Summary Prospectus. for the admission of bonds issued by Petrol d.d., Ljubljana under identification code PET3 to trading on a regulated market

Transcription

1 Summary Prospectus for the admission of bonds issued by Petrol d.d., Ljubljana under identification code PET3 to trading on a regulated market Ljubljana, February 2013

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3 Summary prospectus for admission of bonds issued by Petrol d.d., Ljubljana under identification code PET3 to trading on a regulated market Section A Introduction and Warnings A.1 Warning This Summary Prospectus has been produced together with the Prospectus which contains detailed information giving insight into the Issuer's legal status, financial position, business prospects and the rights attaching to the bonds. The Summary Prospectus should be understood as an introduction to the Prospectus and read in conjunction with it. The Summary Prospectus covers only basic information and risks associated with the Issuer and the bonds to be admitted to trading on a regulated market; it does not contain all the information that may be relevant for potential investors. Any decision to buy the bonds should be based on consideration of the Prospectus as a whole by the investor. Where a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor shall, under the national legislation of the member states, bear the costs of translating the Prospectus before the legal proceedings are initiated. Civil liability attaches to those persons who have tabled the Summary, including the translation thereof, but only if the Summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities. A.2 Consent and notifications Not applicable. Section B Issuer of the Bonds B.1 Legal and commercial name of the Issuer Registered name: Abbreviated name: PETROL, Slovenska energetska družba, d.d., Ljubljana PETROL d.d., Ljubljana B.2 Registered office and legal form of the Issuer, legislation under which the Issuer operates and its country of incorporation Registered office: Ljubljana Address: Dunajska cesta 50, 1527 Ljubljana, Slovenia Telephone: Legal form: Public limited company Governing legislation: The Issuer operates under the legislation of Slovenia Country of registration: Republic of Slovenia B.4b Description of any known trends affecting the Issuer and the industries in which it operates In 2013 the Petrol Group's operations will be affected by changes in oil market prices, changes in the US dollar exchange rate and overall global economic conditions. The business environment in the countries where Petrol operates is also influenced by measures taken by governments to regulate prices and the energy market as well as by the overall economic situation (economic growth, price 2

4 growth rates, increase in consumption and production, etc.). Despite the difficult situation observed since 2008, the Petrol Group's business performance still continues to improve. B.5 Description of the Petrol Group and the Issuer's position within the Group The Petrol Group is the largest Slovene energy group, which is developing into a major regional provider of comprehensive energy and environmental products and services. The Group's core business consists of oil and merchandise sales. In this area, its leading position in the domestic market is being complemented by accelerated expansion to foreign markets. The widespread and strategically positioned network of service stations offering drivers more than merely a point of service is one of the main competitive advantages of the Petrol Group. Lately, the Group has been increasingly focusing on the development of its energy operations. In addition to the controlling company Petrol d.d., Ljubljana, the Petrol Group consisted of eight local and thirteen foreign subsidiaries, three jointly controlled entities and five associates as at 30 September The Group operates in nine markets, i.e. in Slovenia, SE European countries and Cyprus. Figure 1: Petrol Group companies and Petrol d.d., Ljubljana's ownership interests 3

