annual report 2014

Transcription

annual report 2014

AN N UAL R E P O R T 2014
ANNUAL REPORT OF MERKUR TRGOVINA, D.D. FOR 2014
Contents
INTRODUCTION6
Report of the Chairman of the Management Board
8
Statement of Management’s Responsibility
9
Report of the Supervisory Board
10
Key strategic directions of the Company in 2015
12
Management Statement
18
Ownership20
Significant events at Merkur trgovina, d.d. in 2014
21
Significant events after the balance sheet date
24
Corporate Social Responsibility
24
Environmental Responsibility
25
Risk Management
26
BUSINESS REPORT OF MERKUR TRGOVINA, D.D.
32
FINANCIAL REPORT FOR THE 2014 FINANCIAL YEAR
40
Audited Financial Statements of Merkur trgovina, d.d.
41
Notes to the Audited Financial Statements
of Merkur trgovina, d.d.
45
Management's Statement
79
Auditor's Report
80
Business Report
5
INTRODUCTION
Merkur trgovina, d.d. is the leading Slovenian retailer of appliances offering
household items, items for the garden and workshop, as well as products aimed
at final customers, companies and craftsmen. It is present on the market with its
recognised brand MERKUR, which has stood for the best offering of household items
and for DIY enthusiasts for nearly 120 years.
The Company began operating on 13 November 2014, and was registered with the
court register after the repeated compulsory settlement against Merkur – trgovina
in storitve, d. d. was approved with a final resolution. Namely, the latter's plan of
financial restructuring envisaged the spin-off of its healthy core, its retail activity.
With 23 retail stores all over Slovenia, franchise stores and two web stores we provide
a high-quality and broad offering of various products to various types of customers.
We upgrade our sales range with a variety of additional services in order to surpass
customers' expectations.
In the eyes of our final customers, we are recognised by our network of modern, wellstocked and friendly shopping centres. As their main advantage, they bring together
the concept of successfully selling construction, renovation and maintenance
products alongside products for entertainment, comfort and high-quality living.
The main mission of Merkur trgovina is to satisfy its customers, business partners and
employees.
Report of the Chairman
of the Management Board
2014 was a year of rebirth for Merkur. We concluded the financial restructuring process, which
began in 2010. In November 2014, the repeated compulsory settlement was confirmed with
a final resolution, and Merkur’s healthy core - trade - was transferred to the newly established
company Merkur trgovina. We are happy to report that our first year was a profitable one in
accordance with our plans.
I would like to extend my thanks to all the stakeholders - especially our employees, suppliers and
creditors, who approved our financial restructuring concept with an overwhelming majority - for
not stopping to believe in Merkur in the past. This period, which was probably the most difficult
in all of Merkur’s history, is now finally behind us. We have turned a new leaf and a new chapter
in Merkur’s history has begun.
Alongside the financial restructuring, we have streamlined our internal processes. Today, Merkur
is an agile company, focused on one key mission: to provide our customers, at each visit, the
best range, the best price-quality performance and excellent sales assistance. We are in excellent
condition to, as the economy improves, realise revenue growth without any significant increase
in fixed costs.
I am pleased that despite the unfavourable circumstances, Merkur has succeeded in retaining its
market position and even improve its position in certain segments. All the changes in the past
years were implemented bearing in mind that the services provided to our customers, which
is something Merkur is most recognised for, must remain at the highest possible level. In 2014,
Merkur continued to be the first retailer Slovenian customers spontaneously recalled in all key
categories of our sales range. We have faithful customers who like to come back to us.
We are fast to adapt to ever-changing consumer habits, and thus aim to attract an even broader
customer base. We have improved the contents offered by the Merkur website and thus reaffirm
our competences on the platform where Slovenian customers begin searching for information:
on-line.
Merkur has emerged as the victor in a challenging battle. We have overcome challenges we
ourselves did not pick. However, we are now even better prepared to address the challenges
at the heart of our business: the challenges posed by the market, generating growth and the
satisfaction of all stakeholders. We are the first choice of Slovenian customers and a faithful partner
to numerous craftsmen and entrepreneurs. We have the most experienced sales staff, who are
always prepared to offer advice on any project - from finding the right screw to designing your
dream bathroom. Merkur is here for everything.
The beginnings of the restructuring took place as we celebrated 115 years. At that time, many
wondered whether we would celebrate 120 years. Now we know this is not a question - the only
question is what the next 120 years will bring.
Blaž Pesjak,
Chairman of the Board
8
Annual Report 2014
Statement of Management’s
Responsibility
The Chairman and Members of the Management Board of Merkur trgovina, d.d. hereby declare
that the Annual Report of Merkur trgovina, d.d. and all of its integral parts have been compiled
and published in accordance with provisions of the Companies Act and the International
Financial Reporting Standards as adopted by the EU.
The Management Board is responsible for the preparation of the Annual Report of Merkur
trgovina, d.d. that gives a true and fair presentation of the financial position of the Company
and of its financial performance. The Management Board hereby confirms that the financial
statements have been compiled under the assumption of a going concern, and that the selected
accounting policies have been applied consistently with disclosure of any changes thereto.
The Management Board of Merkur trgovina, d.d. also declares that in 2014, at the initiative of the
controlling entity Merkur, d. d. - v stečaju or at the initiative of related parties, the Company did
not take or omit any action which would result in any damages arising to Merkur trgovina, d.d.
The Management Board is also responsible for the adoption of measures to secure the property
of Merkur trgovina, d.d. and prevent and detect fraud and any other irregularities.
Blaž Pesjak,
Anita Valjavec,
Member of the Board
Marjan Smrekar,
Member of the Board
Employee Director
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9
Report of the Supervisory Board
In economic terms, Merkur trgovina, d.d. began operations on 1 October 2013. The financial
statements are available from that date onwards, as the economic activities relating to the Company’s operations (in accordance with the Financial Operations, Insolvency Proceedings and
Compulsory Dissolution Act - the ZFPPIPP) actually began before the Company was formally
established. As part of the repeated compulsory settlement initiated against Merkur, d. d. from
which Merkur trgovina, d.d. was spun-off, the operations were monitored by the Kranj District
Court, the creditor committees of regular creditors and creditors with right to separate settlement, and the repeated compulsory settlement administrator.
The Supervisory Board began its work in November 2014, when Merkur trgovina, d.d. was registered in the court register and begun operations; thus is was also established in the legal sense.
Work of the Supervisory Board
At their sessions of 16 July 2014, the creditor committees of regular creditors and creditors with
right to separate settlement, both of which were established in the repeated compulsory settlement proceedings against MERKUR – trgovina in storitve, d. d., in accordance with the ZFPPIPP,
appointed members of the Supervisory Board of MERKUR trgovina, d.d. - shareholder representatives. Klemen Boštjančič, Jure Fišer, Marko Ninčević and Bojan Papič were appointed as members
of the Supervisory Board.
The Supervisory Board met at its first session when Merkur trgovina, d.d. was registered in
the court register and began operations. Before the first session, the Company’s workers’
council appointed employee representatives to the Supervisory Board. At its first session of
21 November 2014, the Supervisory Board elected its Chairperson and Deputy Chairperson.
Since then, it has had the following composition: Bojan Papič (Chairman), Marko Ninčević
(Deputy Chairman), Klemen Boštjančič and Jure Fišer as shareholder representatives and Ana
Hochkraut and Peter Fratnik as employee representatives.
The Supervisory Board's composition did not change by the end of the year.
In 2014, the Supervisory Board met at two regular sessions. At these sessions it regularly monitored and supervised the Company’s operations and the work of the Company’s Management
Board, in accordance with its powers, competences and obligations outlined in the Companies
Act and the Company’s Memorandum of Association. In performing its duties, the Supervisory
Board considered both the owners’ interests as well as the interests of other stakeholders.
At its first session, the Supervisory Board discussed the Company’s opening balance sheet and
appointed the Chairman of the Management Board. The creditors committee’s appointed Blaž
Pesjak and Anita Valjavec as members of the Management Board, while the Supervisory Board
appointed Blaž Pesjak to the position of Chairman of the Management Board. The Supervisory
Board appointed Marjan Smrekar to the position of Management Board Member - Employee
Director at the initiative of the workers’ council.
At its sessions, the Supervisory Board regularly discussed the operating results of Merkur trgovina, d.d. It regularly monitored the Company’s liquidity, solvency and capital adequacy.
All members of the Supervisory Board actively contributed to its work both through their regular attendance and discussions at the sessions themselves and through drafting proposals and
comments to the materials discussed.
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Annual Report 2014
Consideration of the Annual Report
The Supervisory Board discussed the audited Annual Report of Merkur trgovina, d.d. for 2014
at its fifth regular session held on 20 April 2015. Pursuant to the review of the Annual Report of
Merkur trgovina, d.d. for 2014 including financial statements and notes thereto, consideration
of the Management Board’s proposal relating to the appropriation of the distributable profit
and the certified auditor’s report, the Supervisory Board approved the audited Annual Report of
Merkur trgovina, d.d. for the year 2014.
Proposal for the appropriation of the distributable profit
Along with approval of the Annual Report for 2014, the Supervisory Board determined the
amount of the distributable profit of EUR 1,889,993.73 as at 31 December 2014. The Supervisory
Boards has proposed to the General Meeting to appropriate the total amount of the distributable
profit for 2014 to cover the unregistered decrease in capital.
The report, which is intended for the General Meeting, was prepared by the Supervisory Board
pursuant to the provisions of Article 282 of the Companies Act.
Conclusion
Since its constituting session, the Supervisory Board members have responsibly and precisely
monitored the operations of Merkur trgovina, d.d. In our work we were supported by the
Company, which allowed us to perform the relevant supervisory function as required and with
the required quality.
The Supervisory Board believes the work of the Management Board and all employees in 2014
was successful, as the Company has reached its goals.
Bojan Papič,
Chairman of the Supervisory Board
Naklo, 20 April 2015
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Key strategic directions
of the Company in 2015
In 2015 we will continue implementing activities following our strategic goal, which is to be
the first choice of Slovenian customers when looking to improve their home or garden, offering
the best price, quality and range performance. Merkur trgovina, d.d. is the leading Slovenian
company engaged in the sale of products for the home, DIY products, as well as construction,
electro-technical, metallurgic and professional products. We are highly competent, competitive
and offer the best service.
Business to Consumer sales (B2C)
In 2015, in business to consumer sales, we will focus on improving the quality of service and
improving the shopping experience both through our shopping centres and on-line. A multichannel approach will ensure we offer customers the best possible shopping experience and
the option to shop through various sales channels. Most emphasis will be placed on active sales,
where we will strengthen our internal training and knowledge transfer. Thus our sales staff in all
departments will be even more competent and customer-friendly than before.
We constantly strive to improve the shopping experience and improving the quality of service. A
new service introduced in the beginning of the year is connecting appliances. At the same time
we continue upgrading our sales services by offering installation, where our personal approach
and offering allows us to adapt to the customer’s wishes and project. We provide a comprehensive service, from the first visit to organising the works, when renovating one’s bathroom,
renovating one’s home in an energy efficient manner, or when landscaping around the home.
We only work with verified subcontractors who offer a high-quality service and a warranty of
good workmanship.
Business to Business sales (B2B)
We continue optimising the organisation and processes of active sales. We have optimised sales
of consumables by introducing targeted management and by ensuring an entrepreneurial
approach to each customer. We have created conditions for further growth by focusing on
customer target groups.
Our sales to craftsmen through shopping centres focus on 5 target groups of customers:
• Finalisation works in the construction sector,
• Industry,
• Public companies,
• Electro-installations,
• Mechanical installations.
Our wholesale activities focus on major customers in the construction sector, industry and trade
(sales to franchisees).
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Annual Report 2014
Mission
As a competent and competitive company, Merkur trgovina, d.d. offers the best service both in
selling to final customers and to companies.
• We strive to ensure customer satisfaction through provision of the best ratio between quality,
stock and price, while also offering the best advice.
• We have a broad range which is appropriate for business to business sales.
• Our sales staff are the most competent and customer-oriented.
• We inspire and enrich new lifestyles that appear on the market, and are a strong partner of
leading brands and manufacturers.
• Our retail network is the largest in Slovenia, which allows our suppliers to establish long-term
cooperation with us.
• The best service is the key factor of distinguishing us from the competition and our main
strategic advantage which we constantly invest in and thus ensure a positive environment for
all stakeholders.
Vision
To be the best provider of products and services in the DIY, appliances and seasonal
sections in Slovenia.
Values
Wisdom
We continue our nearly 120-year long tradition of operations and thus look
into the future with fresh ideas.
Enthusiasm
We are passionate, competent and professional, and pursue the Company’s
goals with a team approach.
Reliability
We are a conscientious, serious and reliable business partner.
Quality
We focus on recognisably good services.
Success
We respond to the constant changes in the environment and the market,
while all our employees focus on searching for even better opportunities.
Truthful
We do not hide facts.
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Pillars and categories in Merkur’s sales range
DIY
Construction
Workshop
Living
Bathroom
Garden
SEASONAL
Spring and garden
Summer and patio furniture
Autumn and All Saints Day
Christmas and New Year
APPLIANCES
White goods
Acoustics and computer
equipment
Kitchen appliances
Household appliances
Sales range
Merkur offers a varied sales range. The numerous Slovenian and foreign recognised brands
and broad sales range ensure that the selection and quality of products at Merkur are worthy
of our customers’ trust and attention.
Metallurgy products: tin, stainless tin, welding materials, steel rods and wire, pipes, tool steel,
concrete steel, reinforced concrete mesh, and ferrous metallurgy.
Construction materials and wood: cement and lime, bricks and roof tiles, insulation, façade
systems, plasterboard construction elements, products for the garden and landscaping, wood
and products made of wood, builder’s joinery, wall and floor covering.
Technical products: mountings, screws and adhesion products, chuck equipment, buffing
material, hardware and accessories, measuring equipment, logistics equipment, hand tools,
technical products made of rubber, personal protection means.
Energy and installations: electricity installations, lighting, guides and cables, switches, plumbing installations, sanitary ceramics, ceramic tiles, wellness equipment, heating, ventilation and air
conditioning, and other installation and electrical materials.
Consumer goods: acoustics and video devices, small kitchen appliances, white goods, heating
elements, kitchen appliances, computer and office equipment, telecommunications, gardening
and agricultural/forestry range, other consumer goods.
Chemicals and paper: paint and varnish, decorating materials, building chemicals, adhesives,
construction chemicals, plastic granules, graphic paper and materials, packaging materials.
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Annual Report 2014
Own brands
We have supplemented our sales range with our own brands: BIVA, MTECH and MQ. Through
our own brands we aim to bring our offering even closer to our customers, especially in terms of
construction equipment, equipment for renovating the home, and gardening equipment.
MTECH – Simple but bundles of fun
MTECH is a brand of products needed in the home workshop, in the garden or in construction:
hand tools, workshop equipment and accessories, gardening equipment and machinery. The
products have a modern design, are innovative and made of high-quality materials. Since they
are easy to use they are especially aimed at “DIY” users.
BIVA – For a more comfortable and beautiful home
BIVA-branded products help us create, enrich and beautify our living environment: bathroom
equipment, kitchen appliances, decorative products, paint, builder’s joinery and flooring, patio
furniture and other outdoor living products. Through its modern materials, attractive colours and
designs, and innovation, this brand is aimed at anyone who enjoys the comfort and aesthetics
of their own home.
MQ
MQ is mainly a brand of generic products needed to ensure the primary furnishing of living
spaces. They are exceptionally functional. However, the brand has no function in terms of
differentiation, as the range includes construction tools and materials, installations, workshop
equipment and accessories, gardening equipment, landscaping equipment, energy sources,
and similar. The offering of MQ products is mainly aimed at rational and price-sensitive - both
professional and “DIY” customers.
Business Report
15
Shopping centres
Some 23 modern, well-stocked and customer-friendly shopping centres form the backbone of
our sales.
As their main advantage, they bring together the concept of successfully selling construction,
renovation and maintenance products alongside products for entertainment, comfort and highquality living. Both final and professional customers can benefit from competent sales assistants
in every department, who are always happy to provide assistance and help.
Our shopping centres have two different sales formats:
• The MERKUR hybrid type brings together a comprehensive offering of products and services
for the home, professional customers and builders, and supplies both final customers and
companies that purchase through the retail network. We have 19 of our own retail centres
using the Merkur format, which can be divided into large and medium-size depending on the
size of their sales areas.
• The MERKURMOJSTER type aimed at professional customers brings together an offering
of products and services for professional customers and builders, and supplies both final
customers and companies that purchase through the retail network. We have 4 of our own
retail centres using the Merkur Mojster format.
