adopted by the EU on 11 December 2012 and effective for annual periods beginning on or after 1 January 2014,

IAS 27 (amended in 2011) "Separate financial statements" was adopted by the EU on 11 December 2012 and is effective for annual periods beginning on or after 1 January 2014,

IAS 28 (amended in 2011) "Investments in associates and joint ventures" was adopted by the EU on 11 December 2012 and is effective for annual periods beginning on or after 1 January 2014,



Amendments to IFRS 10 "Consolidated financial statements", IFRS 11 "Joint Arrangements" and "IFRS 12 "Disclosure of Interests in Other Entities" – Transition Guidance, were adopted by the EU on 4 April 2013 and are effective for annual periods beginning on or after 1 January 2014,

Amendments to IFRS 10 "Consolidated financial statements", IFRS 12 "Disclosure of Interests in Other Entities" and IAS 27 (amended in 2011) "Separate Financial Statements" – Investment Entities, were adopted by the EU on 20 November 2013 and are effective for annual periods beginning on or after 1 January 2014),

Amendments to IAS 32 "Financial instruments: Presentation" – Offsetting Financial Assets and Financial Liabilities; the standard was adopted by the EU on 13 December 2012 and is effective for annual periods beginning on or after 1 January 2014,

Amendments to IAS 36 "Impairment of Assets"- Recoverable Amount Disclosure for Non-Financial Assets, were adopted by the EU on 19 December 2013 and are effective for periods beginning on or after 1 January 2014,

Amendments to IAS 39 "Financial Instruments: Recognition and Measurement- Novation of Derivatives and Continuation of Hedge Accounting, were adopted by the EU on 19 December 2013 and are effective for periods beginning on or after 1 January 2014.

c) Standards and interpretations issued by IASB but which have not yet been adopted by the EU

Currently, the IFRS as adopted by the European Union do not considerably differ from those adopted by the International Accounting Standards Board (IASB) with the exception of the following standards, amendments to the existing standards and interpretations which were not confirmed for use on 30 April 2014.

IFRS 9 "Financial Instruments" and subsequent amendments The effective date has so far not been determined,

Amendments to IAS 19 "Employee Benefits"- Defined Benefit Plans: Employee Contributions are effective for annual periods beginning on or after 1 July 2014,

Amendments to a number of standards "Improvements to IFRS over the period 2010 to 2012" stemming from the annual IFRS improvements projects that encompass IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38, mainly in order to eliminate discrepancies and misinterpretations, are effective for annual periods beginning on or after 1 July 2014,

Amendments to a number of standards "Improvements to IFRS over the period 2011 to 2013" stemming from the annual IFRS improvements projects that encompass IFRS 1, IFRS 3, IFRS 13 and IAS 40, mainly in order to eliminate discrepancies and misinterpretations, are effective for annual periods beginning on or after 1 July 2014,



IFRIC 21 "Levies" The interpretation sis effective for annual periods beginning on or after 1 January 2014.

The Company estimates that the adoption of these standards, amendments and interpretations will not have a significant impact on the Company’s financial statements during the period of initial application.

At the same time, the accounting for the hedging of risks associated with the portfolio of financial assets and liabilities, the principles of which the EU has not yet adopted, still remains unregulated.

The Company has assessed that the accounting of risk hedging in connection with the portfolio of financial assets and liabilities in accordance with the requirements of IAS 39: "Financial Instruments: Recognition and Measurement" would not have a significant impact on the consolidated financial statements of the Group, if applied as at the reporting date. 5.4.4 SIGNIFICANT ACCOUNTING POLICIES

Basis of preparations

The financial statements have been compiled under IFRS, the Companies Act, other acts and the Accounting Manual of Pivovarna Laško, and are expressed in euro. When disclosing and measuring the items, the provisions of the standards were directly applied, with the exception of the items where standards provide a choice between several valuation methods.

The financial statements have been prepared taking into account historical costs except for the financial assets, non-current assets held for sale (or assets and related liabilities of the disposal group), property and investment property carried at revalued amount or fair value. The valuation of assets and liabilities is presented in detail in individual sections below.

When selecting the accounting policies and when deciding on their use and in the compilation of these financial statements, the Pivovarna Laško Management Board took into consideration the following three requirements:

Financial statements are understandable when they are easily understood by users,

Information is relevant if it assists the user in making economic decisions,

Information is essential if its omission or untrue statement could have an impact on economic decisions of the users.

The accounting policies presented below were consistently applied in all of the periods presented.



Going concern assumption

As at 31 December 2013, the Company's short-term liabilities exceed the amount of its short-term assets by EUR 224,291,341.


The project of determining the concept of operational and financial restructuring of companies continued over the entire 2013 period, with close participation of all companies involved, creditors, and consultants. The aim of the project was to define an agreement that will on the one hand ensure financial stability of the Laško Group through long-term reprogramming of its borrowings and through deleveraging of the Group to the sustainable level of indebtedness; and on the other hand, to ensure fulfilment of creditors' expectations for rapid deleveraging and simultaneous maximising of the value for the owners. This will ensure the Laško Group of companies a sustainable development of quality brands and preservation of jobs.

A total of 17 various scenarios of the Group's restructuring plan were prepared and following the analysis from the financial, fiscal and legal points of view, the concept that provided the basis for the signed Agreement, was dully selected.




If the first milestone is not fulfilled, the third one should be met at the earliest opportunity. In this case the restructuring would not be terminated, however the majority of creditor banks (85% of liabilities are due to creditor banks), may opt for a different option or solution. Non-compliance with the provisions of the Agreement, the amortisation plan based on the cash flow from the primary activity and deleveraging milestones, will terminate the agreement only, if so decided by the majority of creditors.



The Management of the controlling company have assessed that the use of the going concern assumption in the preparation of the financial statements for the period ended 31 December 2013 is appropriate.

Foreign currencies

All the items presented in the financial statements of the Company are denoted in the currency of the primary environment – the country where the Company operates (this currency is the so-called “functional currency”). The financial statements are presented in euro, which is also the functional and reporting currency of the Company.

Foreign currency transactions are converted into the reporting currency using the exchange rate valid on the day of the transaction. Gains and losses arising from these transactions and from the conversion of cash and liabilities, denominated in a foreign currency, are recognised in the profit or loss.

Exchange rate differences arising from debt securities and other monetary financial instruments are recognised at fair value and are included in the profit or loss of transactions with foreign currencies. Exchange rate differences from non-monetary items such as securities held for trading are reported as an increase or decrease in fair value. Exchange rate differences from securities available-for-sale are included in the revaluation surplus.

The use of estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the carrying amounts of assets and liabilities of the Company as well as the reported income and expenses for the period.

Management estimates include among others: determination of the useful life and residual value of property, plant and equipment, as well as intangible assets; allowances made for inventories and receivables; assumptions material to the actuarial calculation of defined employee benefits; assumptions used in the calculation of potential provisions for lawsuits, as well as assumptions and estimates relating to impairment of goodwill. Regardless of the fact that management duly considers all factors that may impact the preparation of these assumptions, the actual consequences of business events may differ from those estimates. In the process of making accounting estimates, management makes judgements while considering potential changes in the business environment, new business events, new and additional information that may be available, as well as experience.

Key estimates and assumptions as at the day of the statement of financial position that are associated with future operations and which could result in significant adjustment of the book values of assets and liabilities are presented below.

Information on significant estimates about uncertainty and critical judgements in applying accounting policies that have the most significant impact on the amounts recognised in the financial statements is presented in the following notes:



The Company assesses on an annual basis whether there are any indications of impairment of an individual cash-generating unit. If any such indications exist, the recoverable amount of non-financial assets is determined as the present value of future cash flows, based on the estimate of expected future cash flows from the cash-generating unit and determination of the relevant discount rate.

Defined benefit obligations include the present value of termination benefits on retirement and jubilee awards. They are recognised on the basis of the actuarial calculation approved by the management. The actuarial calculation is made by using assumptions and estimates effective at the time of the calculation, and may, as a result of future changes, differ from actual assumptions applicable at that future time. This applies primarily to determination of the discount rate, assessment of employee turnover, mortality assessment, as well as assessment of the increase in salaries. Due to the complexity of the actuarial calculation and the long-term nature of the item, defined benefit obligations are sensitive to changes in the above estimates and assessments.

A provision is recognised when the Company has present obligations (legal or constructive) as a result of past events, a reliable estimate can be made of the amount of obligation, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Contingent liabilities are not recognised in the financial statements as their actual existence will be confirmed only upon the occurrence or non-occurrence of one or more uncertain future events not entirely within the control of the Group. The management of the Company continually assess contingent liabilities to determine whether an outflow of resources embodying economic benefits has become probable. In this case, a provision is recognised in the financial statements of the period in which the change in probability occurs.

Recognition of revenue

Revenue is measured at the fair value of the consideration received or receivables for the sale of products, goods, or services rendered during the ordinary operations of the Company. Revenue is presented exclusive of value added tax and excise duties, rebates and reimbursements.

Revenue from the sale of products, merchandise and materials is recognised if all of the following conditions are fulfilled:

All the significant risks and rewards of ownership of the object of sale are transferred to the buyer;

The seller loses the management and control over what is covered by the sale;

Amount of revenue can be reliably measured;

A high degree of certainty is attached to the flow of economic benefits related to the transaction;

The expenses incurred with respect to transaction can be reliably measured.

Other categories of revenue are recognised based on the following basis:



Interest income is recognised as the income of the period to which they pertain, in accordance with the applicable interest rate and when the degree of certainty attached to the flow of economic benefits is high;

Dividend income is recognised when the right to receive payment is established;

Revenue from royalties is recognised on the basis of the provisions of the licence agreements.

Investments into the subsidiaries

A subsidiary company is a company where Pivovarna Laško, the controlling company, has the power to govern the subsidiary's financial and operating policies.

In separate financial statements of Pivovarna Laško, the investments into subsidiaries are measured at their cost in compliance with IAS 27 (except when classified as non-current assets and related liabilities) held for sale in compliance with IFRS 5).

When establishing whether in the financial statements of Pivovarna Laško any loss due to impairment of the investment into the subsidiary should be recognised, the provisions of IAS 27 are considered. Furthermore, the entire carrying amount of the investment is tested as an asset in accordance with IAS 36; its carrying amount is compared to the recoverable amount (the higher of its fair value less costs to sell or value in use).

Investments into the associated companies

An associate is an entity in which the Company has a significant influence and which is neither a subsidiary nor a jointly controlled entity. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

In separate financial statements of Pivovarna Laško, the investments into the associated companies are measured at cost in accordance with IAS 28.

Intangible assets

Intangible assets with a finite useful life acquired individually (not within a business combination) and not generated within the Company are measured after recognition using the cost model or are disclosed at cost less any accumulated depreciation and any accumulated impairment. They are depreciated according to the straight-line method in the period of their estimated expected functional life periods of individual items of intangible assets or their components. Amortisation of an item of intangible assets begins when the asset is made available for its use (patents, brands, licences 5 years; software application 3 years). Estimates of expected functional life periods and the amortisation method are checked on the preparation of financial statements; any changes of estimates of the categories mentioned are considered in the future periods rather than retrospectively.

Intangible assets with indefinite useful life are not amortised; instead, their recoverable amount is tested regularly by the Company. When the asset's assessed recoverable



amount is lower than its carrying amount, the asset is impaired in accordance with provisions of IAS 36, and the resulting impairment loss is recognised in the profit or loss.

Intangible assets are derecognised upon their disposal or when no future economic benefits are expected from their further use. Gains or losses arising from derecognition of an item of intangible assets are recognised in the profit or loss of the period of derecognition.

Amortisation rates are as follows:

Investment into leasehold assets 10 – 33.3 % Other intangible assets 33.3 % Application software 10 % Concession 33.3 % Licences, patents 10 %

Property, plant and equipment

Land and buildings in use are accounted for using the revaluation models and are disclosed at revalued amount at the date of the revaluation, less any subsequent accumulated depreciation or impairment losses. The revaluation is made with sufficient regularity to ensure that the carrying amount of the assets does not differ materially from their fair value at the reporting date.

The revaluation of land and buildings is recognised or accumulated as the revaluation surplus in other comprehensive income except when the previous impairment of the same land and buildings is reversed and recognised in profit or loss; in this case the revaluation to the value of the prior impairment is recognised in profit or loss. The revaluation of land and buildings in excess of the previously appreciated amount recognised in the revaluation surplus of the same land and buildings is recognised in profit or loss.

Production facilities, machinery, all types of equipment, reusable packaging and small tools are recognised under the cost model and are disclosed at their cost less accumulated depreciation and accumulated impairment losses.

The items of property, plant and equipment being acquired are measured at cost less any impairment loss. The cost of an item of property, plant and equipment includes the relevant borrowing costs in accordance with the adopted accounting policy. They are classified under the relevant categories of property, plant and equipment, to which they will belong when completed and made available for use. Depreciation of the items of property, plant and equipment begins in the month following the month when the assets are made available for their use.

Land is not depreciated.

The depreciation of buildings is recognised in profit or loss, while the reversal of the relevant revaluation surplus is simultaneously recognised in retained earnings. On



derecognition of buildings, the attributable amount of revaluation surplus is reclassified directly to retained earnings.

Depreciation is calculated using the straight-line method (except for land and property, plant and equipment being acquired, which are not depreciated) and is recognised so that the cost or the revalued amount of the property, plant and equipment less any residual value is written-off in the period of its estimated functional life period. The estimates of expected functional life period, their residual values and the depreciation method are checked on the preparation of financial statements; any changes in estimates of those categories are accounted for in future periods rather than retrospectively. The expected functional life periods of individual groups of assets are as follows:

Buildings 10 – 66 years Plant and machinery 5 – 14 years Hardware and software 3 years Motor vehicles 3 – 9 years Other equipment 3 – 20 years Reusable packaging (barrels, bottles, crates) 4 – 5 years

Borrowing costs related to financing the purchase of land, the construction of buildings and the purchase of equipment are attributed to the value of the fixed asset from the day of bringing the asset to its working condition. Costs incurred in relation to property, plant and equipment increase their cost providing they increase future benefits arising from the assets in excess of the originally assessed benefits; however costs that allow the extension of the useful life of the assets initially decrease their accumulated depreciation. The extension of the useful life of an asset of property, plant and equipment relates to the extension of its originally determined useful life during which the asset is depreciated. All other repair and maintenance costs are included in profit or loss of the financial year when they are incurred.

The items of property, plant and equipment are derecognised upon their disposal or when no future economic benefits are expected from their further use. Gains or losses arising from derecognition of an item of property, plant and equipment are recognised in the profit or loss of the period of derecognition.

Investment property

Investment property is property owned by the Company for the purpose of earning rent or increasing the value of the property in the long-term. On recognition, they are measured at cost whereas subsequently they are measured using the so-called fair value model (depreciation is not calculated), which means that the increase or decrease in their fair value affects profit or loss of the period in which it is effected.

An investment property is derecognised on its disposal or final termination of its use, when no future economic benefits are expected from the asset on its disposal. Gains and losses on disposal of investment property are recognised in the profit or loss of the period in which the asset is derecognised.



Impairment of property, plant and equipment, and intangible assets

On preparation of the financial statements, all items of property, plant and equipment, and intangible assets are checked for any signs of impairment. If there are indications of impairment, the asset's recoverable amount is assessed. When the recoverable amount of an individual asset cannot be established, the recoverable amount of a cash-generating unit to which the asset belongs is assessed.

The recoverable amount of the asset is the higher of its fair value decreased by the costs to sell or its value in use. The latter is assessed as the present value of discounted future cash flows associated with the asset taking into account the pre-tax discount rate that reflects the current market estimate of the time value of money and specific risks related to the assets that were not considered in the assessment of future cash flows.

The asset (or a cash-generating unit) is impaired to its recoverable amount if its value in use is lower than its carrying amount. Impairment is immediately recognised in profit or loss except when the asset is carried under the revaluation model; in this case the impairment is disclosed as a decrease in the revaluation surplus.

Loans and deposits issued, monetary items

Financial assets such as loans and deposits issued and monetary items are initially measured at fair value on the date of their issue or placement.

After initial measurement they are disclosed at amortised cost using the effective interest method less any impairment losses.

Financial assets available for sale

Available-for-sale financial assets are initially measured at their fair value on the date of acquisition. This fair value is usually equal to the asset's cost; however, sometimes adjustments are needed.

