Annual Report • May 13, 2021
Annual Report
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We will constantly focus our efforts on fair, high-quality and timely satisfaction of our customers’ needs. We will develop relationships based on mutual trust, cooperation and friendship. We will settle our liabilities to suppliers, banks and contractors with the highest degree of responsibility.
We will work to ensure that the shareholders’ investment and their confidence as to the correctness of the decision to invest are rewarded with expected and suitable returns. We will take care of the Company’s long-term vitality and profitability by investing into development and employees. We understand that our responsibility is proportionate to the trust that has been placed in us by the shareholders.
All employees will enjoy an honest relationship. Fair payment for the work well-done is an unalienable right. We will make sure that the rights to appropriate information, personal safety and equal treatment are respected. The duty of the Company’s management is to promote a positive atmosphere and care for the development and implementation of the rules and principles of ethical operations.
Within the scope of the sustainable development philosophy, investment in environmentally-oriented projects and targeted technology design, we will strive for optimum paths and methods of environmental protection and health of our community members. We will strive for and participate in the development and progress of the local community in the areas of education, sports and culture to the highest possible degree.
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| 2018 | 2019 | 2020 | Change in % | |
|---|---|---|---|---|
| Sales | 163,960,861 | 172,586,979 | 172,386,851 | - |
| Net profit or loss | 30,558,183 | 21,436,385 | 18,950,656 | - 12 |
| Total dividends paid | 21,547,246 | 22,848,863 | 13,559,325 | - 41 |
| Equity (31 Dec) | 173,925,466 | 170,342,846 | 174,016,279 | + 2 |
| ROE | 21.7% | 14.7% | 12.5% | - 15 |
| - Net profit or loss | EUR 37.51 | EUR 26.53 | EUR 23.45 | - 12 | |
|---|---|---|---|---|---|
| - Dividends paid | Gross | EUR 26.52 | EUR 28.27 | EUR 17.00 | - 40 |
| Net | EUR 19.89 | EUR 21.20 | EUR 12.75 | - 40 | |
| - Equity | EUR 213.50 | EUR 210.8 | EUR 215.37 | + 2 | |
| - Market price (31 Dec) | EUR 181.0 | EUR 187.5 | EUR 178.0 | - 5 |
| No. of shares | 814,626 | 807,977 | 807,977 | - |
|---|---|---|---|---|
| No. of treasury shares | 6,649 | 10,652 | 21,951 | + 106 |
| No. of shareholders (31 Dec) | 2078 | 1920 | 1920 | - |
| No. of employees (31 Dec) | 908 | 846 | 824 | - 3 |
In EUR
Cinkarna, metalurško kemična industrija Celje, is a public limited company with registered office in Celje, at Kidričeva 26, and entered in the Companies Register kept by the Court of Celje, no. I-402-00.
The Company's principal activities include:
Other information:
Company Cinkarna, metalurško kemična industrija Celje, d. d.
Registered office Kidričeva 26, 3000 Celje
Telephone – switchboard: (+386) 03 427 6000
Fax – Management Board: (+386) 03 427 6106
Fax: 36517 METKEM SI
E-mail: [email protected]
Website: www.cinkarna.si
Chemistry Mozirje
Registered office Ljubija 11, Mozirje
Telephone: (+386) 03 837 0900
The Company is organised as a set of business profit centres, separated in terms of organisation and management, accompanied by centralised support departments and a centralised unit providing maintenance and energy infrastructure.
With its 148-year tradition of uninterrupted operations, Cinkarna Celje, d. d. is among the best surviving companies in the Slovenian business sector. Until 1968, the Company’s fundamental activity was metallurgy, but having started the production of titanium dioxide pigment in 1972 and its subsequent expansion, Cinkarna Celje, d. d. is now classified as a company in the chemical processing sector. It employs 824 people and generates EUR 172.4 million per year in sales revenues, with around 92% of sales generated on international markets. It thus occupies the leading position in the Slovenian chemical processing industry and is one of the most important and successful Slovenian industrial companies.
Cinkarna Celje aims to consolidate and improve its international status as a trustworthy, reliable and dedicated manufacturer of titanium dioxide pigment. Special emphasis is placed on achieving an excellent relationship between price, quality and prompt delivery of our products. We wish to retain our market position and continue to produce more than one percent of the entire world consumption and over three percent of the entire European consumption of titanium dioxide pigment. We wish to achieve the status of a premium supplier of copper fungicides on the demanding Western markets and upgrade our position as the leading supplier of powder coatings in the region.
Carrying out chemical and metallurgical processes professionally and socially responsibly, we produce a wide range of products necessary for everyday life. We provide work and personal growth to our employees and expected returns to our shareholders.
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In 2020, we achieved sales comparable to those in 2019 and approached the plan for 2020. In the context of the current situation, the one percent failure to achieve the planned sales is minimal. An increase in demand for our flagship product minimised the negative impact of the epidemic. The deterioration of the epidemic situation provoked our customers to accumulate pigment inventories at the end of the first quarter. Decreased production and increased inventories held by our customers resulted in a decline in our sales in the second quarter compared to the second quarter of last year. Sales in the third quarter improved compared to the previous quarter owing to a better epidemiological picture. The last quarter was characterised by optimism in the industry, which was reflected in exceeding the monthly and planned values.
In Cinkarna Celje, d. d., we took a number of measures to prevent the possibility of the spread of the coronavirus. To ensure everyone's safety, employees are able to perform work in various ways; if they are at the company's location, they are subject to the prescribed preventive measures. At the time of preparing the report, the Company operates smoothly and performs all its business functions, including production.
Titanium dioxide pigment and the rationalization of the portfolio of strategic business areas, which is aimed at our core product lines and abandoning unprofitable activities, remain the essential building blocks of the Company's success. In terms of global titanium dioxide pigment production, we are one of the smaller producers. In Europe, the Company is comparable to minor East European producers. Industry analyses and business performance benchmarks place Cinkarna Celje, d. d. among the top performing players in the titanium dioxide pigment industry. The Management Board estimates the Company's business results to be objectively good and exceeding the forecasts for 2020.
In the international economic environment, despite encouraging indicators at the beginning of this year, economic activity has declined. This is related to the risk arising from the still unclear outcome of the COVID-19 epidemic and the related factors. After a distinct rebound of economic activity in the third quarter and a slight decline in the fourth, the decline in GDP was lower than initially projected. This is due to the successful adaptation of consumers and businesses to the existing situation. Regardless of the successful adjustment of selling and purchasing activities, monetary and fiscal policy and growth in foreign demand will have the greatest impact on further growth in the short term. However, the situation is unlikely to finally stabilize until an adequate level of vaccination is achieved. In addition to the uncertainty associated with the spread of COVID-19, we have not perceived any other significant risks in the international economic environment that could have a significant negative impact on the Company's operations and business plans in the current year.
In the context of the specific markets and flagship products of Cinkarna Celje, d. d., despite the otherwise diminished general economic activity explained above, we saw initial growth of demand due to customers’ fear related to the future supply of raw materials. The situation began to deteriorate in the second quarter, which was mainly due to a significant drop in customer orders from Italy, Spain and Turkey. In the third quarter, the situation in these markets partially improved. In the last quarter, we recorded non-traditionally high growth in orders. Demand was significantly higher for all producers of titanium dioxide. This is mainly a reflection
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of increased volume of domestic renovations and the demand for pigment types for the paint industry, as well as the aforementioned adjustments of consumer habits. The favourable conditions will spill over the value chain and improve the margin in the coming months. Pigment inventories held by customers are dwindling faster than usual. Average global sales prices have been 10% lower since the end of 2019 and 4% lower since the end of September 2020. In 2020, the changes in sales prices by markets were harmonious. Past pressures from key raw material suppliers are still reflected in higher average prices of key titanium-bearing raw materials. In the coming quarters, we can expect price increases and occasional shortages of raw materials due to the abundance of fresh money, disrupted supply chains and the reopening of markets in line with the release of measures related to the COVID-19 epidemic.
As the situation in the titanium dioxide pigment industry stabilises, we maintain our long-term business strategy based primarily on an active marketing approach aimed towards finding and developing the most profitable customers and markets, increasing market shares in the highest quality markets and establishing long-term partnerships with key customers. We are planning a more restrictive policy in the area of managing the costs of materials, raw materials, energy, and services. At the same time, we are aware that employees are the most important foundation of business success, so we will continue to ensure, in agreement with representative trade unions and employees’ representatives, that employee benefits will adequately reflect the Company's performance and its business results.
As a relatively small producer of pigment, Cinkarna Celje, d. d. is facing the changes and the situation on the market as a typical follower, while we also endeavour to make the most out of market potentials within the given framework in terms of scale and time dynamics. In terms of business results and benchmarks, we exceed the average. In 2020, we sold 7.1% more tons of pigment than in the same period in 2019, while our average sales prices were 4.6% lower than the average prices achieved in 2019.
In 2020, the operation of product lines other than zinc processing was above the level of the previous comparable period. This relates particularly to the value of sales of metallurgic products, which was lower than in the same period last year due to lower stock market prices of zinc and lower demand. Despite increased demand for metallurgic products towards the end of the year, it was not possible to compensate for the outage and reach the plan.
The main focus of the Company's business policy remains the same. We aim our attention at maximizing our production capacity, exploiting market potentials in the direction of raising sales prices, optimizing production costs and implementing investment plans. Our financial operations are traditionally conservative, the Company is financially stable, the volume of funds is high and enables smooth and timely coverage of all liabilities. On 7 July 2020, in accordance with the Company’s General Meeting resolution of June 2020, we paid dividends above the industry average in the total amount of EUR 13.54 million (EUR 17.00 per share), which represents an 11% dividend yield.
The Company actively prepares and implements several interconnected projects providing the basis for comprehensive management of environmental risks. In order to eliminate risks arising from old burdens related to the current production in Celje, we collaborated with CDM Smith to prepare a summary of all research performed so far and a comparison of different legislations. We forwarded the documents
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to the Ministry of the Environment and Spatial Planning. The latter informed us of their position, to which we will adjust our activities specified below. A very important achievement in the period under review was the beginning of work on the rehabilitation of the Bukovžlak non-hazardous waste landfill (ONOB). We used 49.8% of the funds from our environmental provisions planned for 2020. The work was slower due to the epidemiological situation, and we plan to compensate for the lost work in 2021. There are also some investments in progress to improve the operation or upgrade the treatment plants. We are preparing measures to reduce emissions in the work environment.
In 2020, Cinkarna Celje, d. d. generated EUR 172.4 million of sales revenues, which is at the level of the comparable period in the previous year. Sales in 2020 were 1% below the annual sales plan. Total exports in the period reached EUR 157.8 million, which is 3% more than in the previous corresponding period and stands for 101% of the annual sales plan for foreign markets. Effective cost management, increased demand in the last quarter, the postponement of a major overhaul to 2021 and the extension of the production year had a positive impact on the Company’s net profit, which exceeded the planned annual profit by 34%.
Within the scope of HR activities and management, due to the limited operation of human resources during the COVID-19 epidemic, we geared our activities into a set of measures aimed at ensuring the smooth operation of the Company and thus the maximum level of safe and healthy work, protection of our employees against possible infections and optimization of working conditions. We pursue the principle of positive, motivating wage policy and ensure a suitable level of employee satisfaction and motivation.
In 2020, we spent EUR 12.23 million on investments, acquisition of fixed assets and replacement equipment, which represents 61.5% of the planned funds. The amount is lower than planned, which is mainly due to the suspension of non-urgent investment and maintenance work during the COVID-19 pandemic. Part of this work will be completed in the current year. The bulk of the funds invested was allocated for the production of titanium dioxide, i.e. improving the quality of products, ensuring the reliability of individual devices or processes, improving the safety and health of the working conditions and reducing environmental impacts.
As regards our development activity, we pursue a five-year strategy. We carried out our development activities according to trends and customer expectations. We implemented improvements in all processes, enhancing the quality of our products, achieving greater efficiencies and facility capacities, and more efficient work. In our efforts to ensure sustainable development of titanium dioxide production, we continue the project of integrated water management spanning over several years (separate collection of wastewater from Water Preparation, water treatment, preparations for the implementation of reverse osmosis for the treatment of part of the wastewater from titanium dioxide production, development of a process for reducing sulphate in wastewater and identifying solutions to reduce BOD5 and COD in wastewater).
The Company's financial position remains stable, the Company settles all its liabilities in full and on time. The Company has no bank debts, the remaining financial liabilities refer to assignments. Cash at the end of the year amounted to EUR 37.7 million and was 19% higher than at the end of 2019.
The Business Report presented in the continuation contains more detailed information on operations, including comparisons and analyses. It comprises information that is relevant for fair and objective presentation of the operations in the previous year. The financial standing and operations of the Company in 2020 are presented in the enclosed financial statements and the notes thereto.
The business plan for 2021 was prepared based on global macroeconomic forecasts, projected GDP growth forecasts for the economically most important countries as well as industry analyses and forecasts. The plan for 2021 was prepared amidst poor macroeconomic conditions and the resulting uncertainty over the outcome of the epidemic. We based our expectations and trend forecasts on these facts. For now, market indices and indicators are at a better level than initially expected. We do not expect significant market imbalance in for the 2021 period. We predicted that average sales prices of pigment and, on the input side, also raw materials, would remain approximately at the same level – i.e. stable conditions. The beginning of 2021 saw dynamic rise in the prices of pigment and raw materials. Energy prices will be lower than in 2020 due to favourable provisions of the supply contract. In terms of annual level comparisons, the relative relationship between purchasing and selling prices is not to change substantially.
The Company’s strategy for 2021 will be oriented towards ensuring maximum levels of production quantities and sales and utilising the potential of the most profitable pigment markets. With a high degree of flexibility, we will allocate sales quantities to the most profitable markets. We are traditionally pursuing the principles of conservative financial policy and reliable financial position, bearing in mind the market’s volatility and the related risks. At the same time, solid operations, cash surpluses and forecasts also imply adequate and suitable payouts to owners in compliance with the Company’s strategic plans and its financial position. The proposal for distribution is included herein. We plan to generate EUR 165.9 million of sales revenues in 2021 and net profit in the amount of EUR 10.6 million. It should be noted that the non-traditionally high demand in the last quarter of 2020 helped to exceed the sales plan and the projected business results for 2020. Good demand for pigment has also been noted at the beginning of 2021.
In line with the investment plan, which includes finishing the project of modernising, stabilising and intensifying the titanium dioxide pigment production, we will invest a total of EUR 14.4 million in the Company’s fixed assets, an increase of 17% over 2020. The increased volume of investment is primarily due to extensive overhauls in the production of titanium dioxide and in water treatment. We will invest in individual programmes based on the need, ability and prospect as well as in line with the five-year strategic plan. The planned value of investments for 2021 does not include the reversal of environmental provisions in the amount of EUR 2.6 million.
The business plan is an assessment of future operating conditions and operating performance that is based on the currently available set of key information, which is why it should be understood as a forecast that inexorably carries with it a certain level of uncertainty.
Management Board of the Company
Cinkarna Celje, d. d.
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In 2020, the Supervisory Board held/decided at 16 meetings, of which five extraordinary and five correspondence. The Supervisory Board was as a rule in full attendance at the meetings. Within the legal framework defined by law, regulations, the Company’s Articles of Association as well as relevant codes and in line with the due care approach, we carried out and implemented conscientiously our competencies, duties and responsibilities. We discussed the submitted materials, presentations, special explanations and notes diligently as well as organised and held interviews with individual external experts. We tried to additionally clarify and study certain topics through proposals, questions and requests for additional data, analyses and reports. We believe that the Supervisory Board acted with the due diligence required by the law and to the best of our knowledge and conscience, thereby responsibly protecting the interests of the Company and the shareholders.
At the end of 2020, the Supervisory Board of Cinkarna Celje, d. d. had the following composition:
At the end of the second quarter, the latter two were elected by the Works Council as employee representatives in the supervisory body. On 30 June 2020, Aleš Stevanovič was replaced by Jože Koštomaj. David Kastelic replaced Dejan Rajbar on the part of capital representatives. Pursuant to Article 273 of the Companies Act, on 30 June 2020, the Supervisory Board appointed Aleš Skok, member of the Supervisory Board, BSc (Chemical Engineering), MBA, USA, as an interim Chairman of the Board.
The Management Board had the following composition:
The Supervisory Board devoted its attention and time equally to day-to-day operations, investments, business plans and regular internal audit activities, as well as to finding suitable candidates to take over the management of one of the largest chemical companies in the region. In the recruitment process, with the help of a recruitment agency and internal proposals, some potential candidates were identified and introduced to the members of the Supervisory Board. No candidate received sufficient support from the Supervisory Board in the voting. Pursuant to Article 273 of the Companies Act, Aleš Skok was appointed as interim President of the Management Board. Together with Nikolaja Podgoršek-Selič and Marko Cvetko, he took over the management of the Company on 1 July 2020.
In line with the Rules of Procedure of the Works Council and the Worker Participation in Management Act, the Works Council proposed Filip Koželnik, MSc (Business Studies), to the Supervisory Board to take the position of a member of the Management Board – Workers Director for the 2020–2025 term of office. At the 5th extraordinary meeting on 5 November 2020, the Supervisory Board agreed to the proposal of the Works Council and appointed the proposed candidate as member of the Management Board. Due to their professional profiles and with the aim to ensure the continuity of management, the SB gave a full term until 30 June 2025 to Aleš Skok and Nikolaja Podgoršek-Selič at the December meeting of the Supervisory Board.
In 2021, the Company's Management Board has the following three-member composition: Aleš Skok – President of the Management Board, Nikolaja Podgoršek-Selič – member of the Management Board – Deputy President of the Management Board – Technical Director, and Filip Koželnik – member of the Management Board – Worker Director.
Among other things, it is necessary to outline the Company's activities for the containment or prevention of COVID-19 and the possible impacts on business, the report and discussion on the implementation of the development strategy, environmental issues, safety and health/TiO2 classification issues, and reporting on energy consumption. The Supervisory Board was kept informed of the development and course of environmental protection projects. The Management Board informed the members of the Supervisory Board in detail about the risk of shortage of process water and of the possible solutions. Attention was also paid to monitoring the implementation of the Company's Strategic Plan adopted in 2018 for the 2019–2023 period.
In 2020, investment scope grew by 2% compared to the year before, but it reached only 61% of the planned funds due to the interruption of non-essential work and the postponement of major overhauls. Investments thus totalled EUR 12.2 million. The bulk of the funds were earmarked for the production of titanium dioxide pigment to improve product quality, attain the planned production volumes and reduce environmental impacts.
In December, we discussed and adopted the 2021 operating plan. The 2021 business plan is based on relatively pessimistic macroeconomic forecasts and is traditionally conservative. Sales plan stands at over EUR 165.9 million, which is 4% less than achieved in 2020, and the planned net profit equals EUR 10.6 million. The planned decrease of the latter is mainly due to market pressures to lower average sales prices. The Supervisory Board was of the opinion that the plan was sufficiently ambitious, adequately reflecting the situation in the business environment as well as the competitive position and the possibility of generating results by the Company.
Owing to the efforts of employees and the Management Board in the emergency situation we are facing, the results achieved in 2020 are very good and are among the best in the history of Cinkarna Celje, d. d. They are also above average among the top Slovenian industrial companies. The new Management Board has successfully taken over the operations and continues the excellent management of the Company. International industry comparisons as well again reveal that the Company’s results are at the very peak of the global titanium dioxide pigment industry. The Company’s profitability exceeded the business results of the majority of competing producers of titanium dioxide pigment. We therefore believe that the earned net profit of EUR 18.9 million and total sales of EUR 172.4 million are excellent accomplishments. The Company is traditionally pursuing the strategy of conservative financial operations and is operating without long-term loans or external financial resources, thus being financially stable and solid.
position, increasing market shares and boosting the physical volume of business. In parallel, the possibility of further diversification of the product portfolio will be explored.
The year of 2020 was also successful for the Company in the area of environmental protection and employee health, and especially in containing the spread of COVID-19 among the employees. The Management Board took effective measures to adapt to the situation and successfully prevent the mass spread of the virus.
The Supervisory Board believes that the measures of the Management Board are also successful in terms of the implementation of investment plans and targeted development work. Despite the high dividend payout, a high level of financial stability was maintained. Efficient operations coupled with robustness and stability of the system provide answers to the Company’s long-term prospects. The fundamental business orientations and development policies set in the mid-term strategy were qualitatively implemented in all key items. In 2018, the Supervisory Board participated in the preparation of the development strategy up to 2023 and adopted it. The strategy underscores the Company’s focus on the core activity of titanium dioxide and the change of the sales portfolio of this flagship product towards enhanced quality, optical features and development of products for advanced user applications. The Supervisory Board actively supports the business policy focused on reducing risks and uncertainties and ensuring a stable financial position of the Company. Together with the Management Board, we also pay attention to and ensure compliance and requirements in relation to permanent progress in environmental protection and employee health.
The Annual Report, comprising the mandatory financial statements, disclosures, notes and the Business Report is deemed by the Supervisory Board to contain all the relevant information and indicators and appropriate notes to the specific events and facts. Acting upon the proposal from its Audit Committee, the Supervisory Board approves the Annual Report of Cinkarna Celje, d. d. for 2020.
The Supervisory Board also took note of the independent auditor’s report received by the Company on 26 March 2021 and believes the report to be a suitable presentation of the mandatory audit of the financial statements and notes thereto and accepts the auditor’s opinion that the Business Report is in line with the audited financial statements. Therefore, the requirement for true and fair presentation of the Company’s assets and financial position in the relevant period has been met to a sufficient extent.
The Audit Committee of the Supervisory Board of Cinkarna Celje, d. d. with the following composition: David Kastelic, MSc – Chairman, Jože Koštomaj, BSc (Mech. Eng.) – member and Gregor Korošec, BSc (Economics) – independent external expert, met at seven regular meetings in 2020, of which two were correspondence meetings due to the circumstances in the first epidemic wave. Regardless of the circumstances, the members of the Audit Committee focused on the regular and current tasks and responsibilities.
of the Committee members. Certified auditors Sanja Košir Nikašinović and Lidija Šinkovec from the audit firm Ernst & Young, d. o. o. were present at two meetings. Internal Audit Department Manager was also present at all meetings (Patricija Veršič, MSc until 18 September 2020, Jure Vezjak from 24 September).
At all regular meetings, the Audit Committee familiarised itself with interim operating results of Cinkarna Celje, d. d. and paid special attention to financial and accounting information. The Committee carefully considered the contents of the Company’s interim and annual business reports and prepared proposals and recommendations for modifications. As already mentioned, the Committee verified and examined on an ongoing basis also internal audit reports, which also included reporting on the status of implemented measures based on its recommendations, at the same time actively cooperating, proposing improvements and directing internal audit operations.
The Audit Committee reviewed again the system for identifying, assessing and managing operating risks of the company Cinkarna Celje, d. d. In 2020, the system was adequately integrated into the Company’s business processes, thus substantially enhancing its responsiveness and serving as a highly desired tool for active corporate governance. The risk management system, which is fully incorporated in the Integrated Management System, is based on prompt updating of the risk register, in which the risks are classified systematically in terms of the estimated probability of occurrence of individual types of risks and the level of potential damage. The system also includes a range of measures aimed at managing these risks. The Audit Committee has assessed the system as satisfactory.
In line with its authorities, the Audit Committee was in 2020 active in the regular audit procedures for Cinkarna Celje, d. d. The principal activities could be summarised as follows:
The meetings and activities in 2020 were carried out for acknowledgement of the final audit of the financial statements of the Company for 2019, for review of the Annual Report of Cinkarna Celje, d. d. and the Internal Audit Report. In 2020, the Internal Audit Department was implementing all internal audit tasks successfully and in line with the plan, also reporting promptly to the Audit Committee.
The Audit Committee received the first draft annual report of Cinkarna Celje, d. d. for 2020 on 8 March 2021. At the meeting held on 8 March 2021, the certified auditors were also present and answered further questions of the Audit Committee members. The members of the Audit Committee carefully reviewed the draft annual report and gave their comments at the Audit Committee meeting held on 16 March 2021. The consolidated text of the Annual Report of Cinkarna Celje, d. d. for 2020 was received by the Audit Committee on 29 March 2021 and discussed at its meeting on 6 April 2021. The Audit Committee confirmed that the Annual Report of Cinkarna Celje, d. d. for 2020 was compiled in a timely manner and in accordance with the Slovenian Accounting Standards as well as the provisions of the Companies Act in all important aspects.
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comprises a summary presentation of operations for the last three financial years. The operational and performance analysis for 2020 provides a detailed overview of the assets and profit of the Company as it contains all of the necessary notes on sales, operating profit or loss, expenses and costs, assets and liabilities.
The development of the Company is based on its employees, investments, the development activity, quality assurance and successful implementation of the strategic plan for the following period up to and inclusive of the year 2023.
The Annual Report also includes the Non-Financial Statement, which includes, based on the amended Companies Act, useful information regarding social responsibility, the environment, HR matters and anti-corruption and anti-bribery activities.
The financial statements of Cinkarna Celje, d. d. for 2020, including the accounting policies and notes, were audited by the audit firm Ernst & Young, d. o. o., which was approved by the General Meeting at its 23rd regular meeting on 4 June 2019. On 26 March 2021, the auditor issued an unqualified opinion on the financial statements of Cinkarna Celje, d. d. for 2020 and confirmed that the information contained in the Business Report was in line with the attached financial statements.
In the opinion, the auditor pointed out the key audit matters disclosed in the financial section of the report, namely Note 9 – Provisions and long-term accrued costs and deferred revenues, which states that as at 31 December 2020 the Company disclosed EUR 16,350 of environmental provisions, which were set aside based on projects, reports and assessments made by external advisors and by the management in relation to the costs that will arise due to the rehabilitation of landfills and covering of future obligations related to land redevelopment at the existing location of the Company, formed based on the report of CDM Smith.
The Audit Committee came to the conclusion, based on the unqualified opinion in the auditor’s report, additional explanations provided by the auditor and support departments of Cinkarna Celje, d. d. and the data and disclosures contained in the Annual Report of Cinkarna Celje, d. d. for 2020, that the Annual Report had been compiled in accordance with the Companies Act (ZGD-1) and that the financial statements, in all material respects, give a true and fair view of the financial position of Cinkarna Celje, d. d. as at 31 December 2020 and its profit and cash flow generated in the year then ended, in accordance with the Slovenian Accounting Standards.
The Audit Committee assessed the auditor’s work as objective and independent and in compliance with the Auditing Act. The certified auditor and the audit firm did not render any non-audit services to the Company.
The Audit Committee had no objections to the Annual Report of Cinkarna Celje, d. d. for 2020 that would lead the Committee to withhold the proposal to the Supervisory Board to act in accordance with Article 282 of the Companies Act and approve the Annual Report of Cinkarna Celje, d. d. for 2020.
Chairman of the Supervisory Board
dr. Mario Gobbo
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ANNUAL REPORT 2020
Internal audit in Cinkarna Celje, d. d. is carried out by the Internal Audit Department, which is headed by Internal Audit Department Manager. Audit Department is an independent organisational, responsible directly to the Management Board in organisational terms and to the Audit Committee or the Supervisory Board in functional terms. The Department operates in line with the International Standards for the Professional Practice of Internal Auditing and other rules included in the International Professional Practices Framework and the Hierarchy of Internal Auditing Rules.
Its role is an independent and impartial assurance and consulting activity designed to add value and improve the operations of the Company. It helps the Company to achieve its objectives through systematical and methodical assessment and improvement of the performance of risk management, control procedures and corporate governance. It acts in compliance with the Fundamental Charter and follows the principles of demonstrating integrity, professionalism, professional diligence, impartiality and independence.
It carries out its activities in areas where key risks for the Company arise or may arise and where it can contribute to the improvement of operations and increase business security and business benefits for the Company, where dangers and weaknesses emerge in the course of business that threaten the Company's continued existence and development or where there is probability of fraud, error, override or disputes with a view to making the Company's operations more effective, economical and efficient.
It carried out its activities in 2020 in accordance with the approved annual work plan. Seven of the eight internal audits and other internal audit activities planned were performed, such as periodic monitoring of the implementation of recommendations, internal audit planning, activities related to the work methodology, etc. The Manager of the Internal Audit Department regularly reported the results of audits and other activities to the responsible auditees and to the Management Board, and periodically to the Audit Committee and the Supervisory Board.
Jure Vezjak
Certified Internal Auditor
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Cinkarna Celje, d. d. produces and sells a wide range of products. The various product subgroups can be combined into different product sales groups with similar intended functions. Over the last years, the Company abolished some product lines, which were not achieving planned profitability and performance levels.
The core product and sales group is titanium dioxide pigment, which combines a range of various pigment types. Titanium dioxide pigment is a special inorganic chemical; its extraordinary optical characteristics make it extremely useful in the production of varnishes and paints, plastic materials, laminates and paper. Cinkarna Celje, d. d. markets the pigment to global markets and successfully competes with international corporations thanks to its constant progress in terms of technological advances, formulations, adaptability, reliability and the achievement of an optimal relationship between price, quality and delivery. This group is complemented by a number of types of ultrafine titanium dioxide pigments. These are products featuring high added value that can assume the role of a photocatalyst or UV absorber thanks to their crystalline structure. They are incorporated in high-tech products (self-cleaning systems, photovoltaics, suntan lotions, materials with UV stabilisers, etc.).
Plant protection products represent one of the key sales groups. The leading products in this group are copper fungicides with various formulations and active substances (copper hydroxide, copper oxychloride and tribasic copper sulphate). The strategy for plant protection products focuses mostly on superior quality and environmentally safe use. Over the last years, we achieved a major breakthrough in sales to the demanding Western European markets. This group is also one of the key pillars of the Company’s future development.
The product group consisting of coatings, powder coatings and masterbatches is increasingly gaining in importance. It is a sales group which represents a vertical upgrade of the basic production of titanium dioxide pigment. The coatings are used predominantly for anti-corrosion protection of construction materials, and the majority of powder coatings are intended for anti-corrosion and decorative needs in the production of household appliances, heating elements and other metal goods. Masterbatches are dynamic products intended for incorporation in plastic materials for the purpose of improving their applicable characteristics.
Other significant products and sales groups of Cinkarna Celje, d. d. are:
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The Company's total sales in 2020, in the uncertain conditions created by the epidemic, were less than 1% lower than sales achieved in 2019 and represent 99% of the annual sales plan. Total sales, i.e. net sales revenues, reached EUR 172.4 million.
| Market | 2020 | 2019 | Change in 2020 (%) |
|---|---|---|---|
| Slovenia | 14,623,430 | 18,818,634 | - 22 |
| EU | 130,529,281 | 122,771,835 | + 6 |
| Third countries of the former Yugoslavia | 3,730,801 | 3,570,343 | + 4 |
| Third countries – other | 23,503,340 | 27,426,167 | - 14 |
| Total | 172,386,851 | 172,586,979 | - |
| Market Share | 2020 | 2019 |
|---|---|---|
| Slovenia | 9% | 12% |
| EU | 76% | 71% |
| Middle/Near East & Africa | 4% | 7% |
| Eastern Europe | 11% | 10% |
| USA & Mercosur | 0% | 0% |
Monthly and quarterly sales analysis reveals that sales were relatively successful in the first and fourth quarter of 2020. The first quarter of last year was exceeded, mainly due to extremely high sales in January and March. The rise in sales in Q1 results from the higher value of sales of titanium dioxide, copper fungicides, powder coatings and the services of the Polymers BU. In the second quarter, sales did not reach the plan or exceed the sales of the comparable period in the previous year. This is due to the tightening of measures to prevent the spread of the coronavirus. Sales in the second quarter were significantly below expectations and below the sales for the comparable period in 2019, which represents a Q-o-Q decline of 13%. Third-quarter sales are slightly below the comparable sales in the previous year, down 4% from the plan. The last quarter was characterised by a non-traditionally high level of demand in all BUs, which reflects the changed consumer habits and increased optimism surrounding vaccine approval.