A further 12 franchisees, who have a total of 15 franchise branches all over Slovenia, also follow
the Merkur concept.
Large hybrid shopping centres
CELJE
KRANJ
LJUBLJANA BTC
LJUBLJANA VIŽMARJE
MARIBOR
MURSKA SOBOTA
NOVA GORICA
Medium-sized
hybrid shopping centres
BREŽICE
IZOLA
JARŠE PRI DOMŽALAH
JESENICE
LESCE
LITIJA
LJUBLJANA VIČ
NOVO MESTO
PTUJ
SLOVENJ GRADEC
ŠKOFJA LOKA
VELENJE
MURSKA
SOBOTA
Slovenj Gradec
Jesenice
Lesce
Velenje
Tržič
Jarše pri Domžalah
Cerkno
NOVA
GORICA
KOPER
Izola
CELJE
Ormož
Ptuj
Slovenske Konjice
Rogaška Slatina
LJUBLJANA
Škofja Loka
»Expert« shopping centres
KOPER
MARIBOR STUDENCI
NAKLO
NOVA GORICA
16
Slovenska Bistrica
NAKLO KRANJ
Idrija
MARIBOR
Logatec
Litija
Šentpavel pri Stični
Šentrupert
Ivančna Gorica
Trebnje
Brežice
NOVO
MESTO
Ribnica
Kočevje
the Company headquarters
shopping centres Merkur
franchise branches
Annual Report 2014
On-line
The Merkur website supplements and upgrades our retail network of shopping centres. The
Merkur website is divided into an informative and retail part, and provides information on and
allows customers to purchase over 30,000 products, as well as provides helpful tips and buying
guides for consumers. Through the active inclusion of the entire sales range on the website
and by enriching the contents by providing comprehensive information we help build Merkur’s
competency and approach customers in various phases of the purchasing process.
Merkur’s multi-channel strategy focuses on customers and a systematic approach to advertising
regardless of the channel (leaflets, points of sales, and the web). We aim to allow customers to at
any time and from any location easily reach the brand and obtain all information they need to
effectively take the relevant purchasing decision.
We have two on-line web stores:
• The MERKUR Web Centre, which is aimed at consumers: www.merkur.si
• The MERKURPARTNER portal, which is aimed at concluding electronic transactions with our
business partners: partner.merkur.si
The target
multi-channel
presence
of Merkur
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Business Report
17
Management Statement
Management System
The Company’s Management Board is responsible for drafting and realising the Company’s strategic development goals.
In accordance with the two-tier system, the work of the Management Board is supervised by
the Supervisory Board. Up to four members of the Supervisory Board, appointed by the shareholders at the General Meeting, shall represent shareholder interests. Up to two members of the
Supervisory Board shall represent employee interests. By his very function, the Chairperson of
the workers’ council shall be a member of the Supervisory Board, in addition to one other member of the workers’ council.
General Meeting
No General Meeting was held in 2014.
Supervisory Board
In accordance with the provisions of the ZFPPIPP, the Supervisory Board of Merkur trgovina, d.d.
was appointed by the creditors’ committees of ordinary creditors and creditors with the right to
separate settlement on 16 July 2014, as part of the compulsory settlement proceedings initiated
against Merkur, d. d.
In 2014, the Supervisory Board met at two sessions. At its meetings, the Supervisory Board discussed the following most important topics:
• Report on the election of the Members of the Supervisory Board.
• Constituting the Supervisory Board, electing the Chairperson and their Deputy for the
2014-2019 term of office.
• Appointing the Chairman of the Management Board.
• Review of the operating measures implemented aimed at regularising operations in the
2010–2014 period.
• Opening balance sheet of Merkur trgovina, d.d. and forecast of operations by the end of 2014.
• Draft business plan for the 2015 financial year.
• Appointing the auditor for the 2014 financial year.
• Selecting the International Financial Reporting Standards as the basis for compiling the financial statements.
• Convening the General Meeting.
• Reports on current operations.
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Annual Report 2014
Composition of the Supervisory Board of Merkur trgovina, d.d.:
Shareholder representatives:
Bojan Papič, Chairman of the Supervisory Board
Marko Ninčević, Deputy Chairman
Klemen Boštjančič, Member
Jure Fišer, Member
Employee representatives:
mag. Ana Hochkraut, Member
Peter Fratnik, Member
The term of office of Supervisory Board members (shareholder representatives) expires on
16 July 2019.
The term of office of Supervisory Board members (employee representatives) expires on
22 June 2018.
Management Board
The Management Board of Merkur trgovina, d.d. met at seven sessions in 2014. It focused on
managing and monitoring the realisation of the key operating goals in each relevant area.
Management Board of Merkur trgovina, d.d.:
Blaž Pesjak, Chairman of the Management Board (term of office expires on 14 July 2019)
Anita Valjavec, Member of the Management Board (term of office expires on 14 July 2019)
Marjan Smrekar, Member of the Management Board – Employee Director (term of office expires
on 31 August 2018)
Internal controls relating to financial reporting
From the point of view of proving accounting information complying with the criteria outlined
in the International Financial Reporting Standards, we have established controls aimed at
mitigating the risks related to financial reporting.
These accounting controls ensure the:
• Authenticity,
• Accuracy and
• Completeness of financial data.
We ensure the regular professional training of our employees, which enables them to contribute
high-quality, correct and timely accounting data.
External audit
Deloitte revizija d.o.o. conducts the external annual audit of the financial statements.
Business Report
19
Ownership
The share capital of Merkur trgovina, d.d. amounting to EUR 11,368,274 is represented by
11,368,274 ordinary non-materialized no par value shares. Each share represents EUR 1.
An ordinary no par value share is registered to the holder, giving the holder the right to:
• One vote at General Meetings,
• Proportionate amount of share in the profit earmarked for dividend payment,
• Proportionate share of the remaining bankruptcy or liquidation estate in the event of the
Company going bankrupt or being liquidated.
The shares of Merkur trgovina, d.d. are not traded on an organised market.
As at 31 December 2014, Merkur trgovina, d.d. is wholly-owned by Merkur – trgovina in storitve, d. d. - v stečaju.
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Annual Report 2014
Significant events at Merkur
trgovina, d.d. in 2014
Significant events in 2014 before the spin-off and before Merkur trgovina, d.d. began
operations
Initiation of the repeat compulsory settlement proceedings against
Merkur, d. d. (now in bankruptcy)
On 9 January 2014, the Kranj District Court issued a resolution initiating the repeat compulsory composition proceedings against the debtor Merkur, d. d. It constituted a creditors committee comprised of 7 ordinary creditors (the Tax Administration of the Republic of Slovenia,
Sparkasse d.d., Probanka d.d., Abanka Vipa d.d., NLB d.d., Factor banka d.d., Gorenje d.d.) and
a creditors committee comprised of 12 creditors with right to separate settlement (NLB d.d.,
Gorenjska banka d.d., Banka Koper d.d., Hypo Alpe Adria Bank d.d., Banka Celje d.d., UniCredit
banka d.d., SKB d.d., Abanka Vipa d.d., Probanka d.d., DBS d.d., Nova KBM d.d., PBS d.d.). Both
creditors’ committees met for the first time on 24 January 2014 at the registered address of
Merkur, d. d. at Naklo.
Simona Goriup was appointed administrator of the repeat compulsory composition proceedings by the court.
Appointing Members of the Management Board and of the
Supervisory Board
The meetings of creditors’ committees comprised of ordinary creditors and creditors with right
to separate settlement as part of the repeat compulsory composition proceedings against
Merkur, d. d. took place in July 2014. At these meetings, the members appointed members of the
management of Merkur trgovina, d.d. The organisational structure and Company’s memorandum
of association were enclosed to the financial restructuring plan.
Blaž Pesjak and Anita Valjavec were appointed members of the Management Board.
Klemen Boštjančič, Jure Fišer, Marko Ninčević and Bojan Papič were appointed as members of
the Supervisory Board as shareholder representatives.
Approval of the repeated composition proceedings
On 14 October 2014, the Kranj District Court issued a resolution approving the repeat compulsory settlement proceedings against the debtor MERKUR - trgovina in storitve, d. d. Inter alia, it
established in the resolution that the approved compulsory settlement also involve the spin-off
through establishing the new company Merkur trgovina, d.d. Naklo, in accordance with the spinoff plan enclosed to the debtor’s financial restructuring plan.
The relevant majorities of both classes of creditors voted in favour of the repeat compulsory
settlement proceedings.
Business Report
21
Significant events in 2014 after Merkur trgovina, d.d. began operations
Beginning operations
Merkur trgovina, d.d. was established pursuant to the final decision to approve the repeated compulsory settlement proceedings against Merkur, d. d. when the Company was on
11 November 2014 entered in the business register. According to the spin-off plan, most of
Merkur’s trade activities were transferred to this company. Merkur trgovina, d.d. began operating
on 13 November 2014. Customers did not feel any impacts of the transfer of the operations as
the Company continues trading under the recognised MERKUR brand.
One key advantage of the spin-off is that Merkur’s healthy core - its trade activities - is now a
separate company. In accordance with the spin-off plan, only assets needed in the pursuit of the
core activity were transferred to Merkur trgovina, while the Company’s asset-to-liability ratio is
sustainable. All inventories of merchandise and liabilities incurred after the first finally-approved
compulsory settlement proceedings were transferred to the new company. Although Merkur
trgovina is 100%-owned by Merkur, d. d. no other connections exist between the companies.
Appointing the Chairman of the Supervisory Board, the Chairman of
the Management Board and the Employee Director
At its first session, the Supervisory Board elected as its Chairman Bojan Papič, and Marko Ninčević
as his Deputy. The workers’ council appointed Ana Hochkraut and Peter Fratnik as Members of
the Supervisory Board - employee representatives.
The Supervisory Board appointed Blaž Pesjak as Chairman of the Management Board, while it
appointed Marjan Smrekar to the position of Management Board Member - Employee Director.
Significant events in 2014 in terms of sales and marketing
Extended Merkur Ljubljana Vič shopping centre
In April, Merkur’s Ljubljana Vič shopping centre became even more interesting to a broader
range of customers. Until then, the centre was mainly aimed at professional customers. Now,
it has been renovated and expanded. In addition to products aimed at DIY enthusiasts and
professional customers, customers can now find white goods, small kitchen appliances,
acoustics, household products, decorative lighting and a range of seasonal products, as well
as a bathroom showroom and outdoor garden centre at Merkur Vič.
Shopping centre renovations
In 2014 we significantly renovated two shopping centres. In September, we refurbished the
indoor sales areas at Merkur Brežice, established a new concept of bathrooms and brought
the shopping centre in line with Merkur’s standards for medium-size centres. As a result of the
new organisation of departments, the centre is now more transparent as related departments
are now more connected. In October we refurbished the indoor sales areas at Merkur Murska
Sobota, established a new concept of bathrooms and brought the shopping centre in line with
Merkur’s standards for large centres.
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Annual Report 2014
Introduction of a new concept of bathroom sales
We have continued renovating bathroom departments in other shopping centres to bring them
in line with the new concept of this product offering. Thus we allow customers to more easily
navigate their way through the wide range of products for a perfect bathroom, while the new
instalments allow for greater flexibility in changing collections. Bathrooms are one of the key
categories where we believe we have the opportunity to grow by providing an overall one-stopshop service to our customers: from designing the layout and providing sales advice to providing
high-quality subcontractors to perform installation and construction works.
In 2014, in addition to the centres subject to more in-depth renovation, the shopping centres in
Celje, Kranj, Ljubljana (Vižmarje), Novo mesto, Litija, Velenje, Izola and Škofja Loka were given new
bathroom departments. The final four shopping centres will be refurbished this year.
Updated Merkur Web Centre
In June 2014 we updated and redesigned the Merkur Web Centre, which is now available also
for use on mobile devices and tablets, while faster operation enables an improved and simplified
user experience. By using a variety of filters, around 30,000 products can be viewed on-line
at www.merkur.si, compared, added to the wish list, their availability at individual shopping
centres check and over 10,000 products may be ordered and purchased directly on-line for
home delivery. The new web centre makes the experience of viewing current catalogues and
opening times of our shopping centres much easier.
Participation in the “Vrtičkanje” TV programme
Since September 2014, POP TV has been broadcasting the programme “Vrtičkanje” (Gardening)
where the two moderators share their gardening skills in an easy and friendly manner while
tending their own garden.
Merkur has been taking part in the programme through advertising its products thus reminding
the public of our offer of fresh, healthy and high-quality seedlings as well as a comprehensive
offer of products for the garden. Thus we are building a long-lasting impact on the audience as
we are inviting the audience to visit Merkur’s garden centre where they can find everything one
needs for the garden and growing one’s own healthy and tasty home-grown produce.
The archive of all the programmes broadcast so far is available on the Merkur Web Centre.
For all hidden and revealed wishes
In December 2014 we wanted to invite customers to our Merkur centres in a slightly different
manner. After the successful start-up of the new company, the time was right to strengthen
the consumers’ positive perception of MERKUR brand and to establish an even more relaxed
communication with our customers.
The Leo Burnett agency devised three cutely acted advertisements showing discussions about
giving gifts most of us have at one time or another been a part of. With the campaign under the
slogan “For all hidden and revealed wishes” we addressed our target groups while reminding the
audience that Merkur’s well-stocked shopping centres hold a gift for just about everyone.
Business Report
23
Significant events after
the balance sheet date
The First General Meeting
The first regular General Meeting of Merkur trgovina, d.d. was convened by the Management
Board for 29 January 2015. The General Meeting was attended by representatives of 100% of the
Company’s shares and 100% of all voting shares, all of which are held by the only shareholder
MERKUR - trgovina in storitve, d. d. - v stečaju. The only shareholder was represented at the
General Meeting by proxy, Ms Simona Goriup, attorney at law and the bankruptcy administrator.
All the proposed resolutions were adopted at the General Meeting. The auditing firm Deloitte
revizija, d.o.o. was appointed certified auditor of Merkur trgovina, d.d. from the cut-off date of
the spin-off i.e. 1 October 2013 onwards and for the financial year 2014. The General Meeting
confirmed that from the cut-off date of the spin-off and for a period on no less than five years,
the financial statements of Merkur trgovina, d.d. have and will be prepared in accordance with
the Companies Act and the International Financial Reporting Standards as adopted by the EU.
The General Meeting also confirmed the reimbursement of the Supervisory Board members.
Merkur awarded the Best Buy Award
At the beginning of 2015, in an independent survey Slovenian customers chose Merkur as the
retail chain that offers the best quality and price performance on the Slovenian market when
buying products for the house, home, garden and yard, thus awarding Merkur the Best Buy
Award.
This award goes hand in hand with our mission: to ensure customer satisfaction through provision
of the best ratio between quality, stock and price, while also offering the best advice. As the Best
Buy Award is well known by Slovenian consumers, in 2015 we have included it in our marketing
communication, thereby further strengthening the message that the best ratio between quality
and price is Merkur’s commitment also for the future.
Corporate Social Responsibility
Corporate social responsibility activities focused on the end of the year, when, together with the
Slovenian Association of Friends of Youth we organised the “Podari košček božiča” (“Give a piece
of Christmas”) charitable campaign. Since early December, users of Facebook, Twitter and Instagram social networks were encouraged to share their holiday photographs and thoughts with
the “#PodariKoščekBožiča” hashtag. Our aim was to collect at least 1000 posts. We promised to
give the Slovenian Association of Friends of Youth Merkur gift cards of EUR 10,000 upon reaching
this goal.
As this goal was surpassed a few days before Christmas, we presented the Slovenian Association
of Friends of Youth with 100 Merkur gift cards in the total amount of EUR 10,000 and thus
brightened up the Christmases of 100 children from socially vulnerable families.
24
Annual Report 2014
Environmental Responsibility
Through investing in the environment we aim to contribute to the welfare of future generations.
Merkur trgovina, d.d. generates waste through the Company’s core activity:
• Warehousing and selling goods,
• Packaging, warehousing and dispatching goods,
• Ancillary activities (maintenance, arranging).
Waste is generated in the form of waste packaging, waste electronic and electric equipment,
batteries, and other waste materials generated through retail and ancillary activities.
We have defined our waste management strategy in the relevant internal policies. Our strategic
goals include ensuring the separate collection of waste in all areas, reducing the quantities of
waste generated and selling waste as secondary materials.
We undertake the following key environmental protection measures:
• We have concluded agreements with the relevant waste packaging and electronic and electric
equipment processors and waste disposal service providers.
• When negotiating with suppliers we include provisions with which suppliers undertake to fulfil requirements relating to the assembly and composition of packaging, including limitations
on the content of hazardous substances.
• We have introduced separate waste collection, which is enabled in our offices by introducing
waste collection points ensuring the separate collection of paper, organic waste and waste
packaging.