After the initial recognition, the financial assets available for sale are measured at fair value in the statement of financial position, whereas changes in fair value are recognised under other comprehensive income excluding the assets' impairments and interest that are recognised by using the effective interest rate and exchange rate differences.

The best evidence of an asset's fair value is normally its quoted prices on an active market. If these are not available, valuation techniques are applied that as far as possible take account of market inputs including the most recent arm's length market transactions, reference to the current fair value of another instrument that has substantially similar characteristics, and discounted cash flow analysis.

If the fair value of a financial asset available for sale cannot be reliably measured, the asset is carried at its cost taking into consideration any impairment losses.

On derecognition of an available-for-sale financial asset or its permanent impairment, the cumulative other comprehensive income is reclassified to the profit or loss of the period in which the asset is derecognised or permanently impaired.



Derivatives

Derivative financial instruments are applied in interest rate hedging. They comprise interest options and interest swaps.

Derivative financial instruments are initially recognised at cost on the day of the contract; subsequently, they are measured at fair value on the reporting date. Gains and losses arising from changes in fair value are immediately recognised in profit and loss unless they are applied in the hedging of risks.

Non-current assets held for sale or assets of disposal groups (and related liabilities)

Non-current assets held for sale or assets of disposal groups (and liabilities associated with the non-current assets) are those non-current assets or liabilities for which it is reasonably assumed that their carrying amount will be settled predominantly through their sale rather than their further use. This condition is deemed to have been complied with only if the sale is highly probable and if the assets or group of assets (and liabilities associated with them) are in the condition that makes the sale possible. The management needs to be committed to the closing of the sale process within a year from the asset's reclassification to non-current assets held for sale or to the assets of disposal group (and the associated liabilities).

The assets (and associated liabilities) related to the subsidiary for which it is planned that the controlling influence will be lost, are reclassified to the disposal group of assets (and associated liabilities) irrespective of whether the controlling company is planning to keep the minority stake after the sale or not.

Non-current assets held for sale and assets of disposal groups are measured at the lower of carrying amount or fair value less costs to sell.

Inventories

Inventories of raw materials and consumables are disclosed at the lower of cost and net realisable value; declining values of inventories are accounted for using the weighted average cost method. Net realisable value is the estimated selling price less the estimated costs of completion and the estimated costs necessary to make the sale.

Inventories of finished products, semi-finished products and work in progress are valued at their production costs. Production costs are direct costs of materials and raw materials, labour, production services, depreciation, and indirect costs of production (costs of materials and raw materials, labour, services and depreciation that are accounted for in the production process but cannot be directly linked to emerging production effects).

Inventories of raw materials, materials, spare parts, products and merchandise are written-off on the basis of inventory records, customer complaints and returns and other records or upon a proposal of a responsible person (also damaged products, ullage and breakages) that requires the decision of the Management Board of the company. The inventories are written-off in full if the sale is permanently discontinued or their use is



forbidden. The Group examines the usefulness of the stocks of materials and spare parts with less than 5 years of movement and if necessary, their value is 100% impaired.

Operating receivables

On initial recognition, operating receivables are recognised at fair value; subsequently they are measured at amortised cost using the effective interest rate method less any impairment loss.

Impairments of individual operating receivables are made when there is objective evidence that the recovery of the full amount due is impossible. The impairment loss is the difference between the carrying amount and the present value of estimated future cash flows discounted at the effective interest rate. The impairment loss is recognised in profit or loss.

Cash and cash equivalents

Cash and cash equivalents reported in the cash flow statement comprise cash on hand, sight deposits at banks and investments into the money market instruments without bank overdrafts. Bank overdrafts are included under short-term financial liabilities in the statement of financial position.

Share capital

Ordinary shares are classified as capital. Transaction costs directly associated with the issue of new shares which are not associated to the acquisition of a company are reported as a decrease in capital. Any surpluses over the fair value of received paid-in amounts in excess of the book value of newly issued shares are recognised as a paid-in capital surplus.

Treasury shares

If the company repurchases treasury shares in the financial year, the paid amount inclusive of transaction costs and exclusive of tax is deducted from total capital as treasury shares until these shares are removed, reissued or sold. The Company must create reserves for own shares in the identical amount for that financial year. At the same time, it must also form provisions for PILR shares owned by the subsidiaries. Reserves for treasury shares are released when the Company disposes of or removes its treasury shares, crediting the source from which they were created. Upon the sale of treasury shares, the difference between their selling price and carrying amount is accounted for in equity with no impact on the profit or loss. Treasury shares are used for the purposes defined in Article 247 of the Companies Act.

Dividends

Until approved by the General Meeting of shareholders, proposed dividends are accounted for as retained earnings.



Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of resources will be required in the future to settle the liability and when a reliable estimate of the obligation can be made. Provisions may not be set aside to cover future losses from operations.

The amount of provisions is the best estimate of the outflows expected to be required to settle the present obligation at the reporting date taking into account the related risks and uncertainties. If the provisions are measured at the amounts of future cash flows required for the settlement of present obligations, and the time value of money is important, provisions are discounted to their present value.

The net liabilities of the Company associated with long-term employee benefits for years of service, except for pension schemes, are equal to the earnings which employees have obtained in exchange for their service during current and previous periods. Such liabilities are calculated using the projected unit method and are discounted to their present values.

Operating liabilities

Operating liabilities comprise suppliers credits for purchased merchandise or services and liabilities to employees, the state, owners or others. Liabilities are recognised in books of account if it is likely that economic benefits will decrease due to their settlement and the amount required for their settlement can reliably be measured. They are initially recognised at fair value; subsequently they are measured at amortised cost using the effective interest rate method.

Financial liabilities

Initially, financial liabilities are recognised at fair value exclusive of any attributed transaction costs. Financial liabilities are reduced by debt restructuring costs. In subsequent periods, financial liabilities are measured at amortised cost using the effective interest rate method. Any differences between receipts (exclusive of transaction costs) and liabilities are recognised in profit or loss over the entire period of the financial liability.

Discontinued operation

A discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale (disposal group) and:

represents a separate major line of business or geographical area of operation;

is part of a single coordinated plan to dispose of a separate major lines of business or geographical areas of operations or

is a subsidiary acquired exclusively with a view to resale.



Corporate income tax

The amount of corporate income tax reported in the statement of comprehensive income is the sum total of current and deferred tax.

Current tax is accounted for on the basis of taxable profit of the current year. In the statement of comprehensive income, the amount of taxable profit can differ from pre-tax profit on account of income and expenses taxed or fiscally recognised in other taxable periods or on account of income and expenses that will never be taxed or fiscally recognised. Current amounts of corporate income tax is accounted for at the tax rate of 17% applicable to all commercial companies registered in Slovenia. In Croatia, the registered seat of Laško Grupa, d.o.o. Zagreb, the applicable corporate income tax rate is 20%. In Kosovo, the registered seat of Birra Peja, the applicable corporate income tax rate is 10%.

Deferred tax receivables and deferred tax liabilities

Deferred taxes are shown in their entirety while observing the liability method based on temporary differences between carrying amounts of assets and liabilities and disclosed tax amounts in the financial statements. In principle, deferred tax liabilities are recognised on the basis of all temporary differences whereas deferred tax assets are only recognised to the amount of temporary differences for which taxable profits will be available in the future against which these temporary differences can be utilised. Deferred tax assets and liabilities are calculated using the tax rate (and legislation) applicable on the reporting date which is expected to be effective at the time the deferred tax is realised or liability for deferred tax settled.

Deferred tax assets are verified when annual accounts are drawn up and are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary difference can be utilised.

Current and deferred taxes are recognised in profit or loss except when they refer to the items recognised in other comprehensive income or equity; in such cases the current and deferred tax are recognised in other comprehensive income or directly in equity. 5.4.5 ADJUSTMENT OF HISTORICAL FINANCIAL STATEMENTS

a) Adjustments to the statement of financial position of Pivovarna Laško at 1 January 2012

(reported) (adjusted)(in EUR) 1 January 2012 Impairment 1 January 2012

AssetsDeferred tax assets 17,170,444 3,877,649 21,048,093

EquityRetained earnings - 3,877,649 3,877,649



b) Adjustments to the statement of financial position of Pivovarna Laško at 1 January 2012

Adjustments to the income statement of Pivovarna Laško for the period from 1 January to 31 December 2013

Pivovarna Laško adjusted its historical financial statements on account of the following:

deferred tax assets were decreased on account of impairment of loans issued to Center naložbe and Infond Holding in total EUR 1,539,255 as at 1 January 2012

pursuant to the opinion of the Tax Authorities, deferred tax assets were increased by EUR 5,416,904 on account of impairment of investments in companies in which the controlling company holds more than 8% interest as at 1 January 2012.

The effect of aforementioned retrospective adjustments is reported in table format in relation to the statements of financial position as at 1 January 2012 and 31 December 2012, and as at 31 December 2012 in relation to the income statement and statement of other comprehensive income.

Deferred tax assets on account of impairment of loans issued to Center naložbe and Infond Holding were reduced under the principle of due diligence, prudence and conservative approach to disclosure of deferred tax assets and final tax recognition by the tax authorities of expenditure resulting from impairment losses. In any case, the Company management will use all legally available means to demonstrate that expenditure on account of impairment losses should be recognised for tax purposes as it is assessed that justifiable reasons exist for such treatment.


(in EUR)31 December

2012 Adjustment 31 December

2012

AssetsDeferred tax assets 15,873,730 4,830,525 20,704,255

EquityShare premium 47,256,606 4,830,525 52,087,131


(in EUR)31 December

2012 Adjustment 31 December

2012

Deferred tax (1,663,509) 952,876 (710,633)Net profit or loss for the year (18,510,265) 952,876 (17,557,389)

Total comprehensive income for the year (17,945,271) 952,876 (16,992,395)



5.4.6 NOTES TO INDIVIDUAL ITEMS IN THE FINANCIAL STATEMENTS

1 Intangible assets

2013 Licences and(in EUR) other intangible assets Total

COST

1 January 2013 3,424,590 3,424,590

Direct acquisitions 13,725 13,725Disposals, reductions (71,956) (71,956)

31 December 2013 3,366,359 3,366,359


1 January 2013 2,192,809 2,192,809

Amortisation 235,535 235,535

31 December 2013 2,428,344 2,428,344

CARRYING AMOUNT

31 December 2013 938,015 938,015

1 January 2013 1,231,781 1,231,781

2012 Licences and (in EUR) other intangible assets Total

COST

1 January 2012 3,354,786 3,354,786

Direct acquisitions 71,956 71,956Disposals (2,152) (2,152)

31 December 2012 3,424,590 3,424,590


1 January 2012 1,959,722 1,959,722

Amortisation 235,239 235,239Disposals (2,152) (2,152)

31 December 2012 2,192,809 2,192,809

CARRYING AMOUNT

31 December 2012 1,231,781 1,231,781

1 January 2012 1,395,064 1,395,064



As at 31 December 2013, the items of intangible assets mostly comprise software licences and costs of investments in leasehold assets. There were no intangible assets pledged as of 31 December 2013. The Company pledged a part of the brand names in the amount of EUR 50 million as security for short-term borrowings from banks which are a constituent part of the Company's assets. In accordance with the accounting standards, the Company's own brand names are not disclosed in the financial statements. 2. Property, plant and equipment

Manufacturing Other Fixed assets2013 plant and plant and Small being

(in EUR) Land Buildings equipment equipment tools acquired Total

COST

1 January 2013 7,887,235 25,600,344 108,189,127 25,091,022 11,184,827 221,508 178,174,063Direct acquisitions - - - - - 3,707,582 3,707,582Transfer from assets being acquired 244,800 126,571 440,140 614,652 1,489,173 (2,915,336) -Advances for property, plant and equipment - - - 239,566 - - 239,566Revaluation (616,602) (2,694,573) - - - - (3,311,175)Disposals - - - (1,760,869) (1,376,685) - (3,137,554)31 December 2013 7,515,433 23,032,342 108,629,267 24,184,371 11,297,315 1,013,754 175,672,482


1 January 2013 - 961,724 101,539,818 19,958,752 9,437,646 - 131,897,940Acquisitions - - - 120,396 - - 120,396Depreciation - 794,979 1,390,650 1,293,760 1,046,075 - 4,525,464Impairment reversal - (1,747,824) - - - - (1,747,824)Disposals - - - (1,745,912) (1,354,165) - (3,100,077)31 December 2013 - 8,879 102,930,468 19,626,996 9,129,556 - 131,695,899

CARRYING AMOUNT

31 December 2013 7,515,433 23,023,463 5,698,799 4,557,375 2,167,759 1,013,754 43,976,583

1 January 2013 7,887,235 24,638,620 6,649,309 5,132,270 1,747,181 221,508 46,276,123



As at 31 December 2013, the value of property was assessed by the certified property appraiser. Impairment loss amounting to EUR 823,509 is recognised in other revaluation operating expenses; the impairment loss decreases the amount of equity (revaluation surplus) by EUR 741,111. The carrying amount of intangible fixed assets reflects their fair value.

The disposal of property, plant and equipment relates to the sale and write-off of such assets. Property, plant and equipment amounting to EUR 38,239 have been acquired under finance lease.

Gains in the amount of EUR 13.154, which the Company realised on disposal of property, plant and equipment is reported as an item of revaluation operating expenses, whereas EUR 150,125 of losses realised on disposal of those assets is reported as the revaluation operating expense.

The Company pledged property, plant and equipment whose carrying amount as at 31 December 2013 amounted to EUR 28,125,124, as collateral for short-term and long-term borrowings. The carrying amount of pledged property totals EUR 24,422,487 and the carrying amount of pledged equipment equals EUR 3,702,637. As at 31 December 2013 the Company reports commitments for the acquisition of property, plant and equipment in the amount of EUR 230,415.

Manufacturing Other Fixed assets2012 plant and plant and Small being

(in EUR) Land Buildings equipment equipment tools acquired Total

COST

1 January 2012 7,887,235 25,472,072 107,716,053 25,010,340 11,063,227 512,456 177,661,383Direct acquisitions - - - - - 1,809,071 1,809,071Reclassifications - - - 66,582 - - 66,582Advances for property, plant and equipment - - - 39,000 - - 39,000Transfer from assets being acquired - 128,272 495,100 1,106,623 370,024 (2,100,019) -Disposals - - (22,026) (1,131,523) (248,424) - (1,401,973)31 December 2012 7,887,235 25,600,344 108,189,127 25,091,022 11,184,827 221,508 178,174,063


1 January 2012 - 169,603 100,205,451 19,684,808 8,439,864 - 128,499,726Depreciation - 792,121 1,356,393 1,318,555 1,241,348 - 4,708,417Reclassifications - - - 66,582 - - 66,582Disposals - - (22,026) (1,111,193) (243,566) - (1,376,785)31 December 2012 - 961,724 101,539,818 19,958,752 9,437,646 - 131,897,940

CARRYING AMOUNT

31 December 2012 7,887,235 24,638,620 6,649,309 5,132,270 1,747,181 221,508 46,276,123

1 January 2012 7,887,235 25,302,469 7,510,602 5,325,532 2,623,363 512,456 49,161,657



3. Investment property

Investment property also includes property which is not used for carrying out the basic activity but is leased out by the Company. As at the last day of 2013, the "Tri lilije" sports arena, catering facility Hotel Hum and holiday facilities are also included in the Company's investment property. During the process of ownership transformation into the property of Pivovarna Laško, holiday facilities in Croatia which include holiday home at "Ičići" and holiday facilities in Barbariga, were recognised at the amount of EUR 0 i.e. the ownership transformation was not successful. Accordingly, in 2013 Pivovarna Laško and DSU signed an Agreement on regulation of mutual relationships, that specifies ownership share in the aforementioned investment property. The certified appraiser of property on 1 May 2013 assessed the market value of full ownership rights to the above property. Pivovarna Laško's investments in the renovation of the above property were assessed at EUR 530,100. The property held in Croatia is in the process of disposal.

Pursuant to the valuation report prepared by a certified appraiser of property, in 2013 the Company recognised revaluation operating expenses in the amount of EUR 1,340,143 and revaluation operating revenue amounting to EUR 4,183, as the difference between the assessed value of investment property and their carrying amount.


