1. INTRODUCTION OF TERME ČATEŽ COMPANY AND TERME ČATEŽ GROUP IDENTITY CARD OF THE COMPANY... 2

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2 CONTENTS 1. INTRODUCTION OF TERME ČATEŽ COMPANY AND TERME ČATEŽ GROUP IDENTITY CARD OF THE COMPANY TERME ČATEŽ GROUP HOLDING STRUCTURE IN THE COMPANY AND THE SHARE CORPORATION MANAGEMENT EVENTS AFTER THE ACCOUNTING PERIOD BUSINESS REPORT PROFIT & LOSS STATEMENT HUMAN RESOURCES INVESTMENT HIGHLIGHTS SALES AND MARKETING ACTIVITY HIGHLIGHTS IN THE PERIOD JANUARY TO JUNE FINANCIAL STATEMENT REVIEW OF FINANCIAL STATEMENT OF TERME ČATEŽ COMPANY PROFIT & LOSS STATEMENT BALANCE SHEET OF TERME ČATEŽ COMPANY CAPITAL FLOW AND CASH-FLOW REVIEW OF FINANCIAL STATEMENT OF TERME ČATEŽ GROUP PROFIT & LOSS STATEMENT BALANCE SHEET CAPITAL FLOW AND CASH-FLOW STATEMENT RISK MANAGEMENT ENVIRONMENTAL CARE AND (LOCAL) COMMUNITY ACCESS TO THE RELEASED DATA

3 BASIC DATA ON TERME ČATEŽ COMPANY AND TERME ČATEŽ GROUP 1. INTRODUCTION OF TERME ČATEŽ COMPANY AND TERME ČATEŽ GROUP 1.1 IDENTITY CARD OF THE COMPANY Company name: Terme Čatež d.d. Activity: Company registration number: Tax number: Reg. number: Date of entry in the Companies Register: 23 Nov 1995 Company's share capital: 12,444, Number of shares issued: 497,022 Face value of a share: ordinary shares Shares listing: Ljubljana Stock Exchange, standard listing, share marking: TCRG Management Board: Bojan Petan Chairman of Supervisory Board: Robert Krajnik The company Terme Čatež is engaged in various activities: hotels & restaurants, Spa/health resort, trade, sports, recreation and other. Pursuant to the Act on Medicinal Substances and Spa Health Resorts (Official Gazette of the SRS, no. 36/1964), it was established that the thermal water, staff, equipment and premises comply with the requirements of the above specified Act, and Terme Čatež d.d. obtained the status, i.e. was registered as a "Spa health resort" in Written documents on the Spa originate from 1886 mentioning»hot thermal springs«.the first hotel was build in 1926 and has been in the course of years reconstructed to the existing Toplice Hotel. Today, Terme Čatež has got the controlling position in a Group of companies in Slovenia, Croatia and Bosnia and Herzegowina. Terme Čatež company is one of fifteen Slovenian Natural Spas and enjoy the leading position in Slovenian tourism. Terme Čatež share was the first one in the tourism branch listed (7 June 1993) on the Ljubljana Stock Exchange. MANAGEMENT AND SUPERVISORY COUNCIL Terme Čatež company is represented and managed by Mr. Sebastjan Selan The Supervisory Council of the company consists of nine Members; six members being the representatives of the capital are elected on the Annual Meeting of Shareholders, three are the representatives of the employees (pursuant to Slovene legislation) and are appointed by the Workers' Council. 2

4 Members to Supervisory Council of Terme Čatež company: - Mr. Robert Krajnik, Chairman - Mr. Mitja Grum, Member - Mrs. Ada de Costa Petan, Member - Mr. Samo Roš, Member - Mr. Vladimir Smolec, Member - Mrs. Vesna Uršič, Member - Mrs Andreja Gošek. Member (appointed by Workers Council, since 16 August 2013 instead of Mr. Dragan Štipula) - Mr. Tomislav Kolarek, Member (appointed by Workers Council, since 16 August 2013, instead of Mr. Milan Blaževič) - Mr. Damjan Krulc, Member (appointed by Workers Council) 1.2 TERME ČATEŽ GROUP The Group consists of the parent (controlling) company and subsidiaries, with the parent company as holding company and the majority of voting. Parent company Terme Čatež operates on three locations: at Čatež on 45 hectares, on the right bank of the Sava river; at Mokrice (6 km from Čatež) on 60,000 sm and at Koper: Žusterna Aquapark Hotel, Koper Hotel. The affiliates to the parent company (Terme Čatež) in the Terme Čatež Group: Marina Portorož d.d., Cesta solinarjev 8, 6320 Portorož Del Naložbe d.d., Topliška cesta 35, 8250 Brežice M Kapital d.d., Cesta solinarjev 8, Portorož and M Naložbe d.d., Cesta solinarjev 8, Portorož. Terme Ilidža d.o.o., Ulica Mala aleja 40, Sarajevo; and Termalna riviera d.o.o., Trg Loža 1, Novalja Equity investments into subsidiaries Subsidiary and its headquarters Type of equity Share of Terme Čatež comp. (%) in equity of subsidiary MARINA PORTOROŽ, d.d., Portorož shares DEL NALOŽBE, d.d., Čatež ob Savi shares TERME ILIDŽA, d.o.o., Ilidža, Sarajevo holding TERMALNA RIVIERA, d.o.o., Novalja holding M KAPITAL, d.d., Portorož shares M NALOŽBE, d.d., Portorož shares Table 1: Equity investment into subsidiaries as on 30 June

