CIMOS Annual Report 2010 WWW

SUMMARY
LETTER OF THE PRESIDENT OF THE MANAGEMENT BOARD FINANCIAL AND OPERATING HIGHLIGHTS OVERVIEW OF SIGNIFICANT EVENTS IN 2010 OVERVIEW OF MAJOR EVENTS IN THE BEGINNING OF 2011 REPORT OF THE SUPERVISORY BOARD GENERAL INFORMATION 1. FACT FILE 2. CORPORATE GOVERNANCE FRAMEWORK 3. STRUCTURE AND ORGANISATION OF THE CIMOS GROUP 4. SHAREHOLDER STRUCTURE BUSINESS OVERVIEW 5. MISSION, VISION AND STRATEGIC GOALS 6. ECONOMIC TRENDS 7. ANNUAL BUSINESS PLAN 8. REORGANISATION 9. BRANDS OF THE CIMOS GROUP 10. SALES 11. DEVELOPMENT 12. PROCUREMENT 13. PRODUCTION 14. INVESTMENTS 15. QUALITY ASSURANCE 16. INFORMATION TECHNOLOGY 17. RISK MANAGEMENT AND CONTROL 18. PERFORMANCE ANALYSIS 19. ECONOMIC LANDSCAPE AND THE OUTLOOK FOR 2011 20. CORPORATE SOCIAL RESPONSIBILITY FINANCIAL STATEMENT 21. NOTES TO THE IMPORTANT ACCOUNTING POLICIES 22. CIMOS d.d. 23. CIMOS group THE CIMOS FAMILY 4 9 10 14 16 22 22 22 24 25 28 28 30 38 39 40 43 48 52 54 56 56 57 60 63 67 70 78 78 88 116 146
Letter of the president of the management board
LETTER OF THE PRESIDENT OF THE MANAGEMENT BOARD

Dear shareholders, business partners, employees and stakeholders! 2010 has been a strong year for the Cimos group as demonstrated by 445 million euros in operating revenues or 15 per cent more in comparison with a year earlier. Such result ranges Cimos among the biggest Slovenian companies in terms of sales volumes as well as in terms of sale in the EU market. We operated within four strategic pillars, of which the automotive and energy pillar are the biggest, followed by the agricultural machinery pillar and the machine building and tooling pillar. With EBITDA of over 70 million euros, Cimos competes successfully with its competitors in the EU. During the economic downturn when restoring growth appeared a key challenge, most analysts predicted long lean years for the automotive industry. Only the biggest optimists believed that the car markets would be back on their feet soon and we were among them convinced that although hit hard by the crisis, the automobile industry should recover rather quickly. We have seen a decline in car sales and we can expect mobility patterns to change. Therefore, in 2009 and in 2010, we stepped up applied research and invested in development projects to foster innovation. Our optimism is built on our employees and their knowledge and skills. The results achieved in 2010 show that we have paved the way in the right direction as growth enjoyed across the automotive pillar and the Cimos group confirms. In a world struggling in 2009 to come to terms with the economic crisis, we expected the markets to remain volatile in 2010 and the crisis to cast a long shadow on the real economy. High cost of credit and tight lending conditions standing in the way of restarting economic growth forced governments to adopt measures to support their national economies. Where such action plans were too slow and inadequate, supplier networks collapsed and in many cases car manufactures had to be bailed-out by the government or go bust. Risk level along the supply chain surged and companies capital structure has become highly important to banks and customers. Thanks to its mix of knowledge and ability to deliver innovative solutions, Cimos has responded to customers orders for products designed to meet the requirements of government measures to stimulate car purchase and has strengthened the reputation of Cimos as a reliable and trusted business partner. Not only has Cimos managed to keep its existing customers, but it has acquired new ones. Delivery performance in 2010 rose to 99 per cent while the quality of deliveries in terms of rejects remained 18 PPM (comparable to the achievements of the world-class automotive suppliers).
04
Cimos Annual Report 2010
Letter of the president of the management board
Cimos capital structure reflects its intense corporate development, as we have invested heavily in the improvement and expansion of the existing plants and the construction of new facilities in different parts of Europe. Investments have been streamlined into R&D, IT, state-of-the-art technologies and in current assets needed to sustain the expansion of operations. The investments made in the past are todays advantage as we have in place excellent infrastructure, and development and manufacturing capacities that can cope with the set strategic objectives. Since the amount of the companys share capital has remained the same during the period of its expansion, and the shareholders equity increased only through the retained earnings kept by the company, most capital investments have been financed by borrowing money and to operate as a leveraged business is normal as long as demand remains high. With the outbreak of the crisis, the perception of leverage has changed. In addition to development and manufacturing excellence, a sound company should properly balance equity and borrowed funds. This is the task we are set to accomplish in the forthcoming period. The ideas for strategic growth pencilled in for the forthcoming period are ambitious and release adrenalin. And this is how it should be to be for all of us at Cimos to prove all our values, skills and competences. We have been recognised Tier One supplier by almost all automobile manufacturers and we are committed to maintaining and enhancing this reputation in the future with excellence in all operation fields. We have come a long way from a humble start of simple component manufacturing to a Tier One supplier. But the past performance does not guarantee future success. We have ambitious plans to give momentum inside the Cimos group. The right process organisation is a necessity as we try to optimise the processes within the company and assure sustainable improvement. It is a matter of evolution of operation management and mental framework. At Cimos, we understand the endto-end productivity as a process that starts with the research and development activities and ends with in the payment made to the bank account. As to the immediate future, I expect 2011 to be a year of growth across the board and of good business results.
Franc Kraovec, President of the Management Board
05
No matter what that idea is, every plan is someones brainchild
Financial and operating highlights
FINANCIAL AND OPERATING HIGHLIGHTS

Cimos group (in EUR) Operating revenue Net sales revenue Operating profit (EBIT) Operating profit + depreciation/amortisation (EBITDA) Net profit 2010 444,782,399 419,749,668 36,260,389 72,873,477 4,059,738 2009 385,810,234 367,467,199 32,338,983 66,251,058 3,832,594 Cimos d. d. 2010 362,015,116 356,620,838 17,090,070 28,845,836 2,392,306 2009 320,323,156 319,760,817 13,420,057 25,690,480 2,006,542
(in EUR) Long-term assets Short-term assets Capital Long-term liabilities Short-term liabilities Book value per share
31. 12. 2010 472,186,880 263,470,906 133,130,504 283,232,211 311,005,299 -
31. 12. 2009 444,790,055 266,723,771 121,335,729 278,399,502 304,666,658 -
31. 12. 2010 247,945,661 219,066,981 112,802,420 149,323,227 203,048,524 7.82
31. 12. 2009 238,372,320 221,027,871 112,172,437 161,370,588 185,421,807 7.77
2010 Net profit from sales revenues EBIT in sales revenues EBITDA in sales revenues Return on capital (ROE) annualised Return on assets (ROA) annualised Debt/equity 0.97% 8.64% 17.36% 3.19% 0.55% 4.63
2009 1.04% 8.80% 18.03% 3.20% 0.55% 4.94
2010 0.67% 4.79% 8.09% 2.12% 0.51% 3.15
2009 0.63% 4.20% 8.03% 1.80% 0.46% 3.10
31. 12. 2010 No. of employees 6,864
31. 12. 2009 7,127
31. 12. 2010 995
31. 12. 2009 1,046
09
Overview of significant events in 2010
OVERVIEW OF SIGNIFICANT EVENTS IN 2010

January [01]
Process optimisation
The Management Board meets with the management teams of different facilities with the aim to put in place cost management and business process optimisation at all organisational levels.
New management at P. P. C. Buzet, d. o. o., Buzet

Franko Viintin is appointed managing director of the production plant in Buzet (Croatia).
February [02]
Cimos collaboration with Technical Upper Secondary School in Koper

Cimos presents the company and employment possibilities at the informative day organised by the local Technical Upper Secondary School. The new building for upper secondary vocational and technical education and training stands in close proximity to the Cimos facility in Koper and caters for the development of key competences, skills and vocational qualifications of its students.
Lean Manufacturing in-house training

The purpose of the Lean Manufacturing training is to introduce the employees to Lean Manufacturing where Lean is about doing more with less time, inventory, space, labour, and money. In other words, commitment to eliminating waste, simplifying procedures and speeding up production under the production system and management philosophy developed by Toyota in the 20th century. Today it is used as an example of best practice in business planning, organisation and process management. The training includes the basis of the Lean Manufacturing approach coupled with simulations and practical exercises using real cases from Cimos production.
Cimos Handball club awarded by the Municipality of Koper

The Municipality of Koper awards the handball club (Cimos is an important sponsor) and some persons working within it for outstanding achievements in the past year.
March [03]
The Innovators Day

On the occasion of the Innovators Day, awards are given to the innovators who have contributed to higher economic benefit in 2009 by making the highest number of useful proposals. About 4135 useful proposals (on the average 1.16 proposal per employee within the plants included in the TiNS innovation system) are presented.
Prevention of alcohol abuse at workplace
violations and presence of psychoactive substances has been issued. The purpose of this document is to stimulate prevention and assurance of safe and healthy work.
New location for the members of IV

The companys canteen in Koper is transformed into a gym and a meeting place for the employees of Cimos who subscribe to a healthy lifestyle.
The internal Rules of Procedure on the procedures for establishing whether an employee is intoxicated by alcohol or by any other substance or combination of substances has been adopted. The Rules should encourage alcohol and substance abuse prevention and early intervention strategies and activities in the workplace.
Prevention of alcohol abuse during working hours

An internal general legal act regulating procedures for establishment of drink
010
Eaton Best supplier award

Diversified industrial manufacturer Eaton Corporation confers to Cimos d.d. the best supplier award. The Eaton supplier award program recognises its top suppliers for their contributions to cost management, innovation, quality, delivery, and other attributes delivered in 2009 that contributed to Eatons success.
30th anniversary of existence of AD Kruik precizni liv, Mionica

Kruik precizni liv from Mionica (Serbia), a specialised foundry for high-precision
castings, celebrates 30th anniversary of existence. The foundry was built in 1980 and a part of the production programme of Kruik from Valjevo was relocated to Mionica. As most Serbian companies, the foundry was in dire straits in the 1990s and in 2007 it joined the Cimos group. At present, it employs 137 people and manufactures new products for the automotive industry. The annual capacity of the foundry is 400 tonnes of investment steel and nodular castings.
April [04]
Components from Koper production facility in new Renault Wind

Revoz from Novo Mesto presents the new car model Renault Wind. The production facility in Koper is the only manufacturer and supplier of pedal systems, handbrake levers and engine bonnet hinges for Renault Wind.
Development strategies and reorganisation plans

The Supervisory Board of Cimos d.d. looks into the development strategies for the agricultural machinery and machine building and tolling pillars when they visit the plant in Labin (Croatia) and learn about the milestones of the companys reorganisation plan to be launched in 2011.
May [05]
Contract for refurbishment of the hydroelectric power plant Pyhkoski in Finland

Litostroj Power signs the contract with the Finnish partner for the refurbishment of two Kaplan turbines in HPP Pyhkoski, each having output of 49,820 kW.
Know-how Day in Maribor

For the fourth consecutive year, the Know-how Day takes place in Maribor as a forum of students studying to earn a degree in engineering. Future engineers get the opportunity to present their research and diploma papers and masters thesis. The event also promotes education and knowledge as an important value.
There is a Family-friendly company in Maribor

With the award of the Family-friendly company certificate, CIMOS TAM confirms its commitment to improving the relation work-family and extends its corporate social responsibility. The advantages delivered by active, family-friendly workplace policy are multiple and contribute to the employees feeling better about the job.
Award for innovation goes to Litostroj Power

The 3rd Innovation Festival staged by the Regional Chamber of Commerce and Industry is held in the Ljubljana and Cimos receives two awards: one for the Manufacturing Execution System and another for the Enterprise Resource Planning system.
Trade fair and business meeting with the members of the Chamber of Craft and Small Businesses in Koper
Together with the Chamber of Craft and Small Businesses of Slovenia, Cimos prepares a trade show and a match-making meeting in Koper to find partners for specific facets of the machine-building and tooling manufacturing process. The event is a success and CIM0S gets several new partners.
011
June [06]
Best innovator award

The Regional Chamber of Commerce and Industry of the Coastal Region (Primorska) gives awards for the 10th consecutive year to the best innovators of the Coastal and the Karst region. Mr. Toma Opara from the R&D department of Cimos in Koper gets the award for his innovative proposal .
in Mionica (Serbia) causing huge material damage losses and disruption to production. Thanks to the fast action of the Civil Protection Service, the extent of damages to the plant and equipment and products was lower than feared at first.
Managerial skills training programmes

Training programmes focused on developing management and leadership skills are carried with the aim to deliver effective governance and integration of employees, professionalism, experience and processes. production. Enthusiasm was noted especially among family members of the employees, pensioners and former Cimos employees.
Damages caused by the storm of all storms

High winds and torrential rain damaged a big part of the roof the production plant
July [07]
Champions of the business
The managing director of the Cimos foundry in Zenica, Mr. Razim Luniki has been awarded with Champions of the business award in Sarajevo in occasion of the traditional election of the most successful managers and companies of the SE and central Europe. Cimos TMD Casting has intensified its position in the region.
Senoee facility Open doors
In occasion of a local fest, the facility in Senoee has opened its doors to the public, who showed enthusiasm in viewing stateof-the-art technology and a very demanding
The biggest roof solar power plant in Slovenia has been installed on the roof (about 25 thousand square metres) of one of the Cimos production halls in Maribor. The solar power plant will produce 1124 megawatt hours of electric energy per year and will meet the needs for electric energy of more than 400 households.
Energetic acquisition in Cimos Maribor facility
August [08]
Visit of the German customer BMW in Cimos production location in Serbia

A ten-member team of the German BMW has visited for the second time Livnica Kikinda. During a two-day visit they were informed about the capacities, equipment, production process and technical-professional qualification of employees, and have expressed their satisfaction in viewing order within this Cimos production unit and their willingness to increase orders.
September [09]
First work-shop of energy-specialists in Cimos grey cast iron foundry

The first work-shop of the energy-specialists from grey cast iron foundries was organized in Zenica. Its purpose was to detect and to bring good practices on how to improve energy efficiency and to agree common activities to improve energy efficiency.
specialists presented the achievements of Cimos subsidiaries in Bosnia and Herzegovina.
Meeting of the EUREKA partners

The annual meeting of the project Eureka E!4177 Ubiquitous oriented embedded systems for globally distributed factories of manufacturing enterprises (UES), organized by Cimos P.P.C. took place in Buzet. The general opinion of the participants was that efficient research, that will be useful for the European economy, can be achieved by linking and harmonizing reciprocal efforts and activities.
Mesi visited Cimos Gradaac

The former president of the Republic of Croatia, Mr. Stjepan Mesi, has visited the subsidiary of Cimos in Gradaac. A group of
012
October [10]
Fire in production hall

On October, 10th a severe fire was started in the production hall in Zenica and has caused material damage on the moulding line. Employees have reacted adequately and stopped the fire. Because of this event a two weeks stoppage of production has been implemented. Customers were not jeopardised because Cimos has provided safety stocks and other alternative solutions.
Cimos restaurant distinguished for its culinary specialties

The restaurant Radniki dom in Kikinda presented its activity and culinary specialties on the fairs in ilna (Slovakia), in Biha (BiH) and in Romania. They appeared as guests on the Serbian national television in occasion of the event Dneve ludaje (days of pumpkins) in Kikinda. The restaurant has acquired an award from the Regional Chamber of Commerce and Industry in Kikinda for the quality of catering and touristic activity in the category of catering establishments in the 2010.
Energy experts work-shop in Cimos aluminium foundries

The second work-shop of Cimos energy experts from Al foundries took place in Buzet. The work-shops Shallow arguments and good solutions purpose was to define and transfer good practice among foundries. Some practical samples on how to improve energy efficiency were presented and common activities defined.
IT day
Cimos IT collaborators responsible for technical support took part in the IT day, aimed at the exchange of experiences and acquisition of new IT knowledge.
November [11]
SiEVA development centre

A consortium of eight Slovenian car companies was formed in Ljubljana to reduce R&D investment risks and follow the trends in the global car industry. The SiEVA consortium includes companies Hidria, Cimos, Kolektor, Iskra Avtoelektrika, Iskra Mehanizmi, MLM, Polycom and TPV. The SiEVA (Synergistic Ecological Safe Car) project groups competences, potentials and development infrastructure in order to develop new solutions for advanced internal combustion engines, hybridisation and electrification of cars, safety and comfort and business excellence.
2nd maintenance and tooling work-shop

The 2nd maintenance and tooling workshop took place In Kikinda and Seanj. The purpose was to increase cooperation and netting of experts from different locations in the field of tooling and maintenance.
Visit of VW in Kikinda
A representative of the German Volkswagen visited the foundry in Kikinda. The VW representative has been introduced with Cimos manufacturing programme and technologies in Serbia and assured us future cooperation.
December [12]
End of the humanitarian action A help for Gal

The humanitarian action was initiated to collect funds for nursing care and purchase of additional equipment for a six years old Gal affected by cerebral paralysis. Gal is the son of our co-worker from the subsidiary in Maribor. People from Cimos contribute to humanitarian aid and are ready to unite efforts for such purposes.
recognition for its contribution to cultural life and work of the theatre.
Development center SIMIT

The consortium is formed of companies from the Podravska, the Savinjska, the Central Slovenia and the Gorenjska region, as follows: Talum, Cimos, Iskra ISD, LTH Ulitki, SwatyComet, Unior, Amit, Ortotip, Robotech, TC Livarstvo, HTS IC, Tecos, Zavod za livarstvo Ljubljana and Telkom OT. Partners will focus on research and development of new, modern and ecology sustainable materials, techniques and technologies.sprejemljivih novih materialov ter tehnik in tehnologij.
The National Theatre award to Livnica Kikinda

In occasion of the 60th anniversary of the National Theatre in Kikinda the Cimos subsidiary from Kikinda received a special
013
Overview of major events in the beginning of 2011
OVERVIEW OF MAJOR EVENTS IN THE BEGINNING OF 2011

January [01]
Introduction of the Machine building and tooling pillar
The Machine building and tooling pillar is introduced for the first time in Koper on 1 January 2011 when a new company is established: CIMAT d. o. o. (CImos Machine And Tools). The pillar is established with the purpose of achieving synergy effects within the Cimos group, enhancement of competitive advantage of the automotive pillar and better exploitation of our knowhow. Kikinda, a subsidiary of Cimos group, namely Livnica Kikinda Ai, was the largest exporter in the Region in 2010.
One year of activity of the IV association

One year of successful activity has passed since the establishment of the IV association. The purpose of the association is to inform employees about health issues, healthier life-style, and different activities to improve the work climate and reduce absenteeism.
Livarna Kikinda Ai the largest exporter

According to the data of the Regional Chamber of Commerce and Industry in
February [02]
Development centres for the Slovenian economy win the tender

With the decision of the Ministry for the Economy the consortium SiEVA, SIMIT and ZEL-EN in which Cimos d.d. or Litostroj Power are taking active part, were approved. About 42 applications were sent under the tender but only 17 consortiums are successful. SiEVA is the highest evaluated project in the automotive industry field, and ZEL-EN in the energy field and SIMIT from the Podravska region.
COMOS project for aftermarket activities in the energy sector

LITOSTROJ Power prepares a project to take the traditional customer-supplier relationship to a new level guided by the commitment to delivering a more efficient support to operation of hydro power plants after the expiry of the guarantee period. Machine useful life is quite long: 30 years and more on average. With the new relationship, both, customers and suppliers will benefit from higher exploitation of equipment, fewer withdrawals, major availability, optimum operation of hydro power plants and a more foreseeable error solving. With this purpose Eureka project COMOS* E!5343 is developed and accepted in 2010. The project will be completed by the end of 2012.
014
Overview of major events in the beginning of 2011
March [03]
Innovators Day
On the occasion of the Innovators Day 2010, awards were given to two best innovators of each manufacturing facility. About 7521 useful proposals are made or on average 1.47 useful proposals per employee at the manufacturing facilities where the TiNS system is in place.
3rd Tooling and Maintenance Workshop

The 3rd Maintenance and Tooling Workshop is organised in Gradaac (Bosnia and Herzegovina) in effort to encourage cooperation and the exchange of knowledge and ideas among experts from different manufacturing facilities in the field of tooling and maintenance.
Humanitarian action of Cimos handball players

The members of the Cimos handball team are quick to respond to humanitarian crises. Every year they donate blood in the local Blood Transfusion Centre. In 2011, they have visited three organisations that provide assistance to disabled persons: Sonek Cerebral Palsy Association (Zveza drutev Sonek, Markovec), Association of the blind and visually impaired people (from Koper and the Silva Fund (Sklad Silva, Fijeroga pod Pomjanom) to introduce handball and the club to people with disabilities to cheer them up.
Cimos gets the Premier Supplier Award

Eaton Corporation, a diversified industrial manufacturer, honours 35 of its suppliers including Cimos with the companys prestigious Premier Supplier Award. This is the sixth year that Eaton gives this award to a selected group of its global suppliers. Cimos received the award within the category Direct Material Supplier for the Vehicle Group.
April [04]
HPP Krko Project

The equipment for the HPP Krko should be ready in April complete with the manufacture, supervision and installation of three Kaplan turbines. The November floods and delays in construction have prolonged the completion time by approximately four months.
SiEVA d. o. o. is born
Representatives of eight leading Slovenian companies for development and manufacture of car components Cimos, Hidria, Iskra Avtoelektrika, Iskra Mehanizmi Lipnica, Kolektor Group, MLM, Polycom kofja Loka and TPV sign a consortium agreement and officially incorporate SiEVA d.o.o. with the head office in the northern part of the Primorska Region as yet another step in the development of the Slovenian automotive industry.
015
Report of the supervisory board
REPORT OF THE SUPERVISORY BOARD