In March, we achieved one of the record monthly sales, which amounted to EUR 17.9 million. The lowest sales of the period under review in the amount of EUR 11.9 million were recorded in December, which is in line with the expected reduced customer activity in this month. Sales in October, November and December exceeded the monthly sales plan and the results in the comparable periods in 2019.
We still maintain minimal control market shares in the dollar markets, as higher placements would be irrational due to the specific conditions, which are certainly less favourable than in the European markets. Lower sales on the domestic market are the result of a drop in the value of sales of construction compounds and lower sales of metallurgic products and pigment.
Sales to the EU market are up 6% compared to the same period last year. The driver of growth in this market is increased demand for titanium dioxide, masterbatches and copper fungicides. In the EU market, we saw a severalfold increase in sales of Teflon-coated ball valves and elements for the transport of aggressive mediums.
Sales to the markets of the former Yugoslavia increased by 4%. The growth is mostly due to higher demand for pigment. The loss of sales of powder coatings and masterbatches was to some extent compensated by increased exports of zinc alloys. Sales to the domestic market dropped by 22% as compared to the same period in 2019. The drop is mainly due to lower sales of the Metallurgy BU and the abolition of the construction compounds line. With the exception of the Polymers BU, sales of other business units are lower.
The share of total exports in the Company's total sales amounted to 91.5% in the year under review, an increase of 2.4 percentage points compared to the previous year. The increase in the share of exports is due to increased exports to the European market. The bulk of it is achieved by exporting titanium dioxide pigment.
33.6% of the Company's export sales and 30.8% of its total sales were directed to the German market. The importance of the German market increased slightly compared to the previous year, due to the higher sales value of titanium dioxide pigment. Compared to 2019, the quantities of pigment sold to the German market increased by 21% (from 15,869 t to 19,226 t Y-o-Y). The most important reason for the increase in the sales volume of titanium dioxide pigment in 2020 in relation to the comparable period of 2019 is the positive sentiment in the second half of the year, which materialized mainly towards the end of the year.
The reasons for other significant and more prominent changes in export sales are described below. In Italy, there was a decline in the sales of titanium dioxide and copper fungicides, which coincided with the contraction of the Italian economy due to COVID-19. We increased the sales of pigment and zinc wire to Turkey. We recorded a drop in sales to Belgium and growth in sales to France due to a redistribution of quantities within the corporation (leading European masterbatch manufacturer).
We acquired new buyers of copper fungicides in the Dutch and Greek market. At the same time, we saw a reduction in the amount of pigment sold to the Greek market. In Austria and Hungary, there was a significant increase in demand for pigment. In the Polish market, we strengthened our sales of pigment, copper fungicides, masterbatches, varnishes, paints and products/services of the Polymers BU. The mentioned market recorded a drop in wire sales. In the Croatian market, we recorded slightly lower sales, as a major buyer of copper fungicides realized their transaction in the last quarter of 2019. Higher demand for metallurgic products on the Czech market did not mitigate the decline due to lower demand for coatings, masterbatches, varnishes and pigment. We increased exports of titanium dioxide pigment to Ukraine, Kuwait and Romania. Declines in Spain, Algeria and Portugal are connected with lower volumes of pigment sales.
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Sales structure by national market is, of course, quarterly and significantly changing in line with the conditions prevailing on individual markets from time to time. Roughly speaking, the structure depends on market profitability, market strategy, political and economic security, and market reliability.
| 2020 | 2019 | |||
|---|---|---|---|---|
| Value in EUR | Share in % | Value in EUR | Share in % | |
| Titanium Dioxide | 143,056,990 | 83 | 140,356,503 | 81 |
| Zinc recycling | 5,125,075 | 3 | 7,301,913 | 4 |
| Varnishes, coatings, masterbatches and printing inks | 15,207,872 | 9 | 14,824,299 | 9 |
| Agricultural products | 5,525,614 | 3 | 4,762,037 | 3 |
| Other | 3,471,300 | 2 | 5,342,227 | 3 |
| Value of sales | 172,386,851 | 100 | 172,586,979 | 100 |
The sales of the most important product line of the Company, titanium dioxide pigment, reached EUR 143 million in the relevant period. The supply and demand curve reached a new equilibrium. Fear of shortages in supply of raw materials in the first quarter boosted purchasing on the part of European pigment producers. Changes in consumer habits during the epidemic towards the end of the year resulted in much higher demand for pigment. It is estimated that the demand for the purpose of supplying DIY projects has increased. The increase in the value of sales by EUR 2.7 million is due to the volume of pigment sold. The 7% increase in the volume helped us to overcome the impact of lower prices (-4%). The said increase in demand has spilled over into this year as well. The competition has already adjusted the sales prices, which is visible in the latest sales analyses. As a typical follower and a small player in the global market, we adjusted prices with a delay.
The scope of the zinc recycling line, following the termination of the titanium-zinc sheet line in early 2017, brings together the zinc wire, anode and alloy product groups. Business operations are 30% lower than in the comparable period last year. The decline is due to the lower stock market price of zinc and a drop in sales volumes, as most buyers reduced or even suspended production due to a lack of orders. In the last month of the third quarter and especially in the last quarter, sales of this line increased.
Sales of the agricultural product line comprising copper fungicides, Pepelin, green vitriol (copperas) and Humovit rose by 16% as compared to 2019. The growth is due to both higher quantities and higher sales prices achieved in new markets, which is paramount with regard to managing the risks of seasonal climate conditions, as it indicates decreased dependence on seasonal conditions in a limited geographical area. Average sales prices of copper fungicides increased slightly due to changes in the sales structure. We achieved higher value of sales with Humovit. The fact remains that our sales of soil depend on the situation in the local and nearby markets, as we are not able to enter more distant markets due to additional costs of transporting the product. In 2021, we will continue to produce the very commercially attractive active substance, i.e. tribasic copper sulphate (TBCS).
The category “other” comprises the sales lines of thermoplasts, polymers, elastomers and systems for transport of aggressive mediums (STAM), sulphuric acid, CEGIPS, merchandise and services, and sales of abolished products and product groups. The value of sales of this product group is lower due to the inclusion of the abolished construction product line, which reached EUR 1.9 million in sales in the comparable period of last year. In the period under review, the sales of the construction product line reached EUR 90 thousand and have not been monitored separately since the closure of the construction plant. STAM sales are significantly higher (+ 40%). The value of sulphuric acid sales is down 50%. For product groups from this category, we should mention the 28% increase in the value of CEGIPS sales. We sold 169.7 thousand tonnes of CEGIPS, which is 11% more than in 2019. The volume of CEGIPS sales is important in the context of prolonging the useful life of the Za Travnik landfill.
In 2020, we generated operating profit at the level of EUR 22.5 million. This result accounts for 88% of the 2019 operating result of EUR 25.7 million. As compared to the planned operating result for 2020 (EUR 17.4 million operating profit), it is evident that the business plan was exceeded by 30%. Business operations thus objectively deteriorated as compared to the year before, but at the same time exceeded the business plan levels. Among other things, this surplus was the result of the postponement of overhaul to 2021, record sales volume in the last quarter and the extension of the production period. EBITDA reached EUR 32.9 million and equals 19% of sales. Compared to the previous year, EBITDA is down 11%.
| Year | Operating profit or loss in millions of EUR |
|---|---|
| 2006 | 10.8 |
| 2007 | 11.0 |
| 2008 | 4.6 |
| 2009 | 4.7 |
| 2010 | 13.7 |
| 2011 | 32.8 |
| 2012 | 24.1 |
| 2013 | 8.6 |
| 2014 | 16.2 |
| 2015 | 8.1 |
| 2016 | 10.6 |
| 2017 | 35.7 |
| 2018 | 36.4 |
| 2019 | 25.7 |
| 2020 | 22.5 |
amount of EUR 43 thousand and other financial liabilities in the amount of EUR 52.7 thousand (the costs of provisions for termination and jubilee benefits equal EUR 36 thousand). Minimum foreign exchange losses totalling EUR 2.9 thousand represent the effective use of hedging instruments to manage the volatile movements of the euro-dollar currency pair in the procurement of titanium-bearing ores.
| Year | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | |
|---|---|---|---|---|---|---|---|---|
| Net profit | 5.6 | 6.1 | 0.8 | 1.0 | 8.9 | 25.5 | 18.3 | |
| Year | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| Net profit | 7.2 | 13.9 | 6.8 | 9.8 | 28.8 | 30.6 | 21.4 | 19.0 |
Net profit for the period reached EUR 18,950,656 or 12% less than the one generated in 2019 and 34% more than planned (we planned EUR 14.1 million net profit for 2020). Taking into account the development of events in the international economy and in the titanium dioxide pigment market, and, above all, the results of competitors from the titanium dioxide pigment industry and the COVID-19 situation, we assess the result to be more than excellent. Net profit comprises profit before tax, corporate income tax of EUR 3.4 million (effective tax rate of 15.23%) and deferred tax of EUR 131 thousand. The amount of deferred taxes and the change in the balance of deferred taxes refer to the reduction and derecognition of provisions for termination and jubilee benefits, the use and derecognition of environmental provisions and the final write-offs of previously revalued operating receivables and investments. The increase is mainly related to the higher provisions for employees under SAS 10. The tax relief comprises relief for investments into equipment and research and development, hiring of disabled persons, voluntary supplementary pension insurance and donations.
In 2021, the shares of Cinkarna Celje, d. d. were listed on the standard market of the Ljubljana Stock Exchange with the ticker symbol CICG. As of February 2021, they are listed on the prime market of the Ljubljana Stock Exchange. The average price on the first day of trading, 6 March 1998, was EUR 33.71 per share.
The total number of shareholders as at the last day of 2020 was 1,951, whilst the total number of shares issued was 807,977, whereby 21,751 shares are the Company’s treasury shares. The number of shareholders decreased by 62% from the start of trading on the free market to the last day of 2020.
The price of a share of Cinkarna Celje, d. d. in 2020 was fluctuating between EUR 125 per share and EUR 203 per share. The changes in the first half of the year were mainly the reflection of the general sell-off in the first epidemic wave. There was a rebound in the second half of the year and the share price ranged between EUR 150 and EUR 180. The movement was relatively in line with the developments on the Slovenian market (SBI TOP). The share price fell from EUR 187.5 to EUR 178, a decrease of 5%, between the last trading day in 2019 and the last trading day in 2020.
market and the lack of investors’ trust. The Company’s market capitalisation as at the last day of 2019 was EUR 151.5 million. The table below shows changes in the price of the CICG share over the last year (average price at the end of the month) and previous years.
| Year | 1998 | 2017 | 2018 | 2019 | ||
|---|---|---|---|---|---|---|
| Month | 3 | 12 | 12 | 12 | ||
| CICG price in EUR | 33.6 | 217.0 | 181.0 | 187.5 | ||
| 2020 | 1 | 2 | 3 | 4 | 5 | 6 |
| 194.0 | 180.0 | 134.0 | 158.0 | 165.0 | 173.0 | |
| 7 | 8 | 9 | 10 | 11 | 12 | |
| 160.0 | 166.0 | 160.0 | 150.0 | 168.0 | 178.0 |
The average cumulative monthly turnover in the shares of Cinkarna Celje, d. d. in 2020 was EUR 1.4 million or 8% higher than the average monthly turnover in 2019, when it was EUR 1.3 million. The total annual turnover was EUR 17.1 million (EUR 15.6 million in 2019).
The table shows extreme values of the share price and the cumulative monthly turnover over the last three years.
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Maximum Share price in EUR per share | 274.0 | 225.0 | 203.0 |
| Minimum Share price in EUR per share | 173.0 | 174.0 | 125.0 |
| Cumulative monthly turnover in EUR thousand | 10,586.0 | 2,296.0 | 3,317.1 |
| 1,564.2 | 572.2 | 495.4 |
On 17 June 2020, the Company’s General Meeting voted in favour of the proposal of the Management Board and the Supervisory Board on the use of distributable profit for 2019, which was at the level of EUR 15.9 million. In accordance with the adopted proposal and resolution, the major part of distributable profit of EUR 13.5 million was paid out in the form of dividends. The dividend per share was worth EUR 17.00 gross, which is 40% less than in 2019 and represents an 11% dividend yield. The remaining amount of EUR 2.3 million was allocated to retained earnings.
On 5 June 2018, the General Meeting of Shareholders authorised the Management Board to redeem treasury shares. On the last day of 2019, the number of these shares was 10,652. In 2020, 11,299 shares were obtained from the free market, totalling EUR 1.9 million in value. As at 31 December 2019, the Company had 21,751 treasury shares.
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| 2018 | 2019 | 2020 | Change in 2020 | Change in 2019 | |
|---|---|---|---|---|---|
| Gross dividend in EUR per share | 26.52 | 28.27 | 17.00 | - 40 | +7 |
| Net dividend in EUR per share | 19.89 | 21.20 | 12.75 | - 40 | + 7 |
| P/E 31 Dec | 4.83 | 6.99 | 7.60 | + 9 | + 45 |
The Company paid out 63% of net profit for 2019 in the form of dividends in 2020.
The dividend yield of the share as at the distribution date was a high 11%. The payment represented 40% of total free cash flow from operations in 2020. With above-average dividend payout as compared to the industry, the Company was in 2020 operating smoothly and confidently in terms of ensuring cash for continuous financing of operations and investments. The balance of cash increased by 19%.
The analysis of expenses and costs provided below relates mostly to the cost of material, raw materials and energy and labour costs. The biggest impact on the Company’s operating performance was exerted by the changes in the cost of material, raw material and energy as the Company pursues capital-intensive activities. Labour cost is defined primarily through a constructive dialogue with social partners and by operating performance. The cost of interest again did not represent an important efficiency and performance factor in 2020, as the Company has had no debts as of 2014.
The most important factor for the scope and dynamics of costs are the conditions in the global and European economies. Economic climate indicators were at lower rates in early 2020. Economic growth rates of the major trading partners are mostly negative due to the impact of the epidemic on consumption. The situation in the Slovenian economy is currently encouraging, though the economic climate was deteriorating during the year. The decline in the domestic economy was mitigated by adjustments on the part of businesses and consumers and by fewer disruptions in manufacturing and construction.
The prices of the key goods on the commodity markets (non-ferrous metals, steel, energy, basic chemicals, etc.) were quite volatile during the year, which was mainly evident in the comparison of the first and the last quarter. Towards the end of the year and in parallel with growing optimism, purchase prices mostly rose. We limited the gradual growth of energy prices, and other increases will materialize in the current year. The purchase prices of titanium-bearing raw materials remained at similar levels.
Political and security risks related to the situation in the Near and Middle East and the protectionist measures of the former US administration have not had a direct material impact so far. The combination of the mentioned macroeconomic trends and situation of the titanium dioxide pigment industry led to a deteriorated relationship between purchase and selling prices. The pressure on labour costs increased in Slovenia and the reasonable increase in expectations of employees, but the Company managed to stay within business performance plans with the pay policy.
The total direct cost of material, energy and packaging grew by EUR 3.3 million in the period as compared to 2019, while the scope of production rose by 6% at constant prices. Owing to significantly lower volume of production in the Metallurgy BU and discontinuation of the production of construction materials in the Chemistry Celje BU, raw material costs are marginally higher by 1%. The dynamics of raw material costs corresponds to the dynamics of production scope, while packaging costs fell due to the said abolition of the construction material line – the last major B2C product line. Energy prices are expected and planned to be higher than in 2019, but we keep them at bay with measures aimed towards improving energy efficiency. The increase in energy costs results from a 38% rise in electricity prices.
The ratio between purchasing and selling prices did not change significantly, the margin squeeze was reduced slightly at the expense of lower selling prices of pigment. Purchasing prices of titanium-bearing raw materials remained at the level of the previous comparable period. The containment of raw material costs was influenced by lower purchase prices of sulphur. Copper and zinc are slightly above the 2019 level, which is mainly linked to price growth in the last half of the year.
The biggest share of production costs in 2020 was again arising from raw materials for production (86.0%), which was followed by energy (12.3%) and packaging (1.7%). In line with the increased efficiency and return in the titanium dioxide industry and in Cinkarna Celje, d. d., we implemented a motivating pay policy in 2020 and, within a realistic framework, followed the dynamics of business results, which significantly exceeded the results from the year before as well as the plans. The foundations of the pay policy were agreements and guidelines of social partners at the level of the state and within the Company.
The average monthly gross salary increased by 1% YOY and came in at EUR 2,314.42 in 2020, while it was EUR 2,296.92 in 2019. In April 2020, we paid employees a holiday allowance of EUR 1,806.5 gross per employee. In January 2020, we paid employees a bonus of EUR 1,700.00 gross per employee owing to exceptional business results and high sales. Also, in January 2021, we paid employees a performance bonus as part of the salary in the amount of EUR 1,300.00 gross per employee, charged against the 2020 financial year. In 2020, the Company also paid supplementary pension insurance contributions for employees into the Modri krovni pokojninski sklad (MKPS) managed by Modra zavarovalnica, whereby the annual contribution was EUR 601.6 per employee.
The generated labour costs at the Company level were 3% lower as compared to 2019. Labour costs per employee grew by 1% in 2020 from 2019. The bulk of labour cost is the cost of gross salaries, accounting for 80.8%. Compared to the year before, total gross salaries increased by 2%.
Based on the data on the production value (measured at constant prices) and the average number of employees in 2020, it is concluded that productivity at the level of Cinkarna Celje, d. d. was 10% higher than in the same period last year, and 4% higher than planned for 2020. The productivity growth is mainly due to 9% higher value of production of the Titanium Dioxide BU and 5% higher value of production of the Chemistry Mozirje BU. Productivity was positively affected by a decrease in the average number of employees by 4%.
Amortisation and depreciation expense dropped by 9% on 2020 resulting from the scope of investments, which was lagging behind the amounts of accounted annual amortisation and depreciation over the previous 10 years. 2018 was an exception, as we significantly exceeded the amount of accounted amortisation and depreciation for the year with EUR 22.6 million invested. Investment scope increased by 2% as compared to 2019.
In 2019, the Company had no interest cost as it had no financial debts (in 2014, the Company recorded interest cost arising from bank loans for the last time). The cost of interest thus has no impact on the business performance and at the same time the Company is no longer exposed to risks related to potential changes in interest rates. In 2020, minimum negative financing balance of EUR 22.8 thousand was recorded (in 2019, positive financing balance of EUR 9.6 thousand). The resulting negative financing balance arises from foreign exchange gains of EUR 2.9 thousand, revenue from investments and other loans in the amount of EUR 43 thousand and other financial liabilities in the amount of EUR 52.7 thousand (the costs of provisions for termination and jubilee benefits equal EUR 36 thousand). Minimum foreign exchange losses totalling EUR 2.9 thousand represent the effective use of hedging instruments to manage the volatile movements of the euro-dollar currency pair in the procurement of titanium-bearing ores.
Despite the situation in the past year, we operated extremely successfully in the period under review. We generated net profit of EUR 18.9 million. Corporate income tax for 2020 amounted to EUR 3.4 million. The decrease in deferred taxes stood at EUR 131.3 thousand.
| 2020 | Value in EUR | Share in % | 2019 | Value in EUR | Share in % |
|---|---|---|---|---|---|
| Operating profit or loss | 22,526,270 | 13 | Operating profit or loss | 25,726,942 | 15 |
| Costs of materials and services | 110,970,369 | 63 | Costs of materials and services | 108,285,638 | 61 |
| Labour costs | 30,099,442 | 17 | Labour costs | 30,856,980 | 17 |
| Write-downs in value | 10,349,655 | 6 | Write-downs in value | 11,287,681 | 6 |
| Other expenses | 1,283,476 | 1 | Other expenses | 1,542,270 | 1 |
| Total operating revenues | 175,229,212 | 100 | Total operating revenues | 177,699,511 | 100 |
The sources of financing for the achieved scope of operations in 2020 were mostly our own assets accumulated over the course of current operations and to a minor extent debts. The financing of the increase in and upgrading of production/business equipment and buildings as well as investments underway was exclusively from our own assets accumulated over the course of current operations. Over the last year, we used no bank sources and focused on management of net current, short-term assets, thus ensuring the Company’s reliable, safe and stable financial position and adequate liquidity at all times.
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| 2020 | Value in EUR | Share in % | 2019 | Value in EUR | Share in % | ||
|---|---|---|---|---|---|---|---|
| Long-term assets | 110,083,986 | 52.3 | Long-term assets | 107,290,529 | 51.6 | ||
| Current assets | 99,955,723 | 47.5 | Current assets | 100,183,266 | 48.2 | ||
| - Inventories | 35,524,605 | 16.9 | - Inventories | 40,992,387 | 19.7 | ||
| - Financial assets (investments) | 35,056 | 0.0 | - Financial assets (investments) | 360,650 | 0.2 | ||
| - Receivables | 26,738,238 | 12.7 | - Receivables | 27,131,987 | 13.1 | ||
| - Cash | 37,657,824 | 17.9 | - Cash | 31,698,242 | 15.3 | ||
| Short-term deferred costs and accrued revenues | 295,987 | 0.1 | Short-term deferred costs and accrued revenues | 333,270 | 0.2 | ||
| Assets | 210,335,696 | Assets | 207,807,065 |
Share of non-current assets in total assets increased by 0.7 percentage points from the end of 2019 to 52.3%. The lion’s share of non-current assets is accounted for by property, plant and equipment (96.7%). Their value increased by EUR 3.1 million or 3%, i.e. by the difference between the amount invested in property, plant and equipment and the accounted depreciation in 2020. Long-term investments did not change in 2020 and include shares and interests in companies. Deferred tax assets decreased by 7% or EUR 131 thousand, mostly due to reversal of provisions and derecognition of final write-offs of previously revalued operating receivables and investments.
The share of current assets in total assets decreased by 0.7 percentage points from the end of 2019 to 47.5%. In terms of value, the most important item of these assets are cash (38%), inventories (35%) and receivables (27%).
Inventories decreased by 13% as compared to the end of 2019, with inventories of material (including advances) decreasing by 13% and inventories of work-in-progress increasing by 10%, while the total value of inventories of finished products and merchandise dropped by as much as 18% (as compared to the end of 2019). The key factor for decreased inventories of finished products is higher quantity of pigment sold.
Short-term financial assets (investments) mainly comprise the fair value of derivative financial instruments, having decreased by 78% compared to the end of 2019.
Short-term operating receivables include short-term trade receivables and short-term operating receivables due from others (mostly from the state for input VAT). They decreased by 1% from the end of 2019. Trade receivables grew by 3%, while other short-term receivables dropped by 37%, mostly due to the corporate income tax advance payment being lower than the corporate income tax expense. The overview of trade receivables by maturity reveals that the age structure of receivables remains very solid.
Cash (and cash equivalents) account for 38% of total current assets; their balance increased by 19% as compared to the year before. The relatively high balance of cash mostly arises from excellent operations throughout the year.
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Short-term deferred costs and accrued revenues represent deferred costs paid in advance. Their value decreased by 11%.
| 2020 | 2019 | |||
|---|---|---|---|---|
| Value in EUR | Share in % | Value in EUR | Share in % | |
| Equity | 174,016,279 | 82.7 | 170,342,846 | 82.0 |
| Provisions | 20,876,401 | 9.9 | 22,578,045 | 10.9 |
| Short-term operating and financial liabilities | 14,361,213 | 6.8 | 13,991,310 | 6.7 |
| Short-term accrued costs and deferred revenues | 1,081,803 | 0.5 | 894,864 | 0.4 |
| Liabilities and equity total | 210,335,696 | 100 | 207,807,065 | 100 |
The value of equity in the structure as at 31 December 2020 accounts for 82.7%, which is 0.7 percentage point more than at the end of 2019. The amount of equity increased by 2% as compared to the end of 2019. The increase (EUR 3.7 million) relates to the difference between net profit for 2020 and pay-out of dividends for 2019 in the amount of EUR 13.6 million, the purchase of treasury shares out of provisions in the amount of EUR 1.9 million and due to changes in the surplus from the revaluation of termination benefits equalling EUR 0.2 million. Based on the resolution of the General Meeting dated 5 June 2018 and the resolution dated 17 June 2020, the Company redeemed 11,299 treasury shares in 2020 totalling EUR 1.9 million in value (of which 11,099 of the acquired shares were subscribed as at 31 December 2020), setting aside reserve for treasury shares against other revenue reserves at the same time. As at 31 December 2020, the Company has 21,951 treasury shares (21,751 subscribed to the treasury shares fund). There were no other material changes in equity.
The amount of share capital within total equity stood at EUR 20,229,769.66 and comprises 807,977 ordinary freely transferable no-par value shares (of which 21,951 are treasury shares and 21,751 are subscribed in the treasury shares fund). The carrying amount of a share as at 31 December 2020 was EUR € 215.4 (it increased by 2% from the beginning of the year).
Provisions and long-term accrued costs and deferred revenues comprised 10% of liabilities. Provisions for pensions and similar liabilities were established as at 1 January 2006 (termination and jubilee benefits under SAS 10) and are adjusted annually based on actuarial calculations. Other provisions were established in the ownership transformation procedure for environmental provisions. Over the last years, we established the following additional environmental provisions: EUR 5 million in 2010 for rehabilitation of the Bukovžlak solid waste landfill and EUR 7 and 5 million in 2011 for rehabilitation of the Za Travnik landfill and destruction of low-level radioactive waste. At the end of 2017, we reviewed in detail, checked and only set aside new provisions for elimination of risks arising from old burdens in the amount of EUR 6.4 million. In the period under review, the volume of environmental provisions decreased by 8% due to the coverage of costs of the above mentioned rehabilitation projects. Long-term accrued costs and deferred revenues decreased by 16% owing to the depreciation of assets acquired free of charge and their present value in the coming years.
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Financial and operating liabilities rose by 3% compared to the end of the previous year due to a 15% increase in liabilities from advance payments and a rise in other short-term liabilities arising from taxes and obligations for employee contributions and corporate income tax by 12%. All financial and operating liabilities are short-term. The Company’s gross debt rate was 6.8% and was 0.1 percentage points higher as compared to the balance as at 31 December 2019, when it was 5.3%.
Short-term financial liabilities as at 31 December 2020 amounted to EUR 60.1 thousand, which is 35% more than at the end of 2019 (with EUR 44.6 thousand); the difference arises from increased assignment of our liabilities and receivables of our suppliers. The Company’s debt ratio is thus 0.29‰ (in the previous period: 0.22‰).
Short-term operating liabilities rose by 3% in the period. Short-term trade payables as at the last day of December 2020 stood at EUR 9.3 million and were down 2% as compared to the end of 2019, mostly due to decreased scope of supplies in December 2020 as compared to December 2019. Liabilities from advances received increased by 15% due to compensation for customers for larger purchases. Other short-term operating liabilities rose by 12% (EUR 0.49 million) due to higher liabilities for the payment of corporate income tax for 2020 from advance payments and include mostly EUR 2.2 million of liabilities for net salaries and performance bonuses, EUR 1.1 million of liabilities for salary-related contributions and taxes, EUR 0.8 million for the payment of corporate income tax and EUR 0.4 million of VAT liabilities and liabilities to other institutions.
Short-term accrued costs and deferred revenues increased by 21% in the period concerned. They mostly comprise accounted liabilities for annual leave and labour costs, accrued environmental contributions and taxes and VAT on advances given.
| Financial ratios | 2020 | 2019 |
|---|---|---|
| Equity financing rate | 82.81 % | 81.98 % |
| Long-term financing rate | 92.66 % | 92.84 % |
| Operating fixed assets rate | 51.07 % | 50.28 % |
| Long-term assets rate | 52.34 % | 51.63 % |
| Equity to fixed assets ratio | 1.62 | 1.63 |
| Acid test ratio | 2.62 | 2.27 |
| Quick ratio | 4.49 | 4.23 |
| Current ratio | 6.96 | 7.16 |
| Operating efficiency ratio | 1.15 | 1.17 |
| Net return on equity | 0.13 | 0.15 |
| Dividends to share equity ratio | 0.67 | 1.12 |
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Cinkarna Celje, d. d. is a regional company operating globally. Therefore, it is exposed to risks of economic, environmental and social nature. The risks are perceived individually or collectively as a series of events that could significantly impact the achievement of tactical and strategic goals of the Company and/or its capacity for long-term operations. These events include both positive and negative impacts, those with negative potential impact being risks and those with positive potential impact being opportunities. The risk management system/process (SRM) is designed in the same way and operates in the same, complimentary way for both managing risks and exploiting opportunities.
The Company’s risk management system is comprehensively integrated into all business processes. Its design, process structure and organisation (in terms of competencies and responsibilities) is a combination of corporate knowledge, experience with specific external and internal environment and recommendations, norms, frameworks of international standards for risk management (ISO31000, COSO, RME/ferma, etc.) and established good practices in the industry.
The risk management system itself combines sub-processes of risk identification, risk assessment/evaluation, risk management, control and reporting. SRM input is data obtained based on monitoring and analysing the external and internal environment, whilst the risk management process results co-define business processes in interaction with operational, tactical and strategic planning. The risk management process is presented below.
| EXTERNAL ENVIRONMENT | INTERNAL ENVIRONMENT |
|---|---|
| MONITORING & ANALYSIS | IDENTIFICATION OF RISKS AND OPPORTUNITIES |
| BUSINESS PROCESSES | CONTROL & REPORTING |
| STRATEGIC AND OPERATIONAL PLANNING | RISK MANAGEMENT: |
| -description / estimate | -valuation |
| -decision-making / management |
The sub-process of assessing and evaluating risks is of utmost importance. For this purpose, we use a uniform manner for describing and defining risks and a combined quantitative and qualitative method for their evaluation. Risks are evaluated in terms of the scope of their impact and the probability of their occurrence. The scope of impact on the Company’s results or damage is structured in the following way:
The probability of occurrence is defined in a combined, descriptive manner and is based on arbitrary experiential method:
This risk structuring manner enables a relatively clear definition of significance, ranging and prioritising.
Active operational management of risks and their control includes various tools and their combinations primarily aimed at avoiding risks, eliminating sources of risks, risk taking and integration of risks in the business model, transfer of risks to external partners, reducing probabilities, limiting consequences, etc.
Cinkarna Celje, d. d. is a long-standing company with traditionally prudent approach and business culture, which does not favour taking risks and risky operations. Consequently, the range of measures is primarily focused on rejecting and eliminating risks and less on calculating risk and return trade-off.
The risk management system and its efficiency is a direct collective responsibility of the Company’s Management Board. The Management Board defines the process, supervises it and adopts key decisions (strategic development, investments, divestments, business area portfolio, etc.). Administration of the system is divided into key areas (sales, production, finance, environment, HR), for which individual members of the Management Board are responsible.
The Management Board is directly supported by directors and managers of business units and support departments, i.e. Management Board College, which meets at least once quarterly. In terms of integration into business processes, the support of organisational units of Finance, Accounting, Internal Audit, IT and Planning & Analytics is of key importance. Coordinated actions of all risk management stakeholders and clearly defined responsibilities are prerequisite and enable successful integration of risk management into tactical and strategic plans and operational business processes of the Company.
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Specific risks and opportunities related to individual product and sales lines or specific areas, such as HR, security, IT safety, safety at work, etc., are managed by heads at the level of organisational units or processes, taking into account organisational acts and work instructions and they report systematically on these to the Management Board College, which is responsible to adequately register individual risks and initiate adequate control measures.