5 1.3 HOLDING STRUCTURE IN THE COMPANY AND THE SHARE Equity capital of Terme Čatež company amounts as on #0 June 2013 to 12,444 k and is divided into 497,022 ordinary shares of the same class; the shares being listed as TCRG-shares on the Ljubljana Stock Exchange SHAREHOLDER Numer of shares % in equity DZS, d.d. 227, KAPITALSKA DRUŽBA, D.D. 118, DELO PRODAJA, d.d. 45, TRIGLAV VZAJEMNI SKLADI 19, ZAVAROVALNICA TRIGLAV, d.d. 8, KRITNI SKLAD PRVEGA POKOJNINSKEGA SKLADA 7, DEL NALOŽBE, d.d. 6, ABANKA SKLADI EVROPA 5, ATTEMS JOHANNES 5,005 1,01 OSTALI 52, TOTAL 497, Table 2: Extract from the Shareholders' Register as on 30 June CORPORATION MANAGEMENT 87th MEETING OF SUPERVISORY COUNCIL DATED 9 MAY 2013 The resolutions from the meeting are released on the website of Ljubljana Stock Exchange (SEOnet) and on the website of Terme Čatež company: EVENTS AFTER THE ACCOUNTING PERIOD 88th MEETING OF SUPERVISORY COUNCIL DATED 4 JULY 2013 The resolutions from the meeting are released on the website of Ljubljana Stock Exchange (SEOnet) and on the website of Terme Čatež company: 19 th ANNUAL GENERAL MEETING OF SHAREHOLDER DATED 29 AUGUST 2013 The resolutions from the AGM are released on the website of Ljubljana Stock Exchange (SEOnet) and on the website of Terme Čatež company: 4

6 BUSINESS PART 2. BUSINESS REPORT 2.1 PROFIT & LOSS STATEMENT Terme Čatež company realized in the first six months of ,081 k in operating revenues; out of that, 552 k in operating profit, EBITDA (operating profit + depreciation) amounting to 3,181k and 18 k in net profit. Considering the extraordinary revenues from the abolition of provisions in the first half of 2012 and the dividends from a subsidiary, the company exceeded the semi-annual result from 2012 and thus concluded successfully this year s semi-annual performance. Terme Čatež company plans for m in operating revenues, EBITDA 8.8 m (operating profit + depreciation) and net profit 2.7 m. The semi-annual performance of the company is a bit below the plan (one of the reasons being certainly bad weather), but the results of summer season let hope for an optimistic performance in the second part of the year HUMAN RESOURCES As on 30 June 2013 Terme Čatež Group employed 541 employees. Namely: Terme Čatež company: 449 Marina Portorož company: 64 Terme Ilidža, Sarajevo: 28 Del Naložbe: INVESTMENT HIGHLIGHTS Due to the adverse economic situation in the country, Terme Čatež company realized the most urgent investments with the min of assets, as follows: * CONCLUSION OF THE REFURBISHMENT AND EXPANSION OF TERME HOTEL INVESTMENT PROJECT In the first months of 2013 minor finishing works were conducted on the project, thus bringing it successfully to the end. The whole project was co-financed by the ERDF (European Regional Development Fund). CAMPSITE EXPANSION A growing trend of camping in tents and mobile homes has resulted in an increased cooperation with the foreign tour operators. In the first three months a complete infrastructure for the erection of additional mobile homes and tents was prepared; in the campsite already ninety mobile homes have been erected. 5

7 MOBILE FUN FAIR New requirements and expectations of the guests to Terme Čatež required the expanded offer on new tourist products, predominantly those having distraction contents. Therefore, in the main season of 2013 (i.e. June to August) in the central area of the Spa a mobile fun fair was erected with diverse amusement attractions for different age profiles (roller coaster, racetrack, house of ghosts etc..). OTHER INVESTMENTS Figure 1: Fun fair advertising - refurbishment of bathrooms in the appendix to Toplice hotel; - refurbishment of flooring at Toplice Hotel 2.4 SALES AND MARKETING ACTIVITY HIGHLIGHTS IN THE PERIOD JANUARY TO JUNE 2013 HUMANITY AND CHARITY A long-term co-operation on dancing terms resulted in a charity Valentine's dance (Let's Dance for Children), the proceeds of which were intended for the Brežice primary school kitchen. Compiled was also the charity run (Running is Helping) with Mr. Alen Kobilica as host; the purpose of the event was paying the attention to the problems of blind and poor sighted. BIG PRIZE OF TERME ČATEŽ 2013 (THERMAL FORMULA) By the opening of Summer Thermal Riviera we organized traditionally The Big Prize of Terme Čatež. Figure 2: The Big Prize of Terme Čatež advertisement 6