5 Apart from the changes in the Group's composition after 30 September 2012 which are listed under the diagram, the disposal of the investment in the company Istrabenz d.d. at the end of December 2012 should be mentioned. The principal activity of the parent company Petrol d.d., Ljubljana is trading in petroleum products and selling supplementary merchandise and services, but it is also engaged in gas, electricity, other energy and environmental activities. B.9 Profit forecast or estimate The Petrol Group delivered good performance in the financial year According to the estimated results of the Petrol Group s operations, its sales revenue stood at EUR 3.7 billion and its net profit before impairment at EUR 53.3 million, a year-on-year increase of 2 percent. B.10 Description of any qualifications in the auditor's report on historical financial information The certified auditor's report on the historical financial information regarding the Petrol Group and the company Petrol was unqualified. B.12 Selected key historical financial information about the Issuer Table 1: Business highlights of 2011 THE PETROL GROUP Net sales revenue EUR million 3, , Gross profit EUR million Operating profit EUR million Net profit EUR million Equity EUR million Total assets EUR million 1, , EBITDA 1 EUR million EBITDA / Average fixed assets % EBITDA / Gross profit % Operating costs / Gross profit % Added value / Employee EUR thousand Net debt / Equity Earnings per share 3 EUR Share price as at period end EUR Volume of petroleum products sold million tons Volume of LPG sold thousand tons Volume of natural gas sold thousand m 3 114, , Electricity sold MWh 1,081, , Heat sold MWh 71,909 65, Revenue from the sale of merchandise EUR million Investments in fixed assets EUR million Number of service stations as at period end Number of gas concessions as at period end Number of employees (including at third-party managed service stations) as at period end 3,897 3, EBITDA = Operating profit + Depreciation and amortisation net of depreciation of environmental fixed assets 2 Net debt / Equity = (Non-current and current financial liabilities - Cash and cash equivalents) / Equity 3 Earnings per share = Net profit for the year attributable to owners of the controlling company / Weighted average number of ordinary shares issued, excluding own shares UM RESULTS Index 2011 /

6 Table 2: Business highlights of the first nine months of 2012 The Petrol Group Unit I-IX 2012 I-IX 2011 Index 2012 / 2011 Sales revenues EUR million 2, , Gross profit or loss EUR million Operating profit or loss EUR million Net profit or loss EUR million EBITDA EUR million Non-current (long-term) assets as per day EUR million Earnings per share EUR Net debt / equity The Petrol Group Volume of petroleum products sold thousand tons 1, , Volume of liquefied petroleum gas sold thousand tons Volume of natural gas sold thousand m 3 77,172 72, Electricity sold TWh Heat sold 000 MWh Revenue from the sale of merchandise EUR million Investments in fixed assets EUR million Number of service stations on the last day of the period Unit I-IX 2012 I-IX 2011 Index 2012 / Number of service stations for the year 2011 as at The original independent auditor's reports on the Issuer's financial statements (consolidated and unconsolidated) for the years 2011 and 2010 are published in the annual reports of the Petrol Group and Petrol d.d., Ljubljana for the respective years, which are available from the website of Petrol d.d., Ljubljana ( and via the information system SEOnet. At the time of drawing up the Prospectus, the financial statements of the Petrol Group and Petrol d.d., Ljubljana for the year 2012 have not yet been available. The Issuer's business prospects have not declined considerably since the previous audited financial statements were published, as shown in the analysis of the Petrol Group's performance in the first nine months of 2012 that follows. In the first nine months of 2012, the Petrol Group generated EUR 2.78 billion in net sales revenue, a year-on-year increase of 18 percent. Gross profit from sales stood at EUR million, up 7 percent relative to the same period of the previous year. Compared with the year 2011, the following influenced the amount of gross profit in the first nine months of 2012: the increase of 9 percent in the volume of petroleum products sold, the increase of 9 percent in revenue from the sale of merchandise, the increase of 19 percent in the volume of liquefied petroleum gas sold, the increase of 6 percent in the volume of natural gas sold, the increase of 134 percent in the volume of electricity sold. Operating costs of the Petrol Group in the first nine months of 2012 amounted to EUR million, up 9 percent on the same period of 2011, with the costs of services amounting to EUR 84 million, an increase of 1 percent from the previous year. Compared to the previous year, the depreciation and amortisation charge rose 12 percent, while labour costs increased 17 percent year-on-year. 5