COST

1 January 2013 (56,074) 5,709,012 5,652,938Revaluation - appreciation / impairment (697,246) (639,982) (1,337,228)Reclassifications 1,221,666 (1,221,666) -31 December 2013 468,346 3,847,364 4,315,710

CARRYING AMOUNT

31 December 2013 468,346 3,847,364 4,315,710

1 January 2013 (56,074) 5,709,012 5,652,938


COST

1 January 2012 134,905 6,403,161 6,538,066Revaluation - appreciation / impairment (2,414) (115,060) (117,474)Disposals (188,565) (579,089) (767,654)31 December 2012 (56,074) 5,709,012 5,652,938

CARRYING AMOUNT

31 December 2012 (56,074) 5,709,012 5,652,938

1 January 2012 134,905 6,403,161 6,538,066



The Company incurred EUR 333,718 of expenses from investment property primarily relating to maintenance and facility management, and EUR 88,657 of rental income and payments received for the use of holiday facilities.

In 2013 procedures aimed at the sale of Hotel Hum catering facility and the "Tri lilije" sports arena continued.

Investment property in the amount of EUR 3,450,544 has been pledged as collateral for long-term and short-term borrowings raised from banks. 4. Long-term investments

4. A. Long-term investments in the subsidiaries

Data on the subsidiaries

(in EUR) 2013 2012

INTERESTS IN GROUP COMPANIES

In Slovenia:Firma Del, d. o. o., Laško 7,427 7,427Pivovarna Union, d. d., Ljubljana 162,127,755 169,327,822Vital Mestinje, d. o. o. 1,457,761 1,457,761Radenska, d. d., Radenci 46,472,460 46,472,460Delo, d. d., Ljubljana 14,297,704 20,286,554

224,363,107 237,552,024

Abroad:Laško Grupa, d. o. o., Zagreb 2,709 2,709Laško Grupa, d. o. o., Sarajevo 160,408 160,408

163,117 163,117

Total 224,526,224 237,715,141



Subsidiaries

Radenska, d. d., Radenci beverage production Slovenia 87.090 % 62,454,656 (3,685,486)

Union Group beer production Slovenia 97.928 % 73,986,221 (5,948,512)and beverages production

Vital Mestinje, d. o. o. beverage production Slovenia 96.920 % 3,508,710 51,295

Delo Group newspaper and Slovenia 80.834 % 13,821,643 (1,218,518)publishing

Firma Del, d. o. o., Laško beer production Slovenia 100.000 % 15,254 (104)

Jadranska Pivovara - Split, d. d. beer production Croatia 99.460 % (2,033,796) (1,355,943)

Laško Grupa, d. o. o., Zagreb trade intermediation Croatia 100.000 % (102,111) (130,143)

Laško Grupa, d. o. o., Sarajevo trade intermediation Bosnia and Herzegovina

69.220 % 163,603 6,724



In accordance with IAS 27, the Company values long-term financial investments in the subsidiaries according to the cost model.

The Company possesses 441,765 shares of the subsidiary Pivovarna Union or a 97,928% stake; 539,536 shares in the subsidiary Delo or an 80.834% stake, 5,396,932 shares in the subsidiary Jadranska pivovara – Split or a 99.460% ownership stake and 4,408,340 shares in the subsidiary Radenska or a 87.09% ownership stake. In addition, the Company also has majority ownership stakes in the following subsidiaries: Vital Mestinje, d. o. o. (96,92 %), Laško Grupa, d. o. o., Zagreb (100 %), Laško Grupa, d. o. o., Sarajevo (69,22 %) and Firma Del, d. o. o. (100%).

Long-term investments in subsidiaries increased in 2013 on account of additional acquisitions totalling EUR 10,790. As a result of new acquisitions, Pivovarna Laško increased its stake in Pivovarna Union.

For the purpose of impairment testing, the certified appraiser of companies assessed the value of the following investments as at 31 December 2013: investment in Pivovarna Union, Radenska and Delo inclusive of the investment in Večer.

The estimated recoverable amount of the investments on the last day of 2013 amounted to EUR 162,127,755 or EUR 367 per share, reflecting a decrease of EUR 7,210,857 over the stated carrying amount. The negative difference is recognised as an impairment loss in financial expenses. The difference between the carrying amount and the assessed value of the investment in Delo is also recognised as an impairment loss in the financial expenses. As at 31 December 2013 the investment's value was assessed at EUR 14,297,704, which is EUR 5,988,850 less than its carrying amount. The assessed share value as at 31 December 2013 equals EUR 26.5.

1 Investment in subsidiary Pivovarna Union, Ljubljana

As at 31 December 2013, Pivovarna Laško holds 441,765 shares of its subsidiary Pivovarna Union or 97.93% stake amounting to EUR 162,127,755.

a) Valuation of Pivovarna Union, Ljubljana

Valuation of the investment in Pivovarna Union as at 31 December 2013, was made by a certified business appraiser, registered with the Slovenian Institute of Auditors. The most important elements and findings of the valuation procedure are: The subject of the valuation was assessment of the recoverable amount of the

investments in a 97.93% equity interest in Pivovarna Union as at 31 December 2013, for the purpose of reporting required under IAS 36 i.e. verification of potential investment impairment. The assessed investment in the subsidiary is measured at cost.

The present value of future cash flows expected to be derived from the asset's continued use (in this case investment into a subsidiary) and its disposal at the end of its useful life, was used in the valuation performed in compliance with the requirements of IAS 36.



The company as a whole was identified as the asset with indefinite useful life, while taking into account the relevant equity interest.

Pursuant to provisions of IAS 36, the projected cash flow method was used for the investment assessment:

- based on reasonable and acceptable assumptions that provide the management's best estimate of the circumstances prevailing in the remaining useful life of the asset, while primary emphasis should be devoted to external sources;

- based on the most recent financial projections adopted by the management, exclusive of the assessed future cash flows expected from future restructuring of the asset, improvements to or the asset's enhanced performance. The projections based on these assumptions should cover the period of no more than five years unless a prolonged period is justified;

- assessed for a longer period than the one covered by the most recent forecasts, through extrapolation of projections based on those forecasts using the stable or declining growth rate for future periods unless an increasing percentage is justified. The rate of growth should not exceed the average long-term percentage growth of products in the sector or the country (countries) where the entity operates or the markets in which the asset is used, unless a higher percentage is justified.

- Variability of assumptions used in cash flow projection is assessed through the verification of the reasons for differences between past cash flow projections and the actual cash flows, and the actual past profit or loss.

The appraiser based its projections on the 2014 plan of projections for the period 2015-2018, while taking into account the business cycle, macroeconomic circumstances and circumstances prevailing in the industry sector.

The appraiser based its assessment of future cash flows on assumptions used in the assessment of the market value of the majority equity interest for reporting purposes that complies with all the requirements of IAS 36.

The appraiser based its assessment of the required rate of return on assumptions used in the assessment of the market value of the majority equity interest for reporting purposes that complies with all the requirements of IAS 36.

The assessment of investments including the investment in the capital of Pivovarna Union, took into account the market value of investments in 57.63% equity interest in Birra Peja, and 100% ownership of Birra Peja and Akull brands since these assets are currently actively sold by the company. Costs of disposal were also taken into account.

The recoverable amount of the investment in Pivovarna Union was considered its value in use. The value in use was assessed as the present value of the future cash flows expected to be derived from the assets, while not considering the indebtedness. Detailed projections of future free cash flows were made for the 2014-2019 period (the usual 5-year period was extended due to utilisation of tax losses), whereas the residual amount was based on the perpetuity growth model with cash flows growing at an assumed



constant rate i.e. average 2% annual growth rate. The residual value accounts for 64% of the total equity amount. The weighted average cost of capital (WACC) in the 2014-2019 period of 9.0% was taken into account, with effective tax rate of 8.5%, whereas the WACC of 8.8% was taken into account in the residual value (effective tax rate of 17%). The pre-tax weighted average cost of capital of 10.0% was applied in the assessment of the recoverable value. Based on the sensitivity analysis, a 1 percentage point increase of the weighted average cost of capital or a 1 percentage point decrease in the residual's growth would result in a 20.4% decrease of the assessed value in use of the investment in Pivovarna Union, and consequently also its carrying amount.

The assessed value in use of the investment in 97.92% equity investment in Pivovarna Union, using the above assumptions as at 31 December 2013 for the purpose of impairment testing in accordance with IAS 36 requirements, is equal to the value in use i.e. EUR 162,127,755, which corresponds to EUR 367 per share.

2. Financial investment in the subsidiary Radenska, Radenci

As at 31 December 2013, Pivovarna Laško reports an equity investment in Radenska in the amount of EUR 46,472,460 or 87.09-percent stake in the subsidiary. On the last day of 2013, Pivovarna Laško is registered in the Radenska's share register as the undisputed holder of 75.24% shares of Radenska. Despite the final enforcement judgement for the benefit of NKBM which has not been exercised by the day of the financial statements approval, Pivovarna Laško is reported as the owner of 345,305 RARG shares (6.82% stake), which the former Management Board pledged for the benefit of Center naložbe for borrowings raised from NKBM. On the basis of the final judgement in the dispute between Nova Kreditna banka Maribor as the plaintiff and lienor, and Pivovarna Laško as the defendant and lienee, in 2011 the investment in Radenska was impaired by EUR 3,637,650, which corresponds to the average cost and carrying amount of 345,304 RARG shares. The investment was reclassified to assets of disposal groups. Due to the pledging of RARG shares, financial expenses had already been recognised in 2009 and accrued costs and deferred revenues formed in the identical amount. In 2013 the asset as well as the relevant accrued costs and deferred revenue were derecognised from the Company's books of account.

The ownership of 600,000 RARG shares (11.85%), which Pivovarna Laško temporarily sold to Deželna banka Slovenije in 2011, is not registered in the Radenska share register. Pursuant to the contract and despite temporary transfer of the ownership, the seller, Pivovarna Laško retained the right to the shares and therefore, the investment was not derecognised.

Based on the above facts the official ownership as reported in the Radenska share register (82.06%) differs from the actual ownership on the basis of which the controlling company exercises its management rights (93.911%) and from its share of equity investment in Radenska (87.09%).

a) Procedures in the case of the sale of the stake in Radenska

Pursuant to the operational and financial restructuring of the Laško Group, UniCredit CAIB as the sale consultant, on 1 September 2013 began procedures for the sale of the



stake in Radenska by sending a teaser to all potential investors. Potential investors who signed the NDA received the IM in October. The non-binding bids were received in November and in December 2013 Management pitches were held at the company's headquarters. We expect to receive binding bids in 2014 and to begin discussions with investors regarding transaction structure.

Denationalisation requests in Radenska, Radenci

Nationalisation of property denationalisation Šarič

The proceedings are taking place before the Gornja Radgona Administrative unit in accordance with the Denationalisation Act and in non-contentious proceedings before the Novo mesto District Court pursuant to the Enforcement and Criminal Actions Act. The beneficiaries are demanding restitution of property, company, trademarks and mineral springs that were nationalised during the nationalisation process, and the payment of damages. The Administrative unit Gornja Radgona issued a decision on 27 June 2012, which rejected the request for the privatisation of the nationalised company Zdravilišče Slatina Radenci, Höhn and Comp., public trading company in Radenci with a 48% stake owned by Wilhelmina Höhn Šarič. With the supplementary decision issued on 31 August 2012 the Zdravilišče Slatina Radenci, Höhn and Comp., public trading company is corrected and renamed Kuranstalt Sauerbrun Radein AG. The claim was lodged by the legal successor dr. Rudolf Höhn Šarič on 4 May 1993. In the appeal proceedings, the Ministry of Economic Development and technology on 25 February 2013 rejected the appeal against the decision of the Administrative unit Gornja Radgona as being unjustified. The beneficiary lodged a lawsuit and the proceedings continue before the Administrative Court of the Republic of Slovenia.

On 5 December 2012, the Administrative Unit in Gornja Radgona appointed the expert to produce an expert opinion concerning the value of the company Zdravilišče Slatina Radenci, Hohn and Comp., inclusive of labels and brand wherever the word Radenska is a registered brand name and the three hearts, two hearts and one heart are registered labels, as well as the movable property. Buildings and land are not subject to the expert opinion.

Non-contentious proceedings for the return of property pursuant to the Enforcement and Criminal Actions Act are taking place before the District Court in Novo mesto. The motion was filed on 20 December 2010 for the benefit of beneficiaries, grandchildren of dr. Anton Šarič.

The beneficiaries carried out the entry into the land register in the form of a seal indicating a dispute on all land parcels that are subject of the dispute; notices of dispute have also been placed on 13 brands of Radenska at the Slovenian Intellectual Property Office.

The first main hearing was held at the District Court in Novo mesto on 25 March 2013. In addition to the promoters, 11 members of the opposing party were also present, i.e. representatives of Terme Krka, State Attorney, three municipalities, Slovenske železnice and others. After an additional naming of all the proxies, the judge ended the trial. The District Court in Novo mesto issued an order, which was received on 19 June 2012,



dismissing the request for the return of nationalised property. The Court also set the value of the subject matter of the dispute to EUR 34,200,000.00. The counter party appealed to the Higher Court in Ljubljana against the decision. The Higher Court in Ljubljana rejected the appeal (the decision was received by Radenska on 27 March 2014), and upheld the first instance decision rejecting the claim for restitution of nationalised property. This makes the procedure final. There is a possibility of beneficiaries lodging a request for a review at the Supreme Court.

The management of Pivovarna Laško expect the resolution process of the aforementioned proceedings related to Radenska to be time consuming. Since the management of Pivovarna Laško expect no significant future losses to arise to its subsidiary Radenska from those proceedings, it has assessed that as at 31 December 2013, Pivovarna Laško has no need to impair the investment in the subsidiary Radenska or set aside any provisions as at 31 December 2013 in this regard.

b) Estimated value of Radenska

Valuation of the investment in Radenska, as at 31 December 2013, was made by a certified business appraiser, registered with the Slovenian Institute of Auditors. The most important elements and findings of the valuation procedure are: The subject of the valuation was the majority stake of the company enabling the

majority owner to influence the process of adopting decisions by management bodies as well as to influence the formation of strategy and business decisions concerning investments, borrowings and similar. Furthermore, the majority owner may also implement status changes.


The value in use was assessed as the present value of the future cash flows expected to be derived from the assets, while not considering the indebtedness. The appraiser assessed the present value of free cash flows without repayment of interest and principal amounts (the value of total equity) and deducted total amount of the company's liabilities to arrive to the value of the equity. The resulting value was additionally adjusted for any contingencies, premiums or discounts.

The assessment of future returns takes into account the 2014 plan and potential of the company, based on its performance to date and results of the sector's analysis. The appraiser has assessed the 2014 business plan as viable although rather optimistic and has considered it in the valuation.

In drafting business projections for 2015/2018, the appraiser to large extent considered results of the sector analysis, competitors, and future potential of the company. Furthermore, the appraiser assumed that the company will maintain existing business relations within the Laško Group (above all joint market presence, horeca).



Some of the assessed value was derived from investments whose market value was assessed in the amount of EUR 47.7 million. The cost of disposal of the investments (2% market price relating to investment in Mercator and Delo) were also taken into account. Accordingly:

- the quoted price of Mercator shares as at 31 December 2013 (EUR 82.0 per share) was considered as the market value of the investment in the Mercator shares as the appraiser felt that the quoted price on the valuation date is the best indication of the probable sale of Mercator to Agrokor;

- the market value of a 19.17% investment in Delo was assessed under the present value of future cash flows to EUR 3.46 million (EUR 27,1 per share) in a separate valuation report. The assessed market value for the majority owner (joint 100% control of the company by the Laško Group and planned joint disposal) was also taken into account;

- The market value of the investment in shares of Premogovnik Velenje (7.1% stake) was assessed at the average price of EUR 4.76 per share at EUR 920 thousand.

The investment property was accounted for as surplus assets. The value of these assets was assessed by the certified appraiser of property. Under both scenarios, the market value of superfluous property was assessed at EUR 1.041 million. The costs of disposal in the amount of 7-20% and shift in the sale were also considered.

In addition to financial liabilities amounting to EUR 8.4 million, contingencies in the amount of EUR 4.2 million were also taken into account, based on the carrying amount of provisions set aside for disputes and the related costs. The appraiser pointed out that those carrying amounts do not reflect all contingencies arising from denationalisation proceedings which, as at the valuation date, are difficult to assess due to lack of data and as such were not considered in the valuation assessment.