The Supervisory Board of Cimos d.d. elected at the Annual General Meeting of Shareholders held on 28 August 2008 for a four-year term of office, discharged its tasks in the course of 2010 with the same members as a year earlier: Chairman of Supervisory Board Dr. Andro Ocvirk, Deputy Chairman of Supervisory Board Aleksander Lozej, M.Sc., and Members of the Supervisory Board Meta Berk Skok, edomil Stanii and Franc Herman imnovec. In 2010, the Supervisory Board monitored with due attention and care the effects produced by the global financial and economic crisis on the companys operations, identified the targets, monitored satisfying those targets, and took a stance regarding the current issues related to Cimos and its subsidiaries. The Supervisory Board paid particular attention to the organisational changes designed to optimise business processes and resources and thus lead to the companys higher responsiveness and competitiveness when it comes to winning new contracts and delivering orders under new and already existing contracts by being able to offer in-house research and development, as well as technological solutions. The Supervisory Board endorsed the activities of the Management Board adopted with the aim to tap into fresh capital serving to enable the company to stay at the forefront of development and as a result, to enhance its position in the market. The Supervisory Board examined and approved at five ordinary sessions convened in accordance with law, the companys Articles of Association and the Rules of Procedure the guidelines and resolutions falling within the scope of its duties and powers described below in this report on the basis of well-prepared and exhaustive materials and information provided by the Management Board. The minutes of the meetings of the Supervisory Board provide a balanced insight into the discourses, the questions asked by the members of the Supervisory Board and the explanations given by the Management Board and the companys Executive Directors. The Supervisory Board checked at every following session whether the adopted resolutions were implemented as agreed. The Supervisory Board addressed in 2010 all matters falling within the scope of its duties and powers without appointing special committees or working bodies to assist it in its work. A) At its 7th ordinary session held on 22 April 2010 in the premises of the Cimos production facility in Labin (Croatia) - Labinprogres TPS, the Supervisory Board took note of the information regarding the audited annual report of Cimos d.d. and the consolidated annual report of the Cimos Group for 2009. Against the backdrop of plunging orders, credit crunch and wide-spread uncertainty, Cimos managed to preserve its internal stability, development continuity and jobs. In 2009, the financial crisis that exploded in 2008 continued hitting hard light vehicle manufacture that decreased by 28 per cent in the beginning of the year and posted a 12.6 per cent decline for the whole year. The fact that the power consumption dropped in manufacturing led to a fall in electricity price and forced decision-makers to re-examine plans for investment in the construction of new facilities for power production. As regards the market for farming machinery and implements, Cimos experienced its motocultivator sales plunge in the worst figures and most motocultivators are produced in Cimos plants. The sales figures posted by the machine building pillar were slightly below the budgeted figure. At Cimos d.d., 320.8 million euros was earned in net sales revenue or 20 million euros less than a year earlier. The Cimos group posted in 2009 the amount of 367.5 million euros in consolidated net sales revenue, and this figure is
016

by 93 million euros below the figure achieved a year earlier. The Supervisory Board expressed the opinion that given the global crisis and the situation in the Slovenian economy, the companys results are good on the whole. The companys operating results improved in the first quarter of 2010 in comparison with the same period a year earlier. Its revenues increased by 22 per cent, productivity grew, profit from ordinary activities increased by 11 per cent, and net profit for the period rose by 72 per cent. In comparison with the budget, the revenue grew by 6 per cent and the net profit for the first quarter was by 21 per cent above the budget. In addition, the members of the Supervisory Board learned about the activities and results of each line of business or pillars: agricultural machinery and implements and tooling and machine building, and they were also informed about the pending reorganisation of the automotive pillar. When it comes to the agricultural mechanisation pillar, Cimos is committed to pursuing the strategy based on manufacture of farming equipment and implements in its own production plants for the end buyer, engineering for irrigation systems and ecological services, as well as being the manufacturer of original equipment (OEM). In addition to the irrigation systems, the activities to be performed within the framework of this line of business include the development of services such as planting permanent crops, and in the area of ecological services, effluent (wastewater) treatment, waste management and waste-disposal site upgrading and pool equipment. The pencilled in value of own production of final goods and original equipment manufacture (OEM) and services will arrive at 49 million euros in 2020. The members of the Supervisory Board heard about the blueprints with the organisation of the pillar complete with the production units, development, marketing, purchase and logistics, as well as a unit for quality assurance and after-sales customer service. By enhancing the activities carried out in the area of tooling and machine building, the competitive advantage of the automotive pillar will increase and it will prop up the vertical integration and the concentric diversification strategy across the Cimos group. The tooling and machine building pillar will be able to offer products and services with higher value added and to exploit its production capacity, expand in-house skills and expertise and reduce dependence on production for the automotive industry. At the tooling shops in Koper, Senoee, Maribor and Kikinda, employees handle all phases of the operations for precision machining, tools for machinery for casting, machining, assembly and tooling transformation. This organisation of this line of business (pillar) envisages units specialised in manufacture, marketing and purchase, development and technology. According to the blueprint, the pillar will arrive at 250 million euros in sales in 2016. The organisational model in place will be designed with the aim to facilitate the process of satisfying the milestones on the road to higher competitiveness, quality, flexibility and meeting delivery deadlines. The targets to be achieved through the reorganisation of the automotive pillar are sharpening the companys competitive edge, new business opportunities and lower costs. The lean manufacturing concept will be introduced at all company levels, the processes will be standardised and the resources used optimally. A general view (synopsis) of the processes, production programmes by lines of business, product families and their respective market shares, the process for managing the supply/ supplier chain, support processes, corporate objectives, management levels and the escalation concept was presented to the members of the Supervisory Board. The automotive pillar will organised so as to co-ordinate the operations of the production plants and carrying out of the central functions at the level of a region (country). The Supervisory Board approved at its 8th ordinary session held on 3 June 2010 the annual report and accounts for 2009 with the consolidated annual report for 2009 complete with the Independent Auditors Reports. The members of the Supervisory Board approved the report on the work of the Supervisory Board and the examination of the annual report for 2009. The Supervisory Board indicated it had no objection to convening the Annual General Meeting of Shareholders on 26 August 2010 and approved its proposal of the resolution to be passed by the Annual General Meeting regarding the profit for 2009 available for
017

appropriation by the companys shareholders in the amount of 714,830.75 euros to be allocated to other revenue reserves, and to grant a discharge to the Management Board and to the Supervisory Board. The Supervisory Board proposed to the Annual General Meeting to appoint the audit company Renoma, druba za revizijo in svetovanje d.o.o. for the audit of the companys financial statements for the financial year 2010. The members of the Supervisory Board discussed the initiative given by the IFC for closer co-operation with Cimos and the approved guidelines. The 9th ordinary session of the Supervisory Board held on 16 September 2010 was called to examine investment opportunities. The Supervisory Board approved the resolutions serving to safeguard the interests of the company and all its shareholders. At the 10th ordinary session held on 18 November 2010, the Supervisory Board examined and approved the unaudited interim report of Cimos d.d. for the period ended 30 September 2010 and congratulated the Management Board and the employees on the results achieved. The bottom line of the discourse was that the automobile market was gradually returning to growth as shown by much higher orders than in the first half of 2009. Nevertheless, the market for light vehicles did change together with changed customer behaviour, and the competition among car part suppliers became intensified further. After fourteen months of the downward trend, it was in June 2009 that there was a 2.4 per cent increase in car sales in the Member States of the European Union. In 2010, the trends observed in the automotive industry included accelerated mergers and acquisitions, getting a foothold in the new markets around the world, reducing time-to-market for the vehicles fuelled by alternative energy sources, participation in the purchase process and focus on vehicle supply chain management solutions. The automotive pillar of Cimos d.d. achieved 221.7 million euros in sales revenue for the first nine months of 2010. The group generated for the same period 286.9 million euros in consolidated net sales revenue. The assessment of the Management Board for the financial year 2010 was that the sales figure would be 310 million euros. The total value of the contracts for new projects awarded to the automotive pillar of Cimos is 82.3 million euros. It is the pace of increase in the companys business that accompanies the budgeted value of its new business deals. The partnership concluded with a Russian car supplier for braking systems is a significant step toward winning new contracts in the Russian market for the development and manufacture of components of the automotive industry scheduled to kick off in the second part of the following year. The earnings made by selling equipment and services within the framework of the energy equipment pillar for the period ended 30 September 2010 was 45.8 million euros. The sales to foreign markets accounted for 79 per cent of the sales revenue, and 21 per cent of output was sold in the Slovenian market. The estimated value of net sales revenue of the equipment and services for the energy sector in 2010 is 67.5 million euros and it is slightly below the figure budget for the energy equipment pillar in 2010. The equipment and implements for farming sold during the first nine months of 2010 amounted to 4.3 million euros and this figure is slightly below the budget. This shortfall can be attributed to the disappointing sales of parts for farming equipment practically being half of the budgeted figure. Other production programmes fared much better during the period under review and achieved a 18 per cent increase in sales revenue in comparison with the same period a year earlier and were in line with the budget. The sales revenue for the twelve months of 2010 will add up to 5.1 million euros and this figure will be at the 2009 level. The sales revenue generated within the framework of the tooling and machine building pillar for the first nine months of 2010 totalled 10.5 million euros and this figure was in line with the budget. Machinery and special tools were produced for the Cimos production plants. Running parallel to tooling and machine building operations for its manufacturing facilities, the company produced and sold machinery for the buyers from Russia.
018

The performance analysis is made on the basis of the data for the public limited company Cimos (Cimos d.d.). In comparison with the same period a year earlier, the sales revenue generated by the public limited company Cimos increased by 14 per cent. The public limited company Cimos earned 262.7 million euros in net sales revenue, of which it earned 255.5 million euros in the markets outside Slovenia or as much as 97 per cent of its total sales revenue. The sales plan for that period was exceeded by one per cent. Based on the forecasts made until the end of the year, the annual sales plan will be exceeded by two per cent. Together with other operating, financial and other revenues, the companys total revenue is set at 268.5 million euros. Total expense incurred by Cimos d.d. for the first nine months of 2010 stood at 266.9 million euros and exceeded the total expense item posted for the same period by 15.9 per cent. The achieved operating revenue figure was accompanied by revenue from operations of Cimos d.d. of 11.1 million euros for the first nine months of 2010. The net profit of Cimos d.d. (public limited company) was in the amount of 1.6 million euros. The members of the Supervisory Board received the information about the fire in the plant in Zenica, the terms and conditions of the insurance policy and the impact of the loss event. The Supervisory Board also addressed the positions for the preparation of the business plan/budget for the financial year 2011. The budget pencils in 387 million euros in operating revenue to be achieved by Cimos. Further to the companys capital position, the Supervisory Board has instructed the Management Board to present at one of the forthcoming sessions a material about capital strengthening and proposals for the activities to be undertaken in order to obtain the necessary capital, and to send to the Supervisory Board the letter signed by the Chairman of the Supervisory Board and by the President of the Management Board in June 2010 to the IFC. The members of the Supervisory Board were informed of the progress of the reorganisation due to enter the final phase. The last 11th session of the Supervisory Board in 2010 was held on 23 December 2010. The Supervisory Board approved the budged of the public limited company Cimos for the financial year 2011 that pencils in the consolidated balance sheet for the Cimos group for 2011 with the amount of 454 million euros in revenue, 418 million euros in expense, 36 million euros in operating revenue and 7 million euros in net profit for the reporting period. As a result of price fluctuation, there is a 4.5 per cent decrease in revenue. The Management Board explained that no reduction in the costs of borrowing was envisaged, but efforts for delivering optimum liquidity were brought to the forefront. There are consequences of foreign exchange gains or losses where the items of property, plant and equipment have been converted to equity. The foreign exchange gains or losses are 4.5 million euros. It would be possible to recognise an adjustment to the carrying amount of the items of property, plant and equipment and decrease their carrying amount but the Management Board did not do it and preferred to optimise the tax balance sheet. The members of the Supervisory Board met with the persons responsible for the particular segments of the automotive pillar and having power to make proposals as to setting the targets and organisation. The Supervisory Board learned about the time schedule and the objectives, the integration of the marketing function previously organised as a separate function, the measures for delivering a competitive and technically competent supply chain, the organisation of production facilities with the focus on efficient production management and the region as a support function. The Supervisory Board resumed the examination of the investment opportunities started at its 9th ordinary session and instructed the Management Board to prepare additional expert opinions and findings. The Supervisory Board thanked the secretary of the Supervisory Board responsible for
019

keeping and distributing records of the proceedings of the meetings for many years and expressed appreciation for his good work and contribution to the content of the work of the Supervisory Board. B) The Supervisory Board examined the consolidated annual report of the Cimos Group and the annual report of Cimos d.d. for 2010 within the statutory time line. The Supervisory Board examined the independent auditors reports in which Renoma druba za revizijo in svetovanje d.o.o. expressed its opinion that the financial statements give a fair and true view in all material respects of the financial position of the reporting entities Cimos d.d. and the Cimos group as at 31 December 2010 and their income statement and cash-flow statement. The Supervisory Board acknowledged the qualified auditors opinion to the consolidated financial statements prepared by the Cimos group, as a consequence of the different legislation in effect in the countries in which the subsidiaries Cimos are incorporated (mostly those that operate in Serbia) and specifically the rules regulating foreign exchange losses that differ from the statements made in accordance with International Financial Reporting Standards. The Supervisory Board had no objection to the consolidated annual report of the Cimos group and to the annual report drawn up by Cimos d.d. for 2010; hence, at its 15th ordinary session held on 30 June 2011, the Supervisory Board gave its unqualified opinion to the annual reports, complete with the Independent Auditors Reports. The Supervisory Board has endorsed the proposal made by the Management Board of Cimos d.d. for the appropriation of the companys balance-sheet profit available for appropriation by shareholders in the amount of 852,259.17 euros by allocating the profit to other revenue reserves. The Supervisory Board hereby expresses its unanimous position that despite the troubled economic conditions during the past few years, the Management Board has been successful in creating the conditions for Cimos d.d. and its subsidiaries to preserve the market share by streamlining efforts to the research and development activity and technological capability and innovativeness, while at the same time acting responsibly to all those who are included in business processes. The Supervisory Board proposes to the Annual General Meeting to grant a discharge to the Management Board and to the Supervisory Board. Done in Koper on 30 June 2011. Dr. Andro Ocvirk, Chairman of the Supervisory Board
020
021
General information
GENERAL INFORMATION # 1. [Fact file]

Company name CIMOS d. d. Avtomobilska industrija Cimos Plc Automotive Industry Abbreviated name CIMOS d. d. Telephone + 386 5 66 58 100 Fax + 386 5 66 58 250 Registered office Koper, Cesta Mareganskega upora 2 Principal activity Manufacture of other parts and accessories for motor vehicles Activity code C29.320 VAT identification number SI82923183 Company registration number 5040302000 Share capital 69,480,249.54 EUR
# 2. [Corporate governance framework ]

Both management and governance of the company observe the provisions laid down in effective legislation, the companys Articles of Association, and the powers and responsibilities vested in the bodies of the company. By fostering the development of governance and oversight mechanisms, we add to growth and development of the parent undertaking and its subsidiaries. The company has in place a two-tier governance system and even though its shares are not listed on a regulated securities market, it complies with the Corporate Governance Code adopted on 18 March 2004 and amended on 14 December 2005 and 5 February 2007 (hereinafter referred to as: the Code). The Code sets out a model of best practice principles for good governance and is available in the Slovenian and English language on the web site of Ljubljanska borza, d.d., Ljubljana (Ljubljana Stock Exchange): http://www.ljse.si. The President of the Management Board and senior management composed of executive directors have signed service contracts. The service contracts stipulate their obligations, powers and responsibilities, as well as their remuneration for discharging their duties. The company reports on remuneration of its directors in compliance with applicable legislation. The President of the Management Board and the executive directors also act as members of supervisory boards of Cimos subsidiaries and, in some cases, they are also members of management boards. They are not entitled to any remuneration for discharging these duties. The role of the companys top management in oversight and governance of its subsidiaries is to provide advice to their management on the direction in which their strategy and development should go, which business policy measures should be deployed, they monitor output planning on a regular basis and the companys performance, they give opinion on the decisions proposed to be adopted by the competent bodies of the company, and they report at regular intervals to the bodies of Cimos d.d. and to the bodies of its subsidiaries about their work, findings, proposals
022
General information
and positions. The companys executive directors and other experts working for Cimos discharge these tasks within the framework of the development and audit committees of the parent company.
The management board

On 7 December 2006, the Supervisory Board of Cimos d.d. gave a mandate to the Management Board to run the company for the following five-year term of office with effect from 1 April 2007 after the five-year term of the previously appointed Management Board expired. Mr. Franc Kraovec was reappointed as the sole member and the President of the Management Board. Mr. Kraovec appoints executive directors responsible for specific business areas and they compose the companys top management: Zorko Kenda Miroslav kapin Vladimir Bukvi Dario ik Deputy President of the Management Board and Executive Director for Planning and Control Executive Director for Development Processes and Manufacture Executive Director for Finance and Accounting Executive Director for Research, Development, Procurement and Sales Activities
Supervisory board
In accordance with the provisions laid down in the companys Articles of Association, the Supervisory Board is composed of five members and they represent shareholders interests. The Annual General Meeting of Shareholders elected the Supervisory Board on 28 August 2008 for a four-year term of office. The incumbent members of the Supervisory Board are: Andro Ocvirk Aleksander Lozej Meta Berk Skok edomil Stanii Franc Herman imnovec Chairman Deputy Chairman Member Member Member
The Supervisory Board oversees the operations of the Management Board within the scope of authority and competence stipulated in the companys general acts and the Articles of Association. During the year, attention is paid primarily to business and financial development of the company and of the group, important business events and accomplishment of strategic and general business policies by approving the annual business plan and by monitoring its implementation. The Supervisory Board operates independently and autonomously for the benefit of the company and observes the rules regarding protection of internal information.
General meeting of shareholders

All the decisions relating to the legal and statutory matters are taken at the general meeting of shareholders. The regular session of the general meeting of shareholders is held once a year. The Management Board is responsible to convene the general meeting of shareholders in accordance with effective legislation.
023
General information
The companys shareholders participate at the general meeting directly or through their proxies who have obtained authorisations for decision-making in compliance with legislation. Such arrangement gives minority shareholders (who usually do not attend AGMs) the opportunity to express their will. Furthermore, the company encourages the shareholders to exercise their right to vote and at the same time informs them more efficiently on the forthcoming general meeting and on the contents of the resolutions to be passed at the meeting.
Amendments of the companys articles of association

All amendments to the Companys Articles of Association are adopted in compliance with the provisions of the Slovenian Companies Act (ZGD-1). A majority is needed to amend the Companys Articles of Association.
# 3. [Structure and organisation of the Cimos group]

As at 31 December 2010, the Cimos group was composed of Cimos d.d. (public limited company) as the parent undertaking and 29 subsidiary undertakings incorporated in nine countries. Cimos group as at 31 December 2010 CIMOS d.d., Koper (SI)
024
General information
# 4. [Shareholder structure]
The share capital of Cimos d.d. (public limited company Plc) totals 69,480,250 euros. The amount of share capital is set in the Companys Articles of Association and entered in the company register kept by the competent court. The share capital is divided into 16,650,247 ordinary non-par value shares. The Company has 2,221,189 treasury shares in the value of 13,384,021 euros, and it has the treasury shares account in the same amount. 31. 12. 2007 Number of shares Book value per share (in EUR) 16,650,247 7.40 31. 12. 2008 16,650,247 7.65 31. 12. 2009 16,650,247 7.77 31. 12. 2010 16,650,247 7.82
Ownership structure
The structure of shareholder equity as at 31 December2010 KAPITALSKA DRUBA d. d. PPS 21.39 BANKA KOPER d. d. CIMOS d. d. KOVINOPLASTIKA LO d. d. D.S.U., d. o. o. TRIGLAV NALOBE, d. d. POTEZA NALOBE d. o. o. MERKUR, d. d. SAVA, d. d. ADRIATIC SLOVENICA d. d. OTHERS TOTAL 20.44 13.34 13.10 6.90 5.45 3.04 3.00 1.78 1.66 9.90 100.00
Ownership structure as at 31 December
27% Companies
39% Investment
funds
21%
Cimos d.d.
13%
Banks
025
Weve stayed on track and today we have excellent products, clear course and tangible vision as a platform for the future
Business Overview
BUSINESS OVERVIEW # 5. [Mission, vision and strategic goals]

Cimos is a global and fast-growing company, which is well-equipped to cope with daily challenges thanks to its innovate approach and flexibility. Cimos respects the needs of the individual and the community and responds to these needs in effort to be a model company and a group of companies that introduce innovations and improvements at a material, social and environmental levels.
Mission
The company's core mission to promote its presence on the market and to strengthen it position in the international economic streams. This mission dellivered by high-quality, development-oriented and creative work, since the company endeavours to raise the level of knowledge as well as to encourage permanent education and training of all people. In this way the company creates conditions for employment and offers creative possibilities for achieving strategic goals, which are being constantly fine-tuned to the pace of technology development.
Vision
Cimos will become a co-creator of the global processes. The company is determined to become a market-maker in the automotive industry and one of the most successful corporate groups in all activities on the target markets. At the same time, the company aims at becoming an important economic entity by combining knowledge and experience of people, modern equipment and capital on the one hand and the responsibility to the community and the environment on the other.
Strategic goals
Year after year, the Cimos group sets targets and expectations higher as its companies make headway towards profitable growth as the bottom line of the corporate strategy. The group's long-term strategic document serves as a beacon in guiding corporate development towards the following milestones: # # # # # # # # # consolidation of strategically conceived business fields; building of the four foundation pillars in order to encourage the growth of the entire group; prompt and effective response to market demands; crossing of new technological frontiers; cutting of costs; increasing of value added at high speed; sharpening of the competitive edge as a work-in-progress; global focus; environmental stewardship.
The Strategic Business Plan adopted by Cimos d.d. is a platform for carrying out business activities of the Cimos group during the 2008 2016 period. The new strategic goals and strategies indicated in this framework document are based on the achievements of the companies in the Cimos group during the previous period. The document focuses on the mechanisms, methods and practices identified as essential to give the Cimos group the impetus needed in order to keep the brisk pace of growth and development in the forthcoming period.
028
Business Overview
The analytical-mind frame, critical assessment of abilities and capabilities, as well as the synthesis of business decision-making process have enabled for many years the parent company and the entire Cimos group to creatively and successfully operate, reorganise and adjust with the aim of operating profitability and business excellence. In the forthcoming eight-year period, all companies in the Cimos group will focus effort on satisfying the milestones laid down in the group's strategic document for each pillar, namelly: # Automotive pillar Cimos will keep developing the automotive business with a focus set on the consolidation of operations and efficient assert management. The company is bracing for a number of new projects thanks to its development abilities. These projects will serve to strengthen the position of Cimos by putting the group on par with the largest companies on the international car manufacture market. Energy pillar Cimos aims at becoming the leading company in the field of hydroelectric and hydro-mechanical equipment for hydro power plants in the region. The subsidiary Litostroj Power is committed to cutting the production costs of the equipment as well as optimizing the operation and prolonging of the service-life of the plants. Agricultural pillar substantial investments were made for putting operations on track for thriving business and a strong foothold in the market of Southeastern Europe to promote a brand with a view to making it become a common household name; Machine building and tooling pillar the company is confident that this pillar under construction, by combining strengths of currently separate tool making centres and independent machinery manufacturers within the Cimos group, will become the leading provider of production automation and product prototypes manufacture in the region.
These forecasts were used as the basis for setting the three inseparable strategic goals, which the Cimos group is determined to achieve in the 2008 2016 period by implementing the adopted strategies for the four pillars. By 2016, the Cimos group is determined to: # # # generate earnings of 2 billion euros; achieve return on equity (ROE) of 8 per cent; continue to operate and develop within the framework of the four pillars.
While heading towards its strategic objectives, the Cimos group will be constantly monitoring four key elements of operations: # # # # customer satisfaction, profitability, employee satisfaction and creativity, and safe and healthy working environment.
The development of Cimos in the future will be complex leaving no stone unturned and based on the companys integration with the environmental and social resources adapted to the circumstances. As a globally positioned corporate entity, Cimos pays a lot of attention to improving emotional intelligence and recognising empathy as an economic resource when communicating with their peers: people, fellow workers, customers, business partners and fellow citizens. By grasping the situation correctly and by the ability to put one in anothers shoes people can communicate and get more information about a person and his/her potential. This is where the implemented fast and efficient two-way communication comes in handy.
029
Business Overview
# 6. [Economic trends]
According to the recent evaluations of international institutions including the OECD, the global economy hit hard by the 2008 financial turmoil and the economic crisis is recovering slowly driven by the strong economic revival in some Asian countries. The faltering world trade coupled with lack of business in all sectors of the economy including manufacturing, orders, investment, income and especially international flows of goods and services resulted in plunging GDP figure in the first half of 2009.
World economy
According to analysts, the world economy is recovering. The volume of the world trade rose by 16.7 per cent during the first ten months of 2010 year-on-year, even though the impetus was lost in the last months of 2010. Double-digit growth was registered in China (10.3 per cent), although India was very close with 9.7 per cent growth. Emerging and developing countries, Japan and Russia registered higher growth in comparison with the eurozone countries where the economy grew at the rate of 1.8 per cent.
Economic growth outlook

(in %) World Advanced economies United States Euro Area Germany France Italy Spain Japan Emerging and developing countries Russia China India
2009 -0.6 -3.4 -2.6 -4.1 -4.7 -2.5 -5.0 -3.7 -6.3 2.6 -7.9 9.2 5.7 Source: IMF, January 2011
2010 5.0 3.0 2.8 1.8 3.6 1.6 1.0 -0.2 4.3 7.1 3.7 10.3 9.7
2011 4.4 2.5 3.0 1.5 2.2 1.6 1.0 0.6 1.6 6.5 4.5 9.6 8.4
2012 4.5 2.5 2.7 1.7 2.0 1.8 1.3 1.5 1.8 6.5 4.4 9.5 8.0
A two-speed recovery continues. Activities in emerging and developing countries are growing fast (with average 6.5 per cent growth) and are close to full exploitation of their capacities. In advanced economies growth remains moderate (average 2.5 per cent). Unemployment is still high. Emerging economies, especially some members of the euro area, will continue to deal with fiscal issues deriving from huge deficit and debts.
030
Business Overview
European Union
In 2010, economy of the eurozone started to recover after a harsh 2009. Recovery was visible in the second quarter of the year and remained steady until the end of the year. # GDP in the eurozone increased by 1.8 per cent year-on-year. Growth enjoyed in the markets of our main trading partners was even higher than growth in the eurozone on average. The European Central Bank and the EU Commission expect a slow recovery of the European economy and GDP growth between 0.7 per cent and 2.1 per cent in 2011 and growth between 0.6 per cent and 2.8 per cent in 2012; slowing down of the world market growth will have influence on export activities of the euros area, that shall increase after a period of high growth in 2010 (10.7 per cent) for 6.1 per cent in 2011; along with feeble economic recovery unemployment remains high (in December unemployment level in the eurozone reached 10.0 per cent while in the EU 9.6 per cent); in the last months of 2010 interbank rates did not vary a lot. In December 2010 the value of 3-months EURIBOR amounted on the average to 1.023 per cent, which is 34 basis points more than in January 2010. In the first months of 2011 the values started to rise. Key interest rates of the most important central banks did not vary in December 2010; on average, the euro lost value in 2010 in comparison with the most important world currencies. On the average the value of the US Dollar with respect to the euro was in 1.3257 USD for 1 EUR. Therefore, in 2010 the US Dollar gained of 5.0 per cent with respect to the euro. In 2010, other two currencies have enhanced with respect to euro, namely Yen (10.8 per cent) and Swiss Franc (8.6 per cent). In 2011 euro started to fortify in comparison with the most important world currencies, with exception of the GBP; prices of raw materials in world markets surged in 2010 just like in 2007 and in 2008. Raw materials price index (in USD) rose in December 2010 by 23.4 per cent year-on-year, of which price indexes for agricultural raw materials grew most (34.5 per cent), followed by industrial raw materials (31.3 per cent) and food (26.8 per cent). Prices of non-energy raw materials reached record-high levels; the average price of crude oil Brent was 79.6 USD/barrel in 2010, and it is 28.7 per cent higher than in 2009 (in euro 60.6 EUR/barrel, this is 35.9 per cent more). Despite such increase, the average fluctuations of oil prices remained lower in 2010 in comparison with 2009. Prices of energy and non-energy raw materials increased at the beginning of 2011. In February, the price of a barrel Brent exceeded 100 USD/ barrel for the first time since September 2008.
# # #
Slovenia
In 2010, economic growth was almost entirely a result of export growth. Since companies and households were reluctant to invest, it is unlikely that the Slovenian economy will soon recover. Analysts say that the national economy grew between 2004 and 2007 from 4.3 to 6.8 per cent mainly driven by a rise in investment from 5.6 to 11.9 per cent. At the same time growth in household spending increased from 2.7 to 5.00 per cent, and export increased from 12.8 to 31.1 per cent. Clearly, investments played an important role in Slovenias economic growth. In 2009, growth of GDP ground to a halt when investments dropped by a 12 per cent. In 2010, Slovenias GDP increased by 1.2 per cent and recovery was slower in comparison with the eurozone (1.8 per cent). After a 8.1 per cent fall in 2009, the level of GDP is still far below the 2008 level reached; # # # export rose nominally by 13.7 per cent but it is closing the gap with the pre-crisis level more slowly than in many EU countries; manufacturing grew by 6.8 per cent as opposed to 7.2 per cent achieved in the EU-27 and in comparison with the 2008 level, it is 8.6 per cent lower, whereas this figure is 12.7 per cent in Slovenia; registered unemployment rate was 10.7 per cent in 2010 or 1.6 percentage point more year-on- year (9.1 per cent) and the number of the employed continued to fall
031
Business Overview
in 2010. The increase in the registered jobless persons was the highest in December 2010 and at the end of 2010, this figure was 110,021; consumer prices increased in 2010 by 2.2 per cent (HICP), the same level as in the eurozone. A relative low price growth was the outcome of a weak economic activity that has influenced on the moderate average inflation. In these terms the majority was contributed by higher excise duties and other duties, and price increase of energy products.
Automotive market situation