8 NUTRITIONAL WEEKEND Being aware of the importance of healthy nutrition and detoxication, a very well visited theme weekend was organized at Terme Čatež, with the renown nutritionist, Mrs. Lejla Kržinić Kreho. SPONSORSHIP The semi-annual activities ended with the long-term contact on co-operation between the Crvena zvezda FC (Belgrade, Serbia) and Terme Čatež company. 7

9 3. FINANCIAL STATEMENT Introductory notes to the preparation of profit & loss statement The financial part of the Annual Report consists of two parts. Part I consists of the consolidated financial statement with annotations of Terme Čatež company, Part II of the financial statement of Terme Čatež Group. Both reports are compiled in accordance with the International Financial Reporting Standards (IFRS) as endorsed by the European Union. The Liability Statement of Management Board includes the liability for global statements as of Terme Čatež Group as of Terme Čatež company and is given below. Liability statement of Management Board The Management Board confirms hereby the semi-annual profit & loss account, balance sheetcash-flow statement and capital-flow statement of Terme Čatež company (the period ending on 30 June 2013). The Management Board confirms hereby, that the financial statements were strictly conducted in accordance with the accounting standards and that they in all aspects demonstrate a fair situation of the semi-annual financial conditions and performance of the company. The Management Board confirms hereby, that the financial statements were conducted in accordance with the adopted legislation and the International Financial Reporting Standards (IFRS) endorsed by the Europen Union. 30 August 2013 Terme Čatež d.d. Sebastjan Selan, GM Liability statement of Management Board The Management Board confirms hereby the consolidated semi-annual profit & loss account, balance sheetcash-flow statement and capital-flow statement of Terme Čatež Group (the period ending on 30 June 2013). The Management Board confirms hereby, that the financial statements were strictly conducted in accordance with the accounting standards and that they in all aspects demonstrate a fair situation of the semi-annual financial conditions and performance of the Group. The Management Board confirms hereby, that the financial statements were conducted in accordance with the adopted legislation and the International Financial Reporting Standards (IFRS) endorsed by the Europen Union. 30 August 2013 Terme Čatež d.d. Sebastjan Selan, GM 8

10 3.1 REVIEW OF FINANCIAL STATEMENT OF TERME ČATEŽ COMPANY Non-audited non-consolidated financial statement of Terme Čatež company pursuant to International Financial Reporting Standards (IFRS) SEMI-ANNUAL PROFIT & LOSS STATEMENT OF TERME ČATEŽ COMPANY SEMI-ANNUAL PROFIT & LOSS STATEMENT (in EUR) 1 Jan to 30 June 131 Jan to 30 June 12 Net sales revenues 13,626,785 14,226,607 Change in value of stock and unfinished - - Materialized own products and service - - Other operating revenues (with revaluating operating revenues) 342, ,784 Costs of goods, material and service (6,297,214) (6,484,436) Labour costs (4,220,337) (4,617,740) Walue write-offs (2,752,288) (2,708,240) Other operating expenses (146,999) (147,656) Profit / loss from business acitivity 552, ,319 Financial revenues from holdings - 1,035,976 Financial revenues from 787, ,312 Financial revenues from accounts 2,694 1,698 Financial expenses from financial investments - - Financial expenses from financial (1,399,789) (1,454,375) Financial expenses from operating liabilities (31,167) - Profit / loss from financing activity (640,546) 301,611 Other revenues 111, ,398 Other expenses (1,361) (17,462) Corporation tax -3, ,373 Deferred tax Net profit / loss for the accounting 18,294 1,105,493 Net profit / loss per share Corrected net profit / loss per

11 * The statement includes the abolition of provision for a lawsuit against a construction company (indemnity amounting to 391,033); with the reference thereto, the amount was included in the extraordinary operating revenues in the first six months of 2013 ** The statement includes the dividends granted by a subsidiary and amounting to EUR 1,035,

12 Balance sheet of Terme atež company as on 30 June 2013 BALANCE SHEET AS ON 30 JUNE 2013 (in EUR) 30 June Dec 2012 ASSETS Long-term assets Intangible assets and long-term Deferred expenses and accrued 74,058 71,037 Tangible fixed assets 100,558, ,774,039 Investment property 2,440,825 2,531,131 Long-term financial investments 42,146,870 42,091,870 Long-term operating receivables 0 0 Deferred tax liability 327, ,584 Short-term assets 145,547, ,795,661 Assets (groups for disposal) 0 0 Inventory 520, ,687 Short-term financial investments 9,729,112 9,754,112 Short-term operating receivables 3,587,648 3,078,553 Pecuniary 752, ,424 14,589,041 13,439,776 Short-term deferred expenses and accrued income 1,825, ,957 ASSETS TOTAL 161,961, ,349,395 Ex-balance assets 14,016,480 14,016,480 11