The control premium of 0% was taken into account since future return projections for an average majority strategic owner were made at inception, while a 15% discount on account of the lack of liquidity was considered based on the analysis of a variety of factors that impact liquidity and marketability of the share or equity interest.

In line with the provisions of IAS 36, the assessed fair value (market value for the majority owner) was reduced by the costs of sale. In view of the subject matter and purpose of the valuation, the appraiser took into account costs of disposal, which comprise direct selling (disposal) expenses that may be attributed directly to the asset's disposal, not considering the costs of financing and corporate income tax, in accordance with the provisions of IAS 36. Based on the market inputs, the cost of disposal of the company accounts for approx. 2% of the value of equity interest i.e. the market value.

In view of the anticipated sale of the investment in Radenska, the investment's recoverable value is considered the fair value less costs to sell. The fair value less costs to sell was assessed using the present value of the future cash flows method, excluding the



debt. Detailed projections of future free cash flows were made for the 2014-2019 period, whereas the residual amount was based on the perpetuity growth model with cash flows growing at an assumed constant rate i.e. average 2% annual growth rate. The residual value accounts for 67% of the total equity amount. The weighted average cost of capital (WACC) in the 2014-2019 period of 8.6% was taken into account, with effective tax rate of 8.5%, whereas the WACC of 8.4% was taken into account in the residual value (effective tax rate of 17%). Based on the sensitivity analysis, a 1 percentage point increase of the weighted average cost of capital or a 1 percentage point decrease in the residual's growth would result in a 9.8% decrease of the assessed value in the equity stake in Radenska, which is higher than its carrying amount.

Based on the aforementioned assumptions, the fair value less costs to sell of an 87.09% equity investment in Radenska as at 31 December 2013 for the reporting purposes in compliance with IAS 36, equals EUR 55,985,918 or EUR 12.7 per share, which is more than the carrying amount of one share as at 31 December 2013.

3. Investment in subsidiary Delo, Ljubljana

As at 31 December 2013, the investment in Delo amounts to EUR 14,297,704, which is a reduction of EUR 5,988,850 compared to its value on the last day of 2012.

a) Procedures in the case of a sale of a 100-percent stake in the newspaper Delo, Ljubljana

The Laško Group is selling its entire stake in the newspaper Delo. In addition to Pivovarna Laško, holder of an 80.834% stake in the company, the subsidiary Radenska holds a 19.17% stake in Delo.

In June 2013 UniCredit CAIB were selected as M&A consultants for the sale of Delo, as part of the Laško Group restructuring. As part of the operational and financial restructuring of the Laško Group, a teaser was sent to potential buyers of Delo in September 2013, followed by harmonisation of NDA with potential investors. Potential investors who signed the NDA received the IM in December. The non-binding proposals arrived in March 2014.

b) Estimated value of Delo, Ljubljana

Valuation of the investment in Delo, as at 31 December 2013, was made by a certified business appraiser, registered with the Slovenian Institute of Auditors. The most important elements and findings of the valuation procedure are: The subject of the valuation was the majority stake of the company (80.83%)

enabling the majority owner to influence the process of adopting decisions by management bodies as well as to influence the formation of strategy and business decisions concerning investments, borrowings and similar. Furthermore, the majority owner may also implement status changes.




The value in use was assessed as the present value of the future cash flows expected to be derived from the assets, while not considering the indebtedness. The appraiser assessed the present value of free cash flows without repayment of interest and principal amounts (the value of total equity) and deducted total amount of the company's liabilities to arrive to the value of the equity. The resulting value is additionally adjusted for any contingencies, premiums or discounts.

The assessment of future returns takes into account the 2014-2016 strategic plan and future potential of the company, based on its performance to date and results of the sector's analysis. As the 2014-2019 strategic plan was assessed as being optimistic, it was considered as such in the valuation.

Some of the assessed value was derived from investments whose market value was assessed in the amount of EUR 4.0 million. Costs of investment disposal (2% of the market value of the investment in Večer) were also taken into account. Accordingly:

- the market value of the investment in 79.24% equity share in Večer was assessed using the liquidation method, assuming disposal of the brand and activity as at 30 September 2013 in the amount of EUR 3,100 thousand

- the market value of a 100% equity investment in Izberi was assessed under the present value of future cash flows to EUR 475 thousand.

The investment in property, apartments and holiday facilities was accounted for as surplus assets. The value of these assets was assessed by the certified appraiser of property to EUR 267 thousand. The costs of disposal in the amount of 5% and shift in the sale were also considered.

The control premium of 0% was taken into account since future return projections for an average majority strategic owner were made at inception, while a 15% discount on account of the lack of liquidity was considered based on the analysis of a variety of factors that impact liquidity and marketability of the share or equity interest.

In line with the provisions of IAS 36, the assessed fair value (market value for the majority owner) was reduced by the costs of sale equal to approx. 2% of the value of equity interest i.e. the market value).

In view of the anticipated sale of the investment in Delo, the investment's recoverable amount is considered the fair value less costs to sell. The fair value less costs to sell was assessed using the present value of the future cash flows method, excluding the debt. Detailed projections of future free cash flows were made for the 2014-2019 period, whereas the residual amount was based on the perpetuity growth model with cash flows growing at an assumed constant rate i.e. average 2% annual growth rate. The residual value accounts for 62% of the total equity amount. The weighted average cost of capital (WACC) in the 2014-2019 period of 12.5% was taken into account, with effective tax rate



of 8.5%, whereas the WACC of 12.1% was taken into account in the residual value (effective tax rate of 17%). Based on the sensitivity analysis, a 1 percentage point increase of the weighted average cost of capital or a 1 percentage point decrease in the residual's growth would result in a 19.4% decrease of the assessed fair value less costs to sell of the investment in Delo, and consequently also its carrying amount.

Based on the aforementioned assumptions, the fair value less costs to sell of an 80.83% equity investment in Delo as at 31 December 2013 for the reporting purposes in compliance with IAS 36, equals EUR 14,297,704 or EUR 26.50 per share.

4. Financial investment into Jadranska pivovara – Split

a) Procedures in the case of the sale of the 99.11% stake in Jadranska pivovara – Split

After several years of unsuccessful attempts to sell the entire company as the public limited company and the asset deal, the Management Board decided in the second half of 2012 to sell the production-technical equipment of Jadranska pivovara.

An agreement on representation in the sale of equipment including specific determination of sale procedures and prices of individual groups of production equipment was signed in February 2013. The device for CO2 recycling was disposed of in June, followed in September by the sale of the major group of technical equipment to the Norwegian brewery Aas. The consideration is to be settled in successive payments by 31 May 2014 in line with the equipment dismantling. Due to the fact that since September 2013, the broker Wallart is no longer subject to the exclusivity agreement, we are continuing disposals of the remaining equipment to various potential buyers.

b) Valuation of Jadranska pivovara – Split

The long-term investment in Jadranska pivovara - Split was fully impaired already in 2009. As a result its value as at 31 December 2013 amounts to EUR nil.

The fair value of property was verified as at 31 December 2013 by the certified appraiser. The assessed liquidation market value of property is EUR 4,293,248, which is included in the consolidation, whereas the equipment is revalued to its contractual value amounting to EUR 1,667,000.



Movements in long-term investments – subsidiaries

4. B. Long-term investments into associated companies

Data on the associated companies

As at 31 December 2013, Pivovarna Laško holds 645,003 shares of Thermana accounting for a 20.63% stake in the company. The original purchase value of the investment equalled EUR 6,897,921. In 2010, the investment was impaired to zero value.

The investment is undergoing a sales procedure. The Management gave the mandate for the organisation of the sale to NLB, Ljubljana. An agreement on the implementation of the sale had been prepared in 2010 and forwarded to the owners of more than 50% of the investment. The process for acquiring consent of subscribers was carried out in February 2011. On 28 February 2011, the agreement was signed and harmonised between NLB, Pivovarna Laško and Zavarovalnica Triglav which together represent 44.85% ownership stake in Thermana. Coordinating activities with the remaining potential signatories to the agreement on the implementation of the sale of shares continued in 2011.

Pivovarna Laško signed the Agreement on the joint sale of the Thermana shares (a 51.96% stake) on 10 October 2011. NLB as the sales broker commenced sales activities. A public tender for the sale of the investment was published in the newspaper Delo on 28 November 2011 and in December, a public invitation together with a teaser was sent to over 100 funds and 100 companies from the sector.

(in EUR) 2013 2012

At 1 January 237,715,141 245,016,537

Changes during the year:Acquisition of RARG - 85,378Acquisition of PULG 10,790 58,822Acquisition of Delo - 406Impairment of PULG (7,210,857) -Impairment of Delo (5,988,850) (7,446,002)

At 31 December 224,526,224 237,715,141



associated companies

Thermana, d. d., Laško health resorts Slovenia 20.630 % 26,208,534 (1,209,934)hotels and similar accommodation

Slopak, d. o. o., Ljubljana waste packaging Slovenia 29.220 % 818,374 366,486handling



In 2013, NLB as the broker assessed that there is no interest in the market to purchase a majority holding of Thermana. As a result, a new Agreement on the joint sale of shares was discussed with NLB as the main broker and Omegainvest, Domžale, as the intermediary searching for potential buyers from the Middle East. Since no new agreement was concluded, the sale of the holding in Thermana has been put on hold. 4. C. Available-for-sale financial assets

Compared to the previous year, the value of available-for-sale financial assets did not decrease. 5. Long-term loans issued

Long-term loans refer to housing loans granted by the Company to its employees or the purposes of solving their housing-related issues 6. Long-term financial lease receivables

Long-term financial lease receivables refer to the production equipment for the Bandidos brand which was leased under a finance lease to a business partner from Belarus, and packaging leased under finance lease to Birra Peja. The receivable due from the Belarus business partner as at 2013 year-end amounts to EUR 287,276, while the receivable due from Birra Peja amounts to EUR 245,954.

(in EUR) 2013 2012

Other investments in shares and interests at cost 241,655 241,655

Total 241,655 241,655

(in EUR) 2013 2012

Other long-term loans 376 404

Total 376 404

(in EUR) 2013 2012

Long-term financial lease receivables 533,230 590,416

Total 533,230 590,416

(in EUR) 2013 2012

Subsidiaries 245,954 169,076Other companies 287,276 421,340

Total 533,230 590,416



7. Net deferred tax assets


Deferred tax assets and liabilities are calculated on the basis of temporary differences, using the liability method and by applying the 17% tax rate. Movement of deferred tax assets


Deferred tax assets that impact the profit or loss increased by EUR 6,114,288 compared to the previous year. Deferred tax assets fell as a result of liabilities due to employees of EUR 136,011, while they increased on account of the tax loss amounting to EUR 2,851,743 and impairments of investments in the amount of EUR 3,398,556.


Long-term deferred tax assets 27,521,805 16,576,992Adjustment of the opening balance - 3,877,649Current year adjustments - 952,876Long-term deferred tax liabilities (631,380) (703,262)

Net Long-term deferred tax assets 26,890,425 20,704,255

Fair Liabilities to Value

(in EUR) employees (financial assets) Other Total

DEFERRED TAX ASSETS1 January 2012 - reported 318,630 16,916,686 1,005,186 18,240,502Retrospective adjustments - 3,877,649 - 3,877,6491 January 2012 - adjusted* 318,630 20,794,335 1,005,186 22,118,151

Changes in the income statement (52,470) (884,657) 226,493 (710,634)31 December 2012 - adjusted* 266,160 19,909,678 1,231,679 21,407,517

Changes in the income statement (136,011) 3,398,556 2,851,743 6,114,288

31 December 2013 130,149 23,308,234 4,083,422 27,521,805



Movement of deferred tax liabilities

Deferred tax liabilities were recognised on account of property revaluation to the fair value and which is reported in the revaluation surplus. In 2012 and 2013, the value of deferred tax liabilities decreased by EUR 438,678, which is partly the consequence of the deferred tax liability restatement to a new higher rate and partly as the result of the property revaluation. As at 31 December 2013, deferred tax liabilities amount to EUR 631,380, accounted at the tax rate of 17%. 8. Non-current assets held for sale

The Company reports no assets under the item of non-current assets held for disposal. In 2013 the office and warehouse facility in Ljubljana (including the land) were sold. At the same time an impairment was made of Radenska shares pledged for the benefit of Nova Kreditna banka Maribor as the lienor (345,304 RARG shares or 6,82% stake) in accordance with the enforcement judgement issued at the end of 2011. 9. Inventories

Fair value Fair value (in EUR) (land, buildings) (brands) Total

DEFERRED TAX LIABILITIES

1 January 2012 1,069,320 738 1,070,058Changes in the income statement - (738) (738)Changes in the statement of other comprehensive income (366,058) - (366,058)

31 December 2012 703,262 - 703,262Changes in the statement of other comprehensive income (71,882) - (71,882)

31 December 2013 631,380 - 631,380

(in EUR) 2013 2012

Property held for sale - 770,939Other non-current assets held for sale - 3,637,650

Total - 4,408,589

(in EUR) 2013 2012

Material and raw materials 3,926,609 5,253,746Work in progress 1,076,418 811,208Products 1,515,665 1,367,662Merchandise 382,936 386,283Advances for inventories 36,030 13,188

Total 6,937,658 7,832,087



Movement of inventory allowances

The value of inventories decreased by EUR 894,429 or 11.4% compared to the previous year. The largest decrease in value (25.2%) was recorded in terms of inventory of materials and raw materials. As at 31 December 2013, inventories amounting to EUR 2 million were pledged. The carrying amount of inventories does not exceed their realisable value.

In 2013, the inventory allowances were recognised equalling EUR 67,659 due to a write-off of obsolete inventory. Inventory surpluses and deficits

Inventory deficit amounting to EUR 16,769 and inventory surplus in the amount of EUR 4,329 were determined as a result of the annual stock count of materials, work in progress, semi-finished products and products. 10. A. Short-term operating receivables

As at 31 December 2013, the Company reports short-term operating receivables amounting to EUR 20,154,988, which is an increase of EUR 925,105 compared to the last day of the previous year. Receivables due from foreign customers increased by EUR 1,281,158 (of that, an increase of EUR 949,532 relates to receivables due from Laško Grupa, and EUR 437,402 due from Hermo), whereas receivables due from domestic customers decreased by EUR 503,705.

(in EUR) 2013 2012

Formation 67,659 40,373

Balance at the end of period 67,659 40,373

(in EUR) 2013 2012

Inventory surplus 4,329 14,212Inventory deficit (16,769) (11,423)

(in EUR) 2013 2012

Short-term trade receivables: on domestic market 18,428,046 18,931,751 on foreign markets 6,110,846 4,829,688Less impairments (4,830,469) (5,013,555)Total 19,708,423 18,747,884

Short-term trade receivables due from others 1,220,441 1,894,574Advances (159,517) (98,206)Less impairments (614,359) (1,314,369)

At 31 December 20,154,988 19,229,883



The reported value of short-term operating and other receivables reflects their fair value. Allowances for short-term operating receivables

The accounts receivable allowances increased on account of disputes by EUR 189,567, additional allowances in the amount of EUR 43,992, and by EUR 4,302 of interest. On the other hand they decreased on account of receivable write-offs in the amount of EUR 179,762 and by the amounts recovered based on legal action in the amount of EUR 241,185.

Trade receivables in the amount of EUR 5,422,805 are collateralised by the guarantees and sureties received in the amount of EUR 5,044,000.

Maturity structure of receivables is disclosed in section 5.4.7 FINANCIAL INSTRUMENTS AND RISKS– Note 27. A. Credit risk

As at 31 December 2013, the borrowings raised by the Company are collateralised by trade receivables in the amount of EUR 10,000,000. 10. B. Short-term receivables for excess payment of corporate income tax

In the 2013 tax return the Company reported tax loss in the amount of EUR 15,778,039. As at 31 December 2013, total unsettled tax loss amounts to EUR 23,467,051, and includes accumulated tax losses brought forward from previous periods and the net loss of the financial year. In 2012, the Company reported no tax base and thus in 2013 it did not make any prepayments of corporate income tax. 11. Short-term available-for-sale financial assets

As at the last day of 2013, short-term available-for-sale financial assets amount to EUR 26,305,484, which is a reduction of EUR 11,603,557 compared to the previous year.