• Waste packaging is separately collected according to the relevant types in shopping and
distribution centres. We have introduced containers for cardboard and sacks for plastic and
polystyrene.
• We continuously sell waste as secondary materials (metals, plastics, cardboard, paper).
• In our shopping centres we have established boxes where customers can leave their spent
batteries, luminaries and waste electric and electronic equipment. Thus in 2014 we collected
13% more waste electric and electronic equipment compared to 2013.
In 2014 we collected the following quantities of waste electric and electronic equipment (in
kilograms):
Large
household
appliances
Refrigerators
and freezers
Small
household
appliances
TV screens
Luminaries
Batteries
TOTAL
218,524
120,964
13,670
11,488
7,466
8,477
380,589
Business Report
25
Risk management
Efficient risk management is fundamental to safe and profitable business operations and one of
the significant factors determining a company’s business performance.
Management of different risks requires different risk approaches. The business risks to which our
Company is exposed are managed by sectoral services. Through timely identification of risks
we aim to improve achievement of set objectives, identify any deviations in a timely manner
and adopt corrective measures in order to mitigate the potential impact of adverse events and
improve our management of assets available to the Company for its realisation of set goals.
The risks managed by the Company are divided into three major groups: business risks, financial
risks and operational risks.
Overall the risks have significantly reduced in 2014 at the start-up of the new company Merkur
trgovina, d.d. since after the final repeated compulsory settlement initiated against Merkur trgovina in storitve, d. d. only the healthy business core was transferred to the new spin-off.
Merkur trgovina maintains a sustainable balance between assets and liabilities as it only assumed
those liabilities which were specified in the spin-off plan. Accordingly and pursuant to the law,
Merkur trgovina can no longer be held responsible for settlement of liabilities of the company
the spin-off of which it is. Significantly reduced operational and financial risks are reflected also in
reduced business risks as a result of increased confidence of our business partners.
Business risks
Business risks are risks associated with the company’s business and its core activity. Merkur
trgovina is a trading company and as such its business risks arise from changes in consumer
purchasing habits mainly as a reflection of their buying power and from B2B customer trends
which are largely dependent on the general economic conditions (construction sector, public
procurements and similar). In this respect the key ratios include unemployment rate which
is expected to be gradually falling, GDP trend where a gradual growth is forecast for the next
period, and investment ratio which continues to stagnate and remain at a low level as a result
of deleveraging of the economic and financial sectors. Increasing numbers of consumers are
anticipating an improvement on the general financial position; however, it may take a little bit
longer for this newly-found confidence to be reflected in increased purchases.
MEDIUM
Risk of decline in purchasing power
A halt in unemployment rate growth and increased consumer optimism have so far failed
to be reflected in a significant increase in consumption. Purchasing habits of Slovenian
consumers have altered significantly in recent years towards a more prudent spending
which will have a durable impact. From a customer’s point of view, the fact that he can
obtain a high-quality products at a moderate price is more important that the fact where
he or she can purchase the product from. Due to the forecast of a gradual improvement
in macroeconomic ratios in the future years, we do not expect any further decline in the
purchasing power.
The risk is managed by communicating that we are a trustworthy partner, offering
advice and consultation in addition to a purchase and a complete range of services for
our customers. Merkur trgovina measures its market potential and regularly monitors
customer satisfaction, the number of complaints, and number of visitors to the shopping centres as well as their average basket of purchases. In addition, we compare
prices of products with those of our competitors and by other similar measures.
26
Annual Report 2014
MEDIUM
Risk of product range
Operating in a highly competitive market requires constant supervision over the combination of price and product ranges in order to adapt to the changing environment.
Due to its vast range of products and sales programme, Merkur trgovina is exposed to
a variety of sales and market risks. Rapid response to any potential business changes
and adapting the product ranges and thus also the associated marketing activities to
the new developments is crucial for efficient risk management.
Procurement risks
Procurement risks are separated into two major groups, namely:
• supplier risks - a reliable supplier that offers financially acceptable purchasing conditions;
MEDIUM
• internal ordering risks - optimum stock levels.
The risk associated with selection of the right supplier to ensure smooth supply and
replenishing of stock levels is managed through our internal process of supplier
selection. In addition to reliable and timely supplies, the other decisive factor while
selecting a supplier is the financial agreement concerning payment terms, agreeing
potential counter-sales, minimising the number of complaints and similar terms
and conditions. Indirectly, this affects also financial risk and in particular the risk of
insolvency.
The risk of internal procurement process is managed by active management of inventories where in addition to securing optimum levels of product ranges, we constantly
monitor issued orders and stock levels at our shopping centres.
MEDIUM
Supply chain risks
Timely supply of goods to our shopping centres is of key importance for the achievement of our planned objectives. A number of different sectors cooperate in order to ensure timely supplies: procurement, logistics, and the department that manages individual
product ranges.
The risk is mitigated through active procurement process, compliance with logistics
standards, provision of safety level of stock and by trading with only verified suppliers
who take great care for quality and safety of their products during the manufacturing
process as well as during their supply.
Business Report
27
Financial risks
Financial risks are the risks that may adversely affect the Company’s ability to manage its financial
income and expenses, to preserve the assets’ value and to manage its financial assets. Financial
risk management is described in detail in Note 4.6 of the Accounting Report.
Credit risk
LOW
Credit risk is the risk that trade receivables and those due from other business partners
resulting from deferred payments will either be paid with delay, will only be paid partly
or will not be paid at all.
The Company follows its established policy of active credit risk management which
involves receivable collateralisation, balance sheet analysis of business partners, regular
monitoring of open receivable positions, limiting exposure to individual customers
through introduction of a system of limits, granting benefits on advance payments,
charging default interest on delayed payments and active policy of receivables recovery.
This has an important impact on the quality of receivables, dispersal of exposure and
reduction in due and outstanding receivables and the related losses.
Liquidity risk
LOW
Liquidity risk is a risk of the Company not having sufficient liquid assets at any given moment to settle its current liabilities or to maintain normal business operations.
The Company’s liquidity risk has been reduced significantly through agreement with
its debtors for repayment of total principal amount within 12 years with two-year
moratorium and fixed rate of interest; the first instalment is due in 2017.
Some 57% of total operating revenue is earned on sales to retail customers, presenting
a completely certain daily inflow of funds.
The Company manages its liquidity risk by following its adopted active liquidity risk
management policy through efficient balancing of cash inflows and outflows.
Interest rate risk
LOW
The Company’s exposure to changes in interest rates mainly derives from adverse fluctuation of the EURIBOR variable interest rate.
Pursuant to the Financial restructuring plan of the repeated compulsory settlement of
Merkur - trgovina in storitve, d. d., the Company signed a long-term debt restructuring programme for all financial liabilities due to debtors, which were transferred to
Merkur trgovina, d.d. These borrowings are all agreed at a fixed rate of interest. Thus
only 5% of the Company’s liabilities are linked to a variable interest rate and therefore
the Company is not significantly exposed to the interest rate risk.
LOW
Currency risk
28
Currency risk is a risk of changes in the value of assets due to foreign exchange rate fluctuations.
Merkur trgovina mainly enters transactions denominated in the local currency. Currency exposure of Merkur trgovina arise exclusively from import transactions which are denominated in US$, which accounts for only a minor share of total procurements made.
Annual Report 2014
Operational risk
Operating risks are associated with the implementation and monitoring of business processes
and activities and the consumption and costs incurring during the implementation of the
business processes.
MEDIUM
Strategic risk
Strategic risk is the risk of the Company not being able to pursue its adopted strategy,
meet and monitor the achievement of its planned objectives and actively respond to any
deviations from the plan in order to adopt correctional measures.
Merkur trgovina has established regular reporting channels which help us to identify
any potential deviations from the planned policies. The Management Board adopts
corrective measures that may be necessary to achieve the planned performance
results.
IT risks
MEDIUM
The risk of failure of central information systems, the risk of insufficient information technology support to the business processes and the risk of technological obsolescence of
the information technology support.
The risk of failure is mitigated by keeping abreast with the new technology which is
located in a protective IT location.
The Company owns and maintains its own information technology support to the
business processes. Due to a vast number of services provided to customers and longstanding process development and information support provision, these processes
are rather complex and require specialised human resources. Merkur’s information
system is based on technologies which are difficult and costly to maintain in terms of
human resources due to the fact that they are mostly outdated.
Human resource risk
MEDIUM
This includes the risk of the shortage of suitably qualified human resources, health risk
and risk of lack of satisfaction and motivation of the existing employees.
The primary activity related to human resource risk management is the provision of
an environment and measures that will ensure an acceptable level of employee satisfaction since due to the operational circumstances, the level of employee rights had to
be curtailed. Through the application of mostly soft methods we shall strive to ensure
motivation and self-initiative of all employees and subsequently their affiliation with
the Company.
Employees are provided with systematic training and education to increase their
responsibility and competences at their individual job positions.
Business Report
29
Legal risk
LOW
Legal services ensure legal safety and legality of business operations.
Legal services regularly monitor applicable legislation in the Republic of Slovenia.
Among other tasks, legal services check legal and internal rules and regulations, participate in the work of other services in the Company wherever necessary or required,
and also ensure that the Company’s operations progress in compliance with the applicable legislation. In the field of receivable recovery and litigation the legal services
carry out all the required activities to ensure a swift resolution of proceedings to the
benefit of the Company.
Risk of damages and costs
LOW
Risk of damage events occurring resulting in an increase in operating costs.
Through active implementation of preventive measures and insurance coverage the
Company mitigates potential damage events which could put a major burden on the
Company’s performance result. Merkur trgovina has agreed a comprehensive insurance contract with the insurance company. Non-life insurance contracts are agreed
under the “all risk” system, while liability limits are set sufficiently high to provide a
quality protection of the performance result against major damage events.
MEDIUM
Business restructuring risk
During restructuring process carried out in recent years, all types of costs were optimised
and this led to organisational changes on a large scale. Processes optimisation and cost
reduction are the two key levers that ensure realisation of planned results in a highly competitive market. Thus the Company is studying options for future restructuring that would
lead to increased efficiency and improved customer services.
Through regular communication and implementation of a clear reporting channels
we have improved the overall informing levels of staff and reduced the risk of disruptions in operations during restructuring of processes and activities.
30
Annual Report 2014
BUSINESS REPORT
OF MERKUR TRGOVINA, D.D.
Financial performance
Item
Net sales revenues
EBITDA (earnings before tax, interest, depreciation and amortisation)
Operating profit - EBIT
2014
In EUR thousand
Oct - Dec 2013
208,948
57,505
2,684
2,385
720
1,803
Profit before tax
516
1,901
Assets at 31 Dec
80,321
75,231
Equity at 31 Dec
9,952
9,248
Operating revenues and gross profit from sales
In the financial year ended 31 December 2014, Merkur trgovina, d.d. generated EUR 209 million
of sales revenues. More than 98% are a result of sales of goods, while revenues from sales of
services of EUR 3.4 million only account for less than 2%. Slightly less than three fifths of revenues
from sales of goods are generated on sales to individuals, while slightly more than one fifth is
generated through sales to companies through our shopping centres. The remaining sales are
wholesale sales.
More than three fifths of all goods sold are generated by the Construction materials, wood and
chemistry and Consumer goods ranges. The Consumer goods range is the range with the highest margins.
Construction materials, wood and chemistry 33%
Sales structure per
programme in 2014
Technical appliances 15%
Consumer goods 32%
Energy and installations 19%
Construction materials, wood and chemistry 22%
Technical appliances 25%
Margin share per
programme in 2014
Consumer goods 32%
Energy and installations 21%
Business Report
33
Other operating revenues amounted EUR 0.7 million. Of this amount, slightly less than two
fifths are other operating revenues relating to the use of retained contributions for disabled
persons employed above the quota, grants received for employing disabled persons and
indemnity received from insurance companies as a result of loss events. Less than a third of this
amount relates to the reversal of write-downs of receivables, while more than one fifth relates to
the reversal of write-downs of inventory.
Profit on the disposal of property,
plant and equipment 8.5%
Reversal of inventory write-down
24.7%
Structure of other
operating revenues in 2014
Reversal of receivables write-down
30.1%
Other operating revenues 36.7%
The gross profit from sales amounts to EUR 55.6 million. Sales margin accounts for more than
four fifths of this amount, while revenues on services represent less than one fifth of the gross
profit from sales.
Operating expenses and operating profit or loss
The Company’s entire operating expenses amounted EUR 58 million. Of that amount, more than
a half relates to labour costs, less than two fifths are costs of services, while more than one tenth
are costs of materials, depreciation and amortisation, provisions and other operating costs.
Costs of materials 5.7%
Costs of services 37.1%
Structure of costs
in 2014
Depreciation and amortisation 3.6%
Costs of provisions 0.9%
Labour costs 52.1%
Other operating costs 0.5%
34
Annual Report 2014
Most of other operating expenses, which stand at EUR 1.5 million, represent write-downs of
inventories and receivables.
Losses on the disposal of property,
plant and equipment 1.3%
Structure of other operating
expenses in 2014
Inventory write-down 69.7%
Receivables write-down 28.9%
Other operating expenses 0.1%
Operating profit or loss amounts to EUR 0.7 million.
Business Report
35
Financial revenues and expenses
A financing loss of EUR 0.2 million was sustained in 2014. Four fifths of the financial revenues
relate to interest revenue. Three fifths of financial expenses relate to interest expenses, while the
remaining amount relates to impairments of interest receivables and other financial expenses.
Pre-tax profit or loss and net profit or loss
The financial loss impacted the pre-tax profit, which stands at EUR 0.5 million. Since deferred tax
assets exceed the tax liability of EUR 0.08 million, the net profit amounts EUR 0.6 million.
Assets, equity and debt of Merkur trgovina, d.d.
Total assets of Merkur trgovina, d.d. as at 31 December 2014 amount EUR 80 million.
80
Assets, equity
and debt as at
31 December 2014
Non-current
assets
12
10
Equity
Current
assets
68
25
Non-current
liabilities
45
Current
liabilities
in EUR million
36
Annual Report 2014
Expected operating environment
in 2015
After the significant fall in the previous two years, according to the Institute of the Republic of
Slovenia for Macroeconomic Analysis and Development (IMAD) and international institutions,
private consumption recorded slight growth in 2014. This growth follows the growth in available
income as a result of the recovery of the labour market, which is reflected in growth of wages
and also the employment rate. State consumption is expected to continue to decline as a result
of the consolidation of the public finances in 2015, especially as a result of cutting expenses on
goods and services.
In the coming two years the continuing recovery of economic activity will be linked to further
strengthening exports and the recovery of private consumption, while the growth of investment
consumption will slow mainly due to the expected dynamics of public investments. We also
expect private consumption to continue to grow in line with growth in available income as a
result of the improved labour market situation.
According to international institutions and IMAD, we expect customers will increasingly purchase durable goods as the consumer confidence increases. As the necessary consolidation of
public finances continues, state consumption is expected to decline somewhat more markedly
than in 2014 over the next two years. We do not expect public infrastructure investments to continue next year, which is the main reason for the expected lower growth in overall investment
consumption.
As a result of the recovery of economic activity levels, this year, for the first time after the crisis
began, employment rates will be up (0.6%); we expect employment rates to continue to grow in
the coming two years and the number of registered unemployed to gradually decline.
In light of these forecasts, the operating environment will continue to be as challenging in
2015 as in 2014. Although consumer optimism is returning, according to past experiences, this
optimism will translate into consumption with a certain lag.
Business Report
37
Employees
Merkur trgovina, d.d. was founded through a spin-out in the repeat compulsory settlement
proceedings (ref. no. 2797/2013) conducted against Merkur – trgovina in storitve, d.d., Naklo in
accordance with Article 221.o of the ZFPPIPP. As a result, the former as the legal successor has
also received all legal relationships, including labour law relationships, as provided for in the
financial restructuring plan.
Considering the current situation, in working with our employees, we focus on items necessary
for the optimum operations of the entire Company. Emphasis is placed on ensuring appropriate
staff, building relationships with employees, developing professional competences, an entrepreneurial culture and employee motivation and satisfaction, as well as ensuring safe working
conditions.
Employees of Merkur trgovina, d.d.
Company
Merkur trgovina, d.d.
Number
31 December 2014
Number
13 November 2014
Index
1,573
1,580
99.5
The gender structure of employees is balanced. Comparatively more women are employed in
support services, retail and product group management, while comparatively more men are
employed in logistics and wholesale trade.