13 BALANCE SHEET AS ON 30 JUNE CONTINUED (in EUR) 30 June Dec 2012 LIABILITIES Equity Called-up capital 12,444,216 12,444,216 Capital reserves 29,842,696 29,842,696 Reserves from profit 2,524,839 2,524,839 Revaluation surplus 17,219,656 17,219,656 Net profit brought forward 10,024,310 7,501,262 Net profit / loss for the period 18,294 2,523,048 72,074,011 72,055,717 Provisions and long-term accrued expenses deferred income 7,253,004 7,264,912 Long-term liabilities Long-term financial liabilities 48,037,385 46,537,385 Long-term operating liabilities 0 0 Deferred tax liability 3,188,397 3,188,397 Short-term liabilities 51,225,782 49,725,782 Liabilities in groups for disposal 0 0 Short-term financial liabilities 24,996,640 26,054,928 Short-term operating liabilities 6,371,480 6,194,071 31,368,120 32,248,999 Short-terme accrued expenses and deferred income 40,933 53,985 LIABILITIES TOTAL 161,961, ,349,395 Ex-balance liabilities 14,016,480 14,016,480 12

14 Semi-annual cash flow of Terme atež company SEMI-ANNUAL CASH FLOW FOR THE PERIOD ENDING 30 JUNE 2013 (in EUR) 1 Jan to 30 June 13Jan to 30 June 12 Cash flow from operating activity Receivables from operating activity Receivables from sales of products and service 13,362,010 15,925,122 Other receivables from operating activity 633,060 1,722,877 Disbursements from operating activity Disbursements for purchase of raw material and (6,820,410) (6,860,693) Disbursements for pay-roll and share of employees in profit (3,912,071) (4,597,087) Disbursements for duties of all kind (826,829) (1,022,766) Other disbursements from operating activity (294,699) (282,065) Surplus of receivables / disbursements from operating activity 2,141,061 4,885,387 Cash flow from investment acitivy Receivables from investment activity Receivables from interests and holdings in profit of others referring to investment activity 168 1,036,825 Receivables from disposal of intangible assets - - Receivables from disposal of tangible assets - - Receivables from disposal of investment property - - Receivables from disposal of long-term financial investments - 8,735 Receivables from disposal of short-term financial investments 5,000 - Disbursements from investment activity Disbursements for acquisition of intangible - (5,222) Disbursements for acquisition of tangible assets (527,911) (1,639,545) Disbursements for acquisition of investment property - - Disbursements for acquisition of long-term financial (55,000) (2,498,826) Disbursements for acquisition of short-term financial investments - (13,000) Surplus of receivables / disbursements from financing activity (577,743) (3,111,034) 13

15 SEMI-ANNUAL CASH FLOW FOR THE PERIOD ENDIG 30 JUNE CONTINUED (in EUR) 1 Jan to 30 June 1 13 Jan to30 June 12 Cash flow from financing activity Receivables from financing activity Receivables from deposited capital - - Receivables from increase in long-term financial liabilities 1,500,000 3,680,000 Receivables from increase in short-term financial liabilities 330,000 18,570,055 Disbursements from financing activity Disbursements for loans related to financing activity (1,557,414) (1,264,743) Disbursements for capital deposits - - Disbursements for reimbursements of long-term financial - (2,828,706) Disbursements for reimbursements of short-term financial (875,942) (19,881,892) Disbursements for reimbursements of dividend pay-out and other shares (358,151) in profit (901) Surplus of receivables / disbursements from financing activity (961,507) (1,726,188) Final balance of cash 752, ,626 Cash flow for the period 601,811 48,165 Opening balance of cash 150, ,461 Semi-annual capital flow statement of Terme Čatež company SEMI-ANNUAL CAPITAL FLOW FOR THE PERIOD ENDING ON 30 JUNIE 2013 Called-up Reserves for Reservesj Revaluat. Net profit Net profit / Net profit Net profit / Equity capital Capital Legal Own holding Otherreserves from surplus brought Loss brought Loss for the year (in EUR) TOTAL reserves reserves And treas.s.from profit profit forward forward period Totall Balance as on 31 Dec ,444,216 12,444,216 29,842,696 1,689, , ,524,839 17,219,656 7,501,262 7,501,262 2,523,048 2,523,048 72,055,717 Opening balance as on 1 January ,444,216 12,444,216 29,842,696 1,689, , ,524,839 17,219,656 7,501,262 7,501,262 2,523,048 2,523,048 72,055,717 Changes in holding capital transactions with shareholders Total return on equity for the accounting period Entry of net profit / loss for the accounting period ,294 18,294 18, ,294 18,294 18,294 Capital in- and outflows Rearrangement of the rest of net profit of the compared reporting Period on to other equity components ,523,048 2,523,048-2,523,048-2,523, ,523,048 2,523,048-2,523,048-2,523,048 0 Final balance as on 30 June ,444,216 12,444,216 29,842,696 1,689, , ,524,839 17,219,656 10,024,310 10,024,310 18,294 18,294 72,074,011 14