(in EUR) 2013 2012

At 1 January 5,013,555 4,782,053

Written-off receivables recovered (241,185) (104,183)Final write-off of receivables (179,762) (80,931)Allowances made during the year 43,992 -Increase in allowances for disputed 189,567 411,677Interest transfer to disputed 4,302 4,939

At 31 December 4,830,469 5,013,555

(in EUR) 2013 2012

Short-term available-for-sale financial assets - at fair value 26,305,484 37,909,041

Total 26,305,484 37,909,041



Movement of short-term financial assets available-for-sale

Total impairment loss of EUR 11,603,557 relates to impairment of the investment in Mercator in the amount of EUR 10,159,936, impairment of Probanka shares amounting to EUR 767,001, and impairment of Elektro Gorenjska shares of total EUR 676,620. 1 Investment in Poslovni sistem Mercator, Ljubljana

At 31 December the Company holds 317,498 MELR shares (8.43%) which considering the market value of EUR 82 per one MELR share as at 31 December 2013 amounts to EUR 26,034,836. The fair value of the investment as at 31 December 2013 is by EUR 24,943,002 lower than the investment's original value of EUR 50,977,838 or EUR 160.56 per share. The management has assessed that due to unsuccessful sale of MELR shares, a drop in the quoted price represents a permanent impairment and has decided to recognise it as a financial expense.

Procedures in the sale of a 23.43% stake in PS Mercator, Ljubljana

In line with the strategy adopted in 2012 the companies in the Laško Group continued to pursue activities aimed at a sale of the Group's 23.34% stake in Mercator. Consequently, at the end of October 2012 a new Contract for the joint sale of shares of Poslovni sistem Mercator was agreed between the companies of the Laško Group and other entities interested in the sale of Poslovni Mercator shares (hereinafter: sellers). The agreement was signed by the sellers who are together the majority owner of shares in Mercator. In January 2013, a teaser was issued on the basis of which procedures for direct sale of shares began. The non-binding proposals arrived in February. On a proposal from the financial consultant in the sales process the consortium invited 4 bidders to continue the process. The selected bidders were invited to conduct a due diligence of the company and submit binding offers by the deadline set for May 2013. Following completion of due diligence of Mercator, binding proposals were issued by two potential investors. While a financial investor proposed only capital increase of Mercator, Agrokor offered to pay EUR 106 per one MELR share.

A contract for sale and acquisition of a joint 53% stake in Mercator was signed on 14 June 2013 between the consortium of sellers and the buyer Agrokor who paid EUR 120 per one MELR share. The signing of the sale agreement is a result of an extensive procedure led by the London team of international investment bank ING Bank N.V. The process was performed in compliance with international good practice with the aim of involving all potential investors. Transparency of the process as well as maximising benefits for all Mercator's stakeholders were ensured. The buyer provided bank

(in EUR) 2013 2012

At 1 January 37,909,041 50,026,401

Changes during the year:Impairment (11,603,557) (12,058,462)Disposal (Etol) - (58,898)

At 31 December 26,305,484 37,909,041



guarantees to the amount of 7.5% of total consideration. The Escrow Agreement for release of collateral was signed on 29 July 2013 by the creditor banks, lienors of the Mercator shares. Bilateral agreement signed on 20 July 2013 specify maturity date of the majority of borrowings on 30 April 2014 as well as milestones set for the implementation of the restructuring project. The transactions is expected to be completed by no later than the end of March 2014.

On 30 December 2013 the buyer informed the sellers that he had successfully obtained consent of the regulator in Serbia and that he was waiving the competition condition of obtaining regulators' consents in Croatia and Bosnia and Herzegovina, since at the time their consents had not been issued.

Thus the suspensive conditions other than the condition of rescheduling Mercator's debts had been fulfilled.

The restructuring of the Mercator debt condition should in accordance with SPA be fulfilled by no later than 31 January 2014. If the condition is not met and the buyer does not waive the said condition or there is no other agreement between the parties, the SPA is terminated automatically and the transaction will not take place. Since by 31 January 2014 the condition was not fulfilled, the buyer on the eve of 31 January 2014 issued a statement to the consortium of sellers extending the joint debt restructuring condition and thus the validity of SPA until 4 February 2014. On 3 February 2014 the buyer issued another statement regarding a change in joint debt restructuring condition and extended the deadline and thus validity of the SAP until 28 February 2014. The statement was valid if confirmed by the consortium of sellers by 2 p.m. on 5 February 2014. The consortium of sellers approved the statement within the set deadline.

Since October 2013, negotiations had been ongoing between the buyer and major creditors of Mercator (CoCom banks) regarding joint debt restructuring and conditions for the change in the ownership of Mercator, that would be acceptable to the CoCom banks.

The CoCom banks asked the buyer to secure EUR 250 million of additional funds to Mercator; of that EUR 200 million to be allocated for repayment of creditors and EUR 50 million for working capital. To secure the funding of Mercator as required by the CoCom banks and the time needed to sign the documentation for joint debt restructuring, the buyer proposed a reduction in the price and extension of the long stop date (LST).

As a result of negotiations between the buyer, sellers and creditor banks, Agrokor proposed an Annex to the Sale contract of 14 June 2013, amending some of the core elements of the original contract, namely: the bid price for one MELR share is fixed at EUR 86; transaction completion date is set as 30 June 2014 under condition that Mercator and its creditors bank reach an agreement on long-term joint debt restructuring by 31 May 2014, taking into account the fact that the buyer will assume part ownership of Mercator.

Members of the management boards of the consortium signed an appendix to the sale contract for the price of EUR 86 per MELR share inclusive of a suspensive condition



relating to consent to be obtained from the relevant supervisory boards and the annual General Meeting of shareholders of Pivovarna Union. Another suspensive condition is also signing of a new Escrow Agreement.

2. Other financial investments available for sale

Investment in the shares of Elektro Gorenjska totalling EUR 270,648 (1.6%) are also included in the available-for-sale financial assets. Pursuant to the Bank of Slovenia decision of 17 December 2013 on extraordinary measures for termination of all qualified liabilities of Probanka in order to cover the bank's losses, in December the Company deleted its ownership of Probanka shares and at the same time derecognised its investment in Probanka from the books of accounts of Pivovarna Laško.

12. Short-term loans issued

On the last day of 2013, majority of short-term loans issued amounting to EUR 1,888,641 represents deposits at banks. In 2013 the Company issued a loan of total EUR 205,445 to subsidiary Jadranska pivovara - Split to help solve liquidity issues stemming from severance payments to redundant workforce. The total amount of the short-term loan was impaired and financial expense was recognised since it is highly likely that the loan will not be repaid. On account of impairment of total amount of two other loans issued in the past, in 2013 the Company converted the whole amount of loans issued into share premium of Jadranska pivovara in total amount of EUR 9,062,000. In 2013 the Company received EUR 40,317 on account of repayment of a loan from the bankruptcy estate of Infond Holding, and EUR 330,901 from the bankruptcy estate of Center naložbe.

Short-term loans issued to others decreased in 2013 by EUR 60,000, and bank deposits by EUR 1,214,098. Movements in short-term loans and deposits issued

(in EUR) 2013 2012

Short-term deposits 1,770,902 2,985,000Short-term loans 7,564,745 16,889,015Less impairments (7,447,006) (16,711,277)

At 31 December 1,888,641 3,162,738

Opening Closing balance Impairment New Reversal balance

1 January original loans Repayments past 31 Dec(in EUR) 2013 balance in 2013 Impairment in 2013 impairment 2013

Short-term deposits 2,985,000 - - - (1,214,098) - 1,770,902Short-term loans 16,889,015 (9,062,000) 205,445 - (467,715) - 7,564,745Impairment of short-term loans (16,711,276) 9,062,000 - (205,445) - 407,715 (7,447,006)

Total 3,162,739 - 205,445 (205,445) (1,681,813) 407,715 1,888,641



On average, the interest rate for short-term loans in 2013 equalled 4.79%. The disclosed value of short-term loans reflects their fair value. 13. Cash and cash equivalents

14. Short-term accruals and prepaid expenditure

As at 31 December 2013 the Company reports EUR 33,717 of short-term accruals and prepaid expenditure. 15. Equity

The capital of Pivovarna Laško consists of called-up capital, share premium, profit reserves, retained earnings or accumulated loss, surpluses from the revaluation of financial investments classified as held for sale and also not yet distributed profit for the financial year or the outstanding loss for the financial year.

Share capital is shown as shareholders’ equity (capital from stakes or capital contribution). Share capital is divided into called-up share capital and uncalled share capital. Uncalled share capital is deductible from share capital.

Called-up capital of Pivovarna Laško is defined in the Articles of Association and equals EUR 36,503,304.96. It is divided into 8,747,652 ordinary transferable nominal no-par-value shares. Each share gives its owner a voting right at the annual General Meeting of Shareholders and participation in profits. The nominal value of called-up capital amounted to EUR 36,503,304.96.

In 2013 share premium was reduced by EUR 27,326,561 to cover losses and as a result of property impairment to lower fair value. As at 31 December 2013 share premium in the amount of EUR 24,760,570 was derived from capital injections made in the past periods.

Reserves comprise legal reserves amounting to EUR 3,650,331 and reserves for treasury shares equalling EUR 79,763.

(in EUR) 2013 2012

Cash at bank 255,519 192,036Cash in hand and cheques 41,967 21,792Cash in transit 59,732 81,636

Total 357,218 295,464

(in EUR) 2013 2012

Deferred cost and accrued income 33,717 -

Total 33,717 -



In 2013, reserves for treasury shares decreased due to the revaluation to a lower quoted price totalling EUR 59,275.

As at 31 December 2013 Pivovarna Laško holds no treasury shares; however, its subsidiary Radenska holds 17,760 share lots and Pivovarna Union 2,131 share lots. As at 31 December 2013, treasury shares were restated to the quoted price amounting to EUR 4.01. The controlling entity Pivovarna Laško has created treasury shares reserves for the total amount of treasury shares held by the Group.

Statutory reserves can exclusively be used for covering loss.

The revaluation surplus was recognised on account of property revaluation and actuarial gains. On the last day of the year the Company revalued its property to lower fair value in the amount of EUR 741,111 based on the valuations made by the certified appraiser of property. Revaluation surplus increased on account of the deferred tax impact from revaluation of property amounting to EUR 71,881 and actuarial gains in the amount of EUR 1,622, and decreased by EUR 233,305 of depreciation on account of revaluations made in the past. As at 31 December 2013, the revaluation surplus amounts to EUR 3,084,241.

According to provisions of IFRS; as at 31 December 2013 the carrying amount of one share equals EUR 7.78. The market value of one share at the end of 2013 amounted to EUR 4.01, and is 48.5% lower than its carrying amount. 16. Provisions and long-term accrued costs and deferred income

As at 31 December 2013 provisions discounted to their present value of expected termination benefits and jubilee awards for long years of service amount to EUR 1,333,160, provisions for the disabled employees above the quota amount to EUR 48,927, whereas other provisions total EUR 5,253,988.

As at 31 December 2013 Pivovarna Laško reports additional provisions set aside for water concession fee payable for the period 2005 to 2013 amounting to EUR 4,209,805 and provisions for contingencies to Radenska on account of a settlement claim for losses incurred over the period of contractual concern pursuant to Article 542 of the Companies Act. Current amount of the contingency (EUR 1,044,183) is based on the management's best estimate of cash outflows required to settle the obligation, however the amount may subsequently change since it has not been audited.

When calculating potential liabilities with regard to the retirement benefits the provisions of the Decree on the levels of reimbursed work-related expenses and of certain income not to be included in the tax base are taken into consideration. If the

(in EUR) 2013 2012

Other provisions 5,253,988 -Provisions for retirement grants and jubilee awards 1,333,160 1,259,169Provisions for the disabled above the quota 48,927 90,290

Total 6,636,075 1,349,459



amount of the retirement benefit exceeds the amount from the Decree on the levels of reimbursed work-related expenses and of certain income not to be included in the tax base, the employer needs to pay the 16.1% contributions on the excess amount.

Overview of additional assumptions:

Growth of average wages in the Republic of Slovenia is assumed to be 0.5% annually in 2014, 1% in 2015 and 3.0% in further years, which represents the estimated long-term growth of wages;

The calculation takes into consideration the growth of amounts of the retirement benefits and jubilee awards in the Decree on the levels of reimbursed work-related expenses and of certain income not to be included in the tax base as assumed in the previous indent for the growth of the average wage in the Republic of Slovenia (it is an assumption that the bases will be changing in accordance with the growth of the average wage in the Republic of Slovenia since we are not aware of the actual intention of the legislator concerning the amounts in the Decree on the levels of reimbursed work-related expenses and of certain income not to be included in the tax base);

The calculation of liabilities from severance payments is tied to the years of pensionable service of each individual employee.

Assumption regarding staff turnover and the relevant obligations of the Company:

employee turnover depending in particular upon the employees' age;

employees' death rate was considered using mortality tables of Slovenian population in 2007;

allocation of workers as permanently redundant workforce results in other liabilities of the Company and therefore it is assumed that the present value of the employer's liabilities relating to classification of an employee as a redundant worker equals the present value of the liabilities for severance payments;

cases where the reason is regular retirement are accounted for in the calculation by considering the accumulated and future years of service, taking into account the conditions for old-age pension;

it is assumed that the employees will utilise their right to the old-age pension and therefore, the obligation to pay jubilee awards to an employee subsequently according to the projection, will not arise.

The selected discounted interest rate is 4.10% annually, which equals the return on 10-year corporate bonds with high credit rating in the Eurozone at the end of November 2013 increased by add-on concerning the local risk.



Movements in provisions

In 2013, additional provisions were set aside for the payment of water concession fee for the period 2005-2013 in the amount of EUR 4,209,805, and provisions amounting to EUR 1,044,184 on account of the settlement claim of Radenska, for the settlement of losses that arose during the validity of the contractual group in accordance with Article 542 of the Companies Act. Compared to 2012,provisions increased for additional amount of provisions set aside for termination benefits and jubilee awards amounting to EUR 104,084, as a consequence of changes in the employee structure and changed retirement conditions, whereas they decreased by EUR 30,093 on account of actual retirements and payment of jubilee awards.

Provisions for the disabled above the quota decreased in 2013 by EUR 103,816 due to the utilisation of the exempt contribution for the disabled above the quota, and increased on account of new provisions for disability and retirement insurance of the disabled in the amount of EUR 62,453. 17. Long-term financial liabilities

Long-term financial liabilities relate to the long-term borrowings from banks and finance lease liabilities.

On average, the interest rate for long-term borrowings in 2013 amounted to 4.72%. The disclosed value of long-term financial liabilities reflects their fair value.

Termination Disabledbenefits Jubilee above

(in EUR) on retirement awards the quota Other Total

At 1 January 2013 730,923 528,246 90,290 - 1,349,459-

Increase - formation 61,009 43,075 62,453 5,253,988 5,420,525Decrease - utilisation (7,246) (22,847) (103,816) - (133,909)

At 31 December 2013 784,686 548,474 48,927 5,253,988 6,636,075

(in EUR) 2013 2012

Long-term bank borrowings 3,007,500 3,447,498Long-term borrowings from other companies 30,090 27,172Total 3,037,590 3,474,670

Transfer to short-term financial liabilities (660,000) (660,000)

Total 2,377,590 2,814,670



Maturity of long-term borrowings from banks

Movements in the long-term borrowings from the banks and other companies

Long-term borrowings are fully collateralised by securities, mortgages and pledged property (detailed notes under Short-term financial liabilities). 18. Short-term liabilities

18. A. Short-term operating liabilities

Compared to the previous year, short-term operating liabilities increased by EUR 3,261,098. Major share of trade liabilities represent supplier payables in the amount of EUR 18,117,305; compared to the previous year they increased by EUR 2,838,245. Liabilities to the Group companies amounting to EUR 10,288,710 account for 56.7% of total supplier payables. In 2013, payables to the companies in the Group increased by EUR 1,955,933, whereas other supplier payables rose by EUR 882,312. Majority of liabilities to the Group companies amounting to EUR 7,489,997 have matured and account for 41.34% of all short-term operating liabilities.

