annual report 2020 · 2021. 5. 12. · 2.9 development and investments 79 2.10 divestment of...

ANNUAL REPORT2020

Note: “The English version of the Annual Report 2020 of Intereuropa Group and parent company Intereuropa d. d. constitutes a translation of the original Slovenian version. Only the Slovenian version is legally binding.”

C o n t e n t s

A n n u a lR e p o r tof the Intereuropa Groupand parent companyIntereuropa d. d. for theyear 2020

PUBLISHER: Intereuropa, Global Logistics

Services, Ltd. Co., Koper

TEXT WRITTEN BY: Intereuropa, d. d., Koper

DESIGNED BY: AV Studio d. o. o., Velenje

TRANSLATOR: Amidas d. o. o., Ljubljana

PHOTOGRAFY: Foto Belvedere, Koper and

Intereuropa archive

Koper, April 2021

2 INTEREUROPA / ANNUAL REPORT / 2020

01 Introduction

1.1 Key operating indicators of the Intereuropa Group 61.2 Presentation of the Intereuropa Group 81.3 Letter from the President of the Management Board 121.4 Report of the Supervisory Board for 2020 141.5 Statement of responsibility of the Management Board 181.6 Significant events in 2020 191.7 Impact of COVID-19 on operations 201.8 Corporate governance statement 211.9 Statement regarding non-financial operations 361.10 Explanation in accordance with Article 545 of the ZGD-1 41

02 Business report

2.1 Development strategy of the Intereuropa Group 442.2 Implementation of plans in 2020 462.3 Objectives and business plans for 2021 472.4 Economic conditions in 2020 and forecasts for 2021 482.5 Marketing and sales 512.6 Analysis of operations 592.7 Shares and ownership structure 722.8 Risk management 772.9 Development and investments 792.10 Divestment of commercially obsolete assets 81

03 Sustainable development

3.1 HR issues 843.2 Environmental matters and energy-efficiency 933.3 Social responsibility 953.4 Quality management system 963.5 Responsibility to suppliers 983.6 Communication with key publics 99

04 Financial report

4.1 Financial statements of the intereuropa group and Intereuropa, d. d. 1034.2 Basis for preparation and notes to the financial statements 110

3INTEREUROPA / ANNUAL REPORT / 2020

01Introduction

01 INTRODUCTION

1 . 1 K E Y O P E R A T I N G I N D I C A T O R S O F T H E I N T E R E U R O P A G R O U P

The year 2020 will go down in history as the year of the outbreak of the coronavirus SARS-Cov-2 pandemic (hereinafter: COVID-19), which brought significant changes to the economic environment. The pandemic has had a significant effect on the operations of the Intereuropa Group. Despite additional measures on the sales side, the containment measures of the countries in which the Group operates made it impossible to avoid a decline in sales. Although operating conditions were extremely adverse on all markets, the Group ensured the continuous provision of logistics support to customers along the entire supply chain, both during the first and second wave of the epidemic, while implementing the measures to preserve the health of employees.

The Intereuropa Group generated sales revenue of EUR 150.7 million in 2020, which was down by 6% on the sales revenue in 2019. Cash flows from operating activities (hereinafter: EBITDA) were down by 12% on the previous year and stood at EUR 12.3 million. The Group’s net debt was down by EUR 10.0 million to stand at EUR 44.4 million at the end of 2020, resulting in an EBITDA ratio of 3.6.

TABLE 1: KEY OPERATING INDICATORS OF THE INTEREUROPA GROUP (IN EUR THOUSAND)

2017 2018 2019 2020Index

2020/2019

Sales revenue 149,889 160,382 160,353 150,725 94

EBITDA1 12,739 12,397 13,971 12,298 88

Operating profit (EBIT) 311 6,064 7,524 5,764 77

Profit or loss from ordinary operations -2,028 4,028 6,442 4,563 71

Net profit or loss -1,979 4,408 4,197 3,568 85

Value added1 39,911 41,247 42,905 41,423 97

Net earnings per ordinary share of Intereuropa, d. d. (in EUR)2 0.01 0.15 0.12 0.08 67

Investments in property, plant and equipment, and intangible assets

2,690 5,374 2,889 2,105 73

1 Alternative performance measure (APM), defined in the section ‘Alternative performance measures’ in Table 23 on page 70.2 Earnings (loss) per ordinary share = earnings (loss) of the parent company / (number of ordinary shares – number of treasury shares).

6 INTEREUROPA / INTRODUCTION / 2020

FIGURE 1: CHANGES IN THE SALES REVENUE AND EBITDA OF THE GROUP IN THE PERIOD 2017 TO 2020

170

150

130

110

90

70

50

15

14

13

12

11

10

9

8

7

6

5

SALE

S R

EVEN

UE

(in E

UR

mill

ion)

EBIT

DA

(in

EUR

mill

ion)

2017

Sales revenue

EBITDA1

2018 2019 2020

1 Alternative performance measure (APM), defined in the section ‘Alternative performance measures’ in Table 23 on page 70.

TABLE 2: STATEMENT OF FINANCIAL POSITION OF THE GROUP (IN EUR THOUSAND)

2017 2018 2019 2020Index

2020/2019

Total assets 229,672 232,927 223,351 220,444 99

Non-current assets 188,267 182,978 180,747 174,484 97

Current assets 41,405 49,949 42,604 45,960 108

Equity 117,049 120,229 122,358 124,850 102

Financial and operating liabilities1 109,297 110,251 98,195 92,724 94


FIGURE 2: CHANGES IN THE ASSETS AND FINANCIAL LIABILITIES OF THE GROUP IN THE PERIOD 2017 TO 2020

300

250

200

150

100

50

0

in E

UR

mill

ion

Assets

Financial liabilities

2017 2018 2019 2020

Financial liabilities were down by EUR 3.1 million in 2020, and accounted for 27% of total equity and liabilities at the end of the year.

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7INTEREUROPA / INTRODUCTION / 2020

TABLE 3: PERFORMANCE INDICATORS OF THE GROUP

2017 2018 2019 2020Index

2020/2019

Net return on equity1 -1.6% 3.8% 3.5% 2.9% 83

Net return on assets1 -0.8% 1.9% 1.8% 1.6% 87

Productivity (in EUR thousand)1 112.83 124.72 124.06 116.21 94

Net return on revenue1 -1.3% 2.7% 2.6% 2.3% 92


TABLE 4: AVERAGE NUMBER OF EMPLOYEES (BASED ON HOURS WORKED)

2017 2018 2019 2020Index

2020/2019

No. of Group employees 1,328 1,286 1,293 1,297 100

No. of employees at the parent company 577 566 582 572 98

No. of employees at subsidiaries 751 720 711 725 102

1 . 2 P R E S E N T A T I O N O F T H E I N T E R E U R O P A G R O U P

1.2.1 PRESENTATION OF ACTIVITIES

The Intereuropa Group is the leading provider of comprehensive logistics solutions in the Western Balkans. A full range of services is provided through the following three key business lines:• the land transport segment comprising groupage, domestic transport, road transport, railway freight and customs clearance

services;• the logistics solutions segment comprising the warehousing and distribution products; and• the intercontinental transport segment comprising sea freight, car logistics, shipping agency services and air freight.

The Intereuropa Group also provides additional services that include the leasing of business premises, parking services at customs terminals, trade fair logistics and insurance brokerage services.


1.2.2 BASIC DATA AS AT 31 DECEMBER 2020

TABLE 5: PARENT COMPANY

Abbreviated name Intereuropa, d. d.

Country of the parent company Slovenia

Registered office of the parent company

Vojkovo nabrežje 32, 6000 Koper

Contact informationtel.: +386 5 664 1000 e-mail: [email protected] web: http://www.intereuropa.si

Registration no. 5001684

Tax no. 56405006

Entry in the companies register Registered with the Koper District Court, entry no. 1/00212/00

Share capital of the Company EUR 27,488,803

No. of issued shares27,488,803 no-par-value shares, of which 16,830,838 ordinary shares (IEKG) and 10,657,965 preference shares (IEKN)

Share listing IEKG shares are listed on the prime market of the Ljubljana Stock Exchange.

Management BoardMarko Cegnar, President of the Management BoardMarko Rems, Vice-President of the Management Board

Supervisory Board

Boris Novak, MSc, Chairman of the Supervisory BoardAndrej Rihter, MSc, member of the Supervisory BoardVinko Filipič, member of the Supervisory BoardMilan Perović, member of the Supervisory BoardTjaša Benčina, member of the Supervisory BoardZlatka Čretnik, member of the Supervisory Board

TABLE 6: INTEREUROPA GROUP

Number of employees 1,337

Total closed warehousing area* 215,000 m²

Total land area 1,604,000 m²

Membership in international organisations IATA, FONASBA, BIMCO, GS1 and FIATA

Membership in international logistics networks

WCA, FETA and HCL and ALN

Quality certificates

The ISO 9001:2015 certificate is held by the following companies:Intereuropa, d. d., Koper;Intereuropa, logističke usluge, d. o. o., Zagreb andIntereuropa RTC, d. d., Sarajevo

Important certificates:

The AEO (Authorised Economic Operator) certificate is held by the following companies:Intereuropa, d. d., Koper Intereuropa, logističke usluge, d. o. o., ZagrebAD Intereuropa logističke usluge, Belgrade (OPS)

Own branch networkSlovenia, Croatia, Montenegro, Bosnia and Herzegovina, Serbia, Kosovo, North Macedonia, Albania and Ukraine

* Closed warehousing area, excluding tents and canopies, owned by Intereuropa

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%

Intereuropa, d. d*

Interzav, d. o. o., Koper

71,28%

TOV TEK ZTS, Uzhgorod

89,93%

Interagent, d. o. o., Koper

100,00%

TOV Intereuropa-Ukraina, Kiev

100,00%

Rail Cargo Logistics, železniška špedicija, d. o. o.

26,00%

AD Intereuropa-log. usluge Belgrade

73,62%

Intereuropa Global Logistics Service Albania shpk, Durres

100,00%

Intereuropa Sajam,d. o. o.,Zagreb

51,00%

Intereuropa Skopje, DOO Skopje

99,56%

Intereuropa RTC, d. d. Sarajevo

95,77%

ZETATRANS A.D. Podgorica

69,27%

Intereuropa, logističkeusluge, d. o. o. Zagreb

99,96%

Intereuropa Kosova L.L.C., Prishtina

90,00%

SLOVENIA

BOSNIA & HERZEGOVINA

MONTENEGRO

CROATIA

KOSOVO

SERBIA

ALBANIA

UKRAINE

NORTH MACEDONIA

Parent Company

Associate

Subsidiary

of ownership by the Parent Company

1.2.3 ORGANISATIONAL CHART OF THE INTEREUROPA GROUP AS AT 31 DECEMBER 2020

* The majority owner of Intereuropa, d. d. as at 31 December 2020 was Pošta Slovenije, d. o. o., which was the holder of 68.79% of ordinary shares and 100.00% of preference shares.


1.2.4 PRESENTATION OF INTEREUROPA GROUP COMPANIES

Companies as at 31 December 2020

Management board/director as at 31 December 2020

Sup

ervi

sory

bo

dy Chairman of the supervisory

body/representative of IE, d. d. on the supervisory body as at 31 December 2020

Land

tran

spo

rtLo

gis

tics

so

luti

ons

Inte

rcon

tinen

tal t

rans

por

tO

ther

ser

vice

s

Distinctions

Intereuropa d. d., Koper

Marko Cegnar, President of the Management BoardMarko Rems, Vice-President of the Management Board

Supervisory board

Boris Novak, MSc, Chairman of the Supervisory BoardAndrej Rihter, MSc, member of the Supervisory BoardVinko Filipič, member of the Supervisory BoardMilan Perović, member of the Supervisory BoardTjaša Benčina, member of the Supervisory BoardZlatka Čretnik, member of the Supervisory Board

• • • •

• Leading provider of comprehensive logistics services in Slovenia;

• 119,600 m2 of company-owned and 6,100 m2 of leased warehousing area.*

Interagent d. o. o., Koper

Mihovil Rameša, Director

Sole partner Intereuropa, d. d. as the sole partner • • Company specialising in shipping agency services

Interzav, d. o. o., Koper

Mojca Žbontar, Director

General Meeting of Shareholders

Representative of Intereuropa d. d. by authorisation of the Management Board

• • Insurance transaction broker

Intereuropa, logističke usluge, d. o. o., Zagreb

Darko Skrnički, President of the Management BoardMarija Štajduhar, Member of the Management Board

Supervisory board

Marko Rems, Chairman of the Supervisory Board Matjaž Ujčič and Nikolina Jurković, members

• • • •• Leading provider of comprehensive

logistics services in Croatia;• 48,300 m2 of company-owned

Intereuropa Sajam, d. o. o., Zagreb

Krešimir Lipovčić, DirectorSupervisory board

Marko Rems, Chairman of the Supervisory Board Vjekoslav Granić, member and Matjaž Ujčič, member

• • •

• Company specialising in trade fair logistics services.

• 100 m2 of company-owned warehousing area.

Intereuropa RTC d. d. Sarajevo

Darko Skrnički, Director

Supervisory board

Marko Cegnar, Chairman of the Supervisory BoardMiha Romih, MSc, member Matjaž Ujčič, MSc, member

• • • •

• Leading provider of comprehensive logistics services in Bosnia and Herzegovina;

• 6,700 m2 of company-owned and 4,800 m2 of leased warehousing area.

AD Intereuropa-logističke usluge Beograd

Darko Skrnički, General ManagerDragana Kačar, Executive Director

Board of Directors

Marko Rems, Chairman of the Board of DirectorsVesna Kos Tomažič, MSc, non-executive member Miloš Đurković, non-executive member

• • •

• One the leading providers of comprehensive logistics services in Serbia;

• 21.100 m2 of company-owned and 600 m2 of leased warehousing area.


Arben Mustafa, Director Andrej Kariš, Director



• • • •• Leading provider of comprehensive

logistics services in Kosovo;• 1,000 m2 of leased warehousing area.

Zetatrans A.D. Podgorica

Tomaž Koder, Executive Director

Board of Directors

Matija Vojsk, MSc, Chairman of the Board of Directors Miha Romih, MSc, member Matjaž Ujčič, MSc, member

• • • •

• Leading provider of comprehensive logistics services in Montenegro;

• 16,700 m2 of company-owned and 2,100 m2 of leased warehousing area.

Intereuropa Skopje DOO, Skopje

Manuela Mišev Spasov, DirectorAndrej Kariš, Director



• • • •

• Leading provider of groupage services in North Macedonia;

• 2.100 m2 of company-owned warehousing area.

Intereuropa Global Logistics Service Albania, Durres

Dashamir Mandija, Director Sole partner Intereuropa, d. d. as the sole partner • • • Company specialising in land and sea freight services.

TOV TEK ZTS, Uzhhorod

Anatolly Nikolajević Parfenyuk, Director


Miha Romih, MSc, Chairman of the General Meeting of ShareholdersNeva Klančič, Chair of the Audit CommitteeMiha Romih, MSc, member of the Audit CommitteeSvetlana Čajevska, member of the Audit Committee

•• Company specialising in railway freight

and international road transport services;

TOV Intereuropa–Kiev, Ukraine

Igor Bibikov, Director

Sole partner Intereuropa, d. d. as the sole partner • • The Company did not operate in 2020.

* Own warehousing area comprises closed warehousing area owned by Intereuropa (excluding tents and canopies).

The Intereuropa Group has been a member of the Pošta Slovenije Group since 13 November 2019.

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1 . 3 L E T T E R F R O M T H E P R E S I D E N T O F T H E M A N A G E M E N T B O A R D

Dear Shareholders and Business Partners,

In 2020, which was characterised by the COVID-19 pandemic, the Intereuropa Group once again proved that it is an important logistics provider in Slovenia and the wider region that responds rapidly to changes in the economic environment while successfully steering its operations, even in adverse conditions. Immediately following the outbreak of the pandemic in March 2020, all Group companies began to implement all measures required to protect the health of employees and business partners, and to ensure business continuity. The success of those measures was reflected in a relatively low proportion of employees infected with COVID-19, and in the continuous flow of goods and logistics support to customers along the entire supply chain on all markets where the Group operates. Nevertheless, the Group’s sales were down relative to 2019 due to the pandemic-related restrictive measures implemented in countries in which the Group operates.

The Group generated EUR 150.7 million in sales revenue in 2020, a decrease of 6% relative to 2019, but 8% higher than planned for 2020. Cash flows from operating activities (EBITDA) totalled EUR 12.3 million, a decrease of 12% relative to the previous year, but 21% higher than planned. In the difficult economic conditions and in the context of declining sales, we limited the drop in operating results and ended the year with a net profit of EUR 3.6 million in 2020, a decrease of EUR 0.6 million relative to the previous financial year, but EUR 2.3 million above the planned net profit set out in the revised plan for the year, which was adopted in July 2020.

Also having a positive impact on results relative to 2019 were the more favourable lending terms that the parent company Intereuropa, d. d. agreed in the loan refinancing process in 2020, while the guarantee issued by Pošta Slovenije, d. o. o. for 80% of the loan amount, in turn, had a positive impact on lending terms.

The Group’s net debt was down by EUR 10.0 million during the year to stand at EUR 44.4 million at the end of 2020.

Many activities in 2020 were dedicated to integration with Pošta Slovenije. With the takeover by the latter, Intereuropa became part of the financially stable Pošta Slovenije Group, which gives the Company and the entire Intereuropa Group ample opportunity for future growth and development. I believe that we will exploit that opportunity well and become even better.

The Intereuropa Group is very market-oriented and constantly searches for new business opportunities on the highly competitive logistics services market. We achieve efficient and successful operations by offering a wide range of high-quality logistics services in three business lines, i.e. land and intercontinental transport and logistics solutions in own and leased warehouses, and through the use of innovative approaches. We are flexible, and can boast of the teamwork of highly qualified employees and effective cost optimisation. All of this allows us to be competitive and offer customers comprehensive logistics services.


Numerous activities in 2020 were dedicated to the specialisation of operational processes. We successfully implemented major logistics projects that required from us a high level of coordination and a great deal of experience. In addition, we also demonstrated our ability to intensify marketing activities for the purpose of promotions on the markets where we are present and in the wider region.

Representing an important factor in the competitiveness of the Intereuropa Group are investments in the development of information technology, which can be seen in the continued introduction of information solutions at subsidiaries and in the centralisation of IT management. Just how important that area is was seen at the outbreak of the pandemic when we successfully ensured the technical conditions and requisite information security for work from home by a large number of employees.

In 2020, we also gave a great deal of attention to dialogue with employees, and concern for their motivation and training. We are aware that motivated and satisfied employees are an important factor in the Group’s performance.

Based on achieved operating results in recent years and plans for the future of the Intereuropa Group, a new strategic development programme was drafted for the Intereuropa Group as part of the Pošta Slovenije Group. That programme was approved by the Supervisory Board in December 2020. Emphasis is placed on growth in the Group’s sales, most notably at the parent company in Slovenia and at the subsidiaries in Croatia and Serbia. The Group will earmark EUR 60 million for major investment projects in the period until 2025, while at the same time divesting obsolete real estate. In addition to investments in the logistics infrastructure and information technology, we will also invest in the competences of employees and the continued development of high-quality logistics services. In the coming strategic period from 2021 to 2025, the Intereuropa Group will continue to pursue its vision as a superior and leading provider of comprehensive logistics solutions in the countries of the former Yugoslavia. The Intereuropa Group remains present in Central Europe, where through Slovenia we coordinate all flows of goods between Central, South-Eastern and Eastern Europe.

I believe that 2021 will be very important for the further growth and development of the Intereuropa Group. It will also be a year in which integration activities will continue with our owner: the Pošta Slovenije Group. As part of the Pošta Slovenije Group, we will continue to strengthen our market position in logistics, invest in the optimisation of processes, ensure financial stability and the development of employees, and thus provide logistics support to customers along the entire supply chain. We will continue to pursue our mission to satisfy the needs of customers for logistics services and ensure the optimal functioning of supply chains for those customers. This will be achieved through the use of innovative approaches, flexibility, the teamwork of highly trained employees, our lean organisational structure and cost-efficiency.

We will continue activities in the areas of corporate integrity and compliance at all companies, and build on the identification of risks at individual companies and the management of those risks, with a greater emphasis on monitoring the success of measures.

There is no doubt that last year was special for all of us. The pandemic, the likes of which we have never seen, changed our way of doing business. In this new and different world, we joined forces with shareholders and business partners in the search for the best paths forward and proved that we are able to find solutions, even in difficult circumstances. We proved that we can rely on one another, and that we know how and are able to work together, no matter the external circumstances. Guided by trust, cooperation, flexibility and the search for the best possible solutions, we look forward to the new period before us and our continued cooperation.

Marko Cegnar President of the Management Board

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1 . 4 R E P O R T O F T H E S U P E R V I S O R Y B O A R D F O R 2 0 2 0

In 2020, the Supervisory Board monitored the operations of Intereuropa, d. d. and the Intereuropa Group, and responsibly supervised its management. It was briefed periodically on reports on different business lines, discussed various aspects of their performance, and adopted the appropriate resolutions in this regard and monitored the implementation thereof. Certain topics were discussed in advance in detail by committees, e.g. the Audit Committee and the Nomination and Remuneration Committee, before being discussed by the Supervisory Board. The Supervisory Board adopted the appropriate resolutions on the basis of their findings and recommendations.

1.4.1 COMPOSITION OF THE SUPERVISORY BOARD

The composition of the Company's Supervisory Board was changed at the end of 2019, when shareholders elected the following persons at the General Meeting of Shareholders to serve as members of the Supervisory Board for a period of four years beginning on 30 December 2019: Boris Novak, MSc, Andrej Rihter, MSc, Vinko Filipič and Milan Perović. On 13 January 2020, Boris Novak, MSc was unanimously appointed to serve as Chairman of Intereuropa, d. d.’s Supervisory Board.

The Company’s Supervisory Board functioned in a composition of six members in 2020. That composition is presented in the section Corporate governance statement (Composition of the Supervisory Board and its committees), in the business report section of the annual report.

1.4.2 WORK OF THE SUPERVISORY BOARD IN 2020

The work and decision-making of the Supervisory Board are based on the monitoring and verification of the operations of Intereuropa, d. d. and the Intereuropa Group. The work of the members of the Supervisory Board and the work of committee members, was professional and focused on the effective performance of their function. In adopting the appropriate resolutions, the Supervisory Board was supported in terms of appropriate content by the proposals of its committees. The Supervisory Board continuously informed interested parties about its most important decisions.

The materials that served as the basis for conducting sessions and adopting the relevant decisions were made available in a timely manner and in accordance with the Rules of Procedure of the Supervisory Board and the Rules of Procedure of the Audit Committee. Reports prepared by the Management Board for the purpose of the work of the Supervisory Board and the Supervisory Board’s committees were suitable for the quality assessment of information and the fulfilment of the obligations of Supervisory Board members that are prescribed by the law and the Articles of Association.

The Supervisory Board believes that its cooperation with the Management Board was appropriate, and compliant with legislation and best practices. To the best of its knowledge and with due care, the Supervisory Board requested the necessary clarifications from the Management Board to assess the position of the Company, and formulated the appropriate resolutions based on those clarifications. The Supervisory Board continuously monitored the implementation of its own resolutions.

The Supervisory Board met at 15 sessions, two of which were correspondence sessions. All members of the Supervisory Board attended sessions regularly. Attendance was 100% at all but one of the Supervisory Board’s sessions. Some sessions were conducted as video-conference meetings in 2020 due to the COVID-19 pandemic. The Supervisory Board and Management Board focused their efforts on defining and monitoring the development strategy, and managing business risks, which is important for the successful future operations of the Company and the Intereuropa Group.

The important matters that the Supervisory Board discussed in 2020 are presented below:• It discussed and approved interim reports regarding the current operations of the entire Intereuropa Group and of individual

subsidiaries on a quarterly basis. It also monitored the compliance of reports with adopted business and strategic plans.• It adopted the audited annual report of the Intereuropa Group for 2019, together with the report of the certified audit firm

Ernst & Young, d. o. o., and was briefed in advance on the findings of the audit.• It took a position regarding the corporate governance statement and statement regarding non-financial operations in

accordance with the ZGD-1J.• Together with the Management Board, the Supervisory Board drafted the agenda and proposed resolutions with justifications

for the 34th General Meeting of Intereuropa, d. d., which was held on 27 August 2020.• It was briefed quarterly on sales activities, changes in the balance of receivables, risk management reports, reports on the sale

of real estate and reports on the progress of the implementation of priority projects.• It adopted the plan of the Intereuropa Group for 2020 on 10 February. • It gave its consent to the signing of an employment contract with President of the Management Board, Marko Cegnar, and

Management Board members, Marko Rems and Matija Vojsk, MSc. • On 9 July, it adopted the revised plan of the Intereuropa Group for 2020, which was drafted on the basis of assessments of


operations and risks solely as the result of the COVID-19 pandemic.• It adopted the remuneration policy for members of Intereuropa, d. d.’s Management Board, which complies with the

provisions of the Act Governing the Earnings of Management Staff at Companies under the Majority Ownership of the Republic of Slovenia and Self-Governing Local Communities (ZPPOGD) and the provisions of the Companies Act (ZGD-1) and the Employment Relationships Act (ZDR-1).

• At the proposal of the Nomination and Remuneration Committee, it gave its consent to the work contract of the external member of the Supervisory Board's Audit Committee.

• It was briefed on the semi-annual and annual report on the work of the Internal Audit Department and gave its consent to the rules on the work of the Internal Audit Department.

• It assessed the effectiveness of the work of the Supervisory Board in 2020 according to the methodology of the Slovenian Directors’ Association, and adopted an action plan for future work improvements on the basis of the results of that assessment.

• The Supervisory Boar<d monitored the implementation of strategic projects.• It was briefed on the report of the Works Council of Intereuropa, d. d. as it relates to employee participation in management.• It was briefed annually and semi-annually on the report on the corporate integrity system.• It discussed the reports of the Audit Committee and the Nomination and Remuneration Committee.• At its session held on 28 October, the Supervisory Board of Intereuropa, d. d. reappointed the current President of the

Management Board, Marko Cegnar, to a four-year term of office, effective 12 November 2020.• The Supervisory Board was briefed at the session of 28 October that as of 12 November 2020 the term of office of current

Management Board member, Matija Vojsk, MSc would cease, and decided that, after 12 November 2020, the Management Board of Intereuropa, d. d. will be reconstituted so that it comprises two members: President of the Management Board, Marko Cegnar, and Vice-President of the Management Board, Marko Rems.

• The Supervisory Board adopted the business and financial plan of the Intereuropa Group for the 2021 financial year and the Strategic development programme of the Intereuropa Group until 2025.

• It was briefed on the amended Rules of Procedure of the Management Board.• It approved the financial calendar of announcements for 2021, in which the Company’s major public announcements are

planned.• At the end of the calendar year, it adopted its own work plan, including the planned content of sessions in 2021. • The Supervisory Board monitored and was actively included in the integration processes of Intereuropa, d. d. and Pošta

Slovenije, d. o. o., a process that required a great deal of engagement by both the Management Board and Supervisory Board.

• It was briefed on other information relating to Intereuropa, d. d., the Intereuropa Group and its subsidiaries.

The work of the Supervisory Board was in line with the provisions of applicable legislation, the Articles of Association, the Rules of Procedure of the Supervisory Board, the internal acts of Intereuropa, d. d., the Corporate Governance Policy of Intereuropa, d. d. and the Slovenian Corporate Governance Code (hereinafter: Code). The Supervisory Board and Management Board are committed to respecting the independence of the members of both bodies, and to taking the appropriate action in circumstances that could lead to a significant change in the status of an individual member of the Management Board or Supervisory Board in relation to the Company. They determined that all Supervisory Board members meet the criteria of independence. Both bodies thus signed a statement on the fulfilment of the criteria of independence. The Company publishes the statements of Supervisory Board members on its website. In their work and decision-making, Supervisory Board members took into account the objectives of the Company, and subordinated any other personal interests or the individual interests of third parties, the Management Board, shareholders and the public to those objectives. The members of the Supervisory Board are qualified, and possess the appropriate competences, different knowledge and experience with respect to the frameworks and requirements in which the Company operates. The Supervisory Board believes that its composition and size facilitate effective discussions and high-quality decision-making based on the diverse experience of its members.

The remuneration of members of the Supervisory Board and its committees is disclosed in the financial report of the parent company in note no. 32 Other explanations. Other costs associated with the work of the Supervisory Board and its committees comprise the costs of liability insurance for members of the Supervisory Board, membership fees for the Slovenian Directors’ Association and training costs for Supervisory Board members. The aforementioned costs amounted to EUR 20,988 in 2020.

Two committees functioned under the aegis of the Supervisory Board in 2020: the Audit Committee and the Nomination and Remuneration Committee. The composition of the Supervisory Board’s committees is described in the section Corporate governance statement (Composition of the Supervisory Board and its committees). Members prepared themselves adequately for topics discussed at individual committee sessions and put forward constructive proposals, and through their active participation, contributed to the performance of the Supervisory Board’s tasks. The work of committees contributed significantly to the effective work of the Supervisory Board.

The Audit Committee met at thirteen sessions in 2020. One of those sessions was a correspondence session. All members of the Audit Committee of Intereuropa, d. d.’s Supervisory Board were present at all sessions and voted on matters by submitting ballots to the chair of the Audit Committee. Members of the Supervisory Board who are not members of the

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Audit Committee were kept abreast about the latter’s work by viewing the minutes of and materials for sessions published on an external portal for members of the Audit Committee. The chair of the Audit Committee also regularly reported on the committee’s work and findings at sessions of the Supervisory Board, as explained in the point Report on the work of the Audit Committee. The Audit Committee addressed issues in accordance with the ZGD-1, recommendations for the work of audit committees, the Audit Committee’s rules of procedure, the work plan of the Supervisory Board’s Audit Committee adopted on 17 November 2020 and the resolutions of the Audit Committee.

The Audit Committee was regularly briefed on periodic and quarterly reports on the operations of the Group and Group companies, and on assessments of the interim operating results of Intereuropa, d. d. and the Group, while special attention was given to financial and accounting data, liquidity, borrowing and the fulfilment of commitments to banks. The committee regularly monitored periodic risk management reports for the Company and Group, and the half-yearly and annual reports of the Internal Audit Department.

In 2020, the Audit Committee was briefed on the Internal Audit Department’s annual report for 2019 and on the latter’s work plan for 2020, and was regularly briefed throughout the year on quarterly reports on the work of the Internal Audit Department, and on reports on the implementation of the latter’s recommendations and the recommendations of the external auditor.

The Audit Committee held several meetings in 2020 with the external auditors of Ernst & Young, d. o. o. during the preliminary audit and audit of the financial statements. During those meetings, it was actively involved in the definition of areas subject to auditing, monitored the independence and the quality of the work of the certified auditor and was briefed on the course of and findings from the preliminary audit/audit of the financial statements of the Company and Intereuropa Group. It discussed the unaudited and audited annual report of the Company and the Intereuropa Group for 2019, with the opinion of the independent auditor. It issued a report on its work in 2019, with an assessment of the annual report of the Company and the Intereuropa Group for 2019. It was briefed on the findings and recommendations from the letter to the management drafted by the audit firm, and on response reports.

The Audit Committee was also briefed on the business-financial plan of the Intereuropa Group for 2021 with projections for 2022 and 2023 and on the Strategic Development Programme of the Intereuropa Group for the period 2021 to 2025, and proposed that the Supervisory Board approve both plans. The Audit Committee adopted its work plan for 2021 and carried out a self-assessment of its work for the previous year, and thus established the basis for its work in the coming year.

In 2020, the Supervisory Board's Nomination and Remuneration Committee met at five sessions, one of which was a correspondence session. The main topics discussed were the procedure of appointing the President of the Management Board and the future composition of Intereuropa, d. d.'s Management Board, and the remuneration of the latter. The entire process took a few months, and was conducted by the Nomination and Remuneration Committee of Intereuropa, d. d.'s Supervisory Board, which was already briefed on a variety of potential approaches to recruiting candidates in June 2020, and on the basis of the possibilities available decided in favour of the re-election process. In adopting its decisions, the committee relied on legislation governing this area, as well as on the Company's internal acts.

1.4.3 PERFORMANCE OF THE INTEREUROPA GROUP IN 2020

The Intereuropa Group is a leading logistics company that is consolidating its position as the leading provider of logistics solutions in Slovenia and Southeast Europe. The performance of the Company and the Intereuropa Group focuses on achieving long-term growth.

The Intereuropa Group generated EUR 150.7 million in sales revenue in 2020, a decrease of 6% relative to 2019, but 8% higher than planned. The main factor in lower sales was the COVID-19 pandemic. The Intereuropa Group generated a cash flow from operating activities (EBITDA) of EUR 12.3 million in 2020, a decrease of 12% relative to 2019, but 21% higher than planned. Earnings before interest and taxes (EBIT) was also down relative to 2019 (by 23%), but was 120% higher than planned to stand at EUR 5.8 million in 2020. Despite the negative effects of the COVID-19 pandemic, the Intereuropa Group ended the 2020 financial year with a profit of EUR 3.6 million.

It responded to the adverse conditions by accelerating the implementation of certain development projects, and continued to implement enhanced marketing activities and supply logistics support to customers along the entire supply chain through its network of twelve subsidiaries in nine countries in Southeast Europe and the Ukraine in the scope of the Pošta Slovenije Group during the remainder of 2020.

The Supervisory Board assesses that Intereuropa, d. d. performed well and achieved the key outlined objectives of Intereuropa, d. d. and the Intereuropa Group. It also bases its findings on the independent auditor's report on the financial statements of Intereuropa, d. d. and the Intereuropa Group for 2020, and on the submitted Management Board reports. In addition to its regular tasks, the Supervisory Board devoted special attention in 2020 to the implementation of the Strategic development programme of the Intereuropa Group and its business and financial plan, and to integration with Pošta Slovenije, d. o. o.


1.4.4 APPROVAL OF THE 2020 ANNUAL REPORT

Pursuant to paragraph 3 of Article 272 of the Companies Act (ZGD-1), Intereuropa, d. d.’s Management Board submitted the annual report of the Intereuropa Group and Intereuropa, d. d. for 2020, together with the auditor’s report for 2020, immediately after compilation and the issuance of the auditor’s opinion. The annual report was discussed by the Supervisory Board at its regular session of 29 April 2021. The annual report of the Intereuropa Group and Intereuropa, d. d. for 2020 was audited by the audit firm Ernst & Young revizija, poslovno svetovanje, d. o. o., which issued an unmodified opinion regarding the financial statements of the Intereuropa Group and Intereuropa, d. d. for 2020. At its session of 29 April 2021, the Audit Committee of Intereuropa, d. d.’s Supervisory Board discussed the audited annual report of the Intereuropa Group and Intereuropa, d. d. for 2020 and found that the annual report was compiled in a timely, clear and transparent manner, and in accordance with the provisions of the Companies Act (ZGD-1), the applicable International Financial Reporting Standards, as adopted by the European Union, and other relevant legislation. The Audit Committee had no comments with respect to the annual report of the Intereuropa Group and Intereuropa, d. d. for 2020, and proposed that the Supervisory Board adopt a decision in accordance with Article 282 of the Companies Act (ZGD-1) regarding the approval of the annual report of the Intereuropa Group and Intereuropa, d. d. for 2020. Based on the auditor’s opinion, the positions of the Audit Committee of Intereuropa, d. d.’s Supervisory Board, and data and disclosures in the annual report of the Intereuropa Group and Intereuropa, d. d. for 2020, the Company’s Supervisory Board assesses that the auditor performed its work independently and professionally in accordance with valid legislation and business practices, that the annual report was compiled, in all material aspects, in accordance with the requirements of the Companies Act (ZGD-1), and that the financial statements fairly present, in all material aspects, the financial position of the Intereuropa Group and Intereuropa, d. d. as at 31 December 2020, and their operating results and cash flows for the year then ended in accordance with the International Financial Reporting Standards, as adopted by the European Union. The Supervisory Board has no remarks regarding the auditor’s report. It also has no comments regarding the annual report of the Intereuropa Group and Intereuropa, d. d. for 2020 that would in any way inhibit its decision to approve the annual report. Thus, in accordance with paragraph 3 of Article 282 of the Companies Act (ZGD-1), the Supervisory Board of Intereuropa, d. d. approved the annual report of the Intereuropa Group and Intereuropa, d. d. for 2020. The 2020 annual report was approved by the prescribed deadline, i.e. one month from its submission to the Supervisory Board by the Company’s Management Board.

In accordance with Article 545 of the ZGD-1, the Company drafted the report on relations with affiliates indicating all the legal transactions that the company concluded with the controlling company or any undertaking related thereto in the previous financial year, at the initiative of or in the interest of these companies, and all other acts that were committed or omitted at the initiative or in the interest of these companies in the previous financial year.

The Management Board of Intereuropa, d. d. hereby explained that the Company did not suffer any deprivation on account of the transactions and acts presented in the report on relations with affiliates.

Pursuant to Article 546 of the ZGD-1, the auditor audited the report on relations with affiliates. The auditor had no comments regarding that report and confirmed:• that the statements in the report on relations between associated companies for the year ended 31 December 2020 are

accurate in all material respects; • that the value of the Company’s legal transactions stated in the report is not disproportionately high given the circumstances

that were known at the time the legal transactions were executed; and • that there are no circumstances relating to other acts stated in the report that would suggest a substantially different

assessment of deprivation than the one given by the management.

In accordance with Article 546a, the Supervisory Board was briefed on the report on relations with affiliates and on the auditor's opinion on the report, and had no comments on the Management Board's statement regarding relations with affiliates.

When adopting the annual report, the Supervisory Board also took a position regarding the corporate governance statement and the statement of compliance with the reference code, which are included in the business report section of the annual report of the Intereuropa Group and Intereuropa, d. d. for 2020, and assessed that they reflect the actual state of corporate governance in 2020.

Koper, 29 April 2021 Andrej Rihter, MSc Deputy Chairman of the Supervisory Board

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1 . 5 S T A T E M E N T O F R E S P O N S I B I L I T Y O F T H E M A N A G E M E N T B O A R D

The Management Board is responsible for compiling the annual report of Intereuropa, d. d. and the Intereuropa Group and the accompanying financial statements in such a way that it presents a true and fair picture of the financial position and the results of the operations of the Company and its subsidiaries in 2020.

The Management Board also confirms that the appropriate accounting policies were applied in the compilation of the financial statements of Intereuropa, d. d. and the Intereuropa Group, that accounting estimates were made according to the principle of prudence and the diligence of a good manager, and that the financial statements of Intereuropa, d. d. and the Intereuropa Group present a true and fair picture of their financial position and the results of their operations in 2020.

The Management Board is also responsible for ensuring that accounting is conducted correctly and that appropriate measures are taken to secure property and other assets, and confirms that the financial statements of Intereuropa, d. d. and the Intereuropa Group, together with the notes, have been compiled on a going concern basis and in line with current legislation and the International Financial Reporting Standards, as adopted by the EU.

The Management Board hereby confirms that, to the best of its knowledge, the financial report was compiled in accordance with the applicable financial reporting framework and presents a true and fair picture of the assets, liabilities, financial position and operating results of Intereuropa, d. d. and the subsidiaries included in the consolidation of the Intereuropa Group. The Management Board also confirms that the business report includes a fair presentation of the development of Intereuropa, d. d.’s operations and of its financial position, including a description of the principal types of risk to which Intereuropa, d. d. and the subsidiaries included in consolidation are exposed. The business report includes a fair presentation of information regarding material transactions with related parties, and is compiled in accordance with the applicable legislation and the International Financial Reporting Standards.

The President and member of Intereuropa, d. d.’s Management Board have been briefed on the constituent parts of the annual report of Intereuropa, d. d. and the Intereuropa Group for 2020. By signing below, they hereby confirm that they agree with the aforementioned report in full.

Management Board of Intereuropa, d. d.

Koper, 13 April 2021

Marko Cegnar Marko Rems President of the Management Board Vice-President of the Management Board


1 . 6 S I G N I F I C A N T E V E N T S I N 2 0 2 0

• On 16 January, Intereuropa, d. d. received a decision from the Securities Market Agency (SMA) regarding the takeover bid of the acquiring company Pošta Slovenije, d. o. o. for the shares of the target company Intereuropa, d. d., in which the SMA found the aforementioned bid successful.

• On 31 January, Intereuropa, d. d. successfully completed the refinancing of several loans arranged under the financial restructuring agreement in 2012. Intereuropa, d. d. and a syndicate of banks, including Nova Ljubljanska banka, d. d. acting as the organiser and agent, concluded a long-term loan agreement in the amount of EUR 54,850,000. The new loan comprises two tranches, one with a maturity of seven years and the other with a maturity of four years. Pošta Slovenije, d. o. o. contributed to that successful refinancing by issuing a guarantee covering 80% of the amount of that loan.

• On 10 February, the Management Board of Intereuropa, d. d. signed a new collective agreement with representatives of the ŠAK KS90 Trade Union and the Trade Union of Transportation and Communication Workers.

• On 10 February, the Supervisory Board of Intereuropa, d. d. adopted the Intereuropa Group’s planning document for 2020.• In February 2020, Intereuropa, d. d. submitted a letter of intent to purchase the remaining participating interest in Intereuropa

RTC, d. d., Sarajevo, by which it will become 100% owner of that company. The consent of the Securities Commission of the Federation of Bosnia and Herzegovina, whose operations have been suspended since November 2019, is required to complete the takeover bid process. The takeover process cannot be completed without that consent.

• At its session held on 16 April, Intereuropa, d. d.’s Supervisory Board adopted the audited annual report of the Intereuropa Group for the 2019 financial year, together with the independent auditor’s report.

• On 26 May, the Company concluded annex 1 to a loan agreement with a syndicate of banks with the aim of mitigating the effects of the COVID-19 pandemic and strengthening its liquidity position. The payment of principal and interest was deferred for one year under that annex.

• At its session held on 9 July, the Company’s Supervisory Board adopted the Intereuropa Group’s revised business plan for 2020, in which the Group planned lower but positive operating results during the second half of 2020 in the context of enhanced marketing activities. The revised business plan was drawn up as the result of the adverse economic conditions following the outbreak of the COVID-19 pandemic. More information regarding the business plan is given in section 2.3.2 Business and financial objectives.

• At the General Meeting of Shareholders of Intereuropa, d. d. held on 27 August, shareholders were briefed on the annual report of the Intereuropa Group and Intereuropa, d. d. for 2019, together with the auditor’s report and the report of the Supervisory Board on the results of the verification of the annual report for 2019 and the confirmation thereof, as well as the remuneration of members of the Management Board and Supervisory Board. Official approval was conferred on the Management Board and Supervisory Board for their work in 2019, and a decision was made on the use of the distributable profit in the amount of EUR 7,908,105.27, which remains undistributed.

• At its session held on 28 October, the Supervisory Board of Intereuropa, d. d. adopted a decision on the reappointment of the current President of the Management Board, Marko Cegnar, to a four-year term of office, effective 12 November 2020. The Supervisory Board was also informed that the term of office of current member of the Management Board, Matija Vojsk, MSc, will come to an end on 12 November 2020. The Supervisory Board decided that, after 12 November 2020, the Management Board of Intereuropa, d. d. will be reconstituted so that it comprises two members: President of the Management Board, Marko Cegnar, and Vice-President of the Management Board, Marko Rems.

• On 19 November, the Supervisory Board of Intereuropa, d. d. adopted the Intereuropa Group’s business and financial plan for the 2021 financial year.

• On 23 December, the Supervisory Board of Intereuropa, d. d. adopted the Strategic development programme of the Intereuropa Group until 2025.

Significant events after the end of the 2020 financial year

• On 20 January 2021, the Government of the Republic of Slovenia awarded major recognition to Intereuropa, d. d.; i.e. a commemorative token for sacrifices made in the fight against COVID-19. The Company was recognised for its sacrifices in preventing the spread of the SARS–CoV-2 infectious disease (COVID-19).

• On 6 April 2021, the subsidiary Intereuropa, d. o. o., Zagreb concluded an agreement on the purchase of land in the Kukuljanovo industrial zone for the purpose of setting up a new logistics centre. On the same day, it also concluded an agreement on the sale of the existing Dražice location, which it will continue to use under lease for its activity until its relocation to the new logistics centre.

• On 31 March 2021, the Supervisory Board of Intereuropa, d. d. received the resignation of Boris Novak, MSc from his position as Chairman and member of the Company’s Supervisory Board.

• In accordance with the agreement concluded with Pošta Slovenije at the end of December on the transfer of activities, Intereuropa, d. d. transferred a portion of its support activities to Pošta Slovenije on 1 January 2021. Employees from those support activities were also reassigned to Pošta Slovenije as part of the transfer of activities.

Information regarding significant events is continuously published on the Company’s website at www.intereuropa.si.

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1 . 7 I M P A C T O F C O V I D - 1 9 O N O P E R A T I O N S

Following the outbreak of the SARS-Cov-2 coronavirus pandemic (hereinafter: COVID-19) in March 2020, all Group companies immediately began to implement all measures required to protect the health of employees and business partners, and to ensure business continuity. Even in the difficult economic and health situation, the Intereuropa Group succeeded in ensuring the continuous flow of goods and logistics support to customers along the entire supply chain on all markets where the Group operates.

The Group's concern for the health and safety of employees in the workplace is paramount. Companies adopted a number of measures and internal guidelines for the effective preventive and responsible conduct of all employees to avoid the spread of virus infections, which in 2020 was seen in a relatively low proportion of infected employees (7%). The Group earmarked EUR 0.1 million in 2020 for preventive means and other costs associated with preventive measures.

In order to minimise the impact of the epidemic on its operations, the Company's key activity was ensuring technical means for work from home for a large number of employees, in addition to ensuring the required information security. Another important goal was the protection of key personnel who enabled this type of work, and the continuous functioning of the IT system.

Global economic activity has been hit hard by the COVID-19 pandemic. The strict measures put in place by individual countries to curb the spread of the coronavirus through the shut-down of non-urgent service activities and the hampered activities of other service sectors in the second and last quarter of the year caused a significant decline in economic activity, which could not be avoided by the Intereuropa Group and was reflected in a 6% decline in sales revenue relative to the previous financial year.

Extensive packages of measures focusing on the mitigation of the loss of income by the corporate and household sectors, the securing of liquidity and support for economic recovery, were adopted at the national level and in the scope of the ECB and the European Commission in order to mitigate the negative consequences of the epidemic. Intereuropa Group companies that benefitted from anti-coronavirus measures in that regard disclosed a total of EUR 1.1 million in other operating revenues, while labour costs were up by EUR 0.3 million as the result of the payment of a crisis bonus.

In May 2020, the parent company concluded annex 1 to a loan agreement with a syndicate of banks with the aim of mitigating the effects of the COVID-19 epidemic and strengthening its liquidity position. The payment of principal and interest was deferred for one year under that annex.

The implementation of anti-coronavirus measures continues in 2021. The Management Board believes that the epidemic will not have a significant impact on the achievement of business plans in 2021.


1 . 8 C O R P O R A T E G O V E R N A N C E S T A T E M E N T

Intereuropa, d. d. is a public limited company, i.e. a public-interest entity, with a two-tier governance system. Corporate governance is based on the laws of the Republic of Slovenia, the Articles of Association, internal acts and the Corporate Governance Policy of Intereuropa, d. d. The Company’s Articles of Association and other key governance documents are accessible on the Company’s website at www.intereuropa.si, in the ‘Corporate Governance’ section under the ‘Investors’ tab. The principal guidelines of corporate governance are transparent operations, the clear segregation of responsibilities and tasks between bodies, continuous concern for the independence and loyalty of the members of management and supervisory bodies, and the continuous monitoring and implementation of improvements to increase the effectiveness of governance.

In 2020, the Company applied the Slovenian Corporate Governance Code, which was adopted by the Ljubljana Stock Exchange and the Slovenian Directors’ Association on 27 October 2016, as its reference code.

1.8.1 GENERAL MEETING OF SHAREHOLDERS

The Company’s share capital is divided into 16,830,838 ordinary registered no-par-value shares and 10,657,965 no-par-value preference shares. Each no-par-value share represents the same stake and corresponding amount in the Company’s share capital. The stake of individual no-par-value shares in the Company’s share capital is determined with respect to the number of no-par-value shares issued. No-par-value shares may not be split.

Ordinary no-par-value shares provide their holders the following rights:• the right to participate in the management of the Company (voting right);• the right to a share in profits; and• the right to a proportional share of the assets remaining after the Company's liquidation or bankruptcy.

No-par-value preference shares provide their holders the following rights:• the right to a share in profits; and• the right to a corresponding portion of residual assets after the liquidation or bankruptcy of the Company.

Preference shares give their holders priority in the sharing of profits in the amount of EUR 0.01 (zero point zero one; preferential amount) per share. The preferential amount is paid out in addition to the share in profits received by the holders of ordinary shares, in accordance with the relevant resolution on the use of distributable profit.

1.8.1.1 Functional bases and method of convocationShareholders exercise their right to participate in the management of the Company at the General Meeting of Shareholders. The competences, responsibilities and functioning of the General Meeting of Shareholders are governed by the Companies Act, the Company’s Articles of Association and the Rules of Procedure of the General Meeting of Shareholders, which are published on the Company’s website in the ‘Corporate Governance’ section under the ‘Investors’ tab.

The General Meeting of Shareholders may be convened by the Company’s Management Board at its own initiative, or at the request of the Supervisory Board or shareholders. The annual General Meeting of Shareholders is typically convened by the end of June every year. The Company informs shareholders in a timely manner about the convocation of the General Meeting of Shareholders, which is published on the websites of the AJPES and Intereuropa, d. d., and via the Ljubljana Stock Exchange’s SEOnet system.

Materials for the General Meeting of Shareholders, including proposed resolutions for all points on the agenda, are available for viewing at the Company’s headquarters in Koper, in the Ljubljana Stock Exchange’s SEOnet system and on the Company’s website in the ‘Corporate Governance’ section under the ‘Investors’ tab, from the date of convocation until the day the General Meeting of Shareholders is held. Proposed resolutions also include the relevant justifications, which provide shareholders sufficient information to make prudent decisions.

Intereuropa, d. d. encourages all major shareholders to publicly disclose their governance policy. To that end, in the scope of the convocation of the General Meeting of Shareholders, the Company also publishes a call to major shareholders to publicly disclose, at a minimum, their voting policy, the type and frequency of governance activities, and the dynamics of communication with the Company’s management and supervisory bodies.

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The main competences of the General Meeting of Shareholders are as follows:• the adoption of the annual report;• decisions regarding the use of distributable profit;• the appointment and recall of members of the Supervisory Board;• the conferral of official approval on the members of management or supervisory bodies;• decisions regarding amendments to the Articles of Association;• decisions regarding measures to increase and decrease capital;• decisions regarding the winding-up of the Company, and status transformations; and• appointment of a certified auditor .

In most cases, the General Meeting of Shareholders makes decisions by a majority of votes cast. The General Meeting of Shareholders makes decisions regarding certain important matters with a three quarters majority of represented share capital. Those matters include: • changes and amendments to the Articles of Association;• decreases or increases in share capital;• changes to the Company’s status;• the early recall of members of the Supervisory Board; and• other cases, if so provided for by law or the Company’s Articles of Association.

1.8.1.2 Conditions for attendance and communication with shareholdersOnly shareholders entered in the Company’s share register (managed by the Central Securities Clearing Corporation or KDD) and their authorised representatives or proxies who have registered to attend in writing by no later than the close of business on the fourth day prior to the General Meeting of Shareholders have the right to attend and exercise voting rights at the General Meeting of Shareholders. Each share entitles its holder to one vote. Only the holders of ordinary no-par-value shares have the right to vote. The holders of preference shares do not have voting rights, unless the preference amount is not paid within one year, or is not paid in full and the remainder is not paid the following year. Preference shareholders have voting rights until that remainder is paid.

Intereuropa, d. d. encourages the active participation of the maximum number of small shareholders at the General Meeting of Shareholders. Thus, the materials published when the General Meeting of Shareholders is convened also include sample registration and authorisation forms. The Company’s website also has an ‘Investors’ tab, where small shareholders and other investors will find information regarding corporate governance and annual and interim reports, in addition to information regarding the General Meeting of Shareholders.

Shareholders are briefed on adopted resolutions immediately following the conclusion of the General Meeting of Shareholders, on the Company’s website and in the Ljubljana Stock Exchange’s SEOnet system.


1.8.1.3 General Meeting of Shareholders in 2020Three general meetings were convened in 2020. The first was convened on 10 January 2020 on the basis of Article 47 of the Takeovers Act, but was later cancelled on 23 January 2020, as the reason for convening the General Meeting of Shareholders was eliminated. The second General Meeting of Shareholders was convened at the proposal of the shareholder Pošta Slovenije, d. o. o. to be held at 14 April 2020, but was also cancelled on 7 April 2020 at the proposal of the shareholder Pošta Slovenije, d. o. o. and under the decision of the Management Board in order to comply with the prohibitions set out in the Decree on the temporary prohibition of the gathering of people at public meetings at public events and other events in public places in the Republic of Slovenia and prohibition of movement between municipalities (Official Gazette of the Republic of Slovenia, No. 38/2020), adopted for the purpose of curbing and managing the SARS-CoV-2 (COVID-19) epidemic.

The 40th annual General Meeting of Shareholders of Intereuropa, d. d. was convened for 27 August 2020. In accordance with paragraph 2 of Article 315 of the ZGD-1, the holders of preference shares held voting rights during the General Meeting of Shareholders. A total of 94.20% of shareholders with voting rights were present. The General Meeting of Shareholders discussed the following points and adopted the following significant resolutions:• It was briefed on the annual report of the Intereuropa Group for 2019, together with the auditor’s opinion, and on the

Supervisory Board’s written report on the verification of the annual report compiled for 2019. • It adopted a resolution, whereby distributable profit in the amount of EUR 7,908,105.27 will remain undistributed.• It approved the work of the Company’s Supervisory Board and Management Board during the 2019 financial year, and

conferred official approval on both bodies for their work in 2019.• It was briefed on the Remuneration policy for members of Intereuropa, d. d.’s Management Board.

The shareholder Pan-Slovenian Shareholders’ Association announced a challenging action against the resolution on the use of distributable profit, which was not filed by the legally prescribed deadline.

The full text of resolutions adopted by the General Meeting of Shareholders is available on the Company’s website at www.intereuropa.si, in the subsection ‘General Meeting of Shareholders’ under the ‘Investors’ tab.

1.8.2 SUPERVISORY BOARD

1.8.2.1 Composition of the Supervisory Board and its committeesIntereuropa, d. d.’s Supervisory Board comprises six members, four of whom are shareholder representatives and two of whom are employee representatives. Members serve a four-year term of office, with the possibility of re-appointment. Supervisory Board members who represent the interests of shareholders are elected by the General Meeting of Shareholders. Employee representatives are elected by the Works Council of Intereuropa, d. d. The General Meeting of Shareholders is only briefed on their election. The Supervisory Board supervises the management of the Company's operations and is fully liable for the performance of its supervisory function.

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TABLE 7: COMPOSITION OF INTEREUROPA, D. D.’S SUPERVISORY BOARD AND ITS COMMITTEES DURING THE 2020 FINANCIAL YEAR

Nam

e an

d s

urna

me

Func

tio

n (C

hair

man

, d

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y, m

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Su

per

viso

ry B

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d)

Init

ial a

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oin

tmen

t to

fu

ncti

on

End

of f

unct

ion/

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f offi

ce

Shar

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lder

/em

plo

yee

rep

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ive

Att

end

ance

at s

essi

ons

w

ith

resp

ect t

o to

tal n

o.

of s

essi

ons

(e.g

. 5/7

)

Gen

der

Nat

iona

lity

Year

of b

irth

Qua

lifica

tio

ns

Prof

essi

ona

l pro

file

Ind

epen

den

ce a

cco

rdin

g

to A

rtic

le 2

3 of

the

Cod

e (Y

ES/N

O)

Exis

tenc

e of

co

nflic

ts o

f in

tere

st d

urin

g fi

nanc

ial

year

(YES

/NO

)

Mem

ber

ship

o

n su

per

viso

ry

bo

die

s of

ot

her

com

pan

ies

Mem

ber

ship

on

com

mit

tees

(e.g

. aud

it,

hum

an r

eso

urce

, o

r rem

uner

atio

n)

Chai

rman

/m

emb

er

Att

end

ance

at s

essi

ons

of

Aud

it C

om

mit

tee

wit

h re

spec

t to

tota

l no

. of

sess

ions

(e.g

. 5/7

) **

Att

end

ance

at s

essi

ons

of

the

No

min

atio

n an

d

Rem

uner

atio

n Co

mm

itte

e w

ith

resp

ect t

o to

tal n

o.

of s

essi

ons

(e.g

. 5/7

) ***

Boris Novak, MSc

Chairman of Supervisory Board since 13 Jan 2020

30 Dec 2019 29 Dec 2023Shareholder representative

14/15 M Slovene 1963Bachelor’s degree and master’s degree in law

Corporate governance Yes No

Družba za upravljanje terjatev bank, d. d. (Bank Assets Management Company) and Športna loterija, d. d.

Member of the Nomination and Remuneration Committee since 13 Jan 2020

Member / 5/5

Andrej Rihter, MSc

Deputy Chair of the Supervisory Board since 13 January 2020


15/15 M Slovene 1970

Bachelor’s degree and master’s degree in traffic technology engineering

Logistics, investments and procurement

Yes No SiDG, d. o. o.Chairman of the Nomination and Remuneration Committee since 13 Jan 2020

Chair / 5/5

Vinko FilipičMember of Supervisory Board


15/15 M Slovene 1971Bachelor’s degree in economics

Finance, accounting, controlling, internal auditing, sales and market communication

Yes NoŠportna loterija, d. d.

Member of the Audit Committee and deputy chairman of the Audit Committee since 13 January 2020

Deputy Chairman 13/13 /

Milan PerovićMember of Supervisory Board



Finance and controlling Yes No /Member of the Audit Committee since 13 January 2020

Chair 13/13 /

Tjaša BenčinaDeputy Chair of the Supervisory Board since 12 Jan 2020

20 November 2017

19 November 2021

Employee representative

15/15 F Slovene 1968Degree in economics

Finance and logistics Yes No

Member of the supervisory board of the Municipality of Koper

Member of the Nomination and Remuneration Committee since 21 November 2017

Member / 5/5

Zlatka ČretnikMember of Supervisory Board

20 November 2017

19 November 2021


15/15 F Slovene 1968degree in economics (higher education)

Finance and logistics Yes No /Member of the Audit Committee since 21 November 2017

Member 14/14 /

* The Supervisory Board met at a total of 15 sessions in 2020.


TABLE 7: COMPOSITION OF INTEREUROPA, D. D.’S SUPERVISORY BOARD AND ITS COMMITTEES DURING THE 2020 FINANCIAL YEAR

Nam

e an

d s

urna

me

Func

tio

n (C

hair

man

, d

eput

y, m

emb

er o

f the

Su

per

viso

ry B

oar

d)

Init

ial a

pp

oin

tmen

t to

fu

ncti

on

End

of f

unct

ion/

te

rm o

f offi

ce

Shar

eho

lder

/em

plo

yee

rep

rese

ntat

ive

Att

end

ance

at s

essi

ons

w

ith

resp

ect t

o to

tal n

o.

of s

essi

ons

(e.g

. 5/7

)

Gen

der

Nat

iona

lity

Year

of b

irth

Qua

lifica

tio

ns

Prof

essi

ona

l pro

file

Ind

epen

den

ce a

cco

rdin

g

to A

rtic

le 2

3 of

the

Cod

e (Y

ES/N

O)

Exis

tenc

e of

co

nflic

ts o

f in

tere

st d

urin

g fi

nanc

ial

year

(YES

/NO

)

Mem

ber

ship

o

n su

per

viso

ry

bo

die

s of

ot

her

com

pan

ies

Mem

ber

ship

on

com

mit

tees

(e.g

. aud

it,

hum

an r

eso

urce

, o

r rem

uner

atio

n)

Chai

rman

/m

emb

er

Att

end

ance

at s

essi

ons

of

Aud

it C

om

mit

tee

wit

h re

spec

t to

tota

l no

. of

sess

ions

(e.g

. 5/7

) **

Att

end

ance

at s

essi

ons

of

the

No

min

atio

n an

d

Rem

uner

atio

n Co

mm

itte

e w

ith

resp

ect t

o to

tal n

o.

of s

essi

ons

(e.g

. 5/7

) ***

Boris Novak, MSc

Chairman of Supervisory Board since 13 Jan 2020


14/15 M Slovene 1963Bachelor’s degree and master’s degree in law

Corporate governance Yes No

Družba za upravljanje terjatev bank, d. d. (Bank Assets Management Company) and Športna loterija, d. d.