It oversees the operations of the system and reports on it to the Internal Audit Department. In compliance with ZGD-1, the Supervisory Board monitors and familiarises itself with the operations and findings of the system for risk management and internal controls. External audit verifies whether the system for risk management and internal controls is in place and operational in compliance with the Accounting Act (ZR).
The Company reports to the external public about its operating risks and their management formally through its annual and semi-annual reports (published on the SEOnet portal and the Company’s website), which means every six months.
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An important part of the risk management system is also the process of strategic planning that integrates all strategic risks and opportunities and defines the fundamental, key guidelines for the Company's future development. Standard tools, such as SGA, SWOT, PA, etc., are actively used within the strategic planning process. The Company prepares strategic plans for a period of five years. Strategic planning is the responsibility of the Management Board.
The system for managing risks and opportunities is constantly dynamically changing and being adjusted to the needs and challenges of the environment, at the same time integrating new knowledge and positive international practices and experience. The overview of key risks in the continuation has been made and updated in accordance with the circumstances and expectations prevailing at the time of the compilation of this Report.
| Probability of occurrence | Amount of damage |
|---|---|
| Moderate | Moderate |
Definition The risk is associated with the possibility and ability of successfully selling products on target markets. It relates to the increasing negotiation power of buyers, economic (in)stability of markets, growing power of competitors (on account of capital concentrations) and the suitability of the elements of our own marketing mix (price, product, market, promotion). The risk related to selling the flagship product, titanium dioxide pigment, is present and arises from four critical factors: drop in basic demand due to the decreasing economic activity of the leading economies, expansion of production capacities in China and Mexico, protectionist policies of the USA federal administration and the spread of the COVID-19 virus. The increase of customs duties on imports of Chinese materials into the USA from 16% to 31% presents the biggest challenge in the short term. At the same time, the issue of growing production capacities in China is becoming a long-term trend, which will affect significantly the industry structure also in the long term. Certain changes in consumption related to the increase in DIY projects have reduced sales risk.
The risk is mitigated by expansion of the sales network, diversification of the production and sales portfolio, introduction of new and shortening of existing sales channels, development of marketing partnerships, and development of new products that allow entry to new markets and industries. In the last years, we have been actively reducing the product sales risk by optimisation of the sales portfolio with exclusion of products with a high market risk. By way of target-oriented technological investments, we are focusing our sales portfolio on applications and markets of a more demanding nature with a higher quality that represent a shift from the commodity markets, characteristic of which is lower value added and high exposure to Chinese pigment at favourable prices. We also manage sales risks through systematic monitoring and comparative analyses of relevant industries (competitors and buyers), participation in marketing and professional industry events and the introduction of standards for managing quality, safety, the environment and health. The risk is managed through strategic development and maintenance of the so-called compensation markets (USA, Near/Middle East) where we can direct any surplus of unsold quantities, taking into account their current profitability. This sales risk management strategy is used to manage the loss of sales due to the COVID-19 virus epidemic.
| Probability of occurrence | Amount of damage |
|---|---|
| Moderate | Moderate |
Definition The Company is highly dependent on purchasing of quality and appropriately priced raw materials and energy. These are mostly standardised raw materials of a global character (which are often traded on organised markets), primarily titanium-bearing raw materials, copper, zinc and sulphur. The negotiating power of suppliers is high (and is rising). In the long-term, the risk is considerable in terms of prices and also availability. Due to the growth of sales markets for titanium dioxide pigment in 2017 and at the beginning of 2018, market pressures increased significantly, which caused high increases in the prices of titanium-bearing raw materials in the second half of 2018. Between 2016 and 2018, the risk related to the purchasing of titanium slag increased slightly due to the discontinuation of production of a long-standing supplier (one of the two global producers), but we have managed to establish business with a quality alternative supplier, so quantities are secured for the long run. We estimate that the current market situation in the field of titanium-bearing raw materials is relatively stable. Slightly less stable conditions exist in relation to epoxy resins, where demand in the Asian market exceeds supply. The risk in the area of energy products (gas and electricity) is important mostly in the long-term due to the expected trend of growing prices and objective long-term limitations of resources. In 2018, the prices of energy products related to crude oil increased, but the situation stabilised in the second half of the year and in 2019. Between the first and the second epidemic wave, the energy market declined. An increase in energy prices is expected or has to some extent already materialised. Transport restrictions in the first and second quarters of 2020 resulted in lower oil prices. The last quarter, however, was characterised by growth and exceeding the initial prices. Lower operating levels of refineries during the epidemic and the replacement of fossil fuels increase the possibility of sulphur price volatility. We estimate that in the next medium-term period the supply of energy will be good and that the market, including price levels, will stabilise. We assess the risk as relatively manageable.
We manage the risk by searching for and evaluating alternative raw material sources (catalogues of verified alternative raw materials and suppliers). We build long-term and stable partnerships in a targeted manner. We monitor and analyse the situation on international markets ourselves and with the help of market specialists. We are in regular contact also with suppliers with whom we do not cooperate, but that could be a solid alternative. In this way, we managed to establish cooperation with three new/additional suppliers of titanium slag (or equivalent raw material) in 2017 and 2018, resulting in somewhat decreased risk of dependence on one supplier. We have guaranteed quantities with a long-standing supplier of epoxy resins. In the period of lower energy prices, we concluded a supply contract at relatively favourable prices. We are developing infrastructure, information systems, technologies and products so as to limit the use of critical raw materials, reduce dependence on individual suppliers and limit the volatility of purchasing prices. Where possible, we conclude long-term fixed-price purchasing agreements, use various hedging systems, balance the structure of consumption of individual energy products, implement energy management and continuous measures/projects aimed at optimising energy consumption. We include targets for specific consumption of raw materials and energy products into the Integrated Management System.
| Probability of occurrence | Amount of damage |
|---|---|
| Moderate | Moderate |
Definition Considering that the Company is not limited geographically, it is exposed to the risk of changes in regional and global macroeconomic conditions, political/security conditions and even damaging climate events. The international economy climbed out of recession in 2013 and in the period from 2014 to 2017 gradual economic recovery was underway. Unfortunately, in 2018 the positive trend started deteriorating. Forecasts, projections, confidence indicators and the indicators for 2020 and beyond are at a lower level than the year before. Nevertheless, they are higher than initially projected. The majority of negative consequences cannot be estimated. The general macroeconomic risk is definitely present at the moment, but we believe to be prepared well enough for possible additional deterioration of conditions. Extreme prudence and attention are still in place due to the escalation of relationships between Russia and the West, complicated security situation in the Middle East, the unpredictable impact of the previous US administration's international economic policy and the ongoing epidemic on the wider economy. The long-term situation in Turkey, which is one of the biggest markets for titanium dioxide pigment, is particularly important for Cinkarna Celje, d. d., although the economic situation has improved towards the end of 2020. In 2021, we will have to devote special attention also to the consequences of Brexit, although so far, we have not detected and do not expect any significant direct impact on our operations in this respect.
We manage the risk by focusing on relatively safe and stable markets within EU+ (more than 80% of sales), while sales outside the borders of EU+ are distributed over a broad portfolio of markets such as: the USA, Near/Middle and Far East. We develop a balanced sales structure from the point of view of risks & returns. An important element of the strategy for the management of this risk is flexibility in directing sales to different geographic markets. We consequently maintain an optimum scope of the so-called compensation markets. In doing so, we regularly monitor macroeconomic forecasts and projections and adjust our business policy accordingly. We are carefully monitoring developments in Turkey, promptly assessing and adjusting our business decisions together with our local partners. We mitigate manageable risks strategically (e.g. financial risks) in order to enhance the compensation ability in objective risks of the global economic environment.
| Probability of occurrence | Amount of damage |
|---|---|
| High | Low |
Definition Cinkarna Celje, d. d. is a capital-intensive company involved in the processing industry with a high share of continuous processes. From the point of view of loading and wear of the means of work, the conditions are mostly unfavourable (chemically aggressive substances, high temperatures, pressure, etc.).
Management The risk is mitigated through professionally elaborated and excellently organised preventative and curative maintenance system. Special attention is placed on preventative maintenance, which implies excellent technical diagnostics. We ensure operational safety through integrated spare devices at critical points.
| Probability of occurrence | Amount of damage |
|---|---|
| Low | High |
Definition The chemical processing and metallurgical industry implies the risk of the occurrence of such accidents.
Management The risk is managed through systematic evaluation of environmental and employee impacts, periodical assessments of fire threats and job systematisation in line with risk assessment. In the area of environmental impact mitigation, we have systematically introduced European environmental standards through the implementation of the principles of the ‘Responsible Action Programme’ and alignment of our activities with the requirements of the IED directive. We implement our processes by observing the ‘best available technique’ (BAT) principle. As regards fire safety, we have our own firefighting unit organised, and the Company also holds adequate fire insurance. As concerns accidents at work, we have a service established that controls compliance with rules and measures for safety and health at work. We provide regular education and training for employees. The Company holds liability insurance. We conclude written agreements with external contractors and provide them with training. We have engaged a permanent coordinator for safe and healthy work. We have introduced work instructions for the performance of maintenance interventions in terms of fire prevention, accident prevention and improvement of cleanliness in the workplace. We have had the ISO 14001 environmental management system and the ISO 45001 safety and health management system in place since 2009, both of which are certified and supervised by an authorised institution. A part of the Company certifies compliance with environmental regulations also by registering in the EMAS register kept by the Ministry of the Environment and Spatial Planning. We have performed an assessment of hazards and prepared the protection and rescue plan. We identify and eliminate process risks for the environment, safety and health through annual framework and implementation goals. We carry out evacuation drills in line with the programme. In 2020, we revised the concept of environmental risk in accordance with the Seveso directive. We are implementing improvement measures resulting from the revision. We have started a comprehensive rehabilitation of the Bukovžlak non-hazardous waste landfill, thus reducing the possibility of accidents in this area.
| Probability of occurrence | Amount of damage |
|---|---|
| Low | Low |
Definition Cinkarna Celje, d. d. performs its purchasing and sales on the global market, which is why it is also exposed to the risk of unfavourable inter-currency ratios. The most important is the euro/US dollar exchange rate. Because the majority of sales are transacted in euros, exposure is worrying especially in dollar-denominated purchasing of titanium-bearing and occasionally also copper compounds.
Management We are continuously monitoring changes and forecasts in relation to the dynamics of the euro/US dollar currency pair. Based on market data and prices of financial instruments (hedging costs), we are defining the strategy for hedging cash flows (method and extent) on an ongoing basis. In essence, the risk of adverse changes in the dollar exchange rate is limited in two ways: we cover part of the exposure by operational hedging, i.e. exchange rate coordination of sales and purchases, and we systematically limit the risk of short-term fluctuations using short-term financial instruments (especially dollar futures).
| Probability of occurrence | Amount of damage |
|---|---|
| Moderate | Low |
Definition This is the risk of potential non-fulfilment of contractual obligations on the part of buyers, meaning that buyers are in delay with payments or default on their past-due liabilities. The risk is limited as we mostly do business with long-standing partners who are frequently well-known traditional European industrial companies with a high credit rating. Over the last years we noticed that the payment discipline is relatively poor in Slovenia, the Balkans and Eastern Europe, but we do not expect further deterioration of problems in this area in the future.
Exposure to credit risk decreased significantly by reorganising the portfolio of the Company’s strategic business areas, specifically by abolishing the product lines of graphic intermediate goods, the titanium-zinc sheet, the anti-corrosion coatings and the construction compounds. As concerns credit risks, we should point to the consequences of the unclear outcome of the epidemic and of the associated changes in consumer habits.
Management The risk is mitigated by development of long-term partnerships, checking of ratings of new domestic and international buyers, selection of reliable buyers, and regular monitoring and verification of the business health of our buyers. We are using the credit limit system, which limits systematically potential damages. We also have a department with adequate IT infrastructure organised for dynamic monitoring of maturity of outstanding receivables, balance of overdue receivables and their collection. When it comes to mediation, court and out-of-court recovery of receivables, we cooperate with external providers of such services. We make use of payment security instruments (collateralisation of receivables, advance payment, bills of exchange, documentary letter of credit, bank guarantee or documentary collections) in individual cases.
| Probability of occurrence | Amount of damage |
|---|---|
| Low | Low |
Definition Liquidity risk is related to the liquidity of a company or the liquidity of an individual financial instrument. The emergence of such a risk would indicate the Company's inability to repay overdue liabilities and could have a chain effect.
Management The Company’s operations are traditionally conservative with high cash flow. Liquidity management includes, among other things, the planning of expected monetary liabilities and their coverage, ongoing monitoring of customers' solvency and regular collection of overdue receivables. The credit rating is AAA.
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| Probability of occurrence | Amount of damage |
|---|---|
| Low | Low |
Definition Interest rate risk is the possibility of losses due to unfavourable changes in interest rates on the market.
Management The Company has no long-term financial liabilities and has no related measures put in place. Should this fact change, appropriate measures would be put in place in order to manage this risk.
| Probability of occurrence | Amount of damage |
|---|---|
| Low | High |
Definition In the last quarter of 2010, the Management Board adopted the decision not to include the Bukovžlak non-hazardous waste landfill in the application for the environmental permit because of the high financial burdens and limited availability/capacity of the landfill and for the landfill closure procedure to be commenced immediately. An overall rehabilitation is needed for long-term safety and minimisation of environmental impacts.
Management In 2010, the Company formed environmental provisions in the amount of EUR 5 million that was debited against operating results. We have obtained the environmental permit for the period of closing down the landfill (30 years). We finished the first phase of comprehensive rehabilitation, strengthening of the barrier. Further works on project documentation revealed a need for additional interventions not anticipated at the time of establishing provisions in 2010, thus we established additional provisions of EUR 782,563 at the end of 2017. In line with the integral permit, in June 2020, we started the implementation of the remaining phases of the comprehensive rehabilitation (cover, drainage of backwaters, central and western drainage, diversion dam). From the view of risk management, we completed the most demanding operation before the end of 2020. The entire rehabilitation is expected to be completed in 2022.
| Probability of occurrence | Amount of damage |
|---|---|
| Low | Low |
Definition The Company only has one functioning pipeline for pumping the neutralising agent at the Za Travnik waste disposal plant. The pipeline has already been partially replaced and a bigger, new one was partially set up, whilst the original is still partially operating. In the event of leaks, production of titanium dioxide must be stopped. We were able to repair the leaks to date in sufficiently short periods of time, which is why the risk is still assessed as low.
| Probability of occurrence | Amount of damage |
|---|---|
| Low | High |
Definition The time to dry backfilling of the Za Travnik waste disposal plant is limited. It depends on available volume, pigment production quantity and by-product quantity. The backfilling of the waste disposal plant means that the titanium dioxide production is stopped.
Management We produce the maximum amount of CEGIPS possible, thus reducing the amount of red gypsum for disposal. The acquired integral permit for the rehabilitation of the Bukovžlak non-hazardous waste landfill endorses the use of red gypsum for the construction of an airtight cover and the setting up of a diversion dam. We have revised the project for backfilling red gypsum into the Za Travnik waste disposal plant, the aim of which is to optimise backfilling (more natural settlements). Given the changed conditions (increased removal of white gypsum, different crystal structure, settlements), we have prepared a new estimate of the available backfilling volumes. The time to backfilling is being prolonged by way of all these measures. Based on Article 9 of the decree on the construction plan for the Za Travnik landfill in the Municipality of Šentjur, we have initiated the process of amending the OPPN (Detailed Municipal Spatial Plan). Coordination with the Municipality of Šentjur is underway. For 2021, we also set the goal of checking the possibility of changing the technology of waste acid treatment, which now results in the formation of red gypsum. We are looking for ways to reduce the dependence of production on the available backfilling volumes.
| Probability of occurrence | Amount of damage |
|---|---|
| Low | High |
Definition Barriers represent a hazard in case of a collapse. The latter could mainly occur in the event of a powerful earthquake.
Management We carry out the prescribed monitoring that is analysed once a year by experts from the Faculty of Civil and Geodetic Engineering of the University of Ljubljana. We observe all recommendations by concurrent maintenance. Projects of the break wave have been developed. We amended the network for technical monitoring at the Za Travnik barrier and renovated the primary and secondary geodetic monitoring network. We plan additional security and drainage measures on the east side. Based on data from new monitoring wells, we will order preparation of the water balance for any necessary measures on the west slope of the barrier. Due to the improved situation following rehabilitation works in previous years, we reversed environmental provisions to EUR 450,000 based on expert assessment of still necessary works. We perform regular maintenance of the high barrier for red gypsum Bukovžlak. At the end of 2017, we established EUR 3 million provisions for more comprehensive rehabilitation of this barrier. In 2018, we made new monitoring wells on the east side of the barrier, where monitoring started in 2019. On the basis of the data obtained we will formulate a plan for the rehabilitation measure. A concept project for lowering lake water level that would contribute significantly to safety of the barrier was prepared. We improvised noise reduction to obtain data for further work. The seismic observation of the high barrier Bukovžlak is in regular operation. Surveillance is carried out by a hired certified seismological observer. Rehabilitation of the barrier of the Bukovžlak non-hazardous waste landfill was carried out in 2016 and 2017. Complete rehabilitation of the entire landfill, which began in June 2020, will further improve stability in the long run.
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The results of the environmental due diligence – phase II revealed that the current production location in Celje is built on waste of past activities. Deposited waste has impact on groundwater, which can affect human health and the environment.
We implemented several simultaneous activities to define the potential impact on human health and the environment and promptly informed the public of the results. In August 2018, we concluded and publicly presented the Human Health and Environmental Risk Assessment arising from consumption of agricultural crops produced under ONOB. It has been established that the polluted hanging underground water under ONOB has no negative impact on crops. In November 2018, we also presented the Ecotoxicological Research of impact of old burdens on the current production location in Celje on the biota in Hudinja and Vzhodna Ložnica water courses. Four locations requiring action have been identified. In 2019, we conducted the first part of the activities to supplement the Ecological Risk Assessment in segments for which the previous research does not provide sufficient causal explanation. One location remains that we cannot explain and requires some additional sampling. We prepared a comparison between the requirements of the Slovenian, German and Dutch legislation and a summary of the work done so far, and submitted the documents to the Ministry of the Environment and Spatial Planning. In its reply, the Ministry stated that the current environmental legislation does not prescribe any measures, therefore the Ministry is unable to participate in the working group. Cinkarna may prepare the measures itself.
In view of the above, the Management Board commissioned a revision of the legal opinion. It also commissioned the company CDM Smith to prepare a proposal for technically feasible rehabilitation measures with a feasibility assessment for the two most polluted areas of the current production site.
Continuous measurements with constant data on water flow and pumping quantity are required. Production can be restricted during months of drought.
We are looking for solutions and we are already making minor investments in partial water recycling. We submitted an application to the Slovenian Water Agency to supplement the application for amending the water permit in accordance with the scientific bases prepared by the Institute for Water of the RS. Given the scientific bases, we expect slightly milder requirements for the determination of ecologically acceptable flow. Given the lengthy nature of the procedure with unpredictable outcome, we undertook the task of examining the provision of process water from other sources in 2020. The terms of reference showed that the existing reservoirs, lake Šmartinsko jezero and lake Slivniško jezero, are not a viable solution due to other purposes of use, environmental requirements and inadequate capacities. The construction of reservoirs is not an economically reasonable solution.
Possible solutions have been indicated in the direction of:
In relation to the first indent, during the collection of initiatives for the preparation of the Water Management Plan for the next period, we submitted an initiative to the Ministry of the Environment and Spatial Planning to transform this part of the water body into a HMWB. We are examining the second and third indents against the objective for 2021.
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| Probability of occurrence | Amount of damage |
|---|---|
| Low | Moderate |
In March 2020, the European Parliament, on a proposal from the Commission, voted to classify TiO2 under CLP legislation – class 2 with the risk phrase H350i – “May cause cancer by inhalation”.
Producers of titanium dioxide must arrange for an extended safety data sheet and the appropriate labelling on the packaging within 18 months.
Interpretation of the classification together with notes and derogations allows for several different options, making the consequences difficult to define. We estimate that the probability of greater titanium dioxide substitution is small, as there are no real alternatives.
An expert fact, which was also endorsed by RAC members in their opinion, is that titanium dioxide as such is not toxic or genotoxic. It merely causes a problem if lungs are overloaded with extremely large amounts of dust, which is not possible in real situations. The measure is not proportionate, the CLP legislation is not an appropriate tool for this purpose. This is why we, titanium dioxide producers, have brought an action to the Court of Justice of the European Union against the European Commission.
The European Titanium Dioxide Manufacturers Association (TDMA) organises several activities for collecting evidence, informing the users and communicating with the decision makers. Among other things, guidelines on how to understand the legislation have been drawn up. As a member, we are actively involved in these activities.
An extensive 5-year scientific program has been launched by TDMA to further investigate the potential risk of using various forms of titanium dioxide in both inhalation and skin contact and ingestion. A programme to define appropriate methods for measuring dust in the work environment is being implemented.
We draw the attention of the decision-making bodies to the unresolved problem of waste that will largely prevent the circular economy.
The Company has initiated a prevention measure to eliminate dust sources in manufacturing jobs. As a result, a series of minor and major investments is in progress. We communicate with employees through managers, co-management bodies and bulletin boards. We make employees aware of the importance of ensuring a clean working environment and the use of personal protective equipment in cases where other measures are not sufficient.
We commissioned a study to check the damages of dust from our production to lung cells. The results will be presented in early 2021.
We are also implementing additional measures to verify and eliminate risks. They are mainly related to:
| Probability of occurrence | Amount of damage |
|---|---|
| Low | Low |
MOC requests from the Company the reimbursement of the costs of rehabilitation of the soil excavated by the construction company that acted on request of the investor (MOC) in the scope of construction works (urban wastewater). The excavations were carried out on the land (location of the old Cinkarna) that MOC took over from the Company based on a contract on transfer of redundant assets free of charge. The material was excavated in 2009. At the time of excavation, it was classified as material that could not be disposed of in a non-hazardous waste landfill due to its heavy metal content. Pursuant to the decision of the administrative authority, MOC rehabilitated the material via an external contractor. Prior to that, MOC had already unsuccessfully sued the construction contractor, against whom bankruptcy proceedings had been initiated in the meantime.
According to the current assessment of the law firm that represents Cinkarna in the legal proceedings, the possibility of a favourable outcome for the Company is greater than 50%.
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| Probability of occurrence | Amount of damage |
|---|---|
| Moderate | High |
Pursuant to Article 78 of the Environment Protection Act (ZVO-1), the Ministry of the Environment and Spatial Planning shall update the environmental protection permit ex-officio due to the publication of BAT conclusions relating to the activity of the installation. Consequently, it is necessary to adapt to the requirements. Along with the publication of BAT CWW conclusions, which also refer to the treatment of wastewater (liquid waste) from the production of titanium dioxide, the levels of chemical oxygen demand (COD) emissions will have to be adjusted below 100 mg/l per each discharge. The level of BAT-related emissions is stricter than the emission limit values set out in the Decree on the emission of substances and disposal of waste from titanium dioxide production, which now sets a limit value.
With the competent authority (ARSO), we will carefully review and coordinate the conditions for a certain COD emission level and the possible exceptions provided by the BAT conclusion. We are also looking for a technical solution to reduce COD below 100 mg/l.
| Probability of occurrence | Amount of damage |
|---|---|
| Low | Moderate |
The nature of the Company’s operations is inherently complex and specific as it operates in several industries that are not interrelated and at the same time supplies products to end users from very different industrial areas. Consequently it is exposed to the risk related to networking and interactions and, above all, transfer of its managerial, engineering and supporting know-how. These risks are thus related both to the HR structure and the system of continuous learning and transfer of acquired knowledge and information through communications paths and structures.
We are training and preparing responsible successors for the key functions at all levels of the Company’s organisational structure through target-oriented programme. We ensure adequate information flow for the key managerial and expert fields in all phases of operations of organisational units through constant communications, informing and harmonised actions of all key employees. Successors are actively participating and are closely familiarised with actions and issues related to ensuring uninterrupted operations of business functions and processes. In cooperation with support services we thus ensure undisturbed takeover of the Company's key functions in case of foreseeable and also extraordinary events (illness or longer period of absence, resignations and retirement).
| Probability of occurrence | Amount of damage |
|---|---|
| High | High |
During the global COVID-19 pandemic and the consequent outbreak of the virus also in Slovenia, the Company's internal environment was exposed to a large number of people, both employees and external contractors. In the event of a virus infection, this presents a risk to the smooth operation of individual production organizational units within the Company. The system of adopting a set of measures and internal testing of employees ensures the stability and reliability of human resources in the time of threats posed by the COVID-19 pandemic.
In many areas of the operational and organizational structure of the Company, we used a number of measures, protocols and channels for targeted communication with employees to ensure the smooth operation of the Company. We restricted or minimised contacts with external partners and contractors, adjusted our internal processes in such a way as to ensure the minimum number of employees required in the workplace, adjusted shift work, limited contacts during shift changes, arranged for a certain reserve of critical crews of workers, introduced instruments for work reassignment and work from home, adjusted our canteen service, established protocols for online communication, prohibited gathering of people and established a system of self-supply with disinfectants and protective masks, while ensuring external procurement of personal protective equipment, taking into account all measures taken by the Slovenian Government and the National Institute of Public Health. We established an internal testing system with rapid antigen tests and promptly informed all employees of the measures and protocols in force within the Company. With these measures, we ensured the uninterrupted operation of the Company in the event of infections, possible quarantines and the required self-isolation of employees.
The Company has set up a system of operational and supervisory internal controls at all levels and areas of operations in order to manage risks that impact achievements of objectives in terms of:
Control activities and responsible persons are defined by internal acts (job descriptions, authorisations, organisational regulations, rules, and rules of procedure). The Company provides for:
The General Meeting is convened by the Management Board at their own initiative, at the request of the Supervisory Board or at the request of the Company’s shareholders representing one twentieth of the share capital.
The General Meeting is familiarised with the Annual Report and takes valid decisions at sessions with a regular majority of votes cast, whereby they decide especially on:
They decide by a ¾ majority especially on amendments to:
Shareholders can attend the General Meeting and exercise their voting rights only under the condition that they announce their attendance at the General Meeting to the Company’s Management Board in writing no later than by the end of the fourth day prior to the General Meeting session. An individual shareholder’s number of votes at the General Meeting is determined by the votes vested in the shares that the former owns according to the information in the share register on the fourth day prior to the date of the General Meeting session. Shareholders can exercise their rights arising from shares directly at the General Meeting or through proxies, whereby the letter of proxy must be issued in writing and deposited with the Company. As a rule, one General Meeting is held per year.
The temporary term of office of the Management Board started on 30 June 2020, while on 31 December 2020 the Supervisory Board extended the term of office of the President of the Management Board and the Deputy President of the Management Board by 4.5 years. A member of the Management Board – Worker Director, Filip Koželnik, was appointed by the Supervisory Board for a five-year term on 5 November 2020. Until 30 June 2020, the Management Board consisted of Tomaž BENČINA, BSc (Metallurgy) and BSc (Economics) – President of the Management Board and Jurij VENGUST, MSc – Member of the Management Board in charge of Finance, Accounting and IT. Until 23 October 2020, Marko CVETKO, BSc (Chemical Engineering), Specialist, was Member of the Management Board – Worker Director.
The Company has a two-tier governance system and is governed by the Management Board and the Supervisory Board. The Management Board represents and presents the Company. It is composed of a President and two members, one of whom is the Worker Director (conditions for the appointment and discharge of the Worker Director as well as his/her competencies are stipulated by the Worker Participation in Management Act).
Aleš SKOK
BSc (Chemical Engineering), MBA, USA (from 1 July 2020)
Nikolaja PODGORŠEK - SELIČ
BSc (Chemical Engineering), Specialist
Filip KOŽELNIK
MSc (Business Studies) (from 5 November 2020)
The Management Board adopts all decisions in accordance with the law and the Articles of Association, with the exception of decisions that fall within the express competence of the General Meeting and the Supervisory Board. The Management Board has in particular the following competencies vis-à-vis the General Meeting:
The Management Board reports to the Supervisory Board on:
The General Meeting of Cinkarna Celje, d. d. appointed a new member of the Supervisory Board on 17 June 2020 (five-year term of office as of 18 June 2020): David Kastelic. It also familiarised itself with the appointment of employee representatives as members of the Supervisory Board, namely Jože Koštomaj, who replaced Aleš Stevanovič, and Dušan Mestinšek (from 18 June 2020 for a five-year term) as well as the with the expiry of the term of office of Supervisory Board member Dejan Rajbar. Due to the resignation of the Chair and member of the Supervisory Board Borut Jamnik on 20 November 2019, the General Meeting at an extraordinary meeting appointed Mario Gobbo member of the Supervisory Board for a five-year term of office starting on 23 December 2019. Mario Gobbo took over the running of the supervisory body on 26 May 2020.
| Chair | Dr. Mario GOBBO | (as of 26 May 2020) |
|---|---|---|
| Deputy Chair | Luka GABERŠČIK | LLB |
The Supervisory Board comprises six members, two of whom are employee representatives elected by the Worker’s Council that notifies the General Meeting thereof. The Supervisory Board is appointed by the General Meeting, within the exception of those Supervisory Board members who are employee representatives. The competencies of the Supervisory Board are stipulated by the law. More detailed regulation, method and conditions for their work are regulated by the Supervisory Board by way of the Rules of Procedure on the Work of the Supervisory Board.
The Management Board must obtain the consent of the Supervisory Board for the adoption of the business policy and plans, establishment and co-establishment of companies, increases and transfers of the founding contributions of the Company in other companies, purchase and transfer of shares and shareholdings of the Company in other companies, awarding of the authorisation for procuration, etc.
The Supervisory Board meetings are convened by the Chairman of the Supervisory Board at their own initiative or the initiative of any member of the Supervisory Board or at the initiative of the Management Board. The Supervisory Board constitutes a quorum for decision-making in meetings if at least half of the members are present during decision-making.
As a rule, the Supervisory Board meets six times a year.
| Member | Name | Qualification | Date |
|---|---|---|---|
| 1 | David KASTELIC | MSc | (as of 18 June 2020) |
| 2 | Dušan MESTINŠEK | BSc (Electrical Engineering) | (as of 18 June 2020) |
| 3 | Jože KOŠTOMAJ | BSc (Mech. Eng.) | (as of 18 June 2020) |
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The Supervisory Board of Cinkarna Celje, d. d. has the Audit Committee, which has been composed of three members since 2 July 2020 and is a permanent body within the Supervisory Board. Members of the Audit Committee are David Kastelic – Chair, Jože Koštomaj – Member and Gregor Korošec as external independent expert. Based on its consideration, the Committee drafts proposals for resolutions, position statements and opinions within the competence of the Supervisory Board and relating to the annual and business reports of the Company’s Management Board, reports and opinions of external auditors, and also prepares Supervisory Board reports for the General Meeting. It must inform the Supervisory Board promptly of its work and activities and deliver to it reports on meetings.
The Supervisory Board’s HR Committee has been operating in the following composition since 2 July 2020: Mario Gobbo – Chair, Luka Gaberščik – Member and Dušan Mestinšek – Member. The Committee drafts proposals for resolutions, position statements and opinions within the competence of the Supervisory Board, in particular in relation to drafting proposals concerning criteria and candidates for members of the Management Board, members of the Supervisory Board committees, and support for designing and implementing the pay system for the Management Board.