(in EUR) 2013 2012

Maturity from 2 to 4 years - 2,127,498Maturity from 1 to 2 years 2,347,500 660,000Short-term amounts of long-term financial liabilities 660,000 660,000

Total 3,007,500 3,447,498

New Amounts Principal amount loans Repayments Balance maturing

(in EUR) at 1 Jan 2013 2013 2013 at 31 Dec 2013 in 2014

Total banks 3,447,498 - 439,995 3,007,503 660,000Long-term borrowings from other companies

27,172 14,462 11,544 30,090 -

Total 3,474,670 14,462 451,539 3,037,593 660,000

(in EUR) 2013 2012

Short-term liabilities to suppliers within the Group 10,288,710 8,332,777Short-term liabilities to other suppliers 7,828,595 6,946,283Short-term operating liabilities to others: to employees 603,544 613,052 to the state 3,996,088 3,311,752Short-term liabilities from advances 126,114 122,485Other short-term liabilities 1,258,280 1,513,884

Total 24,101,331 20,840,233



Compared to the last day of the previous year payables to the state increased by EUR 684,336, primarily on account of excise duty payable. 18. B. Short-term corporate income tax payable

As at the last day of 2013 and 2012, the Company reported no corporate income tax liabilities. In 2013 the Company reported surplus of tax expense over tax revenue in the amount of EUR 15,241,967. In 2013, tax loss amounting to EUR 15,778,039 was reported in the tax return. The value of the unsettled tax losses on the last day of 2013 amounted to EUR 23,467,051. 18. C. Short-term financial liabilities

As at 31 December short-term financial liabilities amount to EUR 255,138,016. Short-term borrowings from banks amount to EUR 210.908.939, whereas EUR 42,413,255 of borrowings was raised from companies in the Group. Movements in short-term borrowings from the banks and other lenders

As at the last day of 2013, short-term financial liabilities amount to EUR 255,138,016, which is a reduction of EUR 3,991,314 compared to the previous year. Short-term borrowings from banks decreased by EUR 2,524,279 on account of repaid amounts. Short-term borrowings from the group companies decreased by EUR 37,723 on account of the profit paid by the subsidiary Firma DEL.

In 2013 the average interest rate on short-term borrowings from banks was 4.97%, whereas the average interest rate on borrowings raised from group companies was 5.26%. The disclosed value of short-term financial liabilities reflects their fair value.

The Company pledged 539,516 shares (80.83%) of the Delo publishers, 4,745,107 shares (93.74%) of Radenska, 440,295 shares (97.60%) of Pivovarna Union, 317,498 shares (8.43%) of Poslovni sistem Mercator, 645,003 shares (20.63%) of Thermana, and

(in EUR) 2013 2012

Short-term amounts of long-term financial liabilities 660,000 660,000Interest payable on borrowings 1,958,231 1,807,753Short-term borrowings from the Group 42,413,255 42,450,977Short-term bank borrowings 210,908,939 213,433,218Other short-term financial liabilities (802,409) 777,382

Total 255,138,016 259,129,330

Principal amount Repayments Balance (in EUR) at 1 Jan 2013 2013 at 31 Dec 2013

Total banks 214,093,218 2,524,279 211,568,939Total other lenders 42,450,978 37,723 42,413,255

Total short-term borrowings 256,544,196 2,562,002 253,982,194



270,648 shares (1.6 %) of Elektro Gorenjska. The carrying amount of pledged shares as at 31 December 2013 amounts to EUR 246,907,229. A portion of the short-term borrowings are additionally insured with a mortgage and a lien on movable assets and investment property. The carrying amount of pledged immovable and movable property and investment property as at 31 December 2013 amounts to EUR 31,575,667. Short-term borrowings are additionally collateralised with receivables whose value at 31 December 2013 amounted to EUR 10,000,000 and by pledges of brands amounting to EUR 50,000,000. As at 31 December 2013, the total value of outstanding short-term borrowings from banks collateralised with shares, mortgage, pledges of movable property, investment property and receivables, equals EUR 213,916,437. Short-term borrowings in the amount of EUR 42,631,859 that the Company obtained from its subsidiaries are secured by bills of exchange.

A Debt Restructuring and Standstill Agreement was signed with the banks on 30 April 2014. Detailed information is included in Section 5.4.12 SUBSEQUENT EVENTS. 19. Short-term accruals and deferred income

Short-term accruals include costs of holiday entitlement not utilised in the amount of EUR 376,167 and accrued expenses amounting to EUR 288,667, while deferred income amounting to EUR 64,866 relates to other deferred revenue.

Accruals and deferred revenue were decreased on account of liquidation of guarantees for borrowings of Jadranska pivovara - Split amounting to EUR 510,643. Due to its poor financial position, Jadranska pivovara was unable to settle the outstanding loan instalments therefore Pivovarna Laško settled them on the basis of the guarantees signed in 2005, 2007 and 2008. (RARG, JP).

The value of guarantees issued for borrowings raised by Jadranska pivovara Split, amounted to EUR 5,110,524 at the end of 2009; financial expense was recognised in 2009 for the entire value of these guarantees. The obligation was settled in full in 2013.

In the financial year under review, the Company reported accrued costs of guarantees issued to Nova Kreditna banka Maribor relating to the financial year 2009 when the previous Management Board of Pivovarna Laško pledged 345,304 shares of Radenska for borrowings in the amount of EUR 6,250,000 which had been raised with the Nova kreditna banka Maribor by its controlling company at that time, Center naložbe. Since Center naložbe failed to repay the borrowings upon maturity, the creditor Nova kreditna banka Maribor based on the contract on the lien of securities, filed an application for the enforcement. The Company filed an appeal against the enforcement decision. The Maribor District Court ruled for the benefit of the plaintiff. The decision became final on 8 December 2011. The creditor NKBM submitted an application for enforcement at the District Court in Celje on 22 December 2011 based on enforceable title (Article 17 of the

(in EUR) 2013 2012

Short-term accrued costs and deferred income 729,700 4,751,862

Total 729,700 4,751,862



Enforcement and Securing of Civil Claims Act), on the basis of which the Court issued an Order of Execution that same day. On the basis of the final judgement in the dispute between Nova Kreditna banka Maribor as the plaintiff and lienor, and Pivovarna Laško as the defendant and lienee, in 2011 the investment in Radenska was impaired by EUR 3,637,650. Even though the enforcement proceedings had not yet been implemented by the date of the confirmation of the Annual Report, the Company derecognised assets available for sale and accrued costs of total EUR 3,637,650 as at 31 December 2013. 20. Operating revenues and expense

20. A. Analysis of sales revenues by market

20. B. Analysis of sales revenues by types of products

Compared to the previous year, net sales revenues increased by 1.35%. On the domestic market, revenue from the sale of services declined by EUR 164,121, whereas on foreign markets the sales revenue increased by EUR 1,981,018.

The biggest share of revenues on foreign markets is generated on the markets of former Yugoslavia in particular in Croatia, whereas the share of sales on the EU markets has remained unchanged compared to 2012.

The sales of beer increased by 2.29%, whereas the sales of other beverages dropped by 12.0%. The net turnover relating to the sale of merchandise remained at the same level as in the previous year.

(in EUR) 2013 2012

Revenue from the sale of products and services in Slovenia 56,733,294 56,897,415Revenue from the sale of products and services on foreign markets 15,319,217 13,338,199Revenues from the sale of material and merchandise in Slovenia 17,942,307 18,641,738Revenues from the sale of material and merchandise on foreign markets 166,285 83,594

Total 90,161,103 88,960,946

(in EUR) 2013 2012

Revenue from sale of beer 68,112,628 66,586,303Revenue from sale of other beverages 2,536,125 2,882,966Revenue from sale of other products 19,512,350 19,491,677

Total 90,161,103 88,960,946



20. C. B. Other operating revenues (including revaluation operating revenues)

20. D. Operating costs and expenses

Compared to the previous year, operating expenses increased by EUR 7,692,732 or 9.5%. The cost of the merchandise sold decreased by 2.2% but costs of raw materials and materials increased by 5.2%. Costs of services also increased, namely by 3.5%. The costs of services incurred in 2013 are not inclusive of costs of consultants regarding financial debt restructuring (legal and financial consultations) amounting to EUR 802,409. The reason for this is the fact that these costs are tied to the total amount of borrowings to be repaid in accordance with debt rescheduling. In 2013, the costs incurred are recognised as a reduction in financial liabilities measured at amortised cost. Subsequently they will be recognised in profit or loss in line with the repayments of the total amount of relevant borrowings in 2014 and 2015. The revaluation operating expenses increased as a result of valuation assessment of property and investment property in 2013. Due to restrictive investment policy in recent years, the depreciation expense decreased in 2013 compared to the previous year. Employee benefit costs are lower than in the previous year due to reassignment of the Members of the Management Board as from 1 March 2013 to part-time employment in Pivovarna Union, reduced wages of newly employed workforce, and reduction in the number of termination benefits paid compared to 2012. Costs of provisions increased due to the settlement claim of Radenska for the duration of the contractual group in accordance with Article 542 of the Companies Act. A significant increase in other operating expenses is due

(in EUR) 2013 2012

Revenue from reversal of provisions 81,941 76,970Other operating revenue 436,166 727,779Revaluation operating revenue from current assets 286,008 154,992Revaluation operating revenue from non-current assets 20,994 19,832

Total 825,109 979,573

(in EUR) 2013 2012

Costs of merchandise sold (Horeca) 18,034,975 18,441,351Costs of materials, raw materials and merchandise 26,244,579 24,950,863Costs of services 19,229,235 18,580,633Amortisation and depreciation 4,760,999 4,943,657Revaluation operating expense from current assets 1,311,959 209,782Revaluation operating expense from non-current assets 312,825 456,989Employee benefit costs 7,683,346 8,030,817Social security contributions on salaries 1,645,252 1,629,176Other labour costs 1,125,052 1,355,771Costs of provisions 1,044,184 262,006Other operating expenses 7,007,901 1,846,530

Total 88,400,307 80,707,575



primarily to the water concession fee for the past years amounting to EUR 4.2 million, and impairment losses from investment property. 20. E. Costs by functional groups

Production costs increased by EUR 1,361,709 in 2013, general and administrative expenses rose by 7,033,609, whereas selling expenses decreased by EUR 702,586.

Production Costs of Costs 2013 products and Costs general

(in EUR) merchandise sold selling activity Total

Costs of merchandise sold (Horeca) - 18,034,975 - 18,034,975Costs of materials, raw materials and merchandise 25,370,205 567,533 306,841 26,244,579Costs of services 2,007,198 12,778,704 4,443,333 19,229,235Amortisation and depreciation 3,417,612 508,854 834,533 4,760,999Revaluation operating expense from current assets 240,139 187,626 884,194 1,311,959Revaluation operating expense from non-current assets 2,285 235,575 74,965 312,825

Employee benefit costs 4,861,720 2,887,001 2,704,929 10,453,650Costs of provisions - - 1,044,184 1,044,184Other operating expenses 255,979 123,715 6,628,207 7,007,901

Total 36,155,138 35,323,983 16,921,186 88,400,307

Production Costs of Costs 2012 products and Costs general

(in EUR) merchandise sold selling activity Total

Costs of merchandise sold (Horeca) - 18,441,351 - 18,441,351Costs of materials, raw materials and merchandise 24,104,299 515,365 331,199 24,950,863Costs of services 2,070,565 12,431,813 4,078,255 18,580,633Amortisation and depreciation 3,590,392 546,819 806,446 4,943,657Revaluation operating expense from current assets 4,858 4,037 200,887 209,782Revaluation operating expense from non-current assets - 416,616 40,373 456,989

Employee benefit costs 4,707,144 2,996,232 3,312,388 11,015,764Costs of provisions 120,724 61,563 79,719 262,006Other operating expenses 221,843 383,454 1,241,233 1,846,530

Total 34,819,825 35,797,250 10,090,500 80,707,575



20. F. Other operating expenses

21. Financial income and expense

Financial expenses exceed financial revenues by EUR 37,018,721. Financial expenses for interest from bank borrowings amounted to EUR 13,035,938, while financial expenses from impairment of investments amounted to EUR 25,008,709. Financial expenses for borrowings raised from banks amount to EUR 10,779,966, whereas EUR 2,255,971 of financial expenses were incurred on borrowings raised from companies in the Group.

Financial expenses include impairment losses from investment in subsidiary Pivovarna Union amounting to EUR 7,210,857; in subsidiary Delo in the amount of EUR 5.988.850; into shares of the Poslovni sistem Mercator amounting to EUR 10,159,936 (based on their revaluation to the fair quoted price); in the Probanka shares amounting to EUR 767,001 following their revaluation to EUR nil pursuant to the Bank of Slovenia measures on orderly wind down of Probanka; and in the Elektro Gorenjska shares in the amount of EUR 676,620.

(in EUR) 2013 2012

Taxes and other levies 6,177 2,733Water fee and environmental charges 230,972 212,948Student grants and awards to students on work-experience placement 17,335 3,812Land charge 139,310 144,089Membership fees 49,982 27,886Other costs (donations, enforcement) 303,447 403,086Default interest paid 380,943 343,508Impairment loss on investment property 1,340,143 312,284Other operating expenses 4,539,592 396,184

Total 7,007,901 1,846,530

(in EUR) 2013 2012

FINANCIAL INCOME less foreign exchange differences 1,083,272 9,535,152Financial income from shares in the profits 359,688 9,377,953Financial income from loans issued 29,923 31,617Financial income from operating receivables 225,781 125,582Financial income from reversal of investment impairment in a subsidiary 467,880 -

FINANCIAL EXPENSE less foreign exchange differences (37,896,548) (34,008,618)Financial expense for investment impairment and write-offs (24,803,264) (19,505,485)Financial expense from financial liabilities (13,035,938) (14,503,133)Financial expense from operating liabilities (57,346) -

FOREIGN EXCHANGE RATE DIFFERENCES on financing (1,698) (781)Foreign exchange losses (1,740) (936)Foreign exchange gains 42 155

Net financial expenses (36,814,974) (24,474,247)



21. A. Discontinued operation

In compliance with IFRS 5, following discontinuation of operations of Jadranska pivovara - Split, in the separate financial statements of the controlling company, all the transactions with the subsidiary are reported as the costs of discontinued operations. 22. Tax on continued operations


The Company reports deferred tax from continued operations amounting to EUR 5,208,846, which is the deferred tax reported in the profit or loss for the financial year 2013, less deferred tax from discontinued operations. 22. A. Tax on discontinued operations

In compliance with IFRS 5, following discontinuation of operations of Jadranska pivovara - Split, in the separate financial statements of the controlling company, all the transactions with the subsidiary are reported as the costs of discontinued operations, inclusive of deferred tax relating to the subsidiary.

(in EUR) 2013 2012

Financial expense for investment impairment and write-offs (205,445) (1,063,000)

Total (205,445) (1,063,000)


Deferred tax from continued operations 5,208,846 1,258,347

Total 5,208,846 1,258,347

(in EUR) 2013 2012

Deferred tax from discontinued operations 905,442 (1,968,980)

Total 905,442 (1,968,980)



22. B. Tax from continued and discontinued operations


The Company reports no taxable profit in 2013 as it reports unsettled tax losses brought forward from previous periods; therefore the Company has no current tax liabilities. Detailed explanation of the deferred tax amounts is provided in Note 7 Long-term net deferred tax assets. 22. C. Calculation of corporate income tax

In 2013, tax loss amounting to EUR 15,778,039 was incurred. Due to this loss, tax relief that could be brought forward to the next year was not established. On the last day of 2013, the Company reports unsettled tax loss amounting to EUR 23,467,051, of which deferred tax assets in the amount of EUR 3,989,439 were recognised using the tax rate of 17%. The loss will be utilised in future periods against taxable profits.

The tax authorities may, at any time within a period of five years after the end of the year for which a tax assessment was due, carry out an inspection of the company's operations, which may lead to assessment of additional tax liabilities, default interest and penalties regarding corporate income tax or other taxes and levies. The management of the company is not aware of any circumstances that could result in a significant tax liability.