According to the estimations made by CLEPA, European Association of Automotive Suppliers, the sale of cars in 2010 grew 9.2 per cent. About 69.6 million light vehicles were sold, of these 90 per cent i.e. 62 million of passenger cars. Sale in new markets (China and Asian market) has increased the most, while the Western European market registered a reduction. Global sale of light vehicles in 2010 (in million vehicles)
3.1 66.0 63.8 1.12
70
1.2
0.356
0.334
0.304
0.135
0.180
69.6
72
- 0.828
66
68
9.2%
56
58
60
62
64
North America
Greater China
South Asia
South America
Japan / Korea
Middle East / Africa
Others
Central / East Europe
West Europe
2008
2009
In the first half of 2010, car sales in Europe started to pick up giving rise to hopes that the crisis may be over soon. Unfortunately, it was a temporary recovery. The subsidy schemes for the purchase of environment-friendly cars operated in many EU countries among them big automotive markets helped automobile industry when the economic crisis was taking the highest toll on car manufacturers. Many countries witnessed record-high car sales in 2009 and in the first half of 2010. In the second half of 2010, the trend was reversed as the subsidy schemes ran-out and car sales plunged. The automobile industry started to double dip. Movement in car sales since 2003 to 2010 (in million vehicles)
,5 18
12
,5
13
13
1 ,5 4
14
1 ,5 5
15
,5
16
16
,5
17
17
2003
2004
2005
2006
2007
2008
2009
2010
032
Aug Nov Feb May Aug Nov Feb May Aug Nov Feb May Aug Nov Feb May Aug Nov Feb May Aug Nov Feb May Aug Nov Feb May Aug
2010
Business Overview
Car sales fell in the second half of 2010 in all markets of Central and Western Europe. In total 13,360,599 new cars were registered in 2010 in Europe or 5.5 per cent less than a year earlier. In contrast to new car sales, car production in Europe has rose by almost 10 per cent. The stocks of cars produced in the pre-crisis years that axed orders placed with suppliers no longer exist and car plants are back in business. Forecasts in the automotive industry are rather reserved. Despite sale volatility and swings in 2010, a period of slow recovery is expected. Car sales in the European market should increase by 3 per cent as opposed to global sales expected to rise by 5 per cent or even more. Passengers cars sale in Europe (est.)
Annual changes
10 .0 % 25
5%
20
.0
0,
.0
0%
15
-5
.0
10
0 -1
5.
-1 5%
2007 Central Europe
2008
2009 Eastern Europe
2010
2011 West Europe
2012
2013 Change
The European carmakers are expected to fare aven better. In 2011 and 2012, output is expected to rise by 3 per cent and in 2013 it should reach 7 per cent.
Energy market situation

After a relatively long period of high demand, 2010 will be remembered as one of the most difficult years since the 1929 Great Depression. Consumption of electric energy in industrial countries fell for the first time after the Second World War and generated surplus of electric energy in the market leading to falling prices. Before the recession, the price of electric energy in Europe was 80 EUR/MWh, and under 50 EUR/MWh in 2009. Such situation in the market stalled many new energy projects in industrial countries and consequently affected the energy equipment industry. Lack of investment was also felt in the traditional markets such as: Slovenia, Croatia, Bosnia and Herzegovina, Serbia, Macedonia and Montenegro. The most affected by the economic crisis were Europe and America, less Asia (still attaining high rates of economic growth). Especially Asian countries with fast growing economies (China, followed by India) are striving towards energy policies that assure safe and reliable supply of energy, competitive pricing and environmental sustainability. Renewable energy resources play a key role in the balanced system of sustainable energy supply. Among renewable resources of electric energy, hydro energy has the longest tradition. Water represents the most important renewable energy resource. About 21.6 per cent of all electric energy in the world is produced by exploiting water energy. The advantage of water energy exploitation lays in the fact, that this energy does not produce greenhouse gasses. Long life-span is another important thing, as well as high efficiency and relatively low operating costs of water power plants, what announces a long-term bright future to this branch. Because of the increased share of renewable energy in the productions structure (known as dependent on weather conditions) a scheme of pumped storage power plants is planned as a reserve for a reliable operation of the power system. According to the IEA forecast, a 70 per cent growth in electricity generation is
033
Business Overview
expected until 2030. The share of hydro energy will be 14 per cent. In a long-term, this should benefit our energy equipment pillar. However, we should keep in mind that competitiveness shall remain at the forefront of our effort to preserve our market position. There are many new competitors in the market such as Chinese manufacturers and we have to step up cooperation with local companies in line with the principle: I produce where I sell. Investment opportunities are in countries with high potential energy of water: in Europe (the Alpine countries) and in Scandinavia. Today, more than half of the existing medium-size hydroelectric power plants are over six years old. The age factor indicates how such capacities need to be refurbished. This represents our opportunity. Possibilities are open in fast growing markets of Asia and Turkey.
Agricultural market situation

Agricultural production in EU covers about 40 per cent of the world production. The estimated annual EU income deriving from this field in 2008 was 28 billion euros. About 4,500 companies producing agricultural equipment are actively involved in this industry, with 135 thousand directly employed people and 125 thousand indirectly employed. Around 20 per cent of EU agricultural production is exported. Strong competition prevails in the market of agricultural mechanization. Competitive advantages are integrated in companies i.e. producers of agricultural equipment and machines, who are able to offer to consumers major safety, efficiency and comfort. In the last period changes have been implemented within the structure of products in the market. Demand is focused on tractors with major power, new and specialised (smart) attachments and on the hobby programme, while other products (beside multicultivator) are disappearing from the market. Trends in agricultural equipment in the European as well as in the global market are: # # # # specialised machines and high-tech equipment; specific needs and work optimization (faster, better, cheaper); bigger dimensions and higher powers of machines; new machines for market niches and multifunctional machines.
During the year under review, global sales of mechanization for farming decreased by 16 per cent to 58 billion euros. The sales figures for Europe dropped by as much as 22 per cent. The figures produced by UnaCom, a PR and business management organisation, reveal that with 17 per cent tractors and harvesters were hit hard, motor-cultivators followed with 10 per cent and trailers with 3 per cent. Irrespective of such negative trend in the last two years, analysts expect the agricultural (equipment and machines) market to be back on track by the end of this year.
Machine building market situation

We can witness major changes caused by the global crisis within this operation field in the last two years. Because of a sharp operation drop in all industrial fields, some regularity started to change. One of the most affected fields is production of vehicles, especially cargo vehicles. At the beginning of crisis, companies in this field have slowed down development activities and investments. Because of the lack of new projects and reduction of demand for serial tools and machines, machine building was faced with strong crisis. The fact is that capacities are exceeding demand. In addition, we are faced with new competitors in the global market. With our solutions we must defend our offer from competitors coming from China, S. Korea, Turkey, Spain, Italy, Portugal, Mexico, etc. This is not contestable. However, a contestable thing is that customers are comparing different offers despite the fact that they know the advantages of each one but at the same time these offers do not provide the same quality solution.
034
Business Overview
Crisis has struck developmental cycles in industry. Along with sluggishness in 2008 and in the 2009, in the last period we are facing a re-boosting of development activities and a faster launching of new projects. In times of crisis, companies started to optimise costs, consequently their capacities. Capacities were then directed to their key activities. Customers expect from suppliers: active collaboration in development activities, short flow times, flexibility and adequate price. Quality cannot be listed among expectations, because it is a fact. Expectations of customers abroad are reached with specialisation and passage of machine and tools projects for products on turn-key basis. The companies in machine building field in Slovenia make approximately 55 per cent of value added in the machine/ tools building and 6 per cent in of value added in manufacturing field. During the last five years, their value added was increasing faster than all manufacturing companies did on average; consequently, their share in value added increased, too. The Slovenian companies in machine building field are export-oriented and boast a high level of technical culture. They are present in the markets around the globe with almost 70 per cent export of production and of brands.
035
New partners fill us with energy to go the extra mile and build on relationships on strong foundations
Business Overview
# 7. [Annual business plan]

Annual operational objectives of business processes, facilities and operating functions and constant monitoring of their efficiency within the Cimos group is changing from year to year on the Progress plans basis. During the year under review, the automotive pillar of the Cimos group overhauled the Progress plan formation process. Such change offered a closer connection between strategic and annual targets and a major harmonisation between operating functions in factories, their targets and activities. Changes are going to be implemented to the other three pillars of the Cimos group, starting with the energy pillar in 2010. The annual Progress Plan is made on the basis of the corporate strategy until 2016 and serves to align the annual targets with the achievement of medium- and long-term strategic objectives. Based on the contemporary principles of the balanced objectives between all the participants, the following medium-term strategic objectives until 2012 have been set out: # # # # # # increase in the volume of sale, increase in the operating revenue, achievement of higher return on investments and increase net cash flow, update and extend the product families, develop and introduce new production programmes with the emphasis on the assurance of excellent and advanced system solutions for customers, ensure faultless, safe and in-time delivered products and services to meet expectations of our customers and users, ensure a safe, healthy and stimulating working environment, which offers a creative and dynamic work and creates satisfaction among employees and gives opportunity for personal and professional development, increase efficiency in energy consumption and reduce all types of environmental strains.
The medium-term objectives have been drawn up to approach long-term objectives by stages exceeding the short-term and one-year periods. The stated medium-term objectives represent the starting point for a short-term plan i.e. for the so-called Progress plan comprehending one year and covering all the annual objectives. Strategic objectives represent WHAT do we want to achieve on a long-term. Annual objectives, on the other hand, represent WHAT do we want to achieve in the current year. But the key question is HOW to achieve the annual objectives. The reply to this question is given by specific annual projects and activities that represent the main content of the Progress plan. Each activity has a definition of its purpose and a measurable target, responsible person or responsible operating function, a team or participating operating functions and a term plan. Some activities are more complex and distributed to sub-activities, which can be performed in single factories or single business divisions or factory in accordance with the policy of the holding activities. On this basis we have developed a range of objectives, from the top, longterm and medium-term Companies targets, which are defined with the strategy, to annual objectives of the operating functions and facilities and in some cases even to lower objectives aimed for the divisions or even for individuals working within such division. The objectives must have interactive harmonisation and shall be classified per priorities, what is being assured within the decision-making and activity- and target-taking process, conducted in work-shops and attended by all the executive directors, operating functions directors and facility managers. The described Progress plan is presented with the X-matrix scheme. The X-matrix gives to the management an effective overlook of the connection between activities and targets and over the course of activities. Furthermore, the employees receive the information in what manner the activities, they are performing, contribute to the achievement of the strategic objectives of the company. Although the Progress Plan is only the first step of the management process known as the P-D-C-A circle, it is the letter P for plan that should lead us to our targets. To achieve the set targets and realise the Progress Plan, we are focused also to
038
Business Overview
other activities of the PDCA circle: D-do, C-check and A-act, which can all be covered within regular management. Management comprises the implementation of the agreed operating activities and the activities from the Progress Plan (D), constant monitoring of such activities (C) and adequate action-taking in case of deviations (A). The meaning of constant depends from the level on which the Progress plan activity is monitored. In general, Cimos management reviews the status of the activities and indices so-called management reviews every four months. Executive directors review the progress made against the benchmarks set for operating functions and facilities at least once per month. While in facilities and operating functions the managers review the activities with priority each month and operating activities and indices at least on a weekly basis. The heads of sections in facilities monitor the operating activities on daily basis and team managers once per shift. A review at whichever level shall be followed by adequate reaction: corrective actions in case of negative deviation or standardisation and transfer of good practice in case of deviations from the set target. We are fully aware that in order to achieve such ambitious strategic objectives, we have to carry out successfully all four letters of the PDCA circle; pencil in the right and harmonised objectives, projects and activities for the progress and perform them in accordance with plans. Monitor their implementation constantly and consistently and act in case of deviations from the plan and from the set objectives.
# 8. [Reorganisation]
In the current year, efforts to improve operating efficiency have led us to the reorganisation of the automotive pillar operations. Such activity was not meant as a formality, but rather as a continuous process to be put in place through different phases: reorganisation, optimisation and rationalisation. When embarking on a company overhaul, it is not about inconsiderate cost cutting, but rather a challenge, profitable growth for the Cimos group. The objective can be achieved only by making a shift from traditionally organised operations to a processoriented business. Instead of rigid vertical functions where limits are exactly defined, the reorganisation creates a net or mesh of multifunctional groups i.e. teams and information running horizontally within the company. Optimisation of three main processes: # # # sale and development of products: production programmes organised as multifunctional groups, having clear ownership and responsibility for product, from its definition until expiry of its life span; manufacturing: reorganisation is focused on production processes. Lean production has been introduced in standard production processes, organised within four regions. All other functions support the production process; logistics: a centralised process of in-time products delivery.
The main objective of reorganisation is cost reduction and removal of waste needless activity. At the same time it will provide a clear overview over meeting of two targets: customer satisfaction and profit for shareholders.
039
Business Overview
# 9. [Brands of the Cimos group]

Particularly during the economic crisis, the battle for survival and preserving the companys position in the market tends to be bloody. Customer demand and needs continue to be of paramount importance when selecting business partners.
# 9.1 Cimos Brand

Under the Cimos brand different development services and production of components for the automotive market are subject to marketing activity. Within the automotive branch, Cimos brand is recognised as a quality and reliable brand focused towards future.
European Automotive Components Expo 2010, Germany

Cimos takes part at the European Automotive Components Expo in Stuttgart every year. From 22 to 24 June, Cimos exhibited at the Expo 2010. The Expo is the fastest growing fair in Europe and represents an excellent opportunity for suppliers of components and materials. The exhibition is organised simultaneously with the Automotive Testing, Vehicle Dynamics in Engine Expo, offering additional synergies. About 600 exhibitors took part in the Expo, from multinational companies showing innovative solutions in automotive industry, to companies from Low-Cost-Countries, such as the suppliers from China, Mexico, Brazil, India and Macedonia. Cimos exhibited its development and production programme. Development of engine components in accordance with the EURO6 standard and application of new materials along with technologic-manufacturing processes have drawn major attention of the public.
Autoindustry Autocomponents 2010, Russia

Cimos also took part in the 4th International Specialised Exhibition Autoindustry Autocomponents 2010, held from 29 September to 1 October in Togliatti, the Russian Federation. The exhibition is one of the fastest growing exhibitions in Russia, representing an excellent field for new opportunities for component and material suppliers. The exhibition represents an important cooperation platform for automotive engineers, R&D managers, procurement managers and innovation managers. At the same time, many other business activities were conducted (business conference, round tables, confrontations with potential customers, etc.) and enriched this event. In the exhibition area Cimos has presented its production programme with main stress on product programme Chassis foundation, comprehending pedal systems, auxiliary brakes and brake disks and drums. These products represent a perspective and interesting programme fields. As for Cimos, this is the first package of products, the company has presented to and offered in the Russian market.
SEE Auto Compo Net 2010, Serbia

From 19 to 21 May, Kragujevac, Serbia, hosted for the first time the International South East Europe Automotive Suppliers Industry Trade Fair. The event was based on customers acquaintance. More than 70 exhibitors had the opportunity to meet personally representatives of international automotive manufacturers, such as: VW, GM and PSA. Many exhibitors had the opportunity to make first business contact with automotive manufacturers. The fair represents the first step towards realization of the vision seeing the West Balkan as an auto region.
040
Business Overview
Cimos represented one of the major and more experienced companies in the automotive industry operating within the mentioned area.
# 9.2 Litostroj Power Brand

LITOSTROJ POWER brand connects companies and activities within the energy pillar. It builds on references of Litostroj achievements.
2nd Customer Conference Sarajevo, Bosnia and Herzegovina

In 2010, the second Customers Business Conference was organised in Sarajevo, the capital of Bosnia and Herzegovina. companies from Slovenia, Croatia, Bosnia and Herzegovina, Serbia and Montenegro, who deal with hydro power, participated as guests in the conference. Participants were introduced with Litostroj Power, connected with the group, as well as other subsidiaries of the group, its connection and cooperation within worldwide projects, the Hydraulic development centre in Czech Republic and the developmental capacities. Few themes were presented to participants, among them: Saxo type Turbine, pump turbines, DTRx regulators and state of the art approaches to refurbishment and up rating of water turbines. The conference was an excellent opportunity to present the achievements of Litostroj Power and new technological solutions in research and development, and to get a feedback from the customers of Litostroj Power.
Hydro 2010, Portugal

From 27 to 29 September 2010 the international conference Hydro 2010 was held in Lisbon, Portugal. The conference theme was Meeting Demands for a Changing World. About 1,300 participants from 85 countries took part in it. Litostroj Power participated in the accompanying trade fair, among other 100 companies, with a contribution of Jindich Vesely from our Czech company, with Theoretical and practical results of hydraulic research of stochastic blade passage application in Hydrodynamic machines. We had the opportunity to meet existent and future business partners in other conferences and events organised during , among which the most important: IPPBC Vancouver fair and conference of equipment manufacturers and private investors from the USA and Canada, the traditional HydroVision 2010 in Charlotte, North Carolina, for the northern American market and Canada. In our construction sites in Slovenia and abroad, where we are involved in projects, we have indicated our presence and collaboration with inscription panels.
IAHR EU, Scotland

The first European congress of the IAHR took place in Edinburgh, Scotland. The main theme of the congress was a theoretic and experimental modelling of hydrostatic and hydrodynamic occurrences in engineering, with focus on exploitation possibilities of sea waves, supported by the EU. Our contribution to the congress was a lecture on Modelling of dynamic response of air valves during pipeline transients.
Water turbines conference Wasserkraftanlagen, Austria

We took part in the conference focused on water turbines the Wasserkraftanlagen in Vienna, where we presented a lecture on Compact vertical axial turbine SAXO.
041
Business Overview
# 9.3 TPS Brand
TPS brand pools activities in the agricultural field. In 2010, the subsidiary Labinprogres TPS took part in the fair Eima, Italy. While its distributors took part in 13 fairs in Italy, Slovenia, Bosnia and Herzegovina, Serbia, Croatia and Morocco.
International Autumn Bjelovar Fair, Croatia

TPS brand was represented by two authorised distributors, Entrada d. o. o. and PMT Poljoopskrba d. o. o. For the first time, during the Spring Fair (26. 28. 03. 2010), we presented the tractor Tuber 40 with a cabin. The new product attracted the attention of the visitors. During the Autumn Fair (10 to 12 September 2010), in collaboration with the Zagrebaka banka, a sale action of farming machinery was carried out, giving the opportunity to purchase equipment under favourable sales terms.
SIAM Salon international de lagriculture au Maroc, Morocco

Among the most important fairs in which Labinprogress TPS took part in 2010, is the SIAM fair, held from 28th April to 02. May in Morocco. Labinprogres TPS took part in the fair together with other eight Croatian companies under the patronage of the Agricultural mechanisation association. Attention for the products was big, as all exhibited products were run out. This showed a good business opportunity for the entry in the Moroccan market and an entry tentative in Algeria and Tunisia.
Meunarodni poljoprivredni sajam (International agricultural fair), Serbia

The fair was held from 15 to 22 May in Novi Sad, Serbia. Labinprogres TPS was represented by a distributor for the Serbian market - aptovi d. o. o. Despite the economic crisis, around 1,300 companies took part in the fair, of these 30 per cent foreign from more than 20 countries. Despite a large number of events and exhibitors the visit was minor than expected, mostly to be contributed to unfavourable weather conditions.
EIMA, Italy
In November, Labinprogres TPS participated in the most important agricultural fair in Italy, which took place in Bologna. Labinprogres TPS, together with its authorised distributor for the Italian market took part in. It resulted in a good business move, with new business opportunities that will be carried out in 2011.
# 9.4 Cimat brand

CIMAT is a new brand within the Cimos group. Cimos as a group of companies is becoming more and more recognisable in relation to its public and known as a wellregulated business system. It is a reliable and to the future-oriented global partner. In the last months arrangements over the formation of a new brand name were in course. It will build and integrate the Cimos machine building and tooling pillar, its companies and people. It brings up references of all Cimos achievements. Cimos red colour and signature contribute to stability and incorporation within the operating system. The basic operating applications are at a stage of preparation, during the 2011 all necessary publicity material will be ready.
042
Business Overview
# 10. [Sales]
The sales strategy of the company has been set upon the conviction that there is a direct correlation between the high sales figures and the level of satisfaction of the customers. The company is thus committed to establishing good business relationships and foreseeing the needs of the customers as it gets along by keeping a watchful eye on the innovations and the market development. In 2010, the company faced new market conditions that meant protraction of the crisis from the previous year. A fast response and adaptation to new conditions resulted in a higher sale. In 2010 the parent company Cimos has registered 356.6 million euros in sales revenue, representing an 12 per cent growth with respect to the previous financial year. The growth in sales (manly triggered by programme diversification) was a little bit higher in the Cimos group that has registered 419.7 million euros of consolidated net sales revenue.
Sales revenue by pillars in 2010
Energy pillar
15%
82% Automotive pillar

2%
# 10.1 Automotive pillar
1%
Agricultural pillar
Machine building and tooling pillar
Sale of automotive components has increased to 343 million euros in the 2010. New projects (mostly from the eco mobility) in a standstill because of customers cautiousness were initiated, at last.
Products
Two out of four production programmes (Turbo and Engine/ Gearbox) are directly linked to innovative solution research. In accordance with the latest environmental requirements and development of components for a new generation of EURO 6 compliant engines vehicles, the company will contribute to reduction of CO2 emissions, optimisation of energy use and expansion of renewable energy use. New components will weight less, and will be produced from new materials with better mechanical and thermal properties. The blueprints for achieving these targets are in the headquarters and production facilities of the Cimos group. Cimos collaborates with its strategic development partner on turbochargers projects, which calls for fresh knowledge in terms of more demanding materials and production processes of these elements. Cimos is one of the largest European manufacturers of components for turbochargers of the new generation.
043
Business Overview
Sales revenue of the automotive pillar by production programme in 2010
19%
Chassis
35% Turbo
10%
Other
Car-body parts
9%
27% Engine/Gearbox
The company recognises the importance of environmental stewardship and safe mobility. Its Chassis and Car-body production programmes contribute to road traffic safety. Cimos is a long-term development supplier (Tier One) of the Chassis parts to a wide range of customers. As a strategic partner, the company is involved in the early stage of concept design of a new car model as its brake system (pedal boxes, handbrakes, brake drums and disks). The new generation systems will comply with the latest safety and environmental standards and will contribute to better safety in road transport, major comfort of driver and passengers. Car bonnet hinges for active pedestrian protection (Car-body parts) are produced by having in mind a higher level of pedestrian safety in case of impact. The hinges are mounted on the German premium car brands. Optimisation of one of the main processes product sale and development will lead us towards modification of production programme organisation. In 2011 the production programme will be redesigned and Cross-industry products will be added.
Customers and new orders