Remuneration of the members of the management bodies equalled EUR 1,149,153 in 2020 (in 2019: EUR 888,874) and remuneration of the members of supervisory bodies EUR 121,410 (in 2019: EUR 110,818). Remuneration of each member of the management and supervisory bodies is specified in detail in tables below.
| Name and surname | Position (President, Member) | Fixed salary - gross (1) | Variable income - gross based on quantitative criteria | Benefits | Other remuneration | Total gross |
|---|---|---|---|---|---|---|
| Aleš Skok | President (as of 1 July 2020) | 107,100 | 0 | 4,507 | 2,119 | 113,725 |
| Tomaž Benčina | President (until 30 June 2020) | 162,349 | 55,489 | 6,403 | 133,727 | 357,968 |
| Nikolaja Podgoršek Selič | Deputy President | 210,354 | 44,390 | 12,079 | 3,964 | 270,787 |
| Jurij Vengust | Member (until 30 June 2020) | 118,021 | 41,616 | 13,401 | 100,882 | 273,920 |
| Marko Cvetko | Member (until 30 October 2020) | 91,006 | 23,582 | 4,890 | 5,295 | 124,773 |
| Filip Koželnik | Member (as of 5 November 2020) | 6,219 | 0 | 200 | 1,561 | 7,980 |
| TOTAL | 695,049 | 165,077 | 41,480 | 247,548 | 1,149,153 |
| Name and surname | Position (President, Member) | Fixed salary - gross (1) | Variable income - gross based on quantitative criteria | Benefits | Other remuneration | Total gross |
|---|---|---|---|---|---|---|
| Tomaž Benčina | President | 252,221 | 29,569 | 15,482 | 3,788 | 301,060 |
| Nikolaja Podgoršek Selič | Deputy President | 201,775 | 23,655 | 13,880 | 3,282 | 242,591 |
| Jurij Vengust | member | 189,163 | 22,177 | 3,766 | 2,774 | 217,879 |
| Marko Cvetko | member | 107,192 | 12,567 | 69 | 7,515 | 127,343 |
| TOTAL | 888,874 |
| Name and surname | Position (Chair, Deputy, Member, external member of the committee) | Remuneration for performing the function – gross annually (1) | Attendance fees for the Supervisory Board and Committees’ meetings – gross annually (2) | Total gross (1 + 2) | Travel expenses | Total remuneration |
|---|---|---|---|---|---|---|
| Aleš Skok | Member of the SB (until 30 June 2020) | 8,333 | 3,049 | 11,382 | 204 | 11,586 |
| Mario Gobbo | Chairman of the SB (as of 26 May 2020) | 15,253 | 5,291 | 20,544 | 2,724 | 23,268 |
| Luka Gaberščik | Deputy Chair of the SB | 14,195 | 5,786 | 19,981 | 292 | 20,273 |
| Name | Position | Contribution 1 | Contribution 2 | Contribution 3 | Contribution 4 | Total |
|---|---|---|---|---|---|---|
| David Kastelic | Member of the SB + Chair of the AC (as of 18 June 2020) | 6,412 | 2,035 | 8,447 | 125 | 8,572 |
| Dejan Rajbar | Member of the SB + Chair of the AC (until 17 June 2020) | 7,750 | 3,487 | 11,237 | 234 | 11,471 |
| Dušan Mestinšek | Member of the SB + member of the AC | 12,875 | 5,082 | 17,957 | 0 | 17,957 |
| Jože Koštomaj | Member of the SB + member of the AC (as of 18 June 2020) | 5,829 | 2,035 | 7,864 | 0 | 7,864 |
| Aleš Stevanovič | Member of the SB (until 17 June 2020) | 6,080 | 3,709 | 9,789 | 0 | 9,789 |
| Žiga Gregorinčič | External members | 0 | 1,315 | 1,315 | 0 | 1,315 |
| Lea Peček | External members | 0 | 1,315 | 1,315 | 0 | 1,315 |
| Gregor Korošec | External members | 0 | 8,000 | 8,000 | 0 | 8,000 |
| Total | 76,728 | 41,104 | 117,831 | 3,579 | 121,410 |
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| Name and surname | Position (Chair, Deputy, Member, external member of the committee) | Remuneration for performing the function – gross annually (1) | Attendance fees for the Supervisory Board and Committees’ meetings – gross annually (2) | Total gross (1 + 2) | Travel expenses | Total remuneration |
|---|---|---|---|---|---|---|
| Borut Jamnik | Chairman of the SB (until 20 November 2019) | 17,703 | 4,056 | 21,759 | 468 | 22,227 |
| Aleš Skok | Deputy Chair of the SB (as of 15 October 2019) | 13,009 | 2,974 | 15,983 | 408 | 16,392 |
| Urška Podpečan | Deputy Chair of the SB (until 1 April 2019) | 3,777 | 275 | 4,052 | 0 | 4,052 |
| Luka Gaberščik | Member of the SB | 5,486 | 1,861 | 7,347 | 117 | 7,464 |
| Dejan Rajbar | Member of the SB + member of the AC | 14,163 | 3,682 | 17,844 | 702 | 18,546 |
| Aleš Stevanovič | Member of the SB | 12,875 | 3,025 | 15,900 | 0 | 15,900 |
| Dušan Mestinšek | Member of the SB + member of the AC | 12,875 | 4,070 | 16,945 | 0 | 16,945 |
| Gregor Korošec | Member of the AC | 0 | 7,000 | 7,000 | 0 | 7,000 |
| Žiga Gregorinčič | External members | 0 | 1,529 | 1,529 | 0 | 1,529 |
| Špela Bizjak | External members | 0 | 765 | 765 | 0 | 765 |
| Total | 79,887 | 29,236 | 109,123 | 1,695 | 110,818 |
individual provisions of the Code:
Governance of the Company is focused on meeting the objectives of its strategy up to 2023 (Strategic Plan of the Company for the period from 2019 to 2023); the Management Board has not adopted together with the Supervisory Board a special document dealing with the Company’s corporate governance policy.
comply fully with item 5.5 in relation to this matter as it requires public disclosure of potentially sensitive personal data or as the Company does not have these data available or the data are not within its competence.
The Supervisory Board’s Rules of Procedure do not include the Board’s communications with the public with respect to the decisions adopted at its meetings. The Company’s Management Board is competent to communicate with the public. The Supervisory Board’s resolutions of greater importance are published at the website of the Ljubljana Stock Exchange, Seonet, and on the Company’s website.
The Supervisory Board did not define the term of office of members of committees (composed of members of the Supervisory Board, except for the external member of the Audit Committee). Membership in committees for members of the Supervisory Board expires upon expiry of membership in the Supervisory Board.
The Company does not have its corporate communication strategy defined within its corporate governance policy. The Company’s Management Board and support services are responsible for the Company’s communications and transparency of operations. Public announcements (Seonet and the Company’s website) comply with legislative requirements and contain all the information necessary for a securities investor to assess the situation and estimate the effect of a business event on the price of the Company’s security.
The Company has not adopted internal acts or rules that would, besides legislative provisions and rules, stipulate restrictions for trading the Company’s shares. Persons with access to inside information sign a special statement on protecting inside information and the Company keeps a list of persons with access to inside information in compliance with the provisions of the Market Abuse Regulation (MAR), the Market in Financial Instruments Act (ZTFI) and requirements of the Securities Market Agency.
The Company has adopted the Code of Ethical Conduct and Work, which is published on its website and defines the fundamental principles and rules of behaviour and actions of the management and all other employees of the Company. These principles and rules define the standard of operation, management and leadership, contributing to the business culture and excellence.
The objective of the diversity policy for management and supervisory bodies is to obtain the optimal efficiency of these bodies, thus enhancing developmental and competitive advantages and the Company’s reputation.
Cinkarna Celje, d. d. implements the diversity policy in management and supervisory bodies in particular in terms of adequate procedure for search and selection of members, in cooperation with the HR (nomination) Committee. The diversity policy is not specifically formulated in writing. The Company’s bodies comply with it and implement it in accordance with valid legislation under the Employment Relationship Act (ZDR-1) as well as principles and provisions of codes defining the substance and providing recommendations for this field.
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Y
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Each individual expressing an interest and fulfilling the criteria defined by the law, the Company’s Articles of Association and the Corporate Governance Code for Publicly Listed Companies can be a member candidate.
The following aspects of the diversity policy are taken into account for composition of the Management Board and the Supervisory Board: sex, age, education and professional experience. Currently, one third of the Management Board consists of women. All members of the Supervisory Board are men. The Company will formulate a diversity policy by the end of 2021. The policy will be formulated based on current guidelines and recommendations.
| President of the Management Board | Aleš SKOK, BSc (Chemical Engineering), MBA, USA |
|---|---|
| Member of the Management Board – Deputy President of the Management Board – Technical Director | Nikolaja PODGORŠEK SELIČ BSc (Chemical Engineering), Specialist |
| Member of the Management Board – Worker Director | Filip KOŽELNIK, MSc (Business Studies) |
In 2020, EUR 12.23 million was spent on investments, acquisition of fixed assets, replacement equipment, and on environmental investments, which represents 61.48% of the funds planned for 2020.
The main deviations from the plan are as regards fixed asset acquisition, where only 30.52% of the plan was achieved. The respective figure for replacement equipment is 65.40%, while in terms of investments, 67.05% of the plan was achieved. The plan achievement rate is lower partly because of the two and a half month interruption of all non-urgent investment and maintenance works, as well as the otherwise contracted activity due to measures related to the COVID-19 epidemic. We made this decision with the aim of reducing the possibility of infection of employees, especially in the production of titanium dioxide, where the spread of disease would make it necessary to stop production. In 2020, we also planned a larger extent of overhauls in the Titanium Dioxide BU, but they were not carried out as a result of increased demand for TiO2 products, low stock and the risk of workers getting infected during the overhaul, as it is difficult to keep an adequate safety distance.
As usual, this year the bulk of funds again went for the production of titanium dioxide and sulphuric acid, to continue the activities as part of the multi-year project. We completed investments in:
We actively worked on investments for:
In the Polymers BU, we completed an investment in increasing the volume capacity for sprinkling fluorinated polymers.
Grafika IV into changing rooms and the premises for development and maintenance of automated processes) and infrastructure (replacement of switches 4, 5, worn-out railway sleepers at individual sections, 50 m section of tracks, preparation of documentation for upgrading the rainwater sewage system with oil traps).
In the area of environmental provisions, we used just under 50% of the planned figure. Most of the funds were used for the rehabilitation of the Bukovžlak non-hazardous waste landfill.
In the Chemistry Celje BU we invested in the storage of sulphuric acid for the production of tribasic copper sulphate. In the field of Energy, we upgraded the cooling of 2.5 and 7 bar compressor stations. There were no significant investment activities in other units. Of the fixed assets, the largest amount was invested in the purchase of a new X-ray machine (XRF).
Investments planned for 2021 total EUR 14,361,931. They include capitalised own products and services of EUR 1,858,933 and exclude projected activities arising from reversal of environmental provisions in the amount of EUR 2.6 million. The planned value of investments with capitalised own products, excluding the funds of environmental provisions, is 28% lower than estimated for 2020. It accounts for 8.7% of the sales plan for 2021 and nearly 110% of depreciation in 2021.
Of the total, 57.2% will be allocated to investments, 35.2% to purchasing replacement equipment and 7.6% to acquiring individual fixed assets. Compared to the year before, the share of funds for replacement equipment has increased, as we plan some major overhauls in the production of titanium dioxide (calcination furnace with the 1st stage of the treatment plant, renovation of two digestion columns, replacement of hydrolising unit, replacement of two filters and gel washing vessels) and Water Preparation (lifting and renewal of sand filters).
Investments will be made in individual lines based on needs, abilities, capacities and prospects as well as in line with the five-year strategic plan.
Also this year, the biggest share of funds invested will be allocated to titanium dioxide production. The following activities are planned:
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We plan to replace the sulphur combustion furnace in the production of sulphuric acid so as to reduce production risks and ensure the target capacity. This year, some major investments are also envisaged in the field of preventive measures for dust reduction. A robot cell will be purchased for the Polymers BU for feeding the CNC machine, which will decrease labour costs per unit of product.
In 2021, a new drainage C under the Bukovžlak high barrier and part of the gypsum pipeline are planned. The construction of the gypsum pipeline over a different route is necessary because it now runs across the land plot 115, cadastral municipality of Teharje, where the Ministry of the Environment and Spatial Planning plans to rehabilitate an illegal waste landfill, which will prevent access for maintenance on the existing route.
Moreover, we will start the first phase of arranging oil traps around the Company. We will also carry out several rehabilitation interventions involving buildings as required due to ensuring static safety, hygiene minimum, establishing organisational changes and arranging a suitable working environment.
The majority of funds planned to be used from environmental provisions (77%) will be spent on the rehabilitation of the Bukovžlak non-hazardous waste landfill. In line with the plans, the actual need and financial ability, we will also prepare and introduce new projects during the year as well as purchase spare parts and new items of fixed assets. We plan financing using own sources.
A more detailed overview of projected investments is included in the Plan of Investments, Fixed Assets and Replacement Equipment for 2021.
In the Titanium Dioxide BU, a large part of development activities was dedicated to improving the quality of various types of TiO2 pigment. By introducing a new calcite grinding technology, we significantly improved the optical properties, namely the brightening power and the blue undertone, which is mainly reflected in dispersion paint applications. We developed, and already introduced some, procedures for enhancing the technological process, which lead to an increase in the pigment opacity – a characteristic that is becoming increasingly important for the customer, mainly due to high TiO2 prices. Namely, it enables lower pigment consumption.
water as possible, we continued development work on procedures for lowering BOD and COD, degassing the gypsum suspension before thickening and thus ensuring the appropriate quality at the reverse osmosis inlet. The procedures are extremely complex and we have not yet achieved satisfactory results.
Sustainable resource management also encompasses a development project for the treatment of waste 23% acid in terms of the extraction of titanium dioxide and some rare metals (scandium, vanadium). In 2020, only the negotiations on the method of work and costs were held with the selected external institution.
In the field of masterbatches, we installed various portions of pigment in the appropriate EMA (ethylene methyl acrylate) carrier and received confirmation of appropriate quality from the market.
We obtained the Class 1.5 certificate for a series of smooth glossy PEQ powder coatings with Qualicoat requirements.
With the objective in mind, we optimised the process of brochantite nucleation for the production of tribasic copper sulphate. We defined a process for obtaining copper oxychloride suitable for SC products throughout the year.
We developed a ball valve in accordance with the requirements of SIST EN 5211.
We were not successful in carrying out remediation of soil contaminated with pyrite cinder using our waste materials. However, we found a way to remediate it using fly ash.
In 2020, 11 internal audits were planned. We audited BUs and departments that have not been audited recently and reviewed the completion of measures as well as the effectiveness of ex-ante audits. In the plan, special attention was paid to the horizontal audit of the implementation of the seven organisational regulations and the review of the up-to-datedness of the documentation. The audit of three organisational regulations was postponed to 2021 due to unfinished audit, whereas the rest was carried out in line with the plan. We did not detect any significant discrepancies, however, many opportunities for improvement were identified.
Due to COVID-19, the external auditors conducted the ISO 9001:2015 compliance audit for 2020 with a delay, in August. No inconsistencies were found and the identified opportunities for improvement were taken into account and incorporated into our integrated management system.
We regularly monitor the number of complaints and comments of our buyers and respond to them with corrective measures. In 2020, there were a total of 14 complaints, of which 8 were unjustified (57.1%). In most cases they were resolved to the satisfaction of the customer.
Compared to 2019, the number of complaints decreased the most in the TiO2 BU, from 22 last year to 1 in 2020. Compared to last year, the Chemistry Celje BU recorded 3 more complaints and the Chemistry Mozirje BU 2. The Polymers BU received no complaints in 2019 and 1 in 2020.
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We continued working on a project aimed at introducing new qualities of titanium dioxide. We initiated and partly implemented a series of optimisations of individual production processes, which should contribute to higher quality of our pigments, in addition to the implementation of the project for wet and dry calcite grinding on new machines. The new method of calcite grinding is in regular operation and represent an improvement especially in terms of greater brightness and bluer undertone of the pigment. Based on the information collected from customers, we develop control methods according to their application needs.
The broader framework of ensuring the quality of the Company’s operations also encompasses the project of formulating a business continuity plan. The tasks of collecting information, drafting the strategy and preparing the basis for crisis communication were carried out throughout the year, and are planned to continue in 2021.
Permanent improvements dictated by standards and quality guidelines are the driving force of progress and continuous improvements on all areas of the Company’s operations. The system for collection of useful suggestions, CC UM, resulted in 0.2 improvement per employee.
Cinkarna Celje, d. d. operates predominantly in the chemical processing sector. The principal activity of the Company is production of titanium dioxide pigment. The Company operates and conducts business globally, but generates most of its revenue on the European market. In the 2020 financial year, the Company generated 91% of net sales revenue from exports. The biggest market of the Company is Germany, accounting for approximately one third of sales, followed by Slovenia, Italy, Turkey, Belgium, France and the Netherlands. At the end of 2020, the Company employed 824 people.
The Company will continue striving for active cooperation with employees, business partners and the local community with the purpose of continued successful operations and generating adequate return for the owners.
Continued optimisation of the HR structure is anticipated with reassignment and new hires of young and technically qualified personnel. Investments in development, training and further improvement of the working environment of employees will also continue.
As the Company is highly aware of the environmental issues of the immediate surroundings, we will continue looking for and introducing additional ways of reducing potential adverse impacts on the environment, continuously acting in compliance with all the requirements of the environmental legislation and regulations. Restrictions in this field could represent additional risks.
Taking into account fluctuations in trends, in the new five-year strategic period from 2019 to 2023 average sales revenue of EUR 190.8 and average annual growth in revenue of 2.3% are anticipated.
achieve the planned organic growth. The majority of funds invested will be directed to growth and development of the core line of titanium dioxide pigment. The main objective is to preserve long-term relationships with existing buyers and acquire new ones through development of products with a higher value added on the basis of achieving the requisite higher level of quality and a suitable relationship between responsiveness, flexibility and quality on the one and price on the other side. Sales will continue focusing mostly on the European markets.
Over the next five-year period, the Company’s Titanium Dioxide strategic business unit will focus on acquiring new buyers from the industry of printing ink production, which has significant short-term opportunities due to the current demand exceeding supply, whilst at the same time its more demanding buyers enable in the long term higher returns and indirectly serve as protection against potential new entries of competitors on the European market with products of a lower quality range. The share of titanium dioxide pigment in sales accounts for 80% and by 2023 this share will increase by approximately 10 percentage points.
When developing its core line, the Company will strive to develop new products with a high value added and those vertically integrated products that will enable professional, income and cost synergies, thus making the best possible use of competitive advantages of the business environments of individual production lines. The Company will strengthen its presence on the existing markets for the key strategic business units of Titanium Dioxide as well as for the accompanying units and lines of Copper Fungicides, Polymers and Metallurgy. The Chemistry Mozirje BU is to be disposed of according to the strategic plan.
The Company will also focus on management of the purchasing process due to unpredictable business cycles with significant changes in selling and purchase prices, which can impact materially the operating results and cash flows. Efficiently utilised production process will allow the Company to provide timely the requested quantities of finished products, which will enable sustainable long-term profitability under the given conditions. The expected EBITDA margin is to reach the average of 16.6% and the ROE indicator the average of 11.5%. The strategic plan includes the dividend policy, which provides for an approximate payment of 75% of the net profit achieved in a year. The dividend policy is naturally subject to change, in line with the amendments to the business policy as regards payments to owners and the structure of the sources of financing.
A new investment cycle required for stable current operations will be carried out over the future years. By investing in the expansion of production capacities at the existing location, the scope of titanium dioxide pigment production is coming close to the regulatory maximum limit, so alternative options for further growth in operations will have to be looked for in the future.
As part of the implementation of the current strategic plan, the Company achieved and exceeded all the business performance objectives and at the same time carried out the optimisation of the portfolio of strategic business units and areas planned for this period.
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Cinkarna Celje, d. d. strives for compliance of operations at all levels. Through constant investments, we provide for technological procedure modernisation in line with the best available techniques and thus minimum environmental impact. We make sure to enable healthy and safe working conditions for employees and their permanent training.
Quality assurance is a constituent part of the Company’s governance and is based on the vision of growth strategy and key strategic objectives aimed at achieving the satisfaction of owners, buyers, employees and the environment in which we operate.
As a chemical company, we chose as our 21st century challenge the development of titanium dioxide in special forms, which we intend to upgrade into finished products with a higher value added. We are also expanding the range and quantity of preparations for plant protection based on copper, different master types and powder coatings and processing fluorinated polymers and elastomer. The majority of our products is exported to the EU markets.
We are looking for innovative and sustainable solutions for reducing waste quantities, offering the market two such products, white gypsum (CEGIPS) and red gypsum (RCGIPS), and we are also developing new ones.
The Company is organised as a set of business profit centres, separated in terms of organisation and management, accompanied by centralised support departments and a centralised unit providing maintenance and energy infrastructure.
The elements of the safety, health and environmental management system are closely intertwined with all business processes in the Company, thus the environmental policy is part of the Rules of Procedure of Integrated Management System. We demonstrate environmental responsibility:
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Every year, the management defines the goals concerning the environmental policy. For 2020, we set three framework goals in the field of the environment, namely:
We carried out six activities related to the elimination of process risks in the titanium dioxide production, water resources management, ensuring the safety of barriers and the elimination of risks arising from old burdens. The plan was achieved in all areas except the elimination of risks due to old burdens. Regarding this issue, we prepared a comparison of different legislations and a summary of the work done so far for the legislator. We also organised a meeting with the legislator, but failed to get a clear answer about further action. In the continuation of the year, we clarified our obligations and we will continue pursuing our activities in 2021 accordingly.
We defined and implemented measures to:
In the Chemistry Celje BU, we made an energy analysis and prepared a concept for the optimisation of the dryer. In the Chemistry Mozirje BU, we introduced the processing of technological waste and cleaning residues into usable granules. Worn-out 2.5 bar compressors were replaced with more energy efficient ones. We renovated the lighting in the machine and electrical repair shops, replacing it with more energy efficient options. The investment in the use of separately collected sewage from the Water Preparation is in full swing.
We carry out tasks related to the project Comprehensive Water Management project. The goal of all activities is to reduce the burden of water courses due to emissions from our production and to increase the share of recycled water. At the same time, we pursued numerous development activities. The measures taken allowed us to successfully decrease the Mn content in the gypsum suspension thickener overflow, while the additional multifunction filter helped us achieve the required conditions for water quality before inlet to reverse osmosis. However, tests at the reverse osmosis pilot plant did not yield the expected result further on. It seems the membranes clogged too quickly. The manufacturer supplied a new set, which will be re-tested in 2021. Tests were carried out regarding the reduction of BOD and COD in wastewater using microfilm. The effect achieved does not meet the set goal, which means we will
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have to look for a solution elsewhere. As regards the task of developing a technological process for the sulphates extraction by use of barium, we prepared a large quantity of barium sulphate under controlled precipitation conditions. Moreover, we defined the appropriate washing method, dried the material and Micronesia it. The obtained sample barium sulphate meets the quality requirements of the market.
| Waste type | 2020 | 2019 | Index | |||
|---|---|---|---|---|---|---|
| Quantity (t) | Sec. quantity (t/EE) | Quantity (t) | Sec. quantity (t/EE) | |||
| Non-hazardous without gypsum | 707.2 | 0.015 | 492.1 | 0.011 | 144 | 136 |
| Non-hazardous with gypsum | 171.6 | 0.0037 | 181.5 | 0.0042 | 95 | 88 |
| Hazardous | 130.3 | 0.0028 | 150.3 | 0.0035 | 87 | 80 |
In 2020, the quantity of non-hazardous waste without gypsum increased by 44%. This was due to the higher sales of scrap steel equipment and the one-time delivery of cake from sulphur filtration, resulting from the lack of liquid sulphur and the consequent greater consumption of solid sulphur.
As we significantly increased the production of white gypsum, the volume of non-hazardous waste with gypsum decreased by 5%. The quantity of hazardous waste also dropped, i.e. by 13%.
Some improvements were made to reduce energy consumption (total electricity, steam, gas), whereby we achieved specific savings from 0.00921 MWH/EE to 0.00907 MW/EE.
To manage the risk of process water shortage in dry periods, we are looking for a solution to have the water permit amended based on a study by the Institute for Water. In January 2020, we submitted the respective application, which the Water Directorate had not considered by the end of the year. We obtained all permits and easements for the installation of a permanent measuring point for monitoring Qes of the Hudinja river, and preparations for construction are underway. In parallel, we also prepared an overview of other options for alternative water supply, informed the Supervisory Board of the results and passed resolutions to continue the activities.
In February, we received the commissioned Impact Assessment of the construction of a pipeline for the discharge of liquid neutralised waste from the titanium dioxide production to the Savinja river. Such an action would reduce the sulphate load on the rivers of Houdini and Vzhodna Ložnica. The assessment concluded that the concentration after the mixing zone in the Savinja river would still be exceeded, so the solution is not appropriate.
That year, we reported to the Environmental Agency two changes in the operation of the plant as part of the obtained environmental permits for installations causing large-scale pollution (production of tribasic copper sulphate and an additional quantity of waste to be processed in the Chemistry Celje BU, increase in the amount of waste cake from sulphur filtration and processed volume in sulphuric acid production). We submitted five applications for amendment to the environmental permit, namely four for the Celje site and one for the Mozirje site. The applications include changes in the operation of individual parts of the installation. As of 2010, when we obtained the integral environmental permit, we have made a total of 13 amendments to the basic permit. In 2020, we did not receive any decision about the amendment from the Agency.
In 2020, intensive coordination and supplementation of the application for the amendment to the environmental permit for an installation posing lower environmental risk (SEVESO) took place. One inspection was conducted in the field of environment (at the Celje site – ONOB). No deficiencies were found.
In the first half of the year, we received two complaints, one regarding excessive noise and one about yellow dust appearing on parked cars in the vicinity of the Company. In relation to the complaint about the noise, we located the sources of the noise and introduced several measures in the production of titanium dioxide. We installed a fan inlet silencer for transport in the surface treatment plant 2, soundproofed the flue from the treatment plant for gel pre-drying and replaced the sound attenuators on the treatment plant for gel pre-drying. The yellow dust on the cars was not due to any irregularities in the Company but the flowering of dandelion and other plants this time of spring.
In November, we again received a complaint from the same person about the recurrence of howling noise. The condition of the devices was inspected in the TiO2 production and the sound attenuator on the pre-drying treatment plant was replaced, as a result of which the situation improved.
We prepared and submitted timely all monitoring reports for 2019 in line with legislative requirements. We did not exceed threshold values.
We are aware of the utmost importance of developing intergenerational cooperation, transfer of knowledge and joint building of a system of values in our society. This is why we devote special attention to working with the youth from Slovenian primary and secondary schools, educational institutes and universities. We regularly organise visits and presentations, take part in the preparation of research and seminar papers, bachelor’s theses and post-graduate theses as well as scientific papers.
In 2019, we carried out 6 excursions and 71 students were on mandatory practical training with us, of whom two were preparing their master’s thesis. We participated at the career fair in Celje with a presentation of occupations and presented our Company and possibilities for employment. In 2019 we granted 10 new scholarships. The Company has a total of 26 scholarship holders.
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The Environmental Protection Department has been cooperating for several years with the Secondary School of Civil Engineering and Environmental Protection from the Celje School Centre in the implementation of practical training for the programme of environmental technician. This year, we also carried out four hours of practical training at our premises. We familiarised students with the principal activities of Cinkarna Celje, d. d. (video), focusing on activities for environmental protection. We saw one of the measuring points for emissions into the air and one for emissions into waters. We also showed them the filtration unit and the device for removing waste – gypsum. We familiarised them with the basics of environmental monitoring, waste management, waste water sampling and field measurements.
We are proud of the multi-annual project of intensive cooperation with primary schools, the fundamental purpose of which is to encourage the creativity and thought processes of children as well as to promote their awareness of the broader social importance of industrial production and development.
So far, we have carried out no fewer than thirteen consecutive competitions.
The challenge for young creators was to draw from our jubilees. They had to present the 145-year development of the Company through a comic book – from the arrival of the train to Celje, construction of the factory, employee training and setting up the first treatment plant, closing down some lines, development of new technologies and products, process modernisation and introduction of the latest technologies for safe operations. 450 children made 72 comic books about the history of Cinkarna.
we invited students and mentors from primary and secondary schools to carry out research in connection with our products. We named the competition »Find Cinkarna Celje products«. The task focused on creating a variety of entertaining board games that linked our products and end products in our daily use. In a fun way we thus made the young people aware that without the products of our industry there would not be a multitude of everyday objects at our disposal. 560 pupils from 31 schools participated and made 40 board games.
we managed to hold the competition entitled »We Are Striving for Better Living« again in 2020. We encouraged children to look through the »Cink« glasses to see how our company used to operate in the past and how it operates now, and to make a drawing of progress by comparison. Around 550 pupils from 30 primary and 3 secondary schools participated, who created around 120 different glasses and 7 videos. All of the contests were extremely well-received and attended. They saw the participation of schools and institutes from the broader Celje region and achieved their aim of enriching the participants, i.e. children, teachers, childcare workers and employees of Cinkarna Celje, d. d.
due to the COVID-19 epidemic and the resulting restrictive measures, we carried out only one excursion, and 52 students were on mandatory practical training with us. Of these, three students prepared diploma theses and two master’s theses. The Company currently has 27 scholarship holders.
with the association SIBAHE (Slovenian Food Bank), in which both employees and the Company participated. Together, we collected a large amount of food for those in need of help.
for the fourth year in a row in sales of their hand-made products, this time only in pre-Easter time. The response of employees was extremely good as they raised quite some funds ensuring undisturbed operations of the Association.
We paid one solidarity grant and two severance pays to the relatives upon the death of our employees.
to be pursued by our employees and external participants at our multi-purpose premises, when such was still possible given the COVID-19 epidemic.
of our employees in the main dining hall and in a special room.
we again responded to the invitation to compete in the contest of the Tourist and Cultural Association Celje, which organised already the 51st awards Golden Rose and Broom. We received the bronze award for neat landscaping, gardens and flower beds in the category of business facilities.
We are trying to regularly inform all stakeholders of our plans and achievements through different forms of communications. For the purpose of internal communications, we issued 15 notifications by Cinko and Cinka, our mascots encouraging employees in a humorous way for more productive, efficient and safe work and delivering important information. We also prepared two issues of Informator, two issues of Cinkarnar and 31 issues of latest news for employees. We communicated with external public via SEOnet, the Company’s website and News releases for journalists. In 2020, 17 News releases were issued.
We are convinced that it is our duty to act and operate with a long-term view and sustainably both from the point of view of environmental impacts and relations with the broader society. We are aware of our role and importance, which is why we strongly encourage, support and finance activities that improve the quality of life and work of people and the entire community.
In doing so, we devote special attention to supporting activities geared towards development and advancement of children and youth.
In 2020, we devoted EUR 688 thousand or somewhat more than 0.40% of total sales to various sponsorships and donations.
As a socially responsible company we support activities focused on sports, culture and in particular the environment. In compliance with the strategy, we earmark 90% of sponsorship and donation funds for sports, 0.01% for cultural (EUR 5,140) and 9.99% for other activities.
The most important areas and activities that we invest in and develop with the holders of said activities are:
In March 2020, we donated EUR 40,000 to the Celje General Hospital for the purchase of a ventilator for COVID-19 patients.
In most cases and especially in cases that involve larger amounts of funds, we get directly involved in the management, operations and supervision of societies, clubs and institutes. We thus actively take part in and help ensure that funds are used for the purpose they were provided for.