Deferred tax 6,114,288 (710,633)

Total 6,114,288 (710,633)

(in EUR) 2013 2012

Profit or loss before tax (34,026,973) (16,846,756)

Tax at applicable tax rate: Revenue adjustment to tax-recognised level (566,987) (8,967,536)Expense not recognised for tax purposes 19,351,993 21,325,148Tax basis I (15,241,967) (4,489,144)

Change in the tax basis (536,072) 1,303,871Tax basis II (15,778,039) (3,185,273)

Tax relief - -Tax basis III (15,778,039) (3,185,273)

Tax loss (15,778,039) (3,185,273)

Tax payable - -



23. Exchange rate differences

Exchange rate differences from operations and financing considered in the profit or loss are as follows:

24. Loss per share

*The values of certain items presented in these financial statements differ from those reported in the Annual Report 2012. The adjustments of the historical financial statements are disclosed separately in Section 5.4.5 ADJUSTMENT OF HISTORICAL FINANCIAL STATEMENTS. Net loss per share is calculated by dividing net revenue which belongs to the shareholders by the weighted average number of shares on the market during the year, with the exception of the average number of treasury shares. 25. Changes in other comprehensive income

26. Dividends per share

The Company paid no dividends in 2013.

(in EUR) 2013 2012

Foreign exchange differences from financing (1,698) (781)

Total (1,698) (781)


Total loss (27,912,685) (17,557,389)Number of ordinary shares issued 8,747,652 8,747,652Number of treasury shares - 454Weighted number of ordinary shares issued 8,747,652 8,747,198

Net loss per share (3.19) (2.01)Diluted net loss per share (3.19) (2.01)

(in EUR) 2013 2012

Financial assets available for sale - (3,345)Gains/losses from revaluation of property (741,111) 201,543Deferred tax on account of revaluation 71,881 366,796Other 1,622 -

Other comprehensive income (667,608) 564,994



5.4.7 FINANCIAL INSTRUMENTS AND RISKS

27. Financial risk

27. A. Credit risk

The carrying amount of financial assets represents exposure to credit risk.

Credit risk exposure

Investments disclosed in the table comprise only financial lease receivables.

Credit risks include all those risks resulting in the decline of the company’s economic benefits due to insolvency of the company’s business partners, namely the buyers, and failure to meet their contractual obligations. To this end, the receivables from our business partners, the wholesalers and retailers, are regularly monitored. In addition, we actively manage receivables, rapidly implement collection procedures by reminding them, collecting receivables via telephone or in the field, as well as debt recovery through an external agent as well as through the courts. The receivables from export buyers are secured with bank guarantees and partly via the SID insurance company, and we only operate under the system of advance payments with some customers. Also on the domestic market the receivables from final users are partly secured with bank guarantees, mortgage on immovable property and bills of exchange. Business with less credit-worthy customers is made on the basis of advance payments and immediate payments so that the risk of non-payment for the purchased goods is avoided to some extent.

Receivables due from our major wholesalers on the local market are only partly collateralised and subsequently, there is a large credit risk exposure to this particular segment. Over the entire 2013 financial year the payment discipline of our major buyers worsened, which caused constant and daily liquidity problems. Our greatest customers are especially prone to payment delays, generating additional liquidity difficulties for our companies. It is believed that there is a considerable risk of spreading late-payment culture also in 2014, which is the result of the financial crisis in all the segments of the economy. The management believes that the credit risk is increasing due to fierce economic conditions.

(in EUR) 2013 2012

Issued loans 1,889,017 3,163,142Investments 533,230 590,416Receivables less amounts due from the state and advances given 19,817,125 18,801,310 thereof trade receivables 19,708,423 18,747,884Cash and cash equivalents 357,218 295,464

Total 22,596,590 22,850,332



Maturity of accounts receivable (net)

Compared to 2012, accounts receivable increased by 3.2% in 2013. As at 31 December 2013, the majority of receivables had not matured or are due and outstanding up to 30 days. Allowances in the amount of EUR 4,830,469 were recognised for receivables due and outstanding more than 90 days amounting to EUR 6,048,313. Detailed monitoring of receivables that have matured and appropriate response ensure efficient credit risk management.

The Company received guarantees amounting to EUR 0.889 million from the domestic customers, EUR 2.155 million from foreign customers, and mortgages and sureties amounting to EUR 2 million. 27. B. Liquidity risk

With regard to financial risks, monitoring liquidity risk which means the risk of loss due to short-term and long-term insolvency is of particular significance. The Company disclosed a significant excess of short-term liabilities over short-term assets, signifying the existence of a material liquidity risk in particular in the parent company. To avoid problems with the short-term liquidity, the Company manages the liquidity risk, drafts and implements a policy of regular liquidity management including the planning of cash outflows and sufficient inflows.

By securing relevant credit lines for short-term cash flow balancing in the form of revolving credits and agreed overdraft facilities, the Company has so far successfully managed to secure coverage of potential daily liquidity shortcomes. However, in view of deteriorating conditions on financial markets and continuing financial crisis, it will become progressively more difficult to successfully manage the liquidity risk. On 29 July 2013 the Company signed a debt rescheduling agreement with all creditor banks extending maturity of all borrowings until 30 April 2014 at the earliest. Subsequently, A contract for long-term debt restructuring until 31 December 2016 was signed. Currently procedures for securing the disposal of investments are pursued actively as part of the companies' restructuring which is expected to be completed by 2016.

Monitoring of fundamental financing and liquidity ratios pursuant to Article 14 of the Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act, prescribing criteria under which an entity is deemed solvent, is particularly important and necessary to ensure effective liquidity risk management. Regular monitoring of an

(in EUR) 2013 2012

Not past due 13,070,493 13,969,639Up to 30 days 4,497,695 3,718,455From 31 to 60 days past due 607,133 299,262From 61 to 90 days past due 315,258 362,206Maturity more than 90 days 6,048,313 5,411,877

At 31 December 24,538,892 23,761,439



entity's liquidity position is of particular importance as it ensures timely response and helps to avoid unfavourable consequences of an emerging liquidity crisis.

Debt rescheduling and deleveraging of all of the remaining investments that are not crucial for the performance of our core activities continued over the entire 2013 year aimed at achieving a sustainable level of financial debt. Until the debt restructuring process is completed, the controlling company will continue to experience a rather difficult liquidity situation. In view of the aforementioned and difficult situation on financial markets and the entire economic environment, we have assessed the Group's exposure to liquidity risk as very high and requiring special attention.

The results of the Company’s operations are good and positive; however, due to negative financing cash flow being the result of high interest expenses and the impairment of financial investments the Company has been disclosing loss for several successive years. Maturity structure of trade payables

As at 31 December 2013, the Company reports EUR 8,714,257 of supplier payables that have matured and mostly relate to liabilities to Pivovarna Union. Other supplier payables are settled on average with a delay of up to 20 days compared to delays in settlements from our largest customers. Maturity of short-term financial liabilities to banks and contractually agreed interest

(in EUR) 2013 2012

Not past due 9,403,048 9,106,876From 1 to 30 days past due 2,549,241 1,709,888From 31 to 60 days past due 1,362,429 1,329,138From 61 to 90 days past due 2,248,164 2,302,928From 91 to 180 days past due 2,518,489 817,270From 181 to 360 days past due 662 (11)Maturity more than 360 days 35,272 12,971

Total 18,117,305 15,279,060

2014 2014(in EUR) Principal amount Interest Total

January - March 322,529 2,655,304 2,977,833April - June 210,916,410 934,700 211,851,110July - September 165,000 33,602 198,602October - December 165,000 33,602 198,602

Total 211,568,939 3,657,208 215,226,147



Maturity of long-term financial liabilities to banks

A Debt Restructuring and Standstill Agreement was signed with the banks on 30 April 2014. Detailed information is included in Section 5.4.12 SUBSEQUENT EVENTS

27. C. Interest rate risk

Interest rate risk is the risk of a possible change in the reference interest rate on the financial market, mainly due to borrowings linked to a variable interest rate (EURIBOR). In 2013 a decreasing tendency of EURIBOR has continued, which had a positive impact on borrowing costs linked to a variable interest rate (EURIBOR). Towards the end of the year the reference interest rate rose slightly, however this had no major impact on interest rates. Financing under variable interest rate conditions represents two-thirds of all the Group's financing while the other one-third represent borrowings with a fixed interest rate. Interest rate hedging of long-term debt at variable interest rate is doubtlessly sensible however, majority of the Company's borrowings mature within a period of 12 months. The Company has already agreed and signed a contract for long-term financial debt rescheduling until 31 December 2016, and hence we will monitor developments on financial markets and take appropriate action at the right time. The management have assessed the Company's interest rate risk as rather high but manageable.

If the average interest rate increased by 1%, and the indebtedness remained at the same level, expenses would increase by EUR 2,618,383 and in the case of 1.5% increase in the average interest rate, expenses would increase by EUR 3,927,574.

If the interest rate dropped by 1 or 1.5%, financial expense would decrease by EUR 2,618,383 or EUR 3,927,574 respectively.

Loans and deposits are issued at fixed rates of interest, and their amount is insignificant.

(in EUR) 2013 2012

Maturity from 2 to 4 years - 2,127,500Maturity from 1 to 2 years 2,347,500 660,000

Total 2,347,500 2,787,500

Averageinterest Difference

(in EUR) Interest rate in % Interest

Actual financial expense for interest paid 13,013,363 4.97 -Expenses resulting from 1% increase in interest rates 15,631,746 5.97 2,618,383Expenses resulting from 1% decrease in interest rates 10,394,980 3.97 (2,618,383)Expenses resulting from 1.5% increase in interest rates 16,940,937 6.47 3,927,574Expenses resulting from 1.5% decrease in interest rates 9,085,789 3.47 (3,927,574)



27. D. Price risk

The Company is exposed to price risks on the downstream side and on the upstream side.

On the downstream side, a risk is the increase of retail prices compared to the declining purchasing power of the population. The retail prices are also affected by the trade margin, the level of excise duty and value added tax. With regard to the situation in the country, there is a potential risk of increasing excise duty on alcohol and alcoholic beverages – beer, and increased rate of value added tax. All these risks can result in increased retail prices. This increase can cause a shift of focus of consumers to cheaper products, the substitutes of our products (e.g.: shift from beer to wine since there is no excise duty on wine and is thus relatively cheaper) or a shift to shopping abroad where these duties are lower. Each drop in sales of the beer on the domestic market by 1% represents the decrease in revenues by EUR 560,000 compared to the revenues in 2013. The Company has no influence on this risk, which is assessed as significant.

Risks on the upstream side due to the exposure to the prices of input materials that depend on the individual harvest of barley, maize and hops are assessed as moderate since the impact is slightly reduced by globalisation. However, global inflation pressures of oil, poor harvests, climate changes, currency fluctuations and similar could gain in importance. The risks are minimised by including all the adequate suppliers into the supply chains within the Laško Group and thus ensure optimal prices and smooth supply. 27. E. Foreign exchange risk

Although the Company operates in an international environment, the currency risk is insignificant since majority of supplier contracts are agreed in the euro and foreign currency fluctuations have no direct impact on prices. The same applies to our products that are invoiced in EUR. 27. F. Capital management

The main purpose of the management of the Company’s equity is to ensure, as far as possible, credit rating and capital adequacy to finance the operations and to maximise the value for the owners.

Calculation of the ratio between net financial liabilities and equity (gearing ratio) at 31 December


Financial liabilities 257,515,606 261,943,999Cash 357,218 295,464Net financial liabilities 257,158,388 261,648,535

Equity 68,078,212 96,364,961Gearing ratio (in %) 377.74 271.52




The ratio between net financial liabilities and equity indicates that Pivovarna Laško is over-indebted. 27. G. The risk of changes in fair value

The risk of changes in fair value of financial investments, property, plant and equipment and investment property is undoubtedly also an important financial risk. In should be highlighted that financial investments are increasingly difficult to sell at desirable prices compared to the purchase price a few years ago when most of them were acquired. The risk can be observed in the segment of financial expenses where financial expenses from the impairment and write-offs are disclosed. In 2013 Pivovarna Laško recognised an impairment loss amounting to EUR 25.0 million on account of investment impairment. Impairments are predominantly the result of a drop in the value of strategically most important investments such as Mercator and Probanka, as well as due to impairments of the companies in the Group and Pivovarna Union amounting to EUR 7.2 million, which is again largely due to the impairment of the investment in Mercator and Delo in the amount of EUR 6 million.

Fair value measurement of assets and liabilities (fair value hierarchy) at 31 December

Difference - Difference - Difference - impact on impact Difference - impact on

Fair value at long-term on revaluation impact on deferred tax

(in EUR) 31 Dec 2013 investments surplus profit or loss liabilities

Market value of MELR at 31 December 2013 26,034,836Price increase by 20% 31,241,803 5,206,967 4,321,783 - 885,184Price decrease by 20% 20,827,869 (5,206,967) - (4,321,783) (885,184)Price increase by 5% 27,336,578 1,301,742 1,080,446 - 221,296Price decrease by 5% 24,733,094 (1,301,742) - (1,080,446) (221,296)

2013 2012(in EUR) Level 1 Level 2 Level 3 TOTAL Level 1 Level 2 Level 3 TOTAL

Assets at fair value 26,034,836 34,863,485 270,648 61,168,969 36,194,772 39,140,517 6,122,858 81,458,147Financial assets available for sale 26,034,836 270,648 26,305,484 36,194,772 - 1,714,269 37,909,041PPE at fair value (property) - 30,547,775 - 30,547,775 - 33,487,579 - 33,487,579Investment property - 4,315,710 - 4,315,710 - 5,652,938 - 5,652,938Non-current assets held for sale - - - - - - 4,408,589 4,408,589

Assets measured at cost including fair value disclosure 357,218 - 21,597,440 21,954,658 295,464 - 21,911,026 22,206,490Loans and deposits issued - - 1,889,017 1,889,017 - - 3,163,142 3,163,142Trade receivables - - 19,708,423 19,708,423 - - 18,747,884 18,747,884Cash 357,218 - - 357,218 295,464 - - 295,464

Liabilities measured at cost including fair value disclosure - - 274,477,089 274,477,089 - - 274,637,925 274,637,925

Borrowings - - 256,359,784 256,359,784 - - 259,358,865 259,358,865Trade payables - - 18,117,305 18,117,305 - - 15,279,060 15,279,060



The Company measures the fair value of assets and liabilities in the statement of financial position according to the following fair value hierarchy:

level 1: assets and liabilities whose fair value is determined based on market inputs (without adjustments) observed on active stock markets,

level 2:assets and liabilities whose fair value is determined based on inputs other than quoted market prices that are observable directly or indirectly,

level 3: assets and liabilities whose fair value is determined based on valuation techniques using unobservable inputs.

5.4.8 RELATED PARTY TRANSACTIONS

28. Related party transactions

28. A. Sales to companies in the Laško Group

28. B. Purchases from companies in the Laško Group

Data is expressed in gross amounts inclusive of value added tax. The purchase by related companies mainly relate to the purchase of commercial goods in Horeca.

(in EUR) 2013 2012

Radenska, d. d. Radenci 2,244,942 2,079,928Vital Mestinje, d. o. o. 28,252 38,332Union Group 12,109,414 12,370,260Delo Group 9,680 -Laško Grupa, d. o. o., Sarajevo 57,166 248,499Laško Grupa, d. o. o., Zagreb 1,282,909 274,000

Total 15,732,363 15,011,019

(in EUR) 2013 2012

Radenska, d. d. Radenci 3,373,087 3,225,305Vital Mestinje, d. o. o. 468,381 583,861Union Group 18,118,601 18,652,101Delo Group 31,137 15,688Jadranska pivovara - Split, d. d. 89,909 114,245Laško Grupa, d. o. o., Sarajevo 227,814 344,658Laško Grupa, d. o. o., Zagreb 992,986 883,936

Total 23,301,915 23,819,794



28. C. Receivables from and payables to the companies in the Laško Group

28. D. Borrowings from the companies of the Laško Group

Liabilities for borrowings decreased in 2013 only on account of the payment of the 2012 distributable profits of subsidiary Firma Del.

As at 31 December 2013, interest payable on borrowings to Radenska amount to EUR 173,581, while EUR 45,022 of interest is payable to Pivovarna Union.