7 Operating profit for the first nine months of 2012 amounted to EUR 69.5 million, up 15 percent from the same period of the previous year. The profitability of operations for this period stood at 1.35, meaning the added value of 35 percent was created with respect to operating costs. The respective figure for the same period of 2011 was EBITDA totalled EUR 97.7 million, which was 7 percent more year-on-year. The Petrol Group's net cash flow in the first nine months of 2012 amounted to EUR million. Its net cash flow for the same period of 2011 stood at EUR million. The Group's pre-tax profit totalled EUR 55.1 million, up 29 percent relative to the same period of the previous year. BREAKDOWN OF ASSETS AND LIABILITIES Figure 2: Balance sheet structure as at 30 September % 80% 60% Non-current assets Equity Non-current liabilities 40% 20% Current assets Current liabilities 0% Assets Equity and liabilities The Petrol Group's total assets stood at EUR 1.59 billion on 30 September The most important non-current assets consist of property, plant and equipment and intangible assets, totalling EUR 789 million, and long-term investments in jointly controlled entities and associates, which amount to EUR 145 million. Current assets accounted for 37 percent of the Petrol Group's assets as at 30 September According to the balance of current assets as at 30 September 2012 and compared to their balance as at 31 December 2011, inventories increased the most, by approximately EUR 86 million, while operating receivables decreased by over EUR 8 million. The Petrol Group's net working capital stood at EUR 69 million as at 30 September 2012, which was EUR 23 million more than on 31 December The financial liabilities to equity ratio stood at 1.50 as at 30 September 2012, while on 31 December 2011 it had stood at B.13 Recent material events relevant to the evaluation of the Issuer's solvency The Issuer believes there are no particular events which are to a material extent relevant to the evaluation of its solvency. 6

8 B.14 The Issuer's dependence on other entities within the Group The Issuer is the largest autonomous entity of the Petrol Group and is either directly or indirectly the largest shareholder of most Petrol Group companies. The Issuer is also not directly and/or indirectly dependent to a material extent on other entities within the Petrol Group. B.15 Description of the Issuer s principal activities The Petrol Group deals in and combines four areas of business: oil and merchandise sales, gas and heat operations, electricity operations and environmental and energy solutions. The Petrol Group's core business still consists of oil and merchandise sales. In this area, its leading position in the domestic market is being complemented by accelerated expansion to foreign markets. The widespread and strategically positioned network of service stations offering drivers more than merely a point of service is one of the main competitive advantages of the Petrol Group. Energy advantages, economic use and mitigation of adverse impacts on the environment constitute, besides comprehensive supply, three main reasons for the successful expansion of gas supply and sales. Recently, the Petrol Group has been increasingly focusing on the management of district heating systems and has therefore actively sought to obtain concessions in this area. Becoming established in the electricity market is one of the Petrol Group's strategic orientations, which is why this segment has been rapidly expanding. The Petrol Group's activities in the area of environmental and energy solutions consist of operating municipal wastewater treatment plants and performing public economic service of municipal wastewater treatment accompanied by energy production from waste and delivery of the complete range of energy products, services and consulting. B.16 The Issuer s ownership structure The issuer is not directly and indirectly owned or controlled. Table 3: 10 largest shareholders of Petrol d.d., Ljubljana as at 30 September

9 Figure 3: Ownership structure of Petrol d.d., Ljubljana as at 30 September 2012 B.17 Credit ratings assigned to the Issuer or its debt securities at the request or with the cooperation of the Issuer in the rating process Neither the Issuer nor its bonds have been assigned a credit rating by a credit rating agency. Petrol d.d., Ljubljana enjoys a high credit rating with its business partners and financial organisations at home and abroad. The high rating reflects the Company s ability to settle its liabilities on time, while its financial strength is derived from its market position, financial flexibility, generation of stable cash flows and added value from operations. Section C Information about the Bonds C.1 Type and class of the bonds admitted to trading Ordinary registered bonds denominated in EUR, issued in book-entry form under identification code PET3 and ISIN code SI The total nominal value of the entire bond issue is EUR 30,158, The nominal value of each bond is EUR 1, The entire bond issue contains 30,158 denominations of EUR 1, C.2 Currency of the bond issue The bonds have been paid up in euros. C.5 Description of any restrictions on the free transferability of the bonds The bonds are registered to a name, issued in book-entry form and entered into the central registry of dematerialised securities operated by KDD the Central Securities Clearing Corporation. Once issued, they are freely transferrable, subject to applicable regulations, as may be amended from time to time, and the rules for operations of KDD the Central Securities Clearing Corporation. 8