16 PROFIT & LOSS STATEMENT Terme Čatež company realized in the first six months of 2013 as follows: EUR 14,081 k in revenues; EUR 18.3 k in net profit. STRUCTURE OF EXPENSES Figure 3: Semi-annual structure of expenses of Terme Čatež company LEGEND: BLUE: COSTS OF GOODS, MATERIAL AND SERVICE CRIMSON: LABOUR COSTS LIME: VALUE WRITE-OFFS BLUE: OTHER EXPENSES CELESTE: FINANCIAL EXPENSES Costs of goods, material and service represent the highest portion in the structure of expenses - namely 42.4 %. Labour costs also contributed a great deal of expenses - namely 28.4 %. Depreciation made to 18.5 %, financial and other expenses totalled 9.6 % BALANCE SHEET OF TERME ČATEŽ COMPANY The value of assets of Terme Čatež as on 30 June 2013 amounted to 161,962 k. The bulk was long-term assets, namely 89.9 %, while short-term assets accounted for 9.0 %. 15

17 Figure 4: Structure of assets of Terme Čatež company as on 30 June 2013 LEGEND: BLUE: SHORT-TERM ASSETS CRIMSON: LONG-TERM ASSETS LIME: SHORT-TERM DEFERRED EXPENSES AND ACCRUED INCOME CAPITAL FLOW AND CASH-FLOW Cash-flow statement shows the in- and outflows of financial assets in separate areas like operation, financing and investments. Capital in- and outflows are evident from the capital flow statement. The amount of capital is increased by the realized net profit of the company. 16

18 3. 2 REVIEW OF FINANCIAL STATEMENT OF TERME ČATEŽ GROUP Non-audited consolidated financial statement of Terme Čatež Group pursuant to International Financial Reporting Standards (IFRS) SEMI-ANNUAL (2013) CONSOLIDATED PROFIT & LOSS STATEMENT OF TERME ČATEŽ GROUP SEMI-ANNUAL (2013) PROFIT & LOSS STATEMENT (in EUR) 1 Jan to 30 June 13 1 Jan to 30 June 12 Net sales revenues 17,107,971 18,226,223 Change in value of inventory products and unfinished production - - Materialized own products and service - - Other operating revenues (revaluating operating revenues incl.) 429, ,709 Costs of goods, material and service (7,547,519) (8,089,378) Labour costs (5,103,707) (5,556,337) Value write-offs (3,299,455) (3,285,631) Other operating revenues (307,655) (303,542) Profit / loss from operating activity 1,278,866 1,706,044 Financial revenues from holdings 41, ,236 Financial revenues from loans 89,452 10,176 Financial revenues from accounts payable 6,954 6,805 Financial expenses from financial investments - - Financial expenses from financial liabilities (1,535,104) (1,463,551) Financial expenses from operating liabilities (31,612) (27,133) Profit / loss from financing activity (1,428,579) (1,347,468) Other revenues 122, ,294 Other expenses (1,361) (20,062) Corporation tax (192,000) (526,010) Deferred tax (3,835) (5,114) Net profit / loss for the accounting period (224,847) 42,684 Net profit / loss to the controlling holder (121,126) 73,631 Net profit / loss to minor shareholders (103,720) (30,947) Net profit / loss per share to controlling holder Corrected net profit / loss per share to controlling holder

19 Consolidated balance sheet of Terme Čatež Group as on 30 June 2013 BALANCE SHEET AS ON 30 JUNE 2013 (v EUR) 30 June Dec 2012 ASSETS Long-term assets Intangible assets and long-term Deferred expenses and accrued income 2,243,459 2,245,137 Tangible assets 181,062, ,523,605 Investment property 5,704,577 5,832,612 Non-current financial investments 4,331,703 4,292,835 Non-current operating accounts payable 1,421 1,106 Deferred tax liability 897, , ,241, ,796,902 Short-term assets Assets (groups for disposal) - - Inventory 751, ,344 Short-term financial investments 35,231,527 35,417,580 Short-term operating receivables 3,889,701 4,042,891 Pecuniary 982, ,660 40,855,597 40,390,475 Short-term deferred expenses and accrued income 1,989, ,266 ASSETS TOTAL 237,086, ,309,643 Ex-balance assets 40,544,002 40,396,126 18

20 BALANCE SHEET AS ON 30 JUNE CONTINUED (in EUR) 30 June June 2012 LIABILITIES Equity Called-up capital 12,444,216 12,444,216 Capital reserves 29,842,696 29,842,696 Reserves from profit 3,830,347 3,830,347 Revaluation reserves 65,569,333 65,569,333 Net profit / loss brought forward 21,104,689 20,106,553 Net profit / loss for the year (121,126) 998,139 Translated correction of capital - Capital of minor shareholders (338,366) (234,646) 132,331, ,556,638 Provisions and long-term accrued expenses and deferred income 7,562,042 7,803,990 Long-term liabilities Non current financial liabilities 47,844,157 35,583,386 Non current operating liabilities - - Deferred tax liability 12,427,454 12,427,454 60,271,611 48,010,840 Short-term liabilities Liabilities in groups for disposal - - Short-term financial liabilities 28,015,632 40,648,286 Short-term operating liabilities 7,478,995 7,400,231 35,494,628 48,048,517 Short-term accrued expenses and deferred income 1,426, ,658 LIABILITIES TOTAL 237,086, ,309,643 Ex-balance liabilities 40,544,002 40,396,126 19