Member of the Nomination and Remuneration Committee since 13 Jan 2020

Member / 5/5

Andrej Rihter, MSc

Deputy Chair of the Supervisory Board since 13 January 2020


15/15 M Slovene 1970

Bachelor’s degree and master’s degree in traffic technology engineering

Logistics, investments and procurement

Yes No SiDG, d. o. o.Chairman of the Nomination and Remuneration Committee since 13 Jan 2020

Chair / 5/5

Vinko FilipičMember of Supervisory Board



Finance, accounting, controlling, internal auditing, sales and market communication

Yes NoŠportna loterija, d. d.

Member of the Audit Committee and deputy chairman of the Audit Committee since 13 January 2020

Deputy Chairman 13/13 /

Milan PerovićMember of Supervisory Board



Finance and controlling Yes No /Member of the Audit Committee since 13 January 2020

Chair 13/13 /

Tjaša BenčinaDeputy Chair of the Supervisory Board since 12 Jan 2020

20 November 2017

19 November 2021


15/15 F Slovene 1968Degree in economics

Finance and logistics Yes No

Member of the supervisory board of the Municipality of Koper

Member of the Nomination and Remuneration Committee since 21 November 2017

Member / 5/5

Zlatka ČretnikMember of Supervisory Board

20 November 2017

19 November 2021


15/15 F Slovene 1968degree in economics (higher education)

Finance and logistics Yes No /Member of the Audit Committee since 21 November 2017

Member 14/14 /

* The Supervisory Board met at a total of 15 sessions in 2020.

TABLE 8: COMPOSITION OF THE AUDIT COMMITTEE'S EXTERNAL MEMBERS DURING THE 2020 FINANCIAL YEAR

Firs

t na

me

and

su

rnam

e

Au

dit

co

mm

itte

e

Part

icip

atio

n in

co

mm

itte

e se

ssio

ns w

ith

resp

ect

to to

tal n

um

ber

o

f ses

sio

ns

Gen

der

Nat

iona

lity

Edu

cati

on

Year

of b

irth

Pro

fess

iona

l pro

file

Mem

ber

ship

in

Barbara Gorjup*

Audit committee

13/13 F Slovene MSc 1973

Business finance, economic viability of investments, controlling, risk management, accounting, auditing, corporate governance

Member of HSE, d. o. o.'s supervisory board and member of Telekom Slovenije d. d.'s supervisory board

Barbara Nose**

Audit committee

/ F SloveneBachelor’s degree in economics

1964 Certified auditorMember of the Supervisory Board of Luka Koper, d. d.

* Committee member since 13 Jan 2020** Committee member until 12 Jan 2020

The Supervisory Board had two functioning committees in 2020: the Audit Committee and the Nomination and Remuneration Committee.

** The Supervisory Board’s Audit Committee met at 13 sessions.*** The Supervisory Board’s Nomination and Remuneration Committee met at a total of five sessions.

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1.8.2.2 Audit CommitteeAt its constitutive session of 13 January 2020, the Supervisory Board appointed Milan Perović to serve as chair of the Audit Committee, Vinko Filipič as deputy chair, Zlatka Čretnik as committee member and Barbara Gorjup as independent expert of the Audit Committee.

The Audit Committee functioned in the following composition in 2020:• Milan Perović (member and chair since 13 January 2020);• Vinko Filipič (member and deputy chair since 13 January 2020);• Zlatka Čretnik (member);• Barbara Nose (independent expert and member until 12 January 2020); and• Barbara Gorjup, MSc (independent expert and member since 13 January 2020).

The Audit Committee functioned in accordance with its competences, and in the manner set out in the ZGD-1, the Corporate Governance Policy of Intereuropa, d. d., the Internal Audit Department’s charter and the Rules of Procedure of the Audit Committee. Details regarding the work of the Audit Committee are presented in the report of the Supervisory Board.

1.8.2.3 Nomination and Remuneration CommitteeThe composition of the Company's Supervisory Board was changed in 2019, when shareholders elected the following persons at the General Meeting of Shareholders to serve as members of the Supervisory Board for a period of four years beginning on 30 December 2019: Boris Novak, MSc, Andrej Rihter, MSc, Vinko Filipič and Milan Perović. At its constitutive session of 13 January 2020, the Supervisory Board appointed Andrej Rihter, MSc to serve as chair of the Nomination and Remuneration Committee, and Boris Novak, MSc and Tjaša Benčina to serve as members of that committee.

The Nomination and Remuneration Committee met at five sessions in 2020, where it primarily discussed topics relating to the composition of the Management Board, the reappointment of the President of the Management Board and the conclusion of contracts with members of the Management Board. The committee’s work is presented in more detail in the report of the Supervisory Board. The committee functioned in the following composition:• Andrej Rihter, MSc (chair since 13 January 2020); and• Boris Novak, MSc (member since 13 January 2020); and• Tjaša Benčina (member).

1.8.2.4 Competences, work method and remuneration of the Supervisory BoardThe Supervisory Board functions within the scope of its competences and in the manner set out in the ZGD-1, the Company’s Articles of Association and the Rules of Procedure of the Supervisory Board. The Supervisory Board’s commitments regarding corporate governance are set out in Intereuropa, d. d.’s Corporate Governance Policy, and include a system for identifying conflicts of interest and ensuring the independence of its members. All members of the Supervisory Board signed a statement underlining their positions on the criteria of independence set out in Annex B: Conflicts of interest in respect of the Slovenian Corporate Governance Code. Those statements are published on the Company’s website at www.intereuropa.si.

Regular sessions of the Supervisory Board must be held at a minimum quarterly. The Rules of Procedure of the Supervisory Board define the areas of the aforementioned body’s work. The Supervisory Board reports on its work at the General Meeting of Shareholders.

Information regarding the remuneration of members of the Supervisory Board and its committees during the 2020 financial year is disclosed in the financial report of Intereuropa, d. d., in note no. 32 Other explanations.


1.8.3 MANAGEMENT BOARD

The tasks and areas of responsibility of the Management Board are defined in the Company’s Corporate Governance Policy, while the aforementioned body’s work method is set out in the Rules of Procedure of the Management Board and the Company’s Articles of Association. The latter states that the Management Board shall comprise a maximum of four members, while the Supervisory Board defines the number of members taking into account the principles of efficiency and economy. The Management Board of Intereuropa, d. d. comprised three members for the period 1 January 2020 to 11 November 2020, which was cut to two members as of 12 November 2020. It comprised the President and two members of the Management Board, with its composition changing as of 12 November 2020 to the President and Vice-President of the Management Board. The Management Board managed the Company’s transactions independently and at its own risk. The company is represented jointly by two members of the Management Board as follows: the President and another member jointly, or by two members of the Management Board. Individual members of the Management Board were responsible for specific work areas in accordance with the Rules of Procedure of the Management Board. With its transition to a two-member management board, the President of the Management Board represents the Company together with the Vice-President.

1.8.3.1 Work of the Management Board in 2020The Management Board managed Intereuropa, d. d. and the Intereuropa Group in accordance with established strategic objectives and policies. In performing its tasks and fulfilling its responsibilities, the Management Board observed the principles of corporate governance and the Corporate Governance Policy of Intereuropa, d. d. and complied with the provisions of the Slovenian Corporate Governance Code. The Management Board performs its work in accordance with the principles set out in Intereuropa, d. d.’s Code of Ethics, applicable regulations, the Rules of Procedure of the Management Board, the Company’s Articles of Association and the resolutions adopted by the Company’s bodies.

1.8.3.2 Remuneration of the Management BoardThe remuneration of members of Intereuropa, d. d.’s Management Board are set out in the remuneration policy for members of Intereuropa, d. d.’s Management Board, which was adopted by the Supervisory Board on 10 February 2020. This policy lays down the rules by which the remuneration and rights to which all members of the Management Board are entitled are defined in contracts for all Management Board members. The aim of this policy is to ensure that all the remuneration paid to Management Board members is proportionate to their tasks and responsibilities, and in line with the Company’s financial position, taking into account the provisions of the Act Governing the Earnings of Management Staff at Companies under the Majority Ownership of the Republic of Slovenia and Self-Governing Local Communities (hereinafter: the ZPPOGD), the Companies Act and the Employment Relationships Act. The remuneration received by members of the Management Board comprises the wages, other remuneration and payment of material costs. Wages comprise a basic salary and variable remuneration in accordance with the ZPPOGD. More detailed provisions on the remuneration of Management Board members are evident in the remuneration policy that was presented to the public at the General Meeting of Shareholders, and is available on the website of Intereuropa, d. d. in the section entitled Sessions of the General Meeting of Shareholders.

Information regarding the remuneration of members of the Management Board during the 2020 financial year is disclosed in the financial report of Intereuropa, d. d., in note no. 32 Other explanations.

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TABLE 9: COMPOSITION OF THE MANAGEMENT BOARD DURING THE 2020 FINANCIAL YEAR

Name and surname

Function (Chairman, member)

Area of work on the Management Board

Initial appointment to function

End of function/ term of office

Gender NationalityYear of birth

Qualifications Professional profileMembership in supervi-sory bodies of company/ unaffiliated companies

Marko CegnarPresident of the Management Board**

Freight forwarding and logistics, sales and marketing, HR and general affairs, public relations, quality, security and formal governance of subsidiaries

19 Mar 2016until 11 November 2024

M Slovene 1973Master’s degree in management

Sales, marketing and logistics Not a member

Marko RemsVice-President of the Management Board

Finance, accounting and controlling, real estate management and central procurement, IT support, legal affairs, corporate integrity and compliance, and internal auditing in organisational terms

5 Jul 2017 until 4 Jul 2021 M Slovene 1967Bachelor’s degree in economics

Financial management with more than 20 years of experience in financial and information systems, implementation and management of financial restructuring, and reorganisation in demanding environments

Not a member

Matija Vojsk, MSc, MBA*

Member of the Management Board

Quality, legal affairs, corporate integrity and compliance, security and formal governance of subsidiaries

12 Nov 2019 until 11 Nov 2020 M Slovene 1963

Master’s degree in management, MBA, bachelor’s degree in electrical engineering

Sales and marketing, procurement, corporate governance, business restructuring, performance management

Not a member

* The term of office of Matija Vojsk, MSc ended on 11 Nov 2020.** Marko Cegnar was reappointed to the function of President of the Management Board on 12 November 2020 for a four-year term of office.

1.8.3.3 Members of the Management Board in 2020

Marko Cegnar,President of the Management Board since 12 November 2019 (reappointed to serve as President of the Management Board as of 12 November 2020):

• year of birth: 1973;• master’s degree in management;• performed executive and management functions in

the areas of sales, marketing, procurement and logistics at DHL logistika, d. o. o., Orbico, d. o. o., ITG Tobačna Grosist, d. o. o., ISS SERVISYSTEM, d. o. o. and DHL Express, d. o. o.;

• term of office as President of the Management Board: from 12 November 2019 to 11 November 2020; reappointed on 12 November 2020 to a four-year term of office

• term of office as member of the Management Board: from 19 March 2016 to 11 November 2019;

• responsible for the following business segments: freight forwarding and logistics, sales and marketing, HR and general affairs, public relations, quality, security and formal governance of subsidiaries.


TABLE 9: COMPOSITION OF THE MANAGEMENT BOARD DURING THE 2020 FINANCIAL YEAR

Name and surname

Function (Chairman, member)

Area of work on the Management Board

Initial appointment to function

End of function/ term of office

Gender NationalityYear of birth

Qualifications Professional profileMembership in supervi-sory bodies of company/ unaffiliated companies

Marko CegnarPresident of the Management Board**

Freight forwarding and logistics, sales and marketing, HR and general affairs, public relations, quality, security and formal governance of subsidiaries

19 Mar 2016until 11 November 2024

M Slovene 1973Master’s degree in management

Sales, marketing and logistics Not a member

Marko RemsVice-President of the Management Board

Finance, accounting and controlling, real estate management and central procurement, IT support, legal affairs, corporate integrity and compliance, and internal auditing in organisational terms

5 Jul 2017 until 4 Jul 2021 M Slovene 1967Bachelor’s degree in economics

Financial management with more than 20 years of experience in financial and information systems, implementation and management of financial restructuring, and reorganisation in demanding environments

Not a member

Matija Vojsk, MSc, MBA*

Member of the Management Board

Quality, legal affairs, corporate integrity and compliance, security and formal governance of subsidiaries

12 Nov 2019 until 11 Nov 2020 M Slovene 1963

Master’s degree in management, MBA, bachelor’s degree in electrical engineering

Sales and marketing, procurement, corporate governance, business restructuring, performance management

Not a member

* The term of office of Matija Vojsk, MSc ended on 11 Nov 2020.** Marko Cegnar was reappointed to the function of President of the Management Board on 12 November 2020 for a four-year term of office.

1.8.3.3 Members of the Management Board in 2020

Marko Rems,Vice-President of the Management Board:

• year of birth: 1967;• bachelor’s degree in economics;• performed executive and management functions in the

areas of finance, accounting, information technology, controlling and risk management at the following companies: Družba za upravljanje terjatev bank, d. d., Ljubljana, Luka Koper, d. d., Adriatic Slovenica, d. d., KD Holding, d. d., Ljubljana and Žito, d. d., Ljubljana;

• term of office: from 5 July 2017 to 4 July 2021;• responsible for the following business segments:

finance, accounting and controlling, real estate management and central procurement, IT support, legal affairs, corporate integrity and compliance, and internal auditing in organisational terms.

Matija Vojsk, MSCMember of the Management Board:

• year of birth: 1963;• master’s degree in management, MBA, bachelor’s

degree in electrical engineering;• his business experience includes strategic and

operational sales, marketing, strategic procurement and corporate governance. He served in executive roles in various economic sectors as a member of management boards and as executive director;

• he also worked for several years as a business consultant, four of those in a leading global network for auditing and consultancy services;

• term of office: from 12 November 2019 to 11 November 2020;

• responsible for the following business segments: quality, legal affairs, corporate integrity and compliance, security and formal governance of subsidiaries, and also for internal auditing in organisational terms.

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1.8.4 DESCRIPTION OF THE DIVERSITY POLICY IN CONNECTION WITH REPRESENTATION ON THE COMPANY’S MANAGEMENT AND SUPERVISORY BODIES

Intereuropa, d. d. is aware of the importance of diversity in the composition of the Management Board and Supervisory Board, as diversity increases the efficiency of the functioning of these bodies and fosters a more comprehensive understanding of the business environment, and risks and opportunities connected with the Intereuropa Group’s operations. Accordingly, the Policy Governing the Diversity of Management and Supervisory Bodies is an integral part of the Corporate Governance Policy of Intereuropa, globalni logistični servis, d. d.

The following aspects are taken into account when determining the composition of the Management Board and Supervisory Board:• professional diversity such that the members have different knowledge, skills, competences and experience;• diversity in terms of gender and age;• the generally adopted principles of non-discrimination; and• efforts to ensure the continuity of operation of the bodies by staggering the process of replacing members.

The Supervisory Board’s Nomination and Remuneration Committee and the Supervisory Board take into account diversity policies primarily in relation to the following:• the appointment of members to the Company’s Management Board;• the recruitment, selection and submission of proposed candidates for members of the Supervisory Board to the General

Meeting of Shareholders; and• the self-assessment of the Supervisory Board’s work, which should also include an assessment of the composition of the

Management Board and Supervisory Board in terms of diversity.

The proportion of under-represented members of management and supervisory bodies was 35% at Intereuropa, d. d. and 32.8% at the Intereuropa Group level in 2020. The ratio between genders is appropriate taking into account the region and sector in which the Intereuropa Group operates. Nevertheless, activities will continue to further improve the ratio between genders. An updated policy on the diversity of management and governance bodies will be drafted in 2021. That policy will describe objectives, activities and measures to improve the diversity of management and governance bodies in terms of gender and other aspects (age, education, etc.).

1.8.5 MANAGEMENT AND GOVERNANCE OF GROUP COMPANIES

The parent company Intereuropa, d. d. and its subsidiaries make up the Group, which is centrally managed by the Management Board of Intereuropa, d. d. The policy governing links between the parent company and its subsidiaries is set out in the Corporate Governance Policy of Intereuropa, d. d. The Policy on the Governance of Intereuropa Group Subsidiaries includes the basic elements of the governance of subsidiaries. An effective system for managing and governing subsidiaries is an important factor in the successful achievement of the business objectives of Group companies and in the transparency of their operations.

1.8.5.1 Governance principles for subsidiariesThe basic principles on which the governance of the Intereuropa Group is based are the financial stability of the Group, centralised information support, an effective system of control over subsidiaries and motivated employees. At the forefront of the governance of subsidiaries are cooperation between subsidiaries and the sharing of know-how and best practices between Intereuropa Group companies.

The governance of Group companies is based on a combination of control and coordination mechanisms. A matrix system for managing subsidiaries that combines formal corporate governance and the direct responsibility of functional managers for certain activities at subsidiaries has been introduced. The centralisation of the most important decisions ensures the uniformity of strategic policies and important business, HR-related and technical decisions. Control over financial results remains a core element of supervision. In addition to the appointed supervisory bodies of individual subsidiaries, functional managers, and the controlling and internal audit departments also play an important role in supervision.

The management bodies of the parent company and subsidiaries communicate regularly with the aim of creating a standard culture within the Intereuropa Group, ensuring the transfer of know-how and best practices, and exploiting various synergies. Of key importance are cooperation and communication between all Intereuropa Group companies at the market-operational level of specific product categories and products.


The effectiveness of the Group at multiple operational levels is achieved through consistent periodic communication and the necessary measures to enhance the exploitation of synergies between Intereuropa Group companies, particularly in the following areas:• a coordinated and uniform market approach, with an emphasis on common logistics products and core product categories;• the coordinated management of strategic and key customers;• the development and optimisation of common logistics products;• the development of standard IT support at all subsidiaries and for all logistics products;• the transfer of best practices in the optimisation of processes and in preventive measures to manage risks; and• employee development, with an emphasis on the acquisition and development of knowledge and competences relating

to core product categories and key logistics products.

Intereuropa Group companies operate in accordance with local legislation, resolutions adopted by the management bodies of the parent company and subsidiaries, the Policy on the Governance of Intereuropa Group Subsidiaries, cooperation agreements entered into between the parent company and individual subsidiaries, and the applicable internal acts adopted by the Management Board of the parent company.

1.8.6 AUDITING

1.8.6.1 External auditing The general meeting of Intereuropa d. d. appointed the audit firm ERNST & YOUNG Revizija, poslovno svetovanje, d. o. o., Dunajska cesta 111, Ljubljana to audit the financial statements of Intereuropa, d. d. and the Intereuropa Group for 2019, 2020 and 2021.

The transactions of Intereuropa, d. d. and its subsidiaries with audit firms are presented in the Company’s financial report as part of the notes to financial statements of the Company and Group.

1.8.6.2 Internal auditingThe mission of the IAD is to strengthen and protect the value of the Intereuropa Group through the independent and unbiased issue of objective assurances based on a risk assessment, and through the provision of consultancy services and an in-depth understanding of the operations of the Group. It helps the organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluating and improving the effectiveness of risk management, control, and governance processes.

Internal auditing tasks was performed within the Group by the parent company’s autonomous and independent Internal Audit Department, which reports organisationally to the Management Board and functionally to the Supervisory Board’s Audit Committee. Internal auditing was carried out in accordance with the internal auditing rules hierarchy, in particular with the International Standards for the Professional Practice of Internal Auditing, the Code of Internal Auditing Principles and the Code of Ethics of Internal Auditors, and the applicable laws, other regulations and bylaws.

The areas of auditing for 2020 were defined in the department’s work plan, which was adopted by the Management Board, discussed by the Audit Committee of the Supervisory Board and approved by the Supervisory Board. The internal auditing tasks in 2020 included the completion of internal audits from the previous year, the performance of current internal audits and advisory tasks, the monitoring of the implementation of recommendations from internal and external audits, and operational and other tasks. Internal audits were performed by three employees. They were performed at the parent company and at two subsidiaries. The objectives of internal audits were to assess the risk management approach and the functioning of internal controls in connection with business and support processes, and the management thereof, both in terms of the compliance of those processes with legal and internal regulations, and in terms of the success and effectiveness of processes with regard to the adopted policies, established objectives and criteria of the Company, and to issue recommendations for the improvement thereof. The areas subject to auditing included the policy for the appointment of management staff at subsidiaries, the sea freight transport process, policies and the process of groupage services, the management of the customs terminal, the guidelines and policy for financial reporting and system of authorisations. The COVID-19 pandemic impacted the processes by requiring them to be performed remotely. The Internal Audit Department reports to the Management Board, Audit Committee and Supervisory Board regarding its work.

At the end of the year, the Supervisory Board of Intereuropa, d. d. gave its consent to the agreement on the transfer of activities from the internal audit division to an external contractor, i.e. to the parent company Pošta Slovenije d. o. o., in order to unify or harmonise the function of the support service within the Pošta Slovenije Group, effective 1 January 2021 inclusive.

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1.8.7 DESCRIPTION OF THE MAIN FEATURES OF INTERNAL CONTROLS AND RISK MANAGEMENT AT THE COMPANY IN CONNECTION WITH THE FINANCIAL REPORTING PROCESS

The purpose of internal controls is to ensure the reliability of financial reporting and compliance with valid laws, and other external and internal regulations. Accounting controls are employed to manage the risks associated with the following:• the credibility of accounting data: of primary importance are bookkeeping documents, as evidence of the existence of

business events, that clearly show the content and value of such transactions;• the completeness of financial data: this is ensured by the Company through precisely defined record-keeping procedures

in internal acts, and through control over the functioning of such procedures;• the accuracy of financial data: this is ensured by the Company through a comparison of data in the information system with

data in the underlying bookkeeping documents; and• the segregation of responsibilities in business processes and authorisations for work in the information system: the precise

and consistent definition of tasks and responsibilities of those involved in a specific business event.

When compiling the financial statements of the Group and the notes thereto, risks are mitigated primarily through: • the transparent organisational structure of the parent company and its subsidiaries;• the consistent application of accounting principles and policies; and• the observation of the timetable for the compilation of the financial statements and the notes thereto.

The information system, with its built-in controls, also plays an important role. The authorisation system ensures that users only execute those transactions in the information system for which they are authorised.


1.8.8 INFORMATION REGARDING SIGNIFICANT DIRECT AND INDIRECT HOLDINGS OF THE COMPANY’S SECURITIES IN TERMS OF ACHIEVING A QUALIFYING HOLDING, SPECIAL CONTROLLING RIGHTS AND RESTRICTED VOTING RIGHTS, AND OTHER EXPLANATIONS IN CONNECTION WITH LEGISLATION GOVERNING MERGERS AND ACQUISITIONS

1.8.8.1 Explanations regarding all restrictions on voting rights and regarding treasury sharesThe Company’s share capital is divided into 27,488,803 shares broken down as follows: 16,830,838 ordinary registered freely transferable no-par-value shares and 10,657,965 freely transferable no-par-value preference shares. The holders of Intereuropa, d. d.’s ordinary shares are not subject to any restriction on voting rights. The Company has no voting rights arising from its treasury shares in accordance with Article 249 of the Companies Act (ZGD-1). Intereuropa, d. d. held 18,135 treasury shares (IEKG) with a carrying amount of EUR 180,000 as at 31 December 2020, representing 0.1077% of ordinary shares and 0.0660% of all shares. Intereuropa, d. d. did not purchase or sell treasury shares in 2020.

As at 31 December 2020, 118 ordinary shares were held on a special account of Kapitalska družba, d. d., which in accordance with Article 48a of the Book-Entry Securities Act (Official Gazette of the Republic of Slovenia, No. 5/17) is intended for securities waived by their holders and/or securities held by the Republic of Slovenia. Kapitalska družba may not exercise the voting rights attached to those securities.

The holders of Intereuropa, d. d.’s preference shares have not been paid preference amounts since 2013, and have thus held voting rights at the General Meeting of Shareholders since 2015 in accordance with paragraph 2 of Article 315 of the ZGD-1. Accordingly, 27,470,553 shares out of a total of 27,488,803 shares had voting rights at the 34th General Meeting of Shareholders held 27 August 2020, representing 99.9336% of the Company’s total shares.

1.8.8.2 Major direct and indirect holdings of the Company's securities in terms of achieving a qualifying holding

The Company publishes information in a timely manner regarding the achievement of a qualifying holding, as set out in the Takeovers Act, in the Ljubljana Stock Exchange’s electronic information system (SEOnet) and forwards that information to the Securities Market Agency.

Pursuant to Article 105 of the Financial Instruments Market Act, which sets the thresholds for a significant holding, direct holders who hold more than 5% of voting rights are presented in Table 10.

TABLE 10: SHAREHOLDERS WHO HELD MORE THAN 5% OF VOTING RIGHTS AS AT 31 DECEMBER 2020

ShareholderNo. of ordinary

shares 31 December 2020

No. of preference shares

31 December 2020

No. of voting rights

31 December 2020*

Proportion of voting rights

31 December 2020

Pošta Slovenije, d. o. o. 11,577,271 10,657,965 22,235,236 80.9%

* Pursuant to Article 315 of the ZGD-1, the holders of preference shares obtained voting rights in 2015 because the Company has not paid preference amounts since 2013.

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1.8.9 STATEMENT OF COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE

The Management Board and Supervisory Board of Intereuropa, Globalni logistični servis, d. d., Koper (hereinafter: the Company) verified the compliance of the Company’s governance with the Slovenian Corporate Governance Code (hereinafter: the Code), and hereby declare that the work and operations of the Company are in line with the Code, with certain deviations that are explained in detail below. Despite already being planned for 2020, the Company did not subsequently adopt the SDH Code as its reference code. The deviations emphasised below therefore only relate to the Slovenian Corporate Governance Code.

Recommendation: The management board, together with the supervisory board, draws up and adopts a diversity policy that is implemented with respect to representation on company’s management and supervisory bodies (point 4 of the Code in its entirety).Deviation: On 7 March 2019, the Management Board and Supervisory Board adopted the revised Corporate Governance Policy of Intereuropa, d. d., which includes a policy governing the diversity of management and supervisory bodies. The latter defines the target level of diversity in terms of age, education, other personal traits and gender, but does not define the ratio between genders, the specific objectives of diversity or the impact on human resource and other processes at the Company (points 4.2 and 4.3 of the Code).

Recommendation: A company must ensure an external assessment of the adequacy of its corporate governance statement at least once every three years (point 5.7. of the Code)Deviation: Intereuropa, d. d. was acquired by Pošta Slovenije, d. o. o. at the end of 2019. It is therefore expected that Intereuropa, d. d. will soon cease to be a public limited company. For this reason, the Company decided that an external assessment of the adequacy of its corporate governance statement for 2020 will not be carried out.

Recommendation: In the proposed new composition of the supervisory board for the general meeting of shareholders, all candidates for members of the supervisory board must be independent. The recommendation to appoint independent members applies to both shareholders and works councils. If the general meeting of shareholders or works council does not follow recommendations regarding the appointment of independent members to the supervisory board, a company must disclose this in its corporate governance statement (points 9.2 and 9.3 of the Code).Deviation: At the General Meeting of Shareholders held on 30 December 2019, three members of the majority shareholder’s executive management were appointed to serve as members of Intereuropa, d. d.’s Supervisory Board.

Recommendation: In addition to other matters, the rules of procedure of the supervisory board include a list of all transactions for which the management board requires the prior consent of the supervisory board based on a supervisory board resolution and the company’s articles of association, as well as a system for ordering the services of external experts for the needs of the supervisory board, and the education and training of supervisory board members (point 12.2 of the Code).Deviation: The Rules of Procedure of the Supervisory Board were last reviewed and updated in 2018. The Supervisory Board’s position during the most recent update of its Rules of Procedure was that a list of all transactions for which the Management Board requires the prior consent of the Supervisory Board and a system for ordering the services of external experts need not be included in those rules. Instead, the list of transactions for which the Management Board requires the Supervisory Board’s prior consent is governed by a resolution adopted by the latter. Due to the negligible scope of the outsourced services of external experts for the Supervisory Board, the latter believes that the inclusion of the management and governance of a separate system solely for the Supervisory Board in that body’s Rules of Procedure is illogical. The method and scope of the education and training of Supervisory Board members are set out in the General Meeting of Shareholders resolution of 20 June 2014 and are not governed separately in the Rules of Procedure of the Supervisory Board.

Recommendation: Once a year, the supervisory board defines a training plan for its members and the members of its committees (point 13.1 of the Code).Deviation: The Supervisory Board has not adopted a special training plan for its members for 2020. However, each member may define an individual training plan in the scope of the annual allotment for training purposes. The Supervisory Board will draft a systemic training plan for its members in 2021 that will also include training in the scope of the SDA or SDH.


Recommendation: At least every three years, the supervisory board organises an external assessment in which it cooperates with an institution or external experts with the requisite experience regarding the work of supervisory boards, in-depth knowledge of corporate governance and the functioning of supervisory boards and their committees (point 14.4 of the Code).Deviation: The work of the Supervisory Board was not subject to an external assessment in 2020 nor will it be in 2021. On 30 December 2019, the General Meeting of Shareholders appointed new members to the Company's Supervisory Board. The Supervisory Board has only been operating in its current composition for a year. A status change is also planned for Intereuropa, d. d. in 2021. For this reason, the Company decided that an external assessment of the Supervisory Board for 2021 will not be carried out.

Recommendation: The performance criteria defined by the supervisory board in connection with the variable component of remuneration of management board members must also promote sustainable development and include non-financial criteria, such as compliance with the company’s valid rules and ethical standards (point 21.1 of the Code).Deviation: The Supervisory Board includes non-financial criteria in the performance criteria that serve as the basis for the payment of the variable component of remuneration of Management Board members, but does not define separate elements, such as compliance with the Company’s valid rules and ethical standards. It is the basic duty of Management Board members to comply with the Company’s rules and follow the highest ethical standards. Thus, such conduct does not require additional remuneration.

Recommendation: The company provides continuous information about its financial position and legal status through the publication of assessments of its performance, potential deviations from forecasts and changed operating conditions (point 29.1 of the Code).Deviation: The Company does not publish assessments of its performance, if that performance is in line with expectations. If major deviations were to occur, the Company would publish an appropriate announcement.

Recommendation: The company publishes the rules of procedure of management and supervisory bodies and the general meeting of shareholders on its website (point 29.9 of the Code).Deviation: The Company has published the rules of procedure of the Supervisory Board, Audit Committee and General Meeting of Shareholders. The Rules of procedure of the Management Board are not published, as the Company deems them to be of an internal nature and they have no impact on the transparency of operations that would be of significance to investors or interested parties.

The Corporate Governance Code is accessible in Slovene and English on the websites of the Ljubljana Stock Exchange (www.ljse.si) and the Slovenian Directors’ Association (www.zdruzenje-ns.si).

The statement of compliance with the Corporate Governance Code is an integral part of the 2020 annual report and is published on the Company's website at www.intereuropa.si).

Intereuropa, Globalni logistični servis, d. d.,

Koper,1 March 2021


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1 . 9 S T A T E M E N T R E G A R D I N G N O N - F I N A N C I A L O P E R A T I O N S

Pursuant to Article 70c of the Companies Act, the Company has drafted a statement regarding non-financial operations that is required to understand the development, performance and position of the Company, and the impacts of its operations. That statement includes information regarding personnel and social matters, environmental matters and energy efficiency, and regarding corporate integrity. The latter includes information regarding respect for human rights, and matters relating to the fight against corruption and bribery. Detailed information regarding HR and social matters, and environmental matters and energy efficiency are presented in section 3 Sustainable development.

1.9.1 BUSINESS MODEL

As a superior and leading provider of comprehensive logistics solutions in the Western Balkans, the Intereuropa Group satisfies the needs of customers for logistics services and ensures the optimal functioning of supply chains for those customers. This is achieved through the use of innovative approaches, flexibility, the teamwork of highly trained employees, a lean organisation and cost-efficiency. The Group also functions in a socially responsible manner, and creates value for owners, employees and other stakeholders.

The range of logistics products is based on the development of three business lines, as follows: (1) land transport, which relies on a broad base of subcontractors, the Group’s own extensive network in the countries of the Western Balkans and a partner network in other European countries; (2) logistics solutions, the scope of which is based primarily on the warehouse capacities of Group companies, qualified employees and outsourced labour; and (3) intercontinental transport.

The Intereuropa Group also aims to reduce its debt in the future and finance its operations through the optimal combination of equity and debt sources, which it will achieve by increasing cash flows from operating activities and the sale of non-essential assets. As a member of the Pošta Slovenije Group, the Intereuropa Group will take advantage of the synergies in both the business area and in Group financing.

1.9.2 PERSONNEL AND SOCIAL MATTERS

1.9.2.1 PolicyThe Company's business success relies on the knowledge and motivation of employees who are responsible for operations at each company. Trends in the business environment require logistics companies to ensure a high level of responsiveness, innovation and increasingly complex services, thereby encouraging the lifelong learning of employees, which facilitates readiness for changes and the continuous search for improvements in their work.

Key employee competences that are systemically developed and assessed include the ability to achieve established common objectives, excellent knowledge of one’s work area, self-initiative, responsibility, team work and flexibility. By implementing the measures from the plan to promote health, special attention is also given to the protection of the health and safety of employees in the workplace.

In addition, the following elements for an integral part of Intereuropa's culture: ensuring the equal treatment of all employees, the prohibition of any type of discrimination in the workplace, and the respect of dignity and human rights.

1.9.2.2 Results of policies, due diligence, indicators and risksThe Intereuropa Group regularly monitors the results of policies in the area of human resources. Data regarding the employees of all Group companies are analysed every quarter, including the number of employees and other flexible forms of employment, employee turnover, organised education and training courses, absenteeism and the number of work accidents, while the organisational climate is measured at Slovenian and Croatian Group companies every other year. Key employee-related risks are also identified based on the aforementioned indicators and the necessary measures implemented. In the scope of regular occupational health and safety activities, environmental measurements of work conditions, inspections of work equipment, and inspections of buildings and fire protection equipment are also carried out. Those indicators are presented in more detail in section 3 Sustainable development on page 84.


TABLE 11: NON-FINANCIAL INDICATORS REGARDING EMPLOYEES AT THE GROUP LEVEL

Indicator 2019 2020Plan for

2021

No. of hours of functional training (seminars, courses, professional meetings, etc.) per employee per year

9 6 11

Proportion of flexible forms of work (agency and student work) 15.4% 13.7% >10%

Improvement in assessments of the organisational climate of the employer (large Group companies)*

3.16 3.2

Absenteeism rate due to sick leave in the Intereuropa Group 5.0% 4.4% up to 4.5%

Intereuropa, d. d. 5.9% 5.4%

Rate of workplace accidents** 0.9% 1.0%less than

1.5%

* The measurement of the employer’s organisational climate is carried out every other year.** Calculation: number of accidents / number of employees + agency workers + students.

Intereuropa recorded a decline in sick leave in 2020 at all large Group companies, with a planned absenteeism rate due to sick leave at the Group level of up to 4.5%. The sick leave rate was down at the parent company for the second consecutive year, by 0.5 percentage points in 2020 relative to 2019. Other Group companies continue to implement activities in the scope of the plan to promote health with the aim of managing the aforementioned risks.

At less than 1.5%, the accident rate at the Group level in 2020 remained close to the level recorded in 2019.

The main HR-related risks remain the turnover of key and perspective employees and ensuring succession.

1.9.2.3 Objectives for 2021The Intereuropa Group’s focus in 2021 with regard to employees will continue to be on activities to ensure the optimal number of competent and motivated employees. It will continue to prepare a system for managing talents, which includes the identification of perspective employees and the development of their managerial and professional competences. It will strive for the increased engagement of employees in training programmes, including employees in lower positions. The implementation of activities focusing on management will be used to retain key and perspective employees. The Group will also continue the implementation of planned measures for the promotion of health aimed at maintaining and ensuring the health of employees.

1.9.3 ENVIRONMENTAL MATTERS AND ENERGY-EFFICIENCY

1.9.3.1 PolicyThe Intereuropa Group takes into account prescribed legal norms and follows the guidelines set out in the Energy Act and in European environmental guidelines. Energy efficiency and a responsible approach to the environment are integral parts of the Group’s work processes and business decisions. The Intereuropa Group takes into account prescribed legal norms and follows the guidelines set out in the Energy Act and in European environmental guidelines in its efforts to reduce hazardous emissions into the environment, limit the loss of energy, and separate and recycle waste. The Intereuropa Group ensures the energy efficiency of buildings and devices, the appropriate management of waste, the compliant handling of hazardous cargoes, measures to reduce light pollution and the monitoring of waste water.

1.9.3.2 Results of policies, due diligence, indicators and risksThe Intereuropa Group has not established the systematic monitoring and review of environmental matters and energy efficiency. There are likewise no indicators in place through which it could systematically monitor the results of policies. These are monitored at the level of individual Group companies, and only for certain elements of energy efficiency and specific impacts on the environment.

The transport activity is a major source of environmental pollution. One of the key criteria in the selection of road transport service providers is thus the number and proportion of a subcontractor’s vehicles with environmentally friendly motors. Old forklifts are being replaced with more modern and energy efficient models, taking into account environmental impacts.

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The Intereuropa Group is also directly reducing negative impacts on the environment in other business processes by reducing paper administration, through various energy-saving measures in warehouses and commercial buildings, and by raising awareness about the contribution of each individual to the preservation of the environment.

Concern for the environment and energy efficiency is passed on to all employees via internal communications.

The level of risks associated with inappropriate waste management and environmental pollution is assessed as low within the Intereuropa Group. Exposure to those risks is controlled and mitigated through the inclusion of companies in national waste management schemes, through the implementation of activities in the areas of energy efficiency and environmental self-awareness, and through the implementation of waste and energy management plans at individual companies.

1.9.3.3 Objectives for 2021The Intereuropa Group will continue to implement energy efficiency measures, and update and supplement existing environmental management rules. It will follow a policy of gradually replacing old forklifts with models that are more technologically and energy efficient, install new and replace existing cooling and heating systems, purchase more efficient lighting and make other investments in order to reduce energy costs, increase the productivity of work equipment and improve work conditions. The investment plan for 2021 envisages EUR 609 thousand for those purposes.

In addition to these investments, an energy review of buildings will be conducted in 2021 in accordance with the provisions of the Energy Act.

1.9.4 CORPORATE INTEGRITY, HUMAN RIGHTS AND THE FIGHTS AGAINST CORRUPTION

1.9.4.1 PolicySince 2014, the Company, in its role as a corporate integrity ambassador, encourages responsible business practices through its model behaviour in accordance with legislation, other rules, and the applicable recommendations and internal regulations, and operations in accordance with best business practices and ethical principles in the environment in which it operates. The integrity of operations has been one of the key values of the Intereuropa Group for a number of years now. The Intereuropa Group’s corporate integrity is based on the following principles:• integrity as one of the core values of the Intereuropa Group’s operations;• the expansion and development of corporate integrity from management on down; and• the responsibility of every employee for corporate integrity.

The core document in this respect is the Code of Ethics, which defines the basic ethical values of the Intereuropa Group such as fairness, confidentiality, impartiality, compliance, responsibility and transparency. The Code of Ethics was translated into English and into the majority of languages of the countries in which subsidiaries operate. It applies to employees and customers that establish business contacts with Intereuropa Group companies. The code is accessible by customers and employees on the companies’ website, and by the latter via an internal collection of the Company’s binding documents.

Other key documents in the area of the Group's corporate integrity are the Corporate Integrity Policy of the Intereuropa Group, adopted in 2019, and the Rules on the Management of Conflicts of Interest, updated in 2020. The latter also sets out rules limiting the acceptance of gifts and entertainment by the employees of Group companies.

The corporate integrity and compliance officer is responsible for the area of corporate integrity within the Intereuropa Group. The separate function of corporate integrity and compliance officer ensures high ethical standards and the responsible operations of the Group. The aforementioned officer is independent in organisational terms and reports directly to the Company’s Management Board. They also have the autonomous right of reporting to the Company’s supervisory bodies. The corporate integrity and compliance officer is responsible for the co-formulation of a policy, rules and procedures for ensuring and monitoring corporate integrity, and for establishing internal controls for verifying corporate integrity at Intereuropa Group companies.

Intereuropa Group companies comply with the law and international conventions, including provisions that relate to human rights. Intereuropa Group companies oppose any form of forced labour, child labour or discrimination. Employees are treated equally irrespective of their nationality, race or ethnic origin, national or social affiliation, gender, skin colour, health status, disability, religion or other beliefs, age, sexual orientation, family status, trade union membership or material standing, or other personal circumstances. Companies respect the dignity and personal integrity of the individual, and their privacy and freedom to express their opinions. The employees of Group companies are committed to mutually


respectful relationships and respectful conduct towards third parties (customers, suppliers, etc.).

Intereuropa Group companies respect the rules of fair competition, and are committed to fair and open competition at home and abroad. They reject all forms of corruption and bribery. Employees may not receive or give gifts in exchange for the conclusion of a transaction or the receipt of any other type of benefit. Employees are expected to conduct themselves objectively, and prevent circumstances that could arise due to conflicts between the personal interests of an individual and the interests of the Company.

The ‘Interžvižgač’ (Internal Whistleblower) is an Intereuropa Group application that has been receiving anonymous reports of suspected violations since 2017. It is available 24 hours a day on the website: https://interzvizgac.intereuropa.si/ The application is available in five languages: in addition to Slovene, English, Croatian, Bosnian, Serbian and Macedonian. A link to the application is published on the websites of the subsidiaries. This ensures stakeholders are better informed of the existence of the application and makes it easier for all employees and business partners of Intereuropa Group companies to file reports.

In accordance with the Code of Ethics and sectoral rules, the Ethics Board, which is coordinated by the corporate integrity and compliance officer, is responsible for handling reports relating to breaches of integrity. The director of the Human Resources and General Affairs Sector is responsible for reports in connection with HR-related breaches. The Ethics Board drafts a report for the Management Board regarding the handling of reported breaches. That report includes recommendations and/or proposed measures. The Ethics Board places special emphasis on protecting the anonymity of bona fide whistleblowers. It also monitors the resolution of reports relating to HR matters.

1.9.4.2 Results of policies, due diligence, indicators and risksWith regard to the development of the area of corporate integrity, activities continued in 2020 to ensure the protection of personal data in accordance with the EU’s General Data Protection Regulation (GDPR) and the implementation of a system for managing conflicts of interests, as well as the updating of the monitoring of received disclosures.

In order to ensure employees are informed, a separate tab was set up for the protection of personal data in 2020 in the scope of sub-section Corporate integrity and compliance on the Company's intranet site, where all of the Company's key documents governing the protection of personal data, useful links and key information relating to personal data protection are posted. The site will be continuously updated in 2021.

Social responsibility was not assessed at Intereuropa, d. d. in 2020. In the past, the assessment of social responsibility included an assessment of environmental impacts, an assessment of the rights of employees and human rights, and an assessment of ethics and sustainable procurement.

Due to restrictions arising from the spread of the COVID-19 pandemic, live training events focusing on corporate integrity were not held. Instead, video presentations were prepared on the importance and functioning of the Interžvižgač application, the work of the Ethics Board, and on the prohibition and restriction on the acceptance of gifts. Infographics were also prepared for employees in the scope of video presentations and key topics. Employees were continuously kept abreast of corporate integrity topics through forwarded information and reminders, via emails and through infographics.

The Ethics Board met eight times in 2020. It discussed reports of breaches of integrity and was briefed on suspected breaches of labour law. A total of 50% of received reports of suspected breaches related to the parent company, while the remaining 50% related to one subsidiary.

The Company assesses the risks associated with breaches of human rights as low, as it primarily operates in an environment where human rights are governed at the national level and the respect for those rights is appropriately monitored by government institutions. All subsidiaries are located in areas that function under the aegis of the Council of Europe. The majority of Intereuropa Group companies’ transactions are executed in European countries where respect for human rights is at a high level. Notwithstanding the low level of risk that derives from the environment and sector in which the Group operates, certain risks do exist, primarily in transactions in the intercontinental transport segment. Indications of breaches include reports of breaches, inspection proceedings, labour law proceedings before the courts, strikes, protests, the number of overtime hours in excess of legal limits, the number of workplace injuries, the inability to exercise the right to annual leave, etc. No labour law-related proceedings were initiated before the competent labour court in 2020. Three inspections of employment relationships or controls of occupational health and safety were conducted at three Group companies in 2020.

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The Intereuropa Group operates on markets where there is an increased level of corruption and in a sector that is more exposed to acts of corruption. Risks associated with acts of corruption exist primarily on three levels. The first risks comprise the risk that suppliers or customers bribe employees to gain more favourable terms and the second risks comprise the risk of losing major business due to the corrupt actions of competitors, while the third risks comprise the risk that employees might act contrary to the interest of the Company to their own benefit.

With regard to the first risk, the Intereuropa Group implements periodic measures to raise awareness and educate employees. At the same time, the ‘Interžvižgač’ (Internal Whistleblower) application was established and is accessible on the websites of Group companies for the anonymous reporting of corrupt acts and other breaches. With regard to the second risks, Intereuropa cannot influence the actions of third parties. However, the Intereuropa Group’s position in this regard is clear and unwavering. Group companies do not support corrupt acts, even if this might mean the loss of business. With regard to the third risks, the Company began to put in place a system for the monitoring of fraud in 2020, which is expected to be expanded to the entire Group in 2021. Indications of risk associated with fraud and corruption include reports and the identification of breaches via internal controls performed by an individual company and controls performed by the parent company. One report of the suspicion of corruption was received in 2020. During the processing of that report, it was determined that it was unjustified. No incidents of fraud were identified in the scope of regular controls.

1.9.4.3 Objectives for 2021In terms of corporate integrity, Intereuropa plans to continue the project concerning the fraud management system in 2021 and expand it to all Group companies.The fraud risk management project is designed to identify inherent risks of fraud, which are specific to the sector in which the Intereuropa Group operates and differ in terms of intensity, depending on the region of operation of a particular company. The project focuses on limiting fraud risks and mitigating the subsequent potential consequences of a case of fraud, the review of organisational procedures, the organisation of continuous and periodic internal controls and the training of employees on the identification of fraud, the avoidance of fraud or the appropriate communication according to planned protocols of conduct and the implementation of measures if a case of fraud is identified.

In 2021, Intereuropa, d. d. will also give special attention to the training of employees, which has been halted to some degree due to the uncertain circumstances last year.

The Company will persevere in clear matters regarding the respect of human rights.

Management Board of Intereuropa, d. d.

Koper, 1 March 2021



1 . 1 0 E X P L A N A T I O N I N A C C O R D A N C E W I T H A R T I C L E 5 4 5 O F T H E Z G D - 1

Intereuropa, d. d. is a subsidiary of Pošta Slovenije, d. o. o. In light of the above, Intereuropa, d. d. is obliged to draft a report regarding relations with affiliates in accordance with Article 545 of the Companies Act. In the circumstances known at the moment a legal transaction was executed, or an act committed or omitted, the Company must include an explanation in the business report of whether it received the appropriate consideration in each such transaction or did not suffer any deprivation on account of a committed or omitted act.

In accordance with Article 545 of the ZGD-1, the Company drafted the report on relations with affiliates indicating all the legal transactions that the company concluded with the controlling company or any undertaking related thereto in the previous financial year, at the initiative of or in the interest of these companies, and all other acts that were committed or omitted at the initiative or in the interest of these companies in the previous financial year.

The Management Board of Intereuropa, d. d. hereby explains that the Company did not suffer any deprivation on account of the transactions and acts presented in the report on relations with affiliates.

Pursuant to Article 546 of the ZGD-1, the auditor audited the report on relations with affiliates. The auditor had no comments regarding that report and confirmed:• that the statements in the report on relations between associated companies for the year ended 31 December 2020 are

accurate in all material respects; • that the value of the Company’s legal transactions stated in the report is not disproportionately high given the circumstances

that were known at the time the legal transactions were executed; and • that there are no circumstances relating to other acts stated in the report that would suggest a substantially different

assessment of deprivation than the one given by the management.

In accordance with Article 546a, the Supervisory Board was briefed on the report on relations with affiliates and on the auditor's opinion on the report, and had no comments on the Management Board's statement regarding relations with affiliates.

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02 BUSINESS REPORT

2 . 1 D E V E L O P M E N T S T R A T E G Y O F T H E I N T E R E U R O P A G R O U P

The strategic development programme of the Intereuropa Group, which outlines the policies for the development of the Intereuropa Group until 2025, was adopted in December 2020.

The long-term development of the Intereuropa Group is based on its outlined vision, mission and values. The Intereuropa Group focuses on the development and specialisation of logistics products, the strengthening of its own business network on existing markets, and on the optimisation of business processes and the exploitation of the synergistic effects of the coordinated operations of Group companies and of the Pošta Slovenije Group. The Intereuropa Group is capable of implementing even the most complex logistics projects, tailored to the needs and expectations of customers.

VISIONOur vision is to be a superior provider of comprehensive logistics solutions.

MISSIONTo satisfy the need for logistics services and ensure the optimal functioning of supply chains to the complete satisfaction of customers, while creating value for the owner, employees and other stakeholders in a socially responsible manner.

VALUES

Integrity. Respect for the highest ethical principles and best business practices. Operations in compliance with applicable legislation, guidelines, recommendations and the Company’s internal rules.

Excellence.The Group’s services are geared towards the superior satisfaction of every customer’s needs for logistics services, and are based on our advanced logistics know-how.

Adaptability and flexibility.

The Group’s services are prompt and tailored to the needs of customers. This is achieved by applying innovative approaches and ensuring a lean organisational structure.

Responsibility. The Group is distinguished by a high level of responsibility for the obligations we undertake, the agreements we conclude, and the social and natural environments in which we operate.

Teamwork and a respectful approach to employees.

The quality of the Group’s services is the result of the work of individuals and top-notch expert teams. The diverse knowledge, experiences and views of our employees are highly valued.

44 INTEREUROPA / BUSINESS REPORT / 2020

KEY STRATEGIC POLICIES

Consolidation of our market position in logistics• Corporate governance of operational business processes of the Intereuropa Group subsidiaries within the Logistics

Division.• Focus on products with higher value added (3PL, groupage and logistics solutions).• Development on fast-emerging markets in the region. • Strengthening the range of comprehensive logistics solutions.• Growth based on aggressive marketing and an increase in capacities via the rental model (transition to the asset light

model).• Taking advantage of the synergies between Intereuropa Group companies (Logistics Division) and the Pošta Slovenije

Group.

Optimisation of processes• Updating key warehousing capacities.• Utilisation of IT support for processes.• Taking advantage of the synergies between Intereuropa Group companies (Logistics Division) and the Pošta Slovenije

Group.

Development of culture• Teamwork.• Rewarding of effectiveness.• Internal development of middle and senior management.

Financial stability• Divestment of non-core real estate and non-strategic real estate, where substitute capacities will be built.• Effective management of working capital.• Financing in the scope of the Pošta Slovenije Group.

TABLE 12: STRATEGIC OBJECTIVES OF THE INTEREUROPA GROUP IN 2025

Indicator Strategy until 2025

Sales revenue EUR 201.5 million

EBITDA1 EUR 22 million

Operating profit (EBIT) EUR 9.6 million

No. of employees at the end of the year 1,448


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2 . 2 I M P L E M E N T A T I O N O F P L A N S I N 2 0 2 0

The following business and financial objectives were set for the Intereuropa Group in the revised business plan for 2020, which was required due to the consequences of the COVID-19 epidemic and adopted on 9 July 2020:• to generate net sales revenue of EUR 139.5 million, which is EUR 20.7 million less relative to 2019. The strengthening of

cooperation with customers that require integrated logistics solutions through the entire supply chain in the region, an emphasis on the development and expansion of the partner and agent network, and the securing of new business remain key sales activities;

• to successfully control direct costs and the sales margin through the active management of the costs of direct services via more favourable purchasing terms, in particular on account of the centralisation of certain procurement functions;

• to generate EBITDA of EUR 10.1 million and an operating profit (EBIT) of EUR 2.6 million. The planned values of EBITDA and EBIT for 2020 are lower than the target values for 2019, for the most part as the result of the foreseen drop in revenues as the consequence of the COVID-19 epidemic.

• to ensure financial stability and reduce debt, despite the adverse economic conditions, through the divestment of real estate that is not used in the performance of the logistics activity.

The Intereuropa Group generated sales revenue in the amount of EUR 150.7 million in 2020, and thus exceeded the planned figure by EUR 11.3 million or 8%. All Group companies except for two small subsidiaries in Slovenia and one in Montenegro recorded figures that were higher than planned revenue. The planned figures were exceeded by all business lines, most in absolute terms by the land transport business line with its road transport product. Within the intercontinental transport business line, planned figures were exceeded most by the sea freight and air freight segments.

Please refer to section 2.5 Marketing and sales for a more detailed overview and analysis of sales results by business line and service category, and by individual market of the Intereuropa Group.

The Intereuropa Group generated EBITDA of EUR 12.3 million in 2020, which was 21% higher than planned. Contributing significantly to the higher-than-planned EBITDA in 2020, in addition to higher-than-planned sales revenue, was higher-than-planned other operating revenues (up EUR 0.7 million on the plan), which was primarily the result of revenues from the reversal of non-current provisions in the amount of EUR 0.3 million. On the other hand, labour costs were also higher than planned.

The Intereuropa Group generated a net profit of EUR 3.6 million in 2020, which was 184% or EUR 2.3 million higher than planned. In addition, the higher-than-planned net profit was also attributed to lower depreciation costs due to an extension of the lifecycle of real estate on the basis of an assessment in 2020, while the loss from financing activities was worse than planned, primarily as the result of higher negative exchange rate differences.

The Group ensures the effective management of working capital, primarily through the active management of trade receivables, the regular verification of customers’ credit ratings and the continuous monitoring of exposure to individual customers.

The Group’s net debt was reduced by EUR 10 million in 2020, and amounted to 44.4 million at the end of the year, which was EUR 3.8 million less than planned. This was mainly attributed to an increase in the balance of cash and cash equivalents. Contributing significantly to the latter was the conclusion of annex 1 to a loan agreement with a syndicate of banks, through which the parent company deferred the payment of principal and interest for one year in order to mitigate the consequences of the COVID-19 pandemic and strengthen its liquidity position. The net debt / EBITDA ratio was 3.6 in 2020.

The Intereuropa Group made investments in 2020 in the amount of EUR 2.1 million, representing 31% of the annual investment plan. A total of EUR 0.6 million was invested in real estate, while EUR 1.5 million was invested in equipment and intangible assets.

The Group had a total of 1,337 employees at the end of 2020, which is 1.5% less than planned and 1.4% less than the number of employees at the end 2019.


2 . 3 O B J E C T I V E S A N D B U S I N E S S P L A N S F O R 2 0 2 1

2.3.1 POINTS OF DEPARTURE OF THE BUSINESS PLAN

While drafting the business plan for 2021, the Intereuropa Group took into account the starting position of the Group as a whole at the end of 2020, as well as trends in the logistics sector and forecasts of economic trends on the Group’s key markets.

TABLE 13: FORECASTS OF ECONOMIC TRENDS ON THE INTEREUROPA GROUP’S KEY MARKETS (IN %)

CountryGDP growth Inflation

Growth in merchandise imports

Growth in merchandise exports

2020 2021 2020 2021 2020 2021 2020 2021

EU -7.6 5.0 0.5 1.3 -10.5* 7.5* -11.5* 8.1*

Slovenia -6.6 4.3 -0.9 1.6 -12.9 9.4 -8.9 6.7

Croatia -9.0 6.0 0.2 0.9 -39.8 32.2 -28.7 16.2

Bosnia and Herzegovina

-6.5 5.0 -0.8 0.4 -6.6 10.1 -7.1 9.1

Serbia -2.5 5.5 1.6 2.0 -5.1 12.4 -6.3 7.7

Kosovo -7.5 6.0 1.5 1.2 -2.2 13.6 -4.3 17.7

Montenegro -12.0 5.5 -0.4 0.9 -37.4 17.8 -20.9 13.0

North Macedonia -5.4 5.5 1.0 1.4 -12.8 8.3 -15.8 8.0

Albania -7.5 6.1 1.2 2.2 -25.3 12.1 -5.7 12.2

Ukraine -7.2 3.0 5.2 5.8 -7.0 12.4 -4.0 5.5

* Data for the euro area.

Sources:• International Monetary Fund, World Economic Outlook Database, October 2020;• Institute of Macroeconomic Analysis and Development, Winter forecast of economic trends in 2020, December 2020.

2.3.2 BUSINESS AND FINANCIAL OBJECTIVES

Taking into account the aforementioned points of departure, the following business and financial objectives were set for the Intereuropa Group for 2021:• to generate EUR 158.5 million in sales revenue through growth in all business lines of the core activity, on all markets (except

the Ukraine) and at the majority of companies;• to strengthen cooperation with customers that require integrated logistics solutions through the entire supply chain in the

region, to increase emphasis on the development and expansion of the partner and agent network, to actively secure new business (cross selling), and to increase the proportion of ‘regular’ customers;

• to control direct costs and the sales margin in the context of growth in sales, through the active management of the costs of direct services via a standard procurement policy at the Group level;

• to generate EBITDA of EUR 12.9 million and an operating profit (EBIT) of EUR 5.1 million;• to ensure financial stability and reduce debt through the divestment of real estate that is not used in the performance of

the logistics activity.

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The following will be necessary to achieve the above-described objectives:• investments of EUR 8.4 million in property, plant and equipment and intangible assets, primarily in the upgrading and

renovation of the warehousing infrastructure and warehouse equipment, in the upgrading of IT equipment and in intangible assets;

• to ensure the optimal number of competent and motivated employees;• investments in the effective development of employees, and the implementation of a systematic plan of measures to

ensure health and well-being within the Intereuropa Group;• to maintain the proportion of flexible forms of employment at a minimum of 10% for the optimal adjustment in the number

of employees to actual work needs;• the continued centralisation of IT management within the Group and the implementation of shared IT solutions;• the continued promotion of corporate integrity and compliance at all Group companies, crucial in this regard is the project

to implement the project to introduce fraud management;• the continued intensive identification of risks to which Group companies are exposed and the management of those

risks, with a greater emphasis on monitoring the success of measures and setting and monitoring key objectives and performance indicators in relation to risk management;

• to ensure the cost-effectiveness of support functions for the performance of logistics processes;• the effective management of working capital; and • the implementation of activities aimed at the sale of assets not required for business purposes.

TABLE 14: MAIN FINANCIAL OBJECTIVES OF THE INTEREUROPA GROUP IN 2021

Indicator 2021 plan

Sales revenue EUR 158.5 million

EBITDA¹ EUR 12.9 million

Operating profit (EBIT) EUR 5.1 million

Investments in property, plant and equipment, and intangible assets EUR 8.4 million

No. of employees at the end of the year 1,313


2 . 4 E C O N O M I C C O N D I T I O N S I N 2 0 2 0 A N D F O R E C A S T S F O R 2 0 2 1

Due to the outbreak of the COVID-19 virus, which spread across Europe in March 2020, and the global pandemic, likewise declared in March 2020, the global economy sustained major economic damage in 2020.

According to estimates of the International Monetary Fund (IMF) from January 2021, the global economy recorded an economic decline of 3.5% in 2020. Projections of global economic growth for 2021 are more encouraging at 5.5%, with recovery mostly expected in the second half of 2021, and a 4.2% forecast for next year. However, the projections are extremely uncertain due to the possibility of new waves of the pandemic and new virus mutations, despite the fact that recent vaccine approvals bring hope for altering the course of the pandemic.