10 C.8 Description of the rights attached to the bonds The bonds are not backed by any specific collateral or guarantee. The settlement of bond obligations is guaranteed against the Issuer s entire assets. The bonds do not contain any provisions that would affect their classification or subordination to any other existing or future obligations of the Issuer. The bonds confer on the beneficiaries the right to receive the payment of the principal and interest, the right to use the bonds freely or have them pledged as security, and other rights under applicable regulations governing securities. The bonds do not confer any other rights, including the possibility of exchanging them for other types of securities. Also, they do not confer the right to a share of the Issuer's profit. The bonds do not contain any provisions that would give the Issuer the right to call them for redemption before their maturity. The bond holder does not have the right to require the Issuer to settle its receivables arising from the bonds ahead of schedule, i.e. before the dates laid down in the repayment schedule. The Issuer shall not encumber its assets nor will it allow the assets of its subsidiaries to be encumbered until its entire bond obligations have been settled in full, where: encumbrance of assets means any establishment of a lien, mortgage, land charge, possessory lien or other exclusive right to payment based on immovable and movable property, securities and other assets which takes place after the bonds have been issued, unless such encumbrance does not exceed 1 percent of the Issuer's assets and of the assets of its subsidiaries as per most recent financial statements; in case the obligations from this paragraph are violated, existing bond holders have the right to request immediate early payment of the bond s principal and accrued interest, unless the Issuer encumbers its assets against a collateral that is at least equivalent to the new encumbrance and is also used to secure its obligations to existing bond holders. C.9 Nominal interest rate and interest obligations The bonds carry a fixed interest rate of 6.00% p.a. Based on the bond s nominal value, interest is calculated using the linear method by multiplying the interest rate by the bond's nominal value and taking into account the actual number of days in the interest period and the actual number of days in the year. Interest is rounded up to two decimal places and begins to accrue on 7 December Interest due for payment on an interest due date is calculated for the interest period beginning on the last previous date on which interest was due (except for the first interest period, which begins on 7 December 2012) and ending on the interest due date, but excluding this day. Interest is calculated using the following formula: ir a p i * * N 100 ay where: i ir ap ay N is the interest accrued in the interest period is the fixed annual interest rate is the actual number of days in the interest period is the actual number of days in the year is the nominal value of the bond 9

11 The Issuer shall pay the interest and the principal (bond obligations) in accordance with the repayment schedule. Table 4: Repayment schedule for the bonds with the nominal value of EUR 1,000.00: Payment of obligations in EUR No. Due date Interest Principal Total 1 07/12/ /12/ /12/ /12/ /12/ , , Total ,000,00 1, The bonds pay interest per annum in arrears. The first payment shall be made on 7 December 2013 and then on 7 December each year until the last due date on 7 December The nominal value of the principal falls due for payment in full and in a single amount upon the maturity of the bond on 7 December Bond obligations shall be paid in EUR. The Issuer shall make the payments arising from bond obligations on the basis of ownership records obtained from the central securities registry of KDD the Central Securities Clearing Corporation to the accounts of registered bond holders or their proxies when an obligation falls due. Other type of payment of the Issuer's bond obligations is possible only upon prior Issuer s notification about the methods of payment of its bond obligations. On the maturity date of a bond obligation, the bond holder shall be deemed the person on whose behalf the bonds have been entered in the central registry of KDD the Central Securities Clearing Corporation at least four trading days prior to the maturity date, or as determined by the Rules of the Ljubljana Stock Exchange. If the bond holder does not receive funds in their account when the receivables arising from the bonds fall due, they must immediately inform the Issuer thereof and provide the latter with correct account details or other suitable information enabling the Issuer to credit the holder s account. If the details about the holder are incomplete and do not allow the Issuer to credit the funds arising from bond obligations that have fallen due in the manner determined herein or in another manner stipulated by the Issuer in accordance with regulations, the funds arising from such bond obligations shall not be subject to interest accrual as of the maturity of the bonds. If the date on which the bond obligations fall due is not a working day in the Republic of Slovenia, the payments shall be made on the next working day following the day on which the payment was due. In this case the bond holder is not entitled to interest for the period between the date on which the bond obligations fell due and the next working day. A working day is the day on which it is possible to execute payments made in the local currency during normal business hours in the Republic of Slovenia and which is not a Saturday, Sunday, national holiday or other public holiday. Pursuant to Articles 346 and 347 of the Code of Obligations, the rights to claim the settlement of obligations arising from the bond principal become statute-barred five years after their maturity and the rights to claim the settlement of obligations arising from interest three years after their maturity. The yield to maturity of the bond is the so-called internal rate of return, which can be calculated using tables or a financial calculator. It represents the annualised yield of the bond and is calculated, based on the interest rate calculation and payment method described herein, using the following formula: 10