(in EUR) 2013 2012

Operating receivables due from the companies in the Laško GroupRadenska, d. d. Radenci 413,301 376,912Vital Mestinje, d. o. o. 8,469 16,545Union Group 1,607,220 2,016,950Delo Group 5,319 -Jadranska pivovara - Split, d. d. 2,590,857 2,590,857Laško Grupa, d. o. o., Sarajevo 52,933 -Laško Grupa, d. o. o., Zagreb 1,177,633 336,735

Total 5,855,732 5,337,999

Operating liabilities to the companies in the Laško GroupRadenska, d. d. Radenci 318,812 312,500Vital Mestinje, d. o. o. 1,029 -Union Group 9,900,000 7,869,189Delo Group 3,654 -Jadranska pivovara - Split, d. d. 4,550 4,550Laško Grupa, d. o. o., Sarajevo 20,665 33,386Laško Grupa, d. o. o., Zagreb 40,000 -

Total 10,288,710 8,219,625

(in EUR) 2013 2012

Radenska, d. d., Radenci 33,100,000 33,100,000Union Group 9,300,000 9,300,000Firma Del, d. o. o., Laško 13,255 50,977

Total 42,413,255 42,450,977



28. E. Loans issued to the companies of the Laško Group

In 2013, the Company granted short-term loans to the subsidiary Jadranska pivovara – Split totalling EUR 205,445 for severance payments. Impairment loss on these loans was recognised and charged to the current profit or loss. 28. F. Financial income of the companies in the Laško Group

Financial income from group companies decreased in 2013 compared to the previous year by EUR 7,145,905 since dividends were not paid by the subsidiary Pivovarna Union and as a result of a significantly reduced dividend payment by Radenska.

(in EUR) 2013 2012

SubsidiariesJadranska pivovara - Split, d. d. (long-term loans) (8,856,555) 9,062,000Impairment of loans issued to Jadranska pivovara - Split, d.d. 8,856,555 (9,062,000)

Total subsidiaries - -

Other associated companiesInfond Holding, d. d., Maribor - 1,699,613Center naložbe, d. d., Maribor - 5,900,000Impairment of loans issued - (7,599,613)

Total other associated companies - -

Total - -

(in EUR) 2013 2012

SubsidiariesRadenska, d. d., Radenci 340,056 4,822,565Union Group 34,430 2,697,826

Total 374,486 7,520,391

Other associated companiesFirma Del, d. o. o., Laško 37,722 -

Total other associated companies 37,722 -

Total 412,208 7,520,391



28. G. Financial expenses of the companies in the Laško Group

28. H. Interest due from the companies in the Laško Group

28. I. Interest payable to the companies in the Laško Group

28. J. Guarantees given to the associated companies in the Laško Group

(in EUR) 2013 2012

SubsidiariesRadenska, d. d., Radenci 1,709,000 1,928,424Union Group 525,616 525,374Firma Del, d. o. o., Laško - 1,451

Total 2,234,616 2,455,249

(in EUR) 2013 2012

SubsidiariesJadranska pivovara - Split, d. d., impairment of loans and interest 523,048 523,048

Total 523,048 523,048

(in EUR) 2013 2012

SubsidiariesRadenska, d. d., Radenci 173,581 146,962Union Group 45,022 43,324

Total 218,603 190,286

(in EUR) 2013 2012

SubsidiariesJadranska pivovara - Split, d. d. (for bank borrowings) - 510,463Jadranska pivovara - Split, d. d. (paid instalments for guarantees) 2,605,523 2,107,305Jadranska pivovara - Split, d. d. (interest not recorded) 1,051,317 999,482Radenska, d. d., Radenci (for bank loans) 2,300,000 4,100,000Pivovarna Union, d. d., Ljubljana (for bank loans) 1,230,258 1,890,354

Total 7,187,098 9,607,604

Other associated companiesBirra Peja, Sh. a., Peć 871,921 2,000,000

Total other associated companies 871,921 2,000,000

Total 8,059,019 11,607,604



Sureties and the relevant impairment loss relating to Jadranska pivovara - Split were derecognised from the off balance sheet assets in their total amount since in 2013 Pivovarna Laško repaid the total amount of borrowings raised by Jadranska pivovara.

As at 31 December 2013, the Company reports EUR 7,187,098 of guarantees issued to the companies in the Laško Group. Compared to the previous year, they decreased by EUR 2,420,506.

The receivables arising in financial years 2011 and 2012, which do not qualify for recognition as assets (repayments of guarantees issued in the amount of EUR 2,605,523) and interest receivables amounting to EUR 1,051,317, are recognised in the off balance sheet records. 28. K. Provisions for companies in the Laško Group

(in EUR) 2013 2012

SubsidiariesRadenska, d. d., Radenci (regulatory requirement) 1,044,184 -

Total subsidiaries 1,044,184 -



5.4.9 REMUNERATION OF MEMBERS OF THE MANAGEMENT AND SUPERVISORY BOARDS AND THE EMPLOYEES WITH INDIVIDUAL CONTRACT OF EMPLOYMENT

The Company is managed by the Management Board and the Supervisory Board and their remuneration (gross earnings) is presented in the table below:

As at 31 March 2013, the Management Board of Pivovarna Laško was re-assigned to Pivovarna Union on a part-time basis.

Earnings received by the employees on the basis of individual contracts in 2013 are shown in the table below:

(in EUR) 2013 2012

MANAGEMENT BOARDFixed remuneration 419,500 672,000 Other receipts (benefits) 14,345 17,291 Jubilee awards 1,536 2,060

Total 435,381 691,351

Other

Fixed receipts Jubilee(in EUR) earnings (benefits) awards Total

MANAGEMENT BOARD - IN 2013Dušan Zorko 109,500 - - 109,500Marjeta Zevnik 77,500 - - 77,500Matej Oset 77,500 5,227 1,536 84,263Mirjam Hočevar 77,500 - - 77,500Gorazd Lukman 77,500 9,118 - 86,618

Total 419,500 14,345 1,536 435,381

(in EUR) 2013 2012

INDIVIDUAL CONTRACTS OF EMPLOYMENT Fixed remuneration 1,044,780 1,113,980Other receipts (benefits) 27,198 27,818Jubilee awards 5,007 2,060

Total 1,076,985 1,143,858



Pursuant to Article 30 of the Articles of Association and resolution of the most recent Annual General Meeting of shareholders, Members of the Supervisory Board of Pivovarna Laško received meeting fees totalling EUR 133,363 in 2013.

(in EUR) 2013 2012

SUPERVISORY BOARDVladimir Malenković 15,331 31,119Peter Groznik 19,556 22,680Bojan Košak - 1,500Andrej Kebe - 1,500Bojan Cizej 17,930 21,275Dragica Čepin 16,730 18,075Borut Jamnik 11,083 19,045Borut Bratina 11,573 19,889Marjan Mačkošek - 2,500Goran Brankovič 6,062Enzo Smrekar 4,658 -Jože Bajuk 5,670 -

Total 108,593 137,583

(in EUR) 2013 2012

SUPERVISORY BOARD'S AUDIT COMMITTEEPeter Groznik 5,040 5,435Bojan Cizej 4,760 3,770Igor Teslić 4,921 3,697

Total 14,721 12,902

(in EUR) 2013 2012

SUPERVISORY BOARD'S HR COMMITTEEBorut Jamnik 3,440 5,655Dragica Čepin 2,440 4,155Borut Bratina 2,440 4,155

Total 8,320 13,965

(in EUR) 2013 2012

SUPERVISORY BOARD'S COMMITTEE FOR MATERIAL REVIEWPeter Groznik 426 -Bojan Cizej 426 -Dragica Čepin 426 -Jože Bajuk 451 -

Total 1,729 -



5.4.10 CONTINGENT LIABILITIES AND ASSETS

The Management Board expects no significant losses from contingencies described below.

A lawsuit brought against Pivovarna Laško by MIP

On 21 March 2013 the Group received a lawsuit brought against the controlling company by MIP, Gornji Vakuf, Uskoplje, which was lodged at the District Curt of Celje by the plaintiff's attorney Matej Erjavec, Ljubljana, demanding payment of damages amounting to EUR 1,135,481.43.

The damages relate to the loss of profits incurred by the plaintiff due to unjustified withdrawal from the Sale contract worth EUR 1,085,481.43, and damages for the loss of reputation in the amount of EUR 50,000.00.

On 22 April 2013 the Group issued a defence plea stating that the plaintiff's claim was unfounded. The court of first instance has not ruled on this matter yet.

Lawsuit brought by Perutnina Ptuj for payment of EUR 10,116,488.71 plus costs and interest

The plaintiff filed a claim against Pivovarna Laško on 31 December 2010 at the District Court of Celje demanding payment of EUR 10,116,488.71 inclusive of the legally prescribed default interest. The plaintiff justified its claim by stating that the legal representative of Pivovarna Laško signed a comfort letter on 10 January 2009 and thus allegedly committing to fulfil the obligation of Perutnina Ptuj to Poslovni sistem Mercator on account of loan contracts. This refers to two loan contracts which Perutnina Ptuj signed with the Poslovni sistem Mercator: one on 24 January 2008 amounting to EUR 5,000,000.00 and the second one on 27 February 2008 for EUR 15,000,000.00. According to representations made by the plaintiff, the disputed amount relates to a part of the loan which, as alleged by the plaintiff, should be paid by Pivovarna Laško. The plaintiff further states that Pivovarna Laško has only partly fulfilled its obligations referred to in the comfort letter; namely, through its business partners it secured cash amounting to EUR 11,864,476.50 to Perutnina Ptuj as a settlement of the loan. The latter is allegedly demonstrated by the account of payments made by Infond Holding and Center naložbe. Perutnina Ptuj is also suing for the remaining amount. The defence statement was submitted within the set deadlines. The court issued a ruling on 22 January 2011 allowing incidental intervention by Boško Šrot, former director of Pivovarna Laško, for the defendant Pivovarna Laško. The court has so far not fixed the date for hearing.

Lawsuit by NKBM claiming payment of EUR 6,570,542.25 plus costs and interest

NKBM filed an application for enforcement against Pivovarna Laško on 1 April 2010 based on the Contract No. 36/2009 for pledges of RARG shares concluded on 25 March 2009 between NKBM as the creditor, Center naložbe as the debtor and Pivovarna Laško as the lienee. The Contract was signed on behalf of Pivovarna Laško by its former



director Boško Šrot. The application for enforcement relates to recovery of EUR 6,570,542.25 inclusive of the legally prescribed default interests through the sale of 345,304 RARG shares, owned by Pivovarna Laško. These shares were pledged by Pivovarna Laško as collateral for borrowings raised by Center naložbe from NKBM. The District Court issued a ruling on 6 April 2010 allowing the application for enforcement. Pursuant to timely filling of an appeal against the ruling, the court issued a decision on 16 February 2011 annulling the ruling that allowed the enforcement and referred the case to be decided by the District Court of Maribor pursuant to the rules applicable to legal procedures. The District Court in Maribor issued its decision on 14 June 2011 that the application for enforcement by the creditor, currently the plaintiff NKBM of 1 April 2010 be deemed withdrawn and the proceedings under reference II Pg 547/2011 to be closed. The decision closing the proceedings became final on 2 July 2011. Based on the District Court of Maribor ruling, on 4 July 2011 the plaintiff refunded Pivovarna Laško the costs of proceedings amounting to EUR 10.208,00.

Further to the lawsuit by NKBM of 29 July 2011, the District Court of Maribor on 17 November 2011 issued a ruling allowing enforcement of the pledged 345,304 RARG shares of Radenska for repayment of receivables totalling EUR 7,349,552.25 inclusive of the legally prescribed default interest. The defendant, Pivovarna Laško must allow the sale of the aforementioned securities and settlement of receivables from the proceeds of the sale. The judgement is final. Based on final and enforceable ruling, the court at the application of NKBM against Pivovarna Laško allowed enforcement of the pledged RARG shares. So far the RARG shares have not been sold in the enforcement procedure.

NKBM proposed deferred enforcement and accordingly on 28 October 2013 the court ruled for the enforcement to be postponed until 1 October 2014.

Legal action by CEN ADRIA, d.o.o. - in bankruptcy, Matulji (Republic of Croatia)

In 2006, Pivovarna Laško filed an application for enforcement against Cen Adria, demanding payment of outstanding invoices totalling Kn 857,292.53 (euro equivalent of 114,764.73) plus costs and interest. Cen Adria appealed against the enforcement ruling and currently the case is proceeding in the same way as in the case of an appeal against payment order in legal proceedings.

In 2006, during the above proceedings, Cen Adria filed a counter action against Pivovarna Laško and Jadranska pivovara Split, Vranjic, demanding payment of damages totalling Kn 25,000,000.00 (euro equivalent of approx. 3,346,720.21), which Cen Adria allegedly incurred due to untimely termination of the Contract on Business Cooperation (Ugovor o poslovnoj suradnji). During the proceedings and upon the appeal of Pivovarna Laško, the Commercial Court issued a decree on lack of jurisdiction and referred the case to the Commercial Court in Split (the registered seat of the second defendant). Cen Adria appealed against the decision of the Commercial Court in Rijeka. The High court in Zagreb subsequently ruled the court in Rijeka as having territorial jurisdiction.

In 2012, bankruptcy proceedings were instigated against Cen Adria. The main hearing of both these cases was held on 17 January 2013 at the Commercial Court in Rijeka.



Jadranska pivovara - Split and Pivovarna Laško both believe that Cen Adria's claim for a counter action is unfounded since Jadranska pivovara - Split terminated the disputed Contract on Business Cooperation in compliance with the contractual terms and conditions.

In the case of Cen Adria against Pivovarna Laško and Jadranska pivovara - Split, the main hearing was held on 24 April 2013, 26 September 2013, and 27 November 2013. The next hearing is scheduled for 24 April 2014. 5.4.11 COSTS OF THE AUDITOR

The cost of the audit performed by Ernst & Young, d. o. o. for the year 2013 amounted to EUR 33,800. 5.4.12 SUBSEQUENT EVENTS

Events that occurred after the end of the financial year in Pivovarna Laško are described in section 2.13.2 SUBSEQUENT EVENTS

Settlement claims of Pivovarna Union and Radenska in accordance with Article 542 of the Companies Act (ZGD-1)

On 23 April 2012, Pivovarna Laško, received the letters entitled "Settlement claim pursuant to paragraph 1 of Article 542 of the Companies Act", both dated 22 April 2014 and sent by Pivovarna Union and Radenska. In the letters, the aforementioned companies inform Pivovarna Laško of the unaudited amounts of their settlement claims aimed to cover the losses of both companies generated during the contractual group with Pivovarna Laško as the controlling entity. The unaudited amount of the claim of Pivovarna Union for the period from 11 April to 26 April 2012 amounts to EUR 0 (nil), while the unaudited amount of the claim of Radenska for the period from 6 February to 26 April 2012 amounts to EUR 1,044,183.99. An overview of the calculations was attached to the letters.

On 23 April 2014, Pivovarna Laško replied to the letters of Pivovarna Union and Radenska informing both companies that it has been informed of their claims. At the same time, both companies were requested to provide confirmation of the amounts by auditors.

In light of the aforementioned, provisions of EUR 1,044,183.99 have been disclosed in the financial statements of Pivovarna Laško for the financial year ended 31 December 2013.


At the end of April 2014, Pivovarna Laško, Pivovarna Union and Radenska, signed a Debt Rescheduling and Standstill Agreement with all of the 18 creditor banks. The Agreement defines important financial restructuring milestones, whereas final maturity of the majority of the company's borrowings has been rescheduled to the end of 2016.



The project of determining the concept of operational and financial restructuring of companies continued over the entire 2013 period, with close participation of all companies involved, creditors, and consultants. The aim of the project was to define an agreement that will on the one hand ensure financial stability of the Laško Group through long-term reprogramming of its borrowings and through deleveraging of the Group to the sustainable level of indebtedness; and, on the other hand, to ensure fulfilment of creditors' expectations for rapid deleveraging and simultaneous maximising of the value for the owners. This will ensure the Laško Group of companies a sustainable development of quality brands and preservation of jobs.





If the first milestone is not fulfilled, the third one should be met at the earliest opportunity. In this case the restructuring would not be terminated, however the majority of creditor banks (85% of liabilities are due to creditor banks), may opt for a different option or solution. Non-compliance with the provisions of the Agreement, the amortisation plan based on the cash flow from the primary activity and deleveraging milestones, will terminate the agreement only, if so decided by the majority of creditors.

C O L O P H O N

Publisher: Pivovarna Laško, d. d., Trubarjeva 28, 3270 Laško

Design: Pivovarna Laško, d. d.

Text: Pivovarna Laško, d. d.

Translating: Prevajalska agencija GORR, d. o. o.

April, 2014

Annual report 2013 lasko group

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Transcript of Annual report 2013 lasko group