The COVID-19 epidemic had a negative impact in the euro area on all components of gross domestic product in the first half of 2020. The decline in GDP is estimated at 7.5%. Private consumption was hit hardest, as consumption in the spring was severely disrupted, which led to the accumulation and strengthening of forced savings. Due to the paralysis of the corporate sector and the sharp increase in uncertainty, investments also declined significantly. After the sharp decline in the second quarter, economic activity recovered in the third quarter in the context of the gradual easing of containment measures and substantial support from monetary and public finance policy, but that recovery was halted towards the end of the year due to the second wave of the epidemic, a rapid increase in infections in October and the resulting re-introduction of stringent containment measures. According to the data of the Slovenian Institute of Macroeconomic Analysis and Development, economic recovery (3.5% growth) is forecast for this year in the euro area, with an even more optimistic forecast from the International Monetary Fund of 5% growth.

Economic activity in Slovenia was also hit hard by the COVID-19 epidemic. Strict measuresto contain the spread of the coronavirus caused a significant decline in economic activity due to the shut-down of non-urgent service activities and the hampered activities of other service sectors and industry. Despite a recovery in the majority of sectors in the third quarter following the easing of most protective health measures, economic activity over


the first nine months of the year was 6% below the level recorded in 2019. Extensive packages of measures focusing on the mitigation of the loss of income by the corporate and household sectors, the securing of liquidity and support for economic recovery, were adopted in order to mitigate the negative consequences of the epidemic. These continue to supplement and significantly mitigate the decline in economic activity and are crucial for rebooting economic activity.

In its winter forecast for 2020, the Slovenian Institute of Macroeconomic Analysis and Development projected a 6.6% decline in GDP in 2020. According to available high-frequency data and confidence indicators for October and November, it was assessed for the final quarter that the economic effects of the second wave of the epidemic and the extensive protective and containment measures primarily focus on the services sector and to a lesser degree on sectors engaged in international trade. The decline in most segments was less severe than in the spring. Contributing to this were adjustments made by businesses and consumers to the new situation. A slightly less significant but still notable factor was a decline in the transport, wholesale and retail trade and manufacturing sectors. A sharp decline in the volume of exports and imports was felt due to negative impacts from the international environment and from foreign and domestic containment measures. Due to a drop in demand and in the context of high uncertainty, which affects the investment decisions of companies, the latter are also contracting their investments. Public investments are increasing slightly. Declining inventories also have a significant negative impact on GDP growth. Due to this trend and supply during the lockdown when there was little opportunity to spend, accompanied by increased uncertainty and precautionary savings, private consumption is also declining sharply despite the level of disposable income being similar to last year as a result of government support measures. Government consumption is strengthening during the crisis.

In the current epidemiological conditions, the Institute of Macroeconomic Analysis and Development assessed that a more rapid economic recovery will be possible from the second quarter of 2021 on, while overall economic activity will not reach the pre-epidemic level until 2022. Economic growth is forecast to reach 4.3% in 2021. The epidemiological conditions, the speed of introducing vaccines and the responsiveness of policies with measures to mitigate the effects of the epidemic and kick start the economy will continue to have a crucial effect on the pace of recovery. Growth in international trade and investments is expected in 2021, including an increase in private consumption in the context of growth in disposable income, while the savings ratio will gradually decline but remain high due to uncertainty. Economic growth is expected to reach 4.4% in 2022 in the context of the gradual stabilisation of the economic situation.

The decline in economic activity and reduced demand last year also impacted price trends, with a gradual increase in prices not expected before this year. The overall price level is expected to stagnate on average primarily on account of lower energy prices, while growth in the prices of most other goods and services has also slowed relative to previous years. The inflation rate is expected to approach 2% in 2022. Contributing to this will be higher growth in service prices as a result of the continued recovery.

According to the assessment of the International Monetary Fund, the Croatian economy recorded a 9% drop in GDP. That country’s economy was hit hardest in the second quarter, but then recovered slightly in the third quarter. The most notable contraction was felt by industrial production, with the unemployment rate falling evenly, while the crucial tourism sector also began to contract. With the increasing number of COVID-19 infections and the introduction of stricter measures by the government, the situation deteriorated in October, most notably in the industrial and retail trade sectors. The revival of foreign demand and strengthening of domestic activity are expected in 2021. The uncertainty surrounding the epidemic and its effect on the tourism sector poses a key risk to the economic outlook. Focus Economics forecasts 5% growth, while the International Monetary Fund forecasts 6% growth for the Croatian economy in 2021.

The International Monetary Fund forecasts a 2.5% decline in gross domestic product for the Serbian economy in 2020. After contracting in the second quarter, industrial production recorded notable growth in the third quarter of the year. Retail sales, characterised by a downward trend in the second quarter, recorded solid growth in July and September. The decline in tourist arrivals was less pronounced during the summer months than in the second quarter of the year. As long as there is no renewed deterioration due to the COVID-19 epidemic, strengthened domestic and foreign demand due to the reopening of the global economy is expected in 2021. Focus Economics forecasts 4.9% growth, while the International Monetary Fund forecasts 5.5% growth for the Serbian economy in 2021.

Measures introduced in Montenegro to curb the COVID-19 epidemic significantly hampered its economy. Retail trade was hit even harder in the third quarter than in the second quarter, while the unemployment rate continued to grow. Industrial production contracted further in the third quarter, while the decline in merchandise exports was significant. With the risk of the progression of the COVID-19 epidemic, the best-case scenario after the reopening of the global economy sees strengthened foreign trade and the recovery of the household sector. The International Monetary Fund forecasts 5.5% growth in the Montenegrin economy in 2021, while Focus Economics goes beyond that with a forecast of 6% growth.

After contracting sharply in the second quarter, the economy in Bosnia and Herzegovina gradually recovered in the

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third quarter of the year. The pace of contraction in industrial production slowed, while retail sales gradually increased in September after declining over the first six months of the year. Companies operating in sectors that were hit hardest were provided financial aid by the government. The outlook for 2021 is better if no new measures to contain the spread of the epidemic are planned. Focus Economics forecasts 3.9% growth, while the International Monetary Fund forecasts 5% growth for the economy in Bosnia and Herzegovina in 2021.

The economy in North Macedonia saw a decline in 2020 due to the COVID-19 epidemic, which was most notable in the final quarter, as the government introduced new restrictions in October. Retail sales contracted significantly, while the most notable decline in industrial production was recorded in July and September. The economy is expected to recover in 2021 if the extension of the health crisis does not hamper a recovery. Household consumption is expected to recover and is supported by fiscal stimulus packages. The increase in global demand is expected to stimulate foreign trade. The International Monetary Fund forecasts 5.5% growth, while Focus Economics forecasts 5.4% growth.

The economy in Kosovo remained in a difficult situation in the third quarter after a strong contraction in gross domestic product in the second quarter of the year. Due to the growing number of COVID-19 infections, the government restored certain containment measures at the beginning of July (easing them somewhat in September), which impacted economic activity in the third quarter of the year. Merchandise exports decreased during this period, while imports grew slightly, which was a reflection of unchanged domestic demand. The growing number of consumer loans was a positive indication, while the inflow of transfers increased in July and August, which together with falling prices strengthened household consumption. The economy in Kosovo is expected to recover rapidly in 2021. The reopening of the economy should relax planned spending and capital expenditure. In addition, increased foreign demand should support foreign trade. Despite this, the outlook remains susceptible to risk due to the progression of the COVID-19 epidemic. Focus Economics forecasts 4.8% growth, while the International Monetary Fund forecasts 6% economic growth.

The Albanian economy recovered slightly in the third quarter, but remains devastated from the lockdown measures introduced at home and abroad in the second quarter of 2020. Despite the continued decline in merchandise imports and exports in the third quarter, the pace of that decline slowed relative to the second quarter. Similarly, tourist arrivals increased during the summer and declined at a slower pace on an annual basis compared with the standstill during the spring months. The recovery of domestic and foreign demand and an increase in investments to support post-epidemic recovery are expected in 2021. The greatest risks to the economic outlook, which Focus Economics and the International Monetary Fund assess at 6% growth, are the unpredictable course of the epidemic and the government's fragile fiscal position.

The economic activity in the Ukraine recovered slightly in the third quarter after active measures were implemented to contain the COVID-19 epidemic in the second quarter. Primarily industrial production and the production of energy were lower. Growth in retail sales recovered in the third quarter and, despite the persistence of weak consumer sentiment, the outlook for household consumption is positive. The increase in the number of infections, particularly in October, prompted the government to extend measures to contain the epidemic until the end of the year, which hampered recovery in the last quarter. A gradual recovery in both foreign and domestic demand is expected in 2021, while fiscal and monetary incentives also represent further support for the corporate sector. However, the continuation of the epidemic and weaknesses in the banking system pose risks to the realisation of the forecasts of a 3 to 4.2% growth in 2021.

All Focus Economics forecasts for the countries of Southeast Europe were prepared in November 2020, and foresaw the winter second wave of the COVID-19 epidemic in 2021 as no more than a risk of failing to achieve projected economic growth.

The section Economic conditions in 2020 and forecasts for 2021 is summarised from the following publications:Institute of Macroeconomic Analysis and Development, Winter forecast of economic trends in 2020, December 2020;International Monetary Fund, World Economic Outlo-ok Database, October 2020;International Monetary Fund, World Economic Outlook, January 2021; andFocus Economics, Economic Data by Region and Country, November 2020.


2 . 5 M A R K E T I N G A N D S A L E S

The Intereuropa Group generated EUR 150.7 million in revenues from sales of its services in 2020, a decrease of 6% relative to the previous year, while the subsidiaries in Serbia, Ukraine and North Macedonia exceeded last year's sales revenue. The parent company generated EUR 104 million in sales revenue in 2020, a decrease of 7% relative to the previous year. Sales at the subsidiaries in Bosnia and Herzegovina, Montenegro and Kosovo were down relative to the previous financial year. The Intereuropa Group's lower sales revenue was primarily the result of the COVID-19 pandemic.

At 52%, the highest proportion of the Intereuropa Group’s sales revenue in 2020 was accounted for by the land transport segment, which generated EUR 77.8 million in sales revenue, a decrease of 9% relative to 2019. The decline in sales revenue in the land transport segment was primarily attributed to the COVID-19 pandemic and a drop in energy prices, which was reflected in both lower selling prices and lower purchase prices. The greatest decline in absolute terms was seen in road transport services at the parent company.

Sales revenue in the intercontinental transport segment totalled EUR 39.2 million in 2020, a decrease of 6% relative to the previous year. The intercontinental transport segment accounted for 26% of total sales revenue. The decrease in sea freight services was mostly the result of the COVID-19 pandemic and the resulting decline in the volume of freight and the suspension of container ships. On the other hand, the COVID-19 pandemic has had a positive impact on growth in air freight services.

Sales revenue in the logistics solutions segment totalled EUR 27.8 million in 2020, and was up by 4% relative to the previous year and accounted for 18% of the Group’s total sales revenue. Primarily at companies in Slovenia, Croatia and Serbia, warehousing transactions were reviewed and numerous activities were implemented to utilise warehouse capacities and secure new transactions with higher value added.

TABLE 15: SALES REVENUE OF THE INTEREUROPA GROUP IN 2020 BY BUSINESS LINE

Business line2020 in EUR

thousandStructure

Index 2020/plan

Index 2020/2019

Land transport 77,769 52% 108 91

Logistics solutions 27,757 18% 107 104

Intercontinental transport 39,184 26% 111 94

Other services 6,016 4% 98 87

TOTAL SALES REVENUE 150,725 100% 108 94

Companies in Slovenia generated 67% of the Group’s total sales revenue.

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TABLE 16: SALES REVENUE OF THE INTEREUROPA GROUP IN 2020 BY COUNTRY (WITH RESPECT TO A COMPANY’S HEAD OFFICE)

Country 2020in EUR thousand Structure Index 2020/2019

Slovenia* 100,456 67% 92

Croatia 23,831 16% 99

Bosnia and Herzegovina 6,946 5% 98

Serbia 5,279 4% 104

Montenegro 4,984 3% 79

Ukraine 3,992 3% 108

Other countries 5,237 3% 100

EU countries 124,287 82% 93

Non-EU countries 26,438 18% 96

TOTAL SALES REVENUE 150,725 100% 94

* Data include consolidation restatements.

FIGURE 3: STRUCTURE OF SALES REVENUE OF THE INTEREUROPA GROUP BY COUNTRY IN 2020 (WITH RESPECT TO A CUSTOMER’S HEAD OFFICE)

Slovenia 41%

Croatia 14%Luxembourg 5%

Austria 4%

Germany 4%

Bosnia and Herzegovina 4%

Serbia 3%

Montenegro 3%Italy 3%

Kosovo 2%Switzerland 1%

Israel 1%Slovakia 1%

Ukraine 0%

Other countries 14%

In terms of size, sector and geographical coverage, the structure of customers is very diverse, particularly in the EU and the Balkans and was little changed relative to 2019. A total of 66% of customers in 2020 were from EU countries, with the majority of those from Slovenia and Croatia. A total of 13% of customers were from other countries of the former Yugoslavia (excluding Slovenia and Croatia).

Given the extensive base of existing customers for whom the Intereuropa Group provides services, market activities focus on the expansion of cooperation in other product categories (cross-selling) and on other markets. To that end, the expansion of the usage of the CRM system to the Group's subsidiaries in 2020 is important and facilitates a more focused market approach and the monitoring of customers’ development. Another strategic focus is the provision of more complex logistics solutions with higher value added, thereby taking advantage of the competitive advantages of the Intereuropa Group, such as a comprehensive portfolio of products and services, the professional qualifications of employees and a broader regional presence.


2.5.1 LAND TRANSPORT

The Intereuropa Group recorded lower sales revenue in most segments of land transport in 2020 relative to the previous year. Lower sales were primarily the result of containment measures to curb the COVID-19 pandemic in Europe. The Intereuropa Group generated EUR 77.8 million in sales revenue in the land transport segment in 2020, a decrease of 9% relative to 2019.

All segments, except for the railway freight segment, particularly after attracting new business in the Ukraine, lagged behind last year's revenues.

The highest proportion or 55% of the total revenues of the land transport segment was generated by the parent company in Slovenia, which generated sales revenue of EUR 45.8 million in 2020. Sales revenue at the parent company was down by 12% relative to 2019. Last year's sales revenue was exceeded by the companies in Bosnia and Herzegovina, Ukraine, Serbia and North Macedonia.

In addition to the COVID-19 pandemic, lower sales revenue in 2020 was also the result of a fall in energy prices. The impact of lower energy prices, which had a significant effect on declining revenues, did not impact sales margins, as the purchase prices of transport services were adjusted accordingly due to lower fuel prices.

Changes in the disclosure of products due to the optimisation of implementing processes and the continued introduction of the standardised WexVS IT solution in the warehousing and storage segment continued to impact the sales results of the land transport segment. In 2020, those changes were seen primarily in the reclassification of sales of customs, groupage and domestic transport services to the distribution product within the logistics solutions segment.

The Group’s key policies in the land transport segment remain intensive sales activities on local markets and abroad, and on cross-selling with existing customers. At the end of 2020, intensive preparations for Brexit were carried out within the customs clearance segment aimed at satisfying increased demand for customs services on the market. The introduction of new IT solutions to support marketing and operational work at all Group subsidiaries will facilitate increased effectiveness in the implementation of processes in all land transport segments.

FIGURE 4: STRUCTURE OF SALES REVENUE OF THE INTEREUROPA GROUP BY COUNTRY IN THE LAND TRANSPORT SEGMENT (WITH RESPECT TO A COMPANY’S HEAD OFFICE)

Slovenia 55%

Croatia 21%


Serbia 3%

Montenegro 3%

Ukrajine 5%

Other Countries 6%

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FIGURE 5: STRUCTURE OF SALES REVENUE OF THE INTEREUROPA GROUP BY INDIVIDUAL PRODUCT IN THE LAND TRANSPORT SEGMENT

Road transport 49%

Customs services 8%

Railway transport 6%

Groupage services 21%

Domestic transport 16%

2.5.1.1 Road transportSales revenue from road transport services amounted to EUR 38.1 million in 2020. The road transport segment generates one half of the Intereuropa Group’s sales revenue.

The parent company generated 72% of all sales revenue in the Group's road transport segment.

2.5.1.2 Groupage servicesThe sales revenue generated by groupage services amounted to EUR 16.2 million in 2020, a decrease of 3% relative to 2019. The parent company generated 70% of sales revenue from groupage services, with sales declining by 10%, and the number of shipments by 5% relative to the previous year. The effect of COVID-19 and diminishing economic activity gave rise to a reduction in the number of shipments within the partner network.

Growth in sales of groupage services was recorded by the subsidiaries in Croatia and in Serbia, with a more notable decline in turnover seen at the company in Kosovo.

The number of shipments within the Intereuropa Group network also continued to increase in 2020.

2.5.1.3 Domestic transportThe sales revenue generated by the domestic transport segment in 2020 was EUR 12.2 million and was down by 3% relative to the previous financial year. Domestic transport services represent an important support service for the Group’s other products. As a stand-alone product, it faces significant price pressures on all local markets.

The sales revenue generated by domestic transport in 2020 was at the same level as the previous year's revenue at the parent company and at the company in Croatia and up by 27% relative to 2019 at the company in Bosnia and Herzegovina, while the company in Serbia saw a significant decline in sales in the domestic transport segment relative to 2019.

All Group companies carry out continuous activities aimed at the optimisation of processes, the control of costs and the search for the optimal implementation of solutions that on one hand will preserve the quality of services at the highest level and on the other will reduce implementation costs.


2.5.1.4 Customs servicesThe Intereuropa Group generated a sales revenue of EUR 6.4 million in 2020 from the sale of customs services. The sales revenue from customer services in 2020 lagged behind the previous year's results due to a decline in the number of completed customs proceedings relative to a year earlier. The poorer sales results were the consequence of diminished economic activity due to the effects of the COVID-19 pandemic at all Group companies. The parent company in Slovenia generated EUR 2.3 million in revenues from the sale of these services. Growth in sales relative to the previous year was also recorded at the company in North Macedonia, while other subsidiaries lagged behind the sales figures achieved in 2019.

Apart from the epidemic, another reason for the decline in sales revenue in Bosnia and Herzegovina was the loss of customs terminal status at that company. This will have a significant impact on future sales results.

Intensive preparations for Brexit were underway at the end of 2020 in the scope of customs clearance services. The custom clearance segment pursues the strategic objective of expanding Intereuropa's presence by maintaining and opening new customs departments in the territory of individual subsidiaries. Subsidiaries face increasing competition in the area of customs clearance services, both in terms of providing basic customs clearance services for customers in customs proceedings and in customs terminal transactions.

An increase in productivity, the centralisation of customs clearance, paperless operations and maintaining a territorial presence comprise the development areas of the customs clearance segment. In addition to the aforementioned development areas, preparations for Brexit and the corresponding increased demand of customers for customs and consultancy services gained special importance in 2020.

2.5.1.5 Railway freightSales revenue generated by the railway freight segment in 2020 was up relative to the previous year. Having a positive effect on the favourable financial results was growth in sales at the company in Ukraine, which generates 68% of the Group’s total sales revenue in the railway freight segment. The remainder of sales revenue was generated by the parent company in Slovenia.

2.5.1.6 Plans for 2021 in the land transport segment

Special attention in the development of services in 2021 will be given to activities aimed at the computerisation of support for field processes, the electronic exchange of data with partners, transporters and customers in international road transport, paperless operations and the centralisation of implementation in the customs clearance segment, and the development of appropriate IT solutions in relation to the exchange of cargo between our customers and transporters on the market.

With the aim of maintaining sales growth and achieving ambitious sales targets, the land transport segment will continue to invest in the development of solutions to raise the efficiency of the sales support process, the centralisation of purchasing, and the development of a transporter management system at the Group level. Additional organisational measures are planned with the aim of achieving increased productivity and the smooth implementation of work processes, with an emphasis on management by objectives (MBO) and the monitoring of the effectiveness of processes by using new IT solutions – BI.

Planned activities in the Point project will continue and are aimed at integrating Intereuropa into the Pošta Slovenije Group.

A relatively high degree of uncertainty connected with the COVID-19 pandemic and high customer expectations for increasingly high-quality services will continue to dominate the land transport services market in the future.

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2.5.2 INTERCONTINENTAL TRANSPORT

The intercontinental transport business line comprises the sea freight, air freight and car logistics segments. The sales revenue from intercontinental transport amounted to EUR 39.2 million in 2020, a decrease of 6% relative to the previous year, and accounted for 26% of the Intereuropa Group’s total sales revenue generated by this business line, which was at the same level recorded in the previous year.

Economic indicators were weaker in 2020 than envisaged in projections, primarily due to the COVID-19 pandemic, the main negative impact of which was on relations in global trade, consumption and industrial production. On the other hand, growth primarily in the air freight segment was the result of an increase in the urgent transportation of protective equipment, which was also recognised in the Intereuropa Group.

The suspension of production in China and a historically high number of halted container ships in circulation at the global level at the beginning of the year, and mainly problems associated with a lack of container equipment and shipping capacities during the final quarter, all had an additional impact on the sea freight segment. The volume of goods transhipped through the Port of Koper, where the Group generates the highest revenues in the sea freight segment, was down at all terminals in 2020 relative to the previous year.

FIGURE 6: STRUCTURE OF SALES REVENUE BY INDIVIDUAL PRODUCT IN THE INTERCONTINENTAL TRANSPORT SEGMENT

Sea freight 68%

Car logistics 10%

Shipping agency 1%

Air freight 21%

2.5.2.1 Sea freightSales revenue from sea freight and shipping agency services together totalled EUR 26.8 million in 2020, a decrease of 14% relative to 2019. Sea freight services accounted for 18% of the Group’s total revenues.

Sales revenue from container transport services amounted to EUR 18.2 million in 2020, meaning a 11% decrease in sales relative to the previous year. The decline in revenue was mainly the result of the impact of the COVID-19 epidemic, which was reflected in a smaller volume of transhipped goods in ports and in changes to delivery routes.

Sales revenue from conventional freight services totalled EUR 7.3 million in 2020, a decrease of 15% relative to 2019. The reduction in the volume of transhipments was a reflection of declining needs in industrial production and consumption.

Sales revenue from RO-RO services totalled EUR 0.9 million in 2020, a decrease of 45% relative to 2019. Fewer major projects were implemented in 2020, while delivery terms also changed.

2.5.2.2 Car logisticsSales revenue from car logistics services totalled EUR 4.1 million, a decrease of 13% relative to 2019. The reduction in the sales of passenger and commercial vehicles of key customers, in particular, impacted operations in 2020.

The parent company in Slovenia accounted for the majority of sales of car logistics services.


2.5.2.3 Air freightThe year 2020 was characterised to a great extent by COVID-19, which caused the greatest shock to airlines and aviation since the Second World War. The effects were first felt on the Chinese market, i.e. in the beginning of the year, but that market had already recovered by April. COVID-19 thus had a significant effect on air freight around the world, beginning in February and up until its peak at the end of April. Recovery was surprisingly slow on most markets. The consequences of travel restrictions were felt strongly, as the connections between cities around the world were discontinued. Freight transport continued to operate significantly better than passenger transport, but the effects were seen in a significant decline in capacities. This was all a serious problem for the global economy and also for supply chains, on which today’s economy relies. Despite the difficult situation due to the epidemic, 2020 was a record-breaking year in the Intereuropa Group for air freight, as the set sales targets were all exceeded significantly.

Sales revenue from air freight totalled EUR 8.3 million in 2020, an increase of 41% relative to 2019. The increase was also attributed to major one-off transactions, primarily the charter and partial charter transport of medical and protective equipment, and to higher prices in general of air freight services due to insufficient capacities on the air freight market. On the key and largest Slovenian market, where 68% of sales revenue in the air freight segment was generated, the previous year’s sales were exceeded by 58%. In Serbia, the second most important market in this segment, sales revenue increase of 25% relative to 2019. On the third most important market in Croatia, sales were up by 16% relative to 2019. All other markets collectively also exceeded the sales generated in 2019.

2.5.2.4 Plans for 2021Key development activities in the intercontinental transport segment focus on intensifying the Intereuropa Group’s sales orientation through investments in the partner network and the development of business in Intereuropa's hinterland countries. Also of importance in that respect are securing favourable purchasing terms from shipping companies and air carriers, and the exploitation of the Group’s good market position at the Port of Koper. With the latter’s help, the Group aims to expand activities at other ports on the Adriatic Sea.

Ambitious plans have been set for 2021, as significant growth in sales revenue from all intercontinental transport segments is expected, particularly in the strategic container and air freight segments. The main activities in achieving established revenue targets will focus on the active marketing of all intercontinental transport segments, including project cargo. The transfer of best practices to subsidiaries, the centralisation of the purchasing function, investments in human resources and the standardisation of processes will all continue.

2.5.3 LOGISTICS SOLUTIONS

The Group generated revenues from the sale of logistics solutions in the amount of EUR 27.8 million in 2020, accounting for 18% of the Group’s total sales revenue. Despite the extraordinary situation caused by COVID-19, the sales revenue generated by the Group in 2020 from logistics solutions exceeded the sales revenue generated in 2019 by 4%, in part due to changes in the way sales revenue is disclosed as the result of the optimisation of implementing processes and the continued introduction of the standardised WexVS IT solution in warehousing operations.

In Slovenia, as the largest key market accounting for 74% of sales of logistics solutions, the results achieved in 2019 were exceeded by 6%. Nearly all warehouse capacities in Slovenia are utilised.

The second largest market for logistics solutions is Croatia, which generates 16% of the sales revenue in this business line. Sales revenue generated in 2020 was up by 1% relative to the previous year. Contributing significantly to this fact were pre-preparations of empty warehouse capacities for the needs of a major new transaction that commenced in the second quarter of 2020.

In addition to the above-mentioned markets, sales revenue from logistics solutions was up by 8% in Bosnia and Herzegovina, by 3% in Montenegro and by 76% in Kosovo. Sales revenue was down relative to 2019 at the companies in North Macedonia and Serbia.

Primarily at the companies in Slovenia, Croatia and Serbia, warehousing transactions were reviewed and numerous activities were implemented to utilise warehouse capacities and secure new transactions with higher value added, which increases the profitability of warehouses.

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FIGURE 7: STRUCTURE OF SALES REVENUE OF THE INTEREUROPA GROUP BY COUNTRY IN THE LOGISTICS SOLUTIONS SEGMENT (WITH RESPECT TO A COMPANY’S HEAD OFFICE)

Slovenia 74%

Croatia 16%


Serbia 2%

Montenegro 4%

Ukraine 0% Other countries 2%

The Group continued to standardise and optimise logistics processes in 2020, particularly in the warehousing and storage segment, and to implement integrated IT support for warehousing operations in Slovenia, Croatia and in Bosnia and Herzegovina. The number of customers using an electronic data interchange (EDI) was up at the Group level.

2.5.3.1 WarehousingThe Group generated sales revenue of EUR 20.9 million from warehousing and storage services in 2020, a decrease of 1% relative to the previous year. Revenues from the sale of warehousing and storage services accounted for 14% of the Group’s total sales and 75% of sales revenue from the logistics solutions segment.

2.5.3.2 DistributionThe Group generated sales revenue of EUR 6.8 million from distribution services in 2020, which represents 5% of the Group’s sales and 25% of sales revenue from logistics solutions. Having a partially positive effect on revenues from distribution services were changes in the way sales revenue is disclosed as the result of the optimisation of implementing processes and the continued introduction of the standardised WexVS IT solution in warehousing operations.

2.5.3.3 Plans for 2021The development of logistics solutions will focus on the specialisation of services by individual merchandise category and thus the establishment of long-term cooperation with partners. Most crucial in terms of development are recognising and meeting the demands of customers, and the optimal integration of the entire supply chain, with the help of IT support adapted for that purpose.

In 2021, logistics solutions will continue to focus on the development of partner relations and thus on enhancing cooperation with existing customers, and on the carefully planned securing of new logistics projects, primarily in terms of utilising free storage capacities in the Group. Most crucial in terms of development are recognising and meeting the demands of customers, and the optimal integration of the entire supply chain, with the help of IT support adapted for that purpose.

After successfully completing the project to introduce WMS IT support in Croatia and Bosnia and Herzegovina, we are also planning to finalise the WMS project in Slovenia and Serbia. The start of construction of a new logistics centre in Rijeka and new cold storage capacities at the warehouse in Celje is planned with regard to the warehousing infrastructure in 2021.


2 . 6 A N A L Y S I S O F O P E R A T I O N S

The Intereuropa Group generated EUR 150.7 million in sales revenue in 2020, a decrease of 6% relative to 2019. Operating cash flows (hereinafter: EBITDA) were down by 12% and totalled EUR 12.3 million. The operations of the Intereuropa Group in 2020 were characterised, on all markets, by the COVID-19 pandemic. Nevertheless, the Group succeeded in providing customers with continuous logistics support along the entire supply chain. Also due to the payment deferral of loan liabilities for one year, the Group increased its cash and cash equivalents and lowered its net debt by EUR 10 million in 2020 to stand at EUR 44.4 million at the end of 2020, resulting in an EBITDA ratio of 3.6.

2.6.1 PERFORMANCE

2.6.1.1 Significant operating indicators in the period 2017 to 2020

TABLE 17: OPERATING INDICATORS OF THE INTEREUROPA GROUP AND THE PARENT COMPANY INTEREUROPA, D. D. FOR THE PERIOD 2017 TO 2020 (IN EUR THOUSAND)

Intereuropa Group Parent company

2017 2018 2019 2020 2017 2018 2019 2020

Sales revenue 149,889 160,382 160,353 150,725 103,976 111,890 111,828 103,964

EBITDA1 12,739 12,397 13,971 12,298 8,530 9,446 9,269 8,125

proportion of sales (in %) 8.5 7.7 8.7 8.2 8.2 8.4 8.3 7.8

Normalised EBITDA 1 12,345 13,898 13,568 11,369 8,972 9,580 9,295 8,002


EBIT 311 6,064 7,524 5,764 2,783 5,332 5,041 4,340


Normalised EBIT1 5,991 6,383 6,344 4,043 4,932 5,043 4,868 3,682


Net profit or loss -1,979 4,408 4,197 3,568 340 4,144 3,388 2,315

proportion of sales (in %) -1.3 2.7 2.6 2.4 0.3 3.7 3.0 2.2

Net earnings per ordinary share (in EUR) 0.01 0.15 0.12 0.08

Assets 229,672 232,927 223,351 220,444 180,279 185,114 176,748 172,272

ROA (in %)1 -0.8 1.9 1.8 1.6 0.2 2.3 1.9 1.3

Equity 117,049 120,229 122,358 124,850 80,797 85,005 87,228 89,225

ROE (in %)1 -1.6 3.8 3.5 2.9 0.4 5.1 4.0 2.7

Equity ratio (in %) 51.0 51.6 54.8 56.6 44.8 45.9 49.4 51.8

Net debt1 67,114 60,197 54,352 44,371 69,670 64,631 57,293 54,115

Net debt/ EBITDA1 5.3 4.9 3.9 3.6 8.2 6.8 6.2 6.7

Investments in property, plant and equipment, and intangible assets

2,690 5,374 2,889 2,105 1,578 4,198 1,603 1,279

Investments as a proportion of sales revenue (in %)

1.8 3.4 1.8 1.4 1.5 3.8 1.4 1.2

No. of employees at the end of the year 1,369 1,327 1,356 1,337 589 599 609 586

Average number of employees (based on hours worked) - FTE1 1,328 1,286 1,293 1,297 577 566 582 572

Value added1 39,911 41,247 42,905 41,423 25,989 28,242 28,184 27,025

Value added/ FTE1 30.0 32.1 33.2 31.9 45.0 49.9 48.4 47.2

Productivity (sales revenue/ FTE)1 112.8 124.7 124.1 116.2 180.2 197.6 192.2 181.7


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TABLE 18: NORMALISATION OF EBITDA1 AND EBIT

Intereuropa Group Extraordinary effects (in EUR thousand) 2020 2019

Gains from the derecognition of operating receivables due to major one-time settlements

Reversal of adjustments to receivables due to the repayment of past-due receivables

0 570

Other operating revenues 2,142 2,892

Revaluation revenues from the reversal of impairment losses on property, plant and equipment, and investment property

Reversal of impairment losses 119 1,333

Gain on sale of property, plant and equipment, and investment property


392 431

Revenues from the reversal of non-current provisions

Reversal of provisions and termination benefits 267 697

All other revenuesGovernment grants, debt write-offs, other revenues

1,365 430

Costs of goods, materials and servicesCorrection of errors from previous years at subsidiaries, and the participation of agency workers in profit

-113 -155

Labour costsEmployee participation in profits, including contributions, and costs for the payment of a crisis bonuses

-757 -757

Impairment losses on receivablesAdjustments to the value of receivables due to corrections of errors from previous years at subsidiaries

0 -25

Other operating expenses

Creation of provisions, effects of fraud at subsidiary in Zagreb, exclusion of Albanian subsidiary from consolidation, expenses from the correction of errors from previous years in Skopje

-212 -790

Costs of creation of provisions Creation of provisions -172 -387


Effects of fraud at subsidiary in Zagreb 0 -354

Exclusion of Albanian subsidiary from consolidation 0 -49

Expenses from the correction of errors from previous years in Skopje

-41 0

Other operating expenses – Revaluation operating expenses for intangible assets and property, plant and equipment

Impairments -189 -557

Amortisation/depreciationAdjustment to depreciation due to changes to the useful life of real estate

862 0

Gains and losses from the derecognition of operating receivables

Write-down of receivables from previous years in Belgrade

-12 0

Total impact on EBITDA1 929 403

Total impact on EBIT¹ 1,721 1,179



Intereuropa, d. d. Extraordinary effects (in EUR thousand) 2020 2019

Gains from the derecognition of operating receivables due to major one-time settlements

Reversal of adjustments to receivables due to the repayment of past-due receivables

0 570

Other operating revenues 977 706

Revaluation revenues from the reversal of impairment losses on property, plant and equipment, and investment property

Reversal of impairment losses 0 251



18 186

Revenues from the reversal of non-current provisions Reversal of provisions and termination benefits 99 1

All other revenuesGovernment grants, debt write-offs, other revenues

859 268

Costs of goods, materials and services Participation of agency workers in profits -113 -134

Labour costsEmployee participation in profits, including contributions, and costs for the payment of a crisis bonuses

-740 -736

Other operating expenses Creation of provisions 0 -181

Other operating expenses – Revaluation operating expenses for intangible assets and property, plant and equipment

Impairments -13 -52

Amortisation/depreciationAdjustment to depreciation due to changes to the useful life of real estate

548 0

Total impact on EBITDA¹ 124 -26

Total impact on EBIT¹ 658 173


TABLE 19: CONSOLIDATED INCOME STATEMENT OF THE INTEREUROPA GROUP FOR 2019 AND 2020

in EUR thousandJanuary–

December 2020January–

December 2019Index

2020/2019

Sales revenue 150,725 160,353 94

Gains and losses from the derecognition of operating receivables -15 -46 33

Other operating revenues 2,142 2,892 74

Costs of goods, materials and services -108,788 -116,356 93

Labour costs -29,124 -28,934 101

Amortisation/depreciation -6,464 -7,224 89

Impairment losses on receivables -269 462 -

Other operating expenses -2,443 -3,623 67

Operating profit 5,764 7,524 77

Interest income 99 454 22

Other finance income 1 362 -

Finance costs – costs of financing -852 -1,857 46

Impairment losses on loans granted and deposits -5 -10 51

Other finance costs -445 -30 1,485

Profit/loss from financing activities -1,202 -1,082 -

Investment result recognised according to the equity method 1 0 -

Profit from ordinary operations 4,563 6,442 71

Corporate income tax (including deferred taxes) -995 -2,245 44

Net profit for the period 3,568 4,197 85

Net profit pertaining to controlling interests 3,647 3,898 94

Net profit/loss pertaining to non-controlling interests -79 299 -

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TABLE 20: INCOME STATEMENT OF THE PARENT COMPANY INTEREUROPA, D. D. FOR 2019 AND 2020

in EUR thousandJanuary–December

2020January–December

2019Index 2020/2019

Sales revenue 103,964 111,828 93

Gains and losses from the derecognition of operating receivables

-10 -46 23

Other operating revenues 977 706 138

Costs of goods, materials and services -76,747 -83,393 92

Labour costs -18,900 -18,915 100

Amortisation/depreciation -3,772 -4,427 85

Impairment losses on receivables -128 532 -

Other operating expenses -1,043 -1,244 84

Operating profit 4,340 5,041 86

Interest income 141 475 30

Other finance income 102 1,843 6

Finance costs – costs of financing -764 -1,759 43

Impairment losses on loans granted and deposits -329 -151 217

Other finance costs -496 -342 145

Profit/loss from financing activities -1,346 65 -

Profit from ordinary operations 2,994 5,107 59

Corporate income tax (including deferred taxes) -679 -1,719 40

Net profit for the period 2,315 3,388 68

Basic and diluted earnings per ordinary share (in EUR)

0.08 0.12 67


2.6.1.2 Operating revenues, operating expenses, operating profit and EBITDAThe Group generated sales revenue of EUR 150.7 million in 2020, a decrease of 6% relative to 2019 and 8% more than planned. The most significant decline in the sales revenue of the Group in 2020 relative to 2019 was recorded by the parent company and the Montenegrin subsidiary. The second largest Group company, the company in Croatia, managed to maintain the level of revenue from the previous year in 2020, while the sales revenue of subsidiaries in Serbia, the Ukraine and North Macedonia increased.

Despite the additional activities on the sales side, the containment measures associated with the epidemic imposed by the countries in which the Group operates made it impossible to avoid a decline in sales. The largest decline in absolute terms, relative to the previous year, was felt by the land transport business line, most notably by the road transport segment. Contributing most to slightly lower sales in the intercontinental transport segment was growth in sales from air freight services through the securing of major one-off transactions, while the most significant effect of the epidemic in this segment was on sea freight services. Despite the epidemic, the Group managed to exceed the previous year's sales results in the logistic solutions segment through its activities to utilise free storage capacities and secure transactions with high value added.

In 2020, the Intereuropa Group successfully continued the trend of growth in the average sales margin from the previous year, and recorded an increase in the average sales margin in 2020 by 0.5 percentage points relative to 2019.

FIGURE 8: CHANGES IN THE SALES REVENUE OF THE INTEREUROPA GROUP AND THE PARENT COMPANY INTEREUROPA, D. D. IN THE PERIOD 2017 TO 2020

Sales revenue of the Group

Sales revenue of the Company

Planned sales revenue of the Group

Planned sales revenue of theCompany

Growth in sales revenue of the Group

Growth in sales revenue of theCompany

200

150

100

50

0

-50

-100

In E

UR

mill

ion

Gro

wth

rate

in %

25

20

15

10

5

0

-5

-10

2017

151160160

150

104112112104

139

95

2018 2019 2020

The decline in sales in 2020, both at the Group level and parent company, resulted in a reduction in work productivity measured by sales revenue per employee.

FIGURE 9: CHANGES IN SALES REVENUE PER EMPLOYEE1 OF THE INTEREUROPA GROUP AND THE PARENT COMPANY INTEREUROPA, D. D. IN THE PERIOD 2017 TO 2020

In E

UR

mill

ion

20

15

10

5

0

-5

-10

Sales revenue of the Group per employee

Sales revenue of the Company per employee

Planned sales revenue of the Group per employee

Planned sales revenue of the Company per employee

Growth in sales revenue of the Group per employee

Growth in sales revenue of the Company per employee

116

182

107

166

2017 2018 2019 2020

250

200

150

100

50

0

-50

-100

Gro

wth

rate

in %


Labour costs as a proportion of sales revenue were up at the Group level in 2020. There was also a slight increase in average labour costs per employee.

113

180

125

198

124

192

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FIGURE 10: OPERATING EXPENSES AS A PROPORTION OF THE SALES REVENUE OF THE INTEREUROPA GROUP IN THE PERIOD 2017 TO 2020

100

90

80

70

60

50

40

30

20

10

0

In %

Costs of services

Labour costs

Amortisation/depreciation

Costs of materials

Revaluation operating expenses


2 2 23 3 20 0 0

3

3

2017 2018 2019 2020

69 70 70 70

18 18 18 19

4 4 5 45

The Intereuropa Group generated EBITDA of EUR 12.3 million in 2020, down by 12% relative to the previous year, but 21% higher than planned. In addition to the main factor of declining sales, the lag in EBITDA in 2020 relative to the previous year was also attributed to lower other operating revenues, mostly as a result of lower revenues from the reversal of impairment losses on property, plant and equipment, and investment property. EBITDA was positively impacted by lower other operating expenses in 2020. The latter were high in 2019 on account of fraud identified at the Croatian subsidiary, higher expenses from revaluation operating expenses for property, plant and equipment, and investment property, and higher expenses from the creation of provisions.

Normalised EBITDA amounted to EUR 11.4 million in 2020, a decrease of 16% relative to normalised EBITDA in 2019.

FIGURE 11: CHANGES IN THE EBITDA1 AND NORMALISED EBITDA¹ OF THE INTEREUROPA GROUP AND THE PARENT COMPANY INTEREUROPA, D. D. IN THE PERIOD 2017 TO 2020

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

In E

UR

tho

usan

d

EBITDA of the Company

EBITDA of the Group

Normalised EBITDA of the Company

Normalised EBITDA of the Group

2017 2018 2019 2020



FIGURE 12: CHANGES IN THE OPERATING PROFIT AND NORMALISED OPERATING PROFIT1 OF THE INTEREUROPA GROUP AND THE PARENT COMPANY INTEREUROPA, D. D. IN THE PERIOD 2017 TO 2020

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

In E

UR

tho

usan

d

EBIT of the Company

EBIT of the Group

Normalised EBIT of the Company

Normalised EBIT of the Group

2017 2018 20202019


2.6.1.3 Finance income and costsThe Group’s net debt amounted to EUR 44.4 million at the end of 2020, a reduction of EUR 10.0 million during the year, which was seen in an improvement in the Group’s net debt / EBITDA ratio, which stood at 3.6 in 2020, a decrease of 7.3% relative to the previous year. The decrease in net debt was mainly the result of an increase in the balance of cash and cash equivalents. Contributing significantly to the latter was the conclusion of annex 1 to a loan agreement with a syndicate of banks, through which the parent company deferred the payment of principal and interest for one year, thus delaying the payment of employee participation in profits. The parent company concluded annex 1 in May 2020 in order to mitigate the effects of the COVID-19 epidemic and its negative effect on the Company's liquidity position.

FIGURE 13: CHANGES IN EBITDA¹ AND THE NET DEBT / EBITDA¹ RATIO OF THE INTEREUROPA GROUP BETWEEN 2017 AND 2020

13,97116,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

In E

UR

tho

usan

d

NFD

/ E

BITD

A

EBITDA

NFD / EBITDA

8

7

6

5

4

3

2

1

0

2017 2018 2019 2020

5.34.9

3.93.6

12,739 12,397 12,298


FIGURE 14: PROFIT OR LOSS FROM FINANCING ACTIVITIES OF THE INTEREUROPA GROUP IN THE PERIOD 2017 TO 2020

3

2

1

0

-1

-2

-3

In E

UR

mill

ion Finance income of the Group

Finance cost of the Group

2017 2018 2019 2020 Loss from financing activities of the Group

-2.3-2.0

-1.1 -1.2

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The Group generated a loss from financing activities of EUR 1.2 million, a slightly poorer result than the previous year. The most important category comprised interest expenses, which amounted to EUR 0.9 million, a decrease of EUR 1 million relative to the previous year, primarily as the result of favourable loan terms that the parent company negotiated in the loan refinancing process, which was successfully completed in January 2020, when the parent company and a syndicate of banks, including Nova Ljubljanska banka, d. d. acting as the organiser and agent, concluded a long-term loan agreement in the amount of EUR 54,850,000. Pošta Slovenije, d. o. o. contributed to that successful refinancing by issuing a guarantee covering 80% of the amount of that loan.

The slightly worse result from financing activities in 2020 was contributed significantly by expenses from negative exchange rate differences in the amount of EUR -0.4 million, while revenues from positive exchange rate differences in the amount of EUR 0.4 million were disclosed in 2019.

2.6.1.4 Net profitThe Intereuropa Group generated a net profit of EUR 3.6 million in 2019, a decrease of EUR 0.6 million relative to the previous financial year and EUR 2.3 million above the planned figure.

The net profit of Intereuropa, d. d. amounted to EUR 2.3 million in 2020, a decrease of EUR 1.1 million relative to the previous year and EUR 1.2 million above the plan.

2.6.1.5 Structure of the statement of financial position of the GroupTotal assets were down by EUR 2.9 million in 2020, primarily as the result of a reduction in non-current assets.

Non-current assets decreased by EUR 6.3 million, most notably in the items of property, plant and equipment and investment property, as investments in property, plant and equipment were lower in 2020 than depreciation.

Current assets were up by EUR 3.4 million in 2020, mostly due to an increase in the balance of cash and cash equivalents. Contributing significantly to the latter was the conclusion of annex 1 to a loan agreement with a syndicate of banks in May 2020.

On the liabilities side, the proportion of current liabilities fell due to the successful refinancing of financial liabilities, while the proportion of non-current liabilities rose, which solidified the financial soundness of the Group.

The proportion of total equity and liabilities accounted for by equity was up by 1.9 percentage points in 2020.


TABLE 21: ITEMS FROM THE STATEMENT OF FINANCIAL POSITION OF THE GROUP IN THE PERIOD 2017 TO 2020 (IN EUR THOUSAND)

2017 2018 2019 2020index

2020/2019

ASSETS 229,672 232,927 223,351 220,444 99

A. NON-CURRENT ASSETS, of which: 188,267 182,977 180,747 174,484 97

property, plant and equipment 164,669 157,404 145,262 141,311 97

non-current financial assets 106 102 185 94 50

B. CURRENT ASSETS, of which: 41,405 49,950 42,604 45,960 108

current operating receivables and contract assets 34,252 33,722 31,931 30,853 97

cash and cash equivalents 3,618 9,578 6,283 11,609 185

EQUITY AND LIABILITIES 229,672 232,927 223,351 220,444 99

A. EQUITY 117,049 120,229 122,358 124,850 102

B. NON-CURRENT LIABILITIES, of which: 81,758 15,470 17,328 68,684 396

non-current financial liabilities 66,995 511 2,719 54,199 1,993

C. CURRENT LIABILITIES, of which: 30,865 97,228 83,665 26,909 32

current financial liabilities 5,786 70,551 58,978 4,419 7

current operating liabilities and contract liabilities 24,838 26,306 24,341 21,940 90

FIGURE 15: STRUCTURE OF THE GROUP’S ASSETS IN THE PERIOD 2017 TO 2020

100

90

80

70

60

50

40

30

20

10

0

In %

Property, plant and equipment and Investment property

Current operating receivables and contract assets

169 mio EUR 164 mio EUR175 mio EUR 170 mio EUR

32 mio EUR 31 mio EUR34 mio EUR34 mio EUR

16 mio EUR

6 mio EUR

14 mio EUR

12 mio EUR

16 mio EUR

4 mio EUR

20 mio EUR

10 mio EUR

Other assets 1

Cash and cash equivalents

2017 2018 20202019


Deferred tax assets account for the majority of other assets.

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FIGURE 16: STRUCTURE OF THE EQUITY AND LIABILITIES OF THE INTEREUROPA GROUP IN THE PERIOD 2017 TO 2020

100

90

80

70

60

50

40

30

20

10

0

In %

Equity

Non-current financial liabilities

125 mio EUR117 mio EUR 120 mio EUR

1 mio EUR

122 mio EUR

54 mio EUR67 mio EUR

3 mio EUR

37 mio EUR

4 mio EUR

40 mio EUR 42 mio EUR 39 mio EUR

Other liabilities

6 mio EUR

71 mio EUR 59 mio EUR


2017 2018 20202019

2.6.1.6 Structure of the parent company’s statement of financial positionThe most significant change on the asset side of the parent company’s statement of financial position in 2020 was recorded in non-current assets, in the item property, plant and equipment, which was the result of lower investments in 2020 and a decrease in right-of-use assets under leases.

On the liabilities side, the most significant change was recorded in the maturity of financial liabilities, which was the result of the aforementioned successful conclusion of a long-term loan agreement in January 2020 in the refinancing process.

TABLE 22: ITEMS FROM THE STATEMENT OF FINANCIAL POSITION OF THE PARENT COMPANY INTEREUROPA, D. D. FROM 2017 TO 2020 (IN EUR THOUSAND)

2017 2018 2019 2020index

2020/2019

ASSETS 180,279 185,114 176,748 172,272 97

A. NON-CURRENT ASSETS, of which: 153,893 150,992 148,710 145,082 98

property, plant and equipment 89,848 85,752 77,641 75,790 98

non-current financial assets, of which: 44,323 44,323 44,889 44,518 99

investments in subsidiaries 44,257 44,257 44,823 44,452 99

B. CURRENT ASSETS, of which: 26,386 34,121 28,038 27,190 97

current operating receivables and contract assets 23,814 24,210 22,759 22,515 99

current financial investments 1,211 1,615 2,326 2,198 95

EQUITY AND LIABILITIES 180,279 185,114 176,748 172,272 97

A. EQUITY, of which: 80,797 85,005 87,228 89,225 102

share capital 27,489 27,489 27,489 27,489 100

share premium account 18,455 18,455 18,455 18,455 100

fair value reserves 32,342 32,183 30,627 30,545 100

B. NON-CURRENT LIABILITIES, of which: 76,364 10,122 11,254 62,845 558

non-current financial liabilities 66,327 0 870 52,642 6,048

C. CURRENT LIABILITIES, of which: 23,118 89,988 78,267 20,202 26

current financial liabilities 5,196 71,778 61,505 6,045 10

current operating liabilities and contract liabilities 17,875 18,073 16,623 13,944 84


FIGURE 17: STRUCTURE OF THE ASSETS OF THE PARENT COMPANY INTEREUROPA, D. D. IN THE PERIOD 2017 TO 2020

100

90

80

70

60

50

40

30

20

10

0

In %

Property, plant and equipment and Investment property

Investments and loans to Group companies

Current operating receivables and contract assets





9 mio EUR

3 mio EUR

8 mio EUR

2 mio EUR

12 mio EUR

0,4 mio EUR

14 mio EUR

5 mio EUR

Other assets 1

Cash and cash equivalents

23 mio EUR 23 mio EUR24 mio EUR24 mio EUR

2017 2018 20202019


Deferred tax assets were the most significant item under other assets.

FIGURE 18: STRUCTURE OF THE EQUITY AND LIABILITIES OF THE PARENT COMPANY INTEREUROPA, D. D. IN THE PERIOD 2017 TO 2020

100

90

80

70

60

50

40

30

20

10

0

In %

Equity


89 mio EUR81 mio EUR 85 mio EUR

0 mio EUR

87 mio EUR


1 mio EUR

24 mio EUR

6 mio EUR

28 mio EUR 28 mio EUR 27 mio EUR

Other liabilities

5 mio EUR


Current financial liabilities

2017 2018 20202019

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2.6.1.7 Alternative performance measuresThe Intereuropa Group also uses the Alternative Performance Measures (APMs) defined by the ESMA (European Securities and Markets Authority) to present its performance. The selected APMs also illustrate the Intereuropa Group's performance.

TABLE 23: LIST OF ALTERNATIVE PERFORMANCE MEASURES

Alternative performance measure Explanation of calculation Reason for selected measure

EBITDA

EBITDA: operating profit + amortisation/depreciation + revaluation operating expenses for intangible assets and property, plant and equipment – revaluation operating revenues from the reversal of impairment losses on intangible assets and property, plant and equipment.

EBITDA reflects performance and is the main source for ensuring shareholder returns.

Normalised EBITDA – Group

Excludes the effect of other operating revenues, expenses from the creation of provisions, expenses for the participation of employees and hired labour in profits, labour costs from a crisis bonus and, in 2019, in addition to all items listed above, expenses associated with the effect of fraud at a subsidiary, revenues from the reversal of impairment losses as the result of the repayment of old operating receivables based on a court settlement, expenses from the correction of errors in previous years at Group subsidiaries, and expenses from the exclusion of a subsidiary from consolidation.

Normalised EBITDA reflects performance after the exclusion of all extraordinary effects, i.e. EBITDA from ordinary operations.

Normalised EBITDA – parent company

Excludes the effect of other operating revenues, expenses from the creation of provisions, expenses for the participation of employees and hired labour in profits, labour costs from a crisis bonus and, in 2019, in addition to all items listed above, revenues from the reversal of impairment losses as the result of the repayment of old operating receivables based on a court settlement.

Normalised EBIT – Group

The same exclusions of effects apply as with EBITDA for the Group, with the additional effect of a correction to depreciation due to a change in the useful life of real estate.

Normalised EBIT reflects performance after the exclusion of all extraordinary effects, i.e. EBIT from ordinary operations.

Normalised EBIT – parent company

The same exclusions of effects apply as with EBITDA for the parent company, with the additional effect of a correction to depreciation due to a change in the useful life of real estate.

Value added Value added = EBITDA + labour costs.

Value added is a basic economic indicator and the basic measure of economic activity and success. In a contextual sense, it means newly created value that the Intereuropa Group has generated in one year.

Value added per employeeValue added per employee = value added / Average number of employees based on hours worked (FTE)

Productivity indicator that reflects average newly created value added per employee in the Intereuropa Group.

Net debtNet debt = financial liabilities – loans granted and deposits – cash.

Net debt in absolute terms indicates the Intereuropa Group's general debt and its ability to settle all its financial liabilities were they to become due immediately.

Net debt / EBITDA Ratio = net debt / EBITDA

Ratio that reflects the Intereuropa Group's ability to repay its financial liabilities, as it indicates how many years would be required to repay financial debt from existing liquid assets and cash flows from operating activities


Alternative performance measure Explanation of calculation Reason for selected measure

Return on equity (ROE)ROE = net profit or loss / average equity calculated: (final balance of equity - net profit/loss) + initial balance of capital/ 2

The ratio reflects the Intereuropa Group's ability to generate net profit relative to equity. Return on equity is also an indicator of the management's success in increasing a company's value for its shareholders.

Return on assets (ROA)ROA = net profit or loss / average assets calculated: (final balance of assets + initial balance of assets) / 2

The ratio reflects the Intereuropa Group's ability to generate net profit relative to assets.

Net return on revenueNet return on revenue = net profit or loss / total revenues (net sales revenue + other operating revenue + finance income)

The ratio reflects the Intereuropa Group's ability to generate net profit relative to revenues.

ProductivityProductivity = sales revenue / Average number of employees based on hours worked (FTE)

The ratio reflects the effectiveness of employees in generating sales revenue.

Other assets

Other assets = intangible assets + other non-current operating assets + non-current operating receivables + deferred tax assets + long-term loans granted and deposits + other non-current financial assets + assets (disposal groups) for sale + inventories + short-term loans, deposits + current receivables for corporate income tax + other current assets.

Methodology for the presentation of other assets in the balance sheet breakdown

Financial and operating liabilities

Long-term financial liabilities + long-term operating liabilities + short-term financial liabilities + short-term operating liabilities + deferred tax liability + liabilities from the contract + short-term liabilities for tax on profit

Methodology for the presentation of financial and operating liabilities in the balance sheet breakdown

2.6.1.8 Cash flow analysisThe Group generated a positive net cash flow from operating activities of EUR 9.6 million in 2020, a decrease of 24% or EUR 3.0 million relative to 2019. The net cash flow from investment activities was negative at the Group level in the amount of EUR 0.9 million. The most significant changes relative to 2019 were in the items net cash flow from short-term deposits placed (-EUR 1.6 million) and outflows for the acquisition of property, plant and equipment (+EUR 1.3 million). Following the coverage of the negative net cash flow from financing activities in the amount of EUR 3.4 million, which was an improvement of EUR 12.8 million relative to the previous year, Group companies disclosed cash and cash equivalents of EUR 11.6 million at the end of 2020, an increase of EUR 5.3 million or 85% on the balance at the end of 2019. Because the parent company is so much larger than other companies in relative terms, changes in the Group’s cash flows generally track those of the parent company, as explained in the next paragraph.

The parent company generated a positive net cash flow from operating activities of EUR 4.9 million in 2020, a decrease of EUR 4.2 million relative to 2019. EUR 0.3 million of that amount derives from lower operating profit before changes in net working capital and taxes, while the remainder derives from a change in net working capital and provisions. The most significant effect was seen in a change in operating liabilities (-EUR 1.9 million) and a change in receivables (-EUR 1.3 million), which resulted in an increase in invested working capital of EUR 3.2 million.

A negative net cash flow from investing activities was generated in the amount of EUR 1.4 million, a decrease of EUR 2.6 million relative to 2019, primarily due to lower inflows from the sale of property, plant and equipment (by EUR 2.9 million).

A negative net cash flow from financing activities was generated in the amount of EUR 3.9 million, an increase of EUR 9.1 million relative to 2019. The main factors in lower net outflows were the repayment of temporarily drawn revolving loans at the beginning of 2019 (EUR 5.5 million drawn at the end of 2018), the negative effect of lending activity within the Group in 2020 compared to a positive effect in 2019 (-EUR 2.7 million), and lower net outflows to commercial banks (EUR 6.7 million), primarily as the result of an agreement reached in May 2020 on the deferral of payments of principal and interest for a period of one year.

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TABLE 24: CASH FLOWS OF THE INTEREUROPA GROUP AND THE PARENT COMPANY INTEREUROPA, D. D. FOR THE PERIOD 2017 TO 2020 (IN EUR THOUSAND)

Intereuropa Group Parent company

2017 2018 2019 2020 2017 2018 2019 2020

Net cash flow from operating activities

9,742 12,317 12,573 9,602 6,469 9,112 9,101 4,876

Net cash flow from investing activities

-832 -2,886 311 -874 425 -2,930 1,253 -1,360

Net cash flow from financing activities

-10,570 -3,437 -16,185 -3,375 -8,303 -1,165 -13,027 -3,899

Exchange rate differences relating to cash

-16 -34 6 -27 0 0 0 0

Net cash flow for the period from ordinary operations

-1,660 5,994 -3,301 5,353 -1,409 5,017 -2,673 -383

2 . 7 S H A R E S A N D O W N E R S H I P S T R U C T U R E

The COVID-19 pandemic in 2020 impacted the functioning of the corporate sector, from where its effect spread to the capital markets. Despite the sharp drop in the SBI TOP index at the beginning of the pandemic, the Ljubljana Stock Exchange ended the year with 31% higher turnover from trading in shares than in the previous year, with the SBI TOP index declining by 2.8%. In the context of a minor price fluctuation, Intereuropa's IEKG share price ended the year at EUR 1.16, with turnover amounting to 44% of turnover in 2019.

Shares of Intereuropa, d. d.The share capital of Intereuropa, d. d. in 2020 was divided into 27,488,803 shares, of which 16,830,838 were ordinary registered freely transferable no-par-value shares (designated IEKG) and 10,657,965 freely transferable no-par-value preference shares (designated IEKN). Ordinary shares were listed on the prime market of the Ljubljana Stock Exchange, while preference shares were not traded on the regulated securities market. Ordinary IEKG shares have been traded on the Ljubljana Stock Exchange since 1998, and have been listed on the prime market since 2005.

On 13 November 2019, Pošta Slovenije, d. o. o. purchased a package of shares, and thus held a 72.1% participating interest in Intereuropa, d. d. at the beginning of 2020. Pošta Slovenija, d. o. o.'s stake comprised 9,168,425 ordinary shares (IEKG) and all 10,657,965 preference shares (IEKN). After the takeover bid sent to other shareholders was completed, Pošta Slovenije, d. o. o. acquired an additional 2,408,846 ordinary shares (IEKG) and thus increased its participating interest to 80.9%.


