PRIVATIZATION IN SLOVENIA: INVESTMENT OPPORTUNITIES

1. PRIVATIZATION IN SLOVENIA: INVESTMENT OPPORTUNITIES Matej Runjak, Member of the Management Board November 2013

3. Why Slovenia? • Current account surplus • Slovenia is an export-oriented economy (EU accounts for 69.1% of Slovenian exports) • The Slovenian banking sector is relatively small in size and with regard to its GDP. • Public debt-to-GDP was at 54.1% of GDP at the end of 2012. • Labour and pension reforms (adopted in 2012). • Introduction of the Golden Fiscal Rule into the Constitution in 2013.

4. Why Slovenia? • Good position of Slovenian companies and their brands in the Western Balkans region. Slovenian companies are among the largest investors in individual countries of the Western Balkans. • Quality and well educated employees, quality infrastructure • Investment incentives (fiscal, financial, other incentives). • Privatization process of 15 companies (7 of which are listed companies)

5. Privatization programme • To raise budgetary proceeds (reaching the highest budgetary revenue possible) • The achievement of macroeconomic objectives, sustainable and stable economic growth, improve the quality and performance of public services, and ensure a more successful and competitive economic system • To achieve further existence and development of the company, new investments, to open up new markets, and to maintain or increase employment in the domestic economy. Objectives • 15 companies for privatisation • According to the decision of the Parliament SOD intends to sell off State holdings in 15 companies • Transparent sales procedures and equal treatment of the tenderers • When an equity investment is held by several parties in direct or indirect ownership of the RS, a joint sale procedure can be carried out with the aim of achieving better sales results Privatization programme & Principles • A public (non-binding) offer • A public auction • A public call for tenders • Securities are offered to the public in accordance with the act governing the financial instruments market • Transaction support with financial Advisor assistance Privatization methods 5

6. Key sectors • chemicals • electrical equipment • industrials • food & beverage • health care • telecommunication • transportation • transportation infrastructure • banking

7. List ofcompanies

8. TELEKOM SLOVENIJE Sales structure: Leading provider of telecommunications services Operates in Macedonia (One) in Bosnia and Herzegovina (Aneks). Has a 50% stake in Gibtelecom Limited Strategy and Plans: Exceed ROE 10%, net income 100 m EUR up to 2016 Dominant position on the domestic market Signed Share Sale Agreement and Letters of Intent(75+% share of Telekom)

9. Solid annual cash flow as generated EBITDA is at around EUR 240m to 250m. Room for an increase in penetration Kosovo and Macedonia Healthy balance sheet with net debt to EBITDA at 1.6x.

10. AERODROM LJUBLJANA Sales structure: Aerodrom Ljubljana is the operator of the biggest Slovenian airport. In 2012 handled 1.2m passengers and 17 tonnes of cargo. Strategy and Plans: To increase the number of passengers to 1.5 mio up to 2017 The biggest airport operator in Slovenia. Potential to attract new passengers Untapped tourism potential Signed Share Sale Agreement and Letters of Intent (75,5 % of the shares)

11. The balance sheet is currently debt free, with significant cash & investment position.

12. CINKARNA CELJE Has a 140-year production history. After 1970 the company moved into the chemical processing sector, starting production of titanium dioxide pigment Strategy and Plans: manufacture more than 1% of world TiO2 production and more than 3% of European production International and therefore diversified sales structure Export markets represent more than 85% of all sales revenues Signed Share Sale Agreement (72,88% of the shares)

13. The balance sheet is healthy with a low financial debt to EBITDA ratio of 0.2.

14. LETRIKA Sales structure: Established in 1960 (as Iskra Avtoelektrika) as provider of electrical parts for automobile industry. High-quality, innovative and cutting-edge products Strategy and Plans: 324m of revenues with EBITDA margin of 9.1 % and ROE 16.4% in 2015 Production facilities in Slovenia, Bosnia & Herzegovina, Belorussia, Brazil and China Highly diversified revenues structure (geographical and product) Innovative and quality products Investing around 3.5% of its revenues in R&D (as group) Management plans to raise this ratio to above 5% by 2020.

15. Innovation is also orientated toward green technologies, which is the predominant trend for the future.

16. NKBM Structure of loan portfolio and liabilities: One of the leading Slovenian financial institutions. Provide comprehensive and broadly accessible banking and financial services (also in mutual funds and the stock brokerage business) Adria bank AG, PoštnabankaSlovenije and also the Serbian bank Credybanka – important parts of Nova KBM Second largest banking group in Slovenia (around 11% market share in terms of total banking sector’s assets) 11% market share in commercial loans and 15% market share in deposits Large branch network - 600 offices and outlets Strong market share on deposit market which is the main source of Group's income

17. Capital increase after finished AQR and stress test in December 2013 - €400,000,000 authorized capital

18. ŽITO Sales structure: Žito Group is engaged in the food industry Bakery, milling and pastries industry, production of pasta, frozen food, confectionery, rice, tea and spices Strategy and Plans: Revenues of 115.2m EUR with EBITDA of EUR 11.3m by 2015 One of the largest Slovenian food producers Leading local producer of flour, bread, pasta, sweets, rice, spices and tea Has 100.000m2 of its production premises in Ljubljana close to the biggest shopping centre BTC Signed Share Sale Agreement (50,70% of the shares)

19. Room for cost rationalization, as management plans to improve EBITDA margin from 6.8% to 10.0% by 2015.

20. ELAN Sales structure: 60 years’ experience in manufacturing and marketing of sport products under its own R&D and brand name Winter sports division (skis of all types, snowboards), Nautical division (sailboats ranging from 20 to 50 feet), Energy division (production of key components for wind turbines) and Sporting equipment division (equipment for sports games, protective nettings) Strategy and Plan: Rank among the Top 3 in Winter division 8.4% market share in skis (7th place) leading market position in East Europe and good market position in Germany, Canada and Japan One of the major manufacturers of yachts in Europe (key markets are Adriatic, Scandinavia and Turkey)

21. According to the survey of Yacht Magazine it is the 3rd most innovative brand and the 13th most recognized brand out of 31 manufacturers of yachts.