Male 50.03%
Gender structure
Structure of employees
per gender and part of the
Company in 2014
Female 49.97%
100
59.6
64.8
80
10.9
89.1
53.7
60
40
Male
Female
60.6
40.4
20
46.3
35.2
0
MANAGEMENT AND
ADMINISTRATION
38
39.4
Annual Report 2014
PROCUREMENT
LOGISTICS
RETAIL
WHOLESALE
The employees of Merkur trgovina boast rich work experience, which is a competitive advantage
recognised and cherished by our customers. As a result, we strive to preserve this advantage.
Educational structure of Merkur trgovina, d.d. (in %)
as at 31 December 2014
As at 31 December 2014, 75% of employees of Merkur trgovina reached the IV or V educational
level, while one fifth of employees reached the VI or VII educational level, and less than 5% of
employees have achieved less than the IV educational level. Merkur trgovina has 14 masters of
science.
40
36.0
38.3
35
30
25
20
15
10.1
10
5
0
10.0
3.4
I.
0.9
0.8
0.5
II.
III.
IV.
V.
VI.
VII.
VIII.
Employee qualifications
Both customers and visitors of Merkur shopping centres recognise our employees as good
sales assistants, which is the result of the extensive training they are provided. In light of the
situation, we aim to continue to invest in knowledge and thus adjust to new findings in the field
of customer relationship management.
Our employees are trained in product familiarity, effective sales methods, technical work
training, workplace and fire safety, legislative requirements, logistic mechanisation management,
languages and IT skills.
FINANCIAL REPORT
FOR THE 2014 FINANCIAL YEAR
Audited financial statements
All the data derived (totals, differences, ratios and indices) are calculated from values expressed in the Euro
rather than thousand Euro.
Statement of financial position at 31 December 2014
Notes
31 Dec 2014
31 Dec 2013
In EUR thousand
1 October 2013 NFP*
Intangible assets
3.1
24
80
106
Property, plant and equipment
3.2
11,649
13,511
13,862
Loans issued
3.3
271
379
386
164
164
164
Item
Other long-term receivables
Deferred tax assets
3.4
Total non-current assets
Inventories
3.5
Short-term financial investments
274
0
0
12,383
14,134
14,518
37,772
35,301
37,694
12
13
13
Loans issued
3.6
103
129
152
Operating receivables and other assets
3.7
19,152
18,061
22,215
Cash and cash equivalents
3.8
10,898
7,593
3,229
Total short-term assets
67,938
61,097
63,303
TOTAL ASSETS
80,321
75,231
77,820
Capital issued
11,368
11,368
11,368
Unregistered decrease in capital
-3,623
-3,623
0
Legal reserves
105
75
0
Statutory reserves
99
71
0
Retained earnings
1,890
1,356
0
- Profit brought forward
1,356
1,356
0
- Net profit for the year
534
0
0
112
0
0
Revaluation surplus
Total capital
3.9
9,952
9,248
11,368
Borrowings
3.10
22,781
22,781
19,158
Financial lease liabilities
3.11
742
779
854
Provisions
3.12
Total long-term liabilities
1,888
1,607
1,611
25,411
25,167
21,624
Financial liabilities
3.13
1,224
1,262
1,204
3.11
391
742
657
Trade and other payables
3.14
42,326
38,000
42,128
597
399
0
Tax liabilities
Provisions
419
414
839
Total short-term liabilities
3.12
44,958
40,816
44,828
Total liabilities
70,369
65,983
66,452
TOTAL EQUITY AND LIABILITIES
80,321
75,231
77,820
The accounting policies and notes form an integral part of these financial statements and should be read in conjunction with them.
*NFP: statement of financial position based on a spin-off plan as an appendix to the financial restructuring plan
Financial Report
41
Income statement for the year ended 31 December 2014
Item
NET SALES REVENUE
In EUR thousand
Oct - Dec 2013
Notes
2014
4.1
208,948
57,505
-153,332
-42,283
Cost of goods sold and production costs
55,616
15,222
Other operating revenue
GROSS PROFIT FROM SALES
4.2
681
131
Selling cost
4.3
-39,232
-9,511
Cost of general activities
4.3
-14,876
-3,618
Other operating expenses
4.4
-1,469
-421
720
1,803
OPERATING PROFIT OR LOSS
Financial income
4.5
534
255
Financial expenses
4.5
-738
-157
-204
98
516
1,901
-199
-399
NET FINANCIAL INCOME/EXPENSE
PROFIT OR LOSS BEFORE TAX
Income tax
4.7
Deferred tax
274
-
PROFIT OR LOSS FOR THE YEAR
592
1,502
Consolidated statement of comprehensive income for the period from 1 January to 31 December 2014
Item
Notes
Net profit or loss for the period
Other comprehensive income that will not be reclassified to profit or loss
Revaluation surplus - actuarial gains
Other comprehensive income for the period
3.9
2014
In EUR thousand
Oct - Dec 2013
592
1,502
112
0
112
0
704
1,502
42
Annual Report 2014
Cash flow statement for the period from 1 January to 31 December 2014
Item
PROFIT OR LOSS FOR THE PERIOD BEFORE TAXATION
2014
In EUR thousand
Oct - Dec 2013
516
1,901
1,964
582
-56
-
-425
-217
626
129
Adjustments for:
Amortisation and depreciation expense
Gains on disposal of property, plant and equipment
Investment income (expense)
Financial income (expense)
Change in provisions and other accrued and deferred items
281
-5
1,099
357
Other effects recognised in equity and/or profit or loss
146
-3,623
Exchange rate differences
-53
-11
PROFIT OR LOSS ADJUSTMENTS
3,582
-2,788
Operating receivables increase / decrease
-1,204
3,870
Inventories increase / decrease
-3,326
2,330
4,294
-4,169
6
-425
Impairment of assets
Operating liabilities increase / decrease
Accrued and deferred items increase / decrease
MOVEMENTS IN WORKING CAPITAL
-230
1,605
3,868
719
Disbursements for acquisition of property, plant and equipment
-77
-165
Cash receipts from loans issued
142
45
Interest received
231
127
CASH FLOWS FROM INVESTING ACTIVITIES
296
6
CASH FLOWS FROM OPERATING ACTIVITIES
Increase in hedged value of property*
-
3,623
-38
-
-
58
Disbursements for financial lease - current
-399
-19
Interest paid Interest paid
-422
-23
CASH FLOWS FROM FINANCING ACTIVITIES
-859
3,639
CASH FLOWS IN THE ACCOUNTING PERIOD
3,305
4,364
Opening balance of cash
7,593
3,229
Closing balance of cash
10,898
7,593
Disbursements in connection with non-current borrowings
Receipts from current borrowings
*explanation in Note 3.9 Equity and reserves
Financial Report
43
Statement of changes in equity of Merkur trgovina, d.d. for the period from 1 January to 31 December 2014
Item
Share
capital
Capital
surplus
Legal
reserves
Equity as at 1 October 2013
11,368
0
0
Statutory (Retained)
reserves Net profit /
loss for the
year
0
0
(Retained)
earnings /
accumulated loss
brought
forward
0
In EUR thousand
Revaluation
TOTAL
surplus CAPITAL
actuarial
gains
0
11,368
-
-
-
-
-
-
-
0
Net profit or loss for the year
-
-
-
-
-
1,502
-
1,502
Total comprehensive income for the period
0
0
0
0
0
1,502
0
1,502
-
-3,623
-
-
-
-
-
-3,623
-
75
71
-
-146
-
0
11,368
-3,623
75
71
0
1,356
0
9,248
-
-
-
-
-
-
112
112
Transactions with owners
Increase in hedged value of property
Net profit appropriation formation of legal reserves
Equity as at 31 December 2013
Net profit or loss for the year
-
-
-
-
592
-
-
592
Total comprehensive income for the period
0
0
0
0
592
0
112
704
Transactions with owners
Net profit appropriation formation of legal reserves
Equity as at 31 December 2014
-
-
30
28
-58
-
-
0
11,368
-3,623
105
99
534
1,356
112
9,952
Items in the statement of comprehensive income are presented in net values reduced by deferred tax
44
Annual Report 2014
Notes to the audited financial statements
1 The reporting entity
Merkur trgovina, d.d. (hereinafter: “the Company”) is a public limited company domiciled in Slovenia. Its registered address
is Cesta na Okroglo 7, 4202 Naklo.
The financial statements of the Company are prepared for the financial year ended 31 December 2014.
The Company’s financial statements and its Annual Report are compiled in accordance with International Financial Reporting Standards as adopted by the EU (hereinafter: IFRS as adopted by the EU) and in compliance with the Companies Act.
The financial year of the Company covers the same period as the calendar year.
Name and registered seat of the controlling company
The Company is a subsidiary of Merkur, trgovina in storitve, d. d. v stečaju, with its registered address at Cesta na Okroglo 7,
4202 Naklo, Slovenia. As at 31 December 2014, Merkur, d. d. - v stečaju is the sole owner of the Company as the holder of a
100% interest in its equity. Merkur, trgovina in storitve, d. d. - v stečaju, does not prepare consolidated financial statements.
The financial statements of Merkur trgovina, d.d. are prepared on a going concern basis assuming that assets are obtained
and sold and liabilities settled in conditions of normal operations.
2 Basis of preparation
2.1 Declaration of conformity
The financial statements have been compiled in accordance with the International Financial Reporting Standards (IFRS) as
adopted by the European Union, including accounting and reporting requirements of the IFRS and the Companies Act.
Standards and interpretations that are currently effective
In the period under review, the following amendments to the existing standards issued by the International Accounting
Standards Board (IASB) were applicable as adopted by the EU:
• IFRS 10 “Consolidated financial statements” that the EU adopted on 11 December 2012 (effective for annual periods
beginning on or after 1 January 2014),
• IFRS 11 “Joint arrangements” that the EU adopted on 11 December 2012 (effective for annual periods beginning on or
after 1 January 2014),
• IFRS 12 “Disclosure of interests in other entities” that the EU adopted on 11 December 2012 (effective for annual periods
beginning on or after 1 January 2014),
• IAS 27 (amended in 2011) “Separate financial statements” that the EU adopted on 11 December 2012 (effective for annual
periods beginning on or after 1 January 2014),
• IAS 28 (amended in 2011) “Investments in associates and joint ventures” was adopted by the EU on 11 December 2012
and is effective for annual periods beginning on or after 1 January 2014,
• Amendments to IFRS 10 “Consolidated financial statements”, IFRS 11 “Joint Arrangements” and “IFRS 12 “Disclosure of
Interests in Other Entities” – Transition Guidance, were adopted by the EU on 4 April 2013 and are effective for annual
periods beginning on or after 1 January 2014,
• Amendments to IFRS 10 “Consolidated financial statements”, IFRS 12 “Disclosure of Interests in Other Entities” and IAS 27
(amended in 2011) “Separate Financial Statements” – Investment Entities, were adopted by the EU on 20 November 2013
and are effective for annual periods beginning on or after 1 January 2014,
• Amendments to IAS 32 “Financial Instruments: Presentation” – Offsetting Financial Assets and Financial Liabilities; the standard was adopted by the EU on 13 December 2012 and is effective for annual periods beginning on or after 1 January 2014,
Financial Report
45
• Amendments to IAS 36 “Impairment of Assets”- Recoverable Amount Disclosure for Non-Financial Assets, were adopted
by the EU on 19 December 2013 and are effective for periods beginning on or after 1 January 2014,
• Amendments to IAS 39 “Financial Instruments: Recognition and Measurement- Novation of Derivatives and Continuation of Hedge Accounting, were adopted by the EU on 19 December 2013 and are effective for periods beginning on or
after 1 January 2014.
The adoption of these amendments to the existing standards led to no changes in the accounting policies of the Company.
Standards and representations issued by IASC and adopted by the EU that have not entered
into force yet
On the date of the approval of these financial statements, the following standards, amendments and interpretations were
issued that the EU approved but did not yet enter into force:
• Amendments to a number of standards “IFRS Improvements over the period 2010 to 2012” , according to the annual
IFRS improvement project encompassing IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38, which is aimed primarily at elimination of discrepancies and clarification of wording. The amended standards were adopted by the EU on
17 December 2014 and are effective for periods beginning on or after 1 February 2015.
• Amendments to a number of standards “IFRS Improvements over the period 2011 to 2013”, according to the annual
IFRS improvement project encompassing IFRS 1, IFRS 3, IFRS 13 and IAS 40, which is aimed primarily at elimination of
discrepancies and clarification of wording. The amended standards were adopted by the EU on 18 December 2014 and
are effective for periods beginning on or after 1 January 2015.
• Amendments to IAS 19 “Employee Benefits”- Defined Benefit Plans: Employee contributions were adopted by the EU on
17 December 2014 and effective for annual periods beginning on or after 1 February 2015.
• The International Financial Reporting Standards Interpretations Committee issued IFRIC 21 “Levies”, adopted by the EU
on 13 June 2014 and are effective for annual periods beginning on or after 17 June 2014.
The Company estimates that the adoption of these standards, amendments and interpretations will not have a significant
impact on the Company’s financial statements during the period of initial application.
Standards and interpretations issued by IASB but which have not yet been adopted by the EU
Currently, the IFRS as adopted by the European Union do not considerably differ from those adopted by the International
Accounting Standards Board (IASB) with the exception of the following standards, amendments to the existing standards
and interpretations which were not confirmed for use on 27 May 2015:
• IFRS 9 “Financial instruments” (effective for annual periods beginning on or after 1 January 2018).
• IFRS 14 “Regulatory Deferral Accounts” (effective for annual periods beginning on or after 1 January 2016).
• IFRS 15 “Revenue from Contracts with Customers” (effective for annual periods beginning on or after 1 January 2017).
• Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures
- Sale or Contribution of Assets between and Investor and its Associate or Joint Venture (effective fir annual periods beginning on or after 1 January 2016).
• Amendments to IFRS 10 “Consolidated financial statements”, IFRS 12 “Disclosure of Interests in Other Entities” and IAS 28
“Investments in Associates and Joint Ventures” - Investment Entities: exemption from consolidation (effective for annual
periods beginning on or after 1 January 2016).
• IFRS 11 “Joint Arrangements” - Accounting for Acquisition of Interests in Jointly Controlled Entities (effective for annual
periods beginning on or after 1 January 2016).
• Amendments to IAS 1 “Presentation of financial statements” - Disclosure Initiative (effective for annual periods beginning
on or after 1 January 2016).
• Amendments to IAS 16 “Property, Plant and Equipment” and IAS 38 “Intangible Assets” - Clarification of Acceptable
Methods of Depreciation and Amortisation (effective for annual periods beginning on or after 1 January 2016).
• A
mendments to IAS 16 “Property, Plant and Equipment” and IAS 41 “Agriculture” - Agriculture: Bearer Plants (effective for
annual periods beginning on or after 1 January 2016).IAS 27 “Separate financial statements” - Equity Method used in the
separate financial statements (effective for annual periods beginning on or after 1 January 2016).
46
Annual Report 2014
• Amendments to a number of standards “IFRS Improvements over the period 2012 to 2014”, according to the annual IFRS
improvement project encompassing IFRS 5, IFRS 7, IFRS 19 and IAS 34, which is aimed primarily at elimination of discrepancies and clarification of wording. The amended standards are effective for periods beginning on or after 1 January 2016.
The Company estimates that the adoption of these standards, amendments and interpretations will not have a significant
impact on the Company’s financial statements during the period of initial application.
At the same time, the accounting for the hedging of risks associated with the portfolio of financial assets and liabilities, the
principles of which the EU has not yet adopted, still remains unregulated. The Company has assessed that the accounting
of risk hedging in connection with the portfolio of financial assets and liabilities in accordance with the requirements of
IAS 39: “Recognition and Measurement” would not have a significant impact on the consolidated financial statements of
the Company, if applied as at the reporting date.
2.2 Functional and reporting currency
The financial statements are presented in Euro, which is the Company’s functional currency. All financial information presented in Euro has been rounded to the nearest thousand, which may resulted in minor discrepancies.
2.3 Conversion of foreign currencies
Transactions and balances in foreign currencies are translated to the respective functional currencies at the bank’s reference exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at
the reporting date are translated to the functional currency at the prevailing exchange rate of the European Central Bank
(ECB) at that date. Foreign exchange rate gains and losses are differences between the asset’s amortised cost denominated
in the functional currency at the beginning of the period, adjusted by the effective interest and payments made during the
period, and amortised cost in foreign currency translated at the reference exchange rate of ECB prevailing at the periodend. Non-monetary assets and liabilities denominated in foreign currencies measured at fair value are translated into the
functional currency at the reference exchange rate of ECB at the date when the fair value was determined.
2.4 Property, plant and equipment
The items of property, plant and equipment are tangible assets used in the performance of activities to generate revenue
from the sale of goods and services and for their use for administrative purposes. The items of plant and equipment are
valued at cost less any potential impairment losses, while property is measured under the revaluation model.