TABLE 25: KEY DATA REGARDING SHARES

2017 2018 2019 2020

Total number of shares 27,488,803 27,488,803 27,488,803 27,488,803

No. of preference shares (IEKN) 10,657,965 10,657,965 10,657,965 10,657,965

No. of ordinary shares (IEKG) 16,830,838 16,830,838 16,830,838 16,830,838

- of which: treasury shares 18,135 18,135 18,135 18,135

Book value per share in EUR (as at 31 December) 2.94 3.09 3.18 3.25

Data regarding trading in IEKG shares

Closing price in EUR (as at 31 December) 2.00 2.60 1.43 1.16

Weighted average price in EUR 2.26 2.50 2.29 1.40

Highest price in EUR 2.40 3.00 2.80 1.87

Lowest price in EUR 1.17 1.93 1.40 1.02

Market capitalisation in EUR thousand 33,679 43,760 24,068 19,524

Turnover in EUR thousand 2,558 2,010 1,207 526

Indicators

Earnings per ordinary share in EUR 0.01 0.15 0.12 0.08

Cash flow per share in EUR 0.16 0.30 0.28 0.23

Gross dividends per share in EUR 0.00 0.00 0.00 0.00

P/BV 0.68 0.84 0.45 0.36

P/CF 12.37 8.7 5.03 5.15

P/E 200.00 17.33 11.92 14.50

Capital yield 69.6% 29.9% -45.0% -18.9%

Dividend yield 0.0% 0.0% 0.0% 0.0%

Total yield 69.6% 29.9% -45.0% -18.9%

Notes:Book value per share: equity / (number of total shares – number of treasury shares).Market capitalisation: closing price at the end of year * number of shares listed on the stock exchange.Earnings (loss) per ordinary share: earnings (loss) per ordinary share / (number of ordinary shares – number of treasury shares).Cash flow per share: (net profit – dividends + amortisation/depreciation) / (number of total shares – number of treasury shares).P/BV: closing price at the end of the year / book value per share.P/CF: closing price at the end of the year / cash flow per share.P/E: closing price at the end of the year / earnings per share.Capital yield: growth in closing price over a one year-period.Dividend yield: gross dividend / closing price at the end of the year.

Trading in IEKG sharesThere was less trading in IEKG shares in 2020 than in the previous year. A total of 449 transactions were concluded in which owners exchanged 377,621 IEKG shares. Annual turnover in shares amounted to EUR 0.5 million, while average daily turnover was EUR 2.1 thousand. The market value of IEKG shares fluctuated between EUR 1.02 and EUR 1.87 per share and ended the year at EUR 1.16. IEKG shares were down 18.9% during the year, while the Ljubljana Stock Exchange’s SBI TOP index recorded a 2.8% drop in value. This was also reflected in the lower market capitalisation of ordinary IEKG shares, which at the end of 2020 amounted to EUR 19.5 million.

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FIGURE 19: CHANGES IN THE PRICE OF IEKG SHARES AND THE SBI TOP INDEX IN 2020

Clo

sing

pric

e o

f IEK

G s

hare

s (in

EU

R)

4.00

3.00

2.00

1.00

0.00

Jan. Feb. Mar. Apr. May. Jun. Jul. Aug. Sep. Oct. Nov. Dec.

Closing price of IEKG shares (in EUR)

SBI TOP (index points)

1,000

900

800

700

600

SBI T

OP

(ind

ex p

oin

ts)

FIGURE 20: TURNOVER IN INTEREUROPA SHARES IN 2020

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.

Turn

ove

r (in

EU

R th

ous

and

)

80

70

60

50

40

30

20

10

0

Ownership structure of the CompanyThe concentration of ownership increased in 2020. A total of 990 shareholders holding a total of 2,408,846 IEKG shares responded to Pošta Slovenija, d. o. o.'s takeover bid in January. Pošta Slovenije, d. o. o. thus increased its ownership stake to 80.9%. By the end of the year, a further 299 shareholders sold their shares, bringing the number of shareholders during the year down by 36%, from 3,608 to 2,319. The combined participating interest of the top ten shareholders was up by 7.4 percentage points relative to the situation as at 31 December 2019 to stand at 95.0% at the end of the year.

In terms of ownership structure at the end of 2020, the stakes held by natural persons and financial corporations were down by 5 percentage points and 3 percentage points, respectively, relative to the previous year, while Pošta Slovenije, d. o. o.’s stake was up by 9 percentage points. The proportion of shares held by foreign investors was 0.3%.

TABLE 26: TOP TEN SHAREHOLDERS OF THE PARENT COMPANY INTEREUROPA, D. D. AS AT 31 DECEMBER 2020

Item no.

ShareholderNumber of shares

31 December 2020Participating interest

31 December 2020

1. Pošta Slovenije, d. o. o. 22,235,236 80.9%

2. Luka Koper, d. d. 1,344,783 4.9%

3. Kapitalska družba, d. d. 719,797 2.6%

4. Luka Koper INPO, d. o. o. 615,730 2.2%

5. SDH, d. d. 474,926 1.7%

6. Zavarovalnica Triglav, d. d. 332,918 1.2%

7. Jereb Law Firm (fiduciary account) 134,599 0.5%

8 Individuals 117,967 0.4%

9. Individuals 76,873 0.3%

10. Individuals 73,196 0.3%


At the end of 2020, 118 ordinary shares were held on a special account of Kapitalska družba, d. d., which in accordance with Article 48a of the Book-Entry Securities Act (Official Gazette of the Republic of Slovenia, No. 5/17) is intended for securities waived by their holders and/or securities held by the Republic of Slovenia. Kapitalska družba may not exercise the voting rights attached to those securities.

FIGURE 21: OWNERSHIP STRUCTURE TAKING INTO ACCOUNT BOTH CLASSES OF SHARES OF THE PARENT COMPANY INTEREUROPA, D. D. AS AT 31 DECEMBER 2020

Individuals 5,3%

KAD (Article 48a of the Book-Entry Securities Act) 0.0%

Luka Koper* 7.1%

Pošta Slovenije, d. o. o. 80.9%Financial corporations 1,5%Other companies 1.1%Kapitalska družba, d. d. 2.6%

SDH, d. d. 1.7 %

Treasury shares 0.1%

* Including Luka Koper, d. d. and its 100% owned subsidiary Luka Koper INPO, d. o. o.

Shares held by members of the Management Board and Supervisory Board

There were no changes in the shares held by members of the Management Board and Supervisory Board. The members of the Management Board did not hold shares of Intereuropa, d. d.

The number of shares held by Supervisory Board members is presented in the table below.

TABLE 27: NUMBER OF IEKG SHARES HELD BY SUPERVISORY BOARD MEMBERS AS AT 31 DECEMBER 2020

Shareholder Number of shares 31 December 2020Participating interest 31 December

2020

Tjaša Benčina, member of the Supervisory Board

40 0.0001%

Authorised capitalIntereuropa, d. d. had no authorised capital as at 31 December 2020.

Dividend policy The Company did not pay dividends in 2020.

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Communication with the financial public

The principles of communication with the financial public are set out in Intereuropa, d. d.’s Corporate Governance Policy, which is accessible on the Company’s website at www.intereuropa.si. The Company strives for regular, honest and accurate communication with its existing owners, which is one of the bases for building successful operations. Emphasis is placed on appropriate communication with investors, and correct and up-to-date information for creditor banks.

To that end, it consistently complies with the Ljubljana Stock Exchange’s information disclosure rules and recommendations, and strives to achieve the best corporate communication possible. The following communication tools and activities are used for that purpose:• the regular General Meetings of Shareholders;• the regular publication of business results and other price-sensitive information;• regular communication via the SEOnet electronic system;• regular communication with the media; and• the regular publication of information regarding operations on the Company's website.

The Company also welcomes the direct opinions and recommendations of shareholders, which it collects via the following e-mail address: [email protected].

Financial calendar of publications for 2021

Date Publication

4 February 2021 – 10 March 2021 No-communication period

11 March 2021 Thursday

Publication of information regarding the business results of the Intereuropa Group and the parent company Intereuropa, d. d. in 2020

29 April 2021 Thursday

Publication of the audited annual report for 2020

1 May 2020 – 19 May 2021 No-communication period

20 May 2021 Thursday

Publication of the unaudited business report of the Intereuropa Group and the parent company Intereuropa, d. d. for the period January to March 2021

24 June 2021 Thursday

Publication of resolutions adopted by the General Meeting of Shareholders

6 Aug 2021 – 26 Aug 2021 No-communication period

26 August 2021 Thursday

Publication of the unaudited business report of the Intereuropa Group and the parent company Intereuropa, d. d. for the period January to June 2021, and the presentation of planning documents of the Intereuropa Group and the parent company Intereuropa, d. d. for 2022

30 October 2021 – 17 November 2021 No-communication period

18 November 2021 Thursday

Publication of the unaudited business report of the Intereuropa Group and the parent company Intereuropa, d. d. for the period January to September 2021

The scheduled dates of publications are given. Any change to those dates will be published on the Company’s website at http://www.intereuropa.si.

Intereuropa, d. d. does not provide information regarding its operations during no-communication periods.

Scheduled regular announcements and other controlled information will be published on the Ljubljana Stock Exchange's website via the SEOnet system (http://seonet.ljse.si) and on the Company's website at http://www.intereuropa.si.


2 . 8 R I S K M A N A G E M E N T

Risk is any uncertainty regarding future business events that could reduce the probability and/or affect the achievement of business objectives, and thus have a negative impact on performance. Intereuropa Group companies therefore employ a risk management system as a tool to maintain their competitive advantage on the market, to reduce the probability of financial or other losses, and the loss of goodwill or damage to the Group’s reputation, and to improve the performance of the Group as a whole.

The risk management policy of Intereuropa Group companies is defined in the Risk Management Rules of the Intereuropa Group, which were updated in 2020. Those rules define the risk management process at all Group companies, and include:• the responsibilities and competences of key persons in the risk management process;• the definition and types of risks;• the definition of the risk management process; • the methodology for the measurement of exposure to risks; • the process of managing loss events and establishing a register of loss events;• the method of establishing a risk register; and • informing and reporting methods.

Exposure to risks is assessed in two steps: first, at the level of each Group company, where risk must be assessed by an administrator and the management of a subsidiary; and second, at the Group level, where the level of risk is calculated as the sum of the estimated weighted average annual amounts of damage at companies where a particular risk was identified. The estimated average annual amount of damage at a given company is calculated as the product of the frequency of an unwanted event and the estimated value of the consequences of the realisation of that event.

The setting of the level of risk for the Group using the calculated weighted average of estimated annual amounts of damage is illustrated in Table 28.

TABLE 28: LEVEL OF RISK FOR THE INTEREUROPA GROUP

Level of risk for the Group Estimated damage to the Group (in EUR)

1 X<=20.000

2 20.001<X<=50.000

3 50.001<X<=80.000

4 80.001<X<=110.000

5 110.001<X<=160.000

6 160.001<X<=210.000

7 210.001<X<=260.000

8 260.001<X<=310.000

9 310.001<X<=410.000

10 410.001<X<=510.000

11 510.001<X<=610.000

12 610.001<X<=710.000

13 710.001<X<=960.000

14 960.001<X<=1.210.000

15 1.210.001<X<=1.460.000

16 X>=1.460.001

Identified levels of risks fall into the following ranges:• Assessments from 1 to 4 represent low-level and less significant risks;• Assessments from 5 to 8 represent medium-level and moderate risks;• Assessments from 9 to 12 represent high-level and significant risks; and• Assessments from 13 to 16 represent very high-level and very significant risks. These are the Group's key risks.

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The management of the parent company is responsible for defining the risk management policy and introducing a comprehensive risk management process within the Intereuropa Group. Risks are addressed systematically by risk holders and the Risk Management Committee, which together implement activities in the risk management process. At sessions, risk managers brief the members of the aforementioned committee on identified risks. They also discuss proposed risk management measures, together with deadlines and responsible persons. The success of the implementation of adopted risk management measures is also monitored. The committee also discusses loss events at sessions.

The Intereuropa Group encounters various risks in its operations. Those risks are classified to the following five risk categories:• strategic risks,• operational risks,• financial risks,• regulatory compliance risks, and• reputation risks.

At the end of 2020, a total of 50 risks were identified at the Group level, four assessed as high, 14 assessed as medium and 32 assessed as low.

Operational risks are among the highest identified risks, both in terms of their number as well as their estimated average annual potential damage. The aforementioned risks represent the possibility of loss due to the inadequate or failed implementation of internal procedures and processes, or due to external events. A high-level risk was also identified among operational risks, i.e. the risk associated with the outbreak of an epidemic and its negative impact on operations. Immediately following the outbreak of the pandemic in March 2020, the Intereuropa Group began to implement all required measures to prevent the spread of the infection and protect the health of employees, and to ensure business continuity. Despite the successful implementation of measures during the first and second waves of the epidemic, the Group was unable to completely avoid its negative impact on its operations.

Strategic risks comprise risks associated with losses as a result of incorrect business decisions, the inadequate implementation of adopted decisions and insufficient responsiveness to changes in the business environment. Those risks depend on compliance between the outlined strategic objectives and the business strategy employed to achieve those objectives, the funds used to achieve those objectives, and on the quality of implementation. Nine strategic risks were identified at the Group level at the end of 2020. The level of risk associated with three was assessed as high, i.e. the risk of fraud committed by management, the risk of the loss of customs terminal status at two Group subsidiaries and the risk that strategic investments would not be implemented by the projected deadline. The level of identified risk associated with the risk of fraud committed by management and the risk of the loss of customs terminal status was lowered in 2020. The lowering of the level of risk was attributed to implemented measures relating to the corporate governance of subsidiaries, the introduction of a fraud prevention system and the suspension of services of the customs terminal in Sarajevo.

Regulatory compliance risks comprise the risk of the failure of Group companies to operate in accordance with valid laws and implementing regulations, other regulations, policies and declarations to which companies are bound, and the internal acts of companies. They relate to corporate governance, relations with employees and industry standards, and are linked to internal control systems and the security policy, and to the personal accountability of management, the members of supervisory boards and the liability of legal entities. Seven regulatory compliance risks were identified at the Intereuropa Group level at the end of 2020, none of which were assessed as high or very high.

Five financial risks were also identified at the Group level at the end of 2020. These are risks associated with the ability to generate finance income, to control finance costs and to preserve the value of financial assets. None of those identified risks were assessed as high or very high. Liquidity risk was assessed as medium, while other risks were assessed as low. Detailed information regarding exposure to financial risks is presented in the financial report in note no. 31.


2 . 9 D E V E L O P M E N T A N D I N V E S T M E N T S

2.9.1 DEVELOPMENT OF THE COMPUTERISATION OF OPERATIONS

Activities and projects in 2020 were characterised by the COVID-19 epidemic, which also had a major effect on the computerisation of processes. In order to minimise the impact of the epidemic on its operations, the Company's key activity was ensuring technical means for work from home for a large number of employees, in addition to ensuring the required information security. An important goal was also the protection of key IT personnel who enabled this type of work, and the continuous functioning of the IT system. The system and process that enabled work from home without major investments for the entire Intereuropa Group were therefore set, and did not simultaneously lead to a reduction in the level of IT services.

Despite this, the majority of planned projects were completed in 2020, as follows:• the completion of projects to introduce the SAP Financial Accounting solution at the subsidiaries AD Intereuropa Beograd,

Intereuropa Kosova, Intereuropa Skopje, Intereuropa Sajam and Interzav;• the partial introduction of the Wex business information solution at the subsidiary AD Intereuropa Beograd, which continues

in 2021;• the introduction of the Wex-WMS system in warehousing processes at Intereuropa RTC, Sarajevo;• the creation and introduction of a mobile solution for tracking FTL/LTL shipments;• a CRM information system was introduced at most Intereuropa Group companies;• a business intelligence (BI) system was introduced for sales, the management of operating receivables and the analysis

of operations, while the development of a system for monitoring the efficiency of operational processes will soon be completed;

• an independent information security function was set up at the end of 2020; and• the implementation of synergies with Pošta Slovenije commenced in the area of the IT infrastructure.

The following key projects and activities are planned for 2021 with the aim of achieving strategic IT objectives, implementing the Group’s business plan and the achieving synergies at the Pošta Slovenije Group level:• the setting up of a back-up IT location for ensuring business continuity;• the linking of the Intereuropa Group’s communication network with Pošta Slovenije’s network;• the construction of interfaces for linking Intereuropa's business information systems with those of Pošta Slovenije;• the continued introduction of the Wex business information solution at other subsidiaries; and• the introduction of a system for monitoring the efficiency of operational processes in the scope of the BI (business

intelligence) project.

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2.9.2 INVESTMENTS IN FIXED ASSETS

2.9.2.1 Intereuropa GroupThe Intereuropa Group invested EUR 2.1 million in fixed assets in 2020. Of that amount, EUR 0.6 million was invested in real estate and EUR 1.5 million in equipment and intangible assets. Thus, 31% of the annual investment plan was realised. A major factor in the suspension and postponement of investments, and thus the partial implementation of the investment plan, was the COVID-19.

The majority of the funds were earmarked for IT development and updates (EUR 0.4 million), for warehouse fences in Maribor, Dravograd and Ljubljana with an advanced security system (EUR 0.3 million), and for the renovation of office premises for lessees in Maribor (EUR 0.3 million).

TABLE 29: OVERVIEW OF THE REALISATION OF PLANNED INVESTMENTS BY THE INTEREUROPA GROUP AND PARENT COMPANY IN 2020 AND COMPARISON WITH 2019 (IN EUR THOUSAND)*

Real estateEquipment and intangible

assetsTotal investments

20192020 plan

2020 20192020 plan

2020 20192020 plan

2020index 20/19

Index 20/20 plan

Intereuropa, d. d. 327 2,120 374 1,276 2,028 905 1,603 4,148 1,279 79.8 30.8

Subsidiaries 329 933 189 957 1,796 637 1,286 2,729 826 64.2 30.3

Total Group 656 3,053 563 2,233 3,824 1,542 2,889 6,877 2,105 72.9 30.6

* Breakdown by property, plant and equipment and intangible assets: of the Group’s total investments in 2020 in the amount of EUR 2,105 thousand, EUR 2,020 thousand was invested in property, plant and equipment and EUR 85 thousand was invested in intangible assets.

2.9.2.2 Plans for 2021Investments in the total amount of EUR 8.4 million are planned at the Group level in property, plant and equipment and intangible assets, primarily in the upgrading and renovation of the warehousing infrastructure and warehouse equipment, in the upgrading of IT equipment and in intangible assets.


2 . 1 0 D I V E S T M E N T O F C O M M E R C I A L L Y O B S O L E T E A S S E T S

The sale of non-core and non-strategic real estate, which will enable the Group to maintain a sustainable level of indebtedness when investing in new warehousing capacities, is envisaged in the scope of the strategic development programme of the Intereuropa Group until 2025.

The Intereuropa Group sold fixed assets with a carrying amount of EUR 2.3 million for EUR 2.7 million in 2020, while in 2019 it sold fixed assets with a carrying amount of EUR 2.9 million for EUR 3.4 million.

The following major items of real estate were sold in 2020:• a warehouse and appertaining land in Zagreb;• office premises in Zagreb;• business premises in Pljevlja, Montenegro;• business premises in Ptuj;• land in Ploče, Croatia.

In addition to the above, a sales contract for a commercial building in Nikšić, Montenegro was concluded in December 2020.

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Sustainabledevelopment

03 SUSTAINABLE DEVELOPMENT

3 . 1 H R I S S U E S

The COVID-19 epidemic had a significant effect on the business processes and work environment in the Group in 2020. A number of measures and internal instructions were adopted at the Company to address the challenges in the new circumstances, which required preventive and responsible action by all employees and consistent compliance with adopted measures.

The Company’s employees were continuously briefed on all measures that followed NIJZ's recommendations, as well as the recommendations of other institutions (Occupational, traffic and sports medicine), which issue the aforementioned recommendations and contribute to the protection of employees during the epidemic.

The general recommendations for preventing the spread of infections were taken into account, i.e. thoroughly washing or disinfecting hands, cough hygiene, maintaining physical distance and wearing a mask. Methods that did not include personal contact (phones, video-conferences, internet, etc.) were used to the greatest extent possible for communication between employees and for meetings.

During the epidemic, employees with access to the information system were ordered to work from home, which was done by 389 Group employees occasionally or for a specific period. Of that amount, 297 were employees from Slovenian Group companies, 62 were from the Croatian subsidiary and 30 from the subsidiary in Bosnia and Herzegovina. Work from home was also carried out to a lesser extent at the other subsidiaries. Employees at higher risk of deteriorating health will work from home on a permanent basis until the epidemiological situation improves. Flexibility in the form of organising work from home for Slovenian Group companies will continue to a certain degree even after the end of the epidemic on the basis of employment contracts concluded for work from home.

A total of 221 employees or 16% of all Group employees were furloughed in 2020 due to the reduced scope of operations. A further 90 employees of the Intereuropa Group were absent from work due to force majeure events, i.e. quarantine, child care and lack of public transport. In accordance with the laws of individual countries, companies took advantage of various financial subsidies to overcome their business problems.

A total of 108 persons in the Group were infected, which translates to 7% of all employees (including hired workers).

3.1.1 NUMBER OF EMPLOYEES

The Intereuropa Group had an average of 1,349 employees in 2020. The balance on the last day of 2020 was 1,337, with Slovenian Group companies accounting for 44.7% of that number and foreign subsidiaries the remaining 55.3%. The total number of Group employees was down by 19 or 1.4%. Two employees from the subsidiary in Albania were not included in the total number of Intereuropa Group employees, as that subsidiary is not included in the Group's consolidated financial statements.

INTEREUROPA / SUSTAINABLE DEVELOPMENT / 202084

FIGURE 22: PROPORTION OF EMPLOYEES BY COUNTRY IN WHICH INTEREUROPA GROUP COMPANIES ARE BASED

SlovenIa; 597; 44.7%

Croatia; 290; 21.7%

Bosnia and Herzegovina; 124; 9.3%

Serbia 97; 7.3%

Montenegro; 114; 8.5%

Kosovo; 49; 3.7%

North Macedonia; 38; 2.8%

Ukraine; 28; 2.1%

3.1.2 CHANGES IN THE NUMBER OF EMPLOYEES

The Intereuropa Group hired 142 new employees and terminated the employment of 161 workers in 2020. Most of the needs for new employees were the result of an increased workload and the securing of new transactions (39%), followed by newly employed workers replacing employees who left the company or were on protracted sick leave (36%) and workers who previously performed work at Intereuropa via employment agencies (25%).

Mutual terminations of employment, as is customary, was the main reason for departures (48%).

The turnover rate of employees who left their jobs at their own initiative was 5.8%, a decrease of 1.9 percentage points relative to 2019.

The first step in replacing employees who left the Intereuropa Group is to verify the possibilities for reassignment and advancement of qualified internal candidates to perform for demanding and managerial work. As an exception, senior positions are filled by a certain number of external candidates due to specific competences that are lacking at the Company and competitive strengths.

TABLE 30: NUMBER OF EMPLOYEES BY INTEREUROPA GROUP COMPANY

Company31 December

201931 December

2020Change 20-19 Index 20/19

Intereuropa, d. d., Koper 609 586 -23 96

Interagent, d. o. o., Koper 9 8 -1 89

Interzav, d. o. o., Koper 3 3 0 100

Subsidiaries in Slovenia 621 597 -24 96

Intereuropa, logističke usluge, d. o. o., Zagreb 286 282 -4 99

Intereuropa Sajam, d. o. o., Zagreb 9 8 -1 89

Intereuropa RTC, d. d., Sarajevo 144 124 -20 86

AD Intereuropa logističke usluge, Belgrade 83 97 14 117

Intereuropa Kosova L.L.C., Prishtina 33 49 16 148

Zetatrans A.D. Podgorica 113 114 1 101

Intereuropa Skopje, d. o. o. 38 38 0 100

TOV TEK ZTS, Uzhhorod 29 28 -1 97

Companies outside of Slovenia 735 740 5 101

TOTAL 1,356 1,337 -19 99

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FIGURE 23: CHANGE IN THE NUMBER OF EMPLOYEES AT THE INTEREUROPA GROUP IN THE PERIOD 2017 TO 2020

1.600

1.400

1.200

1.000

800

600

400

200

0

Num

ber

of e

mp

loye

es

2017 2018 2019 2020

Slovenia

Abroad

Total602 611 621 597

767 716 735 740

1,369 1,327 1,356 1,337

3.1.2.1 Flexible forms of employmentThere is a policy in place in the Intereuropa Group that at least 10% of employees perform work via flexible forms of employment that enable an easier adjustment of the number of employees to the needs of work processes and a better response to changes in the organisation of work. Work via HR agencies, student services and fixed-term employment are classified as flexible forms of work that must comply with the laws of individual countries.

In addition to rights and obligations, employees that perform work via employment agencies are also entitled to the other benefits that apply to regular employees. More than half of these workers are full-time employees. Such forms of work in the Group via agencies and student services are present in jobs with lower value added (e.g. clerks and warehouse workers), or as temporary employment for projects and as a way to temporarily replace absent employees.

An average of 206 workers, recalculated as FTEs, performed work for the Group in 2020 via agencies and student services, broken down as follows: 182 workers via employment agencies (compared with 188 in 2019) and 24 via student services (compared with 45 in 2019). A total of 13.7% of all Group employees, recalculated as FTEs, which was 1.7 percentage points less than in the previous year, worked via flexible forms of employment (agency workers and students).

Fixed-term employment is also deemed a flexible form of employment. At the end of 2020, a total of 11% or 144 of the Intereuropa Group’s employees were on fixed-term employment contracts.

3.1.2.2 Process of integrating procedures with Pošta SlovenijeThe integration of the Intereuropa Group with Pošta Slovenije continued in 2020. These procedures envisage the centralisation of support services, which will enable central governance and management. Its purpose is the standardisation and optimisation of internal procedures, processes and resources, the strengthening of competences and best practices, and the achievement of synergistic effects for both companies. Consultations regarding the merger of support functions and the reassignment of employees took place with the trade unions and work councils of both companies.

3.1.3 STRUCTURE OF EMPLOYEES

3.1.3.1 Employee structure by gender, age and management positionGiven the nature of work, the Intereuropa Group employs more men than women, while the proportion of employees by gender breakdown remains the same at the Group level as in the previous year. The proportion of women employed at Slovenian Group companies was up more than 1% relative to the previous year, while that proportion was down by just under 1% in total at Group companies abroad. The percentage of executive and management staff on individual contracts declined by 0.7% at the Group level relative to the previous year.


TABLE 31: EMPLOYEE STRUCTURE BY GENDER, AGE AND MANAGEMENT POSITION

31 December 2020

Proportion of employees by gender within the Group 62.9% men, 37.1% women

Slovenian Group companies 54.8% men, 45.2% women

Total companies abroad 69.5% men, 30.5% women

Average age of employees at Slovenian Group companies (years) 48.2 years (men: 47.6 years; women: 48.8 years)

Average age at other foreign subsidiaries 42 – 49.7 years

Proportion of management staff (on individual contract) in the Group 4.9% (60.6% men; 39.4% women)

Proportion of management staff (on individual contract) at Slovenian Group companies

4.4% (59.3% men; 40.7% women)

Proportion of management staff (on individual contract) at foreign companies

5.3% (61.5% men; 38.5% women)

3.1.3.2 Qualification structure of employeesThe qualification structure of employees has remained at roughly the same level for a number of years now. Given the Intereuropa Group’s core activity, i.e. logistics operations and warehousing, the majority of employees have a secondary school or vocational education. The proportion of Group employees with higher than secondary school education increased by 0.5 percentage points in 2020 relative to the previous year, which was also the same amount by which the proportion of employees with lower qualifications decreased.

FIGURE 24: QUALIFICATION STRUCTURE OF EMPLOYEES AT THE INTEREUROPA GROUP IN THE PERIOD 2017 TO 2020

100

90

80

70

60

50

40

30

20

10

0

%

2017 2018 2019 2020

Qualification level I.–III. st.

Qualification level IV.–V. st.

Qualification level VI.–VIII.

5.8% 6.1% 5.6%6.1%

57.6% 57.9% 57.9%57.0%

36.6% 36.0% 36.%36.9%

3.1.3.3 Disabled persons

TABLE 32: NUMBER AND SHARE OF DISABLE PERSONS AT THE INTEREUROPA GROUP

31 December 2020

Number and share disabled persons in the Group 44 disabled persons (20 working part-time and 24 working full-time); 3.3%

Slovenian Group companies 35 disabled persons (20 working part-time and 15 working full-time); 5.7%

Total companies abroad 9 disabled persons (9 working full-time); 1.2%

Most employees with a disability status work at the parent company. Intereuropa, d. d., is entitled to compensation for 14 disabled persons for exceeding the legally prescribed quota of disabled persons, which for companies operating in the transport and warehousing sector requires at least 3% of the total number of employees to be disabled persons to be granted compensation.

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3.1.4 TRAINING AND HR DEVELOPMENT

3.1.4.1 System of training, identification and monitoring of required knowledge/skills Two of the key factors contributing to the Company's competitiveness and rapid response to the ever-changing market requirements are the knowledge and skills of employees. Through training and different forms of motivation, the Intereuropa Groups strives for the career development of employees and the securing of the knowledge required to provide competitive logistics services. This mainly includes expertise from logistics, the storage of various types of merchandise, customs clearance services, the organisation of transport, etc. In addition, it is also crucial to ensure support knowledge for management of the organisation and support functions (law, accounting, finances, IT, HR, occupational health and safety), knowledge of foreign languages, communication skills, etc.

Group companies identify their needs for the aforementioned knowledge every year through the planning process, and a training plan is prepared for employees at the level of individual organisational units and companies within the Group. Planning takes place at larger Group companies in connection with the process of management by objectives via the conducting of annual interviews. The cost aspect of the training process according to the plan is monitored on a quarterly basis, while the appropriateness of completed training programmes in terms of content is monitored on an annual basis. The quality of training is verified through occasional surveys and repeated annual assessments of the required organisational knowledge via annual interviews. The key competences that are verified include teamwork, a proper attitude to customers, independence and responsibility, and flexibility. The average score of developed competences is adequate. If an employee's level of development of competences is below expectations, they must undergo the required training programmes.

3.1.4.2 Realisation of training in 2020A total of 7,713 hours was earmarked for employee training at the Group level in 2020, a decrease of 4,426 hours relative to the previous year. This difference was primarily the result of more extensive internal training focusing on occupational health and safety, which was carried out at the subsidiary in Croatia in 2019 (3,202 hours). Group employees received an average of six hours of training, with Slovenian Group companies receiving four hours and foreign subsidiaries receiving 7 hours.

Training in 2020 was also impacted by the measures imposed to prevent the spread of the coronavirus, as internal forms of training were hampered, and external training courses were cancelled or postponed during the epidemic. A large proportion of training was carried out at the Company in the form of short e-learning and web conferences. Only 13% of all education and training was carried out by internal experts (less than in previous years). As is customary, there was training on occupational health and safety and training for the management of logistics processes with IT support at the parent company and subsidiaries in Serbia, Bosnia and Herzegovina and in Croatia.

In terms of content, the largest proportion of training courses was aimed at obtaining logistics knowledge (36%), followed by occupational health and safety training at 29%, while a little over 27% was accounted for by further training to obtain specific professional knowledge and skills from different areas of the company's support activities and a small proportion was accounted for by training focusing on management and sales, and the improvement of business English.

Out of the more extensive training courses undertaken by Slovenian Group companies, mention should be made of e-training on information security, which was attended by 83% of employees who use computers in their work and whose knowledge was tested at the end of training, as well as training for 22 managers who obtained skills for effective communication and management by objectives. Due to the epidemiological measures, only two out of three modules were completed, and a portion of the managers will undergo the full training as soon as the epidemiological situation so allows.

With respect to the subsidiaries abroad, it should be noted that, in addition to the above-mentioned training carried out to enable the use of information programmes in logistics processes, a group of 22 warehouse workers from the Intereuropa Zagreb subsidiary underwent practical training and became familiar with the work process at the warehouse of the Celje business unit.


FIGURE 25: BREAKDOWN OF EDUCATION AND TRAINING AT THE INTEREUROPA GROUP IN 2020 BY CONTENT

Health &Safety at work 29.34%

Logistics 35.68%

Supporting activities 27.22%

Managing 4.20%

Sales and marketing 0.29%

Foreign languages 3.28%

TABLE 33: COMPARISON OF EDUCATION AND TRAINING AT THE INTEREUROPA GROUP IN THE PERIOD 2017 TO 2020

2017 2018 2019 2020

No. of hours of functional training (seminars, courses, professional meetings, etc.)

13,633 14,384 12,138 7,713

No. of hours of internal transfer of knowledge 4,695 4,727 4,776 1,007

No. of training participants (seminars, courses, professional meetings, etc.)

1,483 1,479 1,296 1,090

Total funds used for training in EUR* 99,657 100,249 56,902 58,630

Funds used for training per employee in EUR* 73 75 42 44

* Figure only includes participant fees.

3.1.4.3 Competence centre for human resource development in logisticsFrom September 2019 until May 2022, Intereuropa, d. d. will be included in the European Competence Centre project for the development of employees in logistics (KOC Logins). The objective of the project is the development of employee competences, and thus their improved flexibility, employability and effectiveness, and ultimately the increased awareness of both employees and employers about the importance of lifelong learning.

The Company is participating as a partner in a consortium with 31 other Slovenian companies from the logistics sector. There is also a project office at the Company that organises and coordinates training, reports on work and prepares applications for co-financing.

A total of 47 training events attended by 93 employees (certain employees attending multiple times) were organised at Intereuropa, d. d. in 2020 in the scope of the aforementioned project.

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3.1.5 EQUAL TREATMENT OF ALL EMPLOYEES, PROTECTION AGAINST HARASSMENT AND DISCRIMINATION IN THE WORKPLACE, AND RESPECT FOR HUMAN RIGHTS AND DIGNITY

All of the Intereuropa Group's employees, for the duration of their employment, and job seekers are treated equally, regardless of their personal circumstances, such as gender, nationality, race or ethnic origin, language, religion or belief, political or other beliefs, education, material standing, social position, family status, disability, state of health, age and sexual orientation. All forms of direct and indirect discrimination are prohibited.

The employer ensures the equal treatment of all employees, in particular with regard to employment, advancement, training, education, retraining, pay and other employment earnings, absence from work, working conditions, working hours and the termination of an employment contract, and with regard to the exercising of other employment rights.

The parent company has adopted rules that govern the protection of employees against sexual and other forms of harassment and mobbing, and against discrimination in the workplace and in connection with work. Those rules also define procedures for taking action in the event such harassment, mobbing or discrimination occurs. Intereuropa has adopted the Code of Ethics, which applies to all Group companies and defines standards of ethics and integrity in the work of Group employees. The right to personal data protection (GDPR), the management of conflicts of interest and other areas are also governed at individual companies by the relevant bylaws.

3.1.6 PARTICIPATION OF WORKERS IN MANAGEMENT

Works councils, intended for the participation of workers in the adoption of important HR, economic and other company decisions, function actively at Slovenian Group companies and the subsidiaries in Bosnia and Herzegovina and Ukraine. The works council in Bosnia and Herzegovina comprises seven members, 14 members at the Ukrainian company, and 13 members from individual organisational units at different locations at Slovenian Group companies. A total of 13 sessions were organised at Slovenian Group companies in 2020. In addition to works council members, members of the Management Board, director of the HR and general affairs department and other management staff, as required, were always present at these sessions. Various topics were discussed: presentation of financial reports, HR problems, remuneration, the rights of employees during Pošta Slovenije's takeover, consultation during the adoption of company rules, the organisation of operations, etc. Employees were regularly informed of the content of all sessions and adopted resolutions via the internal website.

Employee rights are represented at Slovenian Group companies by two representative trade unions in which 34% of employees are members. A trade union also operates at the subsidiary in Montenegro and includes 95% of the company's employees, and in Croatia where 12% of employees are members. Other companies do not have representative trade unions.

3.1.6.1 New collective agreement of Intereuropa, d. d. In February 2020, the Management Board of Intereuropa, d. d., together with the representatives of representative trade unions (ŠAK-KS 90 and the road transport trade union) signed a new collective agreement, whose primary aim was the incentive-based regulation of wage relations (disparities) and the long-term stability and competitiveness of the Company.


3.1.7 CONCERN FOR EMPLOYEES AND THE BROADER SOCIAL ENVIRONMENT

The Intereuropa Group provides its employees with a broad spectre of additional benefits that improve the quality of work and time that employees spend in the work environment.

To facilitate the balancing of work and family life, parents with young children have the right to take advantage of flexible part-time work. A total of eight Group employees per month on average took advantage of that opportunity in 2020. Slovenian companies of the Intereuropa Group maintained the New Year's holiday tradition of giving the children of employees a gift certificate in the amount of EUR 30 for a children’s shop.

Slovenian Group companies have financed employees’ supplemental pension insurance for 14 years. That insurance includes all permanent employees, and temporary employees after they have been on the job for one year. The Company co-finances the pension plan by paying in a portion of the insurance premium in favour of policyholders depending on the employee's age: for employees below 35 years of age, the employer pays 70% of the premium, while it pays 80% of the premium for employees above 35 years of age and 90% of the premium for employees above 45 years of age, up to the legally prescribed 5.84% of an employee's gross wage.

A portion of funds is earmarked every year to employees who, due to poor health and extended sick leave, have low income and require financial assistance for additional healthcare services, and in the event of the death of a family member of employee. The Group provided financial assistance to 44 employees in 2020 in the total amount of EUR 22 thousand.

The most loyal employees receive financial rewards and recognition to mark their 10th, 20th, 30th and 40th anniversaries within the Intereuropa Group. A total of 69 Group employees received recognition for major work anniversaries in 2020, five for 40 years, 19 for 30 years and 36 for 20 years of service at Intereuropa.

Current employees and retirees are offered the use of the Intereuropa Group’s holiday facilities (at spas, on the seaside, in the mountains, etc.).

We encourage employees to exercise with the aim of maintaining and strengthening their health, and organise team-building events within specific organisational units and between units (picnics, meetings, various celebrations, sports competitions, marathons, mountain hikes, etc.).

Secondary school and tertiary level students are provided the possibility of undergoing mandatory internships and mentor assistance in preparing their seminar papers and undergraduate theses. Intereuropa's experts cooperate with schools and attend conferences as lecturers.

3.1.7.1 Measurement of the organisational climate (Zlata nit)The organisational climate is measured every two years at Slovenian and Croatian Group companies in the scope of the Zlata nit (GoldenThread) study. On the basis of the results of the most recent measurement in 2019, activities to improve the results relating to remuneration, which alongside communication was identified as a vital opportunity for improvements, were carried out at both of the aforementioned companies. As already mentioned above, a new collective agreement was adopted at the parent company, while the operating results at the subsidiary in Croatia allowed a 2% rise in gross wages.

Intereuropa, d. d. was recognised as a ‘senior-friendly company’ in the competition that was organised under the auspices of the Golden Thread project. This recognition is awarded to companies that implement measures and show concern for personal growth and the development of employees above 45 years of age.

3.1.8 SICK LEAVE RATE Despite the epidemic, the sick leave rate in the Intereuropa Group did not rise in 2020. Just the opposite: the long-term objective of reducing or maintaining the sick leave rate due to illnesses and workplace injuries below 4.5% was achieved at the Group level in 2020. The sick leave rate was 4.4%, which is 0.6 percentage points less than the figure recorded in the previous year. The rate fell by at the parent company, as well, by 0.5 percentage points relative to the previous year to stand at 5.4%. The reasons for the drop in the sick leave rate can very likely be attributed to work from home, as employees with mild forms of illnesses took advantage of this form of work instead of taking sick leave.

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3.1.9 OCCUPATIONAL HEALTH AND SAFETY

In addition to ensuring the appropriate quality of operations, the concern for the safety and health of employees and the satisfaction and suitable work capacity of employees, which ensures optimal productivity, motivation and commitment to work, are all also vital for the business success of the Intereuropa Group.

Achieving higher standards and the well-being of employees in terms of occupational health and safety are ensured through the orderliness of work premises and work stations, through investments to improve working conditions, through the updating of technological procedures, through the purchase of new, modern and safer work equipment, using prescribed personal protective equipment for its intended purpose, through measurements of the work environment, and through the regular inspection of work equipment and the appropriate employee training.

3.1.9.1 Promotion of occupational healthPromotion of health in the workplace is mandatory by the law and represents one of the most important foundations for the safety and good health of workers. The aim of measures to promote occupational health is to ensure a healthy and safe work environment, to maintain employees’ capacity to work and to reduce the sick leave rate. The parent company has been implementing a project to promote occupational health since 2014. Its focus in 2020 was on the implementation of measures to improve mental health, and to prevent respiratory diseases and various forms of cancer. To that end, the following activities were planned: recreational activities in leased halls and fitness centres, mountain hikes and other recreational activities, all with the aim of maintaining and strengthening the health of employees, the raising of awareness about the importance of healthy eating, fresh fruit supplied in the workplace, periodic 15-minute neck and shoulder massages in the workplace, and encouraging active breaks from work. Due to the outbreak of the COVID-19 epidemic, most activities were carried out in a smaller scope.

3.1.9.2 Employee healthcareIn cooperation with authorised physicians, 365 Intereuropa Group employees were referred for preliminary, periodic and other specific-purpose medical examinations, a decrease of 18 or 4.7% relative to 2019. A total of 196 employees were referred for preliminary, periodic and other specific-purpose medical examinations at the parent company, of which 137 were on full-time contracts and 59 were hired workers, a decrease of 48 or 19.7% relative to 2019. Flu vaccinations were free-of-charge for all Slovenian citizens in 2020. Employees applied individually for vaccination.

3.1.9.3 Workplace injuriesA total of 15 employees suffered workplace injuries at the Group level in 2020, which is two more than in 2019, translating to 0.96% of the total number of employees. All injuries to employees that occurred in 2020 were mild, such as blows from objects, cuts and slips, the causes for which were momentary carelessness during work.

A great deal of attention during employee training was invested in teaching correct and healthy work methods, with an emphasis on the risks associated with workplace accidents.

3.1.9.4 Inspections and testing of work equipmentCertain risks associated with injuries and health impairments arise in the use of work equipment. All equipment that employees use in their work and that could be dangerous or detrimental to the health of employees must be appropriately inspected and tested by the deadlines prescribed by the manufacturer, or by the deadline prescribed by law.A total of 529 items of various work equipment, in particular forklifts, lifts, hydraulic loading platforms, wrapping machines, various power tools and other machines and devices, were inspected and tested in the Intereuropa Group in 2020.

3.1.9.5 Work from homeFollowing the outbreak of the COVID-19 epidemic, the Intereuropa Group adopted the decision to allow employees to work from home to the largest extent possible in order to prevent the spread of the infection. In cooperation with an authorised occupational medicine physician, a list of positions was compiled with the possibility of working from home. In terms of occupational health and safety, the employer is the one responsible for ensuring safe and healthy work conditions. Employees were provided the required computer equipment for continuous work from home. They were also given the relevant instructions to arrange a safe and healthy workplace.


3.1.9.6 Fire safetyEnsuring fire safety is of exceptional importance to protect people, property and the environment. In addition to regular fire safety training, special attention was given to ensuring the management and control of fire risks. In 2020, a number of inspections, tests and measurements were conducted in the Intereuropa Group, with 26 being carried out on lightning conductor installations and 79 on electrical installation assemblies. A total of 1,592 items of various fire safety equipment was inspected and tested (fire extinguishers, internal and external fire hydrants, and active fire safety systems).

Inspections, tests and measurements were conducted on 13 lightning conductor installations and 32 electrical installation assemblies at the parent company in 2020. A total of 1,417 items of various fire safety equipment was inspected and tested (fire extinguishers, internal and external fire hydrants, and active fire safety systems).

3 . 2 E N V I R O N M E N T A L M A T T E R S A N D E N E R G Y - E F F I C I E N C Y

The Intereuropa Group takes into account prescribed legal norms and follows the guidelines set out in the Energy Act and in European environmental directives in its efforts to reduce hazardous emissions into the environment, limit the loss of energy, and separate and recycle waste.

Energy efficiency and a responsible approach to the environment are integral parts of the Group’s work processes and business decisions. They relate to: • the energy efficiency of buildings and devices;• waste management, including waste computer equipment;• procedures for handling hazardous cargoes;• light pollution; and• the monitoring of waste water.

Energy efficiency and separate waste collectionIntereuropa Group companies are implementing the following measures in the area of energy efficiency:• the periodic cleaning and servicing of furnaces, chimneys and air conditioning units;• the periodic servicing of work machinery and other equipment;• the replacement of worn-out air conditioning units and work machinery; and• the regulation of heating devices and the additional regulation and control over the functioning of combustion plants,

during operation and on down days.

Intereuropa made the following investments focusing on energy efficiency in 2020:• renovation of the boiler room – improved furnace efficiency and more affordable energy;• the replacement of old, energy inefficient air conditioning devices with new models; and• the replacement of old, energy wasteful lighting with more advanced systems.

The total value of purchases of more energy efficient solutions was EUR 152 thousand in 2020.

Six solar power plants are installed on the roofs of the Intereuropa Group’s warehouses, with a total power of 4,889 kWp, which is enough to supply electricity to 1,350 households. The Group’s contribution to reducing CO2 emissions is thus 3,320 tonnes per year.

In terms of separate waste collection, the Intereuropa Group pursues the long-term objectives to reduce waste and benefit from the expected effects. Special containers are used to separate non-hazardous waste (e.g. cardboard, paper, wood, metals, glass, rubber, plastic foils, etc.), while hazardous chemicals and waste oil are collected in dedicated warehouses. Organic waste of animal origin is removed by specialised contractors. Computer monitors, printer cartridges, batteries and other computer equipment are also collected separately. In agreement with an authorised waste collector and in accordance with legal requirements, waste computer equipment is transported at least once a year to an appropriate disposal site.

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Reduction of environmental impacts in transport and business processesThe transport activity is a major source of environmental pollution. One of the key criteria in the selection of road transport service providers is thus the number and proportion of a subcontractor’s vehicles with environmentally friendly motors.

The Intereuropa Group is also directly reducing negative impacts on the environment in other business processes by transitioning to paperless operations, through various energy-saving measures in warehouses and commercial buildings, and by raising awareness about the contribution of each individual to the preservation of the environment.

The parent company consumed 7.02 million kWh of electricity, 2,414,512 kWh of natural gas and 78,035 litres of fuel oil in 2020.

Concern for the environment and energy efficiency is passed on to all employees via internal communications. The Group aims to contribute to the increased awareness of business partners with regard to environmental protection principles through a diversified range of services that support those principles.

The level of risks associated with inappropriate waste management and environmental pollution is assessed as low within the Intereuropa Group. Exposure to those risks is controlled and mitigated through the inclusion of companies in national waste management schemes, through the implementation of activities in the areas of energy efficiency and environmental self-awareness, and through the implementation of waste and energy management plans at individual companies.

Plans for 2021The Intereuropa Group will continue to implement measures to increase energy efficiency, and is planning the following in 2021 in that regard:• the installation of more cost-efficient exterior and interior lighting at logistics centres: EUR 307,575; and• the implementation of energy efficient measures relating to the cooling and heating of buildings and facilities: EUR 181,301. The total value of planned investments in more energy efficient solutions in 2021 is EUR 608,875.

In addition to these investments, an energy inspection of buildings will be conducted in 2021 in accordance with the provisions of the Energy Act. A quality energy inspection of buildings will serve as the basis for the systematic approach to implementing energy efficiency measures at companies.


3 . 3 S O C I A L R E S P O N S I B I L I T Y

The Intereuropa Group follows sustainable development guidelines, and responsibly manages its social impacts. The Intereuropa Group strives for an inclusive relationship with its most important stakeholders in line with the Group's values. Through its cooperation and positive partnership attitude, it encourages and supports the development of sports, culture and education, and thus implements its mission with support from various stakeholders. It is vital that in supporting these activities their development is also maintained in the future. Intereuropa Group subsidiaries are aware that they operate in a co-dependent society where, in addition to generating positive operating results, they contribute to the development of the social and economic environment through their expertise, and the provision of logistics services and even financial resources. The Group demonstrates its concern for social issues by supporting projects that also form a link between Intereuropa’s core activity and the local environment. That principle applies to all Group companies, which contribute to a higher quality of life, promote and enhance Intereuropa’s good reputation in the eyes of the general public, and strengthen the Intereuropa service brand and positive relations with employees, customers, suppliers, investors and other stakeholders through their sponsorship and donation activities.

The year 2020 was characterised by the management of the COVID-19 pandemic, and also called for increased social responsibility from the parent company and the Intereuropa Group. The Intereuropa Group and Pošta Slovenije Group combined forces to organise logistics for a donation of protective equipment from China. It helped children from Bosnia and Herzegovina through its subsidiary Intereuropa RTC, d. d., Sarajevo. By donating used computers, it supported Telekom BiH's campaign that enabled free internet access to children who were forced to take lessons from home. It enabled the Maribor University Medical Centres (UKC Maribor) to operate under difficult circumstances and donated the lease of a container free-of-charge. The subsidiary Interagent, d. o. o. supported the activity of the Slovenian Friends of Youth Association and the VID Charitable Institute from Kranj.

The parent company Intereuropa, d. d. is also socially active through the support it provides to various educational institutions in the local and broader environment. To that end, it provided 11 secondary school and tertiary level students the opportunity to perform their mandatory internships.

The Group earmarked EUR 12.354 in 2020 for sponsorships and donations, a slight decrease relative to 2019. Intereuropa, d. d. supported certain socially beneficial projects and strove for the equal treatment of all areas of society to the best of its operational abilities. The socially responsible activities focusing on assisting those affected during the coronavirus and support for the ‘Izvozniki.si’ (Slovenian exporters) project were amongst the most notable.

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3 . 4 Q U A L I T Y M A N A G E M E N T S Y S T E M

Implementation of the quality strategyThe year 2020 was characterised by the successful completion of external assessments at all three certified companies. After its introduction at the parent company, a reclamation model was introduced in the scope of the CRM project at two subsidiaries. A total of 74.2% of all Group employees currently work at companies certified according to the ISO 9001:2015 quality management standard (Intereuropa, d. d., Intereuropa, logističke usluge, d. o. o., Zagreb, Intereuropa RTC, d. d., Sarajevo), which is more than two percentage points less than the previous year.

Quality indicatorsCustomer satisfaction with rendered logistics services correlates to the extent to which their requirements have been met in relation to the safety of merchandise during transportation or storage, the speed of rendered services, and accurate and complete documentation.

The customer satisfaction survey emphasised the importance of quality customer relations and the high satisfaction of customers with friendliness and professionalism in that respect, and slightly less satisfaction with the resolution of reclamations.

The number of reclamations received by Intereuropa, d. d. was up by 25% in 2020, while the value of reclamations was also up by 13% relative to 2019. The number of recorded reclamations has increased since the centralisation of the reclamation resolution function in 2018, while the increase during the year was primarily linked to an increase in reclamations in domestic transactions.

The speed of delivery at Intereuropa, d. d., measured by the proportion of shipments delivered the next day in domestic transactions, was down by 0.25 percentage points relative to the previous year, to stand at 94.53%, and was as high as 98.6% if the absence of the recipient is taken into account as a reason for non-delivery.

The proportion of credit notes, which serves as a measure of the accuracy of documentation, has fallen for several years, but has stabilised over the last two years at around 1.48%.

Internal verification of the HACCP food safety management systemThe parent company Intereuropa, d. d. has a food and fodder safety management system in place in its warehouses in accordance with the law and the HACCP system (Hazard Analysis and Critical Control Point). The aim of the system is to ensure the highest possible safety for stored and transported goods and food, fodder and products, and substances and packing materials that come into contact with food and fodder. The HACCP system represents the most effective method for preventing food-borne diseases and diseases that are transmitted through fodder and products, and substances and packing materials that come into contact with food and fodder.

The warehouse in Maribor, Dravograd and Celje have a permanent HACCP system in place. The other warehouses have a temporary HACCP system.

In accordance with the employee training and qualification programme regarding food hygiene and the HACCP system verification programme, which includes verification of the fulfilment of best-practice requirements regarding food and fodder safety, an external assessment was carried out at the Celje, Koper, Vrtojba, Logatec and Jesenice locations. The assessment identified one inconsistency, while two recommendations were also issued in that process. In conjunction with verification of the HACCP system, training was organised at the aforementioned locations for employees who come into contact with food.

Transactions with food and fodder at subsidiaries are carried out in accordance with valid local legislation. The HACCP system has been established at Intereuropa, d. o. o. Zagreb, and is in the process of being established ta AD Intereuropa-logističke usluge, Belgrade.


Handling of hazardous materialsThe parent company is registered with the Chemical Office of the Republic of Slovenia to store hazardous chemicals in warehouses located in Maribor, Celje, Vrtojba, Ljubljana and Jesenice. Due to the types and quantities of hazardous materials stored at the warehouse in Maribor, the latter is also bound by the Decree on the prevention of major accidents and mitigation of their consequences (Official Gazette of the Republic of Slovenia, No. 22/16), and holds the requisite environmental permit.

A regular inspection was carried out in October at the Maribor organisational unit by the Slovenian Inspectorate for the Environment and Spatial Planning. The inspection identified certain deficiencies in connection with ensuring the traceability of changes at the plant. The deficiencies were eliminated by the prescribed deadline.

All employees who work with hazardous materials in warehouses and who are involved in organising the transport of hazardous materials must be properly qualified. Employee training is conducted according to the training programme for work with hazardous materials and in line with the legally prescribed deadlines.

The storage and transportation of hazardous materials are carried out at subsidiaries abroad in accordance with the applicable national and international regulations. Employees involved in organising the transport of hazardous materials are appropriately trained.

External verification of the quality of services

TABLE 34: OVERVIEW OF EXTERNAL VERIFICATIONS OF QUALITY WITHIN THE INTEREUROPA GROUP IN 2020

Company StandardCertification

body

Month of external

assessment

Non-compliance

Recommenda-tions

Intereuropa, d. d., Koper

ISO 9001:2015 SIQ March 0 10


ISO 9001:2015 SIQ June 0 8

Intereuropa RTC d.d., Sarajevo

ISO 9001:2015 SIQ October 0 6

Three external assessments were carried out within the Intereuropa Group in 2020. No cases of non-compliance were identified by external assessors, who issued several recommendations for improvement.

Intereuropa, logističke usluge, d. o. o., Zagreb conducted a reassessment, while the other two companies a conducted regular assessment.

External verification of the storage system for organic products imported from third countriesFor the fourteenth consecutive year, Intereuropa’s Koper organisational unit passed an external assessment of the compliance of warehousing of organic products imported from third countries, as set out in Regulation (EC) No 834/2007 and Regulation (EC) No 889/2008. The assessor found no inconsistencies nor issued any recommendations. The business unit thus extended the validity of the organic certificate for one year.

Plans for 2021The planned activities in relation to ensuring the high quality of logistics services in 2021 primarily relate to gradual improvements in quality characteristics with which customer were not sufficiently satisfied. After the introduction of a new IT solution for the management of reclamations, certified companies will begin to focus on the gradual improvement of their reclamation management system on the basis of better-quality information.

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3 . 5 R E S P O N S I B I L I T Y T O S U P P L I E R S

The integrated supplier relationship management system is defined in the Rules of Procedure on Quality Management, in organisational regulations, work instructions and the Group’s other rules. In order to ensure a smooth work process, the Group strives to maintain professional, sound, reciprocal and fair relationships with our key suppliers and other suppliers of important resources.

Suppliers are categorised according to their importance and abilities as:• partner suppliers with whom long-term cooperation agreements have been entered into;• authorised suppliers assessed as capable and reliable;• suppliers used in one-off and minor purchases; and• suppliers that do not meet selection criteria.

Suppliers for major business lines are assessed annually and placed on the appropriate list (e.g. authorised or unapproved) based on a standard methodology and predefined criteria, such as the prices of services and payment terms, quality and deadlines/delivery terms, mutual cooperation, supplier references and experience from past cooperation, credit ratings and other area-specific criteria. Suppliers are informed of achieved results, and encouraged to provide comments, recommendations and wishes with the aim of improving and strengthening relations.

To ensure the equal position of suppliers and optimal solutions, selections are typically made from at least two suppliers, taking into account the applicable regulations and the relevant supplier list. Selections are made by a selection committee or other responsible person, in cooperation with experts from the relevant area. The appropriateness and quality of services rendered or materials supplied are also controlled regularly, while timely and appropriate measures are implemented to ensure the satisfaction of end-users. Another criterion in the supplier selection process is the possibility of mutual cooperation.

Objectives for 2021The core objective of supplier management remains the timely supply of the work process with services and materials of the requisite quality at the most affordable price. Emphasis is placed on establishing and maintaining long-term business relationships with selected suppliers and on the strengthening of mutual cooperation.


3 . 6 C O M M U N I C A T I O N W I T H K E Y P U B L I C S

In accordance with the adopted Corporate Governance Policy of Intereuropa, d. d., the Intereuropa Group implements an active communication strategy and thus provides the public with all information regarding the performance of the Company and the Intereuropa Group. The Group focuses on the correct and timely notification of the public, and the establishment and strengthening of dialogue with various stakeholders. Communication activities are geared towards strengthening the Group’s reputation and recognition, and increasing brand recognition on all markets where it is present.

Communication with the financial publicDetails regarding communication with the financial public are given in section 2.7 Shares and ownership structure.

Communication with the general publicThe Intereuropa Group ensures the good reputation and positive image in the eyes of the general public through regular and comprehensive communication. Communication with the general public takes the form of periodic press releases, while the parent company regularly responds to journalists’ questions. To that end, we consistently comply with the information disclosure rules to which we are bound as a public limited company listed on the prime market of the Ljubljana Stock Exchange.

Communication with employeesThrough their dedication, competences and professionalism, employees create a friendly environment for business partners and other important stakeholders of the Company. Communication with employees contributes to their awareness of the Group’s mission, vision, values and strategy, and to the recognition of the role of the individual within the Group. Employees are also the first-line ambassadors of the Company, and through their conduct strengthen the positive reputation and recognition of the Company. The Intereuropa Group promotes communication that is based on a fair and equitable relationship. The objectives of internal communication are achievement of the Company’s strategic objectives, the strengthening of affiliation with the Company and the successful integration of new employees into the organisational culture. The Intereuropa Group communicates with employees via various communication channels. Key communication tools include internal websites (intranet), email and personal communication. The Group strives to actively include employees in its operations. This is achieved by providing regular information regarding the latest developments and through employees’ participation in management via the Works Council, trade union representatives and employee representatives on the parent company’s Supervisory Board. The parent company’s Works Council regularly invites the Company’s management to its sessions, and thus provides current information and ensures mutual dialogue about open issues.

Communication with customersThe Intereuropa Group operates in accordance with its medium-term development strategy and through carefully planned communication activities promotes comprehensive logistical services. The Group thus strengthens its reputation and the recognition of the Intereuropa service brand in the eyes of customers, and ensures the integration of different participants along the supply chain. Satisfied customers constitute the basis for long-term partnerships. For this reason, special attention is given to communication with customers. In its customer relations, the Group advocates for two-way communication and long-term relations that form through regular and successful cooperation. It therefore strengthens relations through regular personal visits. These relations are the fruit of long-term cooperation, and the result of the loyalty and trust of customers. Through regular communication, the Group identifies the needs and expectations of customers, and responds to them in a timely manner. The Group also pays special attention to identifying and exploiting new potential opportunities on the market. The Group maintained and strengthened customer relations in 2020 through regular participation in expert consultations, conferences and other events. However, due to the adverse COVID-19 situation it mostly participated in these events remotely. The Group consolidated the recognition and reputation of Intereuropa in 2020 in part through the application of a standard corporate identity on promotional materials, business gifts and on websites in all countries in which the Group operates.

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04

Financia l report

04 FINANCIAL REPORT

INTEREUROPA / FINANCIAL REPORT / 2020102

4 . 1 F I N A N C I A L S T A T E M E N T S O F T H E I N T E R E U R O P A G R O U P A N D I N T E R E U R O P A , D . D .

INCOME STATEMENT

(in EUR) NotesIntereuropa Group Intereuropa, d. d.