Cimos product families cover more than a 10 per cent of the European market share. Products about 260,000 daily delivered in 2010 are installed in different car models, among which: BMW, Mini, Citroen, Peugeot, Renault, Audi, Ford, Toyota, Volvo, Fiat, Opel, VW, Aston Martin, Daimler and the Russian Avtovaz. Year in and year out there are less and less European car brands that do not feature one of the Cimos components. As regards new projects, the revival of the automotive industry is a most welcome sign. The majority of automotive manufacturers are intensively working on new projects launching of new car models on the market. We are following customers activities. Under such dynamics we endeavour to accomplish our projects. The majority of orders for new development and production projects have already been acquired from our existent customers. However, we shall not ignore minor projects from new customers (from the premium cars segment).
New markets
The most noticeable fact in the 2010 is improvement of operations of those automotive manufacturers, who increased their presence in the growing markets. Market and production globalisation, which brought wealth in many in the past non-developed countries, has created new needs for increased mobility. Consequently new markets have originated, representing a new potential for automotive manufacturers.
044
Business Overview
We were aware of this, therefore, we entered in-time in the Russian market. We entered into a partnership agreement with a Russian automotive supplier for brake systems. In 2010 production and supply of pedal systems and handbrake levers started for the biggest Russian car manufacturer. During the year we obtained other orders for development and production, that will start at beginning of the second half of 2011. In parallel we are involved in negotiations for the establishment of a partnership with a company, specialised for aluminium castings and production of plastic that would cover the large demand in the field of development and production of components for the green engines.
# 10.2 Energy pillar

In order to deliver a pro-active service programme, the experts working in the energy area keep abreast of the developments in the market place and are ready to provide dependable and productive solutions to maintain long-term relationships and preserve strong presence in the local markets. The companys customer and market orientation aims at delivering superior value to the customers both in markets where it has strong references and in the emerging markets. The water-to-wire powerhouse equipment packages supplied by Cimos are custom-designed and ensure efficient, long-term performance. To ensure maximum possible power output and minimum chance of failure every, the component supplied by other manufacturers such as generators, transformers and management are selected with utmost care. Cimos is also partners other manufacturers by establishing consortiums to enter new markets. In 2010, the sales amounted to 63.7 million euros, of which the domestic and foreign markets accounted for 32 per cent and 68 per cent respectively. The largest sale share in foreign market was created in America (30 per cent), in the former Yugoslavia territory (18 per cent), Asian market (11 per cent) and in some countries of West Europe (8 per cent). Realisation by production programme: # Turbines sold in Europe and Asia accounted for the bulk of sales since the deliveries of the equipment for the Bhavani II and III projects in India were completed, as well as for the Limberg II project in Austria, for the Dubrava hydroelectric plant in Croatia and for the hydroelectric plant Peruica in Montenegro; the first deliveries of the equipment for Sv. Petek in Macedonia were also made in 2010. The deliveries for the first of two units of the refurbished hydroelectric plant Edsforsen in Sweden and to the Slovenian power plants were completed; Turbines sold in the North and Central America accounted for a smaller share of total sales; Spare parts for pumps accounted for one per cent of total sales.
# #
Sales revenue of the energy pillar by production programme in 2010
69% Turbines Europe

and Asia
Turbines America
1%
Pumps
30%
045
Business Overview
New orders
After a hard work over preparation and presentation of offers, search for new customers and partners, improvement of relationship towards customers, product integration, search for new operating models, cost reduction etc., in 2010, we have finally succeeded and have acquired more orders than in the past two years, despite harsh economic conditions. New orders came mostly from foreign markets. We were effective in India, Iran and Scandinavian countries. At the end of year we succeeded and broke into the USA market. Unfortunately, among the new orders there are no projects for the domestic market and for markets on the territory of the former Yugoslavia. With the purpose of intensifying our service activity and preservation of relations with customers, increase of new business possibilities, we have implemented the COMOS project in 2010. Within the project we have re-installed business relations with customers, who have ordered our turbine equipment in the past years.
# 10.3 Agricultural pillar

2010 will be remembered for efforts to boost sales and investments in the internal organisational adjustment of production, stocks and optimisation of production plans and cost reduction. Sales campaigns and promotions in all important markets and special prices offered to the employees of the Cimos group were organised, with a large publicity campaign and other promotions of the products sale. Activities within the agricultural pillar have been oriented towards the participation in numerous regional and international fairs. Collaboration has been spread to a major number of new customers and marketing scale in new markets has increased significantly. All these activities and the efforts made within production programmes of the agricultural pillar have produced results. Despite a plunge in sale of agricultural machinery, the total sale value increased by 4 per cent. Percent change in value of sales revenue per product line (in %)
60
80
10
92.85
0%
40
33.46 4.07 -8.72
31.62
0%
0%
20
-19.60
Tractors Merchandise
-4
0%
-2
Basic machinery Engineering
Hobby Agricultural machinery parts
While sales of agricultural equipment (tractors, attachments, two-wheel tractors, ) have increased of more than 21 per cent, sales of agricultural machinery parts (integrated into agricultural equipment of a German brand name) have dropped for 19 per cent. Drop of this programme is the outcome of a decision taken by our German customer to transfer a part of production in India, and the other part in Germany, where free production capacities appeared at domestic suppliers as a consequence of lower economic activity. Despite structural changes in the production programme, the structure of sales markets remains unvaried. The most important market is the Croatian; despite a reduction in sales activities in 2010. Loan terms have worsened and some subsidies were cancelled. As the outcome, sales of tractors has diminished. Opposite trends were registered in the Turkish
046
Business Overview
Sales revenue of the agricultural pillar by production programme in 2010
46% Basic machinery
Agricultural machinery parts
33%
1%
Engineering and Merchandise
7% Hobby
13%
Tractors
market, where sales grew up. Traditional markets of Bosnia and Herzegovina and of Serbia were marked by poor growth, mainly because of sale campaigns, price discounts and other investment incentives. In spite of difficult economic conditions, in the 2010, we were successful in entering new markets and it is a good starting point for the future. Our products were exported to Hungary, Portugal and Belgium for the first time. Collaboration with Iran and Denmark where demand for tractors is high has been sealed with the sales contacts. Good news come from other Scandinavian countries, too. The conditions in the market for agricultural machinery and equipment have been changing fast and without a warning. The economic situation in Croatia and in other export markets will tailor the manufacturers results in the forthcoming period. We are ready to make the necessary changes and adapt to the market in terms of increase of sales activities as well as in terms of extension of product lines. High hopes have been pinned to the launch of new models Tuber 50 and Tuber 60, with trailers (and a wide array of implements) to be used both for the new tractors and for Tuber 40 already in the market.
# 10.4 Machine building and tooling pillar

Year by year, the sales value of the machine building and tooling pillar is growing. Custom machines and tools have been manufactured for our production plants. At the same time we manufactured and sold machinery to customers from Russia and India. Big opportunities for growth are offered by the Russian market and by markets of the former Soviet Union. As announced for 2010, activities for upgrading of the Machine building and tooling pillar were performed. During the regular session of the Supervisory Board in April, a concept of operations referring to the machine and tool building pillar has been presented. Strategic guidelines from market segmentation to plans for development of the brands recognisability, new products and services, connections and realisation of growth have been presented. The concept of revival was presented mostly with the purpose to intensify competitive primacy of the automotive pillar, support to the strategy of vertical integration and concentric diversification of the Cimos group, research of products and services with major value added, better exploitation of production capacities of machine building and intensifying of the know-how, as it has been established that tool-shops are operating only locally. None of the machine building centres is organised as independent legal person. They operate within and for a production facility, where they are located. They are not subject to constant pressures from external competition and this reflects in their competitive position,
047
Business Overview
quality, delivery dates and flexibility. Value added of the machine building pillar is expected from manufacturing of devices, tools and machines. Sales revenue of the machine building and tooling by production programme in 2010:
64%
Machines
36%
Tools
# 11. [Development]
# 11.1 Automotive pillar
From the development point of view, 2010 has been an intense and successful year. The cooperation with the majority of customers increased consistently. For a company in the automotive branch research and development activities of proper products represent a central competitive advantage. Without internal development capacities and competences in today's circumstances, it would be rather difficult to operate within the automotive branch that has come to a turning point in terms of products. Because of social, climatic and other changes, the present motor vehicles will completely change in future and will become different products more efficient, ecology oriented, safe and computerised. Cimos standard products will change essentially and become more mechatronized. This is the reason why Cimos is making intense investments in new development and production technologies, facilitating the pursuing of trends and active co-formation. Cimos orientation in the automotive industry is pursuing the development of safe, energy effective solutions within four key areas:
Engine and Gearbox:

# in collaboration with the customer BMW, the main activities were focused on development of engine bracket for the new MCV vehicle. The objective is to develop a polymeric bracket with a 30 to 50 per cent lower mass in comparison with traditional aluminium brackets and with 30 per cent lower price. It is an extremely demanding technical challenge, because brackets having limited volume and mass must guarantee mounting function and loadings in case of collision that happens in a very short time; as regards BMW we have continued with development activities for other engine brackets. For the first time we have used advanced functions, the so called digital muckup, with CATIA V5. We are speaking about virtually composed vehicles, i.e. about preventive checking of collisions occurring between the product and the environment. Another important project is the development of engine bracket for the new generation engines EURO6; as regards the major business partner in this field, PSA, the first half of the year
048
Business Overview
was concluded with efficient revision audit of collaboration in the past years. This confirmed the status of Cimos as one of the leading development suppliers of the PSA group in terms of engine brackets and equipment brackets; technical solutions and development of the new equipment brackets and engines EURO6 were completed with success and many development activities for the flywheel development project were initiated. Development of different types of flywheels (for two new projects) continued for Ford; after a successful presentation of our development part and production of engine components in different locations, Cimos has won a contract with another customer the VW, covering the largest sale share in the European market.
# # #
Chassis:
# # development of auxiliary brake and pedal boxes for the BMW new car models has been completed; a conceptual development of auxiliary brake and pedal boxes for the new BMW platform UKL was brought to a close. The development project was led within the BMW project team in Germany. For Cimos this project represents recognition and a big opportunity. In 2011, many activities focused on the acquisition of a serial order will start; Intensive work is going on in development and optimisation project of the Renault auxiliary brake for the Russian market. We have started with a conceptual study of an exchangeable handle for Opel, within the OPEL Mini Junior project; a concept development of auxiliary brake for PSA was completed with success. The project was followed by an order for serial development and production the first aluminium handbrake lever developed in Cimos; We have acquired an order for development of pedal systems for two Renaults projects for the Russian market, namely development and installation of production for an improved model of Dacia Logan in Russia; intense activities for a concept development of the Audi brake pedals are in course; the objective is to achieve 50 per cent weight reduction by employing hybrid design, metals and polymers; In terms of other chassis parts the main activities were focused in acquisition of the CAE methodology for development of shock absorber lever and of hydrostatic bracket; Activities over installation of a new laboratory for testing of brake drums and disks were conducted in Koper. This will give us the opportunity to obtain additional development activities for this product family; Together with Ford we have been performing improvements of brake disks and drums for Ford Fiesta and have been trying to find design solutions for noise reduction; For the project of brake drums and disks project GAZella NEW we have installed new business collaboration with the Russian company GAZ from Nizhny Novgorod; Cimos competences in terms of development and production of brake disks and drums were presented to a potential customer in Germany (producer of brake plates for passenger and commercial motor vehicles).
# # # # # # # # #
Car-body parts:
According our estimations, projects within this group place Cimos on the European scale to a leading position. # # # Acquisition of a serial order for engine cover hinges with active and passive pedestrian protection system for the new Audi model; development project of engine cover hinges with active protection for the new Bentley vehicle was carried on; our capabilities and references in this field were presented to PSA R&D in terms of concrete solutions of the PED PRO system, prepared for PSA projects.
049
Business Overview
Turbo:
# # # # The main development activities were focused in the development of four types of centre housings for the Audi project; collaboration on the PSAs turbo-compressor housing; we have acquired an order for development of a new generation 3-part insert a component part of turbo-compressor that will integrate two, up to now separated functions; in agreement with the main customer for turbo components, our development engineer started to collaborate in the customers development centre in Thaon Les Vosges, France. Cimos will intensify its presence in development groups and projects of this customer. It is very important for the planned takeover of developmental activities planned for the future, such as: contemporary engineering for development of compressor housing for the PSA project; intense activities were implemented in the case of two new customers. At present, development of production processes for new turbo components is in course.
Regarding the development field we have prepared new and pursued with the realisation of projects that were co-financed from different home and EU funds for the support of the R&D activity: # In collaboration with the Faculty of Mechanical Engineering of the University of Ljubljana, we have continued with activities focused on the EURECA E!4480 OMDAP Modal properties optimization of dynamically loaded car parts to enhance their fatigue life project. The project was completed on 1 July; According to the plan we have continued with activities of the research-development project Electric auxiliary brake the 2nd generation and Development method for modelling of consequences at extreme loaded designs. In collaboration with Magna Steyr, Graz, we are carrying on activities for optimization and preparation of market activities for the 1st generation EPZ; With partners within the ACS and on the basis of a public tender of the Ministry of the Economy and the Ministry of Higher Education, Science and Technology we have prepared two projects and were successful: SiEVA (Synergistic Ecological Safe Car) project groups competences, potentials and development infrastructure in order to develop new solutions for advanced internal combustion engines, hybridisation and electrification of cars, safety and comfort and business excellence; SiMIT (Sodobni Materiali in Inovativne Tehnologije Modern Materials and Innovative Technologies): partners will focus activities in research and development of new, innovative and ecology sound new materials, techniques and technologies; In collaboration with the Laboratory for Dynamics of Machines and Structures of the Faculty of Mechanical Engineering in Ljubljana, we have prepared and acquired the project Structural dynamics in automotive industry that will be co-financed by the Slovenian Research Agency ARRS.
# #
In 2011, Cimos will carry out a host of other important tasks and cope with challenges.
# 11.2 Energy pillar

As regards product-related R&D activities within the framework of the energy pillar, we followed in 2010 the milestones set out the Operating Plan that elaborates on three main business processes: # # # application and basic research work for the projects financed by the government organisations, product development including making offers, engineering and advising, product and project development for turbines, pumps and industrial equipment for the provision of contract and project project-related specifications and drawings for all phasesm of implementation.
Licences of an engineering programme package Ansys Mechanical, replacing the existent obsolete package Algor (not efficient to perform analyses of turbine systems)
050
Business Overview
were ordered. The new programme will be used for demanding calculation of hardiness of turbine elements and turbine equipment. Renewal of licence for the package Ansys CFX will give us the possibility to perform calculations of fluxes in wet parts of turbo machines/ equipment. Purchase of the fore mentioned licences will enhance competition of our development work. Both programmes are in use. Programme package Ansys Mechanical has been applied for hardiness analysis of the Kaplan turbine elements for HPP Zlatolije and standard analyses of projects in course. The CFX program was used for flux analysis in pressure regulator for HPP Bone Creek, characteristics analysis of the double Francis turbine HPP Franquelin, characteristics analysis of the valve for HPP Toro 3 and flux analysis of turbine for HPP Lee. It has been also employed for flux analysis of the turbine SAXO. Research projects work is proceeding in accordance with the programme. Projects were co-financed by the Republic of Slovenia and the EU. We will also cooperate in a new research project (cavitation modelling in turbines), co-financed by the Slovenian Research Agency. The objective of a three-year long project (with the involvement of our researchers) is the development of a tubular turbine with reduced exposure to cavitation occurrences during long-term function. Research work (preparation of project technical documentation) of project and construction engineers is carried on. We were involved in preparation of technical documentation for the following projects: HPP Krko, Bone Creek, Doblar 1, Toro 3, Khoda Afarin and Pyhkoski. A good part of development time requires finding solutions for nonconformities in production and unpredictable activities connected with solution of specific issues on the equipment (visible only during trial operation of machines). In the hydraulic laboratory in Blansko, the Czech Republic, we have performed with success two acceptances of Francis turbine models for the project HPP Doblar 1 and Toro 3. At end of 2010 we have started to work on a model of the Kaplan turbine for HPP Khoda Afarin. The hydraulic laboratory is operating within the company KD Blansko Engineering. In December, a successful acceptance of a Kaplan turbine model for HPP Pyhkoski was performed.
# 11.3 Agricultural pillar

In the area of agricultural machinery we are striving to increase the market share. Lot of energy has been put in the development of new products that are interesting for our final customers. Our key development projects in 2010 were: # tractor Tuber 50: the tractor concept is based on the chassis of the Tuber 40 model with application of a more powerful engine. We are endeavouring to develop a tractor, whose components will be common to the ones used for the Tuber 40. By this we will optimise production of the existent tractor and of the new one; weight transport trailer for Tuber 40: a one-axis transport trailer with carrying capacity of 3,500 kg and equipped with a hydraulic and pneumatic system (together with electric equipment) is in its developmental phase. The trailer will facilitate loading and unloading as it will have the possibility to open in three sides; loading ramp: an attachment for tractor Tuber 40 and 50; it fits on the front side and it is used for manipulation of bulk or solid cargo. Project includes development of a loading ramp, capacity up to 250 kg with carrying capacity up to 1,000 kg. flail mower: particularly suited for cutting grass, shrubs on all green areas, golf play grounds and other areas. A flail mower with hydraulic arm is in its developmental phase. Driving of mower is guided through a transferable mechanism. rotation mower RK 100: an attachment for the existent two-wheel tractor Special Green product of the TPS brand. A prototype has been already constructed and it is in testing phase. improvements on transmission gear of Special Green: with the purpose of breaking into a new market we produced a transmission system of the two-wheel tractor Special Green. The transmission gear has a reinforced differential gear that facilitates transport of a heavier cargo. A prototype is ready and was tested in our production facility by a potential customer.
# # # #
051
Business Overview
# hobby range: Labinprogres TPS operates in the market of half-professional and professional agricultural machinery and in cooperation with partners in the segment of small agricultural machines, i.e. hobby range. With the purpose of spreading our production we will start to implement more important activities in this range of products, too. tractor Tuber 60: starting project phase for a more powerful tractor. A prototype has been planned for the second half of 2011. The project will comprehend development of product and process.
# 12. [Procurement]
Cooperation activities between customers and suppliers are remodelled in longterm partnerships. What we expect from our suppliers is not only sharing of knowhow, experience and information, but rather sharing of common vision, strategy and objectives. The establishment of a long-term cooperation is not sufficient. Focusing on a long-term improvement of cooperation performance is indispensable. We expect our suppliers to prove their technology-production competency, technical and quality compatibility, competitiveness, know-how, experience and best business practices and willingness to invest, learn and improve. Within the automotive branch companies are no longer competing as individuals but rather as supplying chains involved in everyday value deliveries to customers. In harsh conditions appropriate selection of suppliers has become even more important and critic in terms of competitiveness and reliability in meeting the deadlines and quality requirements. Suppliers have a direct influence on prices, product function and on the supply chain.
Raw material markets situation

Material prices increased in 2010 because of the recovery in economy, especially of the automotive and transport industry. More than a real demand, acquisitions of hedge funds have influenced growth of material prices. At the end of the year, insurance companies started to raise credit limits to automotive industry and to suppliers on the basis of better financial results and forecasts of the automotive industry. Factors that have influenced the market price of primary aluminium were beside the rise of price by LME (London Metal Exchange) also rise of producers premiums as a consequence of silicon price rise and energy products price rise. Price of secondary aluminium is formed in dependence of the aluminium scrap. However, the correlation is not linear as the market price is influenced by the level of demand and by speculative purchases and forecasts. The early recovery phases, mostly in Asia and South America, spurred interest in commodities. As a consequence, record trading values on the metal exchange occurred. Volatility of the global economy in 2010 has contributed to LME to achieve a record trading of 120.3 million euros. Major trading activities were focused on the aluminium (42 per cent of the total LME trade), copper (27.5 per cent) and zinc (15.6 per cent). Trading with steel has achieved record values, too. Trading quantity of steel rods on the LME has increased six times in 2010. World production of primary aluminium increased in 2010 of 3.8 per cent to 24.3 million tonnes with respect to year 2009. Production capacities ended to 26.8 million tonnes in 2010. Chinas aluminium production increased of 24 per cent in 2010. Production of crude steel topped a record value of 1,414 million tonnes or 15 per cent more year-on-year. All major steel producers gained a two-digit growth in 2010: EU and America registered a higher growth because of lower production in 2009, while Asia and the CIS states registered a drop in comparison with the 2009. Availability of production capacities in December 2010 resulted of 1.1 per cent higher than a year
052
Business Overview
earlier, i.e. 73.8 per cent. The bulk of crude steel s production is in Asia (63 per cent), Europe is on the second place with a 15 per cent share, followed by North America and the CIS states with an 8 per cent share. Production in the rest of the world covers less than a 6 per cent share. Chinas steel production has increased five times in the last ten years, covering a 44 per cent share of the global steel production. China has been striving for decades to modernise its steel sector. The government ordered to 2,087 steel and aluminium foundries to shut down some of the oldest production facilities until end of September 2010. By shutting down smaller and poorly equipped productions they may well reach modernization and major competitiveness. In 2010 use of such financial instruments has spread to iron ore field as well, as consequence of altered trading conditions in the international market with three largest mining companies.
Supply chain management