Recognition and Measurement
An item of property, plant and equipment is initially measured at cost, which comprises its purchase price, import duties
and non-refundable purchase taxes, as well as directly attributable costs to bringing the asset to the condition necessary
for its intended use. The cost of an asset which requires a prolonged period before it is made available for its intended use,
includes also borrowing costs (interest) accrued until the asset is made ready for its use.
Additional or agreed investments in the assets and in the improvement of assets obtained under financial or operating
lease, are recognised within the items of property plant and equipment or their relevant parts.
Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item
if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be
measured reliably. Expenditure on repairs and maintenance of property, plant and equipment to restore or maintain the
asset’s value on the basis of originally assessed standard of performance of the assets are reported as maintenance costs in
the profit or loss in the period when they are incurred.
Financial Report
47
Subsequent measurement of property, plant and equipment
After initial recognition, the items of plant and equipment are recognised under the cost model reduced by any potential
impairment losses (more information is presented in Note “Impairment”), whereas property is recognised under the revaluation model based on fair values reduced by subsequent accumulated depreciation and accumulated impairment losses.
An increase in the carrying amount of an asset due to its revaluation is recognised in other comprehensive income as a
revaluation reserve in equity unless it reverses a revaluation increase of the same property recognised in profit or loss, in
which case the increase is recognised in profit or loss. If an asset’s carrying amount is decreased as a result of revaluation,
the decrease is recognised as a reduction in revaluation reserve in the other comprehensive income if the revaluation
amount of a certain property was previously recognised in equity, and the remaining amount of decrease is recognised
directly in profit or loss.
Fair value of property measured under the revaluation model
Fair value of property is based on the assessed market value. Market value is the estimated amount for which a property
should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after
proper marketing wherein the parties had each acted knowledgeably, prudently, and independently.
Depreciation, depreciation method and assets’ useful lives
Depreciation of the items of property plant and equipment begins on the first day of the month following the month
when the assets are made available for their use. The items of PPE are depreciated according to the straight-line method in
the period of their estimated expected functional life periods of individual assets. Depreciation expense sis recognised in
the profit or loss. The assets’ useful lives, which are checked at the end of each financial year, are as follows:
Useful life
Office buildings, stores and warehouses
40 years
Intermediate depots and other facilities
30 years
Landscaping and rail tracks
25 years
Warehouses, containers, greenhouses
10 years
Warehousing equipment
Between 5 and 20 years
Technical equipment, devices used during the working process and machinery
Store, office and other equipment
Low value assets in excess of EUR 500
Computer and telecommunications equipment
5 years
Land, advances and assets under construction or those being acquired are not depreciated.
Assets obtained under financial lease are depreciated over their estimated useful lives using the annual depreciation rates
applied to the assets owned by the Company. When there is an uncertainty concerning transfer of title after the expiry of
lease period, the assets are depreciated over the shorter of their useful life or the lease period.
Impairment
An asset is impaired when its carrying amount exceeds its recoverable amount. The Company assesses at each reporting
date whether there are any indications of the assets’ impairment. If any such indication exists then the asset’s recoverable
amount is estimated.
When the amount of impairment cannot be assessed for each individual asset, the assessment is made based on the cashgenerating unit to which the asset belongs.
The recoverable amount of an item of property, plant and equipment is considered the higher of the fair value reduced by
the costs of sale or the value in use. The value in use is determined by discounting the expected future cash flows to the net
present value by applying a discount rate (before tax) that reflects the current market estimate of the time value of money
and any risk related to an individual asset.
48
Annual Report 2014
When the recoverable amount of an asset or cash-generating unit is lower than its carrying amount, the latter is reduced
to the asset’s recoverable amount. Impairment losses are recognised in the profit or loss unless the asset is measured under
the revaluation model in which case the impairment loss is recognised as a reduction in the revaluation reserve.
When an asset’s recoverable amount increases, its carrying amount or that of the cash-generating unit is increased up to
the recoverable amount that may not exceed the asset’s original carrying amount prior to the asset’s impairment. Impairment reversal is recognised in the profit or loss unless the asset is measured under the revaluation model in which case
reversal impairment is recognised as an increase in the revaluation reserve in equity.
Derecognition of property, plant and equipment
When an asset measured under the revaluation model is derecognised due to its disposal or discontinued use, the
revaluation reserve as an equity component is decreased and transferred directly to retained net profit, with the remaining
difference between the asset’s sales value and the carrying amount recognised in the profit or loss. The total amount of
the difference between the sales and the carrying amount of the assets measured at cost is recognised in the profit or loss
upon their DE recognition.
2.5 Intangible assets
An intangible asset is an identifiable non-monetary asset usually without physical substance such as acquisitions of
software applications, and long-term patents and licences.
The costs of research and development, trademarks and similar items are not recognised as an item of intangible assets but
rather as costs or operating expenses of the period in which they were incurred.
Intangible assets are disclosed at cost less any accumulated amortisation and accumulated impairment losses (see
accounting policy “Impairment”).
All intangible assets of the Company have finite useful life. The items of intangible assets are amortised according to the
straight-line method in the period of their estimated expected functional life periods of individual assets. When useful
lives of intangible assets are not specified, the amortisation expense is recognised in the profit or loss. Amortisation of an
intangible asset begins on the first day of the following month after the assets has been made available for its use. The
estimated useful lives are as follows:
Intangible assets
Useful life
Software applications
5 years
Long-term licences
acquired under the contractors
Derecognition of intangible assets
The items of intangible assets are derecognised upon disposal or when no economic benefits are expected to flow to
the entity from their use or subsequent disposal. Gains and losses resulting from the asset’s derecognition present the
difference between the potential selling and carrying amount of the asset. They are recognised in the profit or loss upon
the asset’s derecognition.
Financial Report
49
2.6 Financial assets
In the statement of financial position, the Company reports available-for-sale financial assets, loans and receivables.
Classification depends on the nature of the financial asset and its purpose and is made on initial recognition of financial
assets. Financial assets are recognised on the trading date.
On initial recognition, financial assets are measured at fair value. Transaction costs directly attributable to the acquisition or
issue of a financial instrument increase the asset’s fair value.
Effective interest rate
The effective interest rate means reporting of a debt financial instrument at amortised costs and the systematic allocation
of interest income or expense over the entire duration of the instrument. The effective interest rate is the rate that exactly
discounts the estimated future flow of cash receipts or disbursements (inclusive of the costs of credit approval, premiums
and discounts and similar) through the expected life of the debt financial instrument to the net carrying amount of the
financial instrument upon its initial recognition.
The Company does not apply the effective interest rate; instead, the costs of credit approval are allocated on a straight-line
basis to the costs over the expected repayment period of borrowings. The Management has assessed that the abovedescribed method provides a sufficient approximation of the effective interest rate and for this reason in continuation, the
expression effective interest rate is used.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed and determinable payments that are not quoted or
traded on an active market.
They are initially recognised at amounts recorded in the relevant documents under the assumption that they will be collected.
After initial measurement they are disclosed at amortised cost using the effective interest method less any impairment losses.
Interest income is recognised under the effective interest rate method with exception of short-term assets where the effect
would be insignificant.
Impairment of financial assets
A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative
effect on the estimated future cash flows of that asset and the effect can be measured reliably.
The following are considered objective evidence of financial assets’ impairment:
• debtor’s financial difficulties,
• default on contractual provisions or failure to settle debtor’s debts (delays),
• reprogramming,
• indications that a debtor will become bankrupt and
• loss of an active market for securities as a result of the debtor’s financial difficulties.
With respect to certain groups of financial assets such as trade receivables, impairment of a financial asset is assessed
separately for individual assets and group of assets. Individual assessment is made for each significant receivable of whether
there are any indications of its impairment. When there are no indications of impairment of individual receivables, the
receivable is classified into a group of receivables and impaired at the rate that reflects historical losses of the group with
similar credit risks. Percentage of group impairments reflects in addition to historical losses, also changes in macroeconomic
conditions and other active factors.
Receivables of smaller values are assessed as a group of receivables with similar credit risk characteristics. These groups
are created based on similar credit risks and receivables’ maturity structure. When making group impairment assessment,
the Company considers past experience regarding likely default (non-settlement), period of recovery, and the amount of
losses incurred adjusted by the management’s assessment of whether due to current economic and credit conditions the
actual losses may in fact be higher or lower than those assumed based on the past experience.
50
Annual Report 2014
Impairment losses on all financial assets other that available-for-sale financial assets, are recognised in the revaluation
surplus. When it is assessed that recovery or repayment of a receivable or a loan is no longer likely (usually after the bankruptcy/liquidation proceedings have been completed or when statute barred), the receivables and loans are derecognised
from accounting records.
Subsequent recovery of receivables and loans in respect of which an impairment was recognised previously is recognised
in the profit or loss as other operating revenue.
When there are indications that impairment is no longer needed on financial assets at amortised cost which were impaired
in the past and these factors can be linked directly to an event occurring after the impairment was recognised, the
previously recognised impairment loss is derecognised through profit or loss up to the amortised amount of the financial
assets if the impairment was not recognised.
Derecognition of financial assets
Financial assets are derecognised if and only if the company has no contractual obligations relating to cash flows or when
all risks and benefits of ownership of the financial assets are transferred to a third party.
Upon derecognition, total amount of the difference between the carrying amount and the sales value of the asset are
reported in the profit or loss.
2.7Inventories
Inventory measurements
Inventories are measured at the lower of initial cost and net realisable value. Net realisable value is the estimated selling
price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
Consumption of inventories during the accounting period is accounted for using the weighted average cost method.
The cost of inventories comprises the purchase price, customs duty and other levies (other than those that the company
will be refunded in future from tax authorities), cost of transportation, loading and reloading and other costs directly attributable to the acquisition of merchandise or materials. The purchase price is reduced by trade discounts, rebates received
and similar items.
The carrying amount of inventories sold is recognised as an expense of the period in which the relevant revenue was
accounted for.
Net realisable value of inventories
Write-off and partial write-off of damaged, expired or unusable inventories is made regularly during the financial year or
at the physical stock count when these write-offs are recognised for individual inventory items. Inventory impairment
is recognised at least annually or more often if necessary, in terms of inventory groups of goods taking into account
the inventory turnover ratio. At the end of each financial year the group impairment rates are checked and if necessary
adjusted in view of changed market conditions.
2.8 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, cash in transit, and bank deposits repayable on demand. The overdraft
facility on its transaction account is not considered cash or cash equivalents but rather a financial liability.
2.9Capital
Total equity of the Company is its liability to owners which falls due if the Company ceases to operate. It is determined
by the amounts invested by owners and the amounts generated in the course of operation that belong to the owners.
Equity is decreased by operating losses and payments made to the owners, and by the purchase of treasury shares. Total
equity consists of share capital, capital surplus, profit reserves, retained earnings, fair value reserve and treasury shares as a
deductible item.
Financial Report
51
2.10Liabilities
Financial liabilities are measured at amortised cost using the effective interest rate.
Operating liabilities
Liabilities are disclosed at amortised cost using the effective interest method. Short-term operating liabilities are not
discounted at the reporting date.
On initial recognition, operating liabilities are measured at amounts arising from the relevant documents which evidence
the receipt of a product or service, the work performed or costs accrued, expenses or a share in profit or loss.
Effective interest rate
The effective interest rate means reporting of a debt financial instrument at amortised costs and the systematic allocation
of interest income or expense over the entire duration of the instrument. The effective interest rate is the rate that exactly
discounts the estimated future flow of cash receipts or disbursements (inclusive of the costs of credit approval, premiums
and discounts and similar) through the expected life of the debt financial instrument to the net carrying amount of the
financial instrument upon its initial recognition
The Company does not apply the effective interest rate; instead, the costs of credit approval are allocated on a straight-line
basis to the costs over the expected repayment period of borrowings. The Management has assessed that the abovedescribed method provides a sufficient approximation of the effective interest rate and for this reason in continuation, the
expression effective interest rate is used.
Derecognition
A liability is derecognised when and only when the liability is settled, cancelled or statute barred. The difference between
the carrying amount of a financial liability and the amount of settlement received is derecognised through profit or loss.
2.11Provisions
A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can
be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Since
the time value of money is significant, the amount of provisions equals the present value of expenditure which is expected
to be required for the settlement of the obligation.
The amounts recognised as provisions are the best estimate of the expenditure required to settle obligations at the
balance sheet date, while taking into account all of the risks and uncertainties relating to an individual obligation. When
provisions are measured as an assessed cash flows required for the settlement of a present obligation, the carrying amount
is recognised as the present value of cash flows if the time value of money is significant.
When the Company expects that a part of entire obligation for which provisions were set aside will be settled by a third
party, it recognises a receivable but only when the settlement is certain and the amount of settlement can be measured
reliably.
Provisions for retirement grants and jubilee awards
Pursuant to the legislation, collective agreement and internal rules, the Company is liable to pay to its employees anniversary bonuses and termination benefits upon retirement. For these purposes the Company sets aside relevant amount of
provisions. The Company has no other pension obligations. Due to the amendment of IAS 19 and subsequent changes in
the measurement and recognition of provisions for termination benefits and jubilee awards, actuarial gains and losses are
recognised in the other comprehensive income.
52
Annual Report 2014
Provisions for government subsidies
The Company reports provisions for exempt contributions for employment of excess quota of disabled employees. These
provisions are used to improve working conditions for the disabled persons.
Current employee benefits
Current employee benefit obligations are measured on an undiscounted basis and are expensed as the related service
is provided. The obligations is reported at the amount expected to be payable within 12 months of the period-end id
the Company has present legal or constructive obligation for employee benefits based on past work performed by an
employee and the obligation can be measured reliably (e.g. obligation for unutilised annual leave).
2.12Leases
Lease classification
Financial lease is a lease where the lessor bears majority of the risks and awards relating to the ownership of the asset. All
other leases are operating leases. Assets obtained under lease agreements are not recognised in the statement of financial
position.
Finance lease
On inception of lease, a finance lease is recognised in the statement of financial position as an asset and liability in the
amount equal to the lower of the fair value of leased assets or the present value of the minimum lease payments. Both
values are determined at the inception of the lease. Subsequent to initial recognition, the asset is recognised in accordance
with the accounting policies applicable to leased assets.
Operating lease
Payments made under operating leases are recognised in the profit or loss on a straight-line basis over the entire period
of the lease.
2.13 Income tax
Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the reporting date,
and any adjustment to tax payable in respect of previous financial years.
Deferred tax is recognised using the financial position liability method providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The
amount of deferred tax bases on the expected way of settling the carrying amount of assets and liabilities, using tax rates
enacted at the reporting date or tax rates applicable in the period during which the tax asset or liability is expected to be
derecognised.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which
the deferred tax assets can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the
related tax benefit will be realised.
2.14Revenue
Revenue from the sale of goods
Sales revenue from the sale of goods and products is recognised at fair value of consideration received or the relevant
amount of a receivable, less refunds, discounts, rebates for future sales and quantity discounts. Revenues are recognised
when the buyer assumes all significant risks and benefits connected to the asset’s ownership, and it is certain that compensation and related costs will be repaid or there is a possibility of returning products, and when the Group ceases to make
decisions about sold products.
Financial Report
53
Customer loyalty programme
The Company issues loyalty cards to its customers - Merkur’s loyalty card. By using Merkur loyalty card, purchases made in
all Merkur stores and shopping centres are added up bringing additional benefits to all Merkur loyalty card holders. At the
end of each accounting period, which is three months, the Merkur loyalty card holders receive a discount voucher which
may be used in the next purchase. Depending on the total amount of purchases made during individual period, Merkur
loyalty card holders may collect a credit equal to between 2 and 5% of the total value of purchases made. Revenue from
customer loyalty programmes are allocated at the estimated fair value considering the expected redemption and the
actual redeemable date.
Revenues from the sale of services
Revenues from services rendered are recognised in profit or loss in proportion to the stage of completion of the transaction
at the reporting date. The stage of completion is assessed based on the review of work performed.
Rental income and financial lease
Rental income is recognised as revenue on a straight-line basis over the entire lease period.
Other operating revenue is revenue earned on disposal of property, plant and equipment and investment property, as an
excess of their sales value over their carrying amount and revenue from revaluation of investment property to fair value
and revenue from settlement of receivables including revenue from reversal of receivable impairment.
2.15Expenses
Operating expenses
According to their function, operating expenses are classified as costs of goods sold, selling expenses, general and administrative expenses and other operating expenses not categorised as costs.
Costs of goods and services sold
The declining levels of inventories of merchandise as a result of their sale is accounted for using the weighted average cost
prices. Cost of goods sold is reduced also by subsequently received rebates and quantity discounts approved by suppliers.