2020 2019 2020 2019

Sales revenue 1 150,725,168 160,352,650 103,964,027 111,827,562

Losses from the derecognition of operating receivables and assets from contracts with customers

-14,917 -45,829 -10,410 -45,668

Other operating revenues 2 2,142,090 2,892,033 976,691 706,322

Costs of goods, materials and services 3 -108,787,544 -116,356,145 -76,747,408 -83,392,697

Labour costs 4 -29,124,467 -28,933,556 -18,900,096 -18,914,501

Amortisation and depreciation 5 -6,464,008 -7,224,242 -3,771,916 -4,426,966

Impairment losses on receivables (including the reversal of impairment losses)

6 -268,967 461,911 -127,618 531,710

Other operating expenses 7 -2,443,059 -3,623,286 -1,043,358 -1,244,490

Operating profit 5,764,296 7,523,536 4,339,912 5,041,272

Interest income 99,255 453,612 141,040 475,215

Other finance income 1,179 361,896 102,461 1,842,811

Finance costs – costs of financing -852,045 -1,857,195 -764,026 -1,758,758

Impairment losses on loans granted and deposits -5,259 -10,400 -329,263 -151,450

Other finance costs -445,490 -29,991 -496,323 -342,451

Profit/loss from financing activities 8 -1,202,360 -1,082,078 -1,346,111 65,367

Investment result recognised according to the equity method

9 785 62 0 0

Profit from ordinary operations 4,562,721 6,441,520 2,993,801 5,106,639

Corporate income tax (including deferred taxes) 10 -994,768 -2,244,867 -679,289 -1,718,691

Net profit for the accounting period 3,567,953 4,196,653 2,314,512 3,387,948

Net profit pertaining to controlling interests 3,647,267 3,897,755 0 0

Net profit or loss pertaining to non-controlling interests -79,314 298,898 0 0

Basic and diluted earnings per ordinary share 11 0.21 0.23 0.08 0.12

The notes are a constituent part of the financial statements and must be read in connection with them.

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INTEREUROPA / FINANCIAL REPORT / 2020 103

STATEMENT OF OTHER COMPREHENSIVE INCOME

(in EUR)Intereuropa Group Intereuropa, d. d.

2020 2019 2020 2019


Other comprehensive loss -1,065,034 -1,714,803 -317,290 -1,166,235

Items that will be reclassified to profit or loss -594,914 -168,883 0 0

Change in the fair value of available-for-sale financial assets -2,339 -359 0 0

Foreign currency translation differences -592,575 -168,524 0 0

Items that will not be reclassified to profit or loss -470,120 -1,545,920 -317,290 -1,166,235

Change in fair value of land -79,164 -899,375 0 -542,564

Transfer of revaluation surplus for land to retained earnings -483,046 -817,322 36 -693,214

Change in deferred taxes -72,598 132,453 -172,225 35,127

Change in retained earnings from the transfer of the revaluation surplus for land

483,046 817,322 -36 693,214

Actuarial losses for termination benefits upon retirement -164,613 -711,385 -96,356 -615,570

Transfer of actuarial losses to retained earnings -68,288 -19,929 -48,709 -7,430

Corporate income tax on retained earnings -85,457 -47,684 0 -35,798

Total comprehensive income 2,502,919 2,481,850 1,997,222 2,221,713

Total comprehensive income pertaining to controlling interests 2,628,400 2,151,952 0 0

Total comprehensive income pertaining to non-controlling interests -125,481 329,898 0 0



STATEMENT OF FINANCIAL POSITION

(in EUR) Notes

Intereuropa Group Intereuropa, d. d.

31 December 2020

31 December 2019

31 December 2020

31 December 2019

ASSETS

Property, plant and equipment 12 141,310,696 145,261,598 75,789,593 77,641,425

Investment property 13 22,742,292 23,961,885 16,667,598 17,187,730

Intangible assets 14 2,982,482 3,363,229 2,808,118 3,153,801

Other non-current assets 15 27,602 23,105 27,602 23,105

Non-current operating receivables 16 239,799 303,320 233,652 291,236

Deferred tax assets 10 7,047,360 7,595,723 5,037,469 5,523,068

Long-term loans granted and deposits 17 39,898 52,544 0 0

Other non-current financial assets 18 93,597 185,510 44,518,176 44,889,499

TOTAL NON-CURRENT ASSETS 174,483,726 180,746,914 145,082,208 148,709,864

Available-for-sale assets 19 337,638 2,700,944 0 0

Inventories 25,577 93,390 4,406 7,458

Short-term loans granted and deposits 17 2,598,166 1,010,109 2,198,062 2,325,951

Assets from contracts with customers 20 510,601 533,431 341,298 349,131

Current operating receivables 21 30,342,297 31,398,184 22,173,255 22,409,866

Current receivables for corporate income tax 215,699 189,744 0 0

Other current assets 22 320,583 395,199 99,001 189,326

Cash and cash equivalents 23 11,609,486 6,283,037 2,374,180 2,756,729

TOTAL CURRENT ASSETS 45,960,047 42,604,038 27,190,202 28,038,461

TOTAL ASSETS 220,443,773 223,350,952 172,272,410 176,748,325

EQUITY

Equity pertaining to controlling interests 117,351,472 114,723,072 89,224,850 87,227,628

Share capital 27,488,803 27,488,803 27,488,803 27,488,803

Share premium account 18,454,667 18,454,667 18,454,667 18,454,667

Profit reserves 5,160,392 5,160,392 2,748,880 2,748,880

Fair value reserves 44,420,915 45,023,339 30,544,627 30,627,173

Foreign currency translation differences -7,229,453 -6,668,465 0 0

Retained earnings 25,408,881 21,366,581 7,673,361 4,520,157

Net profit 3,647,267 3,897,755 2,314,512 3,387,948

Equity pertaining to non-controlling interests 7,498,867 7,634,819 0 0

TOTAL EQUITY 24 124,850,339 122,357,891 89,224,850 87,227,628

LIABILITIES

Provisions 26 2,793,522 2,696,699 1,924,930 1,971,620

Non-current deferred income 62,639 65,433 62,639 65,434

Non-current financial liabilities 27 54,199,169 2,719,484 52,642,354 870,375

Non-current operating liabilities 28 935,164 1,026,501 878,475 1,009,644

Deferred tax liabilities 10 10,693,502 10,820,454 7,336,927 7,336,921

TOTAL NON-CURRENT LIABILITIES 68,683,996 17,328,571 62,845,325 11,253,994

Current financial liabilities 27 4,419,148 58,978,257 6,044,691 61,505,027

Liabilities from contracts with customers 535,499 547,740 7,004 15,941

Current operating liabilities 28 21,404,350 23,792,951 13,936,746 16,606,986

Current corporate income tax liabilities 537,311 309,640 209,180 126,735

Current deferred income 13,130 35,902 4,614 12,014

TOTAL CURRENT LIABILITIES 26,909,438 83,664,490 20,202,235 78,266,703

TOTAL LIABILITIES 95,593,434 100,993,061 83,047,560 89,520,697

TOTAL EQUITY AND LIABILITIES 220,443,773 223,350,952 172,272,410 176,748,325


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CASH FLOWS STATEMENT


2020 2019 2020 2019

Cash flows from operating activities


Adjustments for:

Amortisation and depreciation 6,464,008 7,224,242 3,771,916 4,426,966

Impairments and write-offs of property, plant and equipment, and investment property

182,944 548,693 13,363 52,148

Gains on the sale of property, plant and equipment, and assets held for sale

-392,020 -436,152 -17,920 -186,243

Income from the reversal of impairment losses on property, plant and equipment, and investment property

-118,651 -1,333,415 -76 -251,036

Losses from the sale of property, plant and equipment 5,570 8,702 0 0

Losses from the derecognition of operating receivables and assets from contracts with customers

14,917 45,829 10,410 45,668


268,967 -461,911 127,618 -531,710

Impairments and write-offs of inventories 65,945 1,563 3,052 0

Other non-monetary expenses from the exclusion of a subsidiary from the consolidated financial statements

0 49,410 0 0

Finance income from interest -99,255 -453,612 -141,040 -475,215

Other finance income -1,179 -361,896 -102,461 -1,842,811

Finance costs – costs of financing 852,045 1,857,195 764,026 1,758,758

Impairment losses on loans granted and deposits 5,259 10,400 329,263 151,450

Other finance costs 445,490 29,991 496,323 342,451

Investment result recognised according to the equity method -785 62

Corporate income tax (including deferred taxes) 994,768 2,244,867 679,289 1,718,691

Operating profit before changes in net working capital and taxes 12,255,976 13,170,621 8,248,273 8,597,065

Changes in net working capital and provisions

Change in assets from contracts with customers 22,830 228,941 7,832 240,410

Changes in receivables 758,006 1,669,059 97,873 1,432,401

Changes in inventories 1,868 -24,010 0 0

Changes in other current assets 70,119 67,093 85,828 -44,022

Changes in liabilities from contracts with customers -12,241 4,952 -8,937 -1,201

Changes in operating liabilities -2,831,855 -1,515,952 -3,069,644 -1,122,010

Changes in provisions -158,850 -362,007 -199,154 294,412

Changes in non-current deferred income -2,794 -15,993 -2,795 -16,023

Income tax paid -527,118 -650,110 -283,463 -280,020

Net cash flow from operating activities 9,575,941 12,572,594 4,875,813 9,101,012



2020 2019 2020 2019

Cash flows from investing activities

Interest received 150,817 452,331 186,955 464,246

Dividends received and shares in profit 0 8,200 25,991 909,102

Inflows from the sale of property, plant and equipment 2,703,342 3,446,240 56,693 2,917,342

Inflows from long-term loans granted 0 31,000 92,325 97,216

Inflows from long-term deposits placed 10,000 0 10,000 30,000

Net cash flow from short-term loans granted 0 107,179 -300,000 -791,234

Net cash flow from short-term deposits placed -1,598,402 4,320 0 -10,000

Transfer of short-term deposits placed to cash and cash equivalents 30,000 0 0 0

Inflows from the sale of other financial assets 94,661 0 0 0

Outflows for the acquisition of property, plant and equipment -2,032,191 -3,329,142 -1,139,420 -1,987,311

Outflows for the acquisition of intangible assets -232,234 -325,210 -232,236 -314,121

Outflows for long-term deposits placed 0 -6,100 0 0

Outflows for increase in capital of subsidiaries 0 -78,205 -60,000 -62,000

Net cash flow from investing activities -874,007 310,613 -1,359,692 1,253,240

Cash flows from financing activities

Inflows from long-term loans received 55,648,573 0 54,850,000 0

Interest paid -412,911 -1,900,112 -448,629 -1,780,032

Outflows for the repayment of long-term loans (and finance leases during the comparative period)

-56,863,803 -7,400,220 -56,848,460 -7,338,211

Net cash flow from short-term loans -277,059 -5,328,221 -1,000,000 -3,448,120

Payment of lease liabilities -1,420,804 -1,222,010 -451,581 -461,132

Dividends paid -22,899 -334,101 0 0

Net cash flow from financing activities -3,348,903 -16,184,664 -3,898,670 -13,027,495

Opening balance of cash and cash equivalents 6,283,037 9,578,271 2,756,729 5,429,972

Exchange rate differences relating to cash -26,582 6,223 0 0

Net cash flow for the period from ordinary operations 5,353,031 -3,301,457 -382,549 -2,673,243

Closing balance of cash and cash equivalents 11,609,486 6,283,037 2,374,180 2,756,729

The notes ae a constituent part of the financial statements and must be read in connection with them.

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STATEMENT OF CHANGES IN EQUITY FOR THE INTEREUROPA GROUP

(in

EU

R)

Share capital

Share premium account

PR

OFI

T R

ESER

VES

FAIR

VA

LUE

RES

ERV

ES

Foreign currency translation differences

RET

AIN

ED

EAR

NIN

GS

Equity pertaining to controlling interests

Equity pertaining to non-controlling interests

Total equity

Legal reserves

Reserves for treasury shares

Treasury shares (as deduction item)

Reserves under the Articles of Association

Other reserves

Fair value reserves for land

Fair value reserves for financial assets

Provisions for actuarial losses

Retained earnings

Net profit for the accounting period

Bala

nce

as a

t 1 J

anua

ry 2

020

27,4

88,8

0318

,454

,667

4,65

5,54

418

0,39

4-1

80,3

9415

,000

489,

848

45,8

25,1

80-4

6,38

7-7

55,4

54-6

,668

,465

21,3

66,5

813,

897,7

5511

4,72

3,07

27,6

34,8

1912

2,35

7,891

Tota

l com

pre

hens

ive

inco

me

00

00

00

0-4

54,2

79-2

,339

-145

,806

-560

,988

144,

545

3,64

7,267

2,62

8,40

0-1

25,4

812,

502,

919

Net

pro

fit fo

r the

fina

ncia

l yea

r0

00

00

00

00

00

3,64

7,267

3,64

7,267

-79,

314

3,56

7,953

Oth

er c

om

pre

hens

ive

inco

me

00

00

00

0-4

54,2

79-2

,339

-145

,806

-560

,988

144,

545

0-1

,018

,867

-46,

167

-1,0

65,0

34

Tran

sact

ions

with

ow

ners

Tran

sfer

of n

et p

rofit

fro

m th

e p

revi

ous

yea

r to

reta

ined

ear

ning

s0

00

00

00

00

00

3,89

7,755

-3,8

97,75

50

00

Div

iden

ds

and

sha

res

in p

rofit

00

00

00

00

00

00

00

-10,

471

-10,

471

Clos

ing

bal

ance

as a

t 31

Dec

emb

er

2020

27,4

88,8

0318

,454

,667

4,65

5,54

418

0,39

4-1

80,3

9415

,000

489,

848

45,3

70,9

01-4

8,72

6-9

01,2

60-7

,229

,453

25,4

08,8

813,

647,2

6711

7,351

,472

7,498

,867

124,

850,

339

Bala

nce

as a

t 1 J

anua

ry 2

019

27,4

88,8

0318

,454

,667

4,65

9,02

318

0,39

4-1

80,3

9415

,000

915,

551

47,2

31,7

58-4

6,74

6-1

06,1

14-6

,487

,064

15,9

24,1

194,

522,

123

112,

571,

120

7,658

,809

120,

229,

929

Tota

l com

pre

hens

ive

inco

me

00

00

00

0-1

,406

,578

359

-649

,340

-181

,401

491,

157

3,89

7,755

2,15

1,95

232

9,89

82,

481,

850

Net

pro

fit fo

r the

fina

ncia

l yea

r0

00

00

00

00

00

03,

897,7

553,

897,7

5529

8,89

84,

196,

653

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er c

om

pre

hens

ive

inco

me

00

00

00

0-1

,406

,578

359

-649

,340

-181

,401

491,

157

0-1

,745,

803

31,0

00-1

,714,

803

Tran

sact

ions

with

ow

ners

Tran

sfer

of n

et p

rofit

fro

m th

e p

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yea

r to

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ined

ear

ning

s0

00

00

00

00

00

4,52

2,12

3-4

,522

,123

00

0

Div

iden

ds

and

sha

res

in p

rofit

00

00

00

00

00

00

00

-353

,888

-353

,888

Tran

sfer

of r

eser

ves t

o re

tain

ed

earn

ing

s d

ue to

exc

lusio

n of

a

sub

sidia

ry fr

om

the

cons

olid

ated

fin

anci

al s

tate

men

ts

00

-3,4

790

00

-60,

521

00

00

64,0

000

00

0

Settl

emen

t of l

oss

bro

ught

forw

ard

0

00

00

0-3

65,1

820

00

036

5,18

20

00

0

Clos

ing

bal

ance

as a

t 31

Dec

emb

er

2019

27,4

88,8

0318

,454

,667

4,65

5,54

418

0,39

4-1

80,3

9415

,000

489,

848

45,8

25,1

80-4

6,38

7-7

55,4

54-6

,668

,465

21,3

66,5

813,

897,7

5511

4,72

3,07

27,6

34,8

1912

2,35

7,891


STATEMENT OF CHANGES IN EQUITY FOR THE INTEREUROPA, D. D.

(in

EU

R)

Share capital

Share premium account

PR

OFI

T R

ESER

VES

FAIR

VA

LUE

RES

ERV

ESR

ETA

INED

EA

RN

ING

S

Total equity

Legal reserves

Reserves for treasury shares

Treasury shares (as deduction item)

Fair value reserves for land

Provisions for actuarial losses

Retained earnings

Net profit for the accounting period

Bal

ance

as

at 1

Jan

uary

20

2027

,488

,80

318

,454

,667

2,74

8,88

018

0,3

94-1

80,3

9431

,278

,451

-651

,278

4,52

0,1

573,

387,

948

87,2

27,6

28

Tota

l co

mp

rehe

nsiv

e in

com

e0

00

00

29-8

2,57

5-2

34,7

442,

314,

512

1,99

7,22

2

Net

pro

fit fo

r the

fina

ncia

l yea

r0

00

00

00

02,

314,

512

2,31

4,51

2

Oth

er c

om

pre

hens

ive

inco

me

00

00

029

-82,

575

-234

,744

0-3

17,2

90

Tran

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ions

wit

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ners

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of n

et p

rofit

fro

m th

e p

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tain

ed e

arni

ngs

00

00

00

03,

387,9

48-3

,387

,948

0

Clo

sing

bal

ance

as

at 3

1 D

ecem

ber

20

2027

,488

,80

318

,454

,667

2,74

8,88

018

0,3

94-1

80,3

9431

,278

,480

-733

,853

7,67

3,36

12,

314,

512

89,2

24,8

50

Bal

ance

as

at 1

Jan

uary

20

1927

,488

,80

318

,454

,667

2,74

8,88

018

0,3

94-1

80,3

9432

,279

,432

-94,

188

94,1

884,

034

,132

85,0

05,

914

Tota

l co

mp

rehe

nsiv

e in

com

e0

00

00

-1,0

00

,980

-557

,091

391,

837

3,38

7,94

82,

221,

714

Net

pro

fit fo

r the

fina

ncia

l yea

r0

00

00

0

03,

387,9

483,

387,9

48

Oth

er c

om

pre

hens

ive

inco

me

00

00

0-1

,00

0,9

80-5

57,0

9139

1,83

70

-1,1

66,2

34

Tran

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ions

wit

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ners

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et p

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tain

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arni

ngs

00

00

00

04,

034

,132

-4,0

34,1

320

Clo

sing

bal

ance

as

at 3

1 D

ecem

ber

20

1927

,488

,80

318

,454

,667

2,74

8,88

018

0,3

94-1

80,3

9431

,278

,452

-651

,279

4,52

0,1

573,

387,

948

87,2

27,6

28

The

note

s ae

a c

ons

titue

nt p

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f the

fina

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l sta

tem

ents

and

mus

t be

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onn

ectio

n w

ith th

em.

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4 . 2 B A S I S F O R P R E P A R A T I O N A N D N O T E S T O T H E F I N A N C I A L S T A T E M E N T S

4.2.1. BASIS OF PREPARATION

Reporting entityIntereuropa Group and is established in Koper. Its registered office is located at Vojkovo nabrežje 32, 6000 Koper, Slovenia. The Company provides logistics services through its own network of business units. Presented and explained in the report are the consolidated financial statements of the Intereuropa Group for the year ended 31 December 2020 and the separate financial statements of Intereuropa, d. d. for the year ended 31 December 2020.The current controlling company of the Intereuropa Group is Pošta Slovenije, d. o. o., with its registered office at Slomškov trg 10, 2500 Maribor. The company’s founder is the Republic of Slovenia, while its core activity is the provision of universal postal services.The consolidated financial statements of the Intereuropa Group for the year ended 31 December 2020 include the financial statements of the parent company Intereuropa, d. d., the financial statements of subsidiaries and the attributable results of an associate.Subsidiaries included in the consolidated financial statements:In Slovenia:• Interagent, d. o. o., Koper – 100%• Interzav, d. o. o., Koper – 71.28 %

Abroad:• TOV Intereuropa, Kiev, Ukraine – 100%• Intereuropa, logističke usluge, d. o. o., Zagreb, Croatia – 99.96%• Intereuropa Skopje, d. o. o., Skopje, North Macedonia – 99.56 %• Intereuropa RTC, d. d., Sarajevo, Bosnia and Herzegovina – 95.77%• Intereuropa Kosova L. L. C., Prishtina, Kosovo – 90%• TOV TEK ZTS, Uzhhorod, Ukraine – 89.93%• AD Intereuropa logističke usluge, Belgrade, Serbia – 73.62%;• Zetatrans A.D., Podgorica, Montenegro – 69.27 %• Intereuropa Sajam, d. o. o., Zagreb, Croatia – 51%

Associate included in the consolidated financial statements:• Rail Cargo Logistic, železniška špedicija, d. o. o. – 26 %

Intereuropa Global logistics Service Albania Shpk, Durrës, Albania is not included in the consolidated financial statements because it is not material for the fair presentation of the Group’s financial position, as its operations are limited.

Statement of complianceThe financial statements of the Group and Intereuropa have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union, and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC), likewise adopted by the European Union. They also include additional clarifications in accordance with the Companies Act.

In terms of consolidating EU standards, there were no differences in the Company’s accounting policies on the statement of financial position date between the IFRS as applied and the IFRS as adopted by the European Union.

The Management Board of Intereuropa approved the consolidated financial statements and the separate financial statements of the Company on 13th of April 2021.

Basis of measurementThe financial statements have been prepared on a cost basis, except for land and financial assets measured at fair value, for which fair value is applied. The methods used for measurement are described 2.1.


Functional and reporting currencyThe financial statements were prepared in euros, i.e. the functional and presentation currency of Intereuropa. Deviations of +1 or -1 in tables with disclosures are possible due to rounding.

Use of estimates, judgements and assumptionsIn preparing the financial statements, the management made estimates, judgments and assumptions that affect the application of accounting policies and the disclosed amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates.

Information regarding significant assessments of uncertainty and critical judgements drawn up by the management in the application of accounting policies that have the greatest impact on the amounts in the financial statements are presented below.

Significant estimates, judgements and assumptions• The financial statements of the Group and Company are prepared on a going concern basis.

• Estimates relating to the determination of the value of right-of-use assets:- identification of lease agreements: the Group and Company define as lease agreements those agreements that give

them the right to control the leased asset. The Group and Company are deemed to control an asset if they can use that asset and if they are entitled to the economic benefits that derive from its use;

- determination of the lease term: the Group and Company define the lease term as the period in which the lease cannot be terminated, together with:• the period for which the validity of the lease may be extended, if it is reasonably certain that the aforementioned

option will be used, and• the period for which the lease may be terminated, if it is reasonably certain that the aforementioned option will be

used.

In cases when the contractual period is not defined in those agreements, the Group estimates that period based on an assessment of needs for the use of a specific asset, taking into account the needs of the business process of providing logistics services; and- determination of the discount rate: the Group and Company defined the discount rate as the amount of the interest

rate according to which they can obtain a comparable asset with a similar maturity. If the discount rate cannot be determined, the Group uses the incremental borrowing rate.

• When testing non-financial assets for impairment, the Group compared the recoverable amount of assets with their carrying amount, and recognised impairments if the carrying amount of those assets exceeded their recoverable amount or reversed impairments, if they were previously recognised. The appraiser based their assessment of the recoverable amount of buildings and investment property in Montenegro as at 30 September 2020 on analyses of the real estate market and other relevant data, in which the following key assumptions were taken into account: a capitalisation rate of between 9.75% and 10.5%, a deduction for vacancy of 10% and a deduction for bad debt of 1%. When assessing the recoverable amount of buildings in Ukraine, the appraiser took into account a capitalisation rate of 13.5%, a deduction for vacancy of 12.5% and a deduction for bad debt in the amount of 1.25% (Notes 12 and 13).

• Useful life of depreciable assets (Notes 12, 13 in 14) By no later than the end of the financial year, the management verifies the useful life of depreciable assets, taking into account the technical and economic obsolescence thereof.

• Value of doubtful receivables (Note 31) The Group and Company recognise impairment losses on receivables based on the expected credit loss model using the simplified approach in accordance with IFRS 9. The key assumption of the model used by the Group and Company is that the rate of expected credit losses in connection with trade receivables fluctuates in line with the economic cycle, which means that expected credit losses are lower during a period of growth and higher during a recession. The model also uses a forward-looking approach, where forecasts of economic activity are used to forecast future credit losses. The key judgement that must be made is thus whether historical credit loss rates in relation to historical economic activity are also appropriate for forecasting expected credit losses taking into account forecasts of future economic activity.

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• Valuation of land (Note 12) When measuring the fair value of land, the Group and Company take into account the ability of a market participant to

generate economic benefits through the best use of an asset or its sale to another market participant. An assessment of indicators of impairment or a change in fair value for financial reporting purposes was carried out on 30 September 2020 with the help of an independent appraiser. The existence of indicators of impairment were reassessed and changes in key assumptions that were applied in the appraisal from 2019 were analysed taking into account the impact of the COVID-19 epidemic, where no need to draw up new appraisals was identified, except for the companies in Montenegro and Ukraine for which new real estate appraisals were performed. For the companies in Montenegro and Ukraine, fair value was assessed in the appraisal of land that the Group/company in question carry at fair value, using comparable market prices.

• Valuation of equity instruments measured at fair value (Note 18) The fair value of financial assets measured at fair value through profit or loss is determined taking into account a quoted

market price at the end of the reporting period or based on other available data. All assets measured at fair value are classified to the fair value hierarchy based on the level of input data required for the measurement of fair value:• level 1: market prices from an active market for similar assets;• level 2: a valuation model that is directly or indirectly based on market inputs; and• level 3: a valuation model that is not based on market inputs.

The fair value hierarchy is presented in Note 30.

• Recognition of deferred tax assets and liabilities, and the potential use thereof (Note 10) The management assessed the creation of deferred taxes from tax losses based on past experiences and data from

a projection of operations for a five-year period, i.e. from 2021 to 2025, and taking into account the valid tax rate and changes to tax legislation from 1 January 2020 on, as well as planned sales of obsolete land. The aforementioned projection forecasts moderate growth in revenues in the context of the Group’s existing operations. Unused tax losses from previous years do not derive from ordinary operations, but are the result of extraordinary events. The sources for the utilisation of tax losses are taxable profit from the income statement and 50% of the revaluation surplus for land, assuming that the tax base will enable utilisation in that amount (besides other allowances). The projection assumes that the Group and Company are going concerns. In the event of negative deviations from the expected tax basis, the management will reassess the possibility of utilising unused tax losses and correct the balance of deferred taxes from unused past tax losses accordingly.

The Group and Company assessed that the period deemed the acceptable foreseeable future for the purpose of assessing the utilisation of tax losses is five years given the circumstances in connection with the COVID-19 epidemic. The period deemed the foreseeable future was seven years until 2020.

• Recognition of provisions and contingent liabilities (Notes 26 in 29) The Group and Company have created provisions for termination benefits upon retirement, employee anniversary

bonuses and lawsuits. Provisions are recognised if, as a result of a past event, present legal or constructive obligations arise that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle those obligations. The management regularly verifies whether it is likely that there will be an outflow of resources yielding economic benefits in the settlement of a liability. The present value of termination benefits and employee anniversary bonuses is recorded in defined-benefit post-employment commitments. The basis for recognition comprises an actuarial calculation that takes into account actuarial assumptions and estimates at the time of the calculation (e.g. discount rate, estimated employee turnover rate, mortality rate and wage growth). Defined-benefit commitments are sensitive to changes in the aforementioned estimates.

When assessing the probability of an outflow of the Group’s resources embodying economic benefits for the settlement of contingent liabilities for lawsuits, the management also uses the expert opinions of external lawyers who represent the Group in disputes.

The Group treats as contingent liabilities any potential liabilities for which the management assesses that an outflow of resources embodying economic benefits is unlikely for the settlement of the liabilities or for which the amount of the liabilities cannot be measured reliably. Such liabilities are not recognised in the financial statements, but are disclosed in the financial report. If an outflow of benefits is likely, the Group reclassifies the potential liability to provisions in the financial statements when a change in probability occurs.


• Judgement regarding the transfer of real estate to investment property (Notes 12 in 13) When assessing whether real estate is deemed investment property, the Group and Company take into account criteria

for the classification of real estate or parts of real estate to investment property.

• Judgement regarding the transfer of non-current assets to assets held for sale (Notes 12, 13 in 19) The Group classifies the portion of non-current assets that are very likely to be sold in the twelve months following the

balance-sheet date to assets held for sale within current assets (based on an incomplete sale or a decision adopted by the management on the sale of assets on the reporting date). This applies to investment property, intangible assets and non-current financial assets, but only to land and buildings within property, plant and equipment on grounds of materiality.

• Assessment of assumptions of control over subsidiaries and an associate (Note 18) The Group and Company regularly verify whether a change in influence has occurred. The following are deemed

evidence of investors’ significant influence: a) representation on the management board or other decision-making body of a company in which the parent company

invests; and b) participation in significant decisions, including decisions regarding dividends and profit-sharing.

The Company applied the following assumptions for the purpose of assessing the impairment of investments in subsidiaries:• the discounted cash flow model and net asset value approach;• a WACC of between 9.3% and 14.5%, taking into account a long-term inflation rate of 2%; and• valuation based on data from projections of future operations for the period 2021 to 2025.

Changes in accounting estimates and assumptionsThe management of Group companies has verified estimates, judgements and assumptions, and concluded that they were the same as those that applied at the time the financial statements as at 31 December 2019 were prepared, except for the following estimates:

Changes in the useful life of buildingsWhen estimating the useful life of buildings, the Group and Company amended that estimate, such that the useful life of high structures was changed to 50 years, while the useful life of low structures was changed to 30 years. The effect of the change to the useful life of buildings was lower depreciation costs in 2020, as follows:• by EUR 900,872 at the Group level, and• by EUR 548,150 at the Company.

Change in the period applied for the foreseeable futureThe Group and Company assessed that the period deemed the acceptable foreseeable future for the purpose of assessing the utilisation of tax losses is five years given the circumstances in connection with the COVID-19 epidemic. The period deemed the foreseeable future was seven years until 2020.

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4.2.2 SIGNIFICANT ACCOUNTING POLICIES OF THE GROUP

The accounting policies that the Group used in the preparation of its annual financial statements are the same as those applied in the preparation of the financial statements for the previous financial year. The exception is newly adopted or amended standards and interpretations that the Group adopted for annual periods beginning on or after 1 January 2020, as described below.

New standards and interpretations approved by the EU

Conceptual Framework for the IFRSOn 29 March 2018, the International Accounting Standards Board (IASB) published its revised Conceptual Framework for Financial Reporting. The Conceptual Framework defines a comprehensive set of concepts used in financial reporting, the definition of standards, and instructions for the preparers of consistent accounting policies and for the easier understanding and interpretation of standards. The IASB also issued ‘Amendments to References of the Conceptual Framework in the IFRS’, which presents amendments to those standards and serves for the purpose of updating references to the revised Conceptual Framework. The IASB’s aim is to provide support in the transition to the revised Conceptual Framework to companies that adopt their accounting policies based on the instructions set out in the Conceptual Framework whenever a specific transaction is not covered by any of the IFRS. For preparers who adopt their accounting standards based on the Conceptual Framework, the revised version of that framework applies for annual periods beginning on or after 1 January 2020.The application of amendments to the standard has no material impact on the consolidated financial statements.

IFRS 3 Business Combinations (amendments)The IASB published Definition of a Business (Amendments to IFRS 3) with the aim of eliminating uncertainty when determining whether a transaction involves the acquisition of a business or group of assets. The amendments apply to business combinations for which the acquisition date is in the first annual reporting period beginning on or after 1 January 2020 and to asset acquisitions that occur on or after the beginning of that period. Early application of the amendments is permitted.The amended standard has no impact on the consolidated financial statements.

IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Material (amendments)The amendments are effective for annual periods beginning on or after 1 January 2020. Early application of the amendments is permitted. The amendments clarify the definition of the term ‘material’ and how it is used. According to the new definition, “Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.” The IASB also explained more clearly interpretations that relate to that definition. The amendments also ensure the harmonisation of the definition of the term ‘material’ with all other IFRS. The amended standard has no impact on the consolidated financial statements.

Interest Rate Benchmark Reform – IFRS 9, IAS 39 and IFRS 7 (amendments)In September 2019, the International Accounting Standards Board (IASB) published amendments to IFRS 9, IAS 39 and IFRS 7 during the final phase of the response to the effects of interbank offered rate (IBOR) reform on financial reporting by companies. The amendments address matters that could affect financial reporting in the period prior to the replacement of an existing interest rate benchmark with an alternative interest rate, and the implications for specific hedge accounting requirements set out in IFRS 9 Financial Instruments and IAS 39 Financial Instruments: Recognition and Measurement, where a company must take into account the results of a forward-looking analysis of operations. Companies may apply a temporary exemption for recognising all hedges on which the interbank offered rate reform could have a direct effect, and may continue with the recognition of hedge accounting during the period of uncertainty prior to the replacement of an existing interest rate benchmark with an alternative, nearly risk-free interest rate. Amendments to IFRS 7 Financial Instruments: Disclosures relating to additional disclosures around uncertainty arising from the interest rate benchmark reform. The amendments are effective for annual periods beginning on or after 1 January 2020 and must be applied retrospectively. During the second phase of the project (draft), the IASB will address matters that could affect financial reporting in the period in which a company replaces an existing interest rate benchmark with a risk-free interest rate.The amendments to standards have no impact on the consolidated financial statements.


IFRS 16 Leases – changes in lease payments as the result of the COVID-19 pandemic (amendments)The amendments are effective for annual periods beginning on or after 1 June 2020 and must be applied retrospectively. The purpose of the amendments is to provide relief to lessees in the application of IFRS 16 as it relates to accounting for changes in lease payments that are the direct result of the COVID-19 pandemic. The amendments allow lessees to apply practical solutions, such that changes in lease payments that are the direct result of the pandemic need not be accounted for in the same manner as other changes covered by IFRS 16, provided that all of the following conditions are met:• a change in lease payments results in a change in consideration for a lease that is equal to or less than the consideration

defined immediately prior to that change;• each reduction in lease payments only affects payments that according to the original agreement fall due for payment

on or before 30 June 2021; and• all other conditions of the lease remain largely unchanged.The application of the new amendments to the standard has no material impact on the consolidated financial statements.

New standards and interpretations not yet approved by the EU

Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint VentureThe amendments address discrepancies between the requirements of IFRS 10 and IAS 28 in the treatment of sales or contributions of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a company must recognise the full amount of gains or losses when a transaction includes a business (regardless of whether the business is housed in a subsidiary or not). For transactions involving assets that do not constitute a business, only a partial gain or loss is recognised when assets are housed in a subsidiary. In December 2015, the International Accounting Standards Board deferred the effective date of the standard indefinitely while it waits for the results of the research project on the accounting of assets under the equity method.The Group does not expect the introduction of the amendments to have a material impact on its financial statements.

IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current (amendments)The amendments are effective for annual periods beginning on or after 1 January 2022. Early application of the amendments is permitted. In response to the COVID-19 pandemic, the IASB deferred the effective date for one year, i.e. until 1 January 2023, to give companies sufficient time to implement potential changes in the classification of liabilities as the result of amendments to the standard. The amendments offer companies assistance in deciding whether debt and other liabilities with an uncertain settlement date should be classified as current or non-current liabilities in the statement of financial position, and thus ensure greater consistency in compliance with requirements. The amendments affect the presentation of liabilities in the statement of financial position, but do not change existing requirements in connection with the measurement or timing of the recognition of assets, liabilities, revenues or expenses, or the information that is disclosed in those items. The amendments also clarify requirements in connection with the classification of debt that a company could settle through the issue of equity instruments.The Group does not expect the introduction of the amendments to have a material impact on its financial statements.

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IFRS 3 Business Combinations IAS 16 Property, Plant and Equipment IAS 37 Provisions, Contingent Liabilities and Contingent Assets, and annual improvements 2018–2020 cycle (amendments)The amendments are effective for annual periods beginning on or after 1 January 2022. Early application of the amendments is permitted. The IASB published the following limited amendments to the IFRS:• The purpose of amendments to IFRS 3 Business Combinations is the updating of the reference in IFRS 3 to the

Conceptual Framework for financial reporting, where requirements regarding accounting for business combinations remain unchanged.

• IAS 16 Property, Plant and Equipment (amendments) The amendments prohibit companies from deducting proceeds from the sale of items produced while preparing items of property, plant and equipment for their intended use. Companies recognise proceeds from sales and associated costs in profit or loss.

• IAS 37 Provisions, Contingent Liabilities and Contingent Assets (amendments) The amendments set out the costs that companies take into account when defining the costs of the fulfilment of a contract when determining whether a contract is onerous.

• Annual improvements 2018–2020 cycle bring certain minor amendments to IFRS 1 First-time Adoption of the International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and Illustrative Examples accompanying IFRS 16 Leases.

The Group is still reviewing the impact of the amendments to the standards and will apply those amendments when they become effective.

Interest Rate Benchmark Reform – Phase II (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)In August 2020, the IASB published the results of phase II of interest rate benchmark reform in the form of amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, and thus completed its work in response to interest rate benchmark reform. The amendments include temporary relief in the reporting of the effects of replacing the interbank offered rate (IBOR) with an alternative risk-free rate (RFR) on financial reporting. The amendments provide companies a practical solution in accounting for changes in the basis for determining contractual cash flows from financial assets and liabilities, where companies must revise the effective interest rate to reflect changes in the market interest rate. The amendments also provide companies certain relief from the discontinuation of a hedging relationship, including the temporary exemption from the requirement that an interest rate benchmark defined as a hedged item must meet separately defined requirements. In addition, the amendments to IFRS 4 provide insurers that still apply IAS 39 the same relief that is introduced by the amendments to IFRS 9. Amendments to IFRS 7 Financial Instruments: Disclosures requires companies to make disclosures that allow the users of financial statements to understand the effect of interest rate benchmark reform on their financial instruments and risk management strategy. The amendments are effective for annual periods beginning on or after 1 January 2021. Early application of the amendments is permitted. Companies must apply the amendments retrospectively, where the restatement of data from the previous period is not required.The Group is still reviewing the impact of the amendments to the standards and will apply those amendments when they become effective.

A. BASIS FOR CONSOLIDATION

SubsidiariesSubsidiaries are companies controlled by Intereuropa, d. d. Control exists when:• the investor exercises influence over the company in which it has invested;• the investor is exposed to a variable return or has the right to a variable return from its participation in the company in

which it has invested; and• the investor is able to affect the amount of its return through its influence over that company.

The parent company’s management assesses that indicators of control exist. Voting rights are equivalent to shares of control.The financial statements of subsidiaries are included in the consolidated financial statements from the date control is assumed until the date it ceases. They are prepared taking into account the standard accounting policies of the Group.

Associatehe Group values its investment in an associate according to the equity method.

Transactions eliminated on consolidationBalances, and revenues and expenses deriving from transactions within the Group are excluded during the preparation of the consolidated financial statements.


B. FOREIGN CURRENCY

All transactions in foreign currencies are translated to euros (i.e. the Group’s functional currency) upon initial recognition at the daily exchange rate between the functional currency and foreign currency on the transaction date. The reference exchange rate of the European Central Bank (ECB) is applied.

On the statement of financial position date:• monetary items expressed in foreign currencies are translated at the final exchange rate for the year;• non-monetary items denominated in a foreign currency and measured at cost are translated at the exchange rate on the

transaction date; and• non-monetary items denominated in a foreign currency and measured at fair value are translated at the exchange rates

on the day fair value was determined.

The Group recognises exchange rate differences arising in the settlement of monetary items or in the translation of monetary items at exchange rates other than those at which they were translated upon initial recognition during the period in question or at which they were presented in previous financial statements in profit or loss (as revenues or expenses) in the period in which they arise.

Financial statements of companies abroadWhen translating the financial statements of subsidiaries based abroad with a functional currency that differs from the reporting currency (euros) for their inclusion in the consolidated financial statements, the Group translates assets and liabilities into the reporting currency of the consolidated financial statements at the exchange rate applicable on the reporting date, while it translates revenues and expenses disclosed in the income statement and items disclosed in other comprehensive income at the average exchange rate for the period in question, which the Group assesses is an adequate approximation of the exchange rate on the transaction date. Equity items are translated at the exchange rate on the final day of the period in which a change in equity arose. Any resulting exchange rate differences are recognised in other comprehensive income (foreign currency translation differences) until the disposal of a subsidiary, at which time exchange rate differences are transferred to the income statement.

C. FINANCIAL ASSETS

The Group initially recognises financial assets at fair value, except investments in a subsidiary, which is not included in consolidation, and in an associate, which it recognises at cost, and trade receivables, which it recognises at the transaction price.The Group recognises ordinary purchases and sales of financial assets on the transaction date, i.e. the date on which it undertakes to purchase or sell an asset. Any gain or loss resulting from the disposal of financial assets is also recognised on that date.

Cash and cash equivalents comprise sight deposits and cash in hand. Cash equivalents are short-term, readily redeemable investments that can be immediately converted into a specific amount of cash, where the risk of a change in value is negligible. The Group defines short-term call deposits as such. The Group’s statement of cash flows presents changes in inflows and outflows of cash and cash equivalents during the accounting period, using the indirect method, and explains changes in the balance thereof. The statement of cash flows was prepared using data from the consolidated income statement for 2020, items from the consolidated statements of financial position as at 31 December 2020 and 31 December 2019, and additional data.

The Group values investments in shares and participating interests in a subsidiary, which is excluded from consolidation, and in an associate at cost. Payments received in connection with the accompanying participating interest reduce the carrying amount of the investment. In the event of changes in the associate’s other comprehensive income, the Group adjusts the carrying amount of the investment by its corresponding share of those changes. Dividend income and income from other shares in profit in connection with the above-mentioned companies are recognised in the income statement on the day the shareholder’s or owner’s right to payment was exercised.

The Group classifies other financial assets to the categories presented in the table below based on the business model used to manage financial assets, and on the contractual cash flow characteristics of financial assets.

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CLASSIFICATION OF FINANCIAL ASSETS BASED ON THE GROUP’S BUSINESS MODEL USED TO MANAGE FINANCIAL ASSETS AND ON THE CONTRACTUAL CASH FLOW CHARACTERISTICS OF FINANCIAL ASSETS

Skupina finančnih sredstev Finančno sredstvo

Group of financial assets Financial asset

Financial assets measured at amortised costTrade receivables, including receivables from leasing and other operating receivables, contract assets,* loans and deposits.

Financial assets measured at fair value through other comprehensive income

Equity instruments not held for trading, for which the Group makes an irrevocable decision at initial recognition to measure those instruments at fair value through other comprehensive income.

Financial assets measured at fair value through profit or loss

Equity instruments for which the Group does not make a decision at initial recognition to measure those instruments at fair value through other comprehensive income.

* Contract assets represent the Group’s right to consideration for the exchange of goods or services that it has transferred to its customers (current accrued income). They also comprise receivables from uncharged customs and other duties that arise in customs clearance procedures that are charged to customers and treated as suspense items.

Significant characteristics of the financial assets stated in the above table.

1. Financial assets measured at amortised costThe Group measures financial assets upon initial recognition at amortised cost if they meet both of the following conditions:• the financial asset is held within the framework of a business model whose objective is achieved by collecting

contractual cash flows; and• the contractual terms of the financial asset give rise to cash flows, on certain dates, that are exclusively payments of

principal and interest on the outstanding amount of principal.

The Group calculates interest income from the aforementioned assets using the effective interest rate method and recognises it in profit or loss.

2. Financial assets measured at fair value through other comprehensive incomeInterest and exchange rate differences associated with these assets are recognised in the income statement, while other gains and losses are recognised in other comprehensive income. When an asset is derecognised, gains and losses recognised in other comprehensive income (revaluation surplus) are transferred to retained earnings.

3. Financial assets measured at fair value through profit or lossThe Group measures financial assets that it does not measure at amortised cost and that are not investments in subsidiaries and an associate at fair value through profit or loss. Gains and losses are recognised in the income statement.

D. FINANCIAL LIABILITIES

A financial liability is any liability that is a contractual obligation:• to deliver to another company cash or some other financial asset (e.g. trade payables, liabilities from loans received, etc.);

or• to exchange financial assets or financial liabilities with another company under conditions that are potentially unfavourable

to the Company.

The Group recognises financial liabilities on the day they arise. Financial liabilities are initially recognised on the transaction date, i.e. when the Group becomes a contractual party in connection with the instrument in question. The Group derecognises a financial liability when the obligations specified in the contract have been discharged, have been cancelled or have expired. Upon initial recognition, it measures financial liabilities at fair value, including transactions costs. Following initial recognition, derivative financial liabilities are measured at amortised cost using the effective interest rate method.

Liabilities from contracts with customersLiabilities from contracts with customers represent an obligation to transfer goods or services to a customer for which consideration was received from the customer (liabilities for advances received).


E. EQUITY

Share capitalThe parent company’s share capital is defined in nominal terms in its Articles of Association, registered with the court and paid up by its owners.

Share premium accountThe share premium account comprises amounts from the simple reduction of the parent company’s share capital. The share premium account may be used under the conditions and for the purposes set out by law.

Legal reservesLegal reserves comprise amounts retained from profits generated in previous years, and are primarily earmarked for the settlement of potential future losses.

Reserves under the Articles of Association and other reservesReserves under the Articles of Association and other reserves are earmarked for the settlement of potential future losses and for other purposes.

Treasury sharesTreasury shares are disclosed in profit reserves (as a deduction item). Reserves for treasury shares are created in the amounts paid for the acquisition of those shares.

Fair value reservesFair value reserves comprise the revaluation surplus in connection with land, and actuarial losses in connection with provisions for post-employment and other non-current employee benefits, and the revaluation surplus in connection with financial assets measured at fair value. All components of the fair value reserve were reduced for the amount of deferred taxes.

Foreign currency translation differencesForeign currency translation differences are the result of exchange rate differences that arise when the financial statements of subsidiaries are included in the consolidated financial statements.

Liabilities for dividends and other shares in profitLiabilities for dividends and other shares in profit are recognised on the day the right to payment is exercised by a shareholder or owner.

F. PROPERTY, PLANT AND EQUIPMENT

The Group initially recognises property, plant and equipment at cost, which includes amounts directly related to the purchase of an asset, as well as capitalised borrowing costs. Following the initial recognition of property, plant and equipment, the Group measures buildings and equipment using the cost model, while a revaluation model is used for land. According to the cost model, property, plant and equipment are disclosed at cost, less accumulated depreciation and any accumulated impairment loss. According to the applied revaluation model, land is disclosed at fair value on the revaluation date, less accumulated impairment loss. The Group verifies the need to revalue land annually, and otherwise revalues land every five years or more frequently if indications of impairment point to a significant deviation in fair value.

An increase in the carrying amount of land as a result of revaluation is recognised directly in equity as a revaluation surplus in the statement of comprehensive income. A decrease in the carrying amount of land as a result of revaluation reduces the revaluation surplus for that land. If the decrease in the carrying amount exceeds the accumulated revaluation surplus for the same asset, the difference in the decrease is transferred to profit or loss as an expense. The revaluation surplus for land, which constitutes an integral part of equity, is transferred directly to retained earnings when the asset in question is derecognised.

Accounting for borrowing costsThe Group treats borrowing costs that may be directly attributed to the acquisition, construction or manufacture of an asset under construction as part of the cost of that asset. Borrowing costs comprise interest expense and exchange rate differences arising from loans in a foreign currency, if they are treated as a recalculation of interest expense. Other borrowing costs are recognised in the income statement as an expense in the period in which they arise.

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Subsequent costsThe cost of replacing some part of an item of property, plant and equipment is recognised in the carrying amount of the asset in question if it is probable that the future economic benefits embodied within the part will flow to the Group, and its cost can be measured reliably. All other costs are recognised in profit or loss as expenses as they arise.

DepreciationDeprecation is charged on a straight-line basis over the useful life of each individual item of property, plant and equipment. That method most precisely reflects the expected pattern of use of an asset. The estimated useful lives for the current and comparative periods are as follows:

Current period Comparative period

Buildings 30–68 years 40–68 years

Computer equipment 2–4 years 2–4 years

Other plant and equipment 2–10 years 2–10 years

Once a year, the Group reviews the appropriateness of the depreciation method and useful lives, and adjusts them as necessary.

G. INTANGIBLE ASSETS

Intangible assets comprise investments in industrial property rights (concessions, patents, licences, brands and similar rights), the goodwill associated with an acquired company and other rights, as well as other intangible assets. The period and method of amortisation of intangible assets with a finite useful life are reviewed, at a minimum, at the end of each financial year. Following initial recognition, the Group measures intangible assets using the cost model, i.e. at cost less accumulated amortisation and any accumulated impairment loss.

Subsequent costsSubsequent costs in connection with intangible assets are capitalised if they increase the future economic benefits embodied in the asset to which the costs relate. All other costs are recognised in profit or loss as expenses as they arise.

AmortisationAmortisation is charged on the cost of an asset, and is recognised in profit or loss on a straight-line basis over the useful lives of intangible assets, from the date that they are available for use. That method is the most precise reflection of the expected pattern of use of the future economic benefits embodied in an asset.The estimated useful lives for the current and comparative years are 3, 5, 10, 15 and 23 years. The Group verifies amortisation methods, useful lives and residual values at the end of each financial year and adjusts them as required.

GoodwillThe Group recognises any surplus of the cost of a business combination over the fair value of the acquired identifiable assets and liabilities as goodwill. Goodwill is not amortised. Instead, the Group tests goodwill annually for impairment. Goodwill is disclosed at cost, less any accumulated impairment loss.

Acquisition of non-controlling interestsAcquisitions of non-controlling interests are accounted for as transactions with the owners of equity. Thus, no goodwill is recognised as the result of such transactions. Any difference is recognised directly in equity.


H. INVESTMENT PROPERTY

Investment property comprises real estate purchased to generate rental income, to increase the value of non-current assets, or both. An assessment is required to determine whether real estate is deemed investment property. When assessing whether real estate is deemed investment property, the Group defines criteria for the classification of real estate or parts of real estate to investment property, such that all real estate that is the subject of a long-term lease (more than one year) or a lease for an indefinite period is reclassified to investment property if the leased portion of real estate represents more than 10% and less than 90% of the total area of the real estate. If the leased part of real estate represents 90% or more of the total area, the entire real estate is reclassified to investment property; if that part represents 10% or less of the total area of the real estate, that real estate remains classified under fixed assets as real estate used by the owner, except the portion of land that belongs to a building, which is classified to investment property and treated as such. Real estate that is the subject of a short-term lease (less than one year in duration) or is not the subject of a lease (not used) remains classified under fixed assets as property used by the owner.

Following initial recognition, the Group discloses investment property using the historical cost model, i.e. at historical cost less accumulated depreciation and any accumulated impairment loss. Revalued investment property (land) is transferred from property, plant and equipment at the carrying amount on the transfer date, while the associated revaluation surplus remains in equity and is transferred to retained earnings upon disposal. The same useful lives used for real estate classified as property, plant and equipment are applied to investment property.

I. LEASES

Group as lessee of assetsThe Group has different property (land and business premises) and equipment under lease. When entering into a contract, it assesses whether it is a lease contract or whether it contains a lease. A contract is a lease contract or contains a lease if it conveys the right to control of an identified asset for a period of time in exchange for consideration. The Group defines the lease term based on the period in which a lease cannot be terminated, taking into account the period covered by an extension option and the period covered by a termination option.

LEASE TERM FOR THE CURRENT AND COMPARATIVE PERIODS:


Right-of-use assets – land 5–6 years 5–6 years

Right-of-use assets – buildings 1–10 years 1–10 years

Right-of-use assets – equipment 1–5 years 1–5 years

The Group uses a standard approach for recognising and measuring all leases, except short-term leases (leases of up to one year) and low-value leases (with a value of less than EUR 5 thousand). The Group recognises lease payments in connection with short-term and low-value leases as costs in the period to which a lease relates using the straight-line method over the entire lease term. For all other leases, the Group recognises a right-of-use asset and a lease liability for leased assets.

The Group recognises a right-of-use asset at the inception of a lease. The cost of right-of-use assets in connection with leases comprises the amount of the initially measured lease liability, initial direct costs and lease payments that were made at or prior to the commencement of a lease, less lease incentives.

Right-of-use assets in connection with leases are measured at historical cost less value adjustments and impairment losses, with an adjustment to cost at each remeasurement of lease liabilities. The Group impairs assets under lease in the same manner as property, plant and equipment.

Liabilities for leased assets are recognised at the present value of remaining lease payments over the entire lease term. Lease payments are discounted at the interest rate implicit in a lease if that rate can be determined, otherwise the Group applies the incremental borrowing rate that it would have to pay if it acquired an asset with a similar value as a right-of-use asset for a similar period, based on a similar guarantee in a similar economic environment. Following the commencement of a lease, the amount of lease liabilities is increased for lease-related interest and reduced for all lease payments, while the value of a lease is adjusted upon reassessment or a change in a lease.

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At the commencement of a lease, lease liabilities are equal to the value of the associated right-of-use asset and are reduced for payments, while the value of the right-of-use asset is reduced by depreciation charged over the lease term. Depreciation rates are set taking into account the lease term. Interest incurred is charged to finance costs in the period in question. The Group applies the exemption for short-term leases, i.e. leases where the lease term is 12 months or less. It also applies the exemption for leases of low-value assets. The Group recognises lease payments on a straight-line basis over the lease term for short-term and low-value leases.

Due to the situation caused by the COVID-19 pandemic, the Group applies the practical solution not to assess whether a change to lease payments that meet the conditions given below is a change in a lease. Those conditions are:• the result of a change in lease payments is a change in consideration for a lease that is almost equal to or less than the

consideration for a lease immediately prior to that change; • the reduction in lease payments only affects payments that would originally fall due on or before 30 June 2021 (i.e. an

adjustment to lease payments would meet this condition if it caused a reduction in lease payments on or before 30 June 2021 and an increase in lease payments after 30 June 2021); and

• there is no material change in other lease conditions.

In this case, the Group does not treat a change in lease payments as a change to an existing lease, but instead recognises it in the income statement.In sale and leaseback transactions in which it acts as seller, i.e. lessee, the Group measures a right-of-use asset proportionately with that part of the previous carrying amount of the right-of-use asset that it has kept. Accordingly, it only recognises the amount of gains or losses that relate to the rights that were transferred by the buyer, i.e. lessor.

Group as lessor of assetsAs lessor, the Group recognises lease payments from operating leases as revenues on a straight-line basis over the lease term. The Group discloses assets that it leases in the statement of financial position with regard to the nature of an asset that is the subject of a lease.

J. INVENTORIES

Inventories of material are valued at cost, which comprises the purchase price, import duties and the direct costs of procurement. The purchase price is reduced by any discounts received. The weighted average price method is applied in the use of materials.

K. IMPAIRMENT OF ASSETS

1. Impairment of financial assets

Impairment of operating receivablesThe Group impairs operating receivables for expected credit losses over the life of those assets. Impairment losses on trade receivables and other operating receivables (including the reversal of impairment losses) are disclosed in the income statement in the item ‘loss due to the impairment of receivables’.

The Group impairs trade receivables (including receivables from leases) that are not subject to legal actions, enforcement or bankruptcy proceedings, registered in compulsory composition proceedings prior to publication of confirmation thereof or in recovery proceedings via specialised institutions, or are not deemed doubtful based on other objective reasons, by creating a depreciation and impairment using impairment percentages with regard to the age of the receivables.

When measuring expected credit losses associated with such assets, the Group applies a simplified approach using a ‘provision matrix’ that is based on past experiences regarding written-off receivables and estimates for the future.

The Group impairs receivables that are subject to legal actions, enforcement or bankruptcy proceedings, registered in compulsory composition proceedings prior to publication of confirmation thereof or in recovery proceedings via specialised institutions, or that are deemed doubtful based on other objective reasons, in 100% of their value, except where the law permits a reduction in liabilities for calculated and unpaid value added tax. Impairments are reduced for that amount.


The Group impairs receivables for interest on loans granted and deposits placed when it impairs loans and deposits. It does not impair other operating receivables until they are more than 30 days past due, depending on the composition of and past experience with those receivables. After that time, the Group individually assesses the probability of future cash flows from such receivables and impairs them accordingly.

Impairment of loans granted and depositsThe Group impairs loans granted and deposits based on the management’s assessment of their irrecoverability. In accordance with IFRS 9, the Group transitioned from the incurred loss model to the expected loss model, according to which the Group recognises both incurred losses and losses that it expects to incur in the future.

When assessing the impairment of loans granted, the Group assesses evidence of impairment for each loan separately. If it assesses that the carrying amount of a loan exceeds its fair value (i.e. its realisable value), the Group impairs that loan. The assessment of impairment is based on expected credit losses in connection with the probability of loan default over the next 12 months, unless credit risk has risen significantly since initial recognition. In such cases, the assessment of impairment is based on the probability of default over the entire life of the financial asset in question. Expected credit losses comprise the difference between contractual cash flows that have fallen due according to the relevant contract and all cash flows that the Group expects to receive. Expected cash flows will also include cash flows from the sale of a collateralised asset.

The Group assesses impairments for expected credit losses in two steps. For credit exposures for which there has been no significant increase in credit risk since initial recognition, impairments for expected credit losses are recognised for credit losses resulting from potential defaults over the next 12 months. For those credit exposures for which there has been a significant increase in credit risk since initial recognition, the Group recognises an adjustment for losses that it expects over the remaining life of an exposure, regardless of the default period. The Group deems obligations in connection with a financial asset not to be fulfilled when contractual payments are 90 days past due. In certain cases, the Group may deem credit risk to have increased, even when it is probable, based on the relevant information, that it will not receive unpaid contractual amounts in full.

The Group recognises the write-off of a financial asset when it justifiably expects that it will not collect contractual cash flows. Impairment losses on these assets are disclosed in the consolidated income statement in the item ‘other finance costs’.

2. Impairment of non-financial assets

The Group reviews the carrying amount of property, plant and equipment, investment property and intangible assets at each reporting date to determine whether there are any indications of impairment. If such indications exist, the recoverable amount of an asset is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use or its fair value less selling costs. In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to an asset. For impairment testing, assets that cannot be tested individually are grouped into the smallest possible groups of assets that generate cash flows from continued use and that are largely independent of cash generated by other assets or groups of assets (cash-generating unit).

The Group recognises the impairment of an asset or a cash-generating unit when its carrying amount exceeds its recoverable amount. That impairment is disclosed as an expense in the income statement.

The Group reverses an impairment loss to the extent that the asset’s increased carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised in previous years.

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L. NON-CURRENT ASSETS HELD FOR SALE

Non-current assets or a disposal group comprising assets (applicable to investment property, intangible assets and non-current financial assets within non-current assets, and only applicable to land and buildings within property, plant and equipment on grounds of materiality) whose carrying amount is reasonably expected to be settled primarily through sale and not through further use are classified as assets held for sale, with that sale envisaged within the next twelve months, at the latest.

A sale is highly likely when the entire plan and programme to find a buyer are activated. An asset must also be actively marketed and efforts made to achieve a price that corresponds to its current fair value. An asset is remeasured immediately before its classification to assets held for sale. Accordingly, a non-current asset (or disposal group) is recognised at the lower of its carrying amount or fair value, less costs to sell.

The period for completion of a sale may be extended to more than one year due to special events and circumstances that are beyond the control of the Group and if there is sufficient evidence that the Group is consistently pursuing its plans to dispose of the asset.

If an asset held for sale no longer meets the criteria for classification to the aforementioned category, it must be reclassified to another appropriate asset category, i.e. the category to which it was classified before being classified as an asset held for sale.

M. EMPLOYEE BENEFITS

Short-term employee benefitsShort-term employee benefit obligations are measured on an undiscounted basis, and are disclosed as expenses as the service of the employee is provided in respect of the specific short-term benefit.

N. PROVISIONS

Constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Amounts recognised as provisions represent the best estimate of expenditure required for settlement as at the balance-sheet date. In assessing the best estimate of provisions, risks and uncertainties associated with numerous events and circumstances are also considered. Where the effect of the time value of money is material, the amount of provisions represents the present value of expenditure expected to be required to settle an obligation.

Provisions are recognised by accruing the corresponding costs or expenses, and are reduced directly over time by the costs and/or expenses that they were created to cover, except actuarial gains and losses from termination benefits upon retirement due to changes in actuarial assumptions and experiential restatements that are recognised in the revaluation surplus and transferred to retained earnings in the proportionate amount when they are used. That amount is calculated using the ratio between provisions used during the year and the balance of provisions before use.