21 Semi-annual consolidated cash-flow statement of Terme Čatež Group CASH FLOW STATEMENT FOR THE PERIOD ENDING 30 JUNE 2013 (in EUR) 1 Jan to 30 June Jan to 30 June 12 Cash flow from operating activity Receivables from operating activity Receivables from sales of products and service 17,501,276 21,925,765 Other receivables from operating activity 842,278 2,270,378 Disbursements from operating activity Disbursements for purchase of material and service (7,975,693) (8,410,007) Disbursements for pay-roll and share of employees in profit (4,913,823) (5,669,656) Disbursements for duties of all kind (1,505,162) (1,930,788) Other disbursements from operation activity (445,433) (472,718) Surplus of receivables / disbursements from operating activity 3,503,442 7,712,973 Cash-flow from investment activity Receivables from investment activity Receivables from interests and shares in profit of others referring to Investment activity 18,048 1,375,310 Receivables from disposal of intangible assets - - Receivables from disposal of tangible assets 8,700 - Receivables from disposal of investment property - - Receivables from disposal of long-term financial investments - 107,515 Receivables from disposal of short-term financial investments 76,020 1,500 Disbursements from investment activity Disbursements for acquisition of intangible assets - (29,321) Disbursements for acquisition of tangible assets (674,347) (1,837,048) Disbursements for acquisition of investment property (41,986) - Disbursements for acquisition of long-term financial investments - (2,068,708) Disbursements for acquisition of short-term financial investments - (1,151,815) Surplus of receivables / disbursements from investment activity (613,564) (3,602,568) 20

22 CASH FLOW STATEMENT FOR THE PERIOD ENDING 30 JUNE CONTINUED (in EUR) Cash flow from financing activity Receivables from financing activity Receivables from deposited capital - - Receivables from increase in long-term financial liabilities 1,500,000 4,042,251 Receivables from increase in short-term financial liabilities 317,781 18,713,870 Disbursements from financing activity Disbursements for interests related to financing activity (1,804,703) (1,711,950) Disbursements for capital deposits - - Disbursements for reimbursement of long-term financial liabilities (820,195) (3,362,873) Disbursements for reimbursement of short-term financial liabilities (1,022,681) (20,975,225) Disbursements for dividend pay-out and other shares in profit (358,151) (636,877) Surplus of receivables / disbursements from financing activity (2,187,949) (3,930,805) Final balance of cash 982, ,922 Cash flow for the period 701, ,600 Opening balance of cash 280, ,322 Semi-annual consolidated capital flow of Terme Čatež Group Net equity Of controlling holder TOTAL SEMI-ANNUAL CAPITAL FLOW STATEMENT (PERIOD ENDING ON 30 JUNE 2013 Called-up Reserves for Own hold. Reserves Revaluation Net profit Net profit/loss Net profit Net loss Net profit/ Equity of capital Own holdings and And shares From profit surplus brought Brought For the year For the for the year Minor shareholders Equity Capital Legal Statutary Other reserves Loss Equity TOTAL reserves reserves Treas.shares reserves From profit TOTAL forward forward year TOTAL (in EUR) As on 31 December ,444,216 12,444,216 29,842,696 1,689, ,877 (834,877)) 2,140,385 3,830,347 65,569,333 20,106,550 20,106, , , ,791,281 (234,646)) 132,556,636 Opening balance as on 1January 12,444,216 12,444,216 29,842,696 1,689, ,877 (834,877)) 2,140,385 3,830,347 65,569,333 20,106,550 20,106, , , ,791,281 (234,646))) - 132,556, Changes in holding capital transactions with shareholders - - Return on equity for the accounting period Entry of net profit / loss for the accounting period (121,126) (121,126) (121,126)) - - (103,721)) (224,847) (121,126) (121,126) (121,126)) (103,721)) - (224,847) Capital transactions - Rearrangement of the rest of net profit for comparing accounting period on other Capital ingredients , ,139 (998,139) - (998,139) , ,139 (998,139) - (998,139) ,444,216 12,444,216 29,842,696 1,689, ,877 (834,877)) - 2,140, ,569, ,104,689 - ( ) (121,126) 132,670,155 (338,366)) - 132,331,790 Closing balance as on 30 June 2013 Annotations to consolidated financial statement of Terme Čatež Group Reporting company Terme Čatež company (hereinfater:»company«) is a company having its headquarters in the Republic of Slovenia, its adsress being Topliška cesta 35, 8251 Čatež ob Savi. The consolidated financial statement of Terme Čatež Group for the period ending on 30 June 2013 include the company and its affiliated companies (hereinafter:»group«). 21