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Key data:
Cinkarna Celje, d. d., which is a basic chemical processing company integrated on the edge of the industrial zone of the city of Celje, offers interesting and socially safe work with the possibility of constant learning and personal development as well as efficient and responsible work. By nurturing the feeling of belonging to the Company with over 148 years of tradition and responsibility to the micro and macro environment in which we operate, we orient our employees towards respect for sustainable development and compliance with norms and ethical attitude towards fellow beings and the approximate and wider social environment.
As at 31 December 2020, there were 824 employees at Cinkarna Celje, d. d., 77.7% of whom were men and 22.3% were women. In line with the business policy of the Company and due to the impact of first and especially the second wave of COVID-19 epidemic on the labour market and planned employment/retirement, the number of employees decreased by 2.6% or 22 employees. In 2020, 52 people stopped working at the Company. We employed 30 new hires (generally with levels IV, V and VII of vocational education). We managed our other employment needs by internal reassignment.
As at 31 December 2020, the average employee age was 46.92 years (45.08 for men and 49.49 for women). Due to 30 recruitments and 52 terminations of employment and continued optimisation of the number of employees by organisational units, the age structure remained similar as in 2019. The average age slightly increased by 0.03 percentage point, which is reflected in the positive trend of gradual rejuvenation of the staff.
| CC | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 |
|---|---|---|---|---|---|---|
| TOTAL | 46.47 | 46.79 | 46.78 | 47.11 | 47.33 | 47.95 |
| 2016 | 2017 | 2018 | 2019 | 2020 | ||
| 48.20 | 48.42 | 47.91 | 46.89 | 46.92 |
According to data, since 1985, when the Company set a restrictive HR policy, the number of employees has more than halved (from 2,427 to 824, i.e. a cumulative decrease of 1,603 employees), which has indisputably allowed the Company – while operating in the world market and undergoing internal restructuring – to survive and be competitive in increasingly demanding global markets, where it is exposed to fierce global competition.
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The Company invests a lot in development and education of employees. As concerns updating existing knowledge and ensuring legal compliance of employees in 2020, in the light of restrictions related to COVID-19 epidemic, we recorded 11.97 hours of training per employee (in 2019, 19.49 hours of training per employee), the cost of which was EUR 273.8 per employee (in 2019, EUR 446.1 per employee). The biggest share of trainings represents mandatory training, mostly from the fields of occupational health and safety, work with hazardous chemicals, fire safety, environmental protection and compliance with standards, which we operationally adjusted to restrictions and measures with organisational actions. At the individual level, we implemented significantly less content due to the aggravated situation resulting from the COVID-19 epidemic and restrictive measures regarding the gathering of people both at the Company level and at the state level and the freezing of the vast majority of trainings. Most of the individual content was presented via electronic means and applications.
In 2020, specific functional trainings at the Company and outside it were attended by 3,519 participants. Due to the above reasons, the number of hours of training totalled 10,065 (in 2019: 16,480), down 38.9%, and we also allocated significantly less funds to training than in 2019.
In the field of social work, activities were carried out in 2020 in connection with solving individual employee’s problems, the placement of disabled workers, ergonomics, employee prevention and the retirement of those employees who meet the conditions for retirement.
The most common problems arose in the deployment of employees with limited work ability or disability. We are dealing with an increasing number of employees restricted at work due to health issues. At the end of 2020, the Company employed 58 disabled people, which is 5 or 7.9% less than at the end of the previous year. The share of disabled people in the Company, in relation to the entire active population in 2020, is still relatively high at 7.0%, and exceeds the statutory quota for companies by one percentage point. Based on the active policy of cooperation with the Institute of Occupational, Traffic and Sports Medicine and the Disability Commission of the Pension and Disability Insurance Institute, the percentage of disabled people in relation to the total number of employees has decreased for the fifth consecutive year, meaning that the positive trend continues.
Taking into account employee age structure and changes to the legislation, which is increasingly restrictive in terms of the disabled retirement, we do not expect significant improvements to the mentioned structure. The main reason for the situation is the nature of production in the past and, despite technological modernisations, we cannot expect it to improve in the near future.
External employee turnover in 2020 came in at 6.2%, while the total turnover, which includes internal reassignments, equalled 12.2%. External employee turnover is 2.8 percentage points lower than the year before, while total turnover is 0.1 percentage point lower, which can be attributed to more retirements, reassignments between OUs and decreasing the number of employees by use of soft methods owing to the reorganisation of Titanium Dioxide BU as well as the optimisation of the employee number by organisational unit.
The employment and education policy positively affects the rise in the qualifications structure that is visibly on the rise despite the long-term HR optimisation.
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| Year | No. of employees | Share in % | No. of employees | Share in % |
|---|---|---|---|---|
| VIII | 20 | 2.4 | 18 | 2.2 |
| VII | 134 | 15.8 | 137 | 16.6 |
| VI | 53 | 6.3 | 54 | 6.5 |
| V | 280 | 33.1 | 277 | 33.6 |
| IV, III | 275 | 32.5 | 265 | 32.2 |
| II, I | 84 | 9.9 | 73 | 8.9 |
| Balance as at 31 Dec | 846 | 100.0 | 824 | 100.0 |
Monitoring and formulation of employment and training policy indicate a drop in unskilled labour force from the former high 48.7% to the current level of 8.9% and an increase in highly educated labour force from the former 3.5% to the current 18.8%. The employment policy, internal reassignments and merging of jobs are slowly bringing about a positive balance between the actual and required education and the Company is also willing to invest only in those employees whose education obtained benefits the Company and the work process or those that are identified as crucial for the future development and growth of the Company. The employment and education policy positively affects the rise in the qualifications structure that is visibly on the rise despite the long-term HR optimisation with simultaneous higher number of new hires.
The trend of the falling number of unskilled and retrained workers and the hiring of workers with education levels IV, V and VII is also positive, which is in turn favourably affecting the educational structure of the Company.
The average level of employee absence from work decreased by 2.7 percentage points to 21.0% in 2020 as compared to the year before because of a decrease in sick leave and less annual leave used in the current year (sick leave absences account for 6.4% or 30.5% of all absences, which is 0.3 percentage point less than in 2019). At the Company level, the percentage of sickness benefits fell by 4% compared to the year before.
Sickness benefits had a varying dynamic in the structure, dropping in all business units, except for the Metallurgy BU, Chemistry Celje BU and Chemistry Mozirje BU. The causes for absenteeism at Cinkarna Celje, d. d. and the associated sick leave are primarily as follows:
In 2020, we did not record any serious accidents at work. We dealt with 12 minor injuries, 1 less than last year.
We implemented a system of identifying potential hazards and taking action in the event of near misses. We identified 47 potential hazards, which we eliminated on an ongoing basis. 3 near misses were reported. ‘Minute for Safety’ activity took place in various forms and time intervals in the production work environments. In all production BUs, we identified and broke down process risks related to ensuring safety and health at the workplace, as well as measures to reduce emissions in the work environment.
In the field of fire protection, we upgraded the system for automatic fire detection and alarm system as well as the alarm in the “C” storage hall of the Marketing BU in 2020. We re-installed an automatic fire extinguishing system in the archives of the Maintenance and Energy BU. Moreover, in the Titanium Dioxide BU we extended the automatic fire alarm system in all smaller rooms that are separate from production.
■ increasing number of long-term sick leave, mostly due to:
The 2020 framework plan was 855 employees at the end of the year. The plan for the number of employees was based primarily on the envisaged production and sales plan (as well as investment plans) combined with the optimisation of the economy of production processes and increase in activities in specific professional areas. The majority of retirements pursuant to the Pension and Disability Insurance Act (ZPIZ-2) was implemented in the second half of 2020. New hires were anticipated as a rule only for the medium- and higher-level qualification structures, mostly for the fields of production business units and only to a minimum degree for support services, under the condition that a large share of employees leaving the Company would be replaced exclusively by professionally qualified employees.
In terms of production employees, we tried looking for long-term solutions with young employees, mostly from the fields of occupations with a shortage of workers (metal worker, mechanic, milling machine operator, chemical and machine technician, electrotechnician, etc.) and strove to merge jobs. For certain programmes, mostly those with unforeseeable business environment, we continued engaging students and hiring employees through temporary work agencies. In 2020, we continued providing scholarships to pupils and students of technical sciences.
We also arranged the control of elevators so that they cannot be used in the event of a fire. Furthermore, emergency lighting was set up in the Titanium Dioxide BU. The automatic fire alarm system was also installed in the operational maintenance offices. All fire control panels in the buildings are connected to the central control system in the CC Fire Brigade via an optical network connection.
No inspections were carried out in 2020.
The activities of the Occupational Health and Safety Department are aimed at legislative compliance for occupational health and safety and fire safety. By introducing the activities of detecting, recording and eliminating potential hazards and events in the working environment, the Company is actively working on decreasing the number of accidents at work and improving conditions at the workplace. We prevent fires with preventive fire safety measures and ensure active protection against fire with regular supervision, review and servicing of firefighting equipment. We had three framework objectives in the area of occupational health and safety in 2020:
The objective is long-term. We wish to achieve it step by step by implementing various preventive activities and improvements. The number of injuries at work decreased by 1 over 2019. The low FS factor reveals that all injuries were minor.
| Year | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|---|---|---|---|---|
| No. of employees ‒ monthly average | 1064 | 1046 | 999 | 987 | 976 | 941 | 899 | 905 | 873 | 841 |
| No. of reported NM | 102 | 118 | 37 | 37 | 10 | 14 | 9 | 5 | 3 | 3 |
| No. of recorded PH | 81 | 62 | 79 | 105 | 79 | 61 | 56 | 47 | ||
| No. of eliminated PH | 44 | 88 | 71 | 86 | 65 | 57 | 52 | 47 | ||
| FS factor | 20.7 | 23.2 | 27.1 | 22.2 | 23.5 | 14.9 | 13.0 | 5.7 | 5.0 | 4.7 |
| No. of injuries at work | 30 | 27 | 27 | 22 | 20 | 15 | 14 | 15 | 13 | 12 |
| No. of days lost | 735 | 907 | 996 | 1000 | 1122 | 934 | 837 | 346 | 334 | 329 |
| No. of injuries per 100 employees | 2.8 | 2.6 | 2.7 | 2.2 | 2.0 | 1.6 | 1.6 | 1.7 | 1.5 | 1.4 |
| No. of injuries while travelling | 14 | 6 | 0 | 0 | 2 | 0 | 0 | 0 | 0 | 0 |
| No. of days lost | 388 | 151 | 0 | 0 | 43 | 0 | 0 | 0 | 0 | 0 |
NM – near misses; PH – potential hazard; FS factor– factor of frequency and severity of injuries at work (ratio between the number of injuries, sick leave and the number of employees)
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| Year | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Joint support services | 33.3 | 33.3 | ||||||||||||
| Maintenance and Energy | 8.3 | 16.8 | ||||||||||||
| Titanium dioxide | 10.0 | 7.3 | ||||||||||||
| Polymers | 8.0 | |||||||||||||
| Chemistry Mozirje | 6.0 |
| No Per 100 employees | No Eliminated reported potential hazards per 100 employees |
|---|---|
| 2013 | |
| 2014 | |
| 2015 | |
| 2016 | |
| 2017 | |
| 2018 | |
| 2019 | |
| 2020 |
By identifying and breaking down process risks with potential adverse impact on occupational health and safety we were eliminating possible causes for injuries at work. The table below shows the objective and realisation of identified and broken-down process risks by production unit. The goal was achieved.
| Objective | Realisation | ||
|---|---|---|---|
| Production Unit 1 | Details | Production Unit 1 | Details |
| Production Unit 2 | Details | Production Unit 2 | Details |
| Production Unit 3 | Details | Production Unit 3 | Details |
| OBJECTIVE REALISATION | No. of eliminated risks | Identified risks | Percentage |
|---|---|---|---|
| Metallurgy | 1 | 1 | 100 |
| Chemistry Celje | 2 | 2 | 100 |
| Chemistry Mozirje | 1 | 1 | 100 |
| Maintenance and Energy | 3 | 3 | 100 |
| Titanium Dioxide | 4 | 4 | 100 |
| Polymers | 1 | 1 | 100 |
| Marketing | 1 | 1 | 100 |
| Total | 13 | 13 | 100 |
At the Company we promote employees’ health according to a formulated programme. Due to the declared epidemic and the implementation of measures to prevent the spread of infectious diseases, we had to change the programme during the past year and eliminate those activities that were not in accordance with the measures. Despite the above, we carried out 11 adapted activities:
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Last year, we spent EUR 903,054.88 on occupational health and safety and fire safety (excluding preventive maintenance interventions on working equipment).
We pursue tolerance, mutual respect and respect for the fundamental human rights at our work. We reject all forms of mobbing, harassment and discrimination. We comply with ethical and professional principles and the Company’s values.
Recruitment and HR activities are based on the principle of zero discrimination and equal opportunities, ensuring conditions for personal development of employees. We are creating conditions for well-being at the workplace for all employees, at the same time placing special emphasis on personal and professional development.
We also place special attention to personal data protection. Personal data is protected in compliance with the Regulation (EU) 2016/679 (GDPR) and the applicable Slovenian legislation, if the latter prescribes different or stricter rules.
We respect the right to participate in workers’ organisations and strive for the dialogue between social partners to be conducted in a professional manner and in compliance with the law.
In case of detecting any illegal or unethical conduct harming the Company’s reputation or operations or violating the dignity and personal integrity of any employee, we are obliged to report it immediately and initiate adequate procedures and actions.
The Company’s Management Board has adopted the Rules on Prohibition of Sexual and Other Forms of Harassment and Mobbing at the Workplace (with positive opinion of the Workers’ Council and both trade unions). In compliance with these Rules, the Company has appointed the authorised person for receiving reports, help and information. The authorised person is a trustworthy person to whom a victim of sexual or other form of harassment or mobbing at the workplace can turn to for advice, support and information about measures related to protection against sexual and other forms of harassment and mobbing.
In the performance of our work tasks and execution of rights and obligations as well as in making business decisions and acting on behalf of Cinkarna Celje, d. d., all employees are obliged to act in the best interest of the Company, which prevail over personal interests and interests of third parties.
Cinkarna grants donations and sponsorship funds exclusively in compliance with its mission, vision and values, mostly for the fields of sports and culture.
Appropriate and expected behaviour and actions are defined in more detail in the Code of Ethical Conduct and Work.
We have established the mechanism for detecting and reporting any impermissible actions, which have not yet been registered.
The table in the continuation presents a selection of key non-financial indicators, which are disclosed in more detail in the following sections.
| Environmental policy | Total energy consumption | Specific energy consumption | Total waste quantity | Specific waste quantity |
|---|---|---|---|---|
| Social policy | No. of excursions and interactions with schools | No. of interactions with the local community | No. of sponsored associations | Sponsorships and donations |
| HR policy and safety at work | Age structure of employees | Educational structure | Employee satisfaction questionnaires | Absence from work |
| Human rights policy | Participation in trade unions and no. of employees’ representatives | No. of the disabled | Compliance with recommendations and legal bases (Prevention of Money Laundering and Terrorist Financing Act (ZPPDFT-1)) | |
| Anti-corruption and anti-bribery policy | Rules on Prohibition of Sexual and Other Forms of Harassment at the Workplace (authorised person for help and information) | Code of Ethical Conduct and Work | Code of Ethical Conduct and Work Commission for Receiving Comments and Complaints |
| Quantity of by-product sold | |
|---|---|
| No. of schools participating in projects | |
| No. of injuries at work | |
| Zero discrimination in recruitment | |
| Stock exchange rules | |
| No. of activities for the disabled | |
| FS factor | |
| Rules on the Protection of Business Secrets and Personal Data | |
| No. of forms of internal communications | |
| Changes in the no. of employees | |
| Fluctuation rate (internal and external) | |
| Employee training | 80 |
The table below shows the key risks for non-financial operations, whilst more detailed information, including management methods, is provided in previous section.
| Environmental policy | Social policy | HR policy and safety at work | Human rights policy | Anti-corruption and anti-bribery policy | Legal and regulatory non-compliance | Negative reputation of the Company |
|---|---|---|---|---|---|---|
| Restrictive impacts of high average employee age | Negative reputation of the Company | Negative reputation of the Company | Inefficient use of energy | Poor recognition of the Company | Inadequate education and qualifications of employees | Unfavourable attitude of the public and shareholders |
| Unfavourable attitude of the public and shareholders | Limited potential for disposal of non-hazardous waste | Inadequate informing of the public | Decrease in operability due to a high number of the disabled and increased absence from work | Loss of business transactions | Business loss, loss of profit | Process and production risks |
| Inadequate informing of employees | Adverse impacts of injuries and accidents at work | Court proceedings | Court proceedings | Extraordinary events | Spreading of misinformation | Shortage of suitable labour |
The Integrated Management System (IMS) is a constituent part of the management system of Cinkarna Celje, d. d. It includes the fundamental features of management and operations for all activities of the Company in compliance with the requirements of the standards ISO 9001 (quality management standard), ISO 14001 (environmental management standard), ISO 45001 (standard for occupational health and safety management) and, for the Mozirje location, also with the EMAS Regulation.
Compliance of the system with the requirements of the standards is verified each year by the certification authority SIQ (Slovenian Institute of Quality and Metrology). In 2020, the assessment of the Integrated Management System and compliance with the EMAS Regulation (for the Mozirje location) was carried out in August. No instance of non-compliance was detected and 18 recommendations were given, all of which but one have been adopted and for the most part already implemented.
Pursuant to the requirements of the EMAS Regulation, the environmental statement was prepared for CC Chemistry Mozirje, on which the environmental assessor did not give any comments. In the final report the leading assessor wrote that Cinkarna Celje, d. d. implemented, maintained and developed the management system in compliance with the requirements of standards ISO 9001, ISO 14001, ISO 45001 and the EMAS Regulation.
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We submitted a new report under the Responsible Care Programme for 2019 in the end of June 2020. Meeting our obligations for 2020, we again obtained the right to use the (CEFIC) Responsible Care logo until February 2022.
We already started implementing activities in this field in 2013, when the risk arising from old burdens was identified for the areas of current production.
In August 2018, we concluded and publicly presented the Human Health and Environmental Risk Assessment arising from consumption of agricultural crops produced under ONOB. The Assessment and the proposed measures were presented by representatives of the chosen contractor, the German company CDM Smith. It has been established that the polluted hanging underground water under ONOB has no negative impact on crops.
In November 2018, we presented the completed Ecotoxicological Research of impact of old burdens on the current production location in Celje on the biota in Hudinja and Vzhodna Ložnica water courses. The results of the research indicated actions were required in four locations. In order to specify the actions, the impacts and resources need to be further defined. We dealt with this in 2019. After the work done, the source in one location has still not been identified.
In agreement with the representatives of the Ministry of the Environment and Spatial Planning, an outsourced contractor – CDM Smith in 2020 again prepared a summary of all the results and a comparative interpretation of German, Dutch and Slovenian regulations.
We maintain the HACCP system introduced in 2004 at our kitchen facility. In 2017, we renovated it entirely in cooperation with the National Laboratory of Health, Environment and Food. We are implementing the system consistently, thus decreasing the risk of infection. We are making continuous improvements. Supervision and advice are provided by the National Laboratory of Health, Environment and Food, which conducts two inspections annually in the central kitchen and one inspection per year in the marketing and maintenance divisions. The whole HACCP system is very extensive, warranting continuous monitoring and updating as well as verification of the adequacy and necessity of individual procedures. For its successful implementation we organise training for all employees every two years in cooperation with the National Laboratory of Health, Environment and Food.
The Company has not specifically defined a policy for carrying out financial and legal due diligences. In case of carrying out financial and legal due diligences, procedures are being implemented in compliance with the needs of the client and information is disclosed and prepared in compliance with the applicable legislation for the relevant fields.
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| Note | 31 December 2020 | 31 December 2019 |
|---|---|---|
| ASSETS | 210,335,697 | 207,807,065 |
| A. Non-current assets | 110,083,986 | 107,290,529 |
| I. Intangible assets and long-term deferred costs and accrued revenues | ||
| 1 | 1,061,100 | 1,236,811 |
| 1. Long-term property rights | 1,017,825 | 1,195,343 |
| 5. Other long-term deferred costs and accrued revenues | 43,275 | 41,468 |
| II. Property, plant and equipment | 106,399,006 | 103,298,508 |
| 1a. Land | 9,749,192 | 9,821,534 |
| 1b. Buildings | 43,360,477 | 42,230,411 |
| 2. Production plant and machinery | 41,927,817 | 32,446,320 |
| 3. Other plant and equipment | 52,238 | 56,214 |
| 4a. Property, plant and equipment under construction and in production | 10,492,059 | 18,586,034 |
| 4b. Advances for acquisition of property, plant and equipment | 817,222 | 157,995 |
| IV. Long-term financial assets | 950,363 | 950,363 |
| 1a. Other shares and interests | 950,363 | 950,363 |
| VI. Deferred tax assets | 1,673,517 | 1,804,846 |
| B. Current assets | 99,955,723 | 100,183,266 |
| II. Inventories | 35,524,605 | 40,992,387 |
| 1. Material | 21,487,973 | 24,636,886 |
| 2. Work-in-progress | 2,533,235 | 2,297,051 |
| 3. Products and merchandise | 11,340,759 | 13,908,165 |
| 4. Advances for inventories | 162,638 | 150,285 |
| III. Short-term financial assets | 35,056 | 360,650 |
| 1. Short-term financial assets, excluding loans | 35,056 | 160,650 |
| 1c. Other short-term financial assets | 35,056 | 160,650 |
| 2. Short-term loans | 0 | 200,000 |
| 2b. Short-term loans to others | 0 | 200,000 |
| IV. Short-term operating receivables | 26,738,238 | 27,131,987 |
| 2. Short-term trade receivables | 24,734,182 | 23,948,700 |
| 3. Short-term operating receivables due from others | 2,004,056 | 3,183,288 |
| V. Cash | 37,657,824 | 31,698,242 |
| C. Short-term deferred costs and accrued revenues | 11295,987 | 333,270 |
| 31 December 2020 | 31 December 2019 | |
|---|---|---|
| EQUITY AND LIABILITIES | 210,335,697 | 207,807,065 |
| A. Equity | 174,016,279 | 170,342,846 |
| I. Called-up capital | 20,229,770 | 20,229,770 |
| 1. Share capital | 20,229,770 | 20,229,770 |
| II. Capital surplus | 44,284,976 | 44,284,976 |
| III. Revenue reserves | 94,431,872 | 91,601,525 |
| 1. Legal reserves | 16,931,435 | 16,931,435 |
| 2. Reserves for treasury shares | 3,900,280 | 1,992,963 |
| 3. Treasury shares | -3,900,280 | -1,992,963 |
| 5. Other revenue reserves | 77,500,437 | 74,670,090 |
| V. Fair-value reserves | -1,452,475 | -1,618,921 |
| VI. Retained net profit/accumulated loss | 5,151,743 | -231,793 |
| VII. Net profit or loss for the year | 11,370,393 | 16,077,289 |
| B. Provisions and long-term accrued costs and deferred revenues | 20,876,401 | 22,578,045 |
| 1. Provisions for pensions and similar liabilities | 3,984,428 | 4,208,262 |
| 2. Other provisions | 16,659,156 | 18,091,449 |
| 3. Long-Term accrued costs and deferred revenues | 232,817 | 278,334 |
| D. Short-term liabilities | 14,361,213 | 13,991,310 |
| II. Short-term financial liabilities | 60,090 | 44,594 |
| 1. Other short-term financial liabilities | 60,090 | 44,594 |
| III. Short-term operating liabilities | 14,301,123 | 13,946,716 |
| 1. Short-term trade payables | 9,284,985 | 9,483,325 |
| 2. Short-term operating liabilities based on advance payments | 469,831 | 407,013 |
| 3. Other short-term operating liabilities | 4,546,306 | 4,056,377 |
| E. Short-term accrued costs and deferred revenues | 111,081,803 | 894,864 |
The accompanying notes form an integral part of the financial statements and should be read in conjunction with them.
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| Note | YEAR 2020 | YEAR 2019 |
|---|---|---|
| 1. Net sales revenue | 172,386,851 | 172,586,979 |
| - Net sales revenue generated in Slovenia | 14,623,430 | 18,818,634 |
| - Net sales revenue generated on the international market | 157,763,421 | 153,768,345 |
| 2. Change in the value of inventories of products and work-in-progress | -2,366,517 | -3,771,053 |
| 3. Capitalised own products and services | 3,882,906 | 2,827,629 |
| 4. Other operating revenues (including revaluation operating revenue) | 1,325,972 | 6,055,956 |
| 5. Costs of goods, material and services | 110,970,369 | 108,285,638 |
| a) Cost of goods and material sold and costs of material used | 97,154,424 | 93,494,697 |
| b) Cost of services | 13,815,945 | 14,790,940 |
| 6. Labour cost | 30,099,442 | 30,856,980 |
| a) Cost of salaries and wages | 21,224,553 | 20,658,999 |
| b) Cost of social security | 1,680,271 | 1,728,898 |
| c) Cost of pension insurance | 2,421,202 | 2,476,747 |
| d) Other labour cost | 4,773,416 | 5,992,337 |
| 7. Write-downs in value | 10,349,655 | 11,287,681 |
| a) Depreciation and amortisation | 9,932,781 | 10,859,864 |
| b) Revaluation operating expenses associated with intangible assets and property, plant and equipment | 112,277 | 3,624 |
| c) Revaluation operating expenses associated with operating current assets | 304,598 | 424,193 |
| 8. Other operating expenses | 1,283,476 | 1,542,270 |
| Operating profit or loss | 22,526,270 | 25,726,942 |
| 9. Finance revenue from participating interests | 42,306 | 44,228 |
| d) Finance revenue from other investments | 42,306 | 44,228 |
| 10. Finance revenue from loans granted | 78 | 16,021 |
| b) Finance revenue from loans to others | 78 | 16,021 |
| 11. Finance revenue from operating receivables | 426,509 | 414,089 |
| b) Finance revenue from operating receivables due from others | 426,509 | 414,089 |
| 12. Finance expenses for impairment and write-off of financial assets | 0 | 0 |
| 13. Finance expenses for financial liabilities | 35,954 | 85,764 |
| d) Finance expenses for other operating liabilities | 35,954 | 85,764 |
| 14. Finance expenses for operating liabilities | 455,785 | 378,979 |
| b) Finance expenses for trade payables and bills payable | 40,067 | 218,599 |
| c) Finance expenses for other operating liabilities | 415,718 | 160,380 |
| 15. Other revenue | 80,940 | 28,872 |
| 16. Other expenses | 72,766 | 63,230 |
| Profit or loss before tax | 22,511,599 | 25,702,178 |
| 17. Corporate income tax | 3,429,614 | 3,512,018 |
| 18. Deferred taxes | -131,329 | -753,775 |
| 19. Net profit or loss for the period | 18,950,656 | 21,436,385 |
| Basic earnings per share | 23.45 | 26.53 |
| Diluted earnings per share | 23.45 | 26.53 |
The accompanying notes form an integral part of the financial statements and should be read in conjunction with them.
1 Net profit / number of shares
2 All shares are ordinary, freely transferable and of the same class.
| YEAR 2020 | YEAR 2019 | |
|---|---|---|
| 19. Net profit or loss for the period | 18,950,656 | 21,436,385 |
| 23. Other components of comprehensive income (from unrealised actuarial gains/losses) | 166,446 | -184,533 |
| 24. Total comprehensive income for the period (19+23) | 19,117,102 | 21,251,852 |
The accompanying notes form an integral part of the financial statements and should be read in conjunction with them.
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| Share capital | Capital Reserves | Revenue reserves | Fair-value reserves | Retained net profit/ accumulated loss | Net profit or loss for the year | Total capital | Legal reserves | Reserves for treasury shares | Treasury shares | Other revenue reserves |
|---|---|---|---|---|---|---|---|---|---|---|
| I/1 | II | III/1 | III/2 | III/3 | III/5 | V | VI | VII/1 | VIII | |
| 20,229,770 | 44,284,976 | 16,931,435 | 1,992,963 | -1,992,963 | 74,670,089 | -1,618,921 | -231,793 | 16,077,289 | 170,342,845 |
| 1,907,317 | -1,907,317 | 13,536,352 | 13,536,352 | ||
|---|---|---|---|---|---|
| d) Purchase of treasury shares | 1,907,317 | -1,907,317 | 0 | ||
| e) Cancellation of treasury shares | 0 | ||||
| g) Dividend distribution | 13,536,352 | 13,536,352 |
| 166,446 | 18,950,656 | 19,117,102 | ||
|---|---|---|---|---|
| a) Entry of net profit or loss for the reporting period |
| d) Other components of the total comprehensive income for the reporting period | 18,950,656 | 18,950,656 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| B3. Changes within equity | 2,830,348 | 18,919,888 | -23,657,552 | -1,907,317 | ||||||
| a) Allocation of the remaining net profit for the comparative period to other equity components | 0 | |||||||||
| b) Allocation of part of net profit for the period to other equity components according to resolution of management and supervision bodies | 4,737,665 | 18,919,888 | -23,657,552 | 0 | ||||||
| d) Reserves for treasury shares | -1,907,317 | -1,907,317 | ||||||||
| C. Closing balance for the period | 20,229,770 | 44,284,976 | 16,931,435 | 3,900,280 | -3,900,280 | 77,500,437 | -1,452,475 | 5,151,743 | 11,370,393 | 174,016,279 |
| DISTRIBUTABLE PROFIT | 5,151,743 | 11,370,393 | 16,522,136 |
| Share capital | Capital Reserves | Revenue reserves | Fair-value reserves | Retained net profit/ accumulated loss | Net profit or loss for the year | Total capital | Legal reserves | Reserves for treasury shares | Treasury shares | Other revenue reserves |
|---|---|---|---|---|---|---|---|---|---|---|
| I/1 | II | III/1 | III/2 | III/3 | III/5 | V | VI | VII/1 | VIII | |
| A2. Opening balance for the period | 20,396,244 | 44,284,976 | 16,931,435 | 1,364,106 | -1,364,106 | 71,137,482 | -1,666,698 | -76,610 | 22,918,637 | 173,925,466 |
| B1. Changes in equity - transactions with owners | 628,857 | -628,857 | 22,841,510 | 22,841,510 | ||||||
| d) Purchase of treasury shares | 1,992,963 | -1,992,963 | ||||||||
| e) Cancellation of treasury shares | -1,364,106 | 1,364,106 | ||||||||
| g) Dividend distribution | 22,841,510 | 22,841,510 | ||||||||
| B2. Total comprehensive income for the period | 47,777 | -232,310 | 21,436,385 | 21,251,852 | ||||||
| a) Entry of net profit or loss for the reporting period | 21,436,385 | 21,436,385 | ||||||||
| d) Other components of the total comprehensive income for the reporting period | 47,777 | -232,310 | -184,533 | |||||||
| B3. Changes within equity | -166,474 | 3,532,607 | 22,918,637 | -28,277,733 | -1,992,963 | |||||
| a) Allocation of the remaining net profit for the comparative period to other equity components | 5,359,096 | 22,918,637 | -28,277,733 | |||||||
| b) Allocation of part of net profit for the period to other equity components according to resolution of management and supervision bodies | -1,992,963 | -1,992,963 | ||||||||
| d) Reserves for treasury shares | -166,474 | 166,474 | ||||||||
| C. Closing balance for the period | 20,229,770 | 44,284,976 | 16,931,435 | 1,992,963 | -1,992,963 | 74,670,089 | -1,618,921 | -231,793 | 16,077,289 | 170,342,846 |
| DISTRIBUTABLE PROFIT | -231,793 | 16,077,289 | 15,845,496 |
| YEAR 2020 | YEAR 2019 | |
|---|---|---|
| A. CASH FLOWS FROM OPERATING ACTIVITIES | ||
| a) Net profit or loss | 18,950,656 | 21,436,385 |
| Profit or loss before tax | 22,511,599 | 25,702,178 |
| Income tax and other taxes not included in operating expenses | 3,560,944 | 4,265,793 |
| b) Adjustments for | 10,293,014 | 10,221,311 |
| Amortisation and depreciation | 9,932,781 | 10,859,864 |
| Revaluation operating revenues | -14,258 | 1,235,960 |
| Revaluation operating expenses | 416,875 | 657,655 |
| Finance revenue excluding that from operating receivables | -42,384 | 60,248 |
| c) Change in net operating current assets (and accruals and deferrals, provisions, deferred tax assets and liabilities) of operating items in the balance sheet | 3,994,840 | 2,445,499 |
| Opening less closing operating receivables | -281,007 | -405,424 |
| Opening less closing deferred costs and accrued revenues | 37,283 | -40,768 |
| Opening less closing deferred tax assets | 131,329 | 753,775 |
| Opening less closing inventories | 5,163,795 | 4,628,384 |
| Closing less opening operating liabilities | 354,407 | 2,609,971 |
| Closing less opening accrued costs and deferred revenues, and provisions | -1,410,967 | -5,100,439 |
| d) Net cash flow from financing activities (a+b+c) | 33,238,509 | 34,103,195 |
| B. CASH FLOWS FROM INVESTING ACTIVITIES | ||
| a) Receipts from investing activities | 382,236 | 1,296,208 |
| Receipts from interest and profit participations in other entities pertaining to investing activities | 42,384 | 60,248 |
| Receipts from disposal of intangible assets and deferred costs and accrued revenue | 0 | 0 |
| Receipts from disposal of property, plant and equipment | 14,258 | 1,235,960 |
| Receipts from disposal of short-term financial investments | 325,594 | 0 |
| b) Disbursements for investing activities | 12,232,990 | 12,316,648 |
| Disbursements for acquisition of intangible assets | 104,228 | 55,089 |
| Disbursements for acquisition of property, plant and equipment | 12,128,762 | 11,900,909 |
| Disbursements for acquisition of financial assets | 0 | 360,650 |
| c) Net cash flow from investing activities (a-b) or (b-a) | -11,850,754 | -11,020,440 |
| C. CASH FLOWS FROM FINANCING ACTIVITIES | ||
| b) Disbursements for financing activities | 15,428,173 | 24,867,909 |
| Disbursements for repayment of financial liabilities | -15,496 | 26,083 |
| Expenses for redemption of treasury shares | 1,907,317 | 1,992,963 |
| Disbursements for dividends and other profit distributions | 13,536,352 | 22,848,863 |
| c) Net cash flow from financing activities (a-b) or (b-a) | -15,428,173 | -24,867,909 |
| D. CLOSING BALANCE OF CASH AND CASH EQUIVALENTS | 37,657,824 | 31,698,242 |
| x) Cash flow for the period (sum total of items Ad, Bc and Cc) | 5,959,582 | -1,785,153 |
| y) Opening balance of cash and cash equivalents as at 1 Jan | 31,698,242 | 33,483,395 |
The accompanying notes form an integral part of the financial statements and should be read in conjunction with them.