Provisions are derecognised when the contingencies for which they were created no longer apply, or when they are no longer required. Revenues are recognised when provisions created by accruing the corresponding costs or expenses are derecognised. Provisions are restated at the end of the accounting period so that their value is equal to the present value of the expenditure expected to be required to settle the obligation in question.

Provisions for termination benefits and employee anniversary bonusesGroup companies that are obliged to pay termination benefits upon retirement and employee anniversary bonuses to employees in accordance with the applicable legislation, the collective agreement and internal rules create non-current provisions for these purposes. No other pension obligations exist.

The aforementioned provisions are created in the amount of the estimated future payments for termination benefits and employee anniversary bonuses, discounted as at the date of the actuarial calculation.


Interest expense and any increase during the current year are recognised in the income statement as labour costs, while interest is disclosed as a finance cost. Actuarial gains and losses from employee anniversary bonuses are recognised in the income statement as labour costs, while actuarial gains and losses from termination benefits upon retirement are recognised in other comprehensive income in the revaluation surplus and transferred to retained earnings in the proportionate amount when they are used. That amount is calculated using the ratio between provisions used during the year and the balance of provisions before use. Provisions are used in an amount equal to the actual costs incurred for accrued termination benefits upon retirement and employee anniversary bonuses.

O. REVENUES FROM SERVICES RENDERED

Contracts with customers are only accounted for when the relevant conditions have been met. When approving contracts with customers, the consideration that is expected in exchange for goods or services transferred to them is assessed. Consideration received represents the transaction price. The transaction price represents the fixed agreed consideration in exchange for promised goods and/or the provision of services to a customer.

Revenues from services rendered are recognised by the Group in the consolidated income statement taking into account the stage of completion of a transaction at the end of the reporting period or when performance obligations are fulfilled. The stage of completion is assessed on the basis of a review of costs incurred (review of work performed – measurement of the progress of a transaction).

Revenues from services rendered are measured at the transaction prices of completed services stated in invoices (fulfilment of performance obligations at a given moment) or other documents, or at the prices of incomplete services taking into account the stage of completion thereof (performance obligations are fulfilled over time).

In cases when a particular transaction (performance obligation) is not completed (fulfilled) as at the balance-sheet date, the Group believes that no reliable assessment can be made regarding the outcome of such a transaction, but that the progress of that transaction can be reasonably measured. Thus, the Group only recognises revenues up to the amount of direct costs incurred, and for which it can be expected that they will be covered (contribution method).

Amounts collected on behalf of third parties, such as charged value-added tax and other levies (e.g. customs duties) are excluded from sales revenue.

FULFILMENT OF PERFORMANCE OBLIGATIONS

Business lineNature of and time required to fulfil performance obligations to customers

Payment terms

LAND TRANSPORT LOGISTICS SERVICES INTERCONTINENTAL TRANSPORT OTHER SERVICES

A customer sends an order for the execution of forwarding transactions. The order must include all essential data for the correct and timely execution thereof. A transaction is deemed completed when all activities under an order have been implemented. An order may contain different services. A transaction is deemed completed:- for services in connection with organising the transport of

goods: when transport is completed (i.e. the goods are received or delivered);

- for customs clearance transactions: when goods are released to the declaring party

- for the warehousing of goods: when goods are placed in or removed from a warehouse, or other warehouse work is performed (e.g. palletting and labelling); and

- for other transactions: when the agreed service is rendered. An invoice is issued to the customer after a service has been rendered.

In general, a customer must pay for our services and associated costs before a service is rendered (advance). Taking into account a customer’s credit rating, past experience with a customer and commercial agreements, an invoice for services is payable within 30 days following the rendering thereof.

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State aidWe distinguish between state aid in connection with assets and state aid in connection with revenues.

a. State aid in connection with assets, including non-monetary support at fair value, is disclosed in the statement of financial position as deferred income and is consistently transferred to the income statement as revenues over the useful life of the asset in question. The Group discloses deferred income that will cover projected expenses over a period of more than one year under non-current deferred income.

b. State aid in connection with revenues comprises state aid in connection with the reimbursement of wage compensation for employees, the exemption of the payment of social security contributions, etc. The Group recognises state aid in connection with revenues in other operating revenues and not as a reduction in associated costs. It is recognised as revenues in the periods in which the costs that such state aid is earmarked to cover are incurred. State aid is recognised when there is reasonable assurance that the Group will fulfil the conditions to receive such aid and that it will, in fact, receive it. If there is uncertainty in connection with the eligibility to receive state aid (i.e. the possibility exists that the aid must be returned in the event of failure to fulfil certain conditions), the amount of state aid received is disclosed as deferred income until the fulfilment/non-fulfilment of conditions.

P. COSTS – EXPENSES

The Group recognises costs as expenses in the period in which they arise.

Q. FINANCE INCOME AND FINANCE COSTS

Finance income primarily comprises interest income from investments, income from dividends and other shares in profit, income from the disposal of financial assets measured at fair value through profit or loss, positive exchange rate differences and income from the reversal of the impairment of financial assets. Interest income is recognised as it accrues, using the effective interest method. Dividend income and income from other shares in profit are recognised in the income statement on the day a shareholder’s or owner’s right to payment was exercised.

Finance costs primarily comprise interest expense and other borrowing costs (unless capitalised), interest on leases, negative exchange rate differences and impairment losses on financial assets. Borrowing costs are recognised in the income statement in the period in which they arise using the effective interest method.

R. CORPORATE INCOME TAX

Corporate income tax comprises current taxes and deferred taxes. Corporate income tax is disclosed in the consolidated income statement, except to the extent that it relates to items disclosed directly in equity, in which case it is disclosed in other comprehensive income.

Current tax is assessed in accordance with the applicable tax legislation as at the reporting date. The financial year is the same as the calendar year, which in turn is the same as the fiscal year.

Deferred tax is disclosed taking into account temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax reporting purposes.

A deferred tax liability is disclosed in the amount that is expected to be paid when the temporary differences are reversed, based on the laws in force at the end of the reporting period.

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 asset can be utilised.


S. NET EARNINGS PER SHARE

The Group discloses basic earnings per share and diluted earnings per share for its ordinary shares. Basic earnings per share are calculated by dividing the profit or loss pertaining to ordinary shareholders during the financial year with the weighted average number of ordinary shares (excluding treasury shares).

Diluted earnings per share are calculated by adjusting the profit or loss pertaining to ordinary shareholders and the weighted average number of ordinary shares during the financial year for the effect of all dilutive potential ordinary shares. The Group does not hold dilutive potential shares. Basic earnings per share and diluted earnings per share are thus equal.

4.2.2.1 Determination of fair value

Taking into account the Group’s accounting policies, the determination of the fair value of both financial and non-financial assets and liabilities is required in a number of cases. The Group determined the fair values of individual groups of assets for measurement and/or reporting purposes based on the methods described below. Where necessary, further clarifications regarding assumptions used to determine fair values are disclosed in the notes specific to that asset or liability.

LandFollowing recognition, the Group measures land at a revalued amount equal to the fair value on the revaluation date (i.e. the price that would be received when selling an asset or paid when transferring a liability in an orderly transaction, on the principal (or most advantageous) market, between market participants at the measurement date under current market terms, regardless of whether the price can be directly observed or estimated using another valuation technique). Depending on the circumstances or situation, the fair value of land is measured using one or more valuation techniques. They are the market approach, cost approach and income approach. The Group revalues land every five years or more frequently if indications of impairment point to a significant deviation in fair value. Based on an assessment of the effect of a change in indicators of impairment, the amount by which the fair value of land deviates from its carrying amount is assessed. An appraisal of land is performed for financial reporting purposes in the event of a significant deviation.

Investments in equitiesThe fair value of equities valued at fair value is determined taking into account the bid price at the end of the reporting period.

The Group assessed that the carrying amount of current receivables and liabilities was a sufficiently precise approximation of their fair value.

4.2.2.2 Financial risk management

The Group is exposed to the following risks in the use of financial instruments:• credit risk,• liquidity risk,• market risk,• currency risk, and• business risk.

This point discusses the Group’s exposure to the individual risks stated above, and its objectives, policies and procedures for measuring and managing risks, as well as its management of capital. Other quantitative disclosures are included in Note 27.

The management has adopted risk management guidelines as part of risk management rules. The Group has a Risk Management Committee that is responsible for the development and supervision of risk management policies. Financial risks are a part of the Group’s regular reporting on risks that the aforementioned committee regularly reports to the Audit Committee.

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Credit riskCredit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Credit risk arises primarily in connection with the Group’s trade receivables.

The Group’s exposure to credit risk depends primarily on the characteristics of each customer. However, management also takes into account the demographic structure of customers and the solvency risk associated with the sector and country in which a customer operates, as these factors may affect credit risk, particularly in adverse economic conditions.The relevant policies require an analysis of the creditworthiness of a major new customer, before the Group offers its standard payment and delivery terms. The Group creates impairments that represent its estimated losses from operating and other receivables and investments. The main elements of such a depreciation and impairment are the specific part of the loss relating to individual significant risks and the common part of the loss formed for groups of similar assets due to previously incurred but as yet undefined losses.

Liquidity riskLiquidity risk is the risk that the Group will be unable to settle its financial liabilities using cash or other financial assets.

The Group ensures liquidity by always having sufficient liquid assets to settle liabilities at maturity, under both normal and the most demanding situations, without incurring unacceptable losses or risking damage to its reputation.

The Group primarily provides guarantees for potential customs liabilities that might arise from transit procedures, the verification of origin, and various analyses and/or the control of goods that are required for the performance of operational business activities.

Market riskMarket risk is the risk that changes in market prices, such as exchange rates, interest rates and equity instruments, would affect the revenues of the Group or the value of financial instruments. The objectives of market risk management are to manage and control exposure to market risks within reasonable limits, while optimising returns.

Currency riskGroup companies operating outside the euro area are particularly exposed to currency risk, which primarily involves the risk of changes in the exchange rates of the Serbian dinar, Croatian kuna and Ukrainian hryvnia vis-à-vis the euro. With regard to cash flows from operating activities, the aforementioned companies use a natural hedge against the risk of changes in the exchange rate of their national currency vis-à-vis the euro, meaning that they match inflows with outflows in individual currencies in terms of timing and amount, and do not use foreign exchange futures. Subsidiaries that have raised loans in euros have open foreign exchange positions in their statements of financial position. It is highly likely that a change in the exchange rate of the national currency vis-à-vis the euro would have a significant impact on the operations of those companies. The companies in Ukraine are most exposed to currency risk.

On the contrary, exposure to currency risk is low for Group companies that operate in countries of the euro area, as cash flows at those companies are almost exclusively in euros. The effect on their operations is thus minor.

Business riskBusiness risk is the risk of incurring a direct or indirect loss due to numerous reasons associated with processes in the Group, staff, technology and the infrastructure, and as the result of external factors not related to credit, market and liquidity risks. These include risks arising from legal and regulatory requirements, and generally accepted corporate standards. Business risks derive from the overall operations of the Group. The objective is to manage business risks with the aim of establishing a balance between the avoidance of financial losses and damage to the Group’s reputation and overall cost efficiency, and avoiding such control procedures that would hinder or limit self-initiative and creativity. Primary responsibility for developing and introducing controls for managing business risks is borne by the head of each organisational unit.

A programme of regular internal audits is implemented by the Internal Audit Department, which discusses the results of internal audits with the heads of audited business units or subsidiaries, while a summary is submitted to the Company’s Management Board and the Audit Committee.


4.2.3. SIGNIFICANT ACCOUNTING POLICIES OF THE COMPANY

The Company consistently applies the same accounting policies from period to period. Those policies are presented in the enclosed financial statements. The Company only amends accounting policies if:• the change is mandatory under a standard or interpretation, or• as the result of a change, the financial statements present more reliable and relevant information regarding the effects of

transactions, other business events and balances on the financial position, results expressed in monetary terms and the financial flows of the Group or Company.

Comparative information is harmonised with the presentation of information for the financial year in question. Amendments to policies are disclosed.

The accounting policies that the Company used in the preparation of its annual financial statements are the same as those applied in the preparation of the financial statements for the previous financial year. The exception is newly adopted or amended standards and interpretations that the Group adopted for annual periods beginning on or after 1 January 2020, as described below.

New standards and interpretations approved by the EU

Conceptual Framework for the IFRSOn 29 March 2018, the International Accounting Standards Board (IASB) published its revised Conceptual Framework for Financial Reporting. The Conceptual Framework defines a comprehensive set of concepts used in financial reporting, the definition of standards, and instructions for the preparers of consistent accounting policies and for the easier understanding and interpretation of standards. The IASB also issued ‘Amendments to References of the Conceptual Framework in the IFRS’, which presents amendments to those standards and serves for the purpose of updating references to the revised Conceptual Framework. The IASB’s aim is to provide support in the transition to the revised Conceptual Framework to companies that adopt their accounting policies based on the instructions set out in the Conceptual Framework whenever a specific transaction is not covered by any of the IFRS. For preparers who adopt their accounting standards based on the Conceptual Framework, the revised version of that framework applies for annual periods beginning on or after 1 January 2020.The application of amendments has no material impact on the Company’s financial statements.

IFRS 3 Business Combinations (amendments)The IASB published Definition of a Business (Amendments to IFRS 3) with the aim of eliminating uncertainty when determining whether a transaction involves the acquisition of a business or group of assets. The amendments apply to business combinations for which the acquisition date is in the first annual reporting period beginning on or after 1 January 2020 and to asset acquisitions that occur on or after the beginning of that period. Early application of the amendments is permitted.The amendment to the standard has no impact on the Company’s financial statements.

IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Material (amendments)The amendments are effective for annual periods beginning on or after 1 January 2020. Early application of the amendments is permitted. The amendments clarify the definition of the term ‘material’ and how it is used. According to the new definition, “Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general-purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.” The IASB also explained more clearly interpretations that relate to that definition. The amendments also ensure the harmonisation of the definition of the term ‘material’ with all other IFRS. The amendment to the standards has no impact on the Company’s financial statements.

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Interest Rate Benchmark Reform – IFRS 9, IAS 39 and IFRS 7 (amendments)In September 2019, the International Accounting Standards Board (IASB) published amendments to IFRS 9, IAS 39 and IFRS 7 during the final phase of the response to the effects of interbank offered rate (IBOR) reform on financial reporting by companies. The amendments address matters that could affect financial reporting in the period prior to the replacement of an existing interest rate benchmark with an alternative interest rate, and the implications for specific hedge accounting requirements set out in IFRS 9 Financial Instruments and IAS 39 Financial Instruments: Recognition and Measurement, where a company must take into account the results of a forward-looking analysis of operations. Companies may apply a temporary exemption for recognising all hedges on which the interbank offered rate reform could have a direct effect, and may continue with the recognition of hedge accounting during the period of uncertainty prior to the replacement of an existing interest rate benchmark with an alternative, nearly risk-free interest rate. Amendments to IFRS 7 Financial Instruments: Disclosures relating to additional disclosures around uncertainty arising from the interest rate benchmark reform. The amendments are effective for annual periods beginning on or after 1 January 2020 and must be applied retrospectively. During the second phase of the project (draft), the IASB will address matters that could affect financial reporting in the period in which a company replaces an existing interest rate benchmark with a risk-free interest rate.The amendments to the standards had no impact on the Company’s financial statements.

IFRS 16 Leases – changes in lease payments as the result of the COVID-19 pandemic (amendments)The amendments are effective for annual periods beginning on or after 1 June 2020 and must be applied retrospectively. The purpose of the amendments is to provide relief to lessees in the application of IFRS 16 as it relates to accounting for changes in lease payments that are the direct result of the COVID-19 pandemic. The amendments allow lessees to apply practical solutions, such that changes in lease payments that are the direct result of the pandemic need not be accounted for in the same manner as other changes covered by IFRS 16, provided that all of the following conditions are met:• a change in lease payments results in a change in consideration for a lease that is equal to or less than the consideration

defined immediately prior to that change;• each reduction in lease payments only affects payments that according to the original agreement fall due for payment

on or before 30 June 2021; and• all other conditions of the lease remain largely unchanged.The application of new amendments to the standard has no material impact on the Company’s financial statements.

New standards and interpretations not yet approved by the EU

Amendments to IFRS 10 Consolidated Financial Statements and IAS 28 Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint VentureThe amendments address discrepancies between the requirements of IFRS 10 and IAS 28 in the treatment of sales or contributions of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a company must recognise the full amount of gains or losses when a transaction includes a business (regardless of whether the business is housed in a subsidiary or not). For transactions involving assets that do not constitute a business, only a partial gain or loss is recognised when assets are housed in a subsidiary. In December 2015, the International Accounting Standards Board deferred the effective date of the standard indefinitely while it waits for the results of the research project on the accounting of assets under the equity method.The Company does not expect the application of the amendments to have a material impact on its financial statements.

IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current (amendments)The amendments are effective for annual periods beginning on or after 1 January 2022. Early application of the amendments is permitted. In response to the COVID-19 pandemic, the IASB deferred the effective date for one year, i.e. until 1 January 2023, to give companies sufficient time to implement potential changes in the classification of liabilities as the result of amendments to the standard. The amendments offer companies assistance in deciding whether debt and other liabilities with an uncertain settlement date should be classified as current or non-current liabilities in the statement of financial position, and thus ensure greater consistency in compliance with requirements. The amendments affect the presentation of liabilities in the statement of financial position, but do not change existing requirements in connection with the measurement or timing of the recognition of assets, liabilities, revenues or expenses, or the information that is disclosed in those items. The amendments also clarify requirements in connection with the classification of debt that a company could settle through the issue of equity instruments.The Company does not expect the application of the amendments to have a material impact on its financial statements.


IFRS 3 Business Combinations IAS 16 Property, Plant and Equipment IAS 37 Provisions, Contingent Liabilities and Contingent Assets, and annual improvements 2018–2020 cycle (amendments)The amendments are effective for annual periods beginning on or after 1 January 2022. Early application of the amendments is permitted. The IASB published the following limited amendments to the IFRS:• The purpose of amendments to IFRS 3 Business Combination is the updating of the reference in IFRS 3 to the Conceptual

Framework for financial reporting, where requirements regarding accounting for business combinations remain unchanged.

• IAS 16 Property, Plant and Equipment (amendments) The amendments prohibit companies from deducting proceeds from the sale of items produced while preparing items of property, plant and equipment for their intended use. Companies recognise proceeds from sales and associated costs in profit or loss.

• IAS 37 Provisions, Contingent Liabilities and Contingent Assets (amendments) The amendments set out the costs that companies take into account when defining the costs of the fulfilment of a contract when determining whether a contract is onerous.

• Annual improvements 2018–2020 cycle bring certain minor amendments to IFRS 1 First-time Adoption of the International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and Illustrative Examples accompanying IFRS 16 Leases.

The Company is still reviewing the impact of the amendments to the standards and will apply those amendments when they become effective.

Interest Rate Benchmark Reform – Phase II (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)In August 2020, the IASB published the results of phase II of interest rate benchmark reform in the form of amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, and thus completed its work in response to interest rate benchmark reform. The amendments include temporary relief in the reporting of the effects of replacing the interbank offered rate (IBOR) with an alternative risk-free rate (RFR) on financial reporting. The amendments provide companies a practical solution in accounting for changes in the basis for determining contractual cash flows from financial assets and liabilities, where companies must revise the effective interest rate to reflect changes in the market interest rate. The amendments also provide companies certain relief from the discontinuation of a hedging relationship, including the temporary exemption from the requirement that an interest rate benchmark defined as a hedged item must meet separately defined requirements. In addition, the amendments to IFRS 4 provide insurers that still apply IAS 39 the same relief that is introduced by the amendments to IFRS MSRP 9. Amendments to IFRS 7 Financial Instruments: Disclosures requires companies to make disclosures that allow the users of financial statements to understand the effect of interest rate benchmark reform on their financial instruments and risk management strategy. The amendments are effective for annual periods beginning on or after 1 January 2021. Early application of the amendments is permitted. Companies must apply the amendments retrospectively, where the restatement of data from the previous period is not required.The Company is still reviewing the impact of the amendments to the standards and will apply those amendments when they become effective.

A. FOREIGN CURRENCY

Transactions in foreign currenciesAll transactions in foreign currencies are translated to euros (i.e. the Company’s functional currency) upon initial recognition at the daily exchange rate between the functional currency and foreign currency on the transaction date. The reference exchange rate of the European Central Bank (ECB) is applied.

On the statement of financial position date:• monetary items expressed in foreign currencies are translated at the final exchange rate for the year;• non-monetary items denominated in a foreign currency and measured at cost are translated at the exchange rate on the

transaction date; and• non-monetary items denominated in a foreign currency and measured at fair value are translated at the exchange rates

on the day fair value was determined.

The Company recognises exchange rate differences arising in the settlement of monetary items or in the translation of monetary items at exchange rates other than those at which they were translated upon initial recognition during the period in question or at which they were presented in previous financial statements in profit or loss (as income or expenses) in the period in which they arise..

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B. FINANCIAL ASSETS

The Company initially recognises financial assets at fair value, except investments in subsidiaries and an associate, which it recognises at cost, and trade receivables, which it recognises at the transaction price.

The Company recognises ordinary purchases and sales of financial assets on the transaction date, i.e. the date on which it undertakes to purchase or sell an asset. Any gain or loss resulting from the disposal of financial assets is also recognised on that date.

Cash and cash equivalents comprise sight deposits and cash in hand. Cash equivalents are short-term, readily redeemable investments that can be immediately converted into a specific amount of cash, where the risk of a change in value is negligible. The Company defines short-term call deposits as such. The Company’s statement of cash flows presents changes in inflows and outflows of cash and cash equivalents during the accounting period, using the indirect method, and explains changes in the balance thereof. The statement of cash flows was prepared using data from the Company’s income statement for 2020, items from its statements of financial position as at 31 December 2020 and 31 December 2019, and additional data.

The Company values investments in shares and participating interests in subsidiaries and an associate at cost. Dividend income and income from other shares in profit are recognised in the income statement on the day a shareholder’s or owner’s right to payment was exercised. Gains and losses from such assets are recognised in the income statement.

The Company classifies other financial assets to the categories presented in the table below based on the business model used to manage financial assets, and on the contractual cash flow characteristics of financial assets.

CLASSIFICATION OF FINANCIAL ASSETS BASED ON THE COMPANY’S BUSINESS MODEL USED TO MANAGE FINANCIAL ASSETS AND ON THE CONTRACTUAL CASH FLOW CHARACTERISTICS OF FINANCIAL ASSETS

Group of financial assets Financial asset

Financial assets measured at amortised costTrade receivables, including receivables from leasing and other operating receivables, contract assets,* loans and deposits.


Equity instruments not held for trading, for which the Group makes an irrevocable decision at initial recognition to measure those instruments at fair value through other comprehensive income.


Equity instruments for which the Company does not make a decision at initial recognition to measure those instruments at fair value through other comprehensive income.

* Contract assets represent the Company’s right to consideration for the exchange of goods or services that it has transferred to its customers (current accrued income). They also comprise receivables from uncharged customs and other duties that arise in customs clearance procedures that are charged to customers and treated as suspense items.

Significant characteristics of the financial assets stated in the above table.

1. Financial assets measured at amortised costThe Company measures financial assets upon initial recognition at amortised cost if they meet both of the following conditions:• the financial asset is held within the framework of a business model whose objective is achieved by collecting contractual

cash flows; and• the contractual terms of the financial asset give rise to cash flows, on certain dates, that are exclusively payments of

principal and interest on the outstanding amount of principal.The Company calculates interest income from the aforementioned assets using the effective interest rate method and recognises it in profit or loss.

2. Financial assets measured at fair value through other comprehensive incomeInterest and exchange rate differences associated with these assets are recognised in the income statement, while other gains and losses are recognised in other comprehensive income. When an asset is derecognised, gains and losses recognised in other comprehensive income (revaluation surplus) are transferred to retained earnings.


3. Financial assets measured at fair value through profit or lossThe Company measures financial assets that it does not measure at amortised cost and that are not investments in subsidiaries and an associate at fair value through profit or loss. Gains and losses are recognised in the income statement.

C. FINANCIAL LIABILITIES

A financial liability is any liability that is a contractual obligation: • to deliver to another company cash or some other financial asset (e.g. trade payables, liabilities from loans received, etc.);

or• to exchange financial assets or financial liabilities with another company under conditions that are potentially unfavourable

to the Company.

The Company recognises financial liabilities on the day they arise. Financial liabilities are initially recognised on the transaction date, i.e. when the Company becomes a contractual party in connection with the instrument in question. The Company derecognises a financial liability when the commitments stipulated in the contract have been discharged, have been cancelled or have expired. Upon initial recognition, it measures financial liabilities at fair value, including transactions costs. Following initial recognition, derivative financial liabilities are measured at amortised cost using the effective interest rate method.

Liabilities from contracts with customersLiabilities from contracts with customers represent an obligation to transfer goods or services to a customer for which consideration was received from the customer (liabilities for advances received).

D. EQUITY

Share capitalThe Company’s share capital is defined in nominal terms in its Articles of Association, registered with the court and paid up by its owners.

Share premium accountThe Company’s share premium account comprises amounts from the simple reduction of its share capital. The share premium account may be used under the conditions and for the purposes set out by law.

Legal reservesLegal reserves comprise amounts retained from profits generated in previous years, and are primarily earmarked for the settlement of potential future losses.

Treasury sharesTreasury shares are disclosed in profit reserves (as a deduction item). Reserves for treasury shares are created in the amounts paid for the acquisition of those shares.

Fair value reservesFair value reserves comprise the effects of the revaluation surplus in connection with land, and actuarial losses in connection with provisions for post-employment and other non-current employee benefits. All components of the fair value reserve were reduced for the amount of deferred taxes.

Liabilities for dividends and other shares in profitLiabilities for dividends and other shares in profit are recognised on the day the right to payment is exercised by a shareholder or owner.

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E. PROPERTY, PLANT AND EQUIPMENT

The Company initially recognises property, plant and equipment at cost, which includes amounts directly related to the purchase of an asset, as well as capitalised borrowing costs. Following the initial recognition of property, plant and equipment, the Company measures buildings and equipment using the cost model, while a revaluation model is used for land. According to the cost model, property, plant and equipment are disclosed at cost, less accumulated depreciation and any accumulated impairment loss. According to the applied revaluation model, land is disclosed at fair value on the revaluation date, less accumulated impairment loss. The Company revalues land every five years or more frequently if indications of impairment point to a significant deviation in fair value.An increase in the carrying amount of land as a result of revaluation is recognised directly in equity as a revaluation surplus in the statement of comprehensive income. A decrease in the carrying amount of land as a result of revaluation reduces the revaluation surplus for that land. If the decrease in the carrying amount exceeds the accumulated revaluation surplus for the same asset, the difference in the decrease is transferred to profit or loss as an expense. The revaluation surplus for land, which constitutes an integral part of equity, is transferred directly to retained earnings when the asset in question is derecognised.

Accounting for borrowing costsThe Company treats borrowing costs that may be directly attributed to the acquisition, construction or manufacture of an asset under construction as part of the cost of that asset Borrowing costs comprise interest expense and exchange rate differences arising from loans in a foreign currency, if they are treated as a recalculation of interest expense. Other borrowing costs are recognised in the income statement as an expense in the period in which they arise.

Subsequent costsThe cost of replacing some part of an item of property, plant and equipment is recognised in the carrying amount of the asset in question if it is probable that the future economic benefits embodied within the part will flow to the Group, and its cost can be measured reliably. All other costs are recognised in profit or loss as expenses as they arise.

DepreciationDeprecation is charged on a straight-line basis over the useful life of each individual item of property, plant and equipment. That method most precisely reflects the expected pattern of use of an asset. The estimated useful lives for the current and comparative periods are as follows:


Buildings 30–68 years 40–68 years

Computer equipment 2–4 years 2–4 years

Other plant and equipment 2–10 years 2–10 years

Once a year, the Company reviews the appropriateness of the depreciation method and useful lives, and adjusts them as necessary.

F. INTANGIBLE ASSETS

Intangible assets comprise investments in industrial property rights (concessions, patents, licences, brands and similar rights) and other rights, and other intangible assets. The period and method of amortisation of intangible assets with a finite useful life are reviewed, at a minimum, at the end of each financial year. Following initial recognition, the Company measures intangible assets using the cost model, i.e. at cost less accumulated amortisation and any accumulated impairment loss.

Subsequent costsSubsequent costs in connection with intangible assets are capitalised if they increase the future economic benefits embodied in the asset to which the costs relate. All other costs are recognised in profit or loss as expenses as they arise.


AmortisationAmortisation is charged on the cost of an asset, and is recognised in profit or loss on a straight-line basis over the useful lives of intangible assets, from the date that they are available for use. That method is the most precise reflection of the expected pattern of use of the future economic benefits embodied in an asset.

The estimated useful lives for the current and comparative years are 3, 5, 10, 15 and 23 years. The Company verifies amortisation methods, useful lives and residual values at the end of each financial year and adjusts them as required.

G. INVESTMENT PROPERTY

Investment property comprises real estate purchased to generate rental income, to increase the value of non-current assets, or both. An assessment is required to determine whether real estate is deemed investment property. When assessing whether real estate is deemed investment property, the Company defines criteria for the classification of real estate or parts of real estate to investment property, such that all real estate that is the subject of a long-term lease (more than one year) or a lease for an indefinite period is reclassified to investment property if the leased portion of real estate represents more than 10% and less than 90% of the total area of the real estate. If the leased part of real estate represents 90% or more of the total area, the entire real estate is reclassified to investment property; if that part represents 10% or less of the total area of the real estate, that real estate remains classified under fixed assets as real estate used by the owner, except the portion of land that belongs to a building, which is classified to investment property and treated as such. Real estate that is the subject of a short-term lease (less than one year in duration) or is not the subject of a lease (not used) remains classified under fixed assets as property used by the owner.

Following initial recognition, the Company discloses investment property using the cost model, i.e. at cost less accumulated depreciation and any accumulated impairment loss. Revalued investment property (land) is transferred from property, plant and equipment at the carrying amount on the transfer date, while the associated revaluation surplus remains in equity and is transferred to retained earnings upon disposal. The same useful lives used for real estate classified as property, plant and equipment are applied to investment property.

H. LEASES

Company as lessee of assetsThe Company has different property (land and business premises) and equipment under lease. When entering into a contract, it assesses whether it is a lease contract or whether it contains a lease. A contract is a lease contract or contains a lease if it conveys the right to control of an identified asset for a period of time in exchange for consideration. The Company defines the lease term based on the period in which a lease cannot be terminated, taking into account the period covered by an extension option and the period covered by a termination option.

LEASE TERM FOR THE CURRENT AND COMPARATIVE PERIODS:: Current period Comparative period

Right-of-use assets – land 5–6 years 5–6 years

Right-of-use assets – buildings 1–6 years 1–6 years

Right-of-use assets – equipment 1–5 years 1–5 years

The Company uses a standard approach for recognising and measuring all leases, except short-term leases (leases of up to one year) and low-value leases (with a value of less than EUR 5 thousand). The Company recognises lease payments in connection with short-term and low-value leases as costs in the period to which a lease relates using the straight-line method over the entire lease term. For all other leases, the Company recognises a right-of-use asset and a lease liability for leased assets.

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The Company recognises a right-of-use asset at the commencement of a lease. The cost of right-of-use assets in connection with leases comprises the amount of the initially measured lease liability, initial direct costs and lease payments that were made at or prior to the commencement of a lease, less lease incentives.

Right-of-use assets in connection with leases are measured at historical cost less value adjustments and impairment losses, with an adjustment to cost at each remeasurement of lease liabilities. The Company impairs assets under lease in the same manner as property, plant and equipment.

Liabilities for leased assets are recognised at the present value of remaining lease payments over the entire lease term. Lease payments are discounted at the interest rate implicit in a lease if that rate can be determined, otherwise the Company applies the incremental borrowing rate that it would have to pay if it acquired an asset with a similar value as a right-of-use asset for a similar period, based on a similar guarantee in a similar economic environment. Following the commencement of a lease, the amount of lease liabilities is increased for lease-related interest and reduced for all lease payments, while the value of a lease is adjusted upon reassessment or a change in a lease.

At the commencement of a lease, lease liabilities are equal to the value of the associated right-of-use asset and are reduced for payments, while the value of the right-of-use asset is reduced by depreciation charged over the lease term. Depreciation rates are set taking into account the lease term. Interest incurred is charged to finance costs in the period in question. The Company applies the exemption for short-term leases, i.e. leases where the lease term is 12 months or less. It also applies the exemption for leases of low-value assets. The Company recognises lease payments on a straight-line basis over the lease term for short-term and low-value leases.

Due to the situation caused by the COVID-19 pandemic, the Company applies the practical solution not to assess whether an adjustment to lease payments that meet the conditions given below is a change in a lease. Those conditions are:• the result of a change in lease payments is a change in consideration for a lease that is almost equal to or less than the

consideration for a lease immediately prior to that change;• the reduction in lease payments only affects payments that would originally fall due on or before 30 June 2021 (i.e. an

adjustment to lease payments would meet this condition if it caused a reduction in lease payments on or before 30 June 2021 and an increase in lease payments after 30 June 2021); and

• here is no material change in other lease conditions.

In this case, the Company does not treat a change in lease payments as a change to an existing lease, but instead recognises it in the income statement.

In sale and leaseback transactions in which it acts as seller, i.e. lessee, the Company measures a right-of-use asset proportionately with that part of the previous carrying amount of the right-of-use asset that it has kept. Accordingly, it only recognises the amount of gains or losses that relate to the rights that were transferred by the buyer, i.e. lessor.

Company as lessor of assetsAs lessor, the Company recognises lease payments from operating leases as revenues on a straight-line basis over the lease term. The Company discloses assets that it leases in the statement of financial position with regard to the nature of an asset that is the subject of a lease.

I. INVENTORIES

Inventories of material are valued at cost, which comprises the purchase price, import duties and the direct costs of procurement. The purchase price is reduced by any discounts received. The weighted average price method is applied in the use of materials.


J. IMPAIRMENT OF ASSETS

1.Impairment of financial assets

Impairment of investments in subsidiariesAt the end of every financial year, the Company assesses whether there are any indications that an investment may be impaired. If such indications exist, it estimates the recoverable amount of investments in subsidiaries. The recoverable amount of an asset is the greater of its fair value less disposal costs, or its value in use.

If the carrying amount of a financial asset exceeds the recoverable amount, an investment in a subsidiary must be impaired. The discounted cash flow model cannot be used to calculate the recoverable amount for companies with suspended operations. An estimate derived from other bases (e.g. an estimate of the net value of assets) is thus used.

The Company reverses impairment losses of investments in subsidiaries when reasons no longer exist for their impairment by crediting finance income in the partial or full amount of impairment, depending on the assessment of the reversal of impairment associated with those investments.

Impairment of operating receivablesThe Company impairs operating receivables for expected credit losses over the life of those assets. Impairment losses on trade receivables and other operating receivables (including the reversal of impairment losses) are disclosed in the income statement in the item ‘loss due to the impairment of receivables’.

The Company impairs trade receivables (including receivables from leases) that are not subject to legal actions, enforcement or bankruptcy proceedings, registered in compulsory composition proceedings prior to publication of confirmation thereof or in recovery proceedings via specialised institutions, or are not deemed doubtful based on other objective reasons, by creating a value adjustment using impairment percentages with regard to the age of the receivables.

When measuring expected credit losses associated with such assets, the Company applies a simplified approach using a ‘provision matrix’ that is based on past experiences regarding written-off receivables and estimates for the future.

The Group impairs receivables that are subject to legal actions, enforcement or bankruptcy proceedings, registered in compulsory composition proceedings prior to publication of confirmation thereof or in recovery proceedings via specialised institutions, or that are deemed doubtful based on other objective reasons, in 100% of their value, except where the law permits a reduction in liabilities for calculated and unpaid value added tax. Impairments are reduced for that amount.

The Company impairs receivables for interest on loans granted and deposits placed when it impairs loans and deposits. It does not impair other operating receivables until they are more than 30 days past due, depending on the composition of and past experience with those receivables. After that time, the Company individually assesses the probability of future cash flows from such receivables and impairs them accordingly.

Impairment of loans granted and depositsThe Company impairs loans granted and deposits based on the management’s assessment of their bad debt. In accordance with IFRS 9, the Company transitioned from the incurred loss model to the expected loss model, according to which the Company recognises both incurred losses and losses that it expects to incur in the future.

When assessing the impairment of loans granted, the Company assesses evidence of impairment for each loan separately. If it assesses that the carrying amount of a loan exceeds its fair value (i.e. its realisable value), the Group impairs that loan. The assessment of impairment is based on expected credit losses in connection with the probability of loan default over the next 12 months, unless credit risk has risen significantly since initial recognition. In such cases, the assessment of impairment is based on the probability of default over the entire life of the financial asset in question. Expected credit losses comprise the difference between contractual cash flows that have fallen due according to the relevant contract and all cash flows that the Group expects to receive. Expected cash flows will also include cash flows from the sale of a collateralised asset.

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Impairment losses for expected credit losses are assessed in two steps. For credit exposures for which there has been no significant increase in credit risk since initial recognition, impairments for expected credit losses are recognised for credit losses resulting from potential defaults over the next 12 months. For those credit exposures for which there has been a significant increase in credit risk since initial recognition, the Company recognises an adjustment for losses that it expects over the remaining life of an exposure, regardless of the default period. The Company deems obligations in connection with a financial asset not to be fulfilled when contractual payments are 90 days past due. In certain cases, the Company may deem credit risk to have increased, even when it is probable, based on the relevant information, that it will not receive unpaid contractual amounts in full.

The Company recognises the write-off of a financial asset when it justifiably expects that it will not collect contractual cash flows. Impairment losses on these assets are disclosed in the income statement in the item ‘other finance costs’.

2. Impairment of financial assets

The Company reviews the carrying amount of property, plant and equipment, investment property and intangible assets at each reporting date to determine whether there are any indications of impairment. If such indications exist, the recoverable amount of an asset is estimated.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use or its fair value less selling costs. In assessing value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to an asset. For impairment testing, assets that cannot be tested individually are grouped into the smallest possible groups of assets that generate cash flows from continued use and that are largely independent of cash generated by other assets or groups of assets (cash-generating unit).

The Company recognises the impairment of an asset or a cash-generating unit when its carrying amount exceeds its recoverable amount. That impairment is disclosed as an expense in the income statement.

The Company reverses an impairment loss to the extent that the asset’s increased carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised in previous years.

K. NON-CURRENT ASSETS HELD FOR SALE

Non-current assets or a disposal group comprising assets (applicable to investment property, intangible assets and non-current financial assets within non-current assets, and only applicable to land and buildings within property, plant and equipment on grounds of materiality) whose carrying amount is reasonably expected to be settled primarily through sale and not through further use are classified as assets held for sale, with that sale envisaged within the next twelve months, at the latest.

A sale is highly likely when the entire plan and programme to find a buyer are activated. An asset must also be actively marketed and efforts made to achieve a price that corresponds to its current fair value. An asset is remeasured immediately before its classification to assets held for sale. Accordingly, a non-current asset (or disposal group) is recognised at the lower of its carrying amount or fair value, less costs to sell.

The period for completion of a sale may be extended to more than one year due to special events and circumstances that are beyond the control of the Company and if there is sufficient evidence that the Company is consistently pursuing its plans to dispose of the asset.

If an asset held for sale no longer meets the criteria for classification to the aforementioned category, it must be reclassified to another appropriate asset category, i.e. the category to which it was classified before being classified as an asset held for sale.


L. EMPLOYEE BENEFITS

Short-term employee benefitsShort-term employee benefit obligations are measured on an undiscounted basis, and are disclosed as expenses as the service of the employee is provided in respect of the specific short-term benefit.

M. PROVISIONS

Provisions are 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. Amounts recognised as provisions represent the best estimate of expenditure required for settlement as at the balance-sheet date. In assessing the best estimate of provisions, risks and uncertainties associated with numerous events and circumstances are also considered. Where the effect of the time value of money is material, the amount of provisions represents the present value of expenditure expected to be required to settle an obligation.

Provisions are recognised by accruing the corresponding costs or expenses, and are reduced directly over time by the costs and/or expenses that they were created to cover, except actuarial gains and losses from termination benefits at retirement due to changes in actuarial assumptions and experiential restatements that are recognised in the revaluation surplus and transferred to retained earnings in the proportionate amount when they are used. That amount is calculated using the ratio between provisions used during the year and the balance of provisions before use.

Provisions are derecognised when the contingencies for which they were created no longer apply, or when they are no longer required. Revenues are recognised when provisions created by accruing the corresponding costs or expenses are derecognised. Provisions are adjusted at the end of the accounting period so that their value is equal to the present value of the expenditure expected to be required to settle the obligation in question.

Provisions for termination benefits and employee anniversary bonusesIn accordance with the applicable legislation, the collective agreement and internal rules, the Company is obliged to pay employee anniversary bonuses to employees and termination benefits upon retirement. Non-current provisions are created for these purposes. No other pension obligations exist.

The aforementioned provisions are created in the amount of the estimated future payments for termination benefits and employee anniversary bonuses, discounted as at the date of the actuarial calculation.

Interest expense and any increase during the current year are recognised in the income statement as labour costs, while interest is disclosed as a finance cost. Actuarial gains and losses from employee anniversary bonuses are recognised in the income statement as labour costs, while actuarial gains and losses from termination benefits upon retirement are recognised in other comprehensive income in the revaluation surplus and transferred to retained earnings in the proportionate amount when they are used. That amount is calculated using the ratio between provisions used during the year and the balance of provisions before use. Provisions are used in an amount equal to the actual costs incurred for accrued termination benefits upon retirement and employee anniversary bonuses.

Non-current deferred incomeThe Company classifies donations received for the acquisition of property, plant and equipment or for covering specific costs to non-current deferred income. It is earmarked to cover the costs of the depreciation of the aforementioned assets or to cover certain costs, and is used by way of a transfer to operating income in the amount of the depreciation of those assets. Deferred income that will cover projected expenses over a period of more than one year is disclosed under non-current deferred income.

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N. REVENUES FROM SERVICES RENDERED

Contracts with customers are only accounted for when the relevant conditions have been met. When approving contracts with customers, the consideration that is expected in exchange for goods or services transferred to them is assessed. Consideration received represents the transaction price. The transaction price represents the fixed agreed consideration in exchange for promised goods and/or the provision of services to a customer.

Revenues from services rendered are recognised by the Company in the income statement taking into account the stage of completion of a transaction at the end of the reporting period or when performance obligations are fulfilled. The stage of completion is assessed on the basis of a review of costs incurred (review of work performed – measurement of the progress of a transaction).

Revenues from services rendered are measured at the transaction prices of completed services stated in invoices (fulfilment of performance obligations at a given moment) or other documents, or at the prices of incomplete services taking into account the stage of completion thereof (performance obligations are fulfilled over time).In cases when a particular transaction (performance obligation) is not completed (fulfilled) as at the balance-sheet date, the Company believes that no reliable assessment can be made regarding the outcome of such a transaction, but that the progress of that transaction can be reasonably measured. Thus, the Company only recognises income up to the amount of direct costs incurred, and for which it can be expected that they will be covered (contribution method).

Amounts collected on behalf of third parties, such as charged value-added tax and other levies (e.g. customs duties) are excluded from sales revenue.

FULFILMENT OF PERFORMANCE OBLIGATIONS

Business lineNature of and time required to fulfil performance obligations to customers

Payment terms

LAND TRANSPORT LOGISTICS SERVICES INTERCONTINENTAL TRANSPORT OTHER SERVICES

A customer sends an order for the execution of forwarding transactions. The order must include all essential data for the correct and timely execution thereof. A transaction is deemed completed when all activities under an order have been implemented. An order may contain different services. A transaction is deemed completed: - for services in connection with organising the transport of

goods: when transport is completed (i.e. the goods are received or delivered);

- for customs clearance transactions: when goods are released to the declaring party

- for the warehousing of goods: when goods are placed in or removed from a warehouse, or other warehouse work is performed (e.g. palletting and labelling); and

- for other transactions: when the agreed service is rendered. An invoice is issued to the customer after a service has been rendered.

In general, a customer must pay for our services and associated costs before a service is rendered (advance). Taking into account a customer’s credit rating, past experience with a customer and commercial agreements, an invoice for services is payable within 30 days following the rendering thereof.

State aidWe distinguish between state aid in connection with assets and state aid in connection with revenues.

a. State aid in connection with assets, including non-monetary support at fair value, is disclosed in the statement of financial position as deferred income and is consistently transferred to the income statement as revenues over the useful life of the asset in question. The Company discloses deferred income that will cover projected expenses over a period of more than one year under non-current deferred income.

b. State aid in connection with revenues comprises state aid in connection with the reimbursement of wage compensation for employees, the exemption of the payment of social security contributions, etc. The Company recognises state aid in connection with revenues in other operating revenues and not as a reduction in associated costs. It is recognised as revenues in the periods in which the costs that such state aid is earmarked to cover are incurred. State aid is recognised when there is reasonable assurance that the Company will fulfil the conditions to receive such aid and that it will, in fact, receive it. If there is uncertainty in connection with the eligibility to receive state aid (i.e. the possibility exists that the aid must be returned in the event of failure to fulfil certain conditions), the amount of state aid received is disclosed as deferred income until the fulfilment/non-fulfilment of conditions.


O. COSTS – EXPENSES

The Company recognises costs as expenses in the period in which they arise.

P. FINANCE INCOME AND FINANCE COSTS

Finance income primarily comprises interest income from investments, income from dividends and other shares in profit, income from the disposal of financial assets measured at fair value through profit or loss, positive exchange rate differences and income from the reversal of the impairment of financial assets. Interest income is recognised as it accrues, using the effective interest method. Dividend income and income from other shares in profit are recognised in the income statement on the day a shareholder’s or owner’s right to payment was exercised.

Finance costs primarily comprise interest expense and other borrowing costs (unless capitalised), interest on leases, and negative exchange rate differences and impairment losses on financial assets. Borrowing costs are recognised in the income statement in the period in which they arise using the effective interest method.

Q. CORPORATE INCOME TAX

Corporate income tax comprises current taxes and deferred taxes. Corporate income tax is disclosed in the income statement, except to the extent that it relates to items disclosed directly in equity, in which case it is disclosed in other comprehensive income.

Current tax is assessed in accordance with the applicable tax legislation as at the reporting date. The financial year is the same as the calendar year, which in turn is the same as the fiscal year.

Deferred tax is disclosed taking into account temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax reporting purposes.

A deferred tax liability is disclosed in the amount that is expected to be paid when the temporary differences are reversed, based on the laws in force at the end of the reporting period.

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 asset can be utilised.

R. NET EARNINGS PER SHARE

The Company discloses basic earnings per share and diluted earnings per share for its ordinary shares. Basic earnings per share are calculated by dividing the profit or loss pertaining to ordinary shareholders during the financial year with the weighted average number of ordinary shares (excluding treasury shares).

Diluted earnings per share are calculated by adjusting the profit or loss pertaining to ordinary shareholders and the weighted average number of ordinary shares during the financial year for the effect of all dilutive potential ordinary shares. The Company does not hold dilutive potential shares. Basic earnings per share and diluted earnings per share are thus equal.

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4.2.3.1 Determination of fair valueTaking into account the Group’s accounting policies, the determination of the fair value of both financial and non-financial assets and liabilities is required in a number of cases. The Company determined the fair values of individual groups of assets for measurement and/or reporting purposes based on the methods described below. Where necessary, further clarifications regarding assumptions used to determine fair values are disclosed in the notes specific to that asset or liability.

LandFollowing recognition, the Company measures land at a revalued amount equal to the fair value on the revaluation date (i.e. the price that would be received when selling an asset or paid when transferring a liability in an orderly transaction, on the principal (or most advantageous) market, between market participants at the measurement date under current market terms, regardless of whether the price can be directly observed or estimated using another valuation technique). Depending on the circumstances or situation, the fair value of land is measured using one or more valuation techniques. They are the market approach, cost approach and income approach. The Company revalues land every five years or more frequently if indications of impairment point to a significant deviation in fair value. Based on an assessment of the effect of a change in indicators of impairment, the amount by which the fair value of land deviates from its carrying amount is assessed. An appraisal of land is performed for financial reporting purposes in the event of a significant deviation.

Investments in equitiesThe fair value of equities valued at fair value is determined taking into account the bid price at the end of the reporting period.

The Company assessed that the carrying amount of current receivables and liabilities was a sufficiently precise approximation of their fair value.


4.2.3.2 Financial risk managementThe Company is exposed to the following risks in the use of financial instruments:• credit risk,• liquidity risk,• market risk, and• business risk.

This point discusses the Company’s exposure to the individual risks stated above, as well as its objectives, policies and procedures for measuring and managing risks, as well as its management of capital. Other quantitative disclosures are included in Note 30.

The management has adopted risk management guidelines as part of risk management rules. The Company has a Risk Management Committee that is responsible for the development and supervision of risk management policies. Financial risks are a part of the Group’s regular reporting on risks that the aforementioned committee regularly reports to the Audit Committee.

Credit riskCredit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. Credit risk arises primarily in connection with the Company’s trade receivables.

The Company’s exposure to credit risk depends primarily on the characteristics of each customer. However, management also takes into account the demographic structure of customers and the solvency risk associated with the sector and country in which a customer operates, as these factors may affect credit risk, particularly in adverse economic conditions.The relevant policies require an analysis of the creditworthiness of each major new customer, before the Company offers its standard payment and delivery terms. The Company creates impairment losses that represent its estimated losses from operating and other receivables and investments. The main elements of such a depreciation and impairment are the specific part of the loss relating to individual significant risks and the common part of the loss formed for groups of similar assets due to previously incurred but as yet undefined losses.

Liquidity riskLiquidity risk is the risk that the Company will be unable to settle its financial liabilities using cash or other financial assets.

The Company ensures liquidity by always having sufficient liquid assets to settle liabilities at maturity, under both normal and the most demanding situations, without incurring unacceptable losses or risking damage to its reputation.

The Company primarily provides guarantees for potential customs liabilities that might arise from transit procedures, the verification of origin, and various analyses and/or the control of goods that are required for the performance of operational business activities.

Market riskMarket risk is the risk that changes in market prices, such as exchange rates, interest rates and equity instruments, would affect the income of the Company or the value of financial instruments. The objectives of market risk management are to manage and control exposure to market risks within reasonable limits, while optimising returns.

Business riskBusiness risk is the risk of incurring a direct or indirect loss due to numerous reasons associated with processes at the Company, staff, technology and the infrastructure, and as the result of external factors not related to credit, market and liquidity risks. These include risks arising from legal and regulatory requirements, and generally accepted corporate standards. Business risks derive from the overall operations of the Company. The objective is to manage business risks with the aim of establishing a balance between the avoidance of financial losses and damage to the Company’s reputation and overall cost efficiency, and avoiding such control procedures that would hinder or limit self-initiative and creativity. Primary responsibility for developing and introducing controls for managing business risks is borne by the head of each organisational unit.

A programme of regular internal audits is implemented by the Internal Audit Department, which discusses the results of internal audits with the heads of audited business units, while a summary is submitted to the Company’s Management Board and the Audit Committee.

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4.2.4. BUSINESS SEGMENTS

A business segment is an integral part of the Group:• that engages in business activities from which it generates revenues and incurs expenses (including revenues and

expenses relating to transactions with other integral parts of the same group); • whose operating results are reviewed regularly by an employee in a management position, who makes decisions

regarding the allocation of resources to a specific segment and who assesses the latter’s performance; and• for which separate financial data are available.

Disclosures by geographic business segment are based on an internal reporting system used by management in the decision-making process.

INFORMATION BY GEOGRAPHICAL SEGMENT

(in EUR)Slovenia Croatia


Serbia Montenegro

2020 2019 2020 2019 2020 2019 2020 2019 2020 2019

Revenues from external customers

100,479,944 108,791,957 23,830,915 24,066,027 6,945,994 7,072,822 5,279,124 5,096,543 4,983,954 6,284,228

Revenues from transactions with other segments

4,035,246 3,676,038 1,248,579 970,634 473,955 566,963 621,605 592,266 60,675 82,989

Total revenues 104,515,191 112,468,045 25,079,494 25,036,661 7,419,949 7,639,785 5,900,728 5,688,809 5,044,629 6,367,217

Amortisation and depreciation

3,773,083 4,430,513 1,283,276 1,455,357 422,911 431,752 219,815 267,298 404,498 460,640

Operating profit or loss

4,393,778 5,165,114 1,984,984 1,360,045 -489,897 622,371 -775,519 -474,399 524,471 1,190,495

Interest income 143,213 476,150 14,343 3,043 0 0 11 449 55,464 66,309

Interest expense 764,045 1,758,975 35,339 44,896 13,142 18,718 60,580 59,547 16,500 21,045

Profit or loss from ordinary operations

3,042,695 5,233,154 1,962,638 1,331,716 -505,727 603,395 -851,285 -533,718 561,805 1,235,833


0 0 0 0 0 0 0 0 0 0

Corporate income tax

688,513 1,741,322 239,480 250,032 820 94,455 5,997 -1,440 65,661 116,072

Net profit or loss 2,354,182 3,491,832 1,723,158 1,081,684 -506,547 508,940 -857,282 -532,278 496,144 1,119,761

(in EUR)

Slovenia CroatiaBosnia and

HerzegovinaSerbia Montenegro

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Assets 173,544,978 177,697,373 50,352,091 49,851,205 13,857,193 14,373,185 10,375,417 10,273,463 18,594,278 18,221,970

Non-current assets 145,090,711 148,719,385 39,114,701 41,040,017 11,732,676 12,017,805 9,167,395 9,214,673 11,314,155 12,146,639

Operating liabilities 15,479,877 18,087,058 4,096,673 4,163,737 1,329,280 1,172,668 1,089,834 963,979 497,478 502,635

Financial liabilities 58,687,045 62,375,402 572,996 1,040,692 224,051 329,317 2,534,855 1,801,787 723,525 843,422

Investment in associate

39,059 39,059 0 0 0 0 0 0 0 0


(in EUR)Slovenia Croatia


Serbia Montenegro

2020 2019 2020 2019 2020 2019 2020 2019 2020 2019

Revenues from external customers

3,992,270 3,694,396 5,236,928 5,262,818 150,749,128 160,268,841 -23,960 83,859 150,725,168 160,352,650

Revenues from transactions with other segments

0 0 1,290,750 1,169,358 7,730,810 7,058,247 -7,730,810 -7,058,247 0 0

Total revenues 3,992,270 3,694,396 6,527,678 6,432,176 158,479,939 167,327,089 -7,754,770 -6,974,389 150,725,168 160,352,650

Amortisation and depreciation

31,008 33,461 329,416 145,221 6,464,007 7,224,241 0 0 6,464,008 7,224,242

Operating profit or loss

165,834 -143,541 52,284 -111,723 5,855,934 7,608,363 -91,638 -84,828 5,764,296 7,523,536

Interest income 369 342 0 5,860 213,400 552,153 -114,145 -98,541 99,255 453,612

Interest expense 35,529 39,041 41,055 13,513 966,190 1,955,735 -114,145 -98,541 852,045 1,857,195

Profit or loss from ordinary operations

-342,180 140,553 10,972 -129,592 3,878,919 7,881,341 683,801 -1,439,823 4,562,722 6,441,520


0 0 0 0 0 0 785 62 785 62

Corporate income tax

-4,434 21,805 13,038 22,617 1,009,076 2,244,864 -14,311 0 994,768 2,244,867

Net profit or loss -337,747 118,748 -2,066 -152,210 2,869,843 5,636,477 698,110 -1,439,823 3,567,954 4,196,653

(in EUR)

Slovenia CroatiaBosnia and

HerzegovinaSerbia Montenegro

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Assets 1,349,053 1,855,097 3,565,621 3,854,009 271,638,632 276,126,301 -51,194,858 -52,775,350 220,443,774 223,350,952

Non-current assets 968,045 608,482 1,481,091 1,757,067 218,868,775 225,504,068 -44,385,047 -44,757,155 174,483,727 180,746,913

Operating liabilities 690,464 690,530 1,145,449 1,117,346 24,329,055 26,697,952 -1,976,830 -1,878,453 22,352,225 24,819,499

Financial liabilities 1,203,978 1,295,872 473,140 739,215 64,419,589 68,434,709 -5,804,293 -6,736,634 58,615,296 61,698,075

Investment in associate

0 0 0 0 39,059 39,059 25,190 24,406 64,249 63,464

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BREAKDOWN OF SALES REVENUE BY BUSINESS LINE AND COUNTRY

Intereuropa Group

(in EUR)

Slovenia Croatia Bosnia and Herzegovina

2020 2019 2020 2019 2020 2019

Revenues by business line

Land transport 45,819,641 51,957,942 16,975,909 17,434,092 5,260,239 5,202,930

Logistics solutions 20,484,494 19,273,088 4,566,982 4,518,244 703,328 651,157

Intercontinental transport 33,257,772 36,495,420 2,823,248 2,328,058 567,439 486,478

Other services 4,953,284 4,741,546 713,355 756,268 888,943 1,299,220

Total 104,515,191 112,467,996 25,079,494 25,036,662 7,419,949 7,639,785

Revenues generated by country (with respect to a customer’s head office)

Slovenia 60,150,594 62,418,902 1,087,313 1,017,942 276,135 320,358

Croatia 1,947,505 1,814,678 20,322,002 20,315,251 71,142 51,924

Bosnia and Herzegovina 1,143,141 1,036,550 548,372 313,694 5,829,368 5,982,579

Montenegro 324,675 350,955 6,831 9,549 711 1,175

Other countries 40,949,276 46,846,911 3,114,976 3,380,226 1,242,593 1,283,749

Total 104,515,191 112,467,996 25,079,494 25,036,662 7,419,949 7,639,785

Intereuropa Group

(in EUR)

Serbia Montenegro Ukraine

2020 2019 2020 2019 2020 2019


Land transport 2,777,468 2,784,782 2,840,655 3,880,648 3,991,612 3,693,697

Logistics solutions 534,298 915,844 1,002,309 977,954 0 0

Intercontinental transport 2,562,909 1,958,411 390,182 417,566 0 0

Other services 26,053 29,771 811,483 1,091,048 658 699

Total 5,900,728 5,688,808 5,044,629 6,367,216 3,992,270 3,694,396


Slovenia 550,005 451,932 137,918 167,317 213,685 260,784

Croatia 47,040 72,684 27,390 38,964 0 0

Bosnia and Herzegovina 62,005 165,160 79,995 135,654 0 0

Montenegro 66,847 58,931 4,111,967 4,541,931 0 0

Other countries 5,174,831 4,940,101 687,359 1,483,350 3,778,585 3,433,612

Total 5,900,728 5,688,808 5,044,629 6,367,216 3,992,270 3,694,396


Intereuropa Group

(in EUR)

Other countries Exclusions Total

2020 2019 2020 2019 2020 2019


Land transport 5,043,299 5,120,198 4,940,223 5,054,225 77,768,600 85,020,064

Logistics solutions 514,892 358,425 49,500 28,847 27,756,803 26,665,865

Intercontinental transport 628,737 598,833 1,046,138 507,835 39,184,149 41,776,931

Other services 340,749 354,719 1,718,909 1,383,481 6,015,616 6,889,790

Total 6,527,677 6,432,175 7,754,770 6,974,388 150,725,168 160,352,650


Slovenia 764,686 907,775 2,078,764 2,048,548 61,101,572 63,496,462

Croatia 6,771 32,941 1,656,634 1,383,883 20,765,216 20,942,559

Bosnia and Herzegovina 3,900 0 1,389,968 1,130,181 6,276,813 6,503,456

Montenegro 1,410 0 367,774 402,448 4,144,667 4,560,093

Other countries 5,750,910 5,491,459 2,261,630 2,009,328 58,436,900 64,850,080

Total 6,527,677 6,432,175 7,754,770 6,974,388 150,725,168 160,352,650

Intereuropa, d. d.

(in EUR)2020 2019


Land transport 45,819,640 51,957,942

Logistics solutions 20,484,494 19,273,087

Intercontinental transport 32,887,713 36,045,862

Other services 4,772,180 4,550,671

Total 103,964,027 111,827,562


Slovenia 59,937,712 62,184,990

Croatia 1,947,301 1,813,498

Bosnia and Herzegovina 1,143,057 1,036,550

Montenegro 324,675 350,955

Other countries 40,611,282 46,441,569

Total 103,964,027 111,827,562

The Group and Company do not monitor statement of financial position items by business line.