At beginning of 2010, we activated the B2B portal for supply chain management. All potential and actual suppliers are the B2B portal users. The B2B portal will give to suppliers complete information about supply chain management, about strategies and objectives. In mutual cooperation sharing of mutual objectives between customer and supplier is of a vital importance. Such objectives give support to Cimos procurement strategy that it is oriented towards building of an innovative, competitive and reliable supply chain. Key processes such as nomination of supplier, product and process development and serial production are now supported by documents available to suppliers on the B2B portal. We would like to standardise and harmonise activities and procedures by considering the automotive standards and customers requirements. Electric data exchange gives us the possibility to shorten reaction times between the actors of the supply chain; it offers a faster access to documentation, R&D documentation and better transparency of processes. B2B brings another advantage a systematic approach in the formation of the supplier base, i.e. of a base comprehending potential suppliers for new projects. Suppliers will be monitored on regular basis, evaluated with regard to their capability and adequacy to cooperate within the automotive branch. Within the portal we have defined steps and conditions for integration of potential suppliers in new projects, which are oriented in available know-how, experience, operating practice, available resources and production capacities, competitiveness and innovation. The purpose was to present concepts as the condition to start a mutual cooperation and to check, together with the supplier, the areas that would be suitable for Cimos support in terms of training and development of suppliers. The environment we are involved in is very dynamic. The contents of the portal will be adapted to new requirements and expectations of the automotive manufacturers on regular basis. On the initiative of the Chamber of Craft and Small Businesses we have organised a trade fair in Cimos. With regard to a lively interest for the event the fair was visited by companies, who are not involved in business activities with Cimos and for which we have evaluated that there are possibilities for cooperation. Part of the day was designed to the presentation of Cimos and of Cimos functions; interaction with the supply chain and the other part was focused on the technologies and products, particularly those offering the possibility of a joint cooperation. A lot of attention went to business practice and to legality applicable in the automotive industry such as: dependence within the supply chain, preventive actions in all processes from product/ process development to the assurance of a reliable supply to customers, in time and in quantity, and management of innovations. As regards the development field, we have spoken about development competences in terms of analyses, tests and prototype activities and other trends oriented in modularisation.
053
Business Overview
# 13. [Production]
Technologies
2010 did not favour the introduction of new technologies because we were under the influence of the past years economic condition and of the credit crunch that is still a topic. Despite all we continued with the development of new products and production means. Our objective was serial production of products described in the sequel. Most new projects are appointed on existent production means and are achieving their optimum exploitation. At the same time there is no need for additional investments in new equipment. The system for nodulation of steel alloys in a foundry in Bosnia and Herzegovina, which has been developed, manufactured and installed in the 2009, represented the basis of a technological upgrading. In 2010 we have acquired three important projects: two for an existing customer and one for a new one. All the three projects are subject to intense development activities in terms of casting process, machining and assembling. Serial production is expected at beginning of the 2011. In the Serbian subsidiary (steel foundry) capacities (steel micro-casting) are being filled well. We have acquired another important project brackets for diesel injectors; a development project with start of production planned for the 2013. On the basis of a large number of successful projects and strategic connection of Cimos with its biggest customer, we have launched projects for development of casting and machining of high-alloyed and high-temperature-resistant steel turbines. Sizes of engines are being reduced, and turbo compressors are more and more used for gas engines. Beside this, requirements for reduction of carbon monoxide emissions, carbon dioxide emissions and solid particles and on the other hand demand for the increase of combustion temperatures will unlatch the demand for such products in the future. For this reason we have started with development of steel casting (steel turbines) in a foundry in Serbia and with development of machining in a manufacturing facility in Slovenia. In Bosnia and Herzegovina we have launched a manufacturing and assembling process for the new nozzle ring of the third generation (GTC). At Cimos, the range of components is increasing and calls for the introduction of new technologies. In Slovenia, new technological solutions in machining process for production of demanding steel flywheels for Volvo and Ford made possible the acquisition of new projects for flywheels and have doubled occupancy of production capacities. Development of casting process and machining process of a complex and dimension-demanding aluminium product (housing of EGR valve) for the new customer Continental has been completed. In this period the first serial deliveries are starting. Beside before mentioned projects we have started to develop a process for a large number of Cimos traditional products and systems. In terms of engine and gearbox parts we started with development activities in the first half of 2010 all parts refer to the new generation of car components subject to Euro5 standard and are the result of excellent development and production cooperation with customers. A major optimisation of existent processes and increase of productivity casting and machining will give us the possibility to introduce these processes almost without additional new sources. To optimise material flow in production processes and between production facilities we have performed many internal transfers of production in 2010. Furthermore, we have performed in-sourcing for more than seven important products.
Process optimization
With the view of making adequate management and improvement of processes become a permanent, systematic and goal-oriented practice, we took up and pursued the Lean Manufacturing methodology in the manufacture programmes of Cimos. Guided by the
054
Business Overview
vision where adequate command of and improvement of processes would become a permanent, systematic and goal-oriented practice, we have taken up and pursued the Lean Manufacturing methodology in the manufacturing programmes of Cimos. The Lean Manufacturing deals with manufacturing processes from order entry pattern for warehouse items through all necessary and unnecessary manufacturing steps until goods are sent to the customer. The bottom line of the lean production is to remove as much waste as possible from the manufacturing process, i.e. chop off the activities that fail to add value to a product or in any other way keep products on the valuestream map and consequently lead to unnecessary manufacturing cost hikes. Results are shorter reaction times to inquiries and customers orders, shorter flow-times from start of development to the serial production, to ordering and shipment, more capable and effective processes with a less waste and other unnecessary activities. In 2010, we continued with the implementation of a new production system at the Senoee manufacturing facility in collaboration with the company Honeywell. The system is based on the Lean Production methodology and on the Toyota production system. The new production system brings radical changes within the organisation of Cimos, as well as in the production management and within the manufacturing facility. It is a fully integrated system approach in five steps that includes, beside production, all active operating functions within the plant, considers the employees and changes the sphere of activity and the method of approach of the organisation managers in all hierarchy levels. Lean production is not only based on the lean tools and work methods but rather on people, who are consistently eliminating causes of waste in their work processes under the mentoring of the manager. Within the implementation process there are many other practical trainings performed by the managers under the mentoring of the Honeywell instructors. Up to now we have succeeded in the implementation of the project on half of manufacturing capacities and have improved results of production facility in the following areas: safety, productivity and reliability of deliveries and reduction of stock and costs. In 2010, the project has been extended to the second half of the facility and will be accomplished in the first half of 2011. In parallel with this pilot introduction which is proceeding under the help of external experts we have started to prepare material for autonomous introduction of CIPROS, without external help, in other two Cimos production facilities. Within this plan we have completed a standard introduction procedure of (SPU) CIPROS and are preparing material for practical training upon introduction. In 2010, we have performed trainings of Lean production for the employees in the Slovenian and Croatian production facilities. In the 2011 we will perform the fist training for key employees from the Serbian and Bosnian production facilities. Trainings are important because are spreading knowledge within Cimos and prepare better foundations for a faster and more effective introduction of CIPROS.
Suggestions for improvement

At the Cimos group, we recognise that our employees and their expertise are the most valuable corporate asset. Driven by the goal to give a fair chance to all employees to demonstrate their knowledge and to harness it at the place of employment to the best of use to their personal interest and to the benefit of the company, Cimos has established a system to collect, evaluate and reward constructive proposals. The TINS system encourages the employees to be creative and innovative for the sake of the entire Group: Tvoja Inovacija Napredek Sistema translates into Your Innovation is System Benefit. The TINS system is in place in most production facilities of the Cimos group and all lines of business (pillars), with exception of the companies that recently joined the Cimos group. In 2010, as many as 7,484 constructive suggestions for improvement were made by Cimos people. On the annual scale it means 1.46 proposals per employee. Effectiveness of the TiNS varies from facility to facility. The most successful facility in terms of the number of constructive proposals per employee boasts 6.3 constructive proposals per employee on average. In general, these proposals address local issues and apply to individual work places, machines, and tools, they aim at improving the ergonomics of work places, etc. Some proposals go beyond local interests and result in major economic benefits. Total economic benefit generated by these constructive proposals across the Cimos group was 1.6 million euros.
055
Business Overview
The award for the innovator of 2010 on the level of the Cimos group was conferred to Toma Cek of the Semoee facility, with 124 useful proposals and to Ivan Kuhar of the Maribor facility, whose useful proposals in the past year have contributed to 273 thousand euros of savings.
# 14. [Investments]
In the past years capital investments in Cimos were streamlined on development projects and development of the new generation technologies, as well as on modernising production capacities. Despite changes in the market and across the business landscape, Cimos has continued to invest in R&D projects expected to be realised over the next few years and to strengthen the reputation Cimos has in international markets a global supplier of proprietary solutions. The Cimos group has embraced a rather restrictive investment policy largely oriented towards the development of products and completion of investments already under way. The capital investments in property, plant and equipment made in the first half of 2010 should pave the way for the projects of the Slovenian subsidiaries Cimos TAM, Cimos TMD Ai and Cimos TMD Casting (Bosnia and Herzegovina), Livnica Kikinda Ai (Serbia) and of Cimos d.d.
# 15. [Quality assurance]

In times of reduced car sale activity, quality of products is becoming the most important factor at our customers. Each delivered non-conform product may represent a functional disturbance in the assembling process and cause dissatisfaction of customers. Therefore, we pay major attention to production process by detecting and removing all real and potential product defects before shipping the goods to the customer. Fully integrated quality is built on each employee representing a key factor in the performance of activities within a particular operating process. Integration starts at the establishment of the customers needs, it is pursued through our operation processes and it finally expressed in the satisfaction level. In 2010 the quality level in terms of PPM (part per million), i.e. number of supplied products with defect out of million supplied parts, was improved in comparison with year 2009. We have achieved with the level of 18 PPM (parts per million). In comparison with 33PPM of the 2009, this years result is a success. We are now a step closer to our single-number target i.e. a target minor than 10 PPM. However, to achieve this target it will be necessary to make some radical changes in our work, as the conventional working methods are not enough efficient to pursue such target. New requirements are performed with constant improvement of the existent production processes and with a systematic adoption of industrial methods and practices when planning new processes. The final objective is represented by faultless quality and effective compliance with the customers requirements that is the sole assurance of a long-term competitive advantage. In 2010, the companies of the Cimos group performed the following principal quality activities: # regular annual renewal of the ISO/TS 16949:2009 quality management system certificate in the companies within the automotive pillar, i.e. in Cimos d.d., and in the manufacturing facilities in Koper, Senoee, Buzet, Ro, Maribor, Vuzenica, Kikinda, Seanj, Srebrenica and in Gradaac; implementation of the quality management system and the certification under
056
Business Overview
ISO/TS 16949:2009 technical specification in the manufacturing facility in Zenica and in the manufacturing facility in Labin; regular renewal of the ISO 9001 certificate in companies within the energy pillar, i.e. in subsidiaries Litostroj Power and KD Blansko Engineering; regular monthly meetings of the quality board of the energy pillar, where nonconformity issues are addressed, and suggestions for improvements, projects aimed at correcting nonconformities and preventing the reoccurrence of the same nonconformities in the future, development projects, internal audits and other matters are discussed; investments in equipment of our laboratories aimed at raising the level of product quality. We acquired appropriate toolkit for taking preventive action in cases where the product quality deviates from the technical specification; intensive communication of best practice and experience to new members of the Cimos group to improve efficiency of their operating processes.
# #
# #
# 16. [Information technology]

During the year under review, business data processing was focused on the effective application of the system, representing the major opportunity in the crisis. On the one hand the crisis has slowed down investments in new IT equipment, but on the other hand it has opened orientation to a more rational employment of the existent capacities. The most important activities were: # # SAP trainings throughout different production sites (about 50 workshops); completion of a pilot project for the development and introduction of our own production sub-system within the automotive pillar, performed in the Buzet facility. Results were within our expectations. Therefore, it has been extended to all locations of the automotive pillar, having integrated the SAP system, i.e. in Koper, Senoee, Maribor, Labin and Gradaac. This phase will be accomplished in 2011; introduction of the SAP business-information system within the newly established company CIMAT d. o. o. that has formalised the machine building and tooling pillar. The company started to operate at beginning of 2011; upgrading and introduction of modifications in accordance with customers requirements in terms of EDI data exchange; upgrading of the Windows 2003 system to 2008 within all key network servers in all Cimos group locations; upgrading of the Tivoli Storage Manager to version 6.2 and acquisition of first experience with data de-duplication. In future it will be very important in terms of reduction of the hardware used for data storage; central application for revision of the consumption of energy-generating products that will be introduced to the Cimos group. Locations equipped with data collection system have been already included; performance of cost rationalisation analysis for fixed and mobile telephony. Within the offer of local communication connectivity providers we started to update access from remote locations to Cimos group IT network.
# # # # # #
057
We provide solutions customised for customer needs
Business Overview
# 17. [Risk management and control]

Doing business in the international market involves facing challenges and taking risks. Under the present economic circumstances that are marked heavily by the global financial crisis a fast reaction has a major importance. 2010, our attention was focused on questions of how to protect the companys profitability, how to improve cost management, how and which projects shall be financed in times of financial limitations and how to preserve efficient cooperation with business partners. The crisis has transfigured the importance of different risks and action-taking needs in the risk management control. Risks that have been weighed as less important or with minor impact on the operations in the past, were classified on a higher position during the year under review. Among major risks we have ranged payment risk and credit risk and investment risk among minor risks. The major focus is laid on risks in the field of sales, procurement, products, employees, finances, manufacturing, IT and assets. External risk is related to changes of the microeconomic operation terms in single sphere of operation. The global crisis has increased the exposure to these risks. Within the operations of the Cimos group the sales risks are divided in short-term sales risk and long-term sales risks. Short-term risks are represented by risks of unpredicted loss of one or more existing businesses during the current financial year and by risks of insufficient acquisition of new orders in comparison with the annual orders plan. Long-term sales risks are a progressive reduction of sales activities within several years period, with one or more strategic customers, caused by different external or internal causes. The automotive branch is subject to constant pressure from customers because of its competitiveness. Competitors in this market are active and aggressive. It is therefore, necessary to protect incessantly the existent business activities with proper competitiveness. The customers pressure was expressed in terms of prices. It is constantly focused on the lowering of sales prices and increase of proper competitiveness in the automotive manufacturers market. Sales prices are largely defined during the acquisition of businesses and for many years in advance, consequently the long-term agreements with the main customers encompass the dynamics of productivity, sales price reductions within the products life-span extending from three to six per cents annually. From this point of view, Cimos is constantly involved in negotiations for the preservation of the existent businesses and acquisition of new ones. By doing so and by elaborated planning of the sales activity, the company is managing the sales risks. Sales management is analysing the possible deviations from the planned activities, in short-terms (monthly) and annually. In accordance with these analyses the management is taking actions for the maintenance of the planned sales effectiveness and for minimising all the potential sales risks, on which we are reacting by raising the productivity through improvement of technology and organisation. As regards prices of incoming raw materials, particularly of aluminium and iron, we are demanding from the customers a proper indexation, acknowledgement and implementation of adequate raw materials price increase and increase of prices for repro-material in the final products sales prices. Customers accept the indexation with time-lag and in some cases price increases are not even recognised in whole. We are trying to built in the price indexation the fluctuations of the main energy products prices. Control of project risks encompasses processes concerning the identification, analysis and reaction to project risks. The major risk is represented by activities that do not allow deviations and/or repetition. Among the key project risks we have ranged risks connected with the achievement of the planned investment economy with a successful activation of investments in the development of new products and with a successful introduction of new technologies. Innovation and creativity in installing new
060
Business Overview
processes and exploitation of the overall equipment efficiency that sprang out because of a reduced orders, represent the key factors for the achievement of the economic efficiency in new projects and of a competitive position in the acquisition of new businesses. Adequate planning and controlling of the investment effects play a major role. Therefore, risks related to the introduction of new products and technologies are becoming minor, but only with a correct project approach that helps monitoring of the achieved targets and that defines corrective activities in deviation cases. Despite the activities for the reduction of the exposure to risk, the estimations are showing a relatively high exposure to investment and development risks, because of unpredicted changes in the business environment influencing the planning reliability. Containment of production risks, under the present circumstances, is represented by the need to fill the capacities of some programs and the over-filled production capacities in other programs, changes in the law regulations on fuel consumption and emissions and on active and passive safety regulations. By considering all the activities that reduce the exposure to risk, we have evaluated production risks to be relatively low. The personnel risk field throughout the Cimos group has experienced some differences in the 2009. As a difference with the past years, when the major risk had been represented by the lack of high-level expert staff, during the year under review, this type of risk resulted to be not of major interest. Despite the forecasts, in the social environment as well as in the business environment, that have indicated a high fluctuation, Cimos did not perceive it. Data even show a minor number of terminations of employment, in comparison with 2008. 2009 was denoted by consistent observance of promises, agreements and legal provisions, regulating the employment relationship and the dialogue with employees and their representatives. Such observance has rendered possible a possible response from the employees, who were prepared to adapt to changes. Staffing needs were well harmonised and did not provoke activities that would have jeopardise the fulfilment of the customers orders. As regards management of risks related to procurement of raw-material, material, goods and services, the awareness of the importance of the role and influence of the supplying chain and other members within it is in forefront position. This is forcing the automotive companies in the formation of a containment system and development of the supplier chain. The supplying chain management system demands definition of processes, cooperation terms, exchange of information, sharing of know-how, experience and common objectives. The automotive industry chain is based on reliability; therefore the operating concept of the procurement function is based on the evaluation, selection and development of the supplying chain with clearly defined tasks, procedures, tools and methods. Methods that have been developed within the automotive branch, demand planning of processes and are oriented towards detection of potential risks and in-time solutiontaking actions. The evaluation of suppliers adequacy and competency starts with the market research and it extends on until performance of series delivery to Cimos facilities. We are creating a wide range of alternative suppliers offering us, at the same time, two components: safety and competition. Procurement processes are modelled in such way, to give control over suppliers. In this way the primary objectives of the automotive industry reliability and stability of the supplying chain are assured. The objectives of the Cimos supplying chain are stalking our customers targets. Therefore, they are focused in the assurance of deliveries within the required quality, time and quantity from a confirmed source to the target location, under competitive terms and in accordance with the automotive standards and methods, emphasizing the process of continuous improvements. We are developing the potential suppliers base that is constantly renewed and up-dated. Within this activity we are monitoring the suppliers performance comprehending weekly and daily quality performance and supplying reliability of the potential nominated suppliers. Regular evaluation and checking of suppliers in terms of technical-technological competency, developmental reliability, competitiveness cost containment, innovation, reliability and reactivity represent the main guideline of everyday activities. Suppliers are constantly trained to upgrade their know-how and audits are performed over their systems and processes. Furthermore, we are offering them support in the introduction and management of processes and are involving them within project teams. All activities are focused in the prevention and solution of risks within the procurement chain.
061
Business Overview
Information risks are associated with the arrangements for the dissemination of important information to key users, prevention of abuse of information and by ensuring that timely and sound business, financial and investment decisions are taken. In order to effectively mitigate information risks, we have introduced the unified business and information system SAP in all subsidiaries of the group, we maintain software and hardware, as well as communication and network interface, on a regular basis, we install up-to-the-minute firewalls to stop unauthorised access to the computer system, and we provide appropriate staff training. A new work instruction Plan of continuous operations of the information system in Cimos was elaborated for each location. The plan describes actions in case of risks that might occur in a part or on the whole information system. Furthermore, the plan describes the establishment of the infrastructures operation: system rooms, servers and their services and communications. Team members for crisis management, timescales for establishing operations of servers and services, and indications of important contacts have been defined within the plan. Risks of property loss are connected with the management of property and transport risks. As some important property risks with appropriate commercial clauses defining provisions of limitation of liabilities between contracting parties within the sales contract are transferred to suppliers and in some other cases to insurance companies, the exposure to this risk results to be small. Operators responsible for maintenance of energetic installations are constantly trained with the purpose to upgrade their expert knowledge and to guarantee safety and reliability of the energy installations and efficient energy consumption. Employees are constantly trained for fire-fighting. Each location has a group of employees qualified for fire-fighting. These groups have been trained and informed about evacuation modalities in case of fire. With the purpose of risk reduction we are paying attention to the collaboration, information and consultation with the employees. We have defined a communication mode with the employees. Positive results are visible in quick solution of minor risks. This contributes to the increase of the employees satisfaction and to reduction in the number of accidents. As regards product-related risks, our focal point is on management and control of those risks that could lead to incorrect functioning or malfunctioning of our products in the market. Management process of product-related risks is composed of two parts management of risks deriving from product development process and risk containment in the production process development. Within product development process risks derive from product and products function definition. For their management we are adopting, besides experience and information from the market, different analytic methods such as: DFMEA, DOE, Design for 6 sigma and others. All requirements of users (product, production, market processes and legislation) are taken into consideration within the process. Risks in terms of production process development are represented by the product, which is not developed in accordance with a precise definition and that might represent a limitation in achieving the required function. Risks that have been identified throughout the development phase of production processes are categorically removed. Risks are measured with adequate development systems as well as with quality definitions within the quality management systems built in accordance with the ISO/TS 16949:2009, ISO 14001: 2004 and OHSAS 18001:2007 standards. Major focus is put on financial risks. In the Cimos group a key currency risk is represented by the volatility of exchange rates for the Swiss Franc, US Dollar, Canadian Dollar, Japanese Yen, Croatian Kuna and Serbian Dinar. In 2010, we made a partial insurance by adequate exchange-traded futures and whenever necessary we adopted the currency SWAP. Among the instruments for the insurance from exchange differences the company adopts the natural hedge and the netting policy. Risks related to changes of value of some currencies are not insured. Financial markets do not offer instruments that may give an efficient solution for this kind of risk. In case of long-term finance lease, where contracts were made in CHF, a provision
062
Business Overview
regarding a possible change of currency to euro has been agreed, in dependence of a more advantageous parity (currency SWAP without costs). As CHF became overrated the company had negative figures of exchange differences (but not for transactions). From the point view of cash outflows, the best solution for the company was to retain long-term liabilities in CHF. The LIBOR interest rate for CHF remained lower than the EURIBOR rate for euro. By considering the pay-offs of interest rates and of leasing ratios, the outflows proved to be lower than they would be if the company had agreed long-term financial lease contracts in Euro, including the exchange differences. In 2010, the difference between interest rates 3-month EURIBOR and 3-month LIBOR for the CHF resulted to be on average 0.62 per cent, however, interest rate LIBOR CHF has never exceeded the EURIBOR. Credit risk is not high, since the principal customers of Cimos are highly renowned European and world car manufacturers, who enjoy reputation of paying on time. As for new customers of system suppliers, we first acquire the opinion from a credit rating agency and try to stipulate shorter payment terms. Exposure to payment risks is mitigated by careful planning and matching of cash flows throughout the Cimos group. We keep a watchful eye on the regular reciprocal settlement of receivables and liabilities. Furthermore, by considering a harmonised matching between inflows and outflows we try to achieve a maximum financial flow within the Cimos group. As regards suppliers, we have respected payment terms. With some suppliers we have agreed extension of payment terms (not longer than 120 days; with a sight to a new legislation of payment terms). Interest rate risk is exposed to higher interest rate margins i.e. to bank increases. In the past period most of the short-term credits were transformed into long-term, therefore financing costs have increased, as the interest rate for long-term credits are higher. As regards short-term loans, banks shortened the contracts on three or even one month and the interest rate became nominal and fixed. In 2010 we did not make any new insurance due to an increasing trend of a reference interest rate.
# 18. [Performance analysis]

After the crisis became global in 2009 driving many auto companies to the wall, Cimos d.d. posted positive sale results against the backdrop of the weak and volatile economic recovery in 2010. Cimos d.d. generated 357 million euros in net sales revenues or 12 per cent more year-on-year and almost three per cent more than pencilled in the 2010 budget. The share of sales revenues earned in foreign markets reached 97 per cent. Revenues and net sales revenues of Cimos d.d.
(in million EUR) Operating revenues Net sales Operating expenses Cost of goods, materials and services Labour costs Write offs Operating profit Net profit 2010 362 357 345 310 23 12 17.1 2.4 Index 2010 / 2009 113 112 112 114 100 100 128 120
063
Business Overview
Movement in revenues and net sales revenues of Cimos d.d. (in million euros)
36 0 32 0 33 0 34 0 35 0 0
320
2009 Operating revenues
320
362
2010
357
29
30
31
Net sales revenues
Movement in EBITDA, operating profit or loss and net profit or loss for the period 2009 2010 of Cimos d.d.
35 10 ,0 15 ,0 20 ,0 25 ,0 30 ,0 ,0
5,
25.7
13.4
2009
2.0
28.8
17.0
2010
2.4
0,
EBITDA
Operating profit
Net profit
In 2010, the share of net sales revenues in foreign markets was 97 per cent. In comparison with a year earlier, the net sales revenues in foreign markets increased by 12 per cent while the net sales revenues in the Slovenian market decreased for 10.6 per cent. The operating revenues as well as operating expenses increased in 2010: in comparison with 2009 they were of 12 per cent higher and amounted to 345 million euros. A minor increase of operating expenses in comparison with the increase of operating revenues is the consequence of the rationalisation of business processes and lowering of costs at all levels. A breakdown of operating expenses reveals that during the year under review, the costs of goods, material and services accounted for 89 per cent, labour costs accounted for 7 per cent and write-downs for impairment accounted for 4 per cent of all operating expenses. The share of single costs within operating expenses has remained unchanged in comparison with the year before. Operating profit and loss of the public limited company Cimos amounted to 17.1 million euros, that is of 28 per cent higher than in 2009. Net profit or loss amounts to 2.4 million euros, i.e. to 0.7 per cent net sales revenues what is 19 per cent i.e. 7 percentage points more than in 2009. The total assets of Cimos d.d. as at 31 December 2010 amounted to 468 million euros and were by 1.7 per cent higher than the companys total assets a year earlier. The long-term assets increased by 4 per cent whereas the short-term assets decreased by 1 per cent, as in comparison with the previous year. The decrease in short-term assets was primarily the result of a decrease in short-term operating receivables, due from subsidiaries within the group.
064
Business Overview
Asset and liability structure of Cimos d.d.
Assets
Short-term Assets and deferred costs / accured revenue

Liabilities
47%
Long-term Assets
53%
Short-term Liabilities and accured costs and deferred revenue
44%
Long-term Liabilities and provisions
32%
Shsreholders equity
24%
The structure of liabilities shows that during the year under review the long-term liabilities accounted for 56 per cent of all liabilities (capital 24 per cent, long-term debts 32 per cent), while the short-term debts accounted for 44 per cent of total liabilities. Structure of liabilities has impaired mostly due to an increase of short-term liabilities and at the same time reduction of long-term liabilities in comparison with a year earlier. The ratio analysis is a statistical yardstick serving to illustrate the 2010 performance of Cimos d.d.: # # # # # # # EBITDA up by 12 per cent from a year earlier and with 28.8 million euros was at the 2008 level when it was a record high; The inventory ratio or inventory turnover ratio (raw materials, work-in-process, and finished goods) remained at the 2009 level; As regards the level of the operational performance, the coefficient for the operational efficiency in 2010 increased in comparison with the previous years level and amounted to 1.05; The return on sales ratio (ROS) slightly improved in comparison with a year earlier and notched 0.7 per cent; The return on equity (ROE) has improved and accounted to 2.8 per cent; The return on assets (ROA) amounted to 0.5 per cent and remained at the 2009 level; The net profit increased the companys equity and consequently increased the book value of the shares issued by Cimos. The book value of a share as at 31 December 2010 without treasury shares amounted to 7.82 euros.
Throughout 2010, Cimos d.d. had a positive cash flow from the operating activities. In 2010 the cash flow totalled 39 million euros. The positive cash flow from operations is the reflection of a higher realisation and cost lowering as a consequence of rationalisation of operations. Liquidity condition influenced operating receivables and operating liabilities. Operating receivables have been reduced in 2010, while the operating liabilities have increased. In 2010, almost 50 per cent of net sales revenues before consolidation were generated by Cimos d.d., the same result as in the previous year. Preservation of the share of the Cimos public limited company within the group of unconsolidated net sales revenues shows a uniform change of revenues within the group. The consolidated operating revenue of the Cimos group in 2010 increased by 15 per cent in comparison with 2009. The lions share of the consolidated operating income (72 per cent) were earned by Cimos d.d., while 15 per cent of net sales revenues were generated by the Energy group and the remaining 13 per cent by other subsidiaries (which separately contributed up to two per cent each).
065
Business Overview
Revenues, operating expenses and operating profit or loss of the Cimos group
(in million EUR) Operating revenues Net sales Operating expenses Cost of goods, materials and services Labour costs Write offs Operating profit Net profit 2010 445 420 490 247 94 37 36.3 4.1 Index 2010 / 2009 115 114 116 121 104 109 112 108
Movement of net sales revenues and of revenues in 2009 and in 2010 of the Cimos group
45 25 0 30 0 35 0 40 0 0
386
367
445
420
50
10
15
20
2009
2010
Operating revenues
Net sales revenues
Movement of EBITDA, operating profit or loss and net profit or loss for the period 2009 2010 of the Cimos group
70 30 40 50 60
66.3
32.3
2009
3.8
72.9
36.5
2010
4.1
10
20
EBITDA
Operating profit
Net profit
In 2010, the Cimos group generated 420 million euros in net sales revenues, of which 94 per cent, i.e. 393 million euros was earned on foreign markets. The net sales value was higher by 14 per cent in comparison with 2009, thanks to the economic revival in the countries the trading of Cimos d.d. and its subsidiaries especially in the automotive market as the group's most important business.
066
Business Overview
The Cimos group posted operating expenses in the amount of 409 million euros upby 16 per cent from a year earlier. A breakdown of the operating expenses reveals a 67 per cent share of costs of goods, materials and services, a 23 per cent share of labour costs, a 9 per cent share of write-offs, and one per cent of operating expenses. The Cimos group has expanded by incorporating two companies in Slovenia:CIMAT, d. o. o. and TAM poslovne storitve, d. o. o., both in 100 per cent ownership by Cimos d.d. Famos ADI, d. o. o. in Bosnia and Herzegovina, which is 66.47 per cent owned by CIMOS TMD Ai, d. o. o. from Gradaac. Unconsolidated total assets of the Cimos group as at 31 December2010
44.7% Cimos d.d.