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The Company’s financial statements were prepared in accordance with the amended Slovenian Accounting Standards 2019 (hereinafter ‘SAS’), Rules of Diligent Accounting (hereinafter ‘PSR’), provisions of the Companies Act, Corporate Income Tax Act, Rules on Accounting and Finances and the Company’s organisational acts. The Company prepares its financial statements according to the going concern principle.
When disclosing and valuing individual items of the financial statements, standards are applied directly, with the exception of the valuation of items, for which the standards provide the Company with a choice between different valuation methods, which is defined by accounting policies.
The financial statements were prepared by observing the initial cost, with exception of the available-for-sale financial assets. The methods used for the measurement of fair value are described under individual items of accounting policies.
The balance sheet has the form of a sequential report defined in SAS 20.4. and the Companies Act (ZGD-1). Balance sheet items are disclosed according to carrying amount, which is the difference between total value and value adjustment.
Assets are initially valued according to initial cost (purchase price, cost value) and subsequently, in the event of impairment, as the lower of the following two options: carrying amount or the recoverable amount. The recoverable amount is the higher of the following two: either the fair value net of selling costs or the value of asset in use, whichever is higher.
Liabilities are initially valued at cost. Subsequently, the carrying amount of liabilities upon the assumption of prudence is the higher of the following two values: historical cost or fair value.
The principle of individual valuation of items of assets and liabilities was applied. Revenues and expenses are accounted when they occur and recorded in the accounting period, to which they pertain.
The financial statements and notes thereto were compiled in euros without cents. Accounting information presented in euros in the Business Report was rounded.
When compiling financial statements, the management must provide estimates, judgements and assumptions that affect the application of accounting policies and disclosed values of assets, liabilities, revenues and expenses. Actual results may deviate from these estimates.
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The estimates include, among other, determining the life and residual value of property, plant and equipment and intangible fixed assets, value adjustments of inventories and receivables, assessment of possible use of deferred tax assets, assumptions relevant for actuarial calculations related to certain employee benefits, assumptions included in the calculation of potential provisions for environmental purposes and for claims filed by legal and natural persons.
Estimates and assumptions stated must be reviewed regularly. Adjustments to accounting estimates are recognised for the period in which estimates are adjusted, provided they affect only this period, and for future periods, which are affected by the adjustments. Information on significant uncertainty estimates and decisive judgements that were prepared by the management within the process of accounting policy implementation and which affect the amounts in the financial statements the most is described in the notes.
The accounting policies used and the calculation methods applied are the same as for the last annual reporting, with the exception of the new standards that have been adopted and clarifications. Both are set out below and have been taken into account in the preparation of the financial statements if they had an impact during the reporting period.
For transactions that are originally executed in foreign currencies, the recalculation of business events during the year observes the exchange rate of a commercial bank or the middle exchange rate of the Bank of Slovenia. Assets and liabilities expressed in a foreign currency were converted at the middle exchange rate of the Bank of Slovenia as at the reporting date.
In 2020, there were no significant amendments to SAS that would affect the financial statements.
Notable amendments in 2019 SAS were made to leases and were applied in 2019, regarding which the revised standard stipulates as follows:
Upon the conclusion of the contract, the entity assesses whether the arrangement is or contains a lease. The contract is a lease contract or contains a lease if it conveys the right to control the use of identified asset for a period of time in exchange for consideration.
The Company applies a uniform approach to recognition and measurement of all leases, except for short-term leases and leases of small-value assets. The Company recognises a lease liability for lease payments and the right to use the assets, which represents the right to use the leased assets.
Leases in respect of which no significant ownership risks and rewards are transferred are classified as operating leases. Rental income is recognised on a straight-line basis over the lease term under revenue in the statement of profit or loss. Initial direct costs are additional costs that are directly attributable to the negotiation and arrangement of the lease, they increase the carrying amount of the leased asset and are recognised over the lease term in the same way as rental income. Contingent rents are recognised as income in the period in which they are earned.
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Internally generated costs of development are recognised as an intangible asset. The recognition of an intangible asset is reversed and eliminated from the books of account and from the balance sheet on disposal or when no future economic benefits are expected from its further use and subsequent disposal.
Other intangible assets have a defined useful life and are disclosed at cost reduced by amortisation adjustment and any accumulated impairment losses. The cost also includes the cost of borrowing until the creation of an intangible asset. Subsequent expenditures relating to intangible assets are capitalised when they increase future economic benefits of the asset to which they relate.
The Company uses the straight-line depreciation method. Amortisation/depreciation rates are determined according to the expected useful life. Amortisation is accounted individually until the value that forms the basis for the calculation of amortisation is replaced in full, whereby amortisation begins when an intangible asset with a fixed useful life becomes available for use.
| Software | 2 to 10 years |
|---|---|
| Technical and project documentation | 8 to 40 years |
| Easements | 20 years |
Amortisation rates did not change in 2020 as compared to the year before.
Property, plant and equipment of the Company include land, buildings, manufacturing equipment and other property, plant and equipment, small tools, property, plant and equipment under construction and in production and advances for the acquisition of property, plant and equipment.
The Company applies the cost model. The cost is composed of the costs that can be directly attributed to the acquisition of an individual item of fixed assets (import and non-refundable purchase taxes as well as costs that can be directly attributed to the asset being brought to working condition for intended use, especially the cost of transport and installation). The Company uses the cost model and records property, plant and equipment according to their cost reduced by accumulated depreciation and impairment losses. The cost also comprises borrowing costs related to the acquisition of an asset and incurred until it is brought to working condition for its intended use.
to the asset and the general cost of constructing or producing the asset that can be attributed to the asset being brought to working condition for its intended use. The cost of an item of property, plant and equipment is distributed among its components if their value is significant, if they have different useful lives relevant given the total cost of such item and are accounted as a separate asset. Subsequent expenditure on an item of property, plant and equipment increases its cost in case of a replacement and if it is probable that its future economic benefits will exceed the ones originally assessed. In the event of subsequent expenditure on a fully depreciated item of property, plant and equipment, such item is recognised as a new asset with a new useful life.
Own products and services are capitalised when they increase the asset’s future benefits or extend its useful life. These are the products and services created, or performed, the value of which is included in property, plant and equipment or intangible assets. At the same time, these effects of capitalising own products and services are reflected in other operating revenue.
The Company uses the straight-line depreciation method. Amortisation/depreciation rates are determined according to the expected useful life. Depreciation is accounted individually until the value that forms the basis for the calculation of depreciation is replaced in full, whereby depreciation begins on the first day of the month following the month when the asset becomes available for use. Land and fixed assets of artistic and cultural importance are not depreciated.
| Buildings | 5 to 50 years |
|---|---|
| Manufacturing equipment | 2 to 30 years |
| Other equipment | 2 to 5 years |
Depreciation rates did not change in 2020 as compared to the year before.
In the balance sheet, financial assets are disclosed as long-term and short-term financial assets. Long-term financial assets are investments that the Company intends to hold for a period longer than one year and which are not held for trading. Equity investments, equity securities of other companies or debt securities of other companies or the state are valued at fair value upon initial recognition increased by direct costs of acquisition of the investment.
Long-term investments in subsidiaries and affiliates are valued in the financial statements at cost less any impairments. Profit participations increase finance revenue.
reversed as at the date of the transaction. Fair value of available-for-sale securities listed on the stock exchange equals the published average price per share as at the balance sheet date. Changes in the fair value of an investment into securities listed on an organised securities market are disclosed by the Company as an increase in fair value reserve or a decrease in this reserve. Fair value of shares and shareholdings in unlisted companies is estimated based on the most recent transactions or based on a different valid valuation method. If the fair value of shares and shareholdings in unlisted companies does not allow valuation based on the most recent transactions or based on a different valid valuation method and there is unbiased evidence of a decrease in the value of such shares and shareholdings, their value is impaired in line with the unbiased evidence.
Financial assets are measured at fair value upon initial recognition. Financial assets that do not have a price published on an active market and the fair value of which cannot be reliably measured, are measured at cost less impairments.
After initial recognition, the fair value of available-for-sale financial assets is reassessed as a rule every three months, and at the latest on the balance sheet date for the financial year. Fair value is generally calculated on the basis of the quoted price. Upon recognition, available-for-sale financial assets are classified into the following categories:
Held-for-trading financial assets are measured at fair value through profit or loss, while for assets not held for trading, the Company in accordance with SAS 3 decided to measure them at fair value through equity (other comprehensive income). A change in the fair value of available-for-sale assets that an entity does not hold for trading is recognised directly in equity as an increase or decrease in the fair value reserve; if the fair value of an available-for-sale financial asset is less than its recognised value, a negative reserve arising from measurement at the fair value is recognised.
Upon derecognition of available-for-sale assets not held for trading, the difference between the carrying amount and the sum of the consideration received and the accumulated gain or loss recognised directly in equity is recognised in profit or loss. The carrying amounts of securities are discounted at average securities prices upon sale or other disposal.
The assets shown in the balance sheet under Other shares and interests represent available-for-sale assets that are not held for trading.
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The Company records inventories of raw materials and materials as well as support materials, packaging and merchandise at cost including all dependent purchasing costs. When disclosing inventories and consumption of materials, the Company uses fixed prices with deviations. Consumption of basic raw materials is recorded according to the FIFO method, while the consumption of other inventories of materials and goods is recorded according to the weighted average prices method.
Inventories of raw materials and materials without changes are revalued for impairment by writing down values according to the following criteria:
| Year | Percentage |
|---|---|
| Third year | 25 % |
| Fourth year | 50 % |
| Fifth year | 100 % |
Inventories of work-in-progress, semi-finished products and finished products are valued at production costs which include direct costs of material, wages, production services, depreciation and a portion of general production costs of manufacturing cost centres, comprising costs of material, maintenance, insurance and a portion of costs of other services. When disclosing inventories of work-in-progress and finished products, the Company uses fixed prices (AVC) with deviations. Transfer of costs from inventories is performed according to the weighted average price method.
Inventories of work-in-progress and finished products without changes are revalued for impairment by writing down values according to the following criteria:
| Year | Percentage |
|---|---|
| Second year | 25 % |
| Third year | 50 % |
| Fourth year | 100 % |
Receivables are initially recognised at amounts arising from relevant documents under the assumption that they will be paid. Receivables presumed not be settled or settled in their entirety are considered doubtful receivables, or, in the case of litigation, as disputed receivables. The Company accounts for their value adjustment to the debit of revaluation operating expenses relating to receivables.
Revaluation of trade receivables and other operating receivables is based on individual judgement of their risk level, considering the payment dynamic based on past experience, defaults, credit rating of the business partner and its status in case of insolvency proceedings.
Receivables expressed in a foreign currency are translated to euros, the functional currency of the Company, as at the reporting date. An increase in receivables increases finance revenue, while a decrease in receivables increases finance expenses.
95
Cash and cash equivalents comprise: cash on hand, funds in transaction and foreign currency accounts, bank deposits with maturity of 3 months and less, and similar investments intended for ensuring solvency. Upon initial recognition, cash is disclosed in amounts that arise from relevant documents, based on which rights associated therewith are managed.
The Company’s total equity comprises: called-up capital, capital surplus, revenue reserves, fair value reserve, retained earnings or accumulated losses and previously undistributed net profit or unsettled loss for the financial year.
Called-up capital comprises the basic share capital that is nominally defined in the Company’s Articles of Association and comprises ordinary shares.
Treasury shares: upon redemption of treasury shares disclosed as part of share capital, the amount of the consideration paid including the costs that are directly related to the redemption exclusive of any tax effects is recognised as a change in equity. Redeemed shares are disclosed as treasury shares and are deducted from equity. Upon the sale or re-issue of treasury shares, the amount received is disclosed as a capital increase, while the thus obtained surplus or shortage of the transaction is transferred to capital surplus or retained earnings. As treasury shares are purchased, reserves are formed for treasury shares out of revenue reserves.
Capital surplus comprises the capital surplus formed within the procedure of ownership transformation and the general revaluation adjustment of capital that included the revalorisation of share capital prior to 2002 in accordance with the SAS valid at the time. The general revaluation adjustment of the Company’s capital was transferred to capital surplus on 1 January 2006 because of the transition to the new SAS (2006).
Revenue reserves are appropriated retained earnings from the Company’s net profit from previous years, which serve primarily for settling potential future loss. They comprise: legal reserves, reserves for treasury shares or own shareholdings, treasury shares or own shareholdings (as a deduction item), statutory reserves and other revenue reserves.
Retained earnings comprise that part of net profit neither distributed to equity owners as dividends or other participations nor earmarked for reserves.
Fair value reserves relate to the change in fair value of equity investments in other companies that are measured at fair value through equity. Fair value reserves also include the costs of repeated measurement of post-employment benefits (actuarial gains/losses) arising due to a change in the present value of payables for termination benefits upon retirement.
Provisions are recognised when the Company has present legal or indirect obligations as a result of a past event, the amount of which can be reliably estimated and it is probable that the settlement of the obligation will result in an outflow of resources embodying economic benefits. The amount recognised as a provision is the best
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The Company recognises provisions against the relevant expenses or costs once the respective conditions have been met.
Pursuant to the law, the collective agreement and internal rules, the Company is obliged to pay its employees jubilee benefits and termination benefits upon retirement, for which long-term provisions are formed. There are no other pension liabilities. Provisions are established in the amount of estimated future disbursements for termination benefits and jubilee benefits, discounted at the balance sheet date.
Environmental provisions are established as the best estimate made by independent external environmental experts of the costs associated with the operation of landfills and plants owned by the Company for the coverage of long-term obligations. Provisions are discounted at a risk-free rate; however, the Company does not apply the discount because it is not possible to reliably predict the execution schedule of works.
Government grants are recognised in the financial statements when they are received and when there is reasonable assurance that the Company will comply with the conditions attached to them. Deferred revenues received for the coverage of costs are recognised strictly and consistently as revenue in the periods in which the relevant costs, which deferred revenues are supposed to replace, are incurred. Government grants associated with assets are strictly and consistently recognised in the statement of profit or loss among other operating revenues during the useful life of an individual asset.
Government grants received for the acquisition of fixed assets, or to cover specific costs, are temporarily carried as deferred revenue and transferred to operating revenue in line with the depreciation of the acquired fixed assets or with the incurrence of costs for which they have been earmarked.
Long-term liabilities are disclosed as long-term financial liabilities and long-term operating liabilities. Long-term financial liabilities comprise liabilities arising from loans received. They are increased by accrued interest or decreased by repaid amounts and any other settlements provided there is an agreement for this with the creditor. The carrying amount of long-term liabilities equals their initial cost reduced by the repayment of the principal and transfers to short-term liabilities until the need for revaluation arises.
Within the scope of short-term liabilities, short-term financial liabilities and short-term operating liabilities are disclosed separately. Short-term financial liabilities comprise liabilities arising from loans received. Short-term operating liabilities are liabilities arising from the purchase of products or services, liabilities arising from the work performed, liabilities to state institutions and other liabilities due in less than a year.
Short-term deferred costs and accrued revenues comprise short-term deferred costs and expenses. In line with the established methodology for deferring the costs of annual liabilities, deferred costs of holiday pay, paid insurance premiums and other short-term costs are disclosed during the year. As at the reporting date, the Company discloses prepaid purchasing costs of raw materials and the costs relating to the future balance sheet period. The Company also discloses VAT from received advances among short-term deferred costs and accrued revenues.
Short-term accrued costs and deferred revenues include short-term accrued costs (expenses) and short-term deferred revenues (income). In line with the established methodology for deferring the costs of annual liabilities, planned operating liabilities are deferred during the year, while accounted revenues during the year arising from the sale of products and services are recorded among short-term deferred revenues. The Company discloses accounted unused rights to annual leave among short-term accrued costs and deferred revenues. Short-term accrued costs and deferred revenues also comprise VAT from advances given.
Revenues are recognised if the increase in economic benefits in the accounting period is associated with an increase in the value of an asset or a decrease in liabilities, and if the increase can be reliably measured. Revenues are recognised when it is reasonable to expect that they will lead to receipts if these have not been realised upon their occurrence.
Revenue from contracts with customers arises from the sale of chemical, metallurgical and other products and materials, where the performance obligation is satisfied at the moment the goods are shipped or taken over by the customer. However, in the case of revenue from contracts with customers resulting from the sale of a service, the performance obligation is satisfied at the moment the service is performed. Sales revenues arise from contracts with customers on the sale of goods or services. Sales revenues reflect the transfer (supply) of contracted goods or services to customers in the amount of the expected consideration to which the Company will be entitled in exchange for those goods or services. Sales revenues should be classified as revenues earned from the sale of the enterprise's own products and services and as revenues earned from the sale of merchandise and material. Amounts collected on behalf of third parties, such as accrued value added taxes and other sales taxes should be excluded from sales revenues. Similarly, amounts collected by an agent on behalf of a third party are not a component of revenue (sales revenue is only that part of commission to which the agent is entitled for rendering the service).
A goods or a service is transferred when control passes to the customer. The customer acquires control over a good or a service when he or she acquires the right to direct the use of, and obtain substantially all of the remaining benefits from a good or a service. Such control also means the ability to prevent others from directing the use of, and receiving the benefit from, a good or a service. The benefits of a good or a service are potential cash flows (inflows or savings in outflows) that can be obtained directly or indirectly in many ways. The Company transfers control of a good or service at a specific moment or over time, and therefore satisfies a performance obligation.
At the conclusion of the contract with the customer, the Company must identify all performance obligations in the contract. The entity’s promise to transfer a good or a service to the customer is separately identifiable from other promises in the contract:
98
a) if, according to the SAS criteria, it can be separately identified from other promises in the contract for the transfer of goods or services; and
b) if the customer can benefit from a good or a service on its own or in conjunction with other readily available resources. The fact that the Company regularly sells a good or a service separately would, for example, indicate that the customer can benefit from the good or service on its own or in conjunction with other readily available resources.
Sales revenue is recognised in an amount that reflects the transaction price, which is allocated to separate performance obligation in the contract. Transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.
Revaluation operating revenues arise upon disposal of intangible assets and items of property, plant and equipment as surpluses from their sales value above their carrying amount.
Finance revenue comprises revenue from interest received from investments, dividend revenue, revenue from disposal of available-for-sale financial assets, foreign exchange gains and profit from hedging instruments that are recognised in the statement of profit or loss. Interest revenue is recognised upon occurrence using the effective interest rate method. Dividend revenue is recognised in profit or loss when the Company obtains the right to receive payment.
Other revenues consist of extraordinary, unusual items. They are disclosed in amounts that actually occurred.
Expenses are recognised if the decrease in economic benefits in the accounting period is associated with the decrease in an asset or an increase in liabilities, and if the decrease can be reliably measured.
Operating expenses are recognised when material is used or the service is rendered and in the period to which they relate. The usual valuation of inventories of products and work-in-progress at production costs is based on operating expenses comprising the production costs that are no longer held in inventories as well as the purchasing and selling costs and the costs of general activities accrued during the accounting period. The transfer of costs from the inventories of products and work-in-progress to the costs of goods sold, and the transfer of acquisition cost of merchandise and materials to the costs of goods sold are carried out by applying the constant (estimated, standard) price method, taking into account the proportionate part of variance.
Revaluation operating expenses occur in relation to property, plant and equipment, intangible assets and operating current assets because of their impairment.
Finance expenses comprise the costs of interest on loans, foreign exchange losses and losses from impairment of financial assets that are recognised in the statement of profit or loss. Borrowing costs are recognised in the statement of profit or loss according to the effective interest rate method.
Other expenses comprise unusual items that are disclosed in the actually incurred amounts.
99
Corporate income tax for the financial year comprises current (assessed) tax and deferred tax. Corporate income tax is disclosed in the statement of profit or loss, with the exception of the portion related to items that are disclosed directly in equity. Taxable profit differs from net profit reported in the statement of profit or loss because it is exclusive of items of revenues and expenditures that are taxable or deductible in other years and items that are never taxable or deductible.
Current tax is the expected tax payable on taxable profit for the year, using tax rates enacted and applicable at the reporting date.
Deferred tax is disclosed according to the balance sheet liability method, whereby temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts for tax reporting purposes are observed. Deferred tax is disclosed in the amount that is expected to be payable upon elimination of temporary differences pursuant to the law enacted or essentially enacted as at the reporting date.
A deferred tax asset is recognised to the extent that it is probable that taxable profit will be available against which the deferred asset can be utilised. Deferred tax assets are decreased by the amount for which it is no longer probable that it can be claimed as tax relief related to the asset.
A segment is a recognisable component part of the Company that deals with particular products or services (business segment) or products and services in separate, geographically defined economic environment (geographical segment) and differs from other segments in terms of risks and returns. Information by segment is disclosed for geographical and business segments of the Company. The Company’s segment reporting is based on geographical segments supported by the method of management within the Company and the internal reporting system.
The Company’s geographical segments are Slovenia, European Union, third countries and markets of the former Yugoslavia. The Company’s business segments are Titanium dioxide, Zinc recycling, Varnishes, coatings, masterbatches and printing inks, Agricultural products and other. The information about segments is provided in the financial section of the report under Revenues from Contracts with Customers.
Profit or loss by business segment is disclosed as the difference between operating revenues and expenses by taking into account revenues and expenses that can be attributed directly to a particular segment, which excludes revenue and expenses from revaluation that cannot be reasonably allocated to business segments. Smaller business segments are merged into a single category as they are immaterial and because detailed disclosures could also cause significant damage to the Company.
100
In EUR
| Group of intangible assets for 2020 | Group of intangible assets for 2019 | ||||
| Cost | Adjustment | Carrying amount | Cost | Adjustment | Carrying amount |
| 31 December 2019 | 31 December 2020 | 31 December 2018 | 31 December 2019 | 31 December 2018 | |
| Long-term property rights | 5,436,680 | 5,537,658 | 4,241,337 | 5,383,924 | 5,436,680 |
| Other intangible assets | 27,072 | 25,629 | 0 | 0 | 27,072 |
| Assets being acquired | 14,396 | 17,646 | 0 | 0 | 14,396 |
| TOTAL | 5,478,148 | 5,580,933 | 4,241,337 | 5,396,833 | 5,478,148 |
| 3,972,105 | 4,241,337 | 1,411,819 | 1,195,343 | ||
| 1,424,728 | 1,236,811 |
In 2020, the Company invested in long-term property rights from investments in software and project documentation. Decreases in intangible assets relate to amortisation and write-off of other intangible assets. Other intangible assets (other long-term deferred costs and accrued revenues) comprise emission coupons received from the state free of charge, which are valued at EUR 1 each in accordance with Note 1 to the SAS 2/2016. The Company obtained 48,227 coupons in 2020. It will have to present 25,599 coupons for CO2 emissions in 2020. The remaining 25,629 coupons are owned by the Company.
101
| Long-term property rights | Other long-term deferred costs and accrued revenues | Assets being acquired | TOTAL COST | |
|---|---|---|---|---|
| Balance as at 31 Dec 2019 | 5,436,680 | 27,072 | 14,396 | 5,478,148 |
| Increases | 0 | 48,227 | 104,228 | 152,455 |
| Transfer from assets under acquisition | 100,978 | 0 | -100,978 | 0 |
| Decreases | 0 | 49,670 | 0 | 49,670 |
| Balance as at 31 Dec 2020 | 5,537,658 | 25,629 | 17,646 | 5,580,933 |
| Long-term property rights | Other long-term deferred costs and accrued revenues | Assets being acquired | TOTAL | ||
|---|---|---|---|---|---|
| Balance as at 31 Dec 2019 | 4,241,337 | 0 | 0 | 4,241,337 | |
| Amortisation and depreciation | 278,494 | 0 | 0 | 278,494 | |
| Decreases | 0 | 0 | 0 | 0 | |
| Balance as at 31 Dec 2020 | 4,519,832 | 0 | 0 | 4,519,833 |
| Long-term property rights | Other long-term deferred costs and accrued revenues | Assets being acquired | TOTAL | |
|---|---|---|---|---|
| Balance as at 31 Dec 2019 | 1,195,343 | 27,072 | 14,396 | 1,236,811 |
| Balance as at 31 Dec 2020 | 1,017,825 | 25,629 | 17,646 | 1,061,100 |
A part of long-term property rights relates to easements disclosed under land in compliance with SAS 2016 (2.39).
| Long-term property rights | Other long-term deferred costs and accrued revenues | Assets being acquired | TOTAL COST | |
|---|---|---|---|---|
| Balance as at 31 Dec 2018 | 5,383,924 | 0 | 12,909 | 5,396,833 |
| Increases | 0 | 49,243 | 55,089 | 104,332 |
| Transfer from assets under acquisition | 53,602 | 0 | -53,602 | 0 |
| Decreases | 846 | 22,171 | 0 | 23,017 |
| Balance as at 31 Dec 2019 | 5,436,680 | 27,072 | 14,396 | 5,478,148 |
| Long-term property rights | Other long-term deferred costs and accrued revenues | Assets being acquired | TOTAL | |
|---|---|---|---|---|
| Balance as at 31 Dec 2018 | 3,972,105 | 0 | 0 | 3,972,105 |
| Amortisation and depreciation | 270,078 | 0 | 0 | 270,078 |
| Decreases | 846 | 0 | 0 | 846 |
| Balance as at 31 Dec 2019 | 4,241,337 | 0 | 0 | 4,241,337 |
| Long-term property rights | Other long-term deferred costs and accrued revenues | Assets being acquired | TOTAL | |
|---|---|---|---|---|
| Balance as at 31 Dec 2018 | 1,411,819 | 0 | 12,909 | 1,424,728 |
| Balance as at 31 Dec 2019 | 1,195,343 | 27,072 | 14,396 | 1,236,811 |
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| In EUR | Group of PPE for 2020 Cost 31 December 2019 |
Group of PPE for 2020 Adjustment 31 December 2020 |
Group of PPE for 2020 Carrying amount 31 December 2019 |
Group of PPE for 2019 Cost 31 December 2018 |
Group of PPE for 2019 Adjustment 31 December 2019 |
Group of PPE for 2019 Carrying amount 31 December 2018 |
|---|---|---|---|---|---|---|
| Land | 10,803,263 | 10,803,263 | 981,729 | 10,767,363 | 10,803,263 | 909,387 |
| Buildings | 120,691,641 | 124,538,191 | 78,461,230 | 117,642,330 | 120,691,641 | 75,569,282 |
| Equipment | 207,759,470 | 221,895,740 | 175,256,936 | 211,413,712 | 207,759,470 | 175,739,792 |
| Assets being acquired | 18,586,034 | 10,492,059 | 0 | 14,461,532 | 18,586,034 | 0 |
| Advances | 162,153 | 821,380 | 4,158 | 598,110 | 162,153 | 4,158 |
| TOTAL | 358,002,561 | 368,550,632 | 254,704,053 | 354,883,047 | 358,002,561 | 252,222,619 |
| Land | Buildings | Production and other equipment | Total | Assets being acquired | Advances | TOTAL COST | |
|---|---|---|---|---|---|---|---|
| Balance as at 31 Dec 2019 | 10,803,263 | 120,691,641 | 207,759,470 | 339,254,374 | 18,586,034 | 162 | 358,002,560 |
| Increases | 0 | 0 | 0 | 0 | 12,128,762 | 877,431 | 13,006,193 |
| Transfer from assets under acquisition | 0 | 4,337,753 | 16,376,187 | 20,713,940 | -20,713,940 | 0 | 0 |
| Decreases | 0 | 491,203 | 2,239,917 | 2,731,120 | 491,203 | 218,204 | 3,440,527 |
| Balance as at 31 Dec 2020 | 10,803,263 | 124,538,191 | 221,895,740 | 357,237,194 | 10,492,059 | 821,379 | 368,550,632 |
| - transfer from intangible fixed assets | 0 | 0 | 0 | 0 | 0 | 0 | |
| Balance as at 31 Dec 2020 | 10,803,263 | 124,538,191 | 221,895,740 | 357,237,194 | 10,492,059 | 821,379 | 368,550,632 |
| Land | Buildings | Production and other equipment | Total | Assets being acquired | Advances | TOTAL COST | |
|---|---|---|---|---|---|---|---|
| Balance as at 31 Dec 2019 | 981,729 | 78,461,230 | 175,256,936 | 254,699,895 | 0 | 4,157 | 254,704,052 |
| Amortisation and depreciation | 72,342 | 3,073,738 | 6,508,205 | 9,654,285 | 0 | 0 | 9,654,285 |
| Decreases | 0 | 357,255 | 1,849,456 | 2,206,711 | 0 | 0 | 2,206,711 |
| Increases | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Balance as at 31 Dec 2020 | 1,054,071 | 81,177,714 | 179,915,685 | 262,147,470 | 0 | 4,157 | 262,151,627 |
| Land | Buildings | Production and other equipment | Total | Assets being acquired | Advances | TOTAL COST | |
|---|---|---|---|---|---|---|---|
| Balance as at 31 Dec 2019 | 9,821,534 | 42,230,411 | 32,502,534 | 84,554,479 | 18,586,034 | 157,995 | 103,298,508 |
| Balance as at 31 Dec 2020 | 9,749,192 | 43,360,477 | 41,980,055 | 95,089,725 | 10,492,059 | 817,222 | 106,399,006 |
| Land | Buildings | Production and other equipment | Total | Assets being acquired | Advances | TOTAL COST | |
|---|---|---|---|---|---|---|---|
| Balance as at 31 Dec 2018 | 10,767,363 | 117,642,330 | 211,413,711 | 339,823,404 | 14,461,532 | 598,109 | 354,883,045 |
| Increases | 35,900 | 0 | 0 | 35,900 | 11,865,009 | 492,284 | 12,393,193 |
| Transfer from assets under acquisition | 0 | 3,049,311 | 4,691,196 | 7,740,507 | -7,740,507 | 0 | 0 |
| Decreases | 0 | 0 | 8,345,437 | 8,345,437 | 0 | 928,241 | 9,273,678 |
| Balance as at 31 Dec 2019 | 10,803,263 | 120,691,641 | 207,759,470 | 339,254,374 | 18,586,034 | 162,152 | 358,002,560 |
| Balance as at 31 Dec 2018 | 909,387 | 75,569,282 | 175,739,791 | 252,218,460 | 0 | 4,157 | 252,222,617 |
|---|---|---|---|---|---|---|---|
| Amortisation and depreciation | 72,342 | 3,054,400 | 7,463,044 | 10,589,786 | 0 | 0 | 10,589,786 |
| Decreases | 0 | 162,452 | 8,138,932 | 8,301,384 | 0 | 0 | 8,301,384 |
| Increases | 0 | 0 | 193,033 | 193,033 | 0 | 0 | 193,033 |
| Balance as at 31 Dec 2019 | 981,729 | 78,461,230 | 175,256,936 | 254,699,895 | 0 | 4,157 | 254,704,052 |
| Balance as at 31 Dec 2018 | 9,857,976 | 42,073,048 | 35,673,920 | 87,604,944 | 14,461,532 | 593,952 | 102,660,428 |
|---|---|---|---|---|---|---|---|
| Balance as at 31 Dec 2019 | 9,821,534 | 42,230,411 | 32,502,534 | 84,554,479 | 18,586,034 | 157,995 | 103,298,508 |
In 2020, the Company disclosed an increase in property, plant and equipment resulting from the difference between the value of invested funds and accounted depreciation. In 2020, the Company made investments of EUR 12.1 million in property, plant and equipment (EUR 11.9 million in 2019), mainly in the field of titanium dioxide, the most important of which are investments in the C line of neutralisation, the installation of Fundabac filter, the modernisation of ore digestion and gas purification, the modernisation of the treatment plant for calcination and the modernisation of calcite grinding as well as investment in the cooling vessel at 2.5 and 7.5 bar compressor station and siding rehabilitation.