Selling costs including depreciation and amortisation
Selling costs inclusive of amortisation and depreciation comprise all costs incurred that can be contributed to the sale of
products and services. As these costs are not held in inventories they are recognised as operating expenses of the period
in which they were incurred.
Cost of general and administrative activities inclusive of amortisation and depreciation
These comprise all the costs incurred in relation to the procurement, administrative and ancillary services. They are recognised as operating expenses of the period in which they were incurred.
Costs by nature
Costs of materials and services is measured at selling prices, stated in invoices and other documents, decreased for
discounts, granted at the time of sale or subsequently also for early payments.
Depreciation and amortisation are is accounted for individually using depreciation rates that reflect useful life of individual
items of property, plant and equipment and intangible assets.
Employee benefit costs include gross amounts of salaries of employees based on collective agreement and individual
employment contracts, contributions and taxes charged against the employer, supplementary pension insurance and
other costs of labour such as pay for annual leave, transport and meal allowance and similar costs).
54
Annual Report 2014
Other operating expenses are incurred as a result of impairment or write-off of assets and as losses from disposal of
property, plant and equipment and investment property.
2.16 Financial income and expense
Financial income
Financial income comprises interest income on funds invested and operating receivables, dividend income, foreign
exchange gains and gains on the disposal of available-for-sale financial assets.
Interest income is recognised as it accrues in profit or loss, using the effective interest method. Dividend income is recognised in profit or loss on the date that the Company’s right to receive payment is established, which in the case of quoted
securities is the ex-dividend date.
Financial expenses
Financial expenses comprise interest expense on borrowings, losses due to impairment and write-down of financial assets
and losses on hedging instruments that are recognised in profit or loss. All borrowing costs are recognised in profit or loss
using the effective interest method, except those that are attributable to property, plant and equipment under construction. Foreign exchange rate gains and losses are recognised in the net amounts. Financial expenses are recognised upon
statements of accounts, irrespective of actual payments associated with them.
2.17 The use of estimates and judgements
The financial statements are prepared on the basis of estimates and judgements made by the management and which
impact the application of accounting policies as well as the reported amounts of assets, liabilities, revenue and expenses.
These estimates and judgements are checked regularly at least at the end of the financial year.
The fundamental assumptions of future events and assessment of risks as at the reporting period-end that may have a
significant impact of the carrying amounts of assets and liabilities in the next financial year are presented below.
Useful life period of buildings and equipment
The Company checks useful life periods of buildings and equipment at the end of each financial year and no changes in
these assumptions have been made in 2014.
Fair value of property
Property is measured at fair value determined by the valuation performed by a certified appraisal of property. Methods and
assumptions used in the valuation process are disclosed in relation to individual groups of property.
The Management believe that the valuation methods and assumptions used are appropriate and sufficient for assessment
of fair value of property.
2.18 Cash flow statement
The cash flow statement is prepared using the indirect method (Format II). Cash and cash equivalents reported in the cash
flow statement comprise cash in hand, cash on transaction accounts and deposits at banks with maturity of up to three
months.
Financial Report
55
3 Notes to the balance sheet
3.1 Intangible assets
Groups of intangible assets
31 Dec 2014
In EUR thousand
31 Dec 2013
Intangible assets
24
80
Software licences
24
80
Item
Movements in intangible assets of Merkur trgovina, d.d. in 2014 and 2013 (Oct - Dec)
In EUR thousand
Intangible assets
Item
Cost at 1 Oct 2013
3,970
Additions
-
Write-off and disposals
-
Cost at 31 Dec 2013
3,970
Additions
1
-331
Cost at 31 Dec 2014
3,640
Accumulated amortisation at 1 Oct 2013
3,864
26
-
Accumulated amortisation at 31 Dec 2013
Additions
3,890
57
-
-331
Carrying amount at 1 Oct 2013
3,616
106
Carrying amount at 31 December 2013
80
24
The intangible assets are not pledged as security for liabilities. Furthermore the Company has no commitments for acquisition of intangible assets.
56
Annual Report 2014
3.2 Property, plant and equipment
Groups of Property, plant and equipment
Item
31 Dec 2014
In EUR thousand
31 Dec 2013
11,649
13,511
1,968
2,410
Land and buildings
- Land
51
51
- Buildings
1,917
2,359
Plant, machinery and equipment
3,801
4,881
Property, plant and equipment being acquired
Property, plant and equipment under finance lease
-
36
5,880
6,184
Movements in property, plant and equipment of Merkur trgovina, d.d. in 2014 and 2013 (Oct - Dec)
Item
Cost at 1 Oct 2013
Additions
FA under Property,
construction
plant and
equipment
under finance
lease
In EUR thousand
Property,
plant and
equipment
Land
Buildings
Other plant
and equipment
51
6,530
35,341
5
7,745
49,672
-
82
63
36
27
208
Transfer within assets
-
-
2
-5
3
0
-
-
-450
-
-
-450
Cost at 31 Dec 2013
51
6,612
34,955
36
7,775
49,430
-
-
154
-
-
154
Additions
-
-
120
-
-120
0
-
-
-3,131
-36
-
-3,167
Cost at 31 Dec 2014
51
6,612
32,099
0
7,655
46,417
Accumulated amortisation at 1 Oct 2013
0
4,133
30,146
0
1,531
35,810
-
144
376
-
37
557
-
-24
-
-
24
0
-
-
-447
-
-
-447
0
4,253
30,075
0
1,591
35,919
-
442
1,227
-
237
1,906
-
-
53
-
-53
0
-
-
-3,058
-
-
-3,058
0
4,695
28,297
0
1,775
34,768
51
2,397
5,196
5
6,214
13,862
Carrying amount at 1 Oct 2013
51
2,359
4,881
36
6,184
13,511
51
1,917
3,801
0
5,880
11,649
Financial Report
57
Significant movements in property, plant and equipment of Merkur trgovina, d.d. in 2014
In 2014, the Company invested EUR 154 thousand in property, plant and equipment and in particular in acquisition of:
• Store equipment 119
• Logistics equipment 22
• Cars12
• Computer hardware
1
TOTAL
154
Below is presentation of the carrying amounts of major reductions in property, plant and equipment in 2014:
• Sale of plant and equipment 70
• Write-off of on-going investments 36
• Sale of computer hardware
2
• Inventory deficit 1
TOTAL109
The following item of property was held by Merkur trgovina under finance lease in 2014:
Shopping centre
TC Bršljin Novo mesto
Contract agreed in
In EUR thousand
Carrying amount
2002
5,728
In addition, a total of 12 cars are also held under finance lease; their cumulative carrying amount equals EUR 152 thousand
as at 31 December 2014.
Reservation of title
Under financial lease, the lessor holds ownerships title to the leased item until the expiration of the lease contract. Total
financial lease liabilities are reported in Note 3.11 Long-term and short-term financial lease liabilities.
Fair value of property measured under the revaluation model
As an item of fixed assets, property is measured under the revaluation model. The value of property was assessed by a
certified appraiser as at 30 September 2013 in accordance with International Valuation Standards. The fair value of the
shopping centre was determined using the direct return capitalization method, whereas land was assessed using the
market comparison method.
3.3 Loans issued
Groups of long-term loans granted
31 Dec 2014
In EUR thousand
31 Dec 2013
Loans issued
271
379
Loans to others
264
371
7
7
Item
Loans to related companies
Loans issued are mostly housing loans granted to employees; they are denominated in Euro and granted at the interest
rate ranging from 0.00% to 2.52%.
58
Annual Report 2014
Long-term loans collateralisation
Item
31 Dec 2014
In EUR thousand
31 Dec 2013
Total
271
379
53
66
209
303
66
114
- Guarantor
144
189
No collateral
9
10
31 Dec 2014
In EUR thousand
31 Dec 2013
271
379
Maturity from 1 to 2 years
96
115
128
196
Maturity more than 5 years
47
68
31 Dec 2014
In EUR thousand
31 Dec 2013
Net receivables
274
0
Financial assets
158
-
Provisions
51
-
Other items
65
-
31 Dec 2014
In EUR thousand
31 Dec 2013
37,772
35,301
42
51
Mortgage
Other collateral
- Insurance companies
Maturity of long-term loans issued
Item
Loans issued
3.4 Deferred tax assets
Deferred tax assets of Merkur trgovina, d.d.
Item
3.5 Inventories
Groups of inventories
Item
Inventories
Material
Work in progress
20
-
Products and merchandise
37,709
35,250
- Goods kept in warehouses
6,164
6,426
31,022
28,325
524
499
31 Dec 2014
In EUR thousand
31 Dec 2013
Merchandise - net
81
-19
Surplus
372
6
Deficit
-291
-26
- Goods kept in stores
- Goods in transit
Inventory surpluses or deficits identified during the stocktaking
Item
Financial Report
59
Movement of inventory allowances due to their adjustment to the recoverable amount in 2014 and 2013
Item
Balance at 1 Jan / 1 Oct
31 Dec 2014
In EUR thousand
31 Dec 2013
780
846
Formation of allowance
1,023
71
Reversal of inventory impairment
-168
-8
-23
-128
1,613
780
31 Dec 2014
In EUR thousand
31 Dec 2013
Short-term granted loans
103
129
Loans to others
103
129
Inventory write-off
At 31 Dec
3.6 Short-term granted loans
Groups of short-term loans granted to employees
Item
Loans issued to others are mostly current amounts of housing loans granted to employees; they are denominated in Euro
and granted at the interest rate ranging from 0.80% to 2.52%.
Short-term loans collateralisation
Item
31 Dec 2014
In EUR thousand
31 Dec 2013
Total
103
129
Mortgage
14
14
Other collateral
89
115
- Insurance companies
36
56
- Guarantor
53
58
31 Dec 2014
In EUR thousand
31 Dec 2013
19,152
18,061
687
364
14,936
14,333
3.7 Operating receivables and other assets
Short-term operating receivables and other assets
Item
Operating receivables and other assets
Inventory advances
Trade receivables
Operating receivables due from related parties
1,586
505
Operating receivables due from others
1,204
2,254
739
606
Deferred costs and accrued revenue
Movements in receivable impairments and receivables maturity are presented in Note 4.6 Financial risks.
60
Annual Report 2014
3.8 Cash and cash equivalents
31 Dec 2014
In EUR thousand
31 Dec 2013
10,898
7,593
Cash on hand
250
215
Cash on accounts at banks
360
301
10,289
7,077
Item
Demand deposits
No overdraft facilities have been agreed with the banks. Interest rate agreed on demand deposits is fixed at 0.2% per
annum. Demand deposits include EUR 124 thousand of deposits granted on account of open letters of credit, agreed at
the annual interest rate of 0.01% for Euro and 0.02% for US$.
3.9 Share capital and reserves
Share capital of Merkur trgovina, d.d. amounting to EUR 11,368 thousand is represented by 11,368,274 ordinary nonmaterialized no par value shares. The share capital is fully paid.
An ordinary no par value share is registered to the holder, giving the holder the right to:
• one vote at General Meetings,
• proportionate amount of share in the profit earmarked for dividend payment,
• proportionate share of the remaining bankruptcy or liquidation estate in the event of the Company going bankrupt or
being liquidated.
Approved Capital
The Management Board is authorised to, with Supervisory Board’s approval, up to five years of the Company’s entry in the
court register, increase the Company’s share capital by up to 50% of the share capital at the time of the Company’s registration.
Unregistered decrease in capital amounting to EUR -3,623 thousand presents an increase in the protected value of
property.
Pursuant to final Decision of the District Court in Kranj Ref. No. 2797/2013 of 3 November 2014, on confirmation of repeated
compulsory settlement and Attachments (hereinafter the Decision), Merkur trgovina, d.d. is required to assume new
borrowings as a consequence of transfer of liabilities up to the amount of the protected value of collateral in accordance
with Article 221.t.2 of ZFPPIPP.
Pursuant to the aforementioned Article, protected value of collateral is deemed the collateral value determined in a
final decision on receivable testing, increased by 20 percent. Pursuant to Article 221.o of ZFPPIPP, the newly collaterised
receivable must be completely transferred to a new spin-off company since the assets that are subject to the collateral will
also be transferred to the spin-off company.
Regarding certain assets and liabilities, financial restructuring plan of Merkur, d. d. (in its role as the transferring company)
considers transfer of liabilities to the spin-off company Merkur trgovina, d.d. in the amount that is equal to the value of
collateral (assessed value of property pledged as collateral), rather than the equal amount increased by 20 percent since
collateral relates to inventories of merchandise. The basis for the described method is legal opinion obtained prior to
drafting of the financial restructuring plan. In accordance with the financial restructuring plan, the share capital of the spinoff company Merkur trgovina, d.d. is the difference between assets and liabilities of the spin-off company, recognised at
the assumed amount in the financial statements, which were audited by an independent certified auditor as an Appendix
to the Financial restructuring plan. The Memorandum of Association of Merkur trgovina, d.d. was also an attachment to the
latter since the value of share capital was pre-determined.
Pursuant to final decision the aforementioned documents were approved and in addition Merkur trgovina, d.d. was
ordered to assume liabilities equal to 20 percent of the margin on the collateral which were not taken into account in the
Financial Report
61
financial statement preparation as at the date of spin-off. In accordance with the Financial restructuring plan, the amount
of liabilities transferred to the new spin-off company is understated by 20% of the value of certain assessed assets or
EUR 3,623 thousand. As a result of this transfer, the Company reports EUR 36 thousand of additional interest per annum,
while the principal is repayable under the same terms and conditions as those applied to the initial borrowings of the
spin-off company. There are no additional risks associated with these borrowings. Due to the sequence of documents and
Decision on the one hand and the fact that from the accounting point of view the spin-off company operated retroactively
from 1 October 2013 on the other, it was impossible to change the share capital amount. Neither the Companies Act
nor the International Financial Reporting Standards or Interpretations address the described event and consequently the
difference was recognised as an unregistered decrease in capital to maintain the link with the actual substance of the
event.
Profit reserves amount to EUR 204 thousand and are comprised of EUR 105 thousand of legal reserves and EUR 99 thousand
of statutory reserves. Statutory reserves are created from 5% of the net profit remaining after settlement of potential losses,
formation of legal reserves and formation of treasury shares reserves, until the amount of statutory reserves equals maximum 20% of the share capital.
Revaluation surplus amounting to EUR 112 thousand resulted from an increase in provisions for termination benefits on
retirement, determined on the basis of re-measurement of net liabilities as at 31 December 2014.
Retained net profit
As at 31 December 2014 the Company reports EUR 1,890 thousand of retained net profit, of which EUR 1,356 relates to
retained earnings and EUR 534 thousand to net profit for the year.
Appropriation of the net profit generated in 2014
Pursuant to the Companies Act (ZGD-1) and the Statute of Merkur trgovina, d.d. the net profit of 2013 amounting to
EUR 1,502 thousand and net profit generated in 2014 of EUR 592 thousand is appropriated for formation of legal and statutory reserves amounting to total EUR 204 thousand. Appropriation of the remaining amount of total distributable profit
from 2013 and 2014 of EUR 1,890 thousand will be decided by the General Meeting of shareholders.
Identification of distributable profit
2014
In EUR thousand
2013
592
1,502
1,356
0
1,356
-
3. INCREASE IN PROFIT RESERVES
58
146
a) Formation of legal reserves
30
75
Item
1. NET PROFIT FOR THE YEAR
2. RETAINED EARNINGS
a) Transfer of unappropriated retained earnings
b) Formation of statutory reserves
4. DISTRIBUTABLE PROFIT at 31 December
The remaining amount of unappropriated profit of 2013/2014
28
71
1,890
1,356
1,890
1,356
Proposal for appropriation of distributable profit for 2014
The General Meeting of shareholders will decide about appropriation of the distributable profit for 2014 amounting to
EUR 1,890 thousand as proposed by the Management and the Supervisory Boards.
The Management and the Supervisory Boards of Merkur trgovina, d.d. will propose to the General Meeting of shareholders
to appropriate total amount of the distributable profit for 2014 to cover unregistered decrease in capital.
62
Annual Report 2014
3.10 Non-current borrowings
Groups of non-current borrowings
Item
Non-current borrowings
31 Dec 2014
In EUR thousand
31 Dec 2013
22,781
22,781
2,557
20,324
20,224
2,457
Bank borrowings
In EUR thousand
Borrowings
from others
Bank borrowings
Borrowings from others
Movements in non-current borrowings of Merkur trgovina, d.d. in 2014 and 2013
Item
At 1 Oct 2013
19,158
0
1,166
2,457
At 31 Dec 2013
20,324
2,457
Transfer of long-term borrowings to long-term borrowings - BAMC
-17,766
17,766
2,557
20,224
Increase on account of collateral
At 31 Dec 2014
The increase in borrowings on account of collateral is associated with the assumption of additional borrowings as a consequence of transfer of liabilities up to the amount of the protected value of collateral as explained in Note 3.9 Share capital
and reserves.