22. ADRIA AIRWAYS Sales structure: An airline registered in SLO, offering charter and scheduled flight services Connects Slovenia to numerous European cities More than fifty years of experience in air transportation of passengers and cargo Strategy and plan: Continue the pursue restructuring activities Well established carrier Key slots on the main European airports: Frankfurt, Zurich, Munich, Vienna, Brussels, Paris and Amsterdam Small but flexible fleet which includes one Airbus A320, two Airbus A319 aircraft, four Bombardier CRJ900 aircraft and four Bombardier CRJ200 aircraft

23. Results are indicating that restructuring program is successful and will lead to positive results in the near future.

24. ADRIA AIRWAYS TEHNIKA Sales structure: Maintenance, repair and overhaul (MRO) company with a 50-year history Base maintenance provider for Adria Airways, SAS, Wizzair, Air Méditerranée, Afriqiyah Airways, Spanair, Germanwings and many others Strategy and Planes: Positive trends expected, return to profitability Daily connections to major European operators in the range of 2 hours flight range Positioned as an European No. 1 third-party maintenance provider in CRJ100/200/700/900 which are produced by Canadian company Bombardier Since 2005 has been providing maintenance work for the very popular Airbus A320 family

25. The company is continuing with restructuring plan and is closely cooperating also with the trade union.

26. PALOMA Geographic sales structure: Competitive cost efficient provision of a wide range of quality hygienic paper products (toilet paper, kitchen rolls, napkins, tissues, universal towels, industrial towels, medical towels, folded toilet paper and maxi-roll toilet paper) Strategy and Plans: Financial and business restructuring should bring positive effects in 2013 Diversified sales structure in terms of product and geography High brand awareness in the regional markets (over 90%).

27. In 2012 financial and business restructuring activities started, which should bring positive effects in 2013.

28. TERME OLIMIA BAZENI product segmentation of revenues: Owns thermal water well and outdoor pool complex Aqualuna, which is operated by TermeOlimiad.d. Main products of the company are rents and pool cleaning services for TermeOlimiad.d. Strategy and Plans: The future of the company is strongly connected to TermeOlimiad.d. which has several outdoor and indoor thermal facilities aside from Aqualuna. It is planned that both Shareholdings will sold together. One of the better thermal facilities in Slovenia regarding profitability Aqualuna has 3000 m2 of facilities with emphasise on water attractions like 550m2 of Aquajungle 2 and several waterslides

29. Company operates without financial debt. On the other hand it has EUR 964 thousand of cash and short term investments & loans.

30. UNIOR Sales structure: Focus on 4 segments: forging parts (generally intended for the automotive industry), hand tools (5,500 different products, own trademark and original manufacture solutions), special machines (producing specific CNC machines for serial processing) and tourism (several health, thermal and ski resorts) 20 subsidiaries and 9 associated companies Cooperating with: Volkswagen, Audi, BMW, Renault, Dacia, Peugeot, ZF Lemförder & ZF Lenksysteme, Volvo, Bosch Siemens Group, Daimler, Jtekt, GKN, Arvin Meritor, General Motors and Cimos Wide range of products and expertise Generates: 57% of segment revenues by forging parts, 6% by sinter, 22% by hand tools, 11% by special machines and 4% by other products

31. It has signed an agreement with banks regarding financial restructuring. It will deleverage itself from EUR 142m to EUR 71m by 2019 by divesting non-core assets.

32. GOSPODARSKO RAZSTAVIŠČE Sales structure: An event centre that has 24 multifunctional halls with a total surface of 35,471 square meters Located in capital city of Slovenia, Ljubljana Several facilities with modern and functional architecture design. Located near the main railway and bus station in Ljubljana, the capital city of Slovenia. Best location for exhibits in Slovenia 20 multifunction halls with a total surface area of 13,139 square meters complemented with 8,844 of m2 of external exhibition space Function rooms are versatile and can be arranged to attend from 15 to 4,000 delegates.

33. Sales revenues stagnated at around EUR 5.0m, while EBITDA margins are in the last two years around 20% to 21%. Gospodarsko Razstavišče, d.o.o. is a limited company.

34. AERO Sales structure: A producer of self-adhesive products and materials (repositionable products, labels, ribbons), promotional products, paint, paper strips, glues, microcapsules, wet fingering moisteners and repositionable products Strategy and Plans: Cost and revenue optimization process could improve future results. Wide range of adhesive products under its own brand name Exports most of its products Most important markets: Poland, Czech Republic, Lithuania, Hungary, Romania, Netherlands, Germany, Italy and Spain.

35. Cost and revenue optimisation process could improve future results.

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