Property, plant and equipment also include the reported increase in cost by EUR 3,882,906 from capitalised own products and services, involving own maintenance services and material used for maintenance capitalised by the Company, either to extend the asset’s useful life or expand production capacity or construct a new asset. Land also comprises disclosed easements in compliance with SAS 2016 (2.39) in the amount of EUR 406,704. The cost of land did not increase in 2020, whilst the decrease in land refers to amortisation of easement rights for the 2020 financial year of EUR 72,342.
The Company holds no assets under finance lease. As at 31 December 2020, the Company also had no assets pledged as collateral.
| Group of long-term financial assets for 2020 | Cost | Adjustment | Carrying amount | 31 December 2019 | 31 December 2020 | 31 December 2019 | 31 December 2020 | 31 December 2019 | 31 December 2020 |
|---|---|---|---|---|---|---|---|---|---|
| Other investments | 950,363 | 0 | 950,363 | 950,363 | 950,363 | ||||
| TOTAL | 950,363 | 0 | 950,363 | 950,363 | 950,363 |
| Group of long-term financial assets for 2019 | Cost | Adjustment | Carrying amount | 31 December 2018 | 31 December 2019 | 31 December 2018 | 31 December 2019 | 31 December 2018 | 31 December 2019 |
|---|---|---|---|---|---|---|---|---|---|
| Cinkarna BH, d. o. o. | 580,503 | 0 | 580,503 | 0 | 0 | ||||
| Other investments | 950,363 | 0 | 950,363 | 950,363 | 950,363 | ||||
| TOTAL | 1,530,866 | 0 | 950,363 | 580,503 | 0 | 950,363 | 950,363 |
| Electro Celje, d. d. | Electro Maribor, d. d. | |
|---|---|---|
| Number of ordinary shares | 165,818 | 18,350 |
| Cost of a share in EUR | 5.10 | 5.50 |
| Value in books of account in EUR | 5.10 | 5.50 |
Cinkarna Celje, d. d. has no subsidiaries or associates and does not transact with other related entities.
105
| Long-term investments | Other investments | Total | |
|---|---|---|---|
| COST | Balance as at 31 Dec 2019 | 950,363 | 950,363 |
| Balance as at 31 Dec 2020 | 950,363 | 950,363 | |
| ADJUSTMENT | Balance as at 31 Dec 2019 | 0 | 0 |
| Balance as at 31 Dec 2020 | 0 | 0 | |
| CARRYING AMOUNT | Balance as at 31 Dec 2019 | 950,363 | 950,363 |
| Balance as at 31 Dec 2020 | 950,363 | 950,363 |
| Long-term investments | Cinkarna BH d. o. o. | Other investments | Total | |
|---|---|---|---|---|
| COST | Balance as at 31 Dec 2018 | 580,503 | 950,363 | 1,530,866 |
| Decrease during the year | 580,503 | 0 | 580,503 | |
| Balance as at 31 Dec 2019 | 0 | 950,363 | 950,363 | |
| ADJUSTMENT | Balance as at 31 Dec 2018 | 580,503 | 0 | 580,503 |
| Decrease during the year | 580,503 | 0 | 580,503 | |
| Balance as at 31 Dec 2019 | 0 | 0 | 0 | |
| CARRYING AMOUNT | Balance as at 31 Dec 2018 | 0 | 950,363 | 950,363 |
| Balance as at 31 Dec 2019 | 0 | 950,363 | 950,363 |
As at 31 December 2020, the Company has no long-term financial loans. Members of the Management Board and the Supervisory Board also received no long-term loans.
106
| Investment value | Adjustment | Net investments | 31 December 2019 | 31 December 2020 | 31 December 2019 | 31 December 2020 | 31 December 2019 | 31 December 2020 |
|---|---|---|---|---|---|---|---|---|
| Short-term loans to others | 200,000 | 0 | 0 | 200,000 | 0 | |||
| Fair value of derivative financial instruments | 160,650 | 35,056 | 0 | 0 | 160,650 | 35,056 | ||
| TOTAL | 360,650 | 35,056 | 0 | 0 | 360,650 | 35,056 |
The fair value of derivative financial instruments in the amount of EUR 35,056 as at 31 December 2020 refers to FX forward purchases and sales.
| Investment value | Adjustment | Net investments | 31 December 2018 | 31 December 2019 | 31 December 2018 | 31 December 2019 | 31 December 2018 | 31 December 2019 |
|---|---|---|---|---|---|---|---|---|
| Short-term loans to group companies | 50,000 | 0 | 50,000 | 0 | 0 | 0 | ||
| Short-term loans to others | 200,000 | 200,000 | 0 | 0 | 200,000 | 200,000 | ||
| Fair value of derivative financial instruments | 47,681 | 160,650 | 0 | 0 | 47,681 | 160,650 | ||
| TOTAL | 297,681 | 360,650 | 50,000 | 0 | 247,681 | 360,650 |
| Description | Receivables | 2020 | 2019 |
|---|---|---|---|
| Balance as at 1 Jan | 1,804,846 | 2,558,621 | |
| Increase during the year | 22,416 | 47,301 | |
| Decrease during the year | 153,745 | 801,076 | |
| Balance as at 31 Dec | 1,673,517 | 1,804,846 |
The decrease in deferred tax assets relates to the use of provisions for jubilee and termination benefits, environmental and other provisions in the amount of EUR 122,472 and reversal of the allowance for receivables and investments in the amount of EUR 31,273. The increase in deferred tax assets refers to one half of the formed provisions for jubilee benefits and termination benefits upon retirement in the amount of EUR 22,416. Changes in the balance of deferred tax assets had a negative impact on the statement of profit or loss in the amount of EUR 131,329.
EUR 347,623). The basis for the recognition of deferred tax assets is future taxable profits arising from the Company's business plan for the 2021 financial year and the Company's strategy until 2023. All effects were recognised in the statement of profit or loss.
| Group of inventories | 31 December 2020 | 31 December 2019 | Realisable value |
|---|---|---|---|
| Material | 21,487,973 | 24,636,886 | 21,487,973 |
| Work-in-progress | 2,533,235 | 2,297,051 | 2,533,235 |
| Products | 11,270,725 | 13,873,426 | 15,917,711 |
| Merchandise | 70,034 | 34,738 | 70,034 |
| Advances given | 162,638 | 150,285 | 162,638 |
| TOTAL | 35,524,605 | 40,992,387 | 40,171,591 |
In the 2020 financial year, an allowance was made to the value of inventories of materials and goods in the amount of EUR 303,974 (in 2019, in the amount of EUR 393,367) due to the revaluation, obsolescence and unserviceability of material and spare parts inventories. No material inventory differences were established in 2020. Adjustment of EUR 28,890 was made during the year for the inventories of work-in-progress and finished products because of obsolescence and unserviceability. No inventory differences were established in 2020.
In comparison with 2019, the value of inventories of finished products and work-in-progress fell by as much as 15% owing to higher sales of titanium dioxide pigment. Inventories were not pledged as collateral. Net realisable value of inventories as at 31 December 2020 exceeded their carrying amount.
Group of receivables for 2020
| Value of receivables | Allowance | Net receivables | 31 December 2019 | 31 December 2020 | 31 December 2019 | 31 December 2020 | 31 December 2019 | 31 December 2020 | |
| Domestic buyers | 3,736,871 | 3,730,884 | 403,510 | 367,302 | 3,333,361 | 3,363,582 | |||
| International buyers | 20,294,503 | 21,021,811 | 368,351 | 360,960 | 19,926,152 | 20,651,851 | |||
| Exporting agents | 680,004 | 718,749 | 0 | 0 | 680,004 | 718,749 | |||
| Advances given | 9,183 | 0 | 0 | 0 | 9,183 | 0 | |||
| TOTAL | 24,720,561 | 25,462,444 | 771,861 | 728,262 | 23,948,700 | 24,734,182 |
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| Value of receivables | Allowance | Net receivables | ||||
|---|---|---|---|---|---|---|
| 31 December 2018 | 31 December 2019 | 31 December 2018 | 31 December 2019 | 31 December 2018 | 31 December 2019 | |
| Domestic buyers | 3,592,386 | 3,736,871 | 406,481 | 403,510 | 3,185,905 | 3,333,361 |
| International buyers | 21,692,909 | 20,294,503 | 843,440 | 368,351 | 20,849,469 | 19,926,152 |
| Exporting agents | 320,063 | 680,004 | 0 | 0 | 320,063 | 680,004 |
| Advances given | 2,500 | 9,183 | 0 | 0 | 2,500 | 9,183 |
| TOTAL | 25,607,858 | 24,720,561 | 1,249,921 | 771,861 | 24,357,937 | 23,948,700 |
| In EUR | 2020 | ||||
|---|---|---|---|---|---|
| Balance as at 31 December 2019 | Allowance for receivables 2020 | Reversal of allowance from previous periods | Settled receivables previously written off | Balance as at 31 December 2020 | |
| Domestic buyers | 403,510 | 0 | 0 | 36,207 | 367,302 |
| International buyers | 368,351 | 0 | 7,392 | 360,960 | |
| TOTAL | 771,861 | 0 | 0 | 43,599 | 728,262 |
| 2019 | |||||
|---|---|---|---|---|---|
| Balance as at 31 December 2018 | Allowance made in 2019 | Reversal of allowance from previous periods | Settled receivables previously written off | Balance as at 31 December 2019 | |
| Domestic buyers | 406,481 | 0 | 2,971 | 403,510 | |
| International buyers | 843,441 | 26,602 | 488,026 | 13,666 | 368,351 |
| TOTAL | 1,249,922 | 26,602 | 488,026 | 16,637 | 771,861 |
| In EUR | Geographical segment | Total receivables | Outstanding | Overdue | 0 to 15 days | 16 to 60 days | 61 to 180 days | over 180 days |
|---|---|---|---|---|---|---|---|---|
| Category | Leto 2020 | Leto 2019 | ||
|---|---|---|---|---|
| Domestic buyers | International buyers – EU and third countries | Buyers in the former Yugoslavia markets | Exporting agents | |
| Domestic buyers | 3,363,582 | 3,290,091 | 64,061 | 0 |
| International buyers – EU and third countries | 19,954,028 | 19,326,882 | 349,419 | 0 |
| Buyers in the former Yugoslavia markets | 697,823 | 589,279 | 35,073 | 0 |
| Exporting agents | 718,749 | 0 | 0 | 0 |
| Advances given | 0 | 9,183 | 0 | 0 |
| TOTAL trade receivables | 24,734,182 | 23,934,184 | 448,553 | 0 |
| Group of receivables | 31 December 2020 | 31 December 2019 | Index 20/19 |
|---|---|---|---|
| AT claims | 1,708,534 | 1,634,971 | 104 |
| Receivables from the state arising from overpaid withholding corporate income tax | 0 | 1,418,602 | 0 |
| Receivables from the state from COVID-19 | 101,073 | 0 | - |
| Receivables due from institutions | 160,906 | 101,420 | 159 |
| Receivables due from employees | 19,081 | 20,731 | 92 |
| Other receivables | 14,462 | 7,564 | 191 |
| TOTAL | 2,004,056 | 3,183,288 | 63 |
Receivables from the state from COVID-19 as at 31 December 2020 include EUR 54,185 receivables from paid crisis bonus in December 2020 in accordance with Anti-corona package no. 8 (PKP 8) – Act on Additional Measures for Mitigation of Consequences COVID-19 and EUR 46,888 from refunds related to quarantine, short-term absences and leave for childcare due to force majeure (in accordance with the Act on the Intervention Measures to Mitigate the Consequences of the Communicable Disease SARS-CoV-2 (COVID-19) Epidemic).
Receivables are not collateralised. The Company records no receivables due from the Management Board and Supervisory Board members.
| Group of assets | 31 December 2020 | 31 December 2019 | Index 20/19 |
|---|---|---|---|
| Cash on hand | 118 | 298 | 40 |
| Cash in transit | 0 | 86 | - |
| Cash in bank accounts | 27,076,236 | 16,259,781 | 167 |
| Short-term call deposits | 10,041,423 | 15,437,719 | 65 |
| Foreign currency assets in bank accounts | 540,047 | 358 | - |
| TOTAL | 37,657,824 | 31,698,242 | 119 |
Cash is deposited with domestic banks with a fixed annual interest rate ranging from 0.01% to 0.50%.
110
| Equity items | 31 December 2020 | 31 December 2019 |
|---|---|---|
| Share capital | 20,229,770 | 20,229,770 |
| Capital surplus | 44,284,976 | 44,284,976 |
| Legal reserves | 16,931,435 | 16,931,435 |
| Reserves for treasury shares | 3,900,280 | 1,992,963 |
| Treasury shares | -3,900,280 | -1,992,963 |
| Other revenue reserves | 77,500,437 | 74,670,090 |
| Fair-value reserves | -1,452,475 | -1,618,921 |
| Retained earnings/accumulated loss | 5,151,743 | -231,793 |
| Net profit or loss for the year | 11,370,393 | 16,077,289 |
| TOTAL EQUITY | 174,016,279 | 170,342,846 |
The Company’s share capital comprises 807,977 freely transferable no-par value shares of the same class. All no par value shares have the same nominal value and have been paid up in full.
As at 31 December 2020, the Company owns 21,951 treasury shares, of which 21,751 are stated under treasury shares reserve. In 2020, the Company acquired 11,299 treasury shares in the amount of EUR 1.9 million based on the General Meeting’s resolution of 5 June 2018 and the resolution of 17 June 2020 (of which 11,099 shares were included in treasury share reserve as at 31 December 2020), which accounts for 9.4% of share capital. The Company set aside reserve for treasury shares against other revenue reserves at the same time.
| 31 December 2020 | No. of shares | Share in equity (%) |
|---|---|---|
| Nikolaja Podgoršek Selič | 186 | 0.023 |
| 31 December 2019 | No. of shares | Share in equity (%) |
|---|---|---|
| Tomaž Benčina | 383 | 0.047 |
| Nikolaja Podgoršek Selič | 186 | 0.023 |
| Marko Cvetko | 31 | 0.004 |
Fair value reserves include the costs of repeated measurement of post-employment benefits (actuarial gains/losses) arising due to a change in the present value of payables for termination benefits upon retirement.
111
| Increase | Decrease | 31 December 2020 | ||
|---|---|---|---|---|
| Change in revaluation reserve from fair value accounting of financial assets | 1,277 | 0 | 0 | 1,277 |
| Other components of the total comprehensive income for the reporting period | -1,620,198 | 166,446 | 0 | -1,453,752 |
| TOTAL | -1,618,921 | 166,446 | 0 | -1,452,475 |
| Increase | Decrease | 31 December 2019 | ||
|---|---|---|---|---|
| Change in revaluation reserve from fair value accounting of financial assets | 1,277 | 0 | 0 | 1,277 |
| Other components of the total comprehensive income for the reporting period | -1,667,975 | 47,777 | 0 | -1,620,198 |
| TOTAL | -1,666,698 | 47,777 | 0 | -1,618,921 |
On 17 June 2020, the Company’s General Meeting voted in favour of the proposal on the use of distributable profit for 2019 in the amount of EUR 15,845,496. According to the adopted proposal, EUR 13,536,352 (EUR 17 per share) of distributable profit was paid as dividends. The remaining amount of EUR 2,309,144 was allocated to retained earnings.
I. Provisions under ‘Environmental provisions for the field of titanium dioxide production’ (change in depositing the neutralising agent) were originally made in June 1994 in the ownership transformation procedure. The revalued amount as at 31 December 2006 equalled EUR 8.7 million, which represents 47% of assets invested. The amount of provisions is annually decreased by the same percentage of value of accounted depreciation of assets invested. The balance of provisions at the end of 2020 stood at EUR 3.5 million.
For the rehabilitation of the Bukovžlak non-hazardous waste landfill we originally set aside EUR 5 million, in 2017 an additional EUR 1 million due to several necessary interventions, so the balance at the end of 2019 is EUR 4.5 million. We implemented a series of interventions at the location in the years following the establishment of provisions. Based on the facts known thus far, the responsible design engineer Hidrosvet d.o.o. prepared a cost estimate for the completion of works. In 2020, EUR 940,286 was used for rehabilitation. The remaining amount totalled EUR 3,539,065 at the end of 2020.
The results of regular technical monitoring of the high barrier Bukovžlak show a constant trend of deteriorating safety on the east side of the barrier. To ensure long-term safety, the most suitable measure would be drainage, but this procedure requires preparation of projects and obtainment of permits. To prevent critical deterioration of safety in the meantime, the construction designer anticipated two parallel interventions: rehabilitation of the east side and preparation of the dike to start decreasing the level of water in the lake. Estimated costs amount to EUR 3,032,000. We made new provisions for the mentioned amount as at 31 December 2017. In 2020, we used funds in the amount of EUR 22,955, so that the balance of provisions as at 31 December 2020 equalled EUR 2,928,922.
Elimination of risks arising from old burdens at the locations of current production of Cinkarna Celje: The contractor compiling the Human Health and Environmental Risk Assessment Due to Old Burdens for the locations of the current production of Cinkarna Celje anticipated possible remediation measures and estimated them financially at the total of EUR 6.4 million. We established new provisions as at 31 December 2017 at the level of the mentioned amount. In 2020, we used EUR 9,000 of provisions, so that as at 31 December 2020 the balance of provisions was EUR 6,002,275.
Considering the fact that the provisions under Items II–V were re-estimated in 2017 by the Management Board in cooperation with external providers of rehabilitation procedures and that no new information has arisen since then, the Management Board assesses that the amount of established provisions is adequate, as the costs of specific services and materials have not significantly changed.
| In EUR | Environmental Provisions | Balance as at 31 Dec 2018 | Used in 2019 | Reversed 2019 | Balance as at 31 Dec 2019 | Used in 2020 | Balance as at 31 Dec 2020 |
|---|---|---|---|---|---|---|---|
| Provisions for the Za Travnik landfill | 449,400 | 65,034 | 0 | 384,366 | 23,592 | 360,774 | |
| Provisions for the Bukovžlak waste landfill (ONOB) | 4,610,649 | 131,298 | 0 | 4,479,351 | 940,286 | 3,539,065 | |
| Provisions for the TENORM waste disposal | 4,849,379 | 691,004 | 4,158,375 | 0 | 0 | 0 | |
| Provisions for the Bukovžlak high barrier | 2,991,081 | 39,204 | 0 | 2,951,877 | 22,955 | 2,928,922 | |
| Provisions for the elimination of risks arising from old burdens - CDM SMITH | 6,151,648 | 140,372 | 0 | 6,011,275 | 9,000 | 6,002,275 | |
| Provisions for the environmental investment in TIO production | 4,371,447 | 429,977 | 0 | 3,941,471 | 422,977 | 3,518,494 | |
| TOTAL | 23,423,604 | 1,496,889 | 4,158,375 | 17,768,340 | 1,418,810 | 16,349,530 |
113
Drawing of provisions in 2020 consists of costs of contractors for works performed in the amount of EUR 995,833, which are directly debited against provisions (Items II, III, and IV of environmental provisions) and depreciation of invested assets in the amount of EUR 422,977 (Item I of environmental provisions).
The Company discloses provisions for jubilee benefits and termination benefits upon retirement in accordance with the provisions of the amended IAS 19. The actuarial calculation was made by a certified external actuary according to the book reserve method. The following assumptions were used: 1% growth of salaries at the Company, discount rate of 0.44% per annum (in 2019: 0.7%), conditions for retirement, mortality tables 2000-2002 and employee fluctuation rate (the assumptions applied in 2020 are the same as those in 2019, except for discount factor, which equals the return on 10-year corporate bonds with a high credit rating in the euro area (in 2019, a discount factor was applied based on the return on RS bonds with average market return according to MTS methodology).
In 2007, the Company obtained Decision no. PIZ-06/0245 for the exemption from the payment of contributions for pension and disability insurance in accordance with Article 74 of the Vocational Rehabilitation and Employment of Disabled Persons Act. In 2020, we allocated all assigned contributions and awards to covering the costs of salaries of disabled employees.
| Provisions and Long-Term Accrued Costs and Deferred revenues | 31 December 2020 | 31 December 2019 |
|---|---|---|
| Provisions for Termination and Jubilee Benefits | 3,984,428 | 4,208,262 |
| Other long-term provisions – environmental | 16,349,530 | 17,768,340 |
| Government grants received | 51,228 | 27,072 |
| Provisions for lawsuits | 242,705 | 280,345 |
| Accrued costs | 15,692 | 15,692 |
| Deferred revenues | 232,817 | 278,334 |
| TOTAL | 20,876,401 | 22,578,045 |
In 2020, the Company established additional provisions for claims of legal and natural persons due to accidents at work in the amount of EUR 12,360 and also spent EUR 50,000 of provisions for the above purpose.
114
| In EUR | 31 December 2019 | New | Used for specified purpose | 31 December 2020 |
|---|---|---|---|---|
| Provisions for termination and jubilee benefits | 4,208,262 | 235,959 | 459,793 | 3,984,428 |
| Provisions for lawsuits | 280,345 | 12,360 | 50,000 | 242,705 |
| Long-term accrued costs | 15,692 | 0 | 0 | 15,692 |
| Environmental provisions | 17,768,340 | 0 | 1,418,810 | 16,349,530 |
| Emission coupons | 27,072 | 48,227 | 24,071 | 51,228 |
| Assigned contributions for employment of disabled persons | 2,896 | 42,428 | 43,525 | 1,799 |
| Long-term deferred revenues for equipment | 58,464 | 0 | 16,519 | 41,946 |
| Funds received from the ERDF | 216,974 | 0 | 27,901 | 189,073 |
| TOTAL | 22,578,045 | 338,974 | 2,040,618 | 20,876,401 |
| In EUR | 31 December 2018 | New | Used for specified purpose | Reversed | 31 December 2019 |
|---|---|---|---|---|---|
| Provisions for termination and jubilee benefits | 3,811,723 | 1,033,486 | 636,946 | 0 | 4,208,262 |
| Provisions for lawsuits | 0 | 280,345 | 0 | 0 | 280,345 |
| Long-term accrued costs | 15,692 | 0 | 0 | 0 | 15,692 |
| Environmental provisions | 23,423,604 | 0 | 1,496,889 | 4,158,375 | 17,768,340 |
| Emission coupons | 0 | 49,243 | 22,171 | 0 | 27,072 |
| Assigned contributions for employment of disabled persons | 5,729 | 78,650 | 81,483 | 0 | 2,896 |
| Long-term deferred revenues for equipment | 258,246 | 0 | 21,895 | 177,887 | 58,464 |
| Funds received from the ERDF | 244,876 | 0 | 27,902 | 0 | 216,974 |
| Other deferred revenues | 3,423 | 0 | 3,423 | 0 | 0 |
| TOTAL | 27,763,293 | 1,441,724 | 2,290,709 | 4,336,262 | 22,578,045 |
We received the latter in November 2019. If these permits and certificates had not been obtained, the waste would have remained in Slovenia, and the Brinje landfill site would have been the solution used. Waste was transported in the third quarter of 2019 and in the last quarter we received a certificate of successful disposal and storage of that waste in the state of Idaho.
| Group of liabilities | 31 December 2020 | 31 December 2019 | Index 20/19 |
|---|---|---|---|
| Short-term liabilities associated with disbursement of profit | 12,415 | 22,973 | 54 |
| Short-term financial liabilities – assignments, cessions | 47,675 | 21,621 | 221 |
| TOTAL | 60,090 | 44,594 | 135 |
| Group of liabilities | 31 December 2020 | 31 December 2019 | Index 20/19 |
|---|---|---|---|
| Short-term trade payables to domestic suppliers | 7,605,375 | 7,151,802 | 106 |
| Short-term trade payables to foreign suppliers | 1,679,397 | 2,331,459 | 72 |
| Short-term liabilities for goods and services not invoiced | 213 | 64 | 332 |
| Short-term liabilities from advances | 469,831 | 407,013 | 115 |
| Short-term liabilities to employees | 2,236,814 | 2,356,703 | 95 |
| Short-term liabilities for payroll tax | 1,113,104 | 1,201,279 | 93 |
| Short-term liabilities for corporate income tax | 778,351 | 0 | - |
| Short-term liabilities to government and other institutions | 410,129 | 486,896 | 84 |
| Other short-term liabilities | 7,909 | 11,500 | 69 |
| TOTAL | 14,301,123 | 13,946,716 | 103 |
Short-term deferred costs and accrued revenues include short-term deferred costs and expenses and other deferred costs and accrued revenues.
| Description | 31 December 2020 | 31 December 2019 | Index 20/19 |
|---|---|---|---|
| Prepaid costs | 290,744 | 327,660 | 89 |
| VAT on received advances | 5,243 | 500 | 1,049 |
| Material in transit and other deferred costs and accrued revenues | 0 | 5,110 | - |
| TOTAL | 295,987 | 333,270 | 89 |
Short-term accrued costs and deferred revenues comprise accrued costs and expenses.
| Description | 31 December 2020 | 31 December 2019 | Index 20/19 |
|---|---|---|---|
| Accrued unused right to annual leave | 816,499 | 773,768 | 106 |
| Accrued unpaid labour costs | 141,107 | 0 | - |
| VAT on advances given | 82,553 | 13,664 | 604 |
| Other accrued costs and deferred revenues | 41,644 | 107,432 | 39 |
| TOTAL | 1,081,803 | 894,864 | 121 |
| Description | 31 December 2020 | 31 December 2019 | Index 20/19 |
|---|---|---|---|
| Guarantees granted | 2,430,203 | 2,515,051 | 97 |
| Futures and forwards | 1,976,362 | 640,987 | 308 |
| Payment cards VISA and Mastercard | 40,000 | 53,500 | 75 |
| Material in the process of completion or processing | 59,725 | 59,725 | 100 |
| TOTAL | 4,506,290 | 3,269,263 | 138 |
Guarantees granted represent liabilities to Nova kreditna banka Maribor, d. d. and UniCredit Bank d. d. in the amount of EUR 2,423,923 and warranty guarantees in the amount of EUR 6,280.
The Company uses the straight-line depreciation/amortisation method to depreciate/amortise fixed assets over the expected useful life of an individual fixed asset. Depreciation/amortisation reduces the value of an item of fixed assets.
| Description | 2020 | 2019 | Index 20/19 |
|---|---|---|---|
| Amortisation and depreciation | 9,932,781 | 10,859,864 | 91 |
| - intangible assets | 278,495 | 270,078 | 103 |
| - easement | 72,342 | 72,342 | 100 |
| - buildings | 3,073,738 | 3,054,400 | 101 |
| - production equipment | 6,502,231 | 7,457,981 | 87 |
| - other equipment | 5,974 | 5,063 | 118 |
| Revaluation operating expenses associated with non-current assets | 112,277 | 3,624 | 3,098 |
| - loss on elimination of intangible assets and property, plant and equipment | 112,277 | 3,624 | 3,098 |
| Revaluation operating expenses associated with operating current assets | 304,598 | 424,193 | 72 |
| - of which allowance for receivables | 611 | 9,806 | 6 |
| - of which revaluation of inventories of material and merchandise | 303,987 | 393,367 | 77 |
| - write-offs and other | 0 | 21,020 | - |
| TOTAL | 10,349,655 | 11,287,681 | 92 |
| Labour costs | 2020 | 2019 | Index 20/19 |
|---|---|---|---|
| Salaries, wages and compensations for salaries and wages | 21,224,553 | 20,658,999 | 103 |
| Social security contributions | 3,699,005 | 3,805,782 | 97 |
| Reimbursements of expenses to employees and other employee income | 4,773,416 | 5,992,337 | 80 |
| Supplementary pension insurance | 402,469 | 399,863 | 101 |
| TOTAL | 30,099,442 | 30,856,980 | 98 |
Their purpose and substance, thus under costs of used material and services, labour costs, write-downs (amortisation and depreciation) and other operating expenses. The Company accounted unused annual leave in accordance with SAS 13 and IAS 19. The Company is registered in the register of pension funds as an employer that finances a pension plan with the designation PNMZ K that is operated by the open-end fund Modri krovni pokojninski sklad and managed by Modra zavarovalnica.