8.7% Group Energy
7,8TAM Ai % Cimos
0.0%
TAM Poslovne storitve
11 TMD % Group
0.1%
Cimos ZKS
0.2%
Lip
18.1% Livnica Kikinida

group
0.2%
Cimos France
6.1%
Group P.P.C
0.8%
Cimos Titan
0.3%
Cimat
1.5%
Livarna Vuzenica
0.3%
The separate (unconsolidated) total assets increased by less than 3 per cent in comparison with year 2009. The total assets of CIMOS d. d. accounted for 45 per cent and remained at the same level as in the same period in 2009. The consolidated total assets of the group as at 31 December 2010 amounted to 747 million euros and were by about 4 per cent higher in comparison with the previous year. The increase in liabilities is primarily due to an increase in long-term assets, mostly of capital. As regards the assets a major increase was registered among long-term assets.
# 19. [Economic landscape and outlook for 2011]

The forecasts for 2011 for the automotive industry remain gloomy. Even though at times car sales seemed to be gaining ground, in the past year, a slow and protracted recovery is expected. Judging by the order book, CIMOS is poised to enjoy higher annual growth in sales revenues than the automotive industry. In comparison with 2010, sales revenues shall be of 7 per cent higher owing to the fact that in the past two years and despite the economic crisis Cimos has allocated resources financial and human to the development projects focused on environmental stewardship and safe mobility.
067
Business Overview
Cimos will endeavour to play a major role in the automotive industry. Our long-term operating future is based on the following arguments: strong market position, advanced and world-competitive equipment of manufacturing locations, high concentration of know-how, high reputation level and management of processes comparable with the best world practices. The business plan of Cimos d.d. for 2011 is based on the projections of the developments in the EU market in general, in the EU automotive market in particular, and in Slovenia, as well as on the pencilled principal business relations that in the budget also encompass internal cost management and control. Based on the preliminary data of the customers plans for 2011, Cimos drafted a plan of sales for 2010, taking customers requirements into account. The business plan represents a basis for the evaluation of the performance of individual companies within the group in terms of cost containment and cash spending. The business plan is primarily based on the principle that each individual budget unit depends from growth of turnover. Anyhow, production costs shall be lowered by economic consumption of resources and by the reduction of entry prices. Business plan of fixed costs stays on the level of 2010, by taking into account objective changes of single budget units. Variable and fixed costs business plan represent a fame of costs within which a single budget unit can move and at the same time it represents the available cash and cash equivalents available to a single budget unit within a particular time frame in dependence of the turnover. The business plan for 2011 defines costs, which are at the same time the expenses. The planned financial relations in 2011 represent objectives that are going to be realised within the planned period. Objectives are interconnected and depend from the planned sales. Some elements are relatively fixed (amortization, financing costs), while other change with regard to the achieved sale of products and services in the market. Variable costs, amortization and financing costs and net profit shall be covered first and than followed by budget costs per single budget units. In case planned turnover is not reached, budgets shall be reduced to achieve the set targets. The targets set by Cimos d.d. the parent company of the Cimos group are in line with the milestones laid down in its corporate strategy featuring the business activities of Cimos until 2016. The document underlines profitable growth as the benchmark to be kept in mind when planning the strategic activities of all four pillars of the groups business. Based on our knowledge and experience we are determined to meet the set targets for the satisfaction of customers, owners and employees. Operating revenues of Cimos d.d. (in million euros)
45 50 10 0 15 0 20 0 25 0 30 0 35 0 40 0 0
2000 Achieved
2001
2002
2003 Planned
2004
2005
2006
2007
2008
2009
2010
2011
068
Business Overview
The projections of the parent company Cimos d.d. for 2011 include: # # # # # # # # # # # # operating revenues in the amount of 387.4 million euros; value added in the amount of 53,800 euros per employee; reducing the share of quality costs in the net sales revenue by 10 per cent; generate a positive cash flow; achieving the targets set out in the Plan for Progress 2011; generate EBITDA in the amount of 7.8 per cent of operating revenues; NFD/EBITDA 9.5; capital share in total assets 23 %; financial debt / equity ratio 2.4; capital 110 M euros; current ratio 0.8; financie cost / expence from financial and operating liabilities with EBITDA ratio 1.3.
Operating revenues of the Cimos group (in million euros)

60 50 10 0 15 0 20 0 25 0 30 0 35 0 40 0 45 0 50 0 55 0 0
2001 Doseeno
2002
2003
2004 Planirano
2005
2006
2007
2008
2009
2010
2011
Conditions and type of management within the energy branch have varied a lot in the past. However, changes are expected for the future, too. Trends in the filed of water turbines are positive. The developed western part of the world (Europe, N. America) is focused on refurbishment of the existent classic turbines. The second course in the developed world is represented by pumping hydroelectric plants and the third by ecologic turbines for extremely low water falls. However, efforts will be oriented towards the Scandinavian market, Indian market and Turkish market. We are endeavouring to increase our presence in new markets such as: Pakistan, Thailand, Laos and the Pacific part of Asia. Upon the investment crisis in the energy sector in the last two years the N. American market is recovering again. In the year 2011 we will continue to offer equipment for pump stations in Egypt, Bangladesh and spare parts for nuclear pumps in Russia and Ukraine. The operating business plan 2011 of the energy pillar derives from obligations from agreements with business partners and projects that have not been concluded, yet. On the basis of the planned activities the expected operating revenues will be on the level of year 2010. Machine building and tooling pillar strongly depends on the events in industrial branches. The economic crisis and reduction of business volume in industrial branches have caused calmness in the field of machines and tool industry. However, economy is recovering slowly and new investments have been commenced, and demand for new industrial equipment is growing. Machines and tools pillar is based on a vertical integration strategy and concentric diversification of the Cimos group. It reflects in the extension to new areas that would bring synergetic effects. Machines and tools pillar is divided into two production programmes; tool industry and machine manufacture. The objectives of the machine building and tooling pillar for the year 2011 are focused in sales increase of 11 per cent, in comparison with the year 2010. Sales activities will be
069
Business Overview
increased within the Cimos group and external customers. The pillar will respect delivery terms, develop new products and increase productivity. The agricultural equipment market is dominated by strong competition. A competitive advantage is given by the equipment offering major safety, efficiency, comfort and wider serviceability. The agricultural pillar strategy is based on internal production of the hobby programme and big agricultural equipment, on the engineering filed and production of parts for other agricultural equipment manufacturers. The agricultural equipment objectives for the year 2011 are to increase sales volumes for 30 per cent in comparison with the year 2010, to break through into new markets, sales of new products (tractor) and optimization of purchasing costs and entry prices.
# 20. [Corporate social responsibility]

Throughout the Cimos Group we foster a strong sense of corporate social responsibility by continuing to operate at profit, by banking on our development and business advantages and by continuously working on getting recognition and building corporate visibility, which in turn leads to raising the level of trust in people who work with us or for us and who live in the vicinity of our manufacturing facilities. By working hand-inhand with customers, suppliers, local community, numerous stakeholders and, last but not least, with our people in all areas on which our business has an economic, social or environmental impact, we take actions above compliance with minimum legal and statutory requirements and address our own competitive interests and the interests of wider community as we pursue the strategy of accomplishing our objectives for sustainable development.
# 20.1 Responsibility to people

Efficient, successful, committed and satisfied employees represent the key factors of an effective company. Therefore, a correct and effective management of human resources covers an important role that it is understood as follows: # # # # # # # motivation and orientation of employees towards education and acquisition of adequate education and qualification level, professional introduction of the new-employed, continuous training and education for transfer of knowledge at all levels, professional career planning, providing of the key expert staff and initiation for take-up of functions, stimulation of the employees creativeness, development of the degree of loyalty and identification of people with the company.
A mechanism of personal and professional development of employees under the name Cimos KART (KAdrovske RAzvojne Tehnike translated in human resources development techniques) was formed. The mechanism will assist the employees in achieving the satisfaction. The name of this mechanism is emphasizing the inestimable value our employees represent for the company. Employees are compared with diamonds, acquiring value by being grinded. The objective of the mechanism is to plan the professional career of individuals in accordance with his/her vision and the needs/objectives of the company. Professional career planning is a continuous process having many interacting factors. It is therefore subject to constant research and evaluation of the general synergy.
Headcount and qualification structure

The Cimos group had 6,864 employees as at 31 December 2010 or 263 employees
070
Business Overview
less in comparison with a year earlier. With 77 per cent of all employees, male employees remain in majority in the Cimos group. The average employee working at Cimos in 2010 was 40.5 years old; hence, the average age was lower than a year earlier. At Cimos d.d., the average number of employees on the basis of working hours decreased by 1.3 per cent to 999.84 (2009: 1,013.09). Age structure of the employees in 2010
22.6% 51 60 age 24.9% 31 40 age
30.8% 41 50 age
1.2%
over 60 years
18 30 age
20.4%
Although the share of employees with the primary school is falling and the share of employees with higher educational level remains the same, the average educational level in 2010 was 3.9 (at Cimos d.d.: 4.1). The average employee of Cimos has completed the fourth level of education; it does not come as a surprise when we know that the core business of Cimos is to supply components and sub-systems for several industries where hands-on engineering experience and technical skills are an asset. Average number of employees in 2010 by completed level of education Level of completed education Average number of employees I. 1,277 II. 386 III. 347 IV. 2,247 V. 1,544 VI. 359 VII. 655 VIII.+ 46
Education and training of the Cimos people

Despite the intent to optimise costs in all areas because of the economic crisis, education process has not been discontinued in the 2010. Development of the people represents the investment for the future, therefore it shall be subject to special attention. In 2010, the employees working in Cimos d.d. received training in various aspects of production with focus on the ability to work independently without direct supervision. Beside practical trainings the employees have acquired new knowledge within the working field and production technologies. We have identified the key knowledge holders per each production technology, who will collaborate in the internal transfer of know-how between the (global) production facilities. Beside expert trainings, the majority of employees in production attended animation workshops focused on technological disciplines and quality assuring methods within the production process. Along with expert development major stress is put on individual development, therefore we are stimulating different forms of formal studies. Main emphasis is put on the importance of languages-learning. In the past period many language courses (English, French, German and Russian) were performed. Furthermore, we are maintaining and complementing the quality management system, where internal auditors play a major role, and shall therefore constantly develop the know-how and be acquainted with novelties.
071
Business Overview
Satisfaction of customers represents an important task. With the purpose of effective communication with customers we have identified, at the level of the Cimos group, the customers representatives and have trained them for specific customers requirements (surveillance of the customers needs and complaints, quality indices, project management at customers, process confirmation, audits and management of complaints). Optimisation of processes and augmentation of competitiveness in the market is forcing us to stimulate the process of constant improvements. The Lean Production method was introduced in the process, from incoming material warehouse to manufacturing steps, to shipment of goods to customers. The approach makes possible a systematic error-solving approach, for errors that do not bring benefit to the value of product and do not contain the value stream within the process, and have a negative impact on production costs. Many expert training courses of the Lean Production (and other work methods such as: 5S, identification of waste, improvement process, visual management) were performed. In terms of HR management we have performed trainings where the participants have learnt about management skills, different management approaches etc. Particular focus has was laid on annual interviews with employees, delegation of authority, definition of targets. We have explained the meaning and the methods of people motivation and the role of coaches. Employees attended workshops for development of successful communication, Communication code and management, furthermore, they were introduced with the importance of the dignity at work and with the statement of the management about dignity protection policy in Cimos. Continuous improvements and improvement of human resources depend on the competence of employees and are the key for the preservation of competitiveness in the market. Under this purpose we are following the novelties within the production technologies field. Within the PLM (Product Lifecycle Management) project, further trainings focused on document management within the IT system (SAP in SmarTeam) were carried on. We are conscious of the importance of the employees competence all over the Cimos group, therefore we are trying to train all the responsible of a single processes from other Cimos subsidiaries. Changed economic and business conditions are giving a new impetus to the organisation for the performance of internal educational and training courses. With the purpose of developing the human capital, constant preservation and spreading of the know-how, the new Regulations of internal education and training providers was introduced. The advantage of internal transfer of knowledge is founded on the efficiency (cost and transfer of know-how), as the expert and theoretical know-how can be better adapted to the employees needs. The Cimos HR development is not only focused on the employees, but also on future job-seekers. This strategy is based on the desire to offer job opportunities to the best job-seekers. It can be achieved before individuals become active job-seekers. Professional career starts with the selection of the education branch. Therefore, we are taking active part in the planning and acquisition of staff with intense collaboration actions with different age-groups and/or generations by drawing their attention on technical professions.
Human resources development

HR development is a systematic and planned process oriented in the preparation, performance and monitoring of the HR-educational procedures and actions, which purpose is to benefit the expert, work and personal development of employees. HR development instruments are interconnected systems of adoption, distribution, promotion and education of human resources. Continuous changes (new customers, suppliers, products, IT support) require constant mobility of the people, which the people understand as a component part of their occupational development. The HR management plan is prepared on the basis of annual interviews between management and people, i.e. subordinates. Annual interviews represent an overview of the past, present and future plans. Once the findings made during the interviews are analysed, a plan is made for training and staff shifts on the horizontal or vertical workplace grid.
072
Business Overview
Occupational health and safety issues
Preventive and systematic operations in terms of occupational health and safety issues have been completed by the acquisition of the certification of our OH&S management system in conformity with the OHSAS 18 001 standard. This approach has been gradually spread to all the facilities within the Cimos Group. Positive transfer of experiences was already confirmed in Cimos facilities in Slovenia, Croatia and Bosnia and Herzegovina. Further activities for the implementation of the system in facilities Novi Travnik (a certification audit is planned in the 2011) and Srebrenica are in course.
# 20.2 Stewardship of the natural surroundings

At Cimos, we place the global orientation and responsibility for the natural environment at the top of strategic objectives. Therefore, we actively pursue the requirements of the standard for Environmental Management System. Cimos has in place an internal process for the evaluation of the environmental impacts based on the ISO 14 001 standard (Cimos d.d. has acquired the certificate in the 2001). The environment impact evaluation process encompasses all the facilities. The Environmental Management System certificate conferred by the Slovenian Institute of Quality and Metrology (in 2009 it was acquired by the subsidiary in Kikinda, Serbia) is confirming that corporate social responsibility is being spread with success and that we are well aware of the importance of the reduction of impact on the environment. As regards the subsidiaries in Bosnia and Herzegovina, the procedures for the award of the certificate are in course. The facilities in Gradaac and in Zenica have already acquired the certification. Until the end of 2011 the certification is expected to be implemented within the facility in Novi Travnik, too. As regards waste treatment, Cimos subscribes to the following approaches: # # # # In research activities and development of new products we focus on the quantity of solid waste. In the product material selection process we give precedence to recycling materials. Separation of waste is adapted to waste recycling possibilities. Returnable packaging is replaced with a single-use (non returnable) packaging.
The discharge of industrial waste waters has been regulated through the treatment plants, which are under control, or samples of waste waters (in case of washing waters and waste emulsions) are taken and sent to the authorised organisations for control. As regards outlets in the air, we have implemented filtering and cleaning devices with regard to different technologies aimed at the prevention of excessive outlet in the air. The perfection of treatment plants is confirmed by the IPPC environmental permits acquired by our foundries. As regards the energy, we have identified possibilities for the preservation of the natural resources in more efficient energy consumption. This represents a starting point for the introduction of a systematic approach to efficient energy consumption based on the SIST EN 16 001 standard. Strong and transparent relationships with communities, Cimos subsidiaries and the numerous employees are active partners in the sports, culture, health care, education and humanitarian activities that is proved by many recognitions given by representatives of the local communities.
# 20.3 Responsibility to the wider community

The Cimos subsidiaries and their numerous employees are active partners in the sports, culture, health care, education and humanitarian activities as confirmed by many recognitions awarded by representatives of the local communities.
073
Business Overview
Educational system
Integration of pupils and students into the Cimos environment has become a part of our every-day life. Cooperation with schools is performed through school counselling services, information days and excursions, where we are trying to expose the importance of technical professions that represent the key for our operation. Furthermore, we present the possibility of in-company placement, students work and other activities in the technical field. Excursions focused on laboratory exercises offer the students the opportunity of getting informed about our technologies and products. We are trying to draw attention of the students by offering scholarships. We are involved in the cofinancing programme of the young researchers, carried out by the Ministry of Higher Education, Science and Technology. Three candidates for young researchers, who will be involved in research activities in the selected areas, have been selected within the call for applications.
Sports
In the sports field Cimos is a club partner and the major sponsor of the Cimos Handball Club. During the years, Cimos has contributed to the achievement of a real, stageoutlined and development-oriented strategy of the club, bringing into effect the vision of the club in a ten years period. Our mission is to promote sport, motivation, selection and education of home players from juniors to seniors, upon which relies the longterm existence of the club and spectators' interest and socialization of the employees. Although the orientation is of a long-term, short-term results are surprising. We have a top-level junior school that is one of the best in Slovenia and the first team on the top of the handball scale. The club is becoming one of the most stable sport collectives in the country. Six age categories appear in the national championship and are ranged among the first four, giving the young a new hope for the future. Though not all of them are going to succeed in the sport or become top-handball players, we are endeavouring for the development of their work habits, perseverance, healthy life-style, socialisation and awareness that only clear objectives and efforts can bring results. By giving them hope we are contributing to their personal development. In other fields, where Cimos is acting, it is recognized as a promoter and supporter of the youth in sports.
Other
In cooperation with the local communities Cimos is a cornerstone of humanitarian activities. In fact, we are taking active part in different humanitarian actions, from blood donor campaigns and ecology-humanitarian actions to the promotion/organisation of different donation events. On the European and global scale, Cimos advocates a complex and modern approach to marketing and it is thanks to this pro-active stance that the company has been successful in promoting Slovenia as an efficient economic entity of the European and international stature. It is by subscribing to quality and by fostering a responsible stance both to its people and the users of its products and services that Cimos has been spreading the concept of potentials offered by the economy with a humane face.
074
We contribute to a shared, better tomorrow with good ideas and products
Financial Statement
FINANCIAL STATEMENT # 21. [Notes to significant accounting policies]

# 21.1 Basis of preparation of the financial statements
Financial statements of the company and the notes to the financial statements have been prepared in accordance with Slovenian Accounting Standards (2006) and the Companies Act (ZGD-1). The assumptions underlying these financial statements are the fundamental accounting assumptions and namely the accrual basis of accounting and going concern. The financial statements are denominated in euros. They have been prepared on the historical cost basis except for certain available-for-sale financial assets measured at fair value. The management has made certain judgements, estimates and considerations with regard to the financial statements, which affect the application of policies on the reported value of assets and liabilities, revenue and expense. The estimates and considerations are based on past experience and other factors which appear relevant in the given circumstances and on the basis of which we may give a judgement with regard to the carrying value of assets and liabilities. The estimates and considerations have to be constantly checked. Adjustments to accounting estimates are recognised only for the period in which the estimate is corrected, if it affects only that period, and it may be recognised for the adjustment period and for the next year, if the adjustment affects both the current and the next year. The company has changed the accounting policy and in the year 2010 it formed provisions for jubilee and retirement bonuses.
Exchange rate and translation to local currency

Items in financial statements, stated in foreign currencies and indicated in the balance sheet and in the income statement, have been converted in euros according to the ECB reference rate as on 30 September 2010. Foreign exchange gains or losses arising on translation are recognised in the income statement under financial revenue and/or expenses.
Reporting by business segment and geographical segment

In accordance with the strategic operating policy and based on the criteria for formation of business segments (they are formed on the basis of common product characteristics, marketing and advertising methods and risk and profit level) the company has decided not to review separately business segments. Geographical segments (formed on the basis of the assets location) comprising geographically connected countries, which share a similar level of economic development, purchasing power, similar economic and political features are not considered separately by the company.
Intangible fixed assets

Internally developed brands, publishing titles, customer list and items similar in substance have not been recognised as intangible assets, except in case of transactions (acquisition of a company). Investment in goodwill is the amount by which the costs of purchase of an acquired company or a part of a company exceed the fair value of the net identifiable asset acquired adjusted by its liabilities (debt). The costs of research incurred by the company with the aim to acquire new scientific and expert knowledge and understanding are not are recognised as an intangible
078
Financial Statement
asset; instead, they are treated as expenses when they are incurred. The costs of development incurred by the company are recognised as an intangible fixed asset where, where research results are used for planning and designing production of new or significantly improved products and procedures, recognised if the company can demonstrate the technical feasibility of completing the project so that it will be available for use and sale its intention to complete the project and use or sell it and generate probable future economic benefits from the project, if the company has at disposal adequate sources to complete development and if it has ability to measure the expenditure attributable to the intangible fixed asset during its development reliably. The recognised comprises cost of an internally generated intangible fixed asset comprises the cost incurred by its manufacture, and the indirect cost attributable to its manufacture and recognised by the market. The cost of an internally generated intangible fixed asset may include the interest cost incurred on loans for its manufacture. The residual value of use can be recognised in the income statement under expenses, when they are incurred. Useful life is equal to the period of expected future sales, connected with the project. An item of intangible assets is initially measured at cost. After recognition of an intangible asset, the company uses the cost model for the measurement and carries an intangible asset at its cost less any accumulated amortisation and any accumulated impairment losses. Intangible assets are classified as intangible assets with final useful live and intangible assets with indefinite useful lives. The carrying amount carrying amount of an intangible asset with final useful life is decreased through amortisation and impairments when causes for this exist. Appreciation of intangible assets can be accounted when the asset is available for use. The amortisation period and the amortisation method shall be reviewed at least at each financial year-end. If there has been a significant change in the asset, such changes shall be treated as changes in the accounting estimates. Amortisation shall be stated according to the straight-line method. The estimated useful lives are: # # # patents: 5 years; licences: 5 to 10 years; costs of development: 10 years.
Property, plant and equipment