23 Alignment statment The consolidated financial statements of the Group are compiled pursuant to the International Reporting Financial Standards (IFRS) as endorsed by the European Union. They were confirmed by the Management Board dated 20 August Important accounting regulations The accounting regulations implemented were the same as those in the Annual Report Reporting after sections A section is a costituent part of the Group handling with products or services (area sections) or products and services in a special economy (district section) and is subject to risks and profit, which differ from those in other sections. Terme Čatež Group makes 98 % in revenues in the Republic of Slovenia therefore it is not obligatory to have such an evidence. The main stream of operation is tourism as a whole, the separate accounting is conducted for hotels & restaurants, health Dept. and marines. Associated companies The companies of Terme Čatež Group did the business according to the contracts undergeneral market terms. Associated businesses Investment Accounts payable As on 30 June 2013 Loans granted Accounts payable As on 30 June 2013 Loans acquired Operation revenues v EUR Revenues from Expenses from Other costs of Marina Portorož, d.d., Portorož 3, , ,086 15, ,484 15,547 Terme Ilidža, d.o.o., Sarajevo 79,934 21,490, , Termalna riviera, d.o.o., Novalja 0 3, Del Naložbe, d.d., Čatež ob Savi 19, ,919 1, ,584 92, ,124 M Kapital, d.d., Portorož ,915 11,925, Total 102,866 21,672, ,346 12,527, , ,000 11,484 16,671 interests interests service Table 3: Semi-annual associated businesses Investment Accounts payable As on 30 June 2012 Loans granted Accounts payable As on 30 June 2012 Loans acquired Operation revenues v EUR Revenues from Expenses from Other costs of interests interests service Marina Portorož, d.d., Portorož ,461 12,425,002 17, ,411 21,443 Terme Ilidža, d.o.o., Sarajevo 70,464 19,513, , Termalna riviera, d.o.o., Novalja 0 3, Del Naložbe, d.d., Čatež ob Savi 79, , , ,631 7,149 4,333 0 Total 151,026 19,740, ,461 12,779, ,729 7, ,744 21,535 Table 4: Semi-annual associated businesses

24 3.2.1 PROFIT & LOSS STATEMENT Skupinski računovodski izkazi so skupek posamičnih računovodskih izkazov povezanih podjetij, ki prikazujejo premoženjsko in finančno stanje ter poslovni izid, kot da bi šlo za eno samo podjetje. Pri sestavljanju konsolidiranih računovodskih izkazov so učinki vseh transakcij med povezanimi podjetji v celoti izločeni. STRUCTURE OF REVENUES OF THE GROUP Figure 5: Semi-annual structure of revenues of the Group LEGEND: BLUE: OPERATING REVENUES CRIMSON: OTHER REVENUES LIME: FINANCIAL REVENUES Sales revenues are the core revenues of the Group; in the first six months of 2013 they made to 96.5 % of all the revenues of the Group. 23

25 STRUCTURE OF EXPENSES OF THE GROUP Figure 6: Review of the structure of expenses of the Group in the first six months of 2013 LEGEND: BLUE: COSTS OF GOODS, MATERIAL AND SERVICE LIME: VALUE WRITE-OFFS CELESTE: FINANCIAL EXPENSES CRIMSON: LABOUR COSTS LILAC: OTHER EXPENSES Costs of goods, material and service represent the highest portion in the structure of expenses - namely 42.3 %. Labour costs also contributed a great deal of expenses - namely 28.6 %. Depreciation made to 18.5 %, financial expenses totalled 8.8 %.. 24

26 3.2.2 BALANCE SHEET Upon the preparation of financial statement of Terme Čatež Group a single company method has been implemented, according to which all the assets and liabilities of the controlling company and subisidiaries belong to the Group, the minor holdings however are demonstrated as part of holding equity of the Group. Net profit / loss of the year is divided to net profit / loss to the controlling holder and net profit / loss to minor shareholders. STRUCTURE OF THE GROUP'S ASSETS Figure 7: Structure of the Group's assets as on 30 June 2013 LEGEND: BLUE: SHORT-TERM ASSETS CRIMSON: LONG-TERM ASSESTS LIME: SHORT-TERM DEFERRED EXPENSES AND ACCRUED INCOME The value of assets of Terme Čatež Group as on 30 June 2013 amounted to 237,087 k. The bulk was longterm assets, namely 81.9 %, while short-term assets accounted for 17.2 %. 25

27 STRUCTURE OF LIABILITIES OF THE GROUP Figure 8: Structure of liabilities of Terme Čatež Group as on 30 June 2013 LEGEND: BLUE: EQUITY LIME: SHORT-TERM LIABILITIES CELESTE: SHORT-TERM ACCRUED EXPENSES AND DEFERRED INCOME CRIMSON: LONG-TERM LIABILITIES LILAC:LONG-TERM ACCRUED EXPENSES AND DEFERRED INCOME 26