Long-term bank loans amounting to EUR 17,766 thousand were transferred to the Bank Assets Management
Company, d.d. (BAMC).
All long-term borrowings of Merkur trgovina, d.d. are denominated in Euro and agreed at a 1% interest rate and are fully
collateralised with pledged inventories.
Maturity of non-current borrowings
31 Dec 2014
In EUR thousand
31 Dec 2013
22,781
22,781
-
-
6,834
22,781
Maturity more than 5 years
15,947
-
Item
Borrowings
3.11 Long-term and short-term financial lease liabilities
The Company has obtained 12 cars and one property (shopping centre), which is used for the performance of activity, under financial lease arrangements. With payment of the last financial lease instalment, which is due at the end of 2017, the
property tile will be transferred to the Company. Finance lease liabilities are collateralised with legal title to the leased asset.
Long-term and short-term financial lease liabilities
31 Dec 2014
In EUR thousand
31 Dec 2013
Long-term financial lease liabilities
742
779
Short-term financial lease liabilities
391
742
1,133
1,521
Item
Total
Financial Report
63
Maturity of financial lease liabilities
31 Dec 2014
In EUR thousand
31 Dec 2013
Up to one year
391
742
From one to five years
742
779
1,133
1,521
Maturity of financial lease liabilities
Total
All financial lease liabilities of Merkur trgovina are denominated in Euro and agreed at the interest rate ranging from 1.58%
to 6.46%.
3.12 Long-term and short-term provisions
Groups of long-term provisions
31 Dec 2014
In EUR thousand
31 Dec 2013
Long-term provisions
1,888
1,607
1,888
1,607
Provisions for retirement grants
and jubilee awards
Other
provisions
In EUR thousand
Long-term
provisions
1,611
0
1,611
Item
Movements in long-term provisions of Merkur trgovina, d.d. in 2014 and 2013
Item
At 1 Oct 2013
Additional formation during the year
Utilised during the year
Reversal of provisions
At 31 Dec 2013
Additional formation during the year
Utilised during the year
Reversal of provisions
At 31 Dec 2014
-
20
20
-5
-
-5
-
-20
-20
1,607
0
1,607
466
68
534
-185
-
-185
-
-68
-68
1,888
0
1,888
Provisions for termination benefits and jubilee awards are set aside using the following assumptions:
• Growth of average wages in the Republic of Slovenia is assumed to be 0.5% annually, and growth of wages in the
Company is assumed at 0.01% annually, which represents the estimated long-term growth of wages.
• The calculation of liabilities from severance payments is tied to the years of pensionable service of each individual
employee.
• The annual discount rate applied is 4.5%.
• Mortality tables for Slovenia 2005-2007.
The Company set aside additional provisions for severance payment to redundant workforce primarily due to the
restructuring of the sales to corporates and potential business processes rationalisation in other sectors in order to ensure
improved business efficiency, optimisation of the working process and cost efficiency; this includes rationalisation of
employee benefit costs.
64
Annual Report 2014
Groups of short-term provisions
31 Dec 2014
In EUR thousand
31 Dec 2013
Short-term provisions
419
414
Provisions for annual leave entitlement not utilised
419
414
Item
Short-term provisions include amounts set aside for liabilities to employees for annual leave entitlement not utilised.
3.13 Financial liabilities
Groups of short-term financial liabilities
31 Dec 2014
In EUR thousand
31 Dec 2013
1,224
1,262
Short-term financial liabilities to others
1,224
1,262
Item
Total amount of short-term financial liabilities to others refers to sold but so far not redeemed gift cards and vouchers
which are neither interest-bearing nor collateralised.
3.14 Trade and other payables
Short-term trade and other liabilities
Item
Trade and other payables
31 Dec 2014
In EUR thousand
31 Dec 2013
42,326
38,000
411
361
Short-term operating liabilities from advances
Supplier payables
31,845
27,213
Operating liabilities to group companies
3,860
5,034
Operating liabilities to others
6,211
5,392
- Liabilities for salaries
2,006
2,167
- Payables to the state institutions
2,424
2,577
304
53
- Interest payable
1
26
- Accrued costs
- Liabilities for assignment of receivables
1,090
358
- Other liabilities
386
212
Financial Report
65
4 Notes to the income statement
4.1 Net sales revenues
Net sales revenues
Item
Net sales revenues by categories
Revenues from the sale of goods and products
Revenues from the sale of services
Rental income
2014
In EUR thousand
Oct - Dec 2013
208,948
57,505
205,561
56,086
2,629
1,190
758
229
Of total EUR 208,948 thousand of revenue generated by Merkur trgovina in 2014 (Oct - Dec 2013: EUR 57,505 thousand),
EUR 175,543 thousand was earned in retail (Oct - Dec 2013: EUR 47,146 thousand). The remaining revenue from wholesale
and exports amounts to EUR 33,405 thousand (Oct - Dec 2013: EUR 10,359 thousand); of which EUR 14,532 thousand was
generated on sales to 15 major customers (Oct - Dec 2013 EUR 4,694 thousand); of which EUR 484 thousand relates to sales
to related parties (Oct - Dec 2013: EUR 1,773 thousand). Revenue from the sale of goods has been reduced by discounts
granted to customers, holders of Merkur loyalty card. In total, EUR 942 thousand was granted to customers as discounts
on account of purchases made by Merkur loyalty card holders (Oct - Dec 2013: EUR 266 thousand), accounting for 0.5% of
total retail sales to natural entities in 2014. On account of credits to holders of Merkur loyalty cards relating to purchases
made in the last quarter of 2014 and who will be able to claim these discounts until the end of April 2015, the Company deferred revenue in the estimated amount of redeemable credits amounting to EUR 255 thousand (Oct - Dec 2013:
EUR 274 thousand).
Rental income is earned from lease of parts of property which are leased as the entire location such as shopping centres
and the shops within the centres.
4.2 Other operating revenue
2014
In EUR thousand
Oct - Dec 2013
681
131
Financial revenue from receivables
181
49
58
2
109
14
Item
Gains on disposal of property, plant and equipment
Revenue from utilisation and reversal of long-term provisions
68
20
168
8
Revenue from disputed receivables - recovered
25
15
Revenue from government grants
72
23
Reversal of inventory impairments
66
Annual Report 2014
4.3 Costs by nature
Costs by nature
Item
Costs by nature
2014
In EUR thousand
Oct - Dec 2013
54,108
13,129
Costs of materials consumed
3,106
941
- Electricity used
1,747
484
- Cost of fuel
841
319
- Other costs of materials
518
138
Cost of services
20,055
5,017
- Cost of deliveries to customers and other transportation costs
3,723
1,088
- Cost of rent
5,978
1,455
- Cost of investment and regular maintenance
2,838
600
- Costs of advertising, promotion and trade fairs
2,111
533
- Costs of banking and insurance services
1,605
344
- Cost of utility services and water charges
817
187
- Cost of other services
2,983
809
Employee benefits
28,214
6,532
- Payroll cost
19,969
4,743
- Pension and other insurance costs
3,370
807
- Costs of meal and travel allowance
3,483
866
- Other labour costs
1,392
116
Depreciation and amortisation costs
1,964
582
- Depreciation of property, plant and equipment
1,906
557
- Amortisation of intangible assets
57
26
Long-term provisions
510
27
Other operating costs
259
31
Item
2014
In EUR thousand
Oct - Dec 2013
1,469
421
4.4 Other operating expenses
Trade receivables impairment and write-off
Inventory write-off to their net realisable value
Write-off and loss from disposal of property, plant and equipment
Financial Report
424
343
1,023
71
2
2
20
6
67
4.5 Net financial income and expense
Financial income
2014
In EUR thousand
Oct - Dec 2013
Financial income
534
255
Interest income
425
218
88
26
7
11
15
0
- Financial revenue from recovery of interest receivable
-
-
- Reversal of debt impairments
1
-
14
-
2014
In EUR thousand
Oct - Dec 2013
Financial expenses
738
157
Interest expense
432
52
Interest receivable impairment and write-off
201
88
Exchange rate losses
34
15
Impairment of loans
-
1
71
1
Item
Exchange rate gains
Reversal of interest receivable impairment
Other financial income, of which:
- Other financial income
Financial expenses
Item
Other financial expenses
4.6 Financial risks
Due to uncertainties and constant changes in financial environment, active financial risk management is an integral part
of the overall strategy of Merkur trgovina as it impacts the Company’s competitive position, cost control, anticipated cash
flows, supplier confidence, the profit and thus also the Company’s market value. The Company mostly focuses on credit
and liquidity risk management and, to a lesser extent, also on interest rate and currency risks.
Credit risk
Credit risk is the risk that trade receivables and those due from other business partners resulting from deferred payments
will either be paid with delay, will only be paid partly or will not be paid at all.
The Company follows its established policy of active credit risk management which involves receivable collateralisation,
balance sheet analysis of business partners, regular monitoring of open receivable positions, limiting exposure to individual customers through introduction of a system of limits, granting benefits on advance payments, charging default interest
on delayed payments and active policy of receivables recovery.
The Company’s credit risk exposure arises on the sale of goods and services based on agreed deferred payment with
entities in the wholesale or in shopping centres. In accordance with adopted accounting policy, the Company recognises
bad debt allowance if risk of non-payment is identified.
The primary credit rating risk classification in the Company is static and is revised at least annually on compilation of
financial statements while depending on the customer’s size and current events and circumstances, the revision may be
carried our more often. In addition and depending on the importance of individual business partners, an additional risk
assessment may be obtained, including recommendation regarding the set limit, from an independent, external provider.
Secondary credit risk classification of customers is based on current liquidity position, which is updated daily through
monitoring of transaction account blockades and current outstanding amount of receivables compared to the approved
limit.
68
Annual Report 2014
Credit risk arises above all in relation to sale and is partly transferred to an insurance company where trade receivables are
insured. The insurance cover limit is determined using pre-set criteria where business partners are mostly insured automatically; where the criteria set is fulfilled only partly, or in cases of significant limits, insurance policy is agreed additionally in
communication with the insurance company. Failure to fulfil criteria means that credit exposure is not hedged. Automatic
approval of limits is checked regularly at least at the end of the financial year, whereas potential transaction account blockades and receivable maturity are monitored daily. Sales to a customer are suspended when one of the following conditions
are met: the set limit is exceeded, receivables maturity in excess of 30 days, blockade of a customer’s transaction account
or another external information indicating that a debtor is facing significant financial difficulties. Any deviations from these
conditions may only be approved by the Management Board in accordance with their financial and trade authorisations.
The impact of receivable hedging is increased customer dispersion, faster and more efficient receivable recovery and thus
lower share of due and outstanding receivables as well as reduced bade debt allowances.
As at 31 December 2014, 86.4% of short-term trade receivables are insured with the insurance company, collateralised with
mortgages or the option of immediate offsetting of receivables and liabilities.
Liquidity risk
Liquidity risk is a risk of the Company not having sufficient liquid assets at any given moment to settle its current liabilities
or to maintain normal business operations.
The Company’s liquidity risk has been reduced significantly through agreement with its debtors for repayment of total
principal amount within 12 years with two-year moratorium and fixed rate of interest; the first instalment is due in 2017.
57% of total operating revenue is earned on sales to retail customers, presenting completely certain daily inflow of funds.
The Company manages its liquidity risk by following its adopted active liquidity risk management policy through efficient
balancing of cash inflows and outflows. The liquidity risk management policy comprises:
• precisely defined cash flow management process; identification of known, expected and potential cash outflows on
the one hand and ensuring the Company has sufficient cash flows on the other (trade receivable recovery, creating
good quality receivables with fast turnover and similar), by closely monitoring any major fluctuations to speed-up the
response time,
• monitoring changes in the environment that may impact the Company’s liquidity needs,
• high dispersal of external sources of funds,
• high dispersal of liabilities maturity,
• credit risk management policy that ensures highly reliable forecast of cash flows,
• sales to final customers as this facilitates current liquidity management and balancing,
• efficient cost control at all levels.
Interest rate risk
The Company’s exposure to changes in interest rates mainly derives from adverse fluctuation of EURIBOR variable interest
rate. The Company is not significantly exposed to the currency risk mainly due to the fact that only a small part of its liabilities are linked to a variable interest rate (EURIBOR).
Pursuant to the Financial restructuring plan of repeated compulsory settlement of Merkur - trgovina in storitve, d.d. instigated in the beginning of 2014, the Company signed a long-term debt restructuring programme for all financial liabilities
due to debtors, which were transferred to Merkur trgovina, d.d. These borrowings are all agreed at a fixed rate of interest.
Thus only 5% of the Company’s liabilities are linked to a variable interest rate.
Currency risk
Currency risk is a risk of changes in the value of assets due to foreign exchange rate fluctuations.
Currency exposure of Merkur trgovina, d.d. arise exclusively from import transactions which are denominated in US$. The
currency risk arises as the risk of appreciation in foreign currency over the time from transaction being agreed to the actual
payment, as this would result in a significant increase in the price of imported goods or, in the event of a major change in
Financial Report
69
the exchange rate, result in the agreed transaction becoming uneconomic. Since the Company is restricted in the use of
internal methods of hedging currency risk, in the event of major purchases in foreign currency, the Company would decide
for one of external currency risk hedging methods that are available.
Merkur trgovina, d.d. mostly deals in the Euro and therefore its exposure to currency risk has been assessed as low.
Credit risk
The following table shows the Company’s maximum exposure to credit risk in 2014 and 2013, where the concentration is
expressed in percentage of exposure to 10 largest business partners.
The Company’s maximum exposure to credit risk in 2014 and 2013
In EUR thousand
Net Gross Adjustments Concentration* Net Gross Adjustments Concentration*
at
at
at
at
at
at
at
at
31 Dec 2014 31 Dec 2014 31 Dec 2014 31 Dec 2014 31 Dec 2013 31 Dec 2013 31 Dec 2013 31 Dec 2013
Item
Deposits at banks
Loans issued
Trade receivables
- of which due from related
parties
Receivables due from others
Cash equivalents redeemable
on demand
Total
0
0
0
0%
13
13
0
100%
375
439
65
48%
507
570
62
48%
17,210
39,943
22,733
21%
15,202
37,584
22,382
13%
1,586
22,615
21,028
100%
505
21,352
20,847
100%
2,107
2,613
506
46%
3,023
3,522
499
50%
10,289
10,289
0
100%
7,077
7,077
0
100%
29,980
53,284
23,304
25,823
48,766
22,943
*concentration relates to the Company’s exposure to 10 largest customers/borrowers
Hedged credit risk
As at 31 December 2014, EUR 13,498 thousand of trade receivables are insured with the insurance company, collateralised
with mortgages or the option of immediate offsetting of receivables and liabilities.
Trade receivables
Receivable allowances are recognised based on historical data of due and outstanding receivables and disputed receivables
as follows:
• Individually in respect of 25 largest customers,
• Bad debt allowance of total amount of receivables is recognised for receivables due and outstanding in excess of
180 days and
• Bad debt allowance of total amount is also recognised for disputed receivables; however, if there is objective evidence
of repayment or if the receivable is hedged, the allowance may be reduced accordingly.
Maturity of trade receivables of Merkur trgovina, d.d. in 2014 and 2013
Item
Not matured
Gross value
31 Dec 2014
Impairment
31 Dec 2014
Gross value
31 Dec 2013
In EUR thousand
Impairment
31 Dec 2013
11,565
58
11,673
1,535
Due and outstanding 0 - 30 days
3,184
36
3,868
632
2,522
313
5,489
4,097
2,294
2,132
5,376
5,197
More than 12 months
20,378
20,194
11,178
10,920
Total
39,943
22,733
37,584
22,382
70
Annual Report 2014
Maturity of receivables due from others of Merkur trgovina, d.d. in 2014 and 2013
Gross value
31 Dec 2014
Impairment
31 Dec 2014
Gross value
31 Dec 2013
In EUR thousand
Impairment
31 Dec 2013
1,887
0
2,759
0
71
0
109
0
21
0
28
0
Item
Not matured
More than 12 months
Total
12
0
19
0
622
506
606
499
2,613
506
3,522
499
Share of partners Share of receivables at
at 31 Dec 2014
31 Dec 2013
Share of partners
at 31 Dec 2013
Customer classification by risk groups regarding potential for their insolvency
Group classification
Share of receivables
at 31 Dec 2014
Above-average risk
30%
35%
37%
37%
Average risk
38%
21%
33%
20%
Below-average risk
Total
32%
44%
30%
43%
100%
100%
100%
100%
Classification to individual risk groups is based on the credit rating of individual customers.