An item of property, plant and equipment that qualifies for recognition as an asset shall on initial recognition be measured at its cost. It comprises the purchase price, non-refundable purchase taxes, and directly attributable costs to bring the asset to the condition necessary for the intended use, especially the cost of its delivery and installation and estimate of the costs of dismantling and removing the item and restoring the site. Subsequent measurement of tangible assets, the company applies the cost model. Under the cost model, items of property, plant and equipment are carried at their cost, less any accumulated depreciation and any accumulated impairment loss. If the cost of an item of property, plant and equipment is significant, the company allocates it to its individual parts and where these parts have different useful lives each part is depreciated separately. The method used by the company to allocate the depreciable amount of an asset over its useful life is the straight-line method. Accumulated depreciation is not recognised for land. Depreciation of an item of property, plant and equipment begins when it is made available for use. The adequacy of the depreciation period and method used shall be reviewed at least at the end of each financial year. Possible adjustments are treated as a change in accounting estimate. The estimated useful lives for the most important classes of property, plant and equipment are shown below:
079
Financial Statement
# # # # buildings: 20 to 77 years, production machinery and equipment: 4 to 15 years, means of transport: 6 to 8 years, computer equipment and other equipment: 2 to 20 years.
A lease that transfers to the company all significant risks and rewards incidental to ownership of the asset is finance lease. Items of property, plant and equipment leased under a finance lease are stated separately from other items of property, plant and equipment of the same class. The estimated amounts of substantial expenditure for repairs of property, plant and equipment are measured as part of property, plant and equipment and are depreciated by depreciation percentage that guarantees that the estimated amount will be compensated until the time when costs for major repairs are actually incurred. Subsequent expenditure on an item of property, plant and equipment that increases its future economic in excess of the originally assessed, increase its cost. Subsequent expenditure enabling the extension of useful life of an item of property, plant and equipment reduces the accumulated depreciation. All other costs are recognised in profit and loss as expenditures as they are incurred.
Investment property
Investment property is property held either to earn rental income or for capital appreciation of for both. An investment property is measured initially at its cost including transaction costs and any directly attributable expenditure. The company measures investment properties using the cost model, and namely they are measured at costless any accumulated depreciation and any accumulated impairment losses. Depreciation and impairment of investment properties are recognised as financial expenses related to investment properties. Impairment of assets, except financial investments: On each reporting day the company evaluates whether there is a sign of an impaired asset. If so, the company shall evaluate the recoverable amount of such asset. A recoverable amount is the fair value, less selling cost or value upon usage, depending on which of the two is higher. Evaluation of value upon usage comprises evaluation of receipts and expenses that will result from further employment of the asset and its final disposal, and use of adequate discount rate of present and future cash flows. Value upon usage can be established for a money creating unit, i.e. for the least defined assets group, which constant employment represents a source of cash receipts, manly independent from cash receipts from other assets or group of assets. Only in case when recoverable amount is lower than the carrying amount carrying amount, carrying amount the carrying amount shall be reduced to its recoverable amount. Such reduction represents a loss from impairment. Loss from impairment of an asset, measured according to the model of purchase value, is recognised in the income statement. Loss from impairment of an asset, measured according to revaluation model, charges directly each surplus from valuation adjustment, before the difference is recognised in the income statement. Impairment loss in respect of an asset incurred in previous periods shall be reversed only in case of estimation change, used to establish recoverable amounts of an asset, after the last loss from impairment was recognised. In such cases the carrying amount of asset shall be increased to its recoverable amount. Such increase is a reversal of loss from impairment. In case of reversal of impairment loss the increased carrying amount shall not exceed the carrying amount established upon subtraction of accumulative depreciation, if in the past years loss from impairment was not recognised Reversal of impairment loss measured according to the model of purchase value is recognised in the income statement. The reversal of impairment loss measured according to the revaluation model shall be recognised to surplus from revaluation. If impairment loss f the same adjusted asset has been recognised in the income statement, the reversal of impairment loss shall also be recognised in the income statement.
080
Financial Statement
Financial investments
In accordance with Slovenian Accounting Standards 2006, the company classifies its long- and short-term financial investments in four categories: financial assts at fair value through profit or loss, financial investments held to maturity, loans and receivables, available-for-sale financial assets. At the end of a financial year, if it is permitted and appropriate, the Company reclassifies individual long-term and shortterm financial investments to another category of investments. On initial recognition the company measures an investment recognised as financial asset at its fair value. If a financial asset is carried at amortised cost and financial assets measured at fair value increased by revaluation and investments measured at cost, transaction costs are added to fair value. Measurement of financial investment depends on the classification of a financial investment. Financial investments classified in the 1st and 4th category are measured at fair value. Fair value is the amount at which an asset could be bought or sold in a transaction between willing parties (quoted market price for share, net asset value of mutual funds, quoted market price for bonds, etc.). A change in fair value of financial investments is recognised in the income statement as financial income or expense. A changes in fair value of a financial asset available for sale is recognised as revaluation0 surplus. Financial income arising from elimination of revaluation surplus of the financial asset is recognised when the financial assetis sold, i.e. derecognised. Financial investments classified as financial assets held to maturity are measured at amortised cost. The amortised cost is the amount at which the financial asset is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation of discount or premium using the effective interest method and minus any reduction for impairment. Investments in non-listed securities, among which investments in subsidiaries, are classified under financial investment available for sale and are measured at cost. The company derecognises an investment as financial asset when it has no longer control of the contracting rights that comprise that asset, i.e. on the cash flows arising from it. On each balance-sheet date the Company assesses whether there is any objective evidence that an investment is impaired. If any such evidence exists, the investment has to be revalued accordingly. Impairment losses resulting from the revaluation that could not be covered by a revaluation surplus shall be recognised as financial expense in the income statement. If there is objective evidence that an impairment loss on held-to-maturity financial investments f and on loans and receivables carried at amortised cost has been incurred, the previously recognised impairment loss is reversed if the additional increase in recoverable amount can be connected with the event that occurred after the initial recognition of impairment. The impairment loss is reversed through profit or loss statement. The amount of the loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows (other than future loan losses, that have not been inccurred yet) discounted at the original effective interest rate of the financial asset). Impairment losses recognised for an investment in a financial instrument classified as available for sale, measured according at cost cannot reversed. The amount of loss is measured as the difference between the carrying amount of financial asset and the present value of the expected cash flow discounted at the present market interest rate paid on similar financial assets. Impairment losses recognised for an investment in an equity instrument classified as available for sale cannot be reversed through profit or loss. If the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurred after of the impairment loss was recognised in the profit or loss , the impairment loss shall be reversed and the amount of the reversal recognised in profit or loss as financial revenue. The amount of a decline in
081
Financial Statement
the fair value of an available-for-sale financial asset is measured as the difference between the acquisition cost and the current fair value less any impairment loss on that financial asset previously recognised in the profit or loss.
Derivative financial instruments

The Company uses derivative financial instruments to hedge risks of changes in foreign currency exchange rates and changes in interest rates, such as futures and interest rate swaps. At initial recognition and later on, such instruments are measured at fair value. Derivative financial instruments are recognised as financial instrument when the fair value is positive, and are recognised as financial liability when the fair value in negative. Each gain or loss from change in fair value of a derivative financial instrument, which is not a part of the hedging ratio, is recognised in the income statement. Hedging rates are classified in three groups: # Hedging of fair value: hedging from change of fair value of the derivative asset, liability or bound undertakings. Profit or loss in hedged item, which can be recognised to hedged risk, adapts carrying amount of the hedged item in the income statement. In case of a new measurement of a derivative financial instrument (to hedge from risk) the profit and loss is recognised in the income statement; Hedging of cash flows: hedging from variability of cash flows that can be attributed to a single risk, connected with a recognised asset or liability or possible planned transactions. A part of profit and loss from derived hedging, defined as successful hedging from risks, is recognised directly in equity as a surplus from value adjustment. Inefficient part of profit or loss is recognised in the income statement; Hedging of financial investment in the company abroad: accounted as hedging of cash flows.
Assets held for sale

If the carrying amount of an asset is going to be assured with sale, and not with further employment, such asset shall be defined as non-short-term asset for sale or shall be accounted in the disposal for sales group. The asset stops to be depreciated, when it is defined as non-short-term asset for sale or accounted in the group for the disposal for sale. Such non-short-term asset or group for disposal for sale is measured according to its carrying amount or its fair value, less sale cost (according to the value that is lower). Principles for disposal of assets (disposal of groups) for sale are the same as the one applying for long-term assets, with exception of financial investment.
Inventories
Inventories are measured at the lower of initial cost or at net realisable value. The inventories of work-in-progress and finished goods are measured at production costs including direct cost of material, labour, services, depreciation and indirect costs. Extraordinary costs of direct materials and direct labour, as well as extraordinary indirect costs, must not be included in the cost of an item of inventories. of the allocation of fixed production overheads is based on the normal capacity of the production facilities, i.e property, plant and equipment and employees. An item of inventories of materials and merchandise is measured at cost of purchase comprising the purchase price, import duties and other non-refundable purchase taxes and direct costs of purchase. Non-refundable purchase taxes also comprise the non-refundable value added tax. The purchase price is reduced by trade discounts/ rebates received. To recognise declining quantities of inventories - materials and merchandise, the company uses the weighted average price method. To recognise declining quantities of inventories - finished goods and semi-finished products, the company uses the fixed (standard) price method with variances. The company immediately recognises the cost of small tools put in use as an expense.
082
Financial Statement
Inventories are not revalued due to their increase in value. If the carrying amount of inventories exceeds their net realisable value, it shall be written down to the net realisable value. Inventories shall be written down item by item.
Receivables
Receivables are initially recognised at amounts recorded in the relevant accounting documents under the assumption that they will be collected. They are measured according to amortised value by applying the method of effective interests. Receivables believed not to be settled by their due date or in their full amount, should be disclosed as doubtful receivables. If court proceedings have been initiated they are treated as disputable, therefore value adjustment of receivables includes value adjustment of doubtful and disputable receivables due fromdue from customers and an additional value adjustment to customers, formed with regard to maturity structure of receivables. The criterias to form value adjustments of receivables due from customers are established on the basis of individual judgement and/or on the basis of estimated price realization for a single receivable. Value adjustment of receivables comprises receivables due from group companies.
Cash and cash equivalents

Cash comprises cash in bank (deposit money), cash on hand and debt securities with immediate liquidity. Negative balance i.e. bank overdrafts are defined as loans payable.
Equity capital
The total capital consists of called-up capital, capital reserves, revenue reserves, net profit from previous periods brought forward, equity revaluation adjustments, and the undistributed net profit for the financial year. Share capital is stated in local currency. Acquired treasury shares or business stakes are deducted from capital. In case of purchase, sale, issue or withdrawal, profit or loss of business is not recognized in net profit for the financial year, i.e. all differences are accounted with capital.
Provisions and long-term accrued costs and deferred revenue

The company disclosed provisions in the balance sheet, if legal obligation or constructive obligation exists and if there is possibility that outflows giving opportunity for economic benefits will be necessary to settle such obligation. Where effect of time cash value is essential, the provisions sum is defined by discounting the expected future cash flows according to interest rate before tax. This one defines existent evaluations of time cash value and if necessary of risks, typical for such obligation. The effect from discounting is accounted as financial expenditure, i.e. income. Provisions for retirement benefits and anniversary bonuses are defined at the Groups level when on a balance sheet date it is established, and in the income statement is recognised the income or outcome related to the conversion of provisions within the established sum that it is going to be offset: # # # # # the sum of additionally formed provisions for costs of current service in connection with retirement benefits and anniversary bonuses for the current year, accrued interests for provisions, sum of actuarian gain or loss, sum of the increase or reduction of already formed provisions in case of introduction or modification of a programme (change of costs of the past service years) and effects of all limitations or restrictions of provisions.
In the composition of the balance sheet the company evaluates once again nonrecognised liabilities for deferred tax. They are then recognised if it is probable that future taxable profits will enable employment of liabilities for deferred taxes. The
083
Financial Statement
Company reduces the accounting value of liabilities for deferred taxes, if it is no longer probable, that there will be enough available taxable profit. Each reduction is solved, if it is probable, that there will be enough available taxable profits. Income taxes are identified in the profit and loss statement, except in the part referring directly to items stated in capital and shall therefore be accounted among the capital. Insignificant amounts of accounts receivables and liabilities for deferred taxes are not recognised.
Liabilities
Liabilities are of the following types: financial and operating, and short-term and long-term. In the initial recognition all liabilities are evaluated with amounts from corresponding documents showing their origin and proving receipt of cash and payoffs of business debt. Long-term liabilities are subsequently increased through ascribed returns (interests, other compensations), which have been agreed with a creditor. Accounted value of long-term debts is equal to their history value, less pay-offs of the main value and transfers between short-term liabilities, till necessity for revaluation of long-term liabilities occurs. Liabilities are measured according to pay-off value, according to the method of effective interests. If important sums of liabilities are not remunerated, are identified after discounted value, by considering the average interest rate achieved by the Company for similar operations. If the actual, i.e. agreed interest rate does not differentiate from the effective interest rate, liabilities are identified after the initial recognized value less the pay-offs. Carrying amount of short-term liabilities is equal to its history value, adjusted for their increases or decreases in accordance with agreements with creditors, till revaluation necessity occurs. Short-term and long-term liabilities of all kinds are showed in the beginning with amounts deriving from adequate documents, by the assumption, that creditors demand a pay-off. Liabilities are later-on increased with imputed return (interests and other recoveries), which have been agreed with creditors. Liabilities decrease for paidoff amounts and other settlements agreed with a creditor.
Short-term accrued and deferred items

Active short-term accrued and deferred items comprehend short-term deferred cost and short-term non-calculated receipts. Passive accrued cost comprises in advance calculated costs and expenses and short-term deferred income.
Revenues
Revenues are recognised when the inflow of economic benefits during the accounting period is related to increase in assets or decrease in liabilities, and when the amount of revenue can be measured reliably. Through operating profit and loss they affect the capital volume. Revenues are divided in operating revenues, financial revenue and other revenues. Revenues from sales of products are accounted in the operating profit and loss, when the Company transfers to the customer important risks and benefits, connected with products ownership. Revenues from the sales of products, resale goods and materials, are measured on the basis of the selling prices stated in invoices or other documents, decreased by discounts, approved at the moment of sale or later, or for an early payment. Revenues from performed services are measured on the basis of the performed business on the date of the balance sheet. The level of completeness is evaluated with a review of the accomplished work. Revenues are not recognised in case of doubt regarding repayment of reimbursement and other connected costs or possibility of products return, or regarding further decisions about sold products. Revenues from rentals of investment property are recognised evenly among revenues during the renting period.
084
Financial Statement
Public assistances are recognised in the beginning in financial statements as deferred income, when there is an acceptable assurance that the company is going to receive such assistance and that it will fulfil all connected obligations. State aid, received to cover costs are recognised strictly as income within periods when costs (that shall be substituted by assistance) occur. State aid connected with assets are recognised in the profit and loss statement very strictly among other operating revenues during the life-time of such asset. Revenues from interests are recognised after they occur with the method of effective interest rate. Revenues from dividends are recognised in the income statement on the day, when the shareholders pay-off right is exercised. Under financial revenues are accounted positive exchange rate differences, profit from hedging instruments and other revenues deriving from financial investments. Other revenues are composed of unusual items showed with actually occurred amounts.
Expenses
Expenses are defined as operating, financial and other expenses. Purchase value of a sold goods comprises net invoice value of goods, customs expenditure and other import duties calculated according to the suppliers price, transport costs, insurance costs and other purchase costs. Production costs of sold quantities and selling costs and costs of activities depend on the method of inventory valuation, described under Inventory. Revaluating operating expenses occur because of impairment of fixed and current assets and because of the loss from sales of intangible assets and tangible assets in comparison with their carrying amount. Financial expenses comprehend interests from loans, calculated according to the method of effective interest rate, negative exchange rate difference, loss from hedging instruments and other expenses deriving from financial investments. Other expenses are composed of unusual items which are accounted in actually occurred amounts.are composed of unusual items which are accounted in actually occurred amounts.
Income taxes
Income tax on the profit or loss for the period comprises current and deferred tax. Current tax is the expected tax payable on the taxable income for , using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is recognised for all temporary differences, except for: # # # # goodwill not deductible for tax purposes; the initial recognition of assets and liabilities that affect neither accounting nor taxable profit; differences relating to investments in subsidiaries and associated companies to the extent that they will probably not reverse in the foreseeable future. deferred tax asset is recognised for all temporary differences, non utilised tax credit notes and tax losses in the extent that it is probable that future taxable profits will be available against which the asset can be utilised, except in cases: # if difference derive from the initial recognition of assets and liabilities of an event, which at the time of its origin do not influence the accounting gains nor the taxable profits, except in case of liabilities from business combination, segmentation, change of the share in capital or transfer of activity, # if differences derive from financial investments in subsidiaries, affiliated undertakings and associated companies and from shares into joint exploitations and no probability exists that temporary differences will be solved in foreseeable future.
In the composition of the balance sheet the Company evaluates once again non-
085
Financial Statement
recognised liabilities for deferred tax. They are then recognised if it is probable that future taxable profits will enable employment of liabilities for deferred taxes. The Company reduces the accounting value of liabilities for deferred taxes, if it is no longer probable, that there will be enough available taxable profit. Each reduction is solved, if it is probable, that there will be enough available taxable profits. Income taxes are identified in the income statement, except in the part referring directly to items stated in capital and shall therefore be accounted among the capital. Insignificant amounts of accounts receivables and liabilities for deferred taxes are not recognised.
Cash flow statement

Cash flow statement has been prepared on the basis of the items in the income statement for the business year 2010, items in the balance sheet as of 1 January 2010 and 31 December 2010 and other significant items.
Financial statements of the Cimos group

The consolidated financial statements and notes in the present annual report have been prepared in accordance with International Financial Reporting Standards (IFRS), adopted by the International Accounting Standards Board (IASB), and in accordance with the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) as adopted for use in the EU and in consideration of the provisions set out in the Companies Act (ZGD-1). Two basic accounting assumptions have been considered, i.e.: appearance of events and going concern. The consolidated financial statements have been drawn up in EURs. The consolidated financial statements of the Group have been prepared under the consideration of historical costs, while fair value was considered within finance instruments in possession for trade purposes and for sale of available financial resources, listed on stock exchange or that are, in accordance with the International Financial Reporting Standards (IFRS), measured according to the appraisal model. For the preparation of financial statements the Management Board gives judgements, estimations and assumptions, which influence on the application of directives, on the value of assets and liabilities, revenues and expenses. Estimates and assumptions are based on precedent experiences and other factors, which in a given circumstance are considered as founded and on which basis we can make judgements of the carrying amount of assets and liabilities. Estimates and assumptions shall be constantly under review. Amendments of accounting evaluations are acknowledge only for the period, for which the evaluation has been amended, and if it affects only this period. Amendments can be recognised for the amendment period and for future years, if the amendment affects current year as well as future years.
# 21.2 Effects of amendments to reporting standards

Amendments to Slovenian Accounting Standards 2006, published in the Official Gazette of the Republic of Slovenia, nr. 1/2010, are applicable since 01. 01. 2010, and harmonized with the International Accounting Standards (IAS). The major change within the Slovenian Accounting Standards is represented by changes of the income statement with the extension introduction of a statement of a second comprehensive income. In accordance with amendments of the Slovenian Accounting Standards SRS 19 the total comprehensive income is the amendment of capital within a period, except amendments of capital that are the outcome of trading businesses with owners, comprehending: # # # net profit or loss for the period; amendments of the surplus from revaluation of intangible assets and tangible fixed assets; amendments of the surplus from revaluation of financial resources, available for sale;
086
Financial Statement
# # profit or loss from translation of the foreign companies accounts (translation of currency differences); other components of the comprehensive income.
Classification of investments in tangible fixed assets owned by other investors represents another amendment; it would now appear as tangible asset and not as an intangible assets. All changes are attempting to improve the usefulness of financial statements in terms of analysis and comparability of information presented in financial statements. A common feature of changes is they do not affect the evaluation of economic categories; they only affect their disclosures in financial reporting, so changes do not affect taxable profit.
# 21.3 Consolidation principles

Consolidated financial statements are the financial statements of a group presented as those of a single economic entity. It is a representation of how the holding company is doing as a group. The consolidated accounts should provide a true and fair view of the financial and operating conditions of the group. Doing so typically requires a complex set of eliminating and consolidating entries to work back from individual financial statements to a group financial statement that is an accurate representation of operations. Consolidation of capital consists of the elimination of investments in subsidiaries and of the proportional part of capital of these subsidiaries, appertaining to the Cimos Group. The share of minority shareholders in the subsidiaries company's stock shall be disclosed separately within the frame of the capital's item. All reciprocal receivables and payables that refer to the Cimos Group subsidiaries shall be eliminated in the balance sheet consolidation procedure. The main source of differences between receivables and payables are exchange rate differences, deriving from different inter-currency ratios between the Cimos Group subsidiaries and time mismatch of the events' recording. Income and expense figure between the Cimos Group subsidiaries were eliminated from the group income statement, in the extent disclosed by individual subsidiary. Eliminating inter group revenues and expenses do not influence the consolidated profit. The minority shareholders profit is indicated separately. The basis of preparation of the Group's financial statements, including basic assumptions, exchange rates and the method of currency translation into home currency are described in the chapter Summary of important Accounting Policies. For the evaluation of items from financial statements of all the Cimos Group subsidiaries, unified Accounting policies were adopted. For the purpose of consolidation the financial statements drawn up by the subsidiary undertakings, original documentation kept in the parent company and subsidiary undertakings and direct reconciliation of balances and transactions between the companies in the Group have been used. A step by step consolidation process has been used. Since the Group is composed also of the companies incorporated in foreign countries and these entities draw up their financial statements in the respective local currency, only such financial statements have been converted into the presentation currency used by the parent company the EUR. For the purpose of currency translation, the effective exchange rate of the Bank of Slovenia has been applied, and namely the relevant exchange rate of the Bank of Slovenia as at 31 December 2010 for the translation of assets and liabilities and the relevant average exchange rates for 2010 for the translation of revenue, expenditure and cost items, in the event that currency translation as at the date of occurrence of the business event was not possible. The consolidated financial statements prepared by the Cimos Group as at 31 December 2010 include the financial statements of Cimos d.d. and the financial statements of its subsidiaries in which the parent undertaking has the dominant influence. The subsidiary Cimos BRD, Gmbh, Muenchen has not been consolidated due to insignificance of review.
087
Financial Statement
# 22. [Cimos d.d.]