12 SP where: Int Y n annual Int 1 Y 2 annual Intn... 1 Y P annual SP Int t Y annual n P is the selling price is the interest (coupon) in period t (t = 1,...,n) is the annualised yield to maturity is the number of years is the principal No organisation is representing the interests of bond holders in relation to the Issuer. C.10 Derivative component in interest payments Not applicable. C.11 Bond trading venue The bonds will be traded on the bond market of the Ljubljana Stock Exchange. Other than the regulated securities market of the Ljubljana Stock Exchange, there is no other regulated securities market in Slovenia where securities are traded. The Issuer did not enter into any agreements with any party on brokerage on the secondary market and provision of liquidity of the bonds. Section D Risks D.2 Key information on the key risks that are specific to the Issuer The Petrol Group uses a comprehensive business risk management system to continuously monitor risks in its business environment. Its business risk management policy is integrated into the process of strategic business planning and operational decision-making. It thus makes sure that the Group's key risks are identified, exposed, assessed and controlled in due time. Petrol's business risk model consists of two major groups: environment risks and performance risks. The most relevant and probable business risks comprise all financial risks: price, foreign exchange, credit, liquidity and interest rate risks. To control and manage those risks, the most rigorous control system possible is required. The Petrol Group uses such a system, which is described in more detail in sections dealing with individual financial risks. In addition to the financial risks, most relevant and probable risks include financial environment risks, commercial risks, strategic decision-making risks, business and financial decision-making risks, economic environment risks, and legislation and regulation risks. Individual financial risks to which the Petrol Group is exposed and the procedures put in place to hedge against them are detailed below. Price and foreign exchange risk The Petrol Group purchases petroleum products under international market conditions, pays for them mostly in US dollars and sells them in local currencies. Because the global oil market and the US dollar market constitute two of the most volatile global markets, the Petrol Group is exposed to both the price risk (changes in the prices of petroleum products) and the foreign exchange risk (changes in 11