28 3.2.3 CAPITAL FLOW AND CASH-FLOW STATEMENT Izkaz denarnih tokov je bil pripravljen po neposredni metodi na podlagi prejemkov in izdatkov v prvem polletju Izkaz denarnih tokov prikazuje prejemke in izdatke na posameznih področjih, kot so poslovanje, financiranje in naložbenje. Izkaz denarnih tokov je prikazan po neposredni metodi, ki jo predpisuje MRS 7. Uporabnikom daje pojasnila o prejemkih in izdatkih denarnih sredstev in njihovih ustreznikov. Zajema denarne tokove pri poslovanju, denarne tokove pri naložbenju in denarne tokove pri financiranju. Premiki v kapitalu in premiki v ali iz kapitala so razvidni iz izkaza gibanja kapitala. Po stanju na koncu meseca junija 2013 znaša vrednost kapitala Skupine tisoč EUR RISK MANAGEMENT Business performance on the locations in the country as well as beyond the boarders requiress from the management a certain recognition of risks related thereto and an immediate response to prevent negative consequences for the operation of the whole Group. Terme Čatež company evidented the risks to which the company can be exposed and noticed the crutial ones, which have constantly been monitored due to bigger exposure to their certainty of realization. At the same time certain actions were undertaken to prevent the appearance of risks and in the case that would happen to reduce their bad consequences. It is important to know, that the company is insured against internal risks, against external ones the company tries to alleviate bad effects. OPERATION RISKS Crutial risks: customers service purchase of raw material and goods (stock optimizing) purchase policy and price optimization of incoming goods pricing policy and competitivenss management and human resources policy consideration of legislation and legal policy maintenance of amenities and equipment - investment into new amenities and facilities information technology and data security controlling risks of property loss and insurance risks related to possible terrorist attacks epidemic and pandemic diseases radiation. The company has introduced consistent methods of implementing, following and controlling of all business events, which can lead to changes of material status and economy threads; besides, the operation of the company is such, that enables a regular and consistent planning, business operation and synergy control. 27

29 FINANCIAL RISKS The exposure to financial risks means the possibility of changes in fair value of risk exposed items (impairment of assets or increase of debt), which have a direct impact on the company's profit and cash flow. The risks like currency risk, interest rate risk with the calculation of exposure related to indebtedness and credit risk are moderate to high. Short-term payment risk (liquidity) Liquidity was provided by planning of cash flows at the daily, monthly and annual level. A lot of our attention was paid to daily co-ordinations with the creditor banks. The company co-operates with more banks, but due to the adverse economic situation in the country the acquirement of additional financing sources has been rather difficult. This particular risk has been estimated to be moderate to high. Long-term solvency risk As regards the long-term solvency risk, it is estimated that it is present, however it is low because of the adequate capital structure and the quality and marketability of the Group's assets. The equity capital represents 49 % of all liabilities. Therefor, we estimate, that such a risk is held moderate. Inflation risk The exposure of the company to inflation risk is kept modest. Outgoing prices are modified by inflation, except in the cases, where this is not possible due to competition. In such cases internal reserves are released. OTHER RISKS The objective risks (force majeur) like war and political events do not as a rule affect the operation of a company, except in case of terrorist attacks in close vicinity. Our estimations show that there exists no such danger close to the headquarters of the company (the exception being the subsidiary in Bosnia). Certain risks represent epidemic and/or pandemic outbreaks (virusses and bacteria augmentation in water). Other unforeseen events, which could affect the tourist flows, include an outbreak of bird flu pandemic. The close vicinity of the nuclear power plant at Krško is ranged among the possible risks, like single terrorist actions or organized terrorist groups. All risks mentioned in this paragraph are not insured. The risk of flood due to the overflow of Sava river has been present though, above all in the case of longer rain periods. 3.4 ENVIRONMENTAL CARE AND (LOCAL) COMMUNITY The operation of our company is based on controlled handling with water and energy, waste treatment, environment and all natural resourses and a part of permanent education of the employees covers these areas. The company has also solved the problem of waste water treatment. We respect the environment, we treat it with care, for we know how important it is for our health. The rational use of energy- and environment friendly sources is under constant control. According to the adopted legislation referring to waste and waste water, noise, packaging, energy sources, chemicals, construction of buildings, safety precautions, and pursuant ot the inspection audits, we are proud to say that the operation of Terme Čatež company is well within the adopted standards. The company acts as sponsor or donates to diverse local and/or state entities, thus encouraging their cultural, sports, education, humanitary activities. 28

30 4. ACCESS TO THE RELEASED DATA Crutial changes in the data of prospectus for the stock exchange listings are being currently released on the company s website. The released semi-annual report of Terme Čatež company and Terme Čatež Group shall be available to the public from the moment it has been published on the website of the Ljubljana Stock Exchange SEOnet (i.e. 30 August 2013), at the company s headquarters at Topliška cesta 35, 8251 Čatež ob Savi, each working day from 9 a.m. to 2 p.m., and/or on the compan y website: under: >About the company< >Press room< >Press releases< At Čatež, August 2013 Sebastjan Selan General Manager 29