Movements in bad debt allowance due to trade receivable impairment of Merkur trgovina, d.d. in 2014 and 2013
2014
In EUR thousand
2013
22,881
22,501
Item
Balance at 1 Jan 2014 / 1 Oct 2013
Final write-off
-75
-
Impairments
625
431
- Impairment of operating receivables
424
343
- Impairment of interest receivable
201
88
Impairment reversal
-188
-51
- Reversal of operating receivable impairment
-181
-40
- Reversal of interest receivable impairment
-7
-11
Allowances transfer within assets
-3
-
23,239
22,881
2014
In EUR thousand
2013
62
61
-
1
-1
-
3
-
65
62
At 31 Dec
Movements in bad debt allowance due to loans issued impairment of Merkur trgovina, d.d. in 2014 and 2013
Item
Balance at 1 Jan 2014 / 1 Oct 2013
Impairments
Impairment reversal
Allowances transfer within assets
At 31 Dec
Financial Report
71
Liquidity risk
Below is illustration of contractually agreed maturity of financial assets and liabilities including assessed interest without
the effect of offsetting agreements.
Contractual maturity of non-derivative financial assets and liabilities of Merkur trgovina, d.d. in 2014
Item
Carrying
amount
Contractual
cash flows
6 months
or less
6-12
months
1-2
years
2-5
years
In EUR thousand
More than
5 years
12
12
12
-
-
-
-
Non-derivative financial assets
Long-term investments
Loans issued
Trade receivables
375
404
64
56
94
140
50
15,623
15,623
15,623
-
-
-
-
3,693
3,693
3,693
-
-
-
-
10,289
-
-
-
-
-
-
Total non-derivative financial assets
29,992
19,732
19,392
56
94
140
50
-24,005
-25,628
-1,338
-114
-228
-4,972
-18,976
-1,133
-1,153
-201
-201
-403
-348
-
Non-derivative financial liabilities
Borrowings
Supplier payables
-31,845
-31,845
-31,845
-
-
-
-
Liabilities to others
-10,482
-10,482
-10,482
-
-
-
-
Total non-derivative financial liabilities
-67,464
-69,108
-43,866
-315
-631
-5,320
-18,976
Net at 31 Dec 2014
-37,472
-49,376
-24,474
-259
-537
-5,180
-18,926
The table is based on undiscounted cash flows in accordance with contractual terms and conditions including interest
rates that govern settlement of liabilities or redemption of assets.
Contractual maturity of non-derivative financial assets and liabilities of Merkur trgovina, d.d. in 2013
Item
Carrying
amount
Contractual
cash flows
6 months
or less
6-12
months
1-2
years
2-5
years
In EUR thousand
More than
5 years
13
13
13
-
-
-
-
Non-derivative financial assets
Long-term investments
Loans issued
507
551
78
71
121
212
69
15,202
15,202
15,202
-
-
-
-
3,023
3,023
3,023
-
-
-
-
7,077
-
-
-
-
-
-
25,823
18,789
18,316
71
121
212
69
-24,043
-24,043
-1,262
-
-
-22,781
-
-1,521
-1,564
-202
-202
-403
-757
-
Trade receivables
Total non-derivative financial assets
Non-derivative financial liabilities
Borrowings
Supplier payables
-27,213
-27,213
-27,213
-
-
-
-
Liabilities to others
-10,786
-10,786
-10,786
-
-
-
-
Total non-derivative financial liabilities
-63,564
-63,606
-39,463
-202
-403
-23,538
-
Net at 31 Dec 2013
-37,741
-44,817
-21,147
-131
-282
-23,326
69
72
Annual Report 2014
Currency risk
The Company’s exposure to currency risk in 2014 (nominal amounts)
Item
EUR
HRK
Thousand units
USD
16,745
-
486
-24,005
-
-
-1,133
-
-
Receivables and liabilities at 31 Dec 2014
Trade receivables
Borrowings
Supplier payables
-35,734
-
28
Currency exposure of the statement of financial position items
-44,127
0
514
EUR
HRK
Thousand units
USD
14,932
-
266
-24,043
-
-
-1,523
-
-
The Company’s exposure to currency risk in 2013 - Oct - Dec (nominal amounts)
Item
Receivables and liabilities at 31 Dec 2013
Trade receivables
Borrowings
Supplier payables
-32,345
-2
99
Currency exposure of the statement of financial position items
-42,978
-2
365
Sensitivity analysis
Merkur trgovina mostly deals in the Euro and therefore its exposure to currency risk has been assessed as insignificant.
10-percent appreciation in Euro against the following currencies would increase (decrease) profit or loss by the amounts
stated below, providing all other variables (in particular interest rates) remain constant.
Item
31 Dec 2014
In EUR thousand
31 Dec 2013
USD
-52
-33
Total impact on profit or loss
-52
-33
Interest rate risk
Characteristics of interest rates on interest-bearing financial instruments of Merkur trgovina, d.d.
In EUR thousand
Carrying amount
2014
2013
Item
Instruments with fixed rate of interest
-24,005
Financial assets
-24,043
-
-
-24,005
-24,043
-758
-1,014
Instruments with variable rate of interest
Financial assets
Financial Report
375
507
-1,133
-1,521
73
Sensitivity analysis of fair value of financial instruments of Merkur trgovina, d.d.
Since the Company’s financial assets at fixed rate of interest are not reported at fair value through profit or loss, a change
in interest rates as at the reporting date would have no impact on the profit or loss.
A change in variable interest rates of financial instruments by 100 base points would either increase or decrease capital
and profit or loss by the following amounts. The 2013 sensitivity analysis was made using the same assumptions, where all
other variables (in particular foreign exchange rates) remain constant.
+100 b.p.
In EUR thousand
-100 b.p.
Instruments with variable rate of interest at 31 Dec 2014
-11
11
Cash flow sensitivity (net)
-11
11
Instruments with variable rate of interest at 31 Dec 2013
-15
15
Cash flow sensitivity (net)
-15
15
Impact on profit or loss
Fair value
Assessed fair value of assets and liabilities and their carrying amounts reported in the statement of financial position:
Item
Deposits at banks
Loans issued
Trade receivables
Supplier payables
Carrying amount
Value
31 Dec 2014
Fair
Value
31 Dec 2014
Carrying amount
Value
31 Dec 2013
In EUR thousand
Fair
Value
31 Dec 2013
11,649
11,649
13,511
13,511
12
12
13
13
374
374
507
507
17,210
17,210
15,202
15,202
2,107
2,107
3,023
3,023
10,898
10,898
7,593
7,593
-24,005
-24,005
-24,043
-24,043
-1,133
-1,133
-1,521
-1,521
-35,705
-35,705
-32,246
-32,246
In terms of their fair value determination, all the assets and liabilities fall into level 3 fair value hierarchy. Level 3 category
means that all values are based on valuation models where input data is not based on market prices.
74
Annual Report 2014
4.7 Income tax
Income tax
31 Dec 2014
In EUR thousand
31 Dec 2013
Income tax payable
-199
-399
Deferred tax assets
274
-
Total tax recognised in profit or loss
76
-399
2014
In EUR thousand
Oct - Dec 2013
516
1,901
Expense not recognised for tax purposes
1,383
600
Tax-exempt revenue
-125
-1
Other adjustments in the tax base
-185
-32
Item
Effective tax rate of Merkur trgovina, d.d.
Item
Profit or loss before tax
Tax relief
-421
-123
Tax base
1,169
2,346
199
399
Income tax
Tax payable comprises current amounts of corporate income tax and deferred tax. Income tax expense is recognised in
profit or loss except to the extent that it relates to items recognised directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the reporting date,
and any adjustment to tax payable in respect of previous financial years.
Deferred tax is recognised using the financial position liability method providing for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The
amount of deferred tax bases on the expected way of settling the carrying amount of assets and liabilities, using tax rates
enacted at the reporting date or tax rates applicable in the period during which the tax asset or liability is expected to be
derecognised.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which
the deferred tax assets can be utilised.
In 2014 deferred tax assets were recognised on account of the following:
• Differences between amortisation and depreciation for business and tax purposes,
• Formation of receivable allowances and
• Provisions formation.
Financial Report
75
5 Other notes
5.1 Related parties
The Company classifies its related parties into three separate groups:
• Controlling company,
• Related companies,
• Members of the Management and Supervisory Boards and the employees with individual contract of employment.
The controlling company Merkur, d. d. – v stečaju; related companies are all other entities in any kind of equity relationship
with the controlling company. Business transactions between the Company and its controlling entity are mostly the consequence of a recourse relating to settlement of receivables and liabilities that arose over the period from the date of the
accounting spin-off effected on 1 October 2013 until the legal and formal business spin-off of the healthy business core
(Merkur trgovina, d.d.) after the confirmation of the repeated compulsory settlement on 13 November 2014.
Business transactions between the Company and its related companies mainly refer to purchases and sales of merchandise,
products and services. As related parties, the companies transacted pursuant to the relevant sales agreements concluded.
In such transactions, market prices of merchandise, products and services were consistently applied.
Transactions of Merkur trgovina, d.d. with related companies
Item
Sales of
goods
Purchases
of goods
Services
rendered
Services
used
Interest
charged
Interest
received
Receivables
In EUR thousand
Liabilities
-
-
-
801
-
-
1,412
-
1,478
20,107
782
530
186
63
175
3,860
Sales of
goods
Purchases
of goods
Services
rendered
Services
used
Interest
charged
Interest
received
Receivables
In EUR thousand
Liabilities
-
-
-
421
-
-
255
-
1,523
5,749
389
58
159
2
250
5,034
2014
Total due by
to its controlling entity
Total due by
to its related parties
Item
Oct - Dec 2013
Total due by
to its controlling entity
Total due by
to its related parties
76
Annual Report 2014
Transactions of Merkur trgovina, d.d. with members of the Management and Supervisory
Boards and with employees with individual contracts of employment
As at 31 December 2014, no members of the Management Board of Merkur trgovina, d.d. their close family members, and
no members of the Supervisory Board owned shares in Merkur trgovina, d.d.
Gross remuneration
Number of
members
Fixed
remuneration
Other
remuneration
Total gross
remuneration
In EUR thousand
Total net
remuneration
1
2
3
4=2+3
5
Blaž Pesjak
(2 mes)
22
1
23
11
Anita Valjavec
(2 mes)
13
0
13
7
Marjan Smrekar
Management Board of
Bojan Papič
(2 mes)
8
0
9
5
3
43
2
45
23
(2 mes)
-
-
-
-
Marko Ninčević
(2 mes)
-
-
-
-
Klemen Boštjančič
(2 mes)
-
-
-
-
Jure Fišer
(2 mes)
-
-
-
-
Ana Hochkraut
(2 mes)
-
-
-
-
Peter Fratnik
Supervisory Board of
Employees on individual contracts
of employment
Total
(2 mes)
-
-
-
-
6
0
0
0
0
75
2.823
382
3.205
1.983
84
2.866
384
3.250
2.006
Recipient
In formal and legal terms, Merkur trgovina, d.d. was established pursuant to the final decision to approve the repeated
compulsory settlement proceedings against Merkur, d. d. when the company was on 11 November 2014 entered in the
business register, and began operating on 13 November 2014. Notwithstanding the fact that the creditor committees of
creditors with right to separate settlement and regular creditors appointed Blaž Pesjak and Anita Valjavec as members of
the Management Board already on 14 July 2014, according to the provisions of labour law (which also applies to this disclosure), they took their positions on the date the company began operating, which was 13 November 2014.
The report above thus refers to the receipts of the Management Board by 13 November 2014 as receipts of employees
under individual contacts of employment.
Although the members of the Supervisory Board were appointed by the creditor committees (shareholder representatives)
and the workers’ council (employee representatives) in 2014, they had received no remuneration as at 31 December 2014.
Merkur trgovina, d.d. has no receivables or liabilities due to related natural persons.
5.2 Transactions of Merkur trgovina, d.d. with the controlling company Merkur, d. d. – v
stečaju in accordance with Article 545 of the Companies Act
In 2014, at the initiative of the controlling entity Merkur, d. d. - v stečaju or at the initiative of related parties, the Company
did not take or omit any action which would result in any damages arising to Merkur trgovina, d.d.
5.3 Indication of legal actions in which Merkur trgovina, d.d. is the defendant
Merkur trgovina, d.d. Naklo is the defendant in two major cases (where the value at dispute exceeds EUR 100 thousand).
Based on the response to the action filed, the Management Board believes the likelihood of a negative outcome for Merkur
trgovina, d.d. is low, and as such the Company has not recognised any provisions in this respect.
Financial Report
77
5.4 Guarantee for Merkur nepremičnine, d.d.
In the past (in 2010), Merkur, trgovina in storitve, d. d. took out a syndicated loan collateralised with mortgages, the transfer
of receivables pursuant to payment card agreements and bills of exchange.
The financial restructuring plan envisaged the company Merkur trgovina, d.d. continuing the company’s trading activities,
while the company Merkur nepremičnine, d.d. was to manage the real estate.
In accordance with the spin-out, the syndicated loan was transferred to the spun-out company Merkur nepremičnine,
d.d. since the real estate provided as collateral were also transferred to Merkur nepremičnine, d.d. Retail activities, and thus
also payment card transactions, are carried out by Merkur trgovina, d.d. Even after the spin-out, the collateral for the loan
remains unchanged. Most (two thirds) of this loan has been converted into equity of Merkur nepremičnine, d.d. by the
crediting banks.
5.5 Overview of the audit costs of Merkur trgovina, d.d.
The Company is subject to audit according to Article 75 of the Companies Act. Deloitte revizija, d.o.o. was engaged to audit
the financial statements and annual report for the 2014 financial year. The contractual amount is EUR 24 thousand.
6 Subsequent events
There were no subsequent events which impacted the financial statements or would require additional disclosure in the
annual report.
78
Annual Report 2014
Management’s Statement
With this statement we affirm our responsibility for the preparation and fair presentation of these financial statements and
the notes thereto in accordance with the applicable legislation and the International Financial Reporting Standards, as
adopted by the EU Slovene accounting standards. This responsibility includes:
• keeping the books of account,
• designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error,
• selecting and applying appropriate accounting policies, and
• making accounting estimates that are reasonable in the circumstances.
According to all information available to it, the Management Board affirms that the relevant accounting policies were
consistently applied in drafting the financial statements, that accounting estimates have been made in accordance with
the principle of prudence and good management, and that the financial statements give a true and fair view in all material
respects of the financial position of Merkur trgovina, d.d. and of its financial performance for 2014.
The Management Board has taken all relevant measures aimed at securing the funds and other assets.
The Chairman and Members of the Management Board of Merkur trgovina, d.d. are familiar with the contents of the annual
report of Merkur trgovina, d.d. We agree with the annual report and confirm this with our signatures below.
Naklo, 27 March 2015
Blaž Pesjak,
Anita Valjavec,
Marjan Smrekar,
Member of the Board
Member of the Board
Employee Director
Financial Report
79
Auditor’s report
80
Annual Report 2014
Financial Report
81
COMPANY PROFILE
MERKUR trgovina, d.d.
Cesta na Okroglo 7, 4202 Naklo
Entry in the companies register: Okrožno sodišče v Kranju - št. vpisa 2014/49217
Share capital: EUR 11,368,274
Company number: 6723128000 VAT ID number: SI76138437
Activity classification: G/47.520 Tel: +386 (0)4 258 80 00
Fax: +386 (0)4 258 88 05
E-mail: [email protected]
Website: www.merkur.si
Transaction accounts:
- Gorenjska banka, d.d., Kranj:
- NLB, d.d., Ljubljana:
- Abanka Vipa, d.d., Ljubljana:
SI56 0700 0000 2337 596
SI56 0292 8026 1147 951
SI56 0510 0801 3934 915
Management Board of Merkur trgovina, d.d.:
Blaž Pesjak, Chairman of the Board
Anita Valjavec, Member of the Board
Marjan Smrekar, Member of the Board – Employee Director
Supervisory Board of Merkur trgovina, d.d.:
Shareholder representatives:
Bojan Papič, Chairman of the Supervisory Board
Marko Ninčević, Deputy Chairman
Klemen Boštjančič, Member
Jure Fišer, Member
Employee representatives:
mag. Ana Hochkraut, Member
Peter Fratnik, Member
Annual Report of Merkur trgovina, d.d. for 2014
Issued by Merkur trgovina, d.d., Cesta na Okroglo 7, 4202 Naklo
Concept, design and pre-press Alenka Planinc Kuhar, www.JAdesign.si
Text Merkur trgovina, d.d.
Photos Ciril Jazbec and the archives of Merkur trgovina, d.d.
Printed by Trajanus
June 2015
82
Annual Report 2014

annual report 2014

Transcription

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