13 the EUR/USD exchange rate) while pursuing its core line of business. The petroleum product pricing model allows for changes in global petroleum product prices and exchange rates to be passed on to domestic selling prices. The exposure of the Petrol Group to price and foreign exchange risks is thus considerably reduced. As regards supplying electricity to end customers, the controlling company managed price and quantity risks in an appropriate manner by matching the terms of sale applying to customers with suppliers terms of procurement. The controlling company supervises and offers advice on hedging against foreign exchange risks also at the level of subsidiaries. This mainly concerns risks arising from changes in the EUR/HRK exchange rate in Croatia. For this very purpose, the impact of changes in the EUR/HRK exchange rate on operations of Croatian-based companies was analysed, with the analysis being updated on a regular basis, and suggestions for foreign exchange risk hedging prepared. As there were no significant fluctuations in the EUR/HRK exchange rate in the first nine months of 2012, no forward contracts were concluded to hedge the foreign exchange rate risk. Transactions with derivatives are entered into only to hedge against price and foreign exchange risks and not for reasons of speculative nature. Credit risk The operating receivables management system overhauled in 2011 provides for even more efficient control. We have updated the instructions on the management of receivables from legal entities, we stepped up the collection of receivables, we are quicker to discontinue sales on open account to defaulting customers and we accelerated the use of legal remedies to collect receivables. Particular attention is given to an individual treatment of major customers. In the third quarter of 2012, we continued to attach stricter conditions to approving the amount of exposure (limits) to individual buyers and expanded the range of first-class credit insurance instruments as a requirement to approve sales (mortgages, pledges, bank guarantees, insurance with SID - Prva kreditna zavarovalnica d.d. Ljubljana and other insurance companies, collaterals, corporate guarantees, securities, promissory notes, bills of exchange etc.). In addition, a contract was concluded with HKO d.d. Zagreb to cover credit risk to which our companies in Croatia are exposed. In the first nine months of 2012, significant attention was still devoted to the collection of receivables from construction companies in Slovenia and collection of receivables in SEE markets where the solvency of the business sector is even worse than in Slovenia. Receivables are systematically monitored by age, region and organisational unit as well as by quality and individual customer. To monitor receivables, we use a joint computer-based receivables management application, which provides us with automated control over the exposure to individual customers and the possibility to respond immediately. Credit risk was also the most significant risk to which the parent company was exposed in connection with electricity sales to natural and legal entities in the first nine months of 2012, but was successfully managed using the above measures. Despite the general weakening of the financial strength of our customers due to liquidity problems, decreased production and a drop in exports, we estimate that credit risks are successfully managed within the Petrol Group. Our estimate is based on the nature of our products, our market share, our large customer base and the vast range of credit insurance instruments. In the first nine months of 2012, however, the Petrol Group too was unable to completely avoid the consequences of a large number of bankruptcies, compulsory composition proceedings and personal bankruptcies, with forecasts for the coming months not being any more optimistic. 12

14 Liquidity risk The financial crisis in the Slovene and global financial market resulted in a substantially increased vigilance of the banking sector when it comes to financing individuals and companies. What is more, in recent months, country risk assessment has become an increasingly important factor of financing, meaning that as a result of Slovenia's lower ratings foreign banks limit the utilisation of Petrol's credit lines when financing its operations. Despite the above, we managed to secure for the Petrol Group sufficient short-term funds in the first nine months of 2012, which provided us with good-quality short-term financing. In 2012 the levels of petroleum product prices still required a high amount of short-term financing, which is being successfully ensured for the time being. Also, according to petroleum product price forecasts for the coming months, the prices should remain on a par with the current prices, as they are not expected to rise given the drop in demand in the EU. Despite the current price forecasts, we are constantly actively working with existing banking partners to increase our credit lines and also looking for new banking partners. Cash flow management requires considerable attention and prudence especially as regards the planning of cash inflows from lay away sales, seeing that a large number of our customers have problems financing their operations due to the general increase in the number of defaults and weaker sales. The Petrol Group is capable of meeting all of its outstanding liabilities at any given moment. The Group's successful operations in particular are a guarantee for the Group's long-term solvency and increase the amount of its equity capital. At the end of March 2012, we successfully carried out a first issue of Petrol's commercial papers worth EUR 50 million, followed by a second issue of EUR 45.8 million at the end of September. Both the first and the second in a series of consecutive commercial paper issues received a warm welcome from investors despite the fact that the interest rate offered in the second issue was decreased from 4.1 to 3.8 percent. At the beginning of June 2012, Petrol entered into two contracts for so-called Schuldscheindarlehen loans (loans against borrower's note) amounting to EUR 30 million. At the end of June 2012, a long-term loan was taken out for a subsidiary in Croatia for the amount of EUR 50 million and with the repayment period of 10 years. The basis for this loan was insurance underwritten by SID Bank. These contracts show the tremendous trust and respect enjoyed by Petrol in the international financial market. Currently, discussions are underway with banks to secure additional long-term funding sources by the end of this year, which will improve our long-term assets to long-term liabilities ratio. Interest rate risk The Petrol Group regularly monitors its exposure to the interest rate risk. The controlling company s long-term loans contain a variable interest rate which is linked to EURIBOR. The average EURIBOR rate was lower in the first nine months of 2012 than at the end of 2011 and still remains very low. The Petrol Group's overall borrowing interest rate was thus lower in the first nine months of 2012 than at the end of This is chiefly the result of low EURIBOR rates and Petrol s very competitive shortterm financing interest rates. To hedge against exposure to the interest rate risk, a portion of variable interest rates is transformed into a fixed interest rate using derivative financial instruments. The exposure to the interest rate risk can be hedged up to 75 percent of the Petrol Group's net interest position. When deciding whether to pursue additional hedging activities, forecasts regarding interest rate changes are considered. The time of hedging and the type of instruments used to this effect are determined on the basis of market conditions. In the first nine months, interest rate hedging contracts were entered into in connection with taking out new long-term loans to convert the variable interest rate portion of the loans to a fixed rate. In addition, commercial papers were issued and one of the two Schuldscheindarlehen loans was raised at a fixed interest rate. Other than that, no interest rate hedging contracts were entered into. 13