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4.2.5 NOTES TO THE FINANCIAL STATEMENTS

Note 1: Sales revenue


2020 2019 2020 2019

Revenues from sales to companies in the Group 0 0 4,105,793 3,764,156

Income from sales to others 150,725,168 160,352,650 99,858,234 108,063,406

Total 150,725,168 160,352,650 103,964,027 111,827,562

The sales revenue of the Group and Company in 2020 comprised revenues from services rendered.

The Group and Company provide logistics services through three business lines: land transport (groupage, domestic transport, road transport, railway freight and customs clearance services), logistic solutions (warehousing and distribution) and intercontinental transport (air freight, sea freight and car logistics services). The Group and Company also offer additional services, such as the leasing of business premises, parking services at customs terminals, trade fair logistics and insurance brokerage services.

The Group and Company disclose rental income in sales revenue. The Group generated EUR 4,563,510 in rental income in 2020 (EUR 5,721,441 in 2019), while the Company generated EUR 3,043,849 (EUR 4,109,947 in 2019). Sales revenue less rental income is equal to revenues from contracts with customers.

SALES REVENUE WITH RESPECT TO THE TIMING OF RECOGNITION

(in EUR)

2020 2019

Intereuropa Group Intereuropa, d. d. Intereuropa Group Intereuropa, d. d.

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Land transport 70,128,912 155,256 44,243,077 96,445 77,596,187 155,457 48,344,210 133,024

Logistics solutions 32,322,588 113,670 21,012,134 17,201 32,514,598 129,895 22,118,538 3,508

Intercontinental transport

41,399,925 210,124 34,557,865 205,103 43,415,240 172,900 37,534,385 163,525

Other services 6,394,179 514 3,832,202 0 6,357,001 11,372 3,519,300 11,072

Total 150,245,604 479,564 103,645,278 318,749 159,883,026 469,624 111,516,433 311,129


Note 2: Other operating income


2020 2019 2020 2019

Gains on the sale of property, plant and equipment 392,020 436,152 17,920 186,243

Income from the reversal of impairment losses on property, plant and equipment, and investment property

118,651 1,333,415 76 251,036

Income from the reversal of provisions 266,507 699,220 99,401 710

Government grants received 1,195,377 89,657 829,066 85,330

Other operating income 169,535 333,589 30,228 183,003

Total 2,142,090 2,892,033 976,691 706,322

Under the item ‘state aid’, the Group received EUR 1,059,143 in state aid to contain the negative effects of the COVID-19 pandemic in the form of the reimbursement of wage compensation paid to employees, exemption from the payment of contributions and the preservation of jobs. The entire value of subsidies received is not subject to the repayment terms defined by the country in which a specific company is located.

The Company received state aid in the amount of EUR 696,459 to bridge problems during the COVID-19 pandemic in the form of the reimbursement of wage compensation paid to employees and exemption from the payment of contributions. During the year, the Company received subsidies in the amount of EUR 138,180 that relate to the mitigation of the effects of the COVID 19 pandemic, which the Company must return to the state because it failed to meet the conditions for their recognition (the threshold of 90% of the sales revenue achieved in 2019 was exceeded). For this reason, the Company disclosed a liability to the state in the aforementioned amount.

Note 3: Costs of goods, materials and services


2020 2019 2020 2019

Costs of materials and cost of goods sold 3,712,970 4,344,536 1,738,474 1,910,983

Costs of services within the Group 0 0 2,025,228 2,090,776

Costs of services

direct costs 92,926,629 99,324,825 65,068,593 71,381,469

costs of hired labour and student work 3,468,300 3,720,131 3,038,970 3,084,279

maintenance of property, plant and equipment 1,674,845 1,685,326 941,368 943,519

maintenance of intangible assets 842,960 839,843 741,439 737,082

costs of short-term leases of property, plant and equipment 214,646 363,371 62,989 34,849

costs of leases of intangible assets 413,091 406,710 412,585 403,502

insurance premiums 925,442 927,014 592,924 601,958

costs of asset security 895,772 822,779 559,750 519,877

costs of intellectual services 552,681 633,092 213,905 223,670

costs associated with the Supervisory Board and its committees 168,501 184,495 160,674 182,836

other costs of services 2,991,707 3,104,023 1,190,509 1,277,897

Total 108,787,544 116,356,145 76,747,408 83,392,697

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Direct costs of both the Group and Company primarily comprise the costs of subcontractors (e.g. the costs of transport and port-related services) that are directly related to the provision of the services that an individual company sells. Other costs of services comprise the reimbursement of work-related costs to employees, the costs of intellectual services, the costs of rents, municipal services, education and training costs, security costs, the costs of hired workers, and the costs of payment transactions.

The costs of hired labour and student work include recognised expenses for employee participation in profits for 2020 in the amount of EUR 112,725 (including social security costs) and relate to the Company’s contractual obligation that will be settled one year after the approval of the annual report (Notes 4 in 28).

Note 4: Labour costs


2020 2019 2020 2019

Costs of wages and salaries 20,991,935 20,373,548 13,415,937 12,928,766

Social security costs 4,425,164 4,410,301 2,746,228 2,719,186

Other labour costs (excluding social security costs):

annual leave allowance 795,017 847,544 631,412 725,778

transportation and meal allowances 2,001,655 2,045,880 1,436,777 1,537,149

other labour costs 444,227 533,681 212,968 300,604

expenses for employee participation in profits 466,469 722,602 456,774 703,018

Total 29,124,467 28,933,556 18,900,096 18,914,501

Labour costs include expenses for employee participation in profits for 2020 in the amount of EUR 489,836 at the Group level and to EUR 479,676 at the Company, and relate to that portion of the contractual obligation of Slovenian Group companies that will be settled one year after the approval of the annual report for 2020.

NUMBER OF EMPLOYEES BY QUALIFICATION LEVEL

Categories of educational qualifications

Intereuropa Group

Beginning of 2020 End of 2020 Changes in 2020

Average number of employees

by educational qualification in

2020*



2019*

Qualification levels I to III 83 75 -8 79 82

Qualification levels IV to V 785 774 -11 780 771

Qualification levels VI to IX 488 488 0 488 489

Total 1,356 1,337 -19 1,347 1,342

Categories of educational qualifications

Intereuropa, d. d.

Beginning of 2020 End of 2020 Changes in 2020



2020*



2019*

Qualification levels I to III 52 47 -5 50 50

Qualification levels IV to V 289 274 -15 282 283

Qualification levels VI to IX 268 265 -3 267 271

Total 609 586 -23 599 604

* The average number of employees is calculated using the balance of employees at the beginning and end of the year.


Note 5: Amortisation and depreciation


2020 2019 2020 2019

Depreciation of property, plant and equipment, and investment property

4,659,678 5,436,952 2,943,508 3,446,634

Amortisation of intangible assets 462,929 548,259 430,772 512,365

Depreciation of right-of-use assets under leases 1,341,401 1,239,031 397,636 467,967

Total 6,464,008 7,224,242 3,771,916 4,426,966

The Group and Company re-assessed the useful life of buildings in 2020 and amended that estimate, such that the useful life of high structures was changed to 50 years, while the useful life of low structures was changed to 30 years. The effect of the change to the useful life of buildings was lower depreciation costs in 2020, for EUR 861,799 at the Group level and EUR 548,155 at the Company.

Note 6: Impairment losses on receivables (including the reversal of impairment losses)

Impairment losses on receivables (including the reversal of impairment losses) amounted to EUR 270,504 at the Group level in 2020 and to EUR 127,618 at the Company (income from the reversal of losses amounted to EUR 461,911 at the Group level and EUR 531,710 at the Company in 2019). The aforementioned effect is disclosed in the tables ‘Changes in impairment losses on current trade receivables’ and ‘Changes in impairment losses on other current operating receivables’.

Note 7: Other operating expenses


2020 2019 2020 2019

Building land use fees and similar expenses 1,321,380 1,410,576 871,116 875,870

Other levies 85,848 81,332 5,205 8,608

Impairment of property, plant and equipment and investment property

159,765 520,543 0 45,819

Write-downs and losses from the sale of property, plant and equipment, and investment property

28,749 36,850 13,363 6,328

Expenses from impairments and write-offs of inventories 65,945 1,363 3,052 0

Costs from the recognition of provisions 171,735 387,453 0 181,210

Other operating expenses 609,637 1,185,169 150,622 126,655

Total 2,443,059 3,623,286 1,043,358 1,244,490

Other operating expenses in the amount of EUR 609,637 primarily comprise membership fees, compensation for damages and other expenses.

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Note 8: Finance income and costs


2020 2019 2020 2019

Interest income from Group companies 0 0 71,854 56,611

Interest income from others 99,255 453,612 69,186 418,604

Income from dividends and other shares in profit from Group companies

0 0 25,990 901,422

Income from dividends and other shares in profit 116

Income from participating interest in associate 0 0 0 7,661

Income from the disposal of financial assets 0 1,820 0 0

Income from the reversal of impairment losses of investments in participating interests and shares, and loans

1,179 9,836 66,867 933,089

Net exchange rate differences 0 350,124 9,604 639

Total finance income 100,434 815,508 243,501 2,318,026

Interest expense -852,045 -1,857,195 -764,026 -1,758,758

Impairment losses on loans granted and deposits -5,259 -10,400 -497,011 -342,451

Finance costs from impairments and write-offs of financial assets -4,240 -30,000 -329,263 -151,450

Net exchange rate differences -441,250 9 688 0

Total finance costs -1,302,794 -1,897,586 -1,589,612 -2,252,659

Profit/loss from financing activities -1,202,360 -1,082,078 -1,346,111 65,367

Interest income and expenses were calculated using the effective interest method. Interest expenses were down by EUR 1 million at the Group level and at the Company primarily as the result of the refinancing of loans on 31 January 2020, when a considerably lower contractual interest rate was agreed.

At the Company, impairment losses on loans granted and deposits placed, and finance costs from impairments and write-offs of financial assets comprise the following:• the impairment of a long-term loan to TOV TEK ZTS, Uzhhorod, Ukraine in the amount of EUR 89,004;• the impairment of a long-term loan to TOV Intereuropa Kiev, Ukraine in the amount of EUR 236,565; and• the impairment of the investment in the equity of AD Intereuropa Belgrade, Serbia in the amount of EUR 437,011.

The Group disclosed negative exchange rate differences in the amount of EUR 441,250 as the result of the appreciation of the Ukrainian hryvnia (UAH) and Serbian dinar (RSD).

Note 9: Results recognised according to the equity method

In 2020, the Group recognised the results of the associate Rail Cargo Logistics, d. o. o., Ljubljana, in which it holds 26% participating interest, in the amount of EUR 785 while it recognised EUR 62 at the end of 2019).


Note 10: Corporate income tax (current and deferred tax)

ADJUSTMENTS TO THE EFFECTIVE TAX RATE


2020 2019 2020 2019

Current tax -643,377 -468,614 -365,908 -268,587

Deferred tax -523,616 -1,776,253 -485,607 -1,450,104

Tax -1,166,993 -2,244,867 -851,515 -1,718,691

Pre-tax profit 4,562,720 6,482,420 2,993,801 5,106,639

Tax calculated according to prescribed rate -613,805 -1,076,070 -568,823 -970,261

Tax from unrecognised expenses -804,933 -816,240 -434,506 -434,950

Tax from revenues deducted from taxable base 156,407 511,810 19,510 490,251

Tax from revenues added to taxable base -5,123 -103,074 -5,123 -10,218

Tax from expenses deducted from taxable base 8,586 19,887 0 0

Tax from tax allowances and the coverage of tax losses 623,034 742,060 623,034 722,446

Tax relating to deferred taxes -485,607 -1,418,737 -485,607 -1,450,104

Tax from equity items 0 -65,855 0 -65,855

Tax from other items -45,552 -38,648 0 0

Tax -1,166,993 -2,244,867 -851,515 -1,718,691

Effective tax rate 25.58% 34.63% 28.44% 33.66%

A tax rate of 19% was taken into account in the calculation of current corporate income tax for the Company in 2020. Group Companies apply the prescribed corporate income rates in their respective countries. Those rates range from 9% to 19%, inclusive..

Current income tax


2020 2019 2020 2019

Current income tax disclosed in the income statement 643,377 468,614 365,908 233,459

Current income tax disclosed in the statement of other comprehensive income

85,457 47,684 0 35,798

Total 728,834 516,298 365,908 269,257

Unused tax losses at the Company amounted to EUR 82,040,145 as at 31 December 2020 (EUR 84,333,280 at the end of the previous year). Deferred tax assets were recognised in the amount of EUR 4,564,890 for unused tax losses in the amount of EUR 24,025,737, while no deferred assets were recognised for the remaining amount of EUR 58,014,408 (they would have totalled EUR 11,022,738). Deferred tax assets comprise tax losses with no limit on their application in future tax periods (years).

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CHANGES IN DEFERRED TAX ASSETS AND LIABILITIES THAT WERE NOT NETTED IN 2020

Deferred tax assets

(in EUR)


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Property, plant and equipment

1,973,602 -22,446 0 -29,564 1,921,592 0 0 0 0

Revaluation of receivables owing to value restatements

6,243 -85 0 -6,067 91 0 0 0 0

Revaluation of financial assets

104,385 0 0 0 104,385 104,385 0 0 104,385

Provisions 249,539 -9,242 13,781 -1,072 253,006 173,680 -4,844 13,782 182,618

Tax loss 5,148,080 -379,262 -186,000 -3,536 4,579,282 5,134,586 -383,696 -186,000 4,564,890

Other 113,874 75,130 0 0 189,004 110,417 75,159 0 185,576

Total 7,595,723 -335,905 -172,219 -40,239 7,047,360 5,523,068 -313,381 -172,218 5,037,469

Deferred tax liabilities Bal

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Revaluation of land 10,820,454 -26,006 -99,621 -1,325 10,693,502 7,336,921 0 6 7,336,927

Total 10,820,454 -26,006 -99,621 -1,325 10,693,502 7,336,921 0 6 7,336,927


CHANGES IN DEFERRED TAX ASSETS AND LIABILITIES THAT WERE NOT NETTED IN 2019

Deferred tax assets

(in EUR)


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Property, plant and equipment

2,056,579 -78,473 5,244 -9,748 1,973,602 0 0 0 0

Revaluation of receivables owing to value restatements

6,243 0 0 0 6,243 0 0 0 0

Revaluation of financial assets

104,385 0 0 0 104,385 104,385 0 0 104,385

Provisions 230,050 -39,422 59,185 -274 249,539 106,148 8,347 59,185 173,680

Tax loss 7,145,286 -1,756,780 -240,426 0 5,148,080 6,997,438 -1,603,996 -258,856 5,134,586

Other 980 112,894 0 0 113,874 0 110,417 0 110,417

Total 9,543,523 -1,761,781 -175,997 -10,022 7,595,723 7,207,971 -1,485,232 -199,671 5,523,068

Deferred tax liabilities Bal

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Revaluation of land 11,116,169 14,212 -223,937 -85,990 10,820,454 7,571,719 0 -234,798 7,336,921

Total 11,116,169 14,212 -223,937 -85,990 10,820,454 7,571,719 0 -234,798 7,336,921

The management’s assessment of the reversal of deferred tax assets as the result of tax losses from previous years (in the amount of EUR 134,000) is based on data from the projection of Intereuropa’s operations in the period 2021 to 2025. The following assumptions were taken into account:• the utilisation of tax losses until 2025, taking into account valid tax rates;• amended legislation from 2020 on, which permits the utilisation of tax losses and other allowances in the maximum

amount of 63% of the tax base;• the planned sale of certain real estate; and• in addition to taxable profit from the income statement, also assumed was the utilisation of tax losses in the amount of

50% of the revaluation surplus for land, assuming that the tax base will facilitate utilisation in that amount (besides other allowances).

The management assumed the normal operations of the Company during the projection period. In the event of significant deviations from the Company’s planned operating results, the utilisation of tax losses will be reassessed and the amount of deferred tax assets for tax losses corrected accordingly.

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Note 11: Net earnings per share

The Group’s net profit amounted to EUR 3,567,953 in 2020 (EUR 4,196,653 the previous year). Of the aforementioned amount, EUR 3,647,267 pertains to the controlling owner (EUR 3,897,755 the previous year), while the negative amount of EUR -79,314 pertains to non-controlling owners (EUR 298,898 the previous year).The Company’s net profit amounted to EUR 2,314,512 in 2020 (EUR 3,387,948 the previous year).

BASIC EARNINGS PER SHARE


2020 2019 2020 2019

Net profit of ordinary shareholders 3,647,267 3,897,755 1,351,307 2,008,276

Average number of ordinary shares (excluding treasury shares) 16,812,703 16,812,703 16,812,703 16,812,703

Basic earnings per share 0.22 0.23 0.08 0.12

Basic earnings per share are calculated as net profit or loss pertaining to the parent company’s ordinary shareholders divided by the weighted average number of ordinary shares (excluding treasury shares).

DILUTED EARNINGS PER SHARE


2020 2019 2020 2019

Net profit 3,647,267 3,897,755 2,314,512 3,387,948

Average number of total shares* 27,470,668 27,470,668 27,470,668 27,470,668

Diluted earnings per share ((in EUR)) 0.13 0.14 0.08 0.12

* For the needs of calculating this indicator, the Company defined preference shares as potential ordinary shares that can be exchanged for ordinary shares. Because the principle of exchangeability has not been agreed with the holders of preference shares, the calculations in the table are of an informative nature and assume an exchange ratio of 1:1

Diluted earnings per ordinary share are equal to basic earnings per share because the parent company does not hold any dilutive potential ordinary shares..


Note 12: Property, plant and equipment

(in EUR)


31 December 2020

31 December 2019

31 December 2020

31 December 2019

Land and buildings

Land 70,910,232 70,842,976 41,444,763 41,444,722

Buildings 61,159,895 63,095,614 29,332,013 30,158,600

Plant and equipment 6,116,283 6,739,067 3,869,786 4,445,098

Right-of-use assets under leases 2,476,052 4,010,069 791,308 1,362,118

Investments in foreign fixed assets 31,277 30,069 5,380 6,089

Property, plant and equipment in acquisition 616,957 543,803 346,343 224,798

Total 141,310,696 145,261,598 75,789,593 77,641,425

The carrying amount of real estate pledged as collateral by the Group was EUR 40,649,191 as at the reporting date (EUR 95,066,839 at the end of the previous year). The Company had no other legal restrictions on the disposal of assets. The carrying amount of real estate pledged as collateral by the Company was EUR 20,690,549 as at 31 December 2020 (EUR 64,546,339 at the end of the previous year). There were no other legal restrictions on the Group or Company with respect to the disposal of assets.

The cost of the Group’s property, plant and equipment whose carrying amount was zero as at 31 December 2020 and are still in use was EUR 26,747,127 (EUR 33,454,843 at the end of 2019). The cost of the Company’s property, plant and equipment whose carrying amount was zero as at 31 December 2020 and are still in use was EUR 19,075,642 (EUR 25,835,567 at the end of 2019). -

The carrying amount of the Group’s land would be equal to EUR 14,158,274 as at 31 December 2020 if the cost model was used (EUR 13,518,841 at the end of 2019). The carrying amount of the Company’s land would be equal to EUR 9,060,656 at the end of 2020 if the cost model was used (EUR 9,060,656 at the end of 2019).

The Group had commitments to purchase property, plant and equipment in the amount of EUR 476,386 as at the reporting date (EUR 478,638 as at 31 December 2019), while the Company’s commitments totalled EUR 365,113 (EUR 310,778 at the end of 2019).

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CHANGES IN THE GROUP’S PROPERTY, PLANT AND EQUIPMENT

Intereuropa Group

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Balance as at 1 January 2020 76,704,284 143,100,802 35,900,432 1,221,831 27,671 3,084,863 1,454,339 57,462 623,023 262,174,707

Acquisitions 0 0 0 0 0 109,026 127,242 0 1,957,717 2,193,985

Activations 0 668,330 1,165,737 0 0 0 0 11,512 -1,845,579 0

Sales 0 0 -227,071 0 0 0 0 0 0 -227,071

Write-downs 0 -98,810 -828,661 0 0 0 -72,084 0 0 -999,555

Transfer to investment property

0 -54,646 0 0 0 0 0 0 -36,918 -91,564

Transfer from available-for-sale assets

2,644,044 0 0 0 0 0 0 0 0 2,644,044

Revaluation to fair value -79,164 0 0 0 0 0 0 0 0 -79,164

Transfer between items 0 0 -31,742 0 0 0 0 0 0 -31,742

Change in lease agreement

0 0 0 0 0 0 -78,845 0 0 -78,845

Correction of costs 0 0 0 0 -2,158 -291,257 -140,793 0 0 -434,208

Other 40 0 2,564 0 0 -22,867 0 0 0 -20,263

Exchange rate differences -628,612 -646,888 -242,287 -18,541 -2,088 -22,186 -9,061 0 -2,395 -1,572,058

Balance as at 31 December 2020 78,640,592 142,968,788 35,738,972 1,203,290 23,425 2,857,579 1,280,798 68,974 695,848 263,478,266

DEPRECIATION AND IMPAIRMENT

Balance as at 1 January 2020 -5,861,308 -80,005,188 -29,161,343 -737,203 -5,979 -615,381 -420,071 -27,392 -79,220 -116,913,085

Depreciation 0 -2,263,456 -1,683,920 -163,704 -5,201 -734,597 -437,900 -10,305 0 -5,299,083

Sales 0 0 202,644 0 0 0 0 0 0 202,644

Write-downs 0 82,613 822,851 0 0 0 51,162 0 0 956,626


0 3,245 0 0 0 0 0 0 0 3,245

Transfer from available-for-sale assets

-2,061,104 0 0 0 0 0 0 0 0 -2,061,104

Impairments -140,092 -11,355 0 0 0 0 0 0 0 -151,447

Reversal of impairments 60,828 37,526 0 0 0 0 0 0 0 98,354

Transfer between items 0 0 31,742 0 0 0 0 0 0 31,742

Change in lease agreement

0 0 0 0 0 0 75,840 0 0 75,840

Correction of costs 0 0 0 0 432 68,314 12,871 0 0 81,617

Other 0 0 -2,542 0 0 3,811 0 0 0 1,269

Exchange rate differences 271,316 347,722 167,879 11,480 792 3,796 2,498 0 329 805,812

Balance as at 31 December 2020 -7,730,360 -81,808,893 -29,622,689 -889,427 -9,956 -1,274,057 -715,600 -37,697 -78,891 -122,167,570

CARRYING AMOUNT

Balance as at 1 January 2020 70,842,976 63,095,614 6,739,089 484,628 21,692 2,469,482 1,034,268 30,070 543,803 145,261,622

Balance as at 31 December 2020 70,910,232 61,159,895 6,116,283 313,863 13,469 1,583,522 565,198 31,277 616,957 141,310,696


Intereuropa Group

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Reported as at 1 January 2019 85,688,202 166,907,826 34,781,621 1,250,499 0 0 0 2,389 389,264 289,019,801

Restatement 0 -90 0 0 27,154 2,138,598 1,076,648 0 0 3,242,310

Balance as at 1 January 2019 85,688,202 166,907,736 34,781,621 1,250,499 27,154 2,138,598 1,076,648 2,389 389,264 292,262,111

Acquisitions 0 0 0 0 0 947,265 429,302 0 2,622,326 3,998,893

Activations 0 506,812 1,861,333 0 0 0 0 21,964 -2,390,109 0

Sales -179,044 -28,952 -432,731 -24,562 0 0 0 0 0 -665,289

Write-downs 0 -10,870 -408,409 0 0 0 0 0 0 -419,279

Exclusion of subsidiary from consolidation

0 0 -6,364 0 0 0 0 0 0 -6,364

Exclusion due to termination of lease

0 0 0 0 0 -1,344 -50,185 0 0 -51,529


-5,794,188 -24,147,829 -5,754 0 0 0 0 0 0 -29,947,771

Transfer to available-for-sale assets

-2,902,520 -47,000 0 0 0 0 0 0 0 -2,949,520

Revaluation to fair value -532,744 0 0 0 0 0 0 0 0 -532,744

Transfer between items 0 -28,151 -4,957 0 0 0 0 33,108 0 0

Other 0 0 87 0 0 0 0 0 0 87

Exchange rate differences 424,579 -50,943 115,608 -4,108 517 344 -1,426 0 1,542 486,113

Balance as at 31 December 2019 76,704,285 143,100,803 35,900,434 1,221,829 27,671 3,084,863 1,454,339 57,461 623,023 262,174,708


Balance as at 1 January 2019 -8,900,035 -93,873,785 -28,259,932 -580,755 0 0 0 -371 0 -131,614,878

Depreciation 0 -3,228,606 -1,619,001 -183,040 -5,838 -616,698 -433,489 -3,886 0 -6,090,558

Sales 0 1,663 361,719 24,245 0 0 0 0 0 387,627

Write-downs 0 7,717 406,791 0 0 0 0 0 0 414,508

Exclusion of subsidiary from consolidation

0 0 5,715 0 0 0 0 0 0 5,715

Exclusion due to termination of lease

0 0 0 0 0 1,344 13,144 0 0 14,488


1,424,544 15,996,086 5,754 0 0 0 0 0 0 17,426,384

Transfer to available-for-sale assets

2,278,090 3,000 0 0 0 0 0 0 0 2,281,090

Impairments -420,456 -42,145 0 0 0 0 0 0 -78,964 -541,565

Reversal of impairments 49,000 1,074,344 0 0 0 0 0 0 0 1,123,344

Transfer between items 0 17,914 5,221 0 0 0 0 -23,135 0 0

Other 0 0 -124 0 0 0 0 0 0 -124

Exchange rate differences -292,452 38,623 -67,487 2,349 -141 -28 274 0 -256 -319,118

Balance as at 31 December 2019 -5,861,309 -80,005,189 -29,161,344 -737,201 -5,979 -615,382 -420,071 -27,392 -79,220 -116,913,087

CARRYING AMOUNT

Balance as at 1 January 2019 76,788,167 73,033,951 6,521,689 669,744 27,154 2,138,598 1,076,648 2,018 389,264 160,647,233

Balance as at 31 December 2019 70,842,976 63,095,614 6,739,090 484,628 21,692 2,469,481 1,034,268 30,069 543,803 145,261,621

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CHANGES IN THE GROUP’S PROPERTY, PLANT AND EQUIPMENT

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Balance as at 1 January 2020 41,549,767 78,080,475 24,407,020 6,642 1,049,275 759,681 7,091 224,798 146,084,749

Acquisitions 0 0 0 0 0 13,050 0 1,137,124 1,150,174

Activations 0 464,185 551,394 0 0 0 0 -1,015,579 0

Sales 0 0 -49,431 0 0 0 0 0 -49,431

Write-downs 0 -91,873 -601,537 0 0 -45,552 0 0 -738,962

Change in lease agreement 0 0 0 0 0 -78,845 0 0 -78,845

Correction of costs 0 0 0 0 -199,763 -16,636 0 0 -216,399

Other 40 0 2,562 0 0 0 0 0 2,602

Balance as at 31 December 2020 41,549,807 78,452,787 24,310,008 6,642 849,512 631,698 7,091 346,343 146,153,888


Balance as at 1 January 2020 -105,045 -47,921,876 -19,961,921 -1,107 -233,555 -218,818 -1,002 0 -68,443,324

Depreciation 0 -1,280,966 -1,123,618 -1,107 -177,918 -218,611 -709 0 -2,802,929

Sales 0 0 49,431 0 0 0 0 0 49,431

Write-downs 0 82,068 598,428 0 0 29,853 0 0 710,349

Change in lease agreement 0 0 0 0 0 75,840 0 0 75,840

Correction of costs 0 0 0 0 43,088 5,792 0 0 48,880

Other 0 0 -2,542 0 0 0 0 0 -2,542

Balance as at 31 December 2020 -105,045 -49,120,774 -20,440,222 -2,214 -368,385 -325,944 -1,711 0 -70,364,295

CARRYING AMOUNT

Balance as at 1 January 2020 41,444,722 30,158,599 4,445,099 5,535 815,720 540,863 6,089 224,798 77,641,425



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Reported as at 1 January 2019 44,853,873 94,057,088 23,945,914 0 0 0 2,389 15,382 162,874,646

Restatement 0 0 0 6,642 899,554 714,088 0 0 1,620,284


Acquisitions 0 0 0 0 151,065 95,778 0 1,347,342 1,594,185

Activations 0 167,773 965,538 0 0 0 4,702 -1,137,926 87

Sales 0 0 -154,245 0 0 0 0 0 -154,245

Write-downs 0 -10,870 -344,434 0 -1,344 -50,185 0 0 -406,833


-3,128,173 -16,133,515 -5,754 0 0 0 0 0 -19,267,442

Revaluation to fair value – increase

440,506 0 0 0 0 0 0 0 440,506

Revaluation to fair value – decrease

-616,440 0 0 0 0 0 0 0 -616,440

Balance as at 31 December 2019 41,549,766 78,080,476 24,407,019 6,642 1,049,275 759,681 7,091 224,798 146,084,748


Balance as at 1 January 2019 -121,407 -57,629,481 -19,371,020 0 0 0 -371 0 -77,122,279

Depreciation 0 -1,892,821 -1,095,137 -1,107 -234,899 -231,962 -631 0 -3,456,557

Sales 0 0 154,168 0 0 0 0 0 154,168

Write-downs 0 7,717 344,314 0 1,344 13,144 0 0 366,519


19,724 11,418,780 5,754 0 0 0 0 0 11,444,258

Impairments -3,361 -42,145 0 0 0 0 0 0 -45,506

Reversal of impairments 0 216,074 0 0 0 0 0 0 216,074

Balance as at 31 December 2019 -105,044 -47,921,876 -19,961,921 -1,107 -233,555 -218,818 -1,002 0 -68,443,323

CARRYING AMOUNT



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As part of the regular verification of the fair value of real estate, the Group appraised real estate in Montenegro and Ukraine during the 2020 financial year. That appraisal was carried out by a certified appraiser. The appraiser used the market approach to appraise the value of land and the income approach to appraise the value of buildings. A capitalisation rate ranging from 9.75% to 10.5% was applied in Montenegro and a rate of 13.5% was applied in Ukraine for the purpose of assessing the recoverable amount of buildings. A deduction for vacancy of 10% and a deduction of 1% for bad debt were applied in Montenegro. A deduction for vacancy of 12.5% and a deduction of 1.25% for bad debt were applied in Ukraine. The real estate valuation for 2019 was carried out with respect to cash-generating units by individual country (i.e. by individual location). The market approach and income approach were used to perform the valuation. The recoverable amount of cash-generating units was based on fair value less costs to sell. A capitalisation rate ranging from 7.7% to 10% was applied. A deduction for vacancy of 10% and a deduction of 1% for bad debt were applied in 2019.

When estimating the useful life of buildings, the Group and Company amended that estimate, such that the useful life of high structures was changed to 50 years, while the useful life of low structures was changed to 30 years. The effect of the change to the useful life of buildings was lower depreciation costs in 2020 in connection with buildings held in property, plant and equipment, by EUR 712,905 at the Group level and by EUR 417,374 at the Company.

LEASE COSTS


2020 2019 2020 2019

Amortisation and depreciation costs 1,341,401 1,239,031 397,636 467,967

Interest expenses on lease liabilities 111,694 112,778 27,346 43,106

Costs of short-term leases of real estate and equipment 214,646 363,371 62,989 34,849

Total 1,667,741 1,715,180 487,971 545,922

LEASE PAYMENTS AND LEASE LIABILITIES


2020 2019 2020 2019

Lease payments for short-term leases of real estate and equipment (disclosed in cash flows from operating activities)

210,277 320,000 68,267 25,449

Payment of lease liabilities comprising principal (disclosed in cash flows from financing activities)

1,420,804 1,222,000 451,581 460,452

Total 1,631,081 1,542,000 519,848 485,901


Note 13: Investment property


2020 2019 2020 2019

COST

Reported as at 1 January 52,203,730 22,626,478 37,330,944 18,415,620

Acquisitions 62,222 19,957 56,942 19,957

Transfer from property, plant and equipment 91,564 29,947,771 0 19,267,441

Transfer to available-for-sale assets -370,000 0 0 0

Sales -1,718,536 0 -101,016 0

Write-downs -260 -5,443 -260 -5,443

Revaluation to fair value – decrease 0 -366,631 0 -366,631

Exchange rate differences -115,236 -18,402 0 0

Balance as at 31 December 50,153,484 52,203,730 37,286,610 37,330,944


Reported as at 1 January -28,241,845 -10,452,114 -20,143,214 -8,277,861

Depreciation -701,997 -585,496 -538,215 -458,132

Transfer from property, plant and equipment -3,245 -17,426,384 0 -11,444,257

Transfer to available-for-sale assets 32,362 0 0 0

Sales 1,444,913 0 62,243 0

Write-downs 174 2,387 174 2,387

Impairments -8,316 -314 0 34,649

Reversal of impairments 49 210,071 0 0

Exchange rate differences 66,713 10,005 0 0

Balance as at 31 December -27,411,192 -28,241,845 -20,619,012 -20,143,214

CARRYING AMOUNT

Reported as at 1 January 23,961,885 12,174,364 17,187,730 10,137,759

Balance as at 31 December 22,742,292 23,961,885 16,667,598 17,187,730

The fair value of the Group’s investment property was EUR 22,747,604 at the end of 2020 (EUR 26,965,000 at the end of 2019), while the value of the Company’s investment property was EUR 16,667,598 (EUR 19,839,000 at the end of 2019).

The carrying amount of investment property pledged as collateral by the Group was EUR 3,272,986 as at the reporting date (EUR 17,554,371 at the end of the previous year). The carrying amount of investment property pledged as collateral by the Company was EUR 1,374,343 at the end of 2020 (EUR 13,352,796 at the end of 2019). That amount represents additional collateral for liabilities for which the underlying collateral comprises pledged items of property, plant and equipment

As part of the regular verification of the fair value of real estate, the Group appraised real estate in Montenegro during the 2020 financial year. That appraisal was carried out by a certified appraiser. The market approach was used to appraise the value of land, while the income approach was used to assess the recoverable amount of buildings. A capitalisation rate ranging from 9.75% to 10.5% was applied.

When estimating the useful life of buildings, the Group and Company amended that estimate, such that the useful life of high structures was changed to 50 years, while the useful life of low structures was changed to 30 years. The effect of the change to the useful life of buildings was lower depreciation costs in 2020 in connection with buildings held in investment property, by EUR 187,967 at the Group level and by EUR 130,776 at the Company.

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INCOME AND EXPENSES FROM INVESTMENT PROPERTY


2020 2019 2020 2019

Rental income from investment property 4,563,510 3,605,139 3,043,849 3,088,382

Direct operating expenses from investment property -1,832,145 -1,909,578 -1,645,063 -1,662,287

Total 2,731,365 1,695,561 1,398,786 1,426,095

Neither the Group or Company had binding contracts to purchase investment property at the end of 2020.

Note 14: Intangible assets

(in EUR)


31 December 2020

31 December 2019

31 December 2020

31 December 2019

Long-term property rights 343,907 463,970 212,912 299,355

Goodwill 41,721 41,721 0 0

Other intangible assets 2,594,894 2,316,988 2,593,246 2,313,896

Intangible assets under construction 1,960 540,550 1,960 540,550

Total 2,982,482 3,363,229 2,808,118 3,153,801

The majority of long-term property rights comprises rights associated with computer programmes.

Other intangible assets comprise software to support comprehensive logistics services. The results of an impairment test for other intangible assets performed by the Group and Company on the reporting date indicated the need for impairments.

The cost of the Group’s intangible assets whose carrying amount was zero as at 31 December 2020 and are still in use was EUR 4,383,037 (EUR 2,640,910 at the end of the previous year). The cost of the Company’s intangible assets whose carrying amount was zero as at 31 December 2020 and are still in use was EUR 3,968,255 (EUR 2,351,935 at the end of 2019).

The Group had commitments to purchase intangible assets in the amount of EUR 8,826 as at the reporting date (EUR 156,019 at the end of the previous year), while the Company’s commitments totalled EUR 8,826 (EUR 155,973 at the end of 2019).


CHANGES IN INTANGIBLE ASSETS IN 2020

(in EUR)


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Balance as at 1 January 2020

4,949,044 4,463,489 41,721 540,550 9,994,804 4,282,299 4,455,783 540,550 9,278,632

Acquisitions 0 0 0 85,089 85,089 0 0 85,089 85,089

Activations 23,038 600,641 0 -623,679 0 23,038 600,641 -623,679 0

Write-downs -21,596 0 0 0 -21,596 0 0 0 0

Transfer from property, plant and equipment

31,742 0 0 0 31,742 0 0 0 0

Transfer between items 6,031 -6,031 0 0 0 0 0 0 0

Exchange rate differences

-7,657 -27 0 0 -7,684 0 0 0 0

Balance as at 31 December 2020

4,980,602 5,058,072 41,721 1,960 10,082,355 4,305,337 5,056,424 1,960 9,363,721

AMORTISATION AND IMPAIRMENT


-4,485,075 -2,146,501 0 0 -6,631,576 -3,982,944 -2,141,887 0 -6,124,831

Amortisation -141,639 -321,291 0 0 -462,930 -109,481 -321,291 0 -430,772

Write-downs 21,595 0 0 0 21,595 0 0 0 0

Transfer from property, plant and equipment

-31,742 0 0 0 -31,742 0 0 0 0

Transfer between items -4,595 4,595 0 0 0 0 0 0 0


4,761 19 0 0 4,780 0 0 0 0


-4,636,695 -2,463,178 0 0 -7,099,873 -4,092,425 -2,463,178 0 -6,555,603

CARRYING AMOUNT


463,969 2,316,988 41,721 540,550 3,363,228 299,355 2,313,896 540,550 3,153,801


343,907 2,594,894 41,721 1,960 2,982,482 212,912 2,593,246 1,960 2,808,1180

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CHANGES IN INTANGIBLE ASSETS IN 2019

(in EUR)


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5,125,629 4,462,411 41,713 445,880 10,075,633 4,141,372 4,455,783 445,880 9,043,035

Acquisitions 0 0 0 246,311 246,311 0 0 235,597 235,597

Activations 150,595 1,046 0 -151,641 0 140,927 0 -140,927 0

Write-downs -330,000 0 0 0 -330,000 0 0 0 0


2,820 33 8 0 2,861 0 0 0 0


4,949,044 4,463,490 41,721 540,550 9,994,805 4,282,299 4,455,783 540,550 9,278,632

AMORTISATION AND IMPAIRMENT


-4,571,484 -1,841,765 0 0 -6,413,249 -3,773,974 -1,838,492 0 -5,612,466

Amortisation -243,537 -304,723 0 0 -548,260 -208,969 -303,396 0 -512,365

Write-downs 330,000 0 0 0 330,000 0 0 0 0


-53 -14 0 0 -67 0 0 0 0


-4,485,074 -2,146,502 0 0 -6,631,576 -3,982,943 -2,141,888 0 -6,124,831

CARRYING AMOUNT


554,145 2,620,646 41,713 445,880 3,662,384 367,398 2,617,291 445,880 3,430,569


463,970 2,316,988 41,721 540,550 3,363,229 299,356 2,313,895 540,550 3,153,801

Note 15: Other non-current assets

The other non-current assets of the Group and Company in the amount of EUR 27,602 (EUR 23,105 at the end of 2019) comprise non-current deferred costs and expenses.

Note 16: Non-current operating receivables

Non-current operating receivables amounted to EUR 239,799 at the Group level at the end of 2020 (EUR 303,320 at the end of 2019) and to EUR 233,652 at the Company (EUR 291,236 at the end of 2019). The majority of non-current operating receivables comprise receivables from customers in composition proceedings.


Note 17: Loans granted and deposits

(in EUR)


31 December 2020

31 December 2019

31 December 2020

31 December 2019

Long-term loans and deposits 39,898 52,544 0 0

Loans to others 629 1,559 0 0

Deposits 39,269 50,985 0 0

Short-term loans and deposits 2,598,166 1,010,109 2,198,062 2,325,951

Loans to subsidiaries 0 0 2,198,062 2,315,956

Loans to others 766 1,111 0 0

Deposits 2,597,400 1,008,998 0 9,995

Total 2,638,064 1,062,653 2,198,062 2,325,951

At the end of 2020, the Group disclosed short-term deposits pledged as collateral in the amount of EUR 300,000 (EUR 980,000 at the end of 2019).

Based on an assessment, the Company recognised the impairment of loans to TOV TEK ZTS, Uzhhorod in the amount of EUR 89,004, and the impairment of loans to TOV Intereuropa Ukraine, Kiev in the amount of EUR 236,565. The Company applied the following assumptions for the purpose of assessing the impairment of investments in subsidiaries:• the discounted cash flow model and net asset value approach;• a WACC of between 9.3% and 14.5%, taking into account a long-term inflation rate of 2%; and• valuation based on data from projections of future operations for the period 2021 to 2025.

CHANGES IN LOANS GRANTED AND DEPOSITS


2020 2019 2020 2019

Balance as at 1 January 1,062,653 1,145,398 9,995 29,985

New loan/deposit 2,600,048 76,165 0 0

Reversal of impairments 5 10 5 10

Repayment -1,017,770 -190,035 -10,000 -20,000

Transfer to current portion -641 -12,088 0 0

Impairments -1,649 0 0 0

Exchange rate differences -4,582 -111 0 0

Balance as at 31 December 2,638,064 1,062,653 0 9,995

Short-term loans granted to subsidiaries by the parent company are secured by bills of exchange in the amount of EUR 451,331. Remaining loans in the amount of EUR 1,746,731 were unsecured (at the end of 2019, loans in the amount of EUR 531,335 were secured by bills of exchange, loans in the amount of EUR 92,325 were secured by other forms of collateral and loans in the amount of EUR 1,692,296 were unsecured).

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Note 18: Other non-current financial assets

(in EUR)


31 December 2020

31 December 2019

31 December 2020

31 December 2019

Non-current investments in shares and participating interests in subsidiaries

0 0 44,451,958 44,823,281

Non-current investment in a participating interest in an associate 64,249 63,464 39,059 39,059

Other non-current financial assets 29,348 122,046 27,159 27,159

Total 93,597 185,510 44,518,176 44,889,499

Investments in subsidiaries

(in EUR)

Percentage of ownership

as at 31 December

2020/31 December

2019

Value of equity as at

31 December 2020


31 December 2019

Value of participating interest as at 31 December

2020

Value of participating interest as at 31 December

2019

Interagent, d. o. o., Koper 100.00% 230,065 217,034 430,015 430,015

Interzav d. o. o., Koper 71.28% 55,713 67,743 48,499 48,499

Intereuropa, logističke usluge, d. o. o., Zagreb 99.96% 42,741,986 41,783,883 22,104,055 22,104,055

Intereuropa sajam, d. o. o., Zagreb 51.00% 731,876 666,838 32,206 32,206

Intereuropa Skopje d. o. o., Skopje 99.56% 1,159,382 1,274,974 855,132 855,132

Intereuropa RTC d. d., Sarajevo 95.77% 11,728,225 12,241,081 7,438,270 7,438,270

A.D. Intereuropa logističke usluge, Belgrade 73.62% 5,904,042 6,776,483 3,220,657 3,657,668

TOV TEK ZTS, Uzhhorod 89.93% -146,233 3,325 0 0

Intereuropa Kosova L.L.C. 90.00% 722,990 654,645 137,238 137,238

Zetatrans A.D., Podgorica 69.27% 16,330,825 15,928,825 10,185,885 10,120,197

TOV Intereuropa – Kiev, Ukraine 100.00% -415,637 -304,495 0 0

The Company uses the discounted cash flow model and net asset value approach to assess the recoverable amount of investments in subsidiaries. The higher of the two values given by those methods is disclosed in the books of account. Valuation is based on data from projections of future operations for the period 2021 to 2025, and the use of a WACC of between 9.3% and 14.5%, taking into account a long-term inflation rate of 2%.

Because the appraised value of the investments in AD Intereuropa logističke usluge, Belgrade, Zetatrans A.D., Podgorica and TOV TEK ZTS, Uzhhorod according to the discounted cash flow model is lower than the carrying amount of those investments, their value was also appraised using the net asset value approach. In addition to the aforementioned companies, the value of TOV Intereuropa, Kiev, Ukraine (dormant company) was also appraised based on the net value of assets. Based on appraisals performed, the Company reversed the impairment of the investment in participating interests and shares of the subsidiary AD Zetatrans, Podgorica in the amount of EUR 65,688, and impaired the investment in participating interests and shares of AD Intereuropa logističke usluge, Belgrade in the amount of EUR 437,011.


CHANGES IN INVESTMENTS IN SUBSIDIARIES

(in EUR)Intereuropa, d. d.

2020 2019

Balance as at 1 January 44,823,281 44,257,048

Capital increase 60,000 62,450

Impairments -497,011 -342,450

Reversal of impairments 65,688 846,233

Balance as at 31 December 44,451,958 44,823,281

Investment in associateThis item comprises an investment in the associate Rail Cargo Logistics, Železniška špedicija, d. o. o., Ljubljana, in which Intereuropa holds a 26% participating interest. The carrying amount of the Group’s investment was EUR 64,249 as at 31 December 2020 (EUR 63,464 at the end of 2019). The carrying amount of the Company’s investment (EUR 39,059) was unchanged relative to the comparable period in 2019.

CHANGES IN INVESTMENT IN AN ASSOCIATE

(in EUR)Intereuropa Group

2020 2019

Balance as at 1 January 63,464 71,064

Profit according to the equity method 785 62

Distribution of profit 0 -7,662

Balance as at 31 December 64,249 63,464

ASSETS, LIABILITIES, REVENUES AND EXPENSES OF THE COMPANY

(in EUR) 31 December 2020 31 December 2019

ASSETS 1,780,132 1,947,043

Non-current assets 54,603 51,629

Current assets 1,725,529 1,895,414

LIABILITIES 1,780,132 1,947,043

Equity 165,259 162,240

Non-current liabilities 36,306 41,701

Current liabilities 1,578,567 1,743,102

(in EUR) 2020 2019

Revenues 12,364,901 13,133,567

Expenses (including corporate income tax) 12,364,923 13,133,330

Profit from ordinary operations 4,657 2,325

Other comprehensive income 0 0

Total comprehensive income 3,018 237

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Investments in the shares of other companies measured at fair value through profit or lossInvestments in financial assets measured at fair value through other comprehensive income amounted to EUR 29,348 as at 31 December 2020, a change of EUR 92,698 relative to the comparable reporting date (EUR 122,046 at the end of 2019). The Company’s investments in the aforementioned shares amounted to EUR 27,159 as at 31 December. That value was unchanged relative to the end of 2019.

The Group and Company had no such assets pledged as collateral or security for liabilities recognised in the statement of financial position or for contingent liabilities.

CHANGES IN FINANCIAL ASSETS MEASURED AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME


2020 2019 2020 2019

Balance as at 1 January 122,046 31,183 27,159 27,159

Sales -87,827 0 0 0

Transfer between items 0 82,472 0 0

Revaluation to fair value -436 8,391 0 0

Exchange rate differences -4,435 0 0 0

Balance as at 31 December 29,348 122,046 27,159 27,159

Note 19: Available-for-sale assets

Available-for-sale assets comprise real estate, the sale of which is planned in a short period of time. The balance of available-for-sale assets was 337,638 at the Group level at the end of 2020 (EUR 2,700,944 at the end of 2019), while the Company had no available-for-sale assets.

CHANGES IN AVAILABLE-FOR-SALE ASSETS


2020 2019

Balance as at 1 January 2,700,944 4,714,672

Transfer from property, plant and equipment 0 668,457

Transfer to property, plant and equipment -582,940 0

Transfer from investment property 337,638 0

Sales -2,017,577 -2,713,677

Reversal of impairments 20,172 0

Exchange rate differences -120,599 31,492

Balance as at 31 December 337,638 2,700,944


Note 20: Assets from contracts with customers

The Group’s assets from contracts with customers as at 31 December 2020 in the amount of EUR 510,601 (EUR 533,431 at the end of 2019) comprised receivables from incomplete services in the amount of EUR 479,564 and from uncharged customs and other duties that arise in customs clearance procedures that are charged to customers (as suspense items) in the amount of EUR 31,037.

The Company’s receivable from sales at the end of 2020 in the amount of EUR 341,298 (EUR 349,131 at the end of 2019) comprised receivables from incomplete services in the amount of EUR 302,178 and from uncharged customs and other duties that arise in customs clearance procedures that are charged to customers (as suspense items) in the amount of EUR 22,549.

Note 21: Current operating receivables

(in EUR)


31 December 2020

31 December 2019

31 December 2020

31 December 2019

Current operating receivables from Group companies 0 0 651,562 706,806

Current operating receivables from Group companies for interest

0 0 208,030 201,710

Current trade receivables 27,870,099 29,548,893 19,579,906 20,394,556

Other current operating receivables 2,472,198 1,849,291 1,733,757 1,106,794

Total 30,342,297 31,398,184 22,173,255 22,409,866

As at 31 December 2020, current operating receivables in the amount of EUR 5,416,440 at the Group level and EUR 391,512 at the Company were secured by enforcement drafts, guarantees and liens, the retention of title or another form of collateral (EUR 7,215,344 at the Group level and EUR 360,368 at the Company at the end of 2019).

As at the reporting date, the Group and Company had no receivables pledged as collateral (representing additional collateral for contingent liabilities for which the underlying collateral comprises pledged items of property, plant and equipment). Receivables in the amount of EUR 10,000,000 were pledged as collateral at the end of 2019.

Note 22: Other current assets

Other current assets amounted to EUR 320,583 at the Group level on the last day of 2020 (EUR 395,199 as at 31 December 2019) and to EUR 99,001 at the Company (EUR 189,326 at the end of 2019), and comprise current deferred costs.

Note 23: Cash and cash equivalents

Cand cash equivalents amounted to EUR 11,609,486 at the Group level as at 31 December 2020 (EUR 6,283,037 as at 31 December 2019), and to EUR 2,374,180 at the Company (EUR 2,756,729 as at 31 December 2019), and comprised cash held in bank accounts, call deposits and cash in hand. The reasons for increases and decreases in cash and cash equivalents during the financial year are presented in the statement of cash flows.

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Note 24: Equity

Share capitalThe Company’s share capital amounted to EUR 27,488,803 as at 31 December 2020, and is divided into 16,830,838 ordinary registered freely transferable no-par-value shares and 10,657,965 freely transferable no-par-value preference shares. Ordinary shares provide their holders the right to participate in the management of the Company (voting right), the right to a share in profits and the right to a corresponding portion of residual assets after the liquidation or bankruptcy of the Company. The number of shares was unchanged relative to the situation as at 31 December 2019.

Preference shares provide their holders the right to a share in profits and the right to a corresponding portion of residual assets after the liquidation or bankruptcy of the Company. Preference shares give their holders priority in the sharing of profits in the amount of EUR 0.01 (preferential amount) per share. The preferential amount is paid out in addition to the share in profits received by the shareholders, in accordance with the relevant resolution on the use of distributable profit.

Share premium accountThe share premium account comprises amounts from the simple reduction of Intereuropa’s share capital, and may be used under the conditions and for the purposes set out by law. The share premium account is not distributable. This item was unchanged in 2020.

Profit reservesThe profit reserves of the Group amounted to EUR 5,160,392 as at 31 December 2020 and were unchanged relative to the end of 2019. In addition to legal reserves in the amount of EUR 4,655,544, they also comprise reserves for treasury shares in the amount of EUR 180,394 and an equal amount of treasury shares as a deduction item, as well as reserves under the Articles of Association in the amount of EUR 504,848. The parent company holds 18,135 treasury shares. The original cost of treasury shares was EUR 180,394. The parent company holds no rights arising from treasury shares. Other Group companies do not hold its shares. The number of treasury shares was unchanged in 2020.

The Company’s profit reserves amounted to EUR 2,748,880 as at 31 December 2020. In addition to legal reserves in the amount of EUR 2,748,880, they also comprise reserves for treasury shares in the amount of EUR 180,394 and an equal amount of treasury shares as a deduction item. The Company holds 18,135 treasury shares. The original cost of treasury shares was EUR 180,394. The Company holds no rights arising from treasury shares. Other Group companies do not hold its shares. The number of treasury shares was unchanged in 2020. Profit reserves were unchanged in 2019.

Fair value reservesThe Group’s fair value reserves amounted to EUR 44,420,915 at the end of 2020 (EUR 45,023,339 at the end of 2019), and comprised the revaluation of land, including the revaluation of land prior to transfer to investment property in the amount of EUR 45,370,901 (the amount of revaluation is reduced for deferred taxes in the amount of EUR 9,853,500), and reserves for actuarial losses from the revaluation of provisions for termination benefits in the negative amount of EUR -901,260 (the amount of revaluation is reduced for deferred taxes in the amount of EUR 77,034), as well as the revaluation of financial assets measured at fair value through other comprehensive income in the negative amount of EUR -48,726. Changes during the financial year are disclosed in the statement of comprehensive income.

The Company’s fair value reserves amounted to EUR 30,544,627 at the end of 2020 (EUR 30,627,173 at the end of 2019), and comprised the revaluation of land, including the revaluation of land prior to transfer to investment property in the amount of EUR 31,278,480 (the amount of revaluation is reduced for deferred taxes in the amount of EUR 7,336,927), and reserves for actuarial losses from the revaluation of provisions for termination benefits in the negative amount of EUR -733,853 (the amount of revaluation is reduced for deferred taxes in the amount of EUR 77,034). Changes during the financial year are disclosed in the statement of comprehensive income.

Foreign currency translation differencesForeign currency translation losses at the Group level and for the controlling interest amounted to EUR -7,229,453 as at 31 December 2020 and were up by EUR 560,998 relative to 2019 owing to the effect of foreign exchange rate differences arising from the recalculation of equity items in the financial statements of subsidiaries abroad from local currencies into the reporting currency.

Retained earnings and net profit or loss for the current yearChanges in connection with the Group and Company during the financial year are disclosed in the statement of comprehensive income and in the statement of changes in equity.


Note 25: Non-controlling interests in equity

(in EUR)

Country in which company is registered

Non-controlling interestEquity pertaining to non-

controlling interestNet profit or loss pertaining to non-controlling interest

31 December 2020

31 December 2019

31 December 2020

31 December 2020

31 December 2019

31 December 2020

Interzav d. o. o., Koper Slovenia 28.72% 28.72% 16,001 19,456 7,017 10,472


Croatia 0.04% 0.04% 17,097 16,716 659 398

Intereuropa sajam, d. o. o., Zagreb

Croatia 49.00% 49.00% 358,619 326,750 36,893 42,309

Intereuropa Skopje, d. o. o., Skopje

North Macedonia

0.44% 0.44% 5,101 5,610 -310 -1,125

Intereuropa RTC, d. d., Sarajevo


4.23% 4.23% 496,103 517,798 -21,427 21,528

AD Intereuropa logističke usluge, Belgrade

Serbia 26.38% 26.38% 1,557,486 1,787,617 -226,151 -140,433

TOV TEK ZTS, Uzhhorod Ukraine 10.07% 10.07% -14,726 334 -7,593 11,239


Kosovo 10.00% 10.00% 72,299 65,464 6,835 10,362

Zetatrans A.D., Podgorica

Montenegro 30.73% 30.73% 5,018,601 4,895,310 152,477 344,131

Total 7,526,581 7,635,055 -51,600 298,881

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SUMMARY OF ACCOUNTING INFORMATION FOR NON-CONTROLLING INTERESTS

Non-controlling interest 28.72% 0.04% 49.00%

Company nameInterzav, d. o. o.,

KoperIntereuropa, logističke usluge, d. o. o., Zagreb

Intereuropa sajam, d. o. o., Zagreb

(in EUR) 2020 2019 2020 2019 2020 2019

Non-current assets 0 0 15,454 16,176 235,323 294,515

Current assets 24,604 25,158 4,340 3,452 190,382 89,097

Equity and non-current liabilities 17,798 19,456 17,919 17,786 389,109 358,806

Current liabilities 6,807 5,703 1,874 1,841 36,596 24,806

Operating revenues 52,013 54,819 10,045 10,264 337,377 325,790

Profit or loss from ordinary operations 8,804 12,966 751 0 41,640 51,732

Net profit or loss for the accounting period

7,017 10,472 659 398 36,893 42,309


Company nameIntereuropa Skopje, d. o. o.,

SkopjeIntereuropa RTC, d. d.,

SarajevoAD Intereuropa logističke

usluge, Belgrade

(in EUR) 2020 2019 2020 2019 2020 2019

Non-current assets 4,123 4,177 496,292 508,353 2,418,359 2,430,831

Current assets 3,768 3,764 89,867 99,633 321,867 279,309

Equity and non-current liabilities 5,004 5,451 522,295 487,928 2,028,593 2,009,381


Operating revenues 11,997 11,000 315,276 346,582 1,592,128 1,503,686

Profit or loss from ordinary operations -132 -1,097 -21,392 25,524 -224,569 -140,795


-310 -1,126 -21,427 21,528 -226,151 -140,415


Company name TOV TEK ZTS, UzhhorodIntereuropa Kosova L.L.C.,

PrishtinaZetatrans A.D., Podgorica

(in EUR) 2020 2019 2020 2019 2020 2019

Non-current assets 39,374 61,274 54,403 80,777 3,478,472 3,732,662

Current assets 35,279 56,465 122,816 124,144 2,237,182 1,866,948

Equity and non-current liabilities -13,284 4,767 91,714 117,433 5,340,269 4,547,428


Operating revenues 402,114 376,328 384,825 396,521 1,584,436 2,034,972

Profit or loss from ordinary operations -8,040 2,392 8,138 11,973 172,643 379,772


-7,593 11,239 6,835 10,362 152,465 344,103


Note 26: Provisions

(in EUR)


31 December 2020

31 December 2019

31 December 2020

31 December 2019

Provisions for termination benefits upon retirement and employee anniversary bonuses

2,483,386 2,259,900 1,922,290 1,788,980

Provisions for lawsuits 184,385 436,799 2,640 182,640

Other provisions 125,751 0 0 0

Total 2,793,522 2,696,699 1,924,930 1,971,620

CHANGES IN PROVISIONS IN 2020

Intereuropa Group

(in EUR)

Balance as at

1 January 2020

Drawn down (used) Reversed

Additional creation of provisions charged to

expenses


equity

Exchange rate

differences

Balance at 31 December

2020


2,259,900 -155,742 -6,007 163,317 229,580 -7,662 2,483,386

Provisions for lawsuits 436,799 -89,610 -199,613 38,308 0 -1,499 184,385

Other provisions 0 0 0 125,559 0 192 125,751

Total 2,696,699 -245,352 -205,620 327,184 229,580 -8,969 2,793,522

Intereuropa, d. d.

(in EUR)

Balance as at

1 January 2020


Additional creation of provisions

charged to expenses


charged to equity


2020


1,788,980 -117,569 0 105,814 145,065 1,922,290

Provisions for lawsuits 182,640 -80,599 -99,401 0 0 2,640

Total 1,971,620 -198,168 -99,401 105,814 145,065 1,924,930

CHANGES IN PROVISIONS IN 2019

Intereuropa Group

(in EUR)

Balance as at

1 January 2019



expenses


equity

Exchange rate

differences


2019


1,364,627 -145,099 -6,013 316,330 730,931 -876 2,259,900

Provisions for lawsuits 982,147 -239,688 -692,303 387,814 0 -1,171 436,799

Total 2,346,774 -384,787 -698,316 704,144 730,931 -2,047 2,696,699

Intereuropa, d. d.