In 2020, the Company also had costs of services not treated as labour costs in relation to temporary work agencies based on agency contracts in the amount of EUR 782,418.37 (in 2019 the respective costs stood at EUR 701,100.36). Taking into account the number of hours worked based on these contracts, 30.15 persons were employed (in 2019: 29.72).
| In EUR | 2020 | 2019 | Index 20/19 |
|---|---|---|---|
| Members of the Management Board | 1,149,153 | 888,874 | 129 |
| Members of the Supervisory Board | 121,410 | 110,818 | 110 |
| Employees under contracts for which the tariff section of the collective agreement does not apply | 3,371,691 | 3,272,016 | 103 |
| Total gross receipts of groups of persons | 4,642,254 | 4,271,708 | 109 |
| In EUR | Expense | 2020 | 2019 | Index 20/19 |
|---|---|---|---|---|
| Cost of material | 96,965,681 | 93,163,256 | 104 | |
| Cost of services | 13,815,945 | 14,790,940 | 93 | |
| Cost of goods and materials sold | 188,743 | 331,442 | 57 | |
| Other operating expenses | 1,283,476 | 1,542,270 | 83 | |
| TOTAL | 112,253,844 | 109,827,908 | 102 |
Other operating expenses comprise environmental duties and taxes of EUR 357,231, municipal building land use duty amounting to EUR 367,914, bonuses to secondary school and university students on practical training equalling EUR 276,620, accrued provisions for claims of legal and natural persons due to accidents at work in the amount of EUR 12,360, expenses brought forward of EUR 173,010 and other costs during the financial year totalling EUR 96,341.
The 2020 audit of the financial statements was performed by the audit firm Ernst & Young revizija, d. o. o. The contractual value of the agreed auditing services was EUR 22,000 increased by the VAT and travel expenses. In 2020, the audit firm Ernst & Young provided no non-audit services.
| Expense | 2020 | 2019 | Index 20/19 |
|---|---|---|---|
| Interest expenses | 37,928 | 12,739 | 298 |
| Foreign exchange differences | 417,857 | 366,240 | 114 |
| Interest on provisions for termination and jubilee benefits | 35,954 | 85,764 | 42 |
| TOTAL | 491,738 | 464,743 | 106 |
Finance expenses comprise accounted liabilities for the financial year arising from long-term and short-term financial and operating liabilities and foreign exchange losses generated in operating and financing activities. Foreign exchange losses include EUR 215,965 from forwards and futures. Other expenses include primarily losses on settlement of claims for damages and compensations paid to natural persons.
In accordance with SAS 21.7, costs are presented by functional group:
| 2020 | 2019 | Index 20/19 | |
|---|---|---|---|
| Production costs of products sold | 96,122,484 | 94,174,604 | 102 |
| Cost of goods sold | 188,743 | 331,442 | 57 |
| Selling costs | 32,637,411 | 35,468,499 | 92 |
| Costs of general and administrative activities | 26,120,821 | 25,769,077 | 101 |
| TOTAL | 155,069,459 | 155,743,622 | 100 |
Revenues from contracts with customers consist of the sales values of sold products, merchandise and material, and services rendered in the accounting period. The breakdown of net sales revenues by business and geographical segment is shown below.
| 2020 | 2019 | Index | |
|---|---|---|---|
| Net revenues from contracts of customers on products and services | 172,064,707 | 172,161,860 | 100 |
| Net revenues from contracts of customers on goods and material | 322,144 | 425,118 | 76 |
| TOTAL | 172,386,851 | 172,586,979 | 100 |
| In EUR | Realisation Ind. 20/19 | 2020 | 2019 |
|---|---|---|---|
| Titanium dioxide | 102 | 143,056,990 | 140,356,503 |
| Zinc recycling | 70 | 5,125,075 | 7,301,913 |
| Varnishes, coatings, masterbatches and printing inks | 103 | 15,207,872 | 14,824,299 |
| Agricultural products | 116 | 5,525,614 | 4,762,037 |
| Other | 65 | 3,471,300 | 5,342,227 |
| TOTAL | 100 | 172,386,851 | 172,586,979 |
| In EUR | Realisation Index 20/19 | 2020 | 2019 |
|---|---|---|---|
| Slovenia | 78 | 14,623,430 | 18,818,634 |
| European Union | 106 | 130,529,281 | 122,771,835 |
| Former Yugoslavia markets | 104 | 3,730,801 | 3,570,343 |
| Third countries | 85 | 20,280,947 | 23,971,862 |
| Third countries – dollar market | 93 | 3,222,393 | 3,454,305 |
| TOTAL | 100 | 172,386,851 | 172,586,979 |
121
| In EUR | 2020 | 2019 | Index 20/19 |
|---|---|---|---|
| Titanium dioxide | 22,766,653 | 20,406,480 | 112 |
| Other | 388,220 | 465,247 | 83 |
| Unclassified | -4,204,217 | 564,658 | - |
| Total | 18,950,656 | 21,436,385 | 88 |
| In EUR | Revenue | 2020 | 2019 | Index 20/19 |
|---|---|---|---|---|
| Revenues from use and reversal of long-term provisions | 659,912 | 4,901,263 | 13 | |
| Revaluation operating revenues | 14,258 | 997,423 | 1 | |
| Revenues from state support for COVID-19 | 365,254 | 0 | - | |
| Collected claims previously written-off | 130,862 | 20,617 | 635 | |
| Income from previous years | 117,108 | 56,147 | 209 | |
| Other revenue | 38,578 | 80,506 | 48 | |
| TOTAL | 1,325,972 | 6,055,956 | 22 |
Revenues from use and reversal of long-term provisions refer to accounted depreciation of invested assets in environmental provisions that were established in the process of ownership transformation in the amount of EUR 422,977, depreciation of means of work of disabled employees and assets acquired free of charge in the amount of EUR 44,739 as well as covering of salaries and wages of disabled employees in the amount of EUR 43,525 under the Vocational Rehabilitation and Employment of Disabled Persons Act and EUR 148,671 from reversal of provisions for jubilee and termination benefits in accordance with the actuarial calculation.
Revenues from state support for COVID-19 (in accordance with the Act on the Intervention Measures to Mitigate the Consequences of the Communicable Disease SARS-CoV-2 (COVID-19)) include: revenues from exemption from contributions and material costs for protective equipment in the amount of EUR 264,183 equalling the actual damage occurring in the first wave of the epidemics, reimbursement of paid quarantine leave in the amount of EUR 7,986, leave for childcare purposes due to force majeure in the amount of EUR 36,803, reimbursement related to short-term absence in the amount of EUR 2,098 and reimbursement of a crisis bonus paid in December in the amount of EUR 54,184. Grants are unconditional.
Revaluation operating revenue refers to disposal of fixed assets, the selling value of which exceeds their carrying amount.
In EUR
| Revenue | 2020 | 2019 | Index 20/19 |
|---|---|---|---|
| Interest income | 25,108 | 44,532 | 56 |
| Foreign exchange differences | 420,710 | 404,852 | 104 |
| Income from other investments | 23,075 | 24,954 | 92 |
| TOTAL | 468,893 | 474,338 | 99 |
Finance revenue includes interest received on investing activities and receivables, revenue from long-term financial assets and foreign exchange gains from operating and financing activities. Foreign exchange gains include EUR 90,370 from forward transactions.
Other revenue comprises unusual items, the majority of which are funds paid by insurance companies for life assurance and from suppliers for early payment.
Corporate income tax is accounted in accordance with the Rules on Corporate Income Tax Returns at the rate of 19% of the tax base. The tax base in 2020 is decreased by reliefs provided for investments into research and development, hiring of disabled persons, voluntary supplementary pension insurance, investment into equipment and donations.
In EUR
| 2020 | 2019 | Index 20/19 | |
|---|---|---|---|
| Pre-tax profit or loss in accordance with SAS | 22,511,599 | 25,702,178 | 88 |
| Revenues excluded from tax base or increasing the tax base | -226,856 | -45,468 | 499 |
| Expenses not recognised for tax purposes | 356,725 | 1,189,257 | 30 |
| Tax reliefs | -4,590,867 | -8,345,874 | 55 |
| Tax base total | 18,050,601 | 18,500,093 | 98 |
| Tax rate | 19% | 19% | |
| Corporate income tax | 3,429,614 | 3,512,018 | 98 |
123
The effective tax rate calculated as the ratio between tax expenses and the accounting profit or loss is 15.23% in 2020 and 13.66% in 2019.
In accordance with SAS 5.15, the Company disclosed an increase in deferred tax assets arising from temporary differences. The decrease in 2020 relates to the difference between:
| Description | 2020 | 2019 | Index 20/19 |
|---|---|---|---|
| Use of provisions | -122,472 | -556,912 | 22 |
| Reversal of allowance for receivables (investments) | -31,273 | -215,682 | 14 |
| Other derecognition | 0 | -28,482 | - |
| Established provisions | 22,416 | 46,019 | 49 |
| Allowance for receivables (investments) | 0 | 1,282 | - |
| TOTAL | -131,329 | -753,775 | 17 |
The statement of cash flows shows the change in the balance of cash and cash equivalents for the financial year as the difference between the balance as at 31 December 2020 and 1 January 2020. It is compiled according to the indirect method using data from two consecutive balance sheets in accordance with SAS 22.9, i.e. according to the abbreviated format II. Theoretically possible items are not shown and values are disclosed for the current and previous year.
The statement of changes in equity has the form of a table of changes of all equity components in accordance with SAS 23. Theoretically possible items are not presented. Changes in equity relate to the decision of the General Meeting on the allocation of distributable profit for 2019 for dividend distribution to the owners that were paid out in 2020, and the redemption of treasury shares. Pursuant to point 14 of Article 64 of the Companies Act (ZGD-1), the determination of distributable profit is appended to the statement of changes in equity. It represents 60% of net profit for 2020 and retained earnings for 2019.
124
Cinkarna Celje, d. d. is a business partner known for payment discipline in both domestic and foreign markets, having no debts to banks and with stable cash flows. The Company’s operations are traditionally conservative with high cash flow. Liquidity management includes, inter alia, the planning of expected monetary liabilities and their coverage, ongoing monitoring of customers’ solvency and regular collection of past due receivables. The credit rating of the Company is AAA.
Interest rate risk arises from potential losses due to unfavourable interest rate trends on the market. The Company has no long-term financial liabilities and no measures in place in this regard. Should this change, appropriate measures would be put in place to manage such risk.
The key credit risk of Cinkarna Celje, d. d. is the risk of default by customers on maturity. The risk is limited as we mostly do business with long-standing partners who are frequently well-known traditional European industrial companies with a high credit rating. Over the last years we noticed that the payment discipline is relatively poor in Slovenia, the Balkans and Eastern Europe, but we do not expect further problems in this geographical area in the future and the risk potential has notably decreased.
Owing to the reorganisation/cleansing of the portfolio of strategic business lines of the Company, specifically the abolishment of the graphic intermediate goods line, the titanium-zinc sheet line, the anti-corrosion coatings line and the construction material line, the credit risk exposure was significantly reduced, which is evidenced by the data on the maturity of receivables and the fact that we practically no longer record any additional allowances of receivables as a result of doubtful payment and/or default on disclosed trade receivables.
| In EUR | Note | 31 December 2020 | 31 December 2019 |
|---|---|---|---|
| Loans granted | 3 | 0 | 200,000 |
| Financial assets | 3 | 35,056 | 160,650 |
| Trade receivables | 6 | 24,734,182 | 23,948,700 |
| Cash and cash equivalents | 7 | 37,657,824 | 31,698,242 |
| TOTAL | 62,427,062 | 56,007,592 |
The Company has a sound structure of trade receivables, which is reflected in Note 6 Operating Receivables in the table showing the receivables by maturity and in the table of changes in the value adjustment of short-term trade receivables.
125
Cinkarna Celje, d. d. performs its purchasing and sales on the global market, which is why it is also exposed to the risk of unfavourable inter-currency ratios. The most important is the euro/US dollar exchange rate. Because the majority of sales are transacted in euros, exposure is worrying especially in dollar-denominated purchasing of titanium-bearing raw materials and exceptionally sulphur and copper compounds. In terms of volume, exposure is significantly lower in dollar-denominated sales.
We are continuously monitoring changes and forecasts in relation to the dynamics of the euro/US dollar currency pair. Basically, the short-term risk of adverse changes in the dollar exchange rate is limited by the standardised and consistent use of financial instruments (dollar futures). We achieve virtually complete coverage of relevant business events involving the EUR/US dollar currency pair.
We generated financial gain of EUR 2,853 from forward transactions as a result of hedging against the risk of change in the US dollar exchange rate.
126
Since 4 February 2021, the shares of Cinkarna Celje, d. d. have been listed on the Prime Market of the Ljubljana Stock Exchange. The aim of listing on Prime Market is to boost the visibility in the domestic and foreign investment markets and thus increase the liquidity of the share. The Company is thus provided an opportunity to increase its visibility among domestic and foreign investors, allowing it easier access to fresh capital needed to finance major development projects, at lower cost.
By entering the Prime Market, Cinkarna Celje places itself alongside the top competitors in its industry.
As a result of listing shares on the Prime Market, Cinkarna Celje observes the International Financial Reporting Standards in all reports for the 2021 financial year.
As of 1 March 2021, the Company has a contract with InterCapital on maintaining the liquidity of the share.
At the time of this report, the Company is operating smoothly. Employees are regularly informed about COVID-19 measures. At the same time, we carry out rapid antigen tests.
There were no other business events that would affect the 2020 financial statements.
127
We have audited the financial statements of Cinkarna Celje d.d. (the Company), which comprise the balance sheet as at 31 December 2020, the income statement, the statement of other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at 31 December 2020 and its financial performance and its cash flows for the year then ended in accordance with Slovenian Accounting Standards.
We conducted our audit in accordance with International Standards on Auditing (ISA) and Regulation (EU) No. 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities (“Regulation (EU) No. 537/2014 of the European Parliament and the Council“). Our responsibilities under those rules are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the Company in accordance with the International Ethics Standards Board of Accountants’ (IESBA) International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Slovenia, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For the matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial statements section of our report, including in relation to this matter. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matter below, provide the basis for our audit opinion on the accompanying financial statements.
128
At December 31, 2020 the environmental provisions amounted to EUR 16.350 thousand as disclosed in Note 9: Provisions and long term accrued costs and deferred revenue.
The determination of the provisions is based on management’s judgement and estimates of nature, timing and amount of future costs to be incurred to cover long term obligations of waste disposal and rehabilitation of waste landfills and facilities and of legal basis for the provisions. The judgement required to estimate such costs is further compounded by the fact that there has been limited rehabilitation activity or experience with such activities against which the management could benchmark estimates of future costs.
We focused on this area because changes in the assumptions can materially affect the levels of provisions recorded in the financial statements. Environmental provisions are thus significant to our audit and we consider them a key audit matter.
We obtained an understanding of the environmental provisioning process and evaluated and tested design of respective controls.
As part of our testing of the cost estimates prepared by management, we evaluated the existence of legal or constructive obligations with respect to the restoration and rehabilitation for each site and facilities to assess the appropriateness of the intended method of restoration and rehabilitation and associated cost estimate.
We evaluated legal assessment by the external experts of the legal basis for the Company’s obligation to rehabilitate involved locations due to pollution in the past and evaluated whether legal obligations exist with respect to the provision for elimination of the risk arising from old burdens at the location of actual production of the Company.
We evaluated assessment of the required provisions by management, who obtained the assessment of the required disposal and rehabilitation activities and respective cost estimates from the external experts in the previous years. In addition, we assessed the adequacy of assumptions used in calculating the necessary amount of environmental provisions as at December 31, 2020.
We evaluated project documentation prepared in the previous years used as the basis for the management's assessment to determine whether the amount of provisions was adequate. We also checked the utilisation and the release of provisions and inquired the management with respect to the utilisation plans.
We considered the competence and objectivity of management's experts, whether internal or external to the Company, who produced the cost estimates.
We inspected the Company’s litigation and compliance reports in the environmental field, obtained independent legal letters and held discussions with the Company's internal legal specialist for all significant matters. We also considered the appropriateness of the disclosures included in the Note 9: Provisions and long term accrued costs and deferred revenue in accordance with SAS 10 – Provisions.
129
Other information comprises the information included in the Annual Report other than the financial statements and auditor’s report thereon. Management is responsible for the other information. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. In addition, we assess whether the other information has been prepared, in all material respects, in accordance with applicable law or regulation, in particular, whether the other information complies with law or regulation in terms of formal requirements and procedure for preparing the other information in the context of materiality, i.e. whether any non-compliance with these requirements could influence judgments made on the basis of the other information.
Based on the procedures performed, to the extent we are able to assess it, we report that:
In addition, our responsibility is to report, based on the knowledge and understanding of the Company obtained in the audit, on whether the other information contains any material misstatement. Based on the procedures we have performed on the other information obtained, we have not identified any material misstatement.
Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The audit committee and the supervisory board are responsible for overseeing the Company’s financial reporting process. The supervisory board is responsible to approve the audited Annual Report.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with audit rules, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
130
• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control;
• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management;
• conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern;
• evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation;
We communicate with the audit committee and the supervisory board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the audit committee and the supervisory board with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the audit committee and the supervisory board, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters.
We were appointed as auditors of the Company at the general meeting of shareholders on 4 June 2019, the president of the supervisory board has signed the audit agreement on 4 September 2019. The agreement was signed for the period of three years.
Total uninterrupted engagement period, including previous renewals (extension of the period for which we were originally appointed) and reappointments for the statutory auditor, has lasted for 2 years. Sanja Košir Nikašinović and Lidija Šinkovec are certified auditors, responsible for the audit in the name of Ernst & Young d.o.o.
Our audit opinion on the financial statements expressed herein is consistent with the additional report to the audit committee of the Company, which we issued on the same date as the issue date of this report.
No prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No. 537/2014 of the European Parliament and of the Council were provided by us to the Company and we remain independent from the Company in conducting the audit.
131
ERNST & YOUNG
In addition to statutory audit services and services disclosed in the annual report and in the financial statements, no other services which were provided by us to the Company.
Ljubljana, 26 March 2021
Sanja Košir Nikašinović
Lidija Šinkovec
Director
Certified auditor
Ernst & Young d.o.o.
Dunajska 111, Ljubljana
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SALES | ||||||||||||
| Domestic market | 21,268.26 | 24,217.33 | 23,745.12 | 23,523.81 | 22,830.92 | 22,490.37 | 21,438.09 | 24,460.68 | 21,624.29 | 18,818.64 | 14,623.43 | |
| International market | 132,123.81 | 159,850.43 | 149,472.40 | 142,431.27 | 137,839.93 | 146,586.70 | 148,327.34 | 164,244.08 | 142,336.57 | 153,768.35 | 157,763.42 | |
| Sales | 153,392.07 | 184,067.76 | 173,217.52 | 165,955.08 | 160,670.85 | 169,077.06 | 169,765.43 | 188,704.76 | 163,960.86 | 172,586.98 | 172,386.85 | |
| PROFIT OR LOSS | ||||||||||||
| Operating profit or loss | 13,741.75 | 32,831.34 | 24,084.52 | 8,628.40 | 16,241.86 | 8,080.32 | 10,579.07 | 35,721.22 | 36,408.49 | 25,726.94 | 22,526.27 | |
| Profit or loss before tax | 10,854.43 | 31,631.71 | 22,454.30 | 7,573.79 | 16,071.62 | 8,058.16 | 11,029.95 | 34,550.89 | 36,023.66 | 25,702.18 | 22,511.60 | |
| Taxes | 1,970.11 | 6,133.40 | 4,160.50 | 412.89 | 2,139.18 | 1,244.61 | 1,269.95 | 5,785.60 | 5,465.47 | 4,265.79 | 3,560.94 | |
| Net profit or loss | 8,884.31 | 25,498.31 | 18,293.81 | 7,160.90 | 13,932.44 | 6,813.54 | 9,760.00 | 28,765.30 | 30,558.18 | 21,436.39 | 18,950.66 | |
| ASSETS AND LIABILITIES | ||||||||||||
| Equity | 106,881.95 | 127,512.33 | 133,348.36 | 135,148.87 | 140,115.23 | 140,235.49 | 145,966.79 | 166,520.50 | 173,925.47 | 170,342.85 | 174,016.28 | |
| Financial debt | 47,305.74 | 21,137.89 | 19,660.40 | 4,747.01 | 39.44 | 41.72 | 116.86 | 77.57 | 70.68 | 44.59 | 60.09 | |
| Financial debt level | 25% | 11% | 10% | 3% | 0% | 0% | 0% | 0% | 0% | 0% | 0% | |
| Assets | 188,349.62 | 197,957.05 | 196,001.27 | 183,359.40 | 182,947.47 | 180,987.95 | 186,021.92 | 219,731.07 | 213,954.01 | 207,807.07 | 210,335.70 | |
| Net working capital (NWC) | 5,144.77 | 32,745.35 | 47,252.87 | 50,216.93 | 57,527.09 | 62,199.82 | 72,908.59 | 96,412.29 | 94,659.95 | 86,135.69 | 85,594.51 | |
| PER SHARE | ||||||||||||
| Dividends: | - gross | 1.25 | 4.35 | 15.00 | 6.50 | 10.97 | 8.57 | 4.18 | 9.05 | 26.52 | 28.27 | 17.00 |
| - net | 1.00 | 3.48 | 12.00 | 4.88 | 8.23 | 6.43 | 3.13 | 6.79 | 19.89 | 21.20 | 12.75 | |
| Net profit or loss | 10.91 | 31.3 | 22.46 | 8.79 | 17.1 | 8.36 | 11.98 | 35.31 | 37.51 | 26.53 | 23.45 | |
| Equity/no. of shares | 131.2 | 156.53 | 163.7 | 165.9 | 172 | 172 | 179 | 204 | 214 | 210.8 | 215.37 | |
| Market value at end of year | 58.2 | 84.5 | 79 | 90 | 177 | 76 | 162 | 217 | 181 | 187.5 | 178.00 | |
| No. of shares | 814,626 | 814,626 | 814,626 | 814,626 | 814,626 | 814,626 | 814,626 | 814,626 | 807,977 | 807,977 | ||
| No. of treasury shares | 2,149 | 2,149 | 2,149 | 2,149 | 2,149 | 2,149 | 2,149 | 6,649 | 10,652 | 21,951 | ||
| Number of employees | 1,053 | 1,063 | 1,005 | 993 | 989 | 955 | 903 | 893 | 908 | 846 | 824 | |
| Number of shareholders | 1,696 | 1,603 | 1,648 | 1,706 | 2,085 | 1,794 | 1,943 | 1,880 | 2,078 | 1,920 | 1,920 | |
| PERFORMANCE INDICATORS | ||||||||||||
| Current ratio | 1.1 | 1.89 | 2.67 | 3.65 | 4.76 | 5.09 | 5.72 | 5.05 | 9.3 | 7.2 | 7.0 | |
| Quick ratio | 0.7 | 1.04 | 1.41 | 2.02 | 2.6 | 2.7 | 3.7 | 3.3 | 5.3 | 4.2 | 4.5 | |
| Inventory turnover ratio | 21.7 | 18.9 | 12.27 | 12.4 | 11.4 | 11.6 | 16.2 | 25.8 | 13.61 | 10.98 | 13.70 | |
| Days sales outstanding | 65 days | 53 days | 51 days | 52 days | 53 days | 49 days | 51 days | 55 days | 62 days | 51 days | 52 days | |
| Days payables outstanding | 39 days | 37 days | 36 days | 35 days | 37 days | 35 days | 37 days | 43 days | 41 days | 31 days | 31 days | |
| Fixed asset turnover ratio | 1.16 | 1.42 | 1.39 | 1.42 | 1.44 | 1.59 | 1.70 | 1.92 | 1.59 | 1.61 | 1.59 | |
| Total assets turnover ratio | 0.81 | 0.95 | 0.88 | 0.87 | 0.88 | 0.93 | 0.93 | 0.93 | 0.76 | 0.82 | 0.82 | |
| Operating efficiency |
| Measure | Page in the Annual Report | Calculation |
|---|---|---|
| Dividend yield | 13 | amount of dividend/value of a share (as at the day of the General Meeting resolution) |
| EBITDA | 26 | operating profit or loss increased by write-downs in value from the statement of profit or loss |
| Financing balance | 27 | total finance revenue decreased by total finance expenses from the statement of profit or loss |
| P/E 31 December | 29 | value of a share (as at the last day of the year)/net profit per share from the statement of profit or loss |
| Total free cash flow, free cash flow | 31, 89 | net cash from/used in operating activities from the statement of cash flows |
| Labour productivity | 31 | volume of production (constant prices)/average number of employees |
| Value added per employee | 31 | operating profit or loss increased by write-downs in value and labour cost from the statement of profit or loss/number of employees based on calculated hours |
| Net working capital (NWC) | 133 | total current assets decreased by total short-term liabilities from the balance sheet |
| Ratio | 1.1 | 1.2 | 1.16 | 1.05 | 1.11 | 1.05 | 1.07 | 1.23 | 1.25 | 1.17 | 1.15 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Profit margin | 8.90% | 16.80% | 13.50% | 5.20% | 9.60% | 4.70% | 6.36% | 18.74% | 19.99% | 14.48% | 12.86% |
| Total net profit margin | 5.70% | 13.00% | 10.30% | 4.30% | 8.20% | 4.00% | 5.86% | 15.09% | 16.78% | 12.06% | 10.81% |
| Return on sales (ROS) | 5.80% | 13.90% | 10.60% | 4.31% | 8.67% | 4.03% | 5.75% | 15.24% | 18.64% | 12.42% | 10.99% |
| Return on investment (ROI) | 7.00% | 17.10% | 11.80% | 4.28% | 8.81% | 4.49% | 6.05% | 17.06% | 16.65% | 12.36% | 10.78% |
| ROA | 4.70% | 13.20% | 9.30% | 3.78% | 7.61% | 3.74% | 5.32% | 14.18% | 14.09% | 10.17% | 9.06% |
| ROE | 9.10% | 25.50% | 16.90% | 5.89% | 10.96% | 5.25% | 7.24% | 21.00% | 21.74% | 14.67% | 12.47% |
| Beneficiary | Share in % | No. of shares | Share in % | No. of shares | Share in % | No. of shares | Share in % | No. of shares | |
|---|---|---|---|---|---|---|---|---|---|
| 1. LEGAL ENTITIES | 60.52 | 493,024 | 60.05 | 489,182 | 76.60 | 618,885 | 75.28 | 608,260 | |
| 1.1. D.S.U. d.o.o., LJ | 21.95 | 178,777 | 1.94 | 15,789 | - | - | - | - | |
| 1.2. Modra zavarovalnica d.d., LJ | 21.87 | 178,184 | 22.03 | 179,506 | 20.17 | 162,963 | 20.17 | 162,963 | |
| 1.3. DUTB, d.d., LJ | 12.93 | 104,504 | 12.93 | 104,504 | - | - | - | - | |
| 1.4. Slovenski državni holding, LJ | 9.77 | 79,573 | 9.77 | 79,573 | 11.50 | 92,950 | 11.50 | 92,950 | |
| 1.5. Unicredit Bank Austria AG, Wien - fiduciarni | 4.36 | 35,210 | 4.54 | 36,710 | - | - | - | - | |
| 1.6. TR5 d.o.o., LJ | 1.22 | 9,834 | 3.03 | 24,517 | - | - | - | - | |
| 1.7. Raiffeisen bank Austria d.d., Zagreb- fiduciarni | 2.06 | 16,658 | 2.31 | 18,662 | - | - | - | - | |
| 1.8. NLB skladi - Slovenija mešani, LJ | 1.71 | 13,850 | 1.47 | 11,877 | - | - | - | - | |
| 1.9. Generali Rastko Evropa, delniški, LJ | 1.45 | 11,681 | 1.34 | 10,803 | - | - | - | - | |
| 1.10. Generali Galileo, mešani fleks. sklad, LJ | 1.47 | 11,903 | 1.33 | 10,731 | - | - | - | - | |
| 1.11. Primorski skladi, d.d. Koper - PSP MODR | 1.46 | 11,781 | 1.18 | 9,550 | - | - | - | - | |
| 1.12. CITIBANK N.A. - fiduciarni | 0.00 | 0 | 1.11 | 9,006 | - | - | - | - | |
| 1.13. TINFIN d.o.o., LJ | 1.40 | 11,300 | 0.88 | 7,103 | - | - | - | - | |
| 1.14. DBS d.d,, LJ | 0.53 | 4,243 | 0.65 | 5,243 | - | - | - | - | |
| 1.15. ERSTE Group Bank AG, | - | - | - | - | - | - | - | - |
| 0.65 | 5,286 | 0.65 | 5,239 | |||||
|---|---|---|---|---|---|---|---|---|
| 1.16. NOVA KBM d.d., MB | 0.57 | 4,628 | 0.57 | 4,628 | ||||
| 1.17. Generali Dividendni, delniški, LJ | 0.62 | 4,977 | 0.57 | 4,577 | ||||
| 1.18. MAVIA d.d., KR | 1.08 | 8,743 | 0.55 | 4,452 | ||||
| 1.19. Triglav vzajemni skladi, LJ | 0.00 | 0 | 0.50 | 4,007 | ||||
| 1.20. Other | 6.93 | 56,490 | 26.31 | 214,314 | 13.42 | 108,374 | 10.00 | 80,738 |
| 2. NATURAL PERSONS | 39.48 | 321,602 | 39.95 | 325,444 | 22.08 | 178,440 | 22.03 | 177,966 |
| 3. TREASURY SHARES | - | - | - | - | -1.32 | 10,652 | 2.69 | 21,751 |
| TOTAL 1+2+3 | 100.00 | 814,626 | 100.00 | 814,626 | 100.00 | 807,977 | 100.00 | 807,977 |
J
5 1
X
The indicated and undersigned members of the management and the persons responsible for the compilation of the Annual Report within the meaning of the second paragraph of Article 134 of the Financial Instruments Market Act (ZTFI-1) hereby confirm that, to the best of our knowledge:
The financial report complies with the relevant financial reporting standards, i.e. the Slovenian Accounting Standards. As such, it provides a true and fair presentation of the Company’s assets, liabilities, profit or loss and financial position.
The Business Report presents a fair presentation of the development and the operating results of the Company and its financial position, including the description of the material types of risks the Company is exposed to.
The Management Board hereby accepts and confirms the 2020 Annual Report on 26 March 2021.
| President of the Management Board | Member of the Management Board – Deputy President of the Management Board – Technical Director | Member of the Management Board – Worker Director |
|---|---|---|
| Aleš SKOK, BSc (Chemical Engineering), MBA - USA | Nikolaja PODGORŠEK SELIČ BSc (Chemical Engineering), Specialist | Filip KOŽELNIK, MSc (Business Studies) |
| President of the Management Board | Member of the Management Board – Worker Director | Accounting Department Manager |
|---|---|---|
| Aleš SKOK, BSc (Chemical Engineering), MBA - USA | Filip KOŽELNIK, MSc (Business Studies) | Karmen Fujs, MSc, BSc Econ. |
135
We will constantly focus our efforts on fair, high-quality and timely satisfaction of our customers’ needs. We will develop relationships based on mutual trust, cooperation and friendship. We will settle our liabilities to suppliers, banks and contractors with the highest degree of responsibility.
We will work to ensure that the shareholders’ investment and their confidence as to the correctness of the decision to invest are rewarded with expected and suitable returns. We will take care of the Company’s long-term vitality and profitability by investing into development and employees. We understand that our responsibility is proportionate to the trust that has been placed in us by the shareholders.
All employees will enjoy an honest relationship. Fair payment for the work well-done is an unalienable right. We will make sure that the rights to appropriate information, personal safety and equal treatment are respected. The duty of the Company’s management is to promote a positive atmosphere and care for the development and implementation of the rules and principles of ethical operations.
Within the scope of the sustainable development philosophy, investment in environmentally-oriented projects and targeted technology design, we will strive for optimum paths and methods of environmental protection and health of our community members. We will strive for and participate in the development and progress of the local community in the areas of education, sports and culture to the highest possible degree.
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