15 D.3 Key information on the key risks that are specific to the securities Liquidity of the bonds Once admitted to trading on a regulated market, the bonds will be listed on the regulated securities market of the Ljubljana Stock Exchange. No assurance can however be given that there will be active trading in the bonds or that such trading will continue until the final maturity of the bonds. Should there be no active trading, this can adversely affect the market price and liquidity of the bonds. Risk of default The bonds are not backed by any specific collateral or guarantee. The settlement of bond obligations is guaranteed against the Issuer s entire assets. In the case of bankruptcy or liquidation of the Issuer, the payment of bond holders receivables would be made equal to the payment of receivables of other non-collateralised and unsubordinated creditors of the Issuer. Interest rate risk Bond interest is calculated on the bonds' nominal value using a fixed interest rate, meaning that the amount of obligations arising from the bonds is fixed and is not exposed to the interest rate risk. Regulated market price volatility risk Changes in the selling price of the bonds on the regulated market depend on the demand and supply of the bonds and on interest rate fluctuations on the market. Surplus demand for the bonds could result in higher selling prices thereof, while the prices would drop in the case of excessive supply. If market interest rates increased, bond holders could seek higher yields, leading to a decrease in the selling price of the bonds on the regulated market. If market interest rates decreased, bond holders might expect lower yields, leading to an increase in the selling price of the bonds on the regulated market. Section E Offer E.2b Reasons for the offer and use of proceeds The bonds are being issued to ensure continuous financing of the Issuer s operations, with the Issuer seeking to obtain funding sources with relatively longer maturity and diversify its funding base beyond bank loans. E.3 Terms and conditions of the offer The initial sale of the bonds was conducted in accordance with points 1 and 2 of Article 49(1) of the Financial Instruments Market Act (ZTFI) stipulating that the first paragraph of ZTFI Article 36, which lays down the obligation to publish a prospectus for the purpose of offering securities to the public, does not apply to the offering of securities intended exclusively for qualified investors or to the offering of securities intended for fewer than 150 natural or legal persons other than qualified investors. In accordance with ZTFI, such a securities offer does not require a prospectus to be published. The bonds were subscribed and paid for through the agency of Nova Ljubljanska banka d.d., Ljubljana. The selling price at which the bonds were subscribed and paid for totalled % of the bonds nominal value. Fifty-six investors subscribed and paid for the bonds during the initial sale. Other information regarding the terms and conditions of the offer is not relevant as this Summary Prospectus only applies to the admission of the bonds to trading on a regulated market. 14

16 E.4 Description of all interests material to the offer Not applicable. E.7 Estimated expenses of the investor resulting from the offer Not applicable. 15