(in EUR)

Balance as at

1 January 2019



charged to expenses


charged to equity


2019


1,054,697 -106,817 0 218,101 622,999 1,788,980

Provisions for lawsuits 12,707 -11,019 -322 181,274 0 182,640

Total 1,067,404 -117,836 -322 399,375 622,999 1,971,620

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The calculation of provisions for termination benefits upon retirement and employee anniversary bonuses within the Group for 2020 and 2019 is based on an actuarial calculation, in which the following assumptions were taken into account:• the method for calculating termination benefits in specific countries;• growth in average wages in specific countries;• age-based employee turnover, prerequisites for retirement in accordance with the minimum conditions for exercising

the right to an old-age pension;• the mortality rate based on published mortality tables in individual countries;• retirement in accordance with the legal bases of individual countries; and• the application of the following annual discount rates: 0.3475% in Slovenia (2019: 0.1%), 0.666% in Croatia (2019: 0.5%),

2.84% in Bosnia and Herzegovina (2019: 3%), 3% in Serbia (2019: 3.6%), 2.5% in North Macedonia (2019: 2.25%), and 2.55% in Montenegro (2019: 2.55%).

The calculation of provisions for termination benefits upon retirement and employee anniversary bonuses at the Company for 2020 and 2019 is based on an actuarial calculation, in which the following assumptions were taken into account:• wage growth in the Republic of Slovenia in the amount of 3.5% and wage growth of 3% at the Company (2019: wage

growth in the Republic of Slovenia in the amount of 5.5% for 2020 and 2021, and wage growth of 2% (amount of inflation) and real growth of 1% from 2020 on);

• an employer contribution rate of 16.1% (for payments exceeding the amounts defined by the Decree on the Tax Treatment of Reimbursement of Work-Related Expenses and Other Employment Earnings);

• growth in the amounts set out in the aforementioned decree of 0.25%.• employee turnover:

a. 6% in the age group of up to 40 years;b. 3.5% in the age group of 41 to 50 years;c. 0% in the age group of 51 years or more;

• mortality rate (2007 for Slovenia); selection factor for the active population of 75%;• disability rate; and• retirement in accordance with the model on the basis of the Pension and Disability Insurance Act;• annual discount rate of 0.3475% (2019: 0.1%).

CHANGES IN PROVISIONS FOR TERMINATION BENEFITS AND EMPLOYEE ANNIVERSARY BONUSES IN 2020

Intereuropa Group

(in EUR)

Balance as at 1 January

2020Interest

expense Payments

Increase during

current year

Actuarial gains or

losses

Exchange rate

differences

Total as at 31 December

2020

Employee anniversary bonuses 422,483 1,528 -42,160 25,970 -16,961 -32 390,828

Termination benefits upon retirement

1,837,417 5,807 -110,367 146,803 230,392 -17,494 2,092,558

Total 2,259,900 7,335 -152,527 172,773 213,431 -17,526 2,483,386

Intereuropa, d. d.

(in EUR)


2020Interest

expense Payments

Increase during

current year

Actuarial gains or

losses


2020

Employee anniversary bonuses 320,888 321 -34,458 19,948 -15,985 290,714

Termination benefits upon retirement 1,468,092 1,468 -83,111 100,062 145,065 1,631,576

Total 1,788,980 1,789 -117,569 120,010 129,080 1,922,290


CHANGES IN PROVISIONS FOR TERMINATION BENEFITS AND EMPLOYEE ANNIVERSARY BONUSES IN 2019

Intereuropa Group

(in EUR)


2019Interest

expense Payments

Increase during

current year

Actuarial gains or

losses

Exchange rate

differences


2019

Employee anniversary bonuses 297,985 5,015 -55,172 44,292 130,362 0 422,482

Termination benefits upon retirement

1,066,642 18,284 -91,310 101,789 742,889 -876 1,837,418

Total 1,364,627 23,299 -146,482 146,081 873,251 -876 2,259,900

Intereuropa, d. d.

(in EUR)


2019Interest

expense Payments

Increase during

current year

Actuarial gains or

losses


2019

Employee anniversary bonuses 223,489 2,783 -46,636 15,957 125,296 320,889

Termination benefits upon retirement 831,208 13,358 -60,181 60,707 622,999 1,468,091

Total 1,054,697 16,141 -106,817 76,664 748,295 1,788,980

SENSITIVITY ANALYSIS FOR 2020


Discount rate Turnover Discount rate Turnover

Change in % -0.5 +0.5 -1.0 +1.0 -0.5 +0.5 -1.0 +1.0

Effect on balance of provisions 2,602,964 -2,372,522 2,565,573 -2,264,919 2,012,089 -1,838,895 1,963,348 -1,758,635

SENSITIVITY ANALYSIS FOR 2019


Discount rate Turnover Discount rate Turnover

Change in % -0.5 +0.5 -0.5 +0.5 -0.5 +0.5 -0.5 +0.5

Effect on balance of provisions 53,213 -57,049 190,161 -178,476 16,007 -77,126 83,823 -78,735

Note 27: Financial liabilities

(in EUR)


31 December 2020

31 December 2019

31 December 2020

31 December 2019

Loans received from others 52,887,330 0 52,156,428 0

Lease liabilities 1,311,839 2,719,484 485,926 870,375

Total non-current financial liabilities 54,199,169 2,719,484 52,642,354 870,375

Loans from Group companies 0 0 3,100,000 4,100,000

Loans received from others 2,666,878 57,141,194 2,597,984 56,845,360

Lease liabilities 1,327,184 1,399,549 346,707 559,667

Liabilities for dividends and other shares in profit 425,086 437,514 0 0

Total current financial liabilities 4,419,148 58,978,257 6,044,691 61,505,027

The Company had an approved and undrawn revolving loan in the amount of EUR 4,000,000 as at 31 December 2020. The Group had an approved and undrawn overdraft limit on its bank accounts in the amount of EUR 330 thousand.

The Group and Company had no overdue unpaid liabilities under loan agreements as at the reporting date.

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On 31 January 2020, the Company successfully completed the refinancing of several loans arranged under the financial restructuring agreement concluded in 2012. The Company and a syndicate of banks, including Nova Ljubljanska banka, d. d. acting as the organiser and agent, concluded a long-term loan agreement in the amount of EUR 54,850,000. The new loan was concluded in two tranches, one with a maturity of seven years and the other with a maturity of four years. Pošta Slovenije, d. o. o. also contributed to the successful implementation of refinancing by issuing a loan guarantee in the amount of 80% of the loan.

An annex to the loan agreement entered into force on 27 May 2020. Under that annex, the Company and a syndicate of banks agreed on the deferral of payments in accordance with the Emergency Deferral of Borrowers’ Liabilities Act (hereinafter: the ZIUOPOK; Official Gazette of the Republic of Slovenia No. 36-683/2020) as preparation for the expected deterioration in the Company’s liquidity position due to the outbreak of the coronavirus crisis. A one-year deferral of the payment of principal and interest, from 1 April 2020 to 31 March 2021 was agreed.

CHANGES IN FINANCIAL LIABILITIES IN 2020

Intereuropa Group

(in EUR)

Long-term loans (excluding

leases)Long-term

leases

Short-term loans (excluding

leases)

Liabilities for dividends and other shares in

profitTotal financial

liabilities

Balance as at 1 January 2020 56,860,682 4,119,033 280,512 437,514 61,697,741

Cash flow -1,215,227 -1,420,804 -277,059 -12,428 -2,925,518

Amendments to agreements 0 -3,004 0 0 -3,004

Correction (costs) 0 -356,117 0 0 -356,117

New leases 0 236,268 0 0 236,268

Other -95,588 76,962 0 0 -18,626

Exchange rate differences 4,341 -13,315 -3,453 0 -12,427

Balance as at 31 December 2020 55,554,208 2,639,023 0 425,086 58,618,317

Intereuropa, d. d.

(in EUR)Long-term loans

(excluding leases) Long-term leasesShort-term loans

(excluding leases)Total financial

liabilities

Balance as at 1 January 2020 56,845,360 1,430,042 4,100,000 62,375,402

Cash flow -1,995,360 -451,581 -1,000,000 -3,446,941

Amendments to agreements 0 -18,704 0 -18,704

Correction (costs) 0 -167,520 0 -167,520

New leases 0 13,050 0 13,050

Other -95,588 27,346 0 -68,242

Balance as at 31 December 2020 54,754,412 832,633 3,100,000 58,687,045

Long-term loans and long-term leases in the table of changes in financial liabilities comprise long-term loans and leases, as well as the short-term portion of long-term loans and leases, which are disclosed in the statement of financial position in current financial liabilities.


CHANGES IN FINANCIAL LIABILITIES IN 2019

Intereuropa Group

(in EUR)

Long-term loans (excluding

leases)Long-term

leases

Short-term loans (excluding

leases)

Liabilities for dividends and other shares in

profitTotal financial

liabilities

Balance as at 1 January 2019 64,263,793 3,827,019 5,798,027 415,790 74,304,629

Cash flow -7,400,011 -1,222,005 -5,521,005 -231,141 -14,374,162

Increases 0 0 0 252,865 252,865

New leases 0 1,394,986 0 0 1,394,986

Other -3,100 119,033 0 0 115,933

Exchange rate differences 0 0 3,490 0 3,490

Balance as at 31 December 2019 56,860,682 4,119,033 280,512 437,514 61,697,741

Intereuropa, d. d.

(in EUR)Long-term loans

(excluding leases) Long-term leasesShort-term loans

(excluding leases)Total financial

liabilities

Balance as at 1 January 2019 64,187,099 1,620,284 7,590,000 73,397,383

Cash flow -7,338,639 -460,452 -3,490,000 -11,289,091

Reclassification to disposal groups 0 -37,042 0 -37,042

New leases 0 264,146 0 264,146

Other -3,100 43,106 0 40,006

Balance as at 31 December 2019 56,845,360 1,430,042 4,100,000 62,375,402

The Group repaid financial liabilities from loans in the amount of EUR 2,290,861 in 2020, while the Company repaid financial liabilities from loans in the amount of EUR 1,998,460.

LOANS WITH RESPECT TO COLLATERAL


31 December 2020 31 December 2019 31 December 2020 31 December 2019

Secured

Liens on real estate and securities 54,754,412 56,845,360 54,754,412 56,845,360

Bills of exchange 730,902 260,986 0 0

Unsecured 68,894 34,848 3,100,000 4,100,000

Total 55,554,208 57,141,194 57,854,412 60,945,360

LOANS TO OTHERS BY MATURITY


31 December 2020 31 December 2019 31 December 2020 31 December 2019

Maturity of 0 to 1 years 2,662,699 57,140,683 5,697,984 60,945,360

Maturity of 1 to 2 years 5,189,360 511 4,793,750 0




Maturity of more than 5 years 11,687,678 0 11,687,678 0

Total 55,554,208 57,141,194 57,854,412 60,945,360

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Note 28: Operating liabilities

(in EUR)


31 December 2020

31 December 2019

31 December 2020

31 December 2019

Non-current trade payables 115,809 139,339 115,809 139,339

Other non-current operating liabilities 819,355 887,162 762,666 870,305

Total non-current operating liabilities 935,164 1,026,501 878,475 1,009,644

Current operating liabilities to Group companies 0 0 374,048 373,722

Current trade payables (excluding the Group) 15,680,960 19,259,199 9,193,447 12,973,942

Other current operating liabilities 5,723,390 4,533,752 4,369,251 3,259,322

Total current operating liabilities 21,404,350 23,792,951 13,936,746 16,606,986

The Group’s contractual obligation for employee participation in profits, which will be settled one year after the approval of the annual report for 2020, amounted to EUR 602,561 and comprised expenses for employee participation in profits in the amount of EUR 489,839 (including social security costs) and expenses for the participation of hired labour in profits in the amount of EUR 112,722. The latter amount was recognised in the item ‘costs of hired labour and student work’. For the Company, that obligation amounted to EUR 592,398 and comprised expenses for employee participation in profits in the amount of EUR 479,676 (including social security costs) and expenses for the participation of hired labour in profits in the amount of EUR 112,722. The latter amount was recognised in the item ‘costs of hired labour and student work’ (Notes 3 and 4).

Of the Group’s total current operating liabilities as at 31 December 2020, EUR 2,358,710 related to liabilities for costs for which suppliers’ invoices were not yet received (EUR 2,262,849 at the end of the previous year), while the Company disclosed such liabilities in the amount of EUR 1,678,333 (EUR 1,657,452 at the end of 2019).

Other current operating liabilities comprised liabilities to employees for wages and wage compensation, liabilities for contributions and taxes, and other liabilities.

Only liabilities for customs duties amounting to EUR 100,099 on the final day of 2020 (EUR 2,862,442 on the final day of 2019) were secured by a bank guarantee. The Group and Company do not issue collateral instruments to secure payments to other suppliers.


Note 29: Contingent liabilities

(in EUR)


31 December 2020

31 December 2019

31 December 2020

31 December 2019

Contingent liabilities from bank guarantees and guarantees given to Group companies

0 0 799,796 155,857

Contingent liabilities from bank guarantees and guarantees given to others

17,710,888 17,299,390 10,199,763 9,555,000

Contingent liabilities from lawsuits 602,032 303,043 7,000 7,000

Other contingent liabilities 170,706 170,706 65,706 65,706

Total 18,483,626 17,773,139 11,072,265 9,783,563

The Group and Company disclose as contingent liabilities any liabilities that are not disclosed in the statement of financial position and for which they assess that an outflow of economic benefits will not be likely in the settlement of those liabilities.

The guarantees and warranties for Group companies that the Company discloses primarily comprise guarantees for raised loans and the customs guarantees of subsidiaries. Other guarantees and warranties mainly comprise contingent liabilities arising from guarantees for potential customs liabilities that might arise from transit procedures, the verification of origin, and various analyses and controls of goods.

With regard to contingent liabilities arising from lawsuits in the amount of EUR 602,032 at the Group level and EUR 7,000 at the Company, there is a less than 50% probability that the court will rule in favour of the plaintiff’s claim (which would result in the outflow of resources embodying economic benefits).

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Note 30: Fair value

FAIR VALUE OF FINANCIAL INSTRUMENTS

Intereuropa Group

(in EUR)

31 December 2020 31 December 2019

Carrying amount

Fair valueCarrying

amountFair value

Fair value of assets


2,189 2,189 2,625 2,625


27,159 27,159 119,421 119,421

Loans and deposits 2,638,064 2,638,064 1,062,653 1,062,653

Operating receivables (excluding receivables from the government and employees, and advances paid)

28,914,452 28,914,452 31,701,504 31,701,504

Cash and cash equivalents 11,609,486 11,609,486 6,283,037 6,283,037

Total 43,191,350 43,191,350 39,169,240 39,169,240

Fair value of liabilities

Loans and leases

at fixed interest rates 0 0 19,509 19,509

at variable interest rates 55,554,208 55,554,208 59,933,496 59,933,496

Lease liabilities 2,639,023 2,639,023 4,119,033 4,119,033

Liabilities for dividends and other shares in profit 425,086 425,086 437,514 437,514

Operating liabilities (excluding liabilities to the government and employees, and advances received)

16,476,693 16,476,693 24,819,452 24,819,452

Total 75,095,010 75,095,010 89,329,004 89,329,004

Intereuropa, d. d.

(in EUR)


Carrying amount

Fair valueCarrying

amountFair value



27,159 27,159 27,159 27,159



21,140,817 21,140,817 22,701,102 22,701,102


Total 25,740,218 25,740,218 27,810,941 27,810,941


Loans and leases

at fixed interest rates 3,100,000 3,100,000 4,100,000 4,100,000

at variable interest rates 54,754,412 54,754,412 56,845,360 56,845,360

Lease liabilities 832,633 832,633 1,430,042 1,430,042


10,260,769 10,260,769 17,616,630 17,616,630

Total 68,947,814 68,947,814 79,992,032 79,992,032

The Group and Company assume that the carrying amount of receivables and liabilities with a maturity of less than one year is a proper reflection of their fair value.


Fair value hierarchyThe table illustrates the classification of non-financial and financial instruments with respect to the calculation of their fair value. The Company classifies those instruments to the following three levels:• level 1 includes the unadjusted price quoted on an active market on the date of measurement;• level 2 includes inputs other than the quoted prices included in level 1 that can be directly or indirectly observed for

assets or liabilities; and• level 3 includes unobservable inputs for an asset or liability.

FAIR VALUE HIERARCHY FOR ASSETS MEASURED AT FAIR VALUE

Intereuropa Group

(in EUR)


Level 1 Level 3 Total Level 1 Level 3 Total



2.189 0 2,189 2,625 0 2,625


0 27,159 27,159 0 119,421 119,421

Loans and deposits 0 2,638,064 2,638,064 0 1,062,653 1,062,653


0 28,914,452 28,914,452 0 31,701,504 31,701,504

Cash and cash equivalents 0 11,609,486 11,609,486 0 6,283,037 6,283,037

Total 2.189 43,189,161 43,191,350 2,625 39,166,615 39,169,240


Loans 0 55,554,208 55,554,208 0 59,953,005 59,953,005

Lease liabilities 0 2,639,023 2,639,023 0 4,119,033 4,119,033

Liabilities for dividends and other shares in profit 0 425,086 425,086 0 437,514 437,514


0 16,476,693 16,476,693 0 24,819,452 24,819,452

Total 0 75,095,010 75,095,010 0 89,329,004 89,329,004

Intereuropa, d. d.

(in EUR)


Level 3 Total Level 3 Total



27,159 27,159 27,159 27,159



21,140,817 21,140,817 22,701,102 22,701,102


Total 25,740,218 25,740,218 27,810,941 27,810,941


Loans 57,854,412 57,854,412 60,945,360 60,945,360

Lease liabilities 832,633 832,633 1,430,042 1,430,042


10,260,769 10,260,769 17,616,630 17,616,630

Total 68,947,814 68,947,814 79,992,032 79,992,032

For other financial instruments for which value is disclosed, that value reflects level three.

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Note 31: Financial risks

The financial risks to which the Group and Company are exposed include:1. liquidity risk,2. currency risk,3. credit risk, and4. interest-rate risk

Liquidity riskThe Group and Company manage liquidity risk through the active management of cash, which includes:• the monitoring and planning of cash flows;• egular collection activities and daily contact with major customers; and• the option of using short-term credit lines via banks.In addition, subsidiaries may raise short-term borrowings within the Group.

The table regarding liquidity risk illustrates estimated undiscounted cash flows, including future interest.

Intereuropa Group 31 December 2020

(in EUR)Carrying

amount

Contrac-tual cash

flows

6 months

or less

6 to 12 months

1 to 2 years

2 to 5 years

More than 5 years

Loans from banks and others 55,554,208 58,104,234 1,524,058 2,086,851 5,702,250 36,885,840 11,905,235

Operating lease liabilities 2,240,529 2,474,370 859,086 424,232 417,593 552,466 0

Finance lease liabilities 398,494 406,027 289,397 116,630 0 0 0

Liabilities for dividends and other shares in profit

425,086 425,086 5,142 419,945 0 0 0

Current trade payables 15,727,034 15,901,362 15,646,379 24,647 23,735 69,363 22,712

of which trade payables for short-term leases

10,391 10,391 10,391 0 0 0 0

Other operating liabilities 749,659 749,659 745,240 12,445 4,419 0 0

Total 75,095,010 78,060,738 19,069,302 3,084,750 6,147,997 37,507,669 11,927,947

Intereuropa, d. d. 31 December 2020

(in EUR)Carrying

amount

Contrac-tual cash

flows

6 months

or less

6 to 12 months

1 to 2 years

2 to 5 years

More than 5 years

Loans from Group companies 3,100,000 4,120,997 1,811,836 1,305,401 0 0 0

Loans from banks and others 54,754,412 57,304,439 1,524,058 2,022,137 5,306,640 36,546,369 11,905,235

Operating lease liabilities 832,633 1,246,617 200,900 153,192 241,771 278,523 0

Operating liabilities to Group companies

374,048 406,707 374,048 0 0 0 0

Trade payables 9,309,256 9,309,256 9,168,800 24,647 23,735 69,363 22,712


8,310 8,216 8,310 0 0 0 0

Other operating liabilities 577,465 577,465 577,465 0 0 0 0

Total 68,947,814 72,965,481 13,657,107 3,505,377 5,572,146 36,894,255 11,927,947


Intereuropa Group 31 December 2019

(in EUR)Carrying

amount

Contrac-tual cash

flows

6 months

or less

6 to 12 months

1 to 2 years

2 to 5 years

More than 5 years

Loans from banks and others 57,141,194 57,280,185 57,003,095 271,960 5,130 0 0

Operating lease liabilities 3,622,072 4,264,073 2,013,168 473,650 656,573 1,120,681 0

Finance lease liabilities 496,961 518,505 55,691 55,691 407,124 0 0


437,514 437,514 14,416 0 0 0 0

Trade payables 19,398,538 20,118,427 19,856,327 68,761 23,735 46,856 68,749


28,221 28,221 28,221 0 0 0 0

Other operating liabilities 1,344,173 1,344,173 473,868 0 870,305 0 0

Total 82,440,452 83,962,877 79,416,565 870,062 1,962,867 1,167,537 68,749

Intereuropa, d. d. 31 December 2019

(in EUR)Carrying

amount

Contrac-tual cash

flows

6 months

or less

6 to 12 months

1 to 2 years

2 to 5 years

More than 5 years

Loans from Group companies 4,100,000 4,111,922 2,807,550 1,304,372 0 0 0

Loans from banks and others 56,845,360 56,972,105 5,697,211 0 0 0 0

Operating lease liabilities 1,430,042 1,503,272 297,408 237,167 361,056 607,641 0

Operating liabilities to Group companies

373,722 373,722 373,722 0 0 0 0

Trade payables 13,113,281 13,113,281 12,905,181 68,761 23,735 46,856 68,749


151,597 151,597 151,597 0 0 0 0

Other operating liabilities 1,287,784 1,287,784 417,479 0 870,305 0 0

Total 77,150,189 77,362,086 22,498,551 1,610,300 1,255,096 654,497 68,749

On 31 January 2020, the Company successfully completed the refinancing of several loans arranged under the financial restructuring agreement concluded in 2012. The Company and a syndicate of banks, including Nova Ljubljanska banka, d. d. acting as the organiser and agent, concluded a long-term loan agreement in the amount of EUR 54,850,000. The new loan was concluded in two tranches, one with a maturity of seven years and the other with a maturity of four years.

The Group and Company estimate a time span of between six months and five years for contingent liabilities from bank guarantees and guarantees issued in the total amount of EUR 17,710,888 and EUR 10,199,763, respectively.

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Currency risk

Intereuropa Group

(in EUR)

31 December 2020

EUR USD HRK RSD Other Total

Operating receivables 23,506,925 130,660 3,555,822 629,946 1,091,099 28,914,452

Long-term loans granted and deposits 0 0 39,279 0 619 39,898

Short-term loans granted and deposits 2,597,400 0 0 0 766 2,598,166

Long-term loans received -52,155,429 0 0 -731,901 0 -52,887,330

Short-term loans received -2,597,984 0 0 -68,894 0 -2,666,878


-419,944 0 0 0 -5,142 -425,086

Lease liabilities -2,126,980 0 0 -234,418 -277,625 -2,639,023

Operating liabilities -11,356,554 -368,940 -3,247,812 -563,076 -940,311 -16,476,693

Exposure disclosed in the statement of financial position

-42,552,566 -238,280 347,289 -968,343 -130,594 -43,542,494

Intereuropa, d. d.

(in EUR)

31 December 2020

EUR USD HRK Other Total

Operating receivables from Group companies 859,592 0 0 0 859,592

Operating receivables 20,227,023 56,302 -1,523 -577 20,281,225

Short-term loans to Group companies 2,198,062 0 0 0 2,198,062

Long-term loans received -52,156,428 0 0 0 -52,156,428

Short-term loans from Group companies -3,100,000 0 0 0 -3,100,000

Short-term loans received -2,597,984 0 0 0 -2,597,984

Lease liabilities -832,633 0 0 0 -832,633

Operating liabilities within the Group -374,057 0 0 9 -374,048

Other operating liabilities -9,595,834 -276,295 368 -14,960 -9,886,721


-45,372,259 -219,993 -1,155 -15,528 -45,608,935

Intereuropa Group

(in EUR)

31 December 2019

EUR USD HRK RSD Other Total

Operating receivables 23,611,512 348,431 3,854,729 706,432 1,931,402 30,452,506

Long-term loans granted and deposits 0 43,944 0 0 8,600 52,544

Short-term loans granted and deposits 1,008,998 0 0 0 1,111 1,010,109

Short-term loans received -56,865,375 0 0 -260,986 -14,833 -57,141,194


-423,175 0 0 0 -14,339 -437,514

Lease liabilities -3,611,461 0 0 -182,086 -325,486 -4,119,033

Operating liabilities -15,443,514 -361,382 -3,064,000 -696,000 -1,168,618 -20,733,514


-51,723,015 30,993 790,729 -432,640 417,837 -50,916,096


Intereuropa, d. d.

(in EUR)

31 December 2019

EUR USD Ostalo Skupaj

Operating receivables from Group companies 908,516 0 0 908,516

Operating receivables 21,679,677 107,086 5,823 21,792,586

Short-term loans to Group companies 2,315,956 0 0 2,315,956

Short-term loans granted and deposits 9,995 0 0 9,995

Short-term loans from Group companies -4,100,000 0 0 -4,100,000

Short-term loans received -56,845,360 0 0 -56,845,360

Lease liabilities -1,430,042 0 0 -1,430,042

Operating liabilities within the Group -373,722 0 0 -373,722

Operating liabilities -14,129,000 -225,732 -46,369 -14,401,101


-51,963,980 -118,646 -40,546 -52,123,172

EXCHANGE RATES IN THE GROUP

CountryFunctional currency

2020 2019

Year-end exchange rate in

EUR*

Average exchange rate in

EUR*

Year-end exchange rate in

EUR*

Average exchange rate in

EUR*

Montenegro and Kosovo EUR - - - -

Croatia HRK 7.552 7.538 7.437 7.418

North Macedonia MKD 61.559 61.674 61.419 61.585

Bosnia and Herzegovina BAM 1.956 1.956 1.956 1.956

Serbia RSD 117.530 117.710 117.380 117.700

Ukraine UAH 34.135 30.597 26.354 27.930

Albania ALL 124.380 124.120 122.410 121.970

* ECB reference exchange rates taken into account.

Credit risk

(in EUR)


31 December 2020

31 December 2019

31 December 2020

31 December 2019


2,189 2,625 27,159 27,159


27,159 119,421 2,198,062 2,325,951



28,914,452 31,701,504 2,374,180 2,756,729


Total 43,191,350 39,169,240 51,480,436 55,621,882

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EXPOSURE TO CREDIT RISK AND EXPECTED CREDIT LOSSES IN CONNECTION WITH CURRENT TRADE RECEIVABLES

(in EUR)


Gross value as at

31 December 2020

Average percentage of

impairment losses

recognised

Impairment losses as at

31 December 2020

Gross value as at 31

December 2020


impairment losses

recognised


31 December 2020

Not due 21,995,294 0.35% 76,570 17,066,618 0.28% 48,372

1 to 30 days past due 3,972,959 0.99% 39,410 2,312,371 1.16% 26,818

31 to 90 days past due 1,805,868 6.95% 117,209 897,781 2.84% 31,898

91 to 180 days past due 391,712 15.07% 59,030 83,540 10.41% 20,614

More than 180 days past due 3,984,817 100.00% 3,984,818 1,750,614 24.68% 1,750,614

Exchange rate differences 2,990 6,504 -1,140 0

Total 32,153,640 4,283,541 22,109,784 1,878,316

(in EUR)



December 2019


impairment losses

recognised


31 December 2019


December 2019


impairment losses

recognised


31 December 2019

Not due 20,952,672 0.27% 56,358 15,902,416 0.18% 24,901

1 to 30 days past due 5,847,827 0.56% 32,778 3,721,117 0.56% 20,891

31 to 90 days past due 2,273,332 2.46% 55,988 1,330,207 2.12% 28,264

91 to 180 days past due 700,083 15.42% 107,953 283,213 27.88% 78,948

More than 180 days past due 4,654,351 100.00% 4,654,351 2,189,034 100.00% 2,189,034

Exchange rate differences 13,000 -14,000 -1,407 0

Total 34,441,265 4,893,428 23,424,580 2,342,038

The majority of the receivables of the Group and Company are unsecured. Receivables from the largest single customer amounted to EUR 2,442,151 at the Group level as at 31 December and accounted for 8.8% of the Group’s trade receivables. Receivables from the largest single customer amounted to EUR 2,442,151 at the Company as at 31 December and accounted for 8.3% of the Company’s trade receivables.

The customers of the Group and Company are dispersed in such a way that there is no major exposure to a single customer.


CHANGES IN IMPAIRMENT LOSSES ON CURRENT TRADE RECEIVABLES


2020 2019 2020 2019

Adjustment in impairment losses on receivables as at 1 January

4,893,428 5,206,007 2,342,038 2,623,158

Exclusion of company from the consolidated financial statements

0 -35,000 0 0

Written-off receivables -856,634 -458,390 -591,252 -319,355


270,216 173,712 127,530 38,235

Exchange rate differences -23,469 7,099 0 0

Adjustment in impairment losses on receivables as at 31 December

4,283,541 4,893,428 1,878,316 2,342,038

EXPOSURE TO CREDIT RISK AND EXPECTED CREDIT LOSSES IN CONNECTION WITH OTHER CURRENT OPERATING RECEIVABLES

(in EUR)


Gross value as at 31 December 2020

Impairment losses as at 31 December

2020Gross value as at

31 December 2020


2020

Not due 1,371,101 0 990,834 0

Past due 322,663 189,371 180,547 180,547

Total 1,693,764 189,371 1,171,381 180,547

(in EUR)


Gross value as at 31 December 2019


2019Gross value as at

31 December 2019


2019

Not due 560,000 0 1,106,633 0

Past due 427,487 294,195 180,547 180,547

Total 987,487 294,195 1,287,180 180,547

CHANGES IN IMPAIRMENT LOSSES ON OTHER CURRENT OPERATING RECEIVABLES


2020 2019 2020 2019

Adjustment in impairment losses on receivables as at 1 January

294,195 1,351,795 180,547 1,172,379

Written-off receivables -2,339 -421,300 0 -421,396


227 -636,300 0 -570,436

Difference due to different data capture -102,451 0 0 0

Exchange rate differences -261 0 0 0

Adjustment in impairment losses on receivables as at 31 December

189,371 294,195 180,547 180,547

The Group and Company assess that credit risk is appropriately managed. The most significant risk in the aforementioned category is the risk of payment delays and default by customers, where the Company and Group have defined control limits and mechanisms for approving exposure to credit risk for major customers.

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INTEREST-RATE RISK

Type of variable interest rate (IR)

(in EUR)


Loan amount as at 31

December 2020

Increase in IR by 10

basis points


basis points


basis points


December 2020


basis points


basis points


basis points

3-month EURIBOR

54,850,000 0 0 0 54,850,000 0 0 -3,840

1-month BELIBOR

799,796 -800 -1,999 -3,999 0 0 0 0

Total 55,649,796 -800 -1,999 -3,999 54,850,000 0 0 -3,840

Type of variable interest rate (IR)

(in EUR)



December 2019


basis points


basis points


basis points


December 2019


basis points


basis points


basis points

3-month EURIBOR

57,360,000 -57,000 -143,000 -287,000 56,848,460 -56,848 -142,121 -284,242

1-month BELIBOR

261,000 0 -1,000 -1,000 0 0 0 0

Total 57,621,000 -57,000 -144,000 -288,000 56,848,460 -56,848 -142,121 -284,242

The Group and Company disclosed loans with fixed interest rates.

Capital management

(in EUR)


31 December 2020

31 December 2019

31 December 2020

31 December 2019

Non-current financial liabilities 54,199,169 2,719,484 52,642,354 870,375

Current financial liabilities 4,419,148 58,978,257 6,044,691 61,505,027

Total financial liabilities 58,618,317 61,697,741 58,687,045 62,375,402

Equity 124,974,366 122,357,891 89,224,850 87,227,628

Debt/equity 0.47 0.50 0.66 0.72

Current financial assets 2,598,166 1,010,109 2,198,062 2,325,951


Net financial liabilities 44,410,665 54,404,433 54,114,803 57,292,722

Net debt/equity 0.36 0.44 0.61 0.66

Total assets 220,457,193 223,350,952 172,272,410 176,748,325

Equity to total assets 0.57 0.55 0.52 0.49

The main purpose of capital management is to ensure capital adequacy, the highest possible level of financial stability and long-term solvency for the needs of financing operations, and the maximisation of value for shareholders.


Note 32: Other notes

COSTS OF SERVICES OF AUDITOR


2020 2019 2020 2019

Auditing of the annual report 95,786 102,635 30,280 45,214

Other audit services 4,800 40,311 4,800 10,384

Total costs of auditing services 100,586 142,946 35,080 55,598

Auditing services for 2020 were provided by the audit firm Ernst & Young, d. o. o., Ljubljana for all Group companies subject to auditing. In addition to auditing services, the Group’s auditor also provided other permitted non-audit services in 2020. Audit costs for the 2020 annual report were recognised taking into account the stage of completion of those services.

Related partiesThe direct controlling company of Intereuropa, d. d. is Pošta Slovenije, d. o. o., while the ultimate controlling party is the Republic of Slovenia.

Other related parties of Intereuropa, d. d., Koper include:• an associate or joint venture,• the parent company’s key management personnel and their immediate family members, and• members of the Supervisory Board and their family members.

Key management personnel at the parent company are the members of the Management Board.

INTEREUROPA GROUP COMPANIES

Composition of the Group

(in EUR)

Ownership stake as at

31 December 2020

Ownership stake as at

31 December 2019


31 December 2020


31 December 2019

Parent company

Intereuropa, d. d., Koper 89,224,850 87,227,628

Subsidiaries

Interagent, d. o. o., Koper 100.00% 100.00% 230,065 217,034

Interzav d. o. o., Koper 71.28% 71.28% 55,716 67,743

Intereuropa, logističke usluge, d. o. o., Zagreb 99.96% 99.96% 42,741,985 41,783,883

Intereuropa sajam, d. o. o., Zagreb 51.00% 51.00% 731,876 666,838

Intereuropa Skopje d. o. o., Skopje 99.56% 99.56% 1,159,382 1,274,974

Intereuropa RTC d. d., Sarajevo 95.77% 95.77% 11,728,225 12,241,081

A.D. Intereuropa logističke usluge, Belgrade 73.62% 73.62% 5,904,042 6,776,413

TOV TEK ZTS, Uzhhorod 89.93% 89.93% -146,233 3,325

Intereuropa Kosova L.L.C. 90.00% 90.00% 722,990 654,645

Zetatrans A.D., Podgorica 69.27% 69.27% 16,330,825 15,928,825

TOV Intereuropa – Kiev, Ukraine 100.00% 100.00% -415,637 -304,495

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DISCLOSURE OF TRANSACTIONS WITH RELATED PARTIES

Intereuropa Group

(in EUR)

Associate Other* Pošta Slovenije Group

2020 2019 2020 2019 2020 2019

Revenues from the sale of services 363,817 438,338 6,240 112,031 206,372 40,023

Costs of services 2,115,394 4,475,625 5,288 11,290 378,151 12,653

31 December

2020

31 December

2019

31 December

2020

31 December

2019

31 December

2020

31 December

2019

Balance of operating receivables 35,103 74,000 0 23,836 40,320 24,741

Balance of operating liabilities 495,419 467,000 0 439 59,870 12,961

Intereuropa, d. d.

(in EUR)

Subsidiaries Associate Other*Pošta Slovenije

Group

2020 2019 2020 2019 2020 2019 2020 2019

Revenues from the sale of services

4,105,793 3,811,479 363,817 438,338 0 104,791 197,338 40,023

Interest income 2,025,228 2,090,776 3,725,684 4,475,625 0 5,880 357,248 12,653

Income from participating interests

25,991 901,422 0 7,661 0 0 0 0

Costs of services 71,854 56,611 0 0 0 0 0 0

Interest expense 40,760 31,361 0 0 0 0 0 0

31

December 2020

31 December

2019

31 December

2020

31 December

2019

31 December

2020

31 December

2019

31 December

2020

31 December

2019

Non-current investments in shares and participating interests

44,451,959 44,823,281 39,059 39,059 0 0 0 0

Balance of operating receivables

859,592 908,516 35,103 74,516 0 23,836 36,016 24,741

Loans granted 2,198,063 2,315,956 0 0 0 0 0 0

Balance of operating liabilities 374,048 373,722 175,149 466,586 0 439 49,162 12,961

Loans received 3,100,000 4,100,000 0 0 0 0 0 0

* Companies that are controlled or jointly controlled by an individual, or a member of their immediate family, who is in a relationship with Intereuropa, d. d.

In the scope of the refinancing of Intereuropa, d. d.’s loans, Pošta Slovenije, d. o. o. issued a guarantee at the end of January 2020 in the amount of 80% of the refinancing loan. As at 31 December 2020, the aforementioned company was the guarantor for Intereuropa, d. d.’s loans in the amount of EUR 43,880,000. In October 2020, the Company issued blank bills of exchange to a commercial bank in Serbia as collateral for the long-term loans of the subsidiary A.D. Intereuropa logističke usluge, Belgrade. As at 31 December 2020, the liabilities of that subsidiary in connection with the loan amounted to RSD 94,000,000.

None of the above listed liabilities to related parties are secured nor has any guarantee been issued or received in connection with them. Liabilities to the associate are typically settled by remittances, assignment or mutual netting. Transactions with related parties were executed according to market terms.


Transactions with companies in which the state has a direct controlling interestParties related to owners include those companies in which the Republic of Slovenia and SDH together hold a direct participating interest of at least 20%. A list of the aforementioned companies is published on SDH’s website (https://www.sdh.si/sl-si/upravljanje-nalozb/seznam-nalozb).

Intereuropa GroupDuring 2020, the Group generated operating revenues in the amount of EUR 1,875,338 and operating expenses in the amount of EUR 6,879,669, and recorded finance income in the amount of EUR 6,148 and finance costs in the amount of EUR 141,541 with companies in which the state has a direct controlling interest.

As at 31 December 2020, the Group disclosed operating receivables in the amount of EUR 528,192, operating liabilities in the amount of EUR 870,858, financial liabilities in the amount of EUR 54,850,000 and contingent assets and liabilities in the amount of EUR 9,525,000 vis-à-vis the aforementioned companies. Financial liabilities comprise a loan raised under market terms.

Intereuropa, d. d.During 2020, the Company generated operating revenues in the amount of EUR 1,861,491 and operating expenses in the amount of EUR 6,851,978, and recorded finance income in the amount of EUR 2,375 and finance costs in the amount of EUR 140,029 with companies in which the state has a direct controlling interest.As at 31 December 2020, the Company disclosed operating receivables in the amount of EUR 527,418, operating liabilities in the amount of EUR 470,217, financial liabilities in the amount of EUR 54,850,000 and contingent assets and liabilities in the amount of EUR 9,525,000 vis-à-vis the aforementioned companies. Financial liabilities comprise a loan raised under market terms.

Remuneration of members of the Management Board and Supervisory Board and employees on individual contracts, and the compensation of key management personnel in 2020 The Company did not approve any advances, loans or sureties to members of the Management Board, Supervisory Board or employees on individual contracts.

REMUNERATION OF MEMBERS OF THE MANAGEMENT BOARD IN 2020

(in EUR)

Wages – fixed portion

Fringe benefits and other remuneration*

Total

Gross Net Gross Net Gross Net

MARKO CEGNAR, President of the Management Board 99,197 54,672 9,607 11,753 108,804 66,425

MARKO REMS, Member of the Management Board 89,451 50,662 7,053 9,676 96,504 60,338

MATIJA VOJSK, MSc, Member of the Management Board (remuneration from 1 January 2020 to 11 November 2020)

83,091 45,279 5,417 9,579 88,508 54,858

Total 271,739 150,613 22,077 31,008 293,816 181,621

* Gross fringe benefits and other remuneration comprise fringe benefits (fringe benefits for insurance, cars and liability insurance) and gross session fees, while net fringe benefits and other remuneration comprise net fringe benefits, supplementary healthcare insurance, meal allowances, annual leave allowances and net session fees. From this it is evident that net fringe benefits and other remuneration are higher than gross fringe benefits and other remuneration.

NET FRINGE BENEFITS AND OTHER REMUNERATION

(in EUR)Supplementary

pension insurance

Other fringe

benefits

Reimbursement of expenses

Share in profit

Other remuneration

Total

MARKO CEGNAR, President of the Management Board

2,819 3,462 1,395 0 4,077 11,753

MARKO REMS, Member of the Management Board

2,819 2,481 1,383 0 2,993 9,676

MATIJA VOJSK, MSc, Member of the Management Board (remuneration from 1 January 2020 to 11 November 2020)

2,592 152 1,230 0 5,606 9,580

Total 8,230 6,095 4,008 0 12,676 31,009

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REMUNERATION OF THE SUPERVISORY BOARD AND ITS COMMITTEES IN 2020

(in EUR)

Rem

un

erat

ion

for

fun

ctio

n p

erfo

rmed

Rem

un

erat

ion

for

wo

rk o

n co

mm

itte

es

Sess

ion

atte

nd

ance

fee

s

Rei

mb

urs

emen

t o

f ex

pen

ses

Oth

er

rem

un

erat

ion

an

d

frin

ge

ben

efit

s

Tota

l

Boris Novak, MSc, Chairman 13,976 2,329 4,226 28 26 20,585

Andrej Rihter, MSc, Deputy-Chairman 10,249 3,494 4,226 96 26 18,091

Vinko Filipič, Member 9,318 2,562 5,555 13 26 17,474

Milan Perović, Member 9,318 3,494 5,555 385 26 18,778

Tjaša Benčina, Member 10,267 2,544 4,721 240 26 17,798

Zlatka Čretnik, Member 10,175 2,544 6,270 1,189 26 20,204

Barbara Gorjup, External member of the Audit Committee (remuneration from 13 January 2020 to 31 December 2020)

0 5,787 2,266 0 0 8,053

Barbara Nose, External member of the Audit Committee (remuneration until 13 January 2020)

0 826 220 13 0 1,059

Total 63,303 23,580 33,039 1,964 156 122,042

REMUNERATION OF KEY MANAGEMENT PERSONNEL


2020 2019

Current remuneration (gross wages, annual leave and sick leave, shares in profit, non-monetary earnings (fringe benefits))

543,838 690,524

Termination benefits 0 8,500

Other earnings 13,485 25,352

Total 557,323 724,376

The remuneration of employees on individual contracts amounted to EUR 1,788,300. Gross wages accounted for EUR 1,559,755 of that amount, while fringe benefits and other earnings accounted for EUR 228,545.

Note 33: Distributable profit


2020 2019 2020 2019

Retained earnings 25,408,881 21,366,581 7,673,361 4,520,157

Net profit for the financial year 3,647,267 3,897,755 2,314,512 3,387,948

Total 29,056,148 25,264,336 9,987,873 7,908,105


Note 34: Events after the statement-of-financial position-date

Since March 2020, the outbreak of COVID-19 has had a significant impact on health-related, economic and other developments across the world. Intereuropa Group companies are carefully monitoring current events, and are doing everything necessary, in accordance with the measures adopted by the competent institutions and the recommendations of experts, to protect the health of employees and business partners, and to ensure business continuity.

The negative impact of COVID-19 on the operations of the Group and Company has been relatively small due to the continuous adaptation of activities to the circumstances in the countries where the Intereuropa Group provides services. The liquidity of the Group and Company improved last year in part due to the deferral of debt repayments and payments for employee participation in profits, which contributed to the mitigation of liquidity and credit risks.

The Management Board assesses that there is relatively low risk that the continuation of the epidemic and the possible renewed deterioration in conditions will affect the achievement of the business objectives of the Intereuropa Group and Company.

It therefore assesses that the assumption of the Company and Group as going concerns is not under threat.

An agreement was signed with Pošta Slovenije at the end of 2020 on the transfer of activities, under which a portion of Intereuropa’s support activities were transferred to Pošta Slovenije. Employees from those activities were also reassigned to Pošta Slovenije with the transfer of activities.

In accordance with the annex to the relevant loan agreement, the Company began repaying loan principal and interest and liabilities for employee participation in profits on 31 March 2021.

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This is a translation of the original report in Slovene language

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of Intereuropa d.d.

Opinion

We have audited the separate financial statements of Intereuropa d.d. (the Company) and the consolidatedfinancial statements of Intereuropa Group (the Group), which comprise the statement of financial position and theconsolidated statement of financial position as at 31 December 2020, the income statement and the consolidatedincome statement, the statement of other comprehensive income and the consolidated statement of othercomprehensive income, the statement of changes in equity and the consolidated statement of changes in equity,the statement of cash flows and the consolidated statement of cash flows for the year then ended, and a summaryof significant accounting policies and other explanatory information.

In our opinion, the accompanying separate financial statements and consolidated financial statements present fairly,in all material respects, the financial position of the Company and the Group as at 31 December 2020 and itsfinancial performance and its cash flows for the year then ended in accordance with International FinancialReporting Standards as adopted by the European Union.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISA) and Regulation (EU) No.537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regardingstatutory audit of public-interest entities (“Regulation (EU) No. 537/2014 of the European Parliament and theCouncil“). Our responsibilities under those rules are further described in the Auditor’s responsibilities for the auditof the separate and the consolidated financial statements section of our report. We are independent of the Companyand the Group in accordance with the International Ethics Standards Board of Accountants’ (IESBA) InternationalCode of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code)together with the ethical requirements that are relevant to our audit of the financial statements in Slovenia, and wehave fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit ofthe separate and the consolidated financial statements of the current period. These matters were addressed in thecontext of our audit of the separate and the consolidated financial statements as a whole and in forming our opinionthereon, and we do not provide a separate opinion on these matters. For each matter below, our description ofhow our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the separate and theconsolidated financial statements section of our report, including in relation to these matters. Accordingly, our auditincluded the performance of procedures designed to respond to our assessment of the risks of materialmisstatement of the separate and the consolidated financial statements. The results of our audit procedures,including the procedures performed to address the matters below, provide the basis for our audit opinion on theaccompanying separate and consolidated financial statements.


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Revenue recognition in the separate and the consolidated financial statements

As at 31 December 2020, in the separate financialstatements the net sales revenues amounted to EUR 104million, whereas the net sales revenues in theconsolidated financial statements amounted to EUR 150.7million, as disclosed in Note 1: Sales revenue. Therecognition of revenue in accordance with IFRS 15 iscomplex for the Company and the Group because of thevariety of contracts in place for transportation andlogistical services, client representation in front of customsauthority, warehousing services and other services.Agreements with customers and services sometimesinclude multiple element arrangements which increasesthe complexity in the revenue recognition process.

We focused on this area because of the various revenuestreams, nature of services and involved managementjudgement in assessment of how the performanceobligation fulfilment affect the timing of revenuerecognition. We identified revenue recognition as a riskmostly due to the possibility of improper timing of revenuerecognition; resulting in overstatement of revenue as aresult of premature recognition of revenue orunderstatement of revenue as a result of late recognitionof revenue.

These facts require more extensive audit procedures andis therefore considered as key audit matter.

Our audit procedures included considering theappropriateness of the Company’s and the Group’srevenue recognition accounting policies and assessingcompliance with the policies in terms of InternationalFinancial Reporting Standards as adopted by theEuropean Union.

We tested the design, implementation and operatingeffectiveness of internal controls over revenuerecognition in terms of error, fraud prevention andtiming of revenue.

On a sample of transactions, we testedappropriateness of determining the performanceobligations as well as allocation of the priceconsideration to individual performance obligation andtiming of control transfer for each revenue stream, inaccordance with IFRS 15.We involved information technology specialists toassist us in evaluating of the application controls in theprocess of revenue recognition.

We also tested a sample of sales transactions takingplace at either side of the statement of financialposition date as well as credit notes issued after thestatement of financial position date to assess whetherrevenue was recognised in the correct period andwhether accruals for discounts as at 31 December2020 are fully recognized.

For a sample of customers contracts open at thestatement of financial position date, we assessed themanagement estimate of the level of the contract thathas been fulfilled, based on the obtained supportingdocumentation from the third parties (i.e. invoices ofservice providers, customs documentation, flight listsetc). In relation to the sample of customers contracts openat the statement of financial position date, we reviewedthe appropriateness of the amount of the assets fromcontracts with customers and liabilities from contractswith customers, respectively.

We also assessed the adequacy of disclosures onrevenues included in Note 2.o. Revenues fromservices rendered and Note 3.n. Revenues fromservices rendered and Note 1: Sales revenue and Note20: Assets from contracts with customers of theseparate and the consolidated financial statements,and their compliance with International FinancialReporting Standards as adopted by the EuropeanUnion.

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Land, measured at fair value in the separate and the consolidated financial statements

The Company’s and the Group’s property plant andequipment includes land plots across the countries inwhich the Company and the Group operate, used tosupport their business operations, primarily in providing itswarehousing and storage services. The Company and theGroup measure land at fair value and as at 31 December2020 the carrying amount of land amounts to EUR 41.4million in the separate financial statements and EUR 70.9million in the consolidated financial statements.

The management’s assessment of fair value of land wassignificant to our audit because this process is complexand requires significant management judgement.

The management prepares estimates of the fair value withthe assistance of external appraisals, and references tothe observed recent transactions with similar assets. Themanagement prepares estimates of fair value every fiveyears, or more frequently if indications of impairment pointto a significant deviation in fair value.

In addition, the judgments and assumptions used aresubject to additional uncertainty caused by COVID 19pandemic.

The management process of identification of indications ofimpairment or change in fair value of the land is complexand requires significant judgement.We therefore determined this to be a key audit matter.

We evaluated management's assessment of fair valueof land.

We assessed the competency, experience andobjectivity of the external appraisals who assessed thechanges in fair value of land in 2020 compared to 2019,based on the their assessment of capitalisation ratesand analyses of market indicators in 2020.

We involved valuation experts to assist us in theevaluation of judgments and assumptions used in thisassessment, along with the effect of the uncertaintiescaused by the Covid 19 pandemic, such as, but notlimited to, assessing the selection of comparabletransactions, capitalisation rates, occupancy rates andaverage market rents in 2020.

We assessed the historical accuracy of management'sestimates based on the Company’s and the Group’srecent sales transactions and by reviewing whetherthese transactions resulted in significant profits orlosses.

We also evaluated the adequacy of disclosuresregarding the revaluation of land, which are included inNote 2.f. Property, plant and equipment and Note 3.e.Property, plant and equipment and Note 12: Property,plant and equipment of the separate and theconsolidated financial statements and their compliancewith International Financial Reporting Standards asadopted by the EU.


4/8

Impairment of property, plant and equipment and investment property in the separate and the consolidatedfinancial statements

The Company’s and the Group’s property, plant andequipment includes buildings and equipment in variouslocations across countries where the Company and theGroup perform their operations. The Company’s and theGroup’s investment property includes land and buildingsat various locations that are leased out and held for thepurpose of achieving a rental income or appreciation ofvalue. As at 31 December 2020, property, plant andequipment amounts to EUR 75.8 million (property, plantand equipment) and EUR 16.7 million (investmentproperty) in the separate financial statements; whereasproperty, plant and equipment amounts to EUR 141.3million (property, plant and equipment) and EUR 22.7million (investment property) in the consolidated financialstatements.

The Company and the Group annually assesses theexistence of impairment indicators for its property, plantand equipment as well as investment property andconducts the impairment tests when indicators areidentified.

Considering the last impairment tests for all significantcash generating units were performed in 2019, themanagement engaged the independent appraisal toreview whether the assumptions used in 2019 impairmenttests, like discount rates, average market rent andoccupancy rate, are still relevant.In addition, the judgments and assumptions used aresubject to additional uncertainty caused by COVID 19pandemic.

Management's assessment of the impairment indicatorsfor property, plant and equipment was significant to ouraudit because this process is complex and requiressignificant management judgement. We thereforedetermined this to be a key audit matter.

We evaluated management's assessment ofimpairment indications for property, plant andequipment and investment property.

We assessed the competency, experience andobjectivity of the external appraisals who assessed thechanges in fair value of land in 2020 compared to 2019,based on their assessment of capitalisation rates, andanalyses of market indicators in 2020.

We involved valuation experts to assist us in theevaluation of judgments and assumptions used in thisassessment, such as, but not limited discount rates,average market rent and occupancy rates.

We also evaluated the adequacy of the disclosuresregarding the impairments of these property, plant andequipment and investment property, which areincluded in Note 12: Property, plant and equipment,Note 13: Investment property and Note 7: Otheroperating expenses of the separate and theconsolidated financial statements and their compliancewith International Financial Reporting Standards asadopted by the EU.

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Recoverability of deferred tax assets in the separate and the consolidated financial statements

At 31 December 2020 deferred tax assets amount to EUR5.0 million in the separate financial statements and EUR 7.0million in the consolidated financial statements, as disclosedin Note 10: Corporate income tax (current and deferred tax)to the separate and the consolidated financial statements,majority of which relates to unused tax losses (EUR 4.6million in the separate financial statements and EUR 4.6million in the consolidated financial statements).

The risk exists that future taxable profits will not be sufficientto fully recover the deferred tax assets. Managementsupports the recoverability of the deferred tax assets mainlywith income projections that contain estimates of and taxstrategies for the future taxable income. However, judgmentsand assumptions used are subject to additional uncertaintycaused by COVID 19 pandemic.Changes in for example the business and its markets andchanges in tax regulations may affect these projections.

The valuation of deferred tax assets is significant to our auditbecause the assessment process is complex and is basedon estimates of future taxable income.

We performed audit procedures on the valuation andaccuracy of the amounts recognized as a deferred tax andthe evaluation of tax exposures.

In addition, in respect of deferred tax assets, we assessedand tested the Management's analysis and assumptionssupporting the probability that the deferred tax assetsrecognized in the statement of financial position will berecovered through taxable income in the future years andavailable tax planning strategies.

We assessed the adequacy of the disclosures on thedeferred tax assets included in Note 10: Corporateincome tax (current and deferred tax), Note 1 Basis ofpreparation of the separate and the consolidated financialstatements and their compliance with InternationalFinanal Reporting Standards as adopted by the EU.

Impairment of investment in subsidiaries in the separate financial statements

Equity investments in subsidiaries amount to EUR 44.5million as at 31 December 2020 which represents 25.8%of the total assets as at 31 December 2020 in the separatefinancial statements. Management’s impairment tests areprepared based on the discounted future cash flows or netasset model and are significant to our audit because theassessment process is complex and requires significantmanagement judgment and imposes significant estimates.

Given the inherent subjectivity in the valuation, wedetermined this to be a key audit matter.

Our audit procedures included an assessment of thehistorical accuracy of management’s estimates,evaluation and testing of the assumptions,methodologies, discount rates and other inputs usedby the Company.

We included in our team a valuation expert to assist usin our assessment of the discount rates and theappropriateness of the models used.We also considered sensitivities such as the impact onthe impairment tests if net operating income would bedecreased, or the discount rates would be increased.

We assessed the adequacy of the Company’sdisclosures on the impairment test performed, includedin Note 3.j.1. Impairment of investments insubsidiaries, Note 18: Other non current financialassets - Investments in subsidiaries and Note 8:Finance income and costs of the separate financialstatements in accordance with International FinancialReporting Standards as adopted by the EuropeanUnion.


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Other information

Other information comprises the information included in the Annual Report other than the separate and theconsolidated financial statements and auditor’s report thereon. Management is responsible for the other information.Our opinion on the separate and the consolidated financial statements does not cover the other information and wedo not express any form of assurance conclusion thereon.

In connection with our audit of the separate and the consolidated financial statements, our responsibility is to readthe other information and, in doing so, consider whether the other information is materially inconsistent with theseparate and the consolidated financial statements or our knowledge obtained in the audit or otherwise appears tobe materially misstated. In addition, we assess whether the other information has been prepared, in all materialrespects, in accordance with applicable law or regulation, in particular, whether the other information complies withlaw or regulation in terms of formal requirements and procedure for preparing the other information in the contextof materiality, i.e. whether any non-compliance with these requirements could influence judgments made on thebasis of the other information.

Based on the procedures performed, to the extent we are able to assess it, we report that: The other information describing the facts that are also presented in the separate and the consolidated

financial statements is, in all material respects, consistent with the separate and the consolidated financialstatements; and

The other information is prepared in compliance with applicable law or regulation.

In addition, our responsibility is to report, based on the knowledge and understanding of the Company and theGroup obtained in the audit, on whether the other information contains any material misstatement. Based on theprocedures we have performed on the other information obtained, we have not identified any material misstatement.

Responsibilities of management, audit committee and the supervisory board for the separate and theconsolidated financial statements

Management is responsible for the preparation and fair presentation of the separate and the consolidated financialstatements in accordance with International Financial Reporting Standards as adopted by the European Union, andfor such internal control as management determines is necessary to enable the preparation of the separate and theconsolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the separate and consolidated financial statements, management is responsible for assessing theCompany’s and the Group’s ability to continue as a going concern, disclosing, as applicable, matters related togoing concern and using the going concern basis of accounting unless management either intends to liquidate the

Company and the Group or to cease operations, or has no realistic alternative but to do so.

The audit committee and the supervisory board are responsible for overseeing the Company’s and the Group’sfinancial reporting process. The supervisory board is responsible to approve the audited annual report.

Auditor’s responsibilities for the audit of the separate and the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the separate and the consolidated financialstatements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that anaudit conducted in accordance with ISA will always detect a material misstatement when it exists. Misstatementscan arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonablybe expected to influence the economic decisions of users taken on the basis of these separate and consolidatedfinancial statements.

As part of an audit in accordance with audit rules, we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:

identify and assess the risks of material misstatement of the separate and the consolidated financial statements,whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,forgery, intentional omissions, misrepresentations, or the override of internal control;

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obtain an understanding of internal control relevant to the audit in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of theCompany’s and the Group’s internal control;

evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates andrelated disclosures made by management;

conclude on the appropriateness of management’s use of the going concern basis of accounting and, based onthe audit evidence obtained, whether a material uncertainty exists related to events or conditions that may castsignificant doubt on the Company’s and the Group’s ability to continue as a going concern. If we conclude thata material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosuresin the separate and the consolidated financial statements or, if such disclosures are inadequate, to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.However, future events or conditions may cause the Company and the Group to cease to continue as a goingconcern;

evaluate the overall presentation, structure and content of the separate and the consolidated financialstatements, including the disclosures, and whether the separate and the consolidated financial statementsrepresent the underlying transactions and events in a manner that achieves fair presentation;

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or businessactivities within the Group to express an opinion on the consolidated financial statements. We are responsiblefor the direction, supervision and performance of the group audit. We remain solely responsible for our auditopinion.

We communicate with the audit committee and the supervisory board regarding, among other matters, the plannedscope and timing of the audit and significant audit findings, including any significant deficiencies in internal controlthat we identify during our audit.

We also provide the audit committee and the supervisory board with a statement that we have complied withrelevant ethical requirements regarding independence, and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, actions taken toeliminate threats or safeguards applied.

From the matters communicated with the audit committee and the supervisory board, we determine those mattersthat were of most significance in the audit of the separate and the consolidated financial statements of the currentperiod and are therefore the key audit matters.

Other requirements on content of auditor’s report in compliance with Regulation (EU) No. 537/2014 of theEuropean Parliament and of the Council

Appointment and Approval of Auditor

We were appointed as auditors of the Company and the Group at the general meeting of shareholders on 27 June2019, the president of the supervisory board has signed the audit agreement on 10 October 2019. The agreementwas signed for the period of three years.Total uninterrupted engagement period, including previous renewals (extension of the period for which we wereoriginally appointed) and reappointments for the statutory auditor, has lasted for 2 years. Sanja Košir Nikašinovićand Lidija Šinkovec are certified auditors, responsible for the audit in the name of Ernst & Young d.o.o.

Consistence with Additional Report to Audit Committee

Our audit opinion on the separate and the consolidated financial statements expressed herein is consistentwith the additional report to the audit committee of the Company, which we issued on 28 April 2021.

Non-audit Services

No prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No. 537/2014 of the EuropeanParliament and of the Council were provided by us to the Company and its controlled undertakings and we remainindependent from the Company and its controlled undertakings in conducting the audit.


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In addition to statutory audit services and services disclosed in the annual report and in the separate and theconsolidated financial statements, no other services which were provided by us to the Company and its controlledundertakings.

Ljubljana, 28 April 2021

Sanja Košir Nikašinović Lidija ŠinkovecDirector, Certified auditor Certified auditorErnst & Young d.o.o.Dunajska 111, Ljubljana

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