# 22.1 Financial statements
Balance sheet
(in EUR) A. I. 1. 2. 3. 4. 5. II. 1. NON-CURRENT ASSETS Intangible assets and long-term deferred items Long-term property rights Goodwill Advances for intangible assets Long-term deferred development expenses Other long-term deferred items Tangible fixed assets Land and buildings a. Land b. Buildings 2. 3. 4. Production machinery Other devices and equipment Tangible fixed assets under construction of manufacturing a. Tangible fixed assets under construction of manufacturing b. Advances for acquisition of tangible fixed assets III. IV. 1. Investment property Long-term financial investments Long-term financial investments, except for loans a. Shares and stakes in the group b. Shares in stakes of associated companies c. Other shares and stakes . Other long-term investments 2. Long-term loans a. Long-term loans to members of the group b. Long-term loans granted to others c. Long-term subscribed capital unpaid V. 1. 2. 3. VI. B. I. II. 1. 2. 3. 4. III. 1. Long-term operating receivables Long-term operating receivables from group companies Long-term accounts receivable Other long-term operating receivables Deferred tax assets CURRENT ASSETS Assets (or disposal groups) classified as held for sale Inventories Material Work in progress Products and merchandise Advances for inventories Short-term financial investments Short-term financial investments, except for loans a. Shares in stakes in the group b. Other shares and stakes c. Other short-term financial investments 2. Short-term loans a. Short-term loans to group companies b. Short-term loans granted to others c. Short-term subscribed capital unpaid IV. 1. 2. 3. V. C. Short-term operating receivables Short-term operating receivables from group companies Short-term accounts receivable Short-term operating receivables from others Cash Short-term deferred items TOTAL ASSETS 10 11 9 8 7 6 5 3 4 2 1 Note 31. 12. 2010 247,945,661 11,464,068 495,724 10,952,948 15,396 55,825,760 25,874,425 7,875,618 17,998,807 16,377,940 5,745,889 7,827,506 7,801,186 26,320 178,962,897 169,811,460 169,315,063 496,397 9,151,437 9,107,638 43,799 1,355,073 1,355,073 337,863 219,066,981 26,610,252 5,764,421 2,941,083 15,609,550 2,295,198 73,011,032 73,011,032 46,849,608 26,161,424 115,935,347 49,050,578 55,235,633 11,649,136 3,510,350 783,728 467,796,370 31. 12. 2009 238,372,320 8,561,625 794,366 7,648,622 118,637 57,709,600 27,489,396 7,875,618 19,613,778 22,657,510 5,971,881 1,590,813 1,496,388 94,425 170,042,447 157,420,275 148,922,439 8,497,836 12,622,172 12,362,320 259,852 2,058,648 2,058,648 221,027,871 26,801,970 5,634,436 2,860,914 16,566,500 1,740,120 72,562,856 72,562,856 37,025,365 35,537,491 121,378,853 55,555,243 55,543,104 10,280,506 284,192 332,624 459,732,815
088
Financial Statement
(in EUR) A. I. 1. 2. II. III. 1. 2. 3. 4. 5. IV. V. VI. B. 1. 2. 3. C. I. 1. 2. 3. 4. II. 1. 2. 3. 4. 5. III. . I. II. 1. 2. 3. 4. III. 1. 2. 3. 4. 5. G. CAPITAL Called-up capital Subscribed capital Uncalled capital (deduction item) Capital reserves Profit reserves Legal reserves Reserves for own shares and stakes Own shares and own stakes (as deductible item) Statutory reserves Other reserves from profit Revaluation surplus Net profit/loss brought forward Net profit or loss in the accounting period PROVISIONS AND LONG-TERM ACCRUED ITEMS Provisions for pensions and similar liabilities Other provisions Long-term accrued items LONG-TERM LIABILITIES Long-term financial liabilities Long-term financial liabilities to group companies Long-term financial liabilities to banks Long-term liabilities arising from bonds issued Other long-term financial liabilities Long-term operating liabilities Long-term operating liabilities from group companies Long-term operating liabilities to suppliers Long-term liabilities arising from bills of exchange Long-term operating liabilities arising from advances Other long-term operating liabilities Deferred tax liability SHORT-TERM LIABILITIES Liabilities included in disposal groups Short-term financial liabilities Short-term financial liabilities to group companies Short-term financial liabilities to banks Short-term financial liabilities arising from bonds issued Other short-term financial liabilities Short-term operating liabilities Short-term operating liabilities to group companies Short-term operating liabilities to suppliers Short-term liabilities arising from bills of exchange Short-term operating liabilities arising from advances Other short-term operating liabilities SHORT-TERM ACCRUED ITEMS TOTAL LIABILITIES
Note 12
31. 12. 2010 112,802,420 69,480,250 69,480,250 13,187,961 29,336,646 3,416,882 13,384,021 (13,384,021) 6,787,190 19,132,574 (54,696) 852,259
31. 12. 2009 112,172,437 69,480,250 69,480,250 13,187,961 28,874,642 3,297,267 13,384,021 (13,384,021) 6,219,017 19,358,358 (85,247) 714,831 161,370,588 161,370,588 122,072,507 20,000,000 19,298,081 185,421,807 93,198,605 83,237,519 9,961,086 92,223,202 32,099,166 34,267,962 757,720 25,098,354 767,983 459,732,815
13
1,906,489 1,906,489 149,323,227
14
149,323,227 129,404,922 19,918,305 203,048,524 -
15
107,478,324 1,490,000 79,228,040 20,000,000 6,760,284
16
95,570,200 33,007,080 34,341,928 1,485,910 26,735,282
17
715,710 467,796,370
089
Financial Statement
Income statement for the year ended 31 December
(in EUR) 1. Net sales a) Net sales on home market b) Net sales on foreign markets 2. 3. 4. 5. Changes in inventories of products and work in progress Capitalised own products and own services Other operating revenues Costs of goods, material and services a) Costs of goods and material sold and costs of material used b) Costs of services 6. Labour costs a) Wages and salaries b) Social insurance Pension insurance cost c) Other labour costs 7. Write-downs a) Depreciation b) Revaluation operating expenses of intangible and tangible fixed assets c) Revaluation operating expenses associated with operating current assets 8. 9. Other operating expenses Financial revenues from participations a) Financial revenues from stakes in group companies b) Financial revenues from stakes in associated companies c) Financial revenues from stakes in other companies ) Financial revenues from other companies 10. Financial revenues from loans granted a) Financial revenues from loans granted to group companies b) Financial revenues from loans granted to others 11. Financial revenues from operating receivables a) Financial revenues from operating receivables from group companies b) Financial revenues from operating receivables form others 12. Financial expenses from impairment and write-offs of financial investments Financial expenses from impairment and write-offs of financial investments of group a) companies b) Financial expenses from impairment and write-offs of financial investments of others 13. Financial expenses for financial liabilities a) Financial expenses for loans received from group companies b) Financial expenses for loans received from banks c) Financial expenses for bonds issued ) Financial expenses for other financial liabilities 14. Financial expenses for operating liabilities a) Financial expenses for operating liabilities to group companies b) Financial expenses for liabilities to suppliers and bill of exchange liabilities c) Financial expenses for other operating liabilities 15. 16. 17. 18. 19. Other revenues Other expenses Corporate income tax Deferred taxes NET PROFIT OR LOSS FOR THE ACCOUNTING PERIOD 23 24 22 22 22 21 21 20 21 20 20 19 19 19 20 Note 19 2010 356,620,838 10,121,064 346,499,774 (1,342,415) 5,292,619 1,444,074 310,112,333 292,654,912 17,457,421 22,762,983 16,924,791 2,903,368 1,660,707 2,934,824 11,755,766 11,701,361 53,590 815 293,965 49,797 49,797 2,145,380 1,410,142 735,238 747,507 562,749 184,758 65 65 16,578,553 310 10,515,916 1,150,000 4,912,327 1,138,912 52,979 650,663 435,270 51,318 112,890 (138,655) 2,392,306 2009 319,760,817 10,082,070 309,678,747 75,254 369,398 117,687 271,956,986 254,708,073 17,248,913 22,520,569 16,622,420 2,856,165 1,632,217 3,041,984 12,270,423 11,907,440 61,873 301,110 155,121 31,616 31,616 2,062,058 1,881,115 180,943 5,648 5,648 1,541,465 1,541,465 11,465,884 8,841,343 1,151,317 1,473,224 358,183 13,152 247,999 97,032 190,851 14,352 323,804 2,006,542
Statement of the second comprehensive income

(in EUR) Profit or loss for the accounting period Changes in revaluation surplus regarding intangible and tangible fixed assets Changes in revaluation surplus regarding available-for-sale financial investments Gains and losses arising from translating the financial statements of a foreign operation Other comprehensive income TOTAL COMPREHENSIVE INCOME RECOGNISED IN THE PERIOD 2010 2,392,306 30,551 2,422,857 2009 2,006,542 (283,223) 1,723,319
090
Financial Statement
Cash flow for the year ended 31 December
(in EUR) CASH FLOWS FROM OPERATING ACTIVITIES Income statement items Operating revenues and financial revenue from operating receivables Operating expenses excluding depreciation financial expenses from operating liabilities Income taxes and other taxes not included in operating expenses Net working capital changes, balance sheet items: Opening less closing operating receivables Opening less closing deferred costs and accrued revenue Opening less closing deferred tax assets Opening less closing assets (disposal groups) held for sale Opening less closing inventories Closing less opening operating liabilities Closing less opening accrued costs and deferred revenue and provisions Closing less opening deferred tax liabilities Net cash flow from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Cash receipts from interests and dividends: Received from investing activities Cash receipts from disposal of intangible assets Cash receipts from disposal of property, plant and equipment Cash receipts from disposal of investment property Cash receipts from disposal of long-term financial investments Cash receipts from disposal of short-term financial investments Cash disbursements from investing activities: Cash disbursements for aquisition of intagible assets Cash disbursements for acquisition of property, plant and equipment Cash disbursements for acquisition of investment property Cash disbursements for acquisition of long-term financial investments Cash disbursements for acquisition of short-term financial investments Net cash flow from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Cash receipts from financing activities: Cash proceeds from paid-in capital Cash proceeds from increase in long-term financial liabilities Cash proceeds from increase in short-term financial liabilities Cash disbursements from financing activities: Cash disbursements for interest paid on financing activities Cash repayments of equity Cash repayments of long-term financial liabilities Cash repayments of short-term financial liabilities Cash payments of dividends and other shares of profit paid Net cash flow from financing activities CLOSING BALANCE OF CASH AND CASH EQUIVALENTS Cash and cash equivalents changes in period Opening balance of cash and cash equivalents (12,965,952) (1,792,874) (2,157) (25,482,335) (16,139,069) 3,510,350 3,226,158 284,192 (11,200,149) (15,633,238) 29,148,951 284,192 (129,284) 413,476 14,274,776 9,829,473 48,859,463 7,122,875 (4,173,476) (9,309,777) (20,508,079) (12,834,881) (19,862,927) (7,743,590) (1,722,014) (10,481,563) (44,389,482) (59,010,643) 2,195,177 2,253 761,036 8,247,977 15,756,843 2,093,674 376 155,461 61,033 3,015,462 6,147,081 (451,104) (337,863) 191,718 3,346,998 1,854,216 39,228,154 (11,195,793) 1,348,204 6,380,654 8,964,673 (592,987) 29,732,408 362,813,941 (334,475,488) 138,655 320,519,655 (295,368,194) (323,804) 2010 2009
091
Financial Statement
Statement of changes in equity for the year ended 31 December 2010
(in EUR) BALANCE ON DECEMBER 31, 2009 Adjustment for the previous years (errors correction) Adjustment for the previous years (changes in accounting polices) BALANCE ON JANUARY 01, 2010 Changes in equity transactions with owners Entry of called-up share capital Entry of uncalled share capital Call of registered share capital Entry of added deposit of capital Purchase of own shares and own business interests Disposal or withdrawal of own shares Repayment of capital Payment of dividends Payment of bonuses to Management and Supervisory Board Other changes of own capital Total changes in equity transactions with owners Total comprehensive income for the period Entry of net profit of the period Change in revaluation adjustments of intangible assets Change in revaluation adjustments of tangible assets Change in revaluation adjustments of financial investments Other components of the comprehensive income for the period Total comprehensive income for the period Transfers in equity Allocation of the rest of the profit of the comparative period on ather equity components Allocation of the rest of the profit on ather equity components decision of headquarters and supervisory board Allocation of the rest of the profit on ather equity components decision of the assembly Loss settlement Setting reserves for own shares from other components of equity Release of reserves for own shares Other changes in equity Total transfers in equity BALANCE ON DECEMBER 31, 2010 DISTRIBUTABLE PROFIT
Called-up capital 69,480,250 69,480,250
Capital reserve 13,187,961 13,187,961
Legal reserve 3,297,267 3,297,267
69,480,250 -
13,187,961 -
119,615 119,615 3,416,882 -
092
Financial Statement
Reserves for own shares and stakes 13,384,021 13,384,021
Own shares and own stakes (as deductible item) (13,384,021) (13,384,021)
Statutory reserve 6,219,017 6,219,017
Other reserves from profit 19,358,358 (1,792,874) 17,565,484
Total reserves from profit 28,874,642 (1,792,874) 27,081,768
Revaluation surplus (85,247) (85,247)
Net profit/loss brought forward -
Net profit or loss in the accounting period 714,831 714,831
Total 112,172,437 (1,792,874) 110,379,563
30,551 30,551
2,392,306 2,392,306
2,392,306 30,551 2,422,857
13,384,021 -
(13,384,021) -
568,173 568,173 6,787,190 -
852,259 714,831 1,567,090 19,132,574 -
1,540,047 714,831 2,254,878 29,336,646 -
(54,696) -
(1,540,047) (714,831) (2,254,878) 852,259 852,259
112,802,420 852,259
093
Financial Statement
(in EUR) BALANCE ON DECEMBER 31, 2008 Adjustment for the previous years (errors correction) Adjustment for the previous years (changes in accounting polices) BALANCE ON JANUARY 01, 2009 Changes in equity transactions with owners Entry of called-up share capital Entry of uncalled share capital Call of registered share capital Entry of added deposit of capital Purchase of own shares and own business interests Disposal or withdrawal of own shares Repayment of capital Payment of dividends Payment of bonuses to Management and Supervisory Board Other changes of own capital Total changes in equity transactions with owners Total comprehensive income for the period Entry of net profit of the period Change in revaluation adjustments of intangible assets Change in revaluation adjustments of tangible assets Change in revaluation adjustments of financial investments Other components of the comprehensive income for the period Total comprehensive income for the period Transfers from equity Allocation of the rest of the profit of the comparative period on ather equity components Allocation of the rest of the profit on ather equity components decision of headquarters and supervisory board Allocation of the rest of the profit on ather equity components decision of the assembly Loss settlement Setting reserves for own shares from other components of equity Release of reserves for own shares Other changes in equity Total transfers in equity BALANCE ON DECEMBER 31, 2009 DISTRIBUTABLE PROFIT
Capital reserve 13,187,961 13,187,961
Legal reserve 3,196,940 3,196,940
69,480,250
13,187,961
100,327 100,327 3,297,267
094
Financial Statement
Statutory reserve 5,742,463 5,742,463
Other reserves from profit 17,401,932 17,401,932
Total reserves from profit 26,341,335 26,341,335
Revaluation surplus 197,976 197,976
Net profit/loss brought forward -
Net profit or loss in the accounting period 1,241,595 1,241,595
Total 110,449,117 110,449,117
(283,223) (283,223)
2,006,542 2,006,542
2,006,542 (283,223) 1,723,319
13,384,021
(13,384,021)
476,553 476,553 6,219,017
714,831 1,241,595 1,956,426 19,358,358
1,291,711 1,241,595 2,533,306 28,874,641
(85,247)
(1,291,711) (1,241,595) (2,533,306) 714,831 714,831
112,172,437 714,831
095
Raunovodsko poroilo Financial Statement

# 22.2 Notes on the financial statements
Note 1
Deferred development costs
Intangible assets and long-term deferred costs 11,464,068 EUR

Trade marks, patents, licenses and other rights
(in EUR) Procurement value December 31, 2009 Allowance after closing balance January 01, 2010 Direct acquisitions Acquisitions own production Increase due the acquisition Carry-forwards of investments in progress Disposals Transfers to short-term assets Weakening Re-evaluations to fair value Re-classifications December 31, 2010 Written-off value December 31, 2009 Allowance after closing balance January 01, 2010 Depreciation in the year Increase due the acquisition Disposals Transfers to short-term assets Weakening Re-evaluations to fair value Re-classifications December 31, 2010 Present value DECEMBER 31, 2009 JANUARY 01, 2010 DECEMBER 31, 2010
Investments in foregin assets
Assets in progress
Other deferred costs
Total
13,289,781 13,289,781 4,136,571 17,426,352
196,707 (196,707) -
6,260,716 6,260,716 36,905 6,297,621
1,438,124 2,735,352 (4,173,476) -
2,421,370 2,421,370 (2,253) 2,419,117
22,168,574 (196,707) 21,971,867 1,438,124 2,735,352 (2,253) 26,143,090
5,641,159 5,641,159 832,245 6,473,404
95,719 (95,719) -
5,466,350 5,466,350 335,547 5,801,897
2,403,721 2,403,721 2,403,721
13,606,949 (95,719) 13,511,230 1,167,792 14,679,022
7,648,622 7,648,622 10,952,948
100,988 -
794,366 794,366 495,724
17,649 17,649 15,396
8,561,625 8,460,637 11,464,068
In 2010 intangible assets increased year-on-year, driven mostly by deferred cost for development of the safe, energy- and cost-effective solutions for the automotive industry. Development projects were carried out in four production programmes: Engine and Gearbox, Chassis, Car-body parts and Turbo. Within long-term property rights, assets were invested in licences and in software.
096
Raunovodsko poroilo Financial Statement

Note 2 Property, plant and equipment 55,825,760 EUR
(in EUR) Procurement value December 31, 2009 Allowance after closing balance January 1, 2010 Direct acquisitions Acquisitions own production Increase due the acquisition Carry-forwards of investments in progress Disposals Transfers to short-term assets Weakening Re-evaluations to fair value Transfers from investment property Transfers to investment property Re-classifications Capitalized financial expenses December 31, 2010 Written-off value December 31, 2009 Allowance after closing balance January 1, 2010 Depreciation in the year Increase due the acquisition Disposals Transfers to short-term assets Weakening Re-evaluations to fair value Transfers from investment property Transfers to investment property Re-classifications December 31, 2010 Present value DECEMBER 31, 2009 JANUARY 1, 2010 DECEMBER 31, 2010
Land
Production device, machinery Buildings and equipment
Other device and equipment
Investments in foreign assets
Assets under construction
Advance payments
Total
7,875,618 7,875,618 -
47,708,856 47,708,856 125,458
85,393,724 85,393,724 594,412
21,364,339 21,364,339 1,714,942
196,707 196,707 8,000
1,496,388 1,496,388 6,190,342 2,557,268 (2,442,812)
94,425 94,425 562,167 -
163,933,350 196,707 164,130,057 6,752,509 2,557,268 -
7,875,618
(11,455) 47,822,859
(6,315,579) 79,672,557
(1,450,672) 21,628,609
204,707
7,801,186
(630,272) 26,320
(8,407,978) 165,031,856
28,095,078 28,095,078
62,736,214 62,736,214
15,392,458 15,392,458
95,719 95,719
106,223,750 95,719 106,319,469
1,740,328 (1,084) 29,834,322
6,909,550 (6,287,325) 63,358,439
1,848,795 (1,358,533) 15,882,720
34,896 130,615
10,533,569 (7,646,942) 109,206,096
7,875,618 7,875,618 7,875,618
19,613,778 19,613,778 17,988,537
22,657,510 22,657,510 16,314,118
5,971,881 5,971,881 5,745,889
100,988 74,092
1,496,388 1,496,388 7,801,186
94,425 94,425 26,320
57,709,600 57,810,588 55,825,760
097
Financial Statement
The present value of property, plant and equipment within finance lease is shown below: # # # manufacturing plant and equipment in the amount of 13,933,973 euros, other equipment in the amount of 892,792 euros, transport means in the amount of 502,494 euros.
In 2010, the company invested 8,747,610 euros in manufacturing and other equipment. The biggest items refer to the acquisitions made for the PRINCE and FLY projects. The costs of the self-constructed items in the amount of 2,557,268 euros and measured at production cost are carried under manufacturing and other equipment. The value of the companys fixed assets taken out of service as at 31 December 2010 is 11,664 euros. There is a registered mortgage on the parcel of land with the buildings constructed on it (112,747 square metres) carried as at 31 December 2010 in the companys books of account in the amount of 13,532,861 euros.
Note 4
(in EUR) Long-term financial investments, excluding loans Shares in interests in group companies Other shares and interests Long-term loans Long-term loans to group companies Long-term loans to others TOTAL
Long-term financial investments
178,962,897 EUR
31. 12. 2010 31. 12. 2009
169,315,063 496,397 9,107,638 43,799 178,962,897
148,922,439 8,497,836 12,362,320 259,852 170,042,447
(in EUR) Share in subsidiaries: National: PS Cimos TAM A.i., d.o.o., Maribor CIMAT, d.o.o., Koper Cimos Titan, d.o.o., Kamnik Livarna Vuzenica, d.o.o., Vuzenica Litostroj Power, d.o.o., Ljubljana TAM poslovne storitve d.o.o. LIP, d.o.o., Ljubljana Foreign: P.P.C. Buzet, d.o.o., Hrvaka Cimos France, d.o.o., Francija Cimos BRD, d.o.o., Nemija PS Cimos TMD A.i., d.o.o., BiH Cimos TMD Casting, d.o.o., BIH Livnica Kikinda, d.d., Srbija Livnica Kikinda A.i., d.o.o.,Srbija Fam Seanj A.i., d.o.o., Srbija Livnica Mainogradnja, d.o.o., Srbija Kruik Precizni liv, d.o.o., Srbija CIMOS-ZKS d.o.o. Share in group subsidiaries Other shares in interests: National Foreign Other shares in interests TOTAL
31. 12. 2010
31. 12. 2009
12,768,803 2,806,346 8,485,758 7,500 51,000 9,380,647 284,820 17,542,392 11,332,872 13,709,233 61,047,001 8,989,673 22,399,459 505,784 3,775 169,315,063
12,768,803 8,485,758 51,000 9,380,647 284,820 17,256,865 11,332,872 13,709,233 48,681,631 8,989,673 17,471,578 505,784 3,775 148,922,439
490,708 5,689 496,397 169,811,460
8,492,082 5,754 8,497,836 157,420,275
098
Financial Statement
(in EUR) Loans Financial investments available for sale TOTAL 31. 12. 2010 9,151,437 169,811,460 178,962,897 31. 12. 2009 12,622,172 157,420,275 170,042,447
In 2010, Cimos d.d. founded a new company named CIMAT d. o. o. and acquired from Livinca Kikinda AD a 100 per cent holding in Livnica Mainogradnja d. o. o. and a 16.10 per cent holding in Livnica Kikinda A. i., d. o. o. The Companys liabilities from the unpaid share capital total 6,560,327 euros. Other shares and stakes have decreased as a result of the sale of the shares in Kovinoplastika Lo d.d. Long-term financial investments in all subsidiaries are classified in the fourth category available-for-sale financial assets and are measured at cost. The investment in shares of the subsidiary Livnice Kikinda AD listed as LVNK on the Belgrade Stock Exchange has not been impaired as these shares have not been traded since 2007. Investments, measured at fair value recognised directly in equity have increased by the revaluation surplus of 30,551 euros in . The long-term loans granted by the company decreased by 3,470,735 euros mostly because they were reclassified as short-term lending. Cimos d.d. has approved to its subsidiaries short-term credit facilities (as a source of stand-by funding) to provide liquidity for a company's day-to-day operations . These credit facilities are usually granted against additional security: fiduciary transfer of property right to movable objects such as plant and equipment in a foundry and other types of manufacture owned by the borrowers. The value of the pledged long-term financial assets for the loans received amounted to 38,796,953 euros as at 31 December 2010. Cimos d.d. has provided guarantees of 11,051,792 euros for the loans taken by its subsidiaries Cimos Titan, d. o. o., Livarna Vuzenica d. o. o. and CIMOS TAM A. i., d. o. o. With a 38 per cent share, long-term financial assetss account for the largest portion of the companys total assets.
099
Financial Statement
Movement of long-term financial investment
Financial investments on fair value througt IS Financial investments in proprety till maturity Financial investments available for sale
(in EUR) Gross value Status as at 31. 12. 2009 Increases New loans, aquistions Revaluation exchange difference Capitalisation of Interests Revaluation to fair value Decreases Amortisation, sale Revaluation exchange difference Transfer to short-term Write-off Revaluation to fair value Status as at 31. 12. 2010 Value adjustment Status as at 31. 12. 2009 Increases Allowance in the year Decreases Recovered write-off receivables Write-off Transfer to short-term Status as at 31. 12. 2010 NET VALUE 31. 12. 2009 NET VALUE 31. 12. 2010
Loans
Total
12,622,172
170,434,473
183,056,645
115,455 (216,052) (3,370,138) 9,151,437
20,392,624 (65) (8,031,925) 30,551 182,825,658
20,392,624 (65) 115,455 (8,247,977) (3,370,138) 30,551 191,977,095
13,014,198
13,014,198
12,622,172 9,151,437
13,014,198 157,420,275 169,811,460
13,014,198 170,042,447 178,962,897
Note 5
Long-term operating receivables 1,355,073 EUR
(in EUR) Long-term operating receivables due from group companies Short-term share of long-term operating receivables TOTAL
31. 12. 2010 2,058,648 (703,575) 1,355,073
31. 12. 2009 2,058,648 2,058,648
Long-term operating receivables refer to the long-term trade credits given to P.P.C. Buzet. The last instalment is due in 2014.
Note 6
(in EUR) Provisions for costs and expenses Unused brought forward tax losses TOTAL 31. 12. 2009 01. 01. 2010 199,208 199,208
Deferred tax assets 337,863 EUR

Deferred tax througt IS (8,559) 147,214 138,655 31. 12. 2010 190,649 147,214 337,863
0100
Financial Statement
The modification to accounting policies in 2010 due to provisioning for jubilee and retirement benefits has had effects on the companys tax balance sheet. Deferred tax assets in the amount of 190,649 euros have been for the provisions for jubilee and retirement benefits and for the tax loss carry forward in the amount of 147,214 euros.
Note 7
(in EUR)
Inventories
26,610,252 EUR
31. 12. 2010 5,764,421 2,941,083 5,069,871 10,539,679 2,295,198 26,610,252 26,610,252 31. 12. 2009 5,634,436 2,860,914 6,492,456 10,074,044 1,740,120 26,801,970 26,801,970
Materials and consumables Work in progress Products Merchandise Advances for inventories TOTAL
In comparison with the end of 2009, the balance of inventories has not changed much. The finished goods inventory decreased most as a result of producing customer orders more quickly then last quarter of 2010. No major discrepancies have been identified during the inventory control. There is missing inventory of 19,316 euros, but it is within the limits of normal loss for this type of manufacture. An inventory surplus of 3,399 euros has been established.
Note 8
(in EUR) Short-term loans
Short-term financial investments 73,011,032 EUR

31. 12. 2010 31. 12. 2009
Short-term loans to group companies Short-term loans to others TOTAL
46,849,608 26,161,424 73,011,032
37,025,365 35,537,491 72,562,856
The increase in short-term lending to the companies in the group in comparison with 2009 is attributable to the fact that the portion of long-term loans with maturity in 2011 were transferred under short-term investments, and new loans granted in 2010. The bigger portion of the receivables arising from the loans refer to the loans to the subsidiaries: CIMOS TAM A.i., CIMOS Titan, Livarna Vuzenica, Litostroj Power, P.P.C. Buzet and CIMOS BRD. The interest rate charged on the loans given to the subsidiaries in the home country are the rates recognised as deductible for tax purpose. The short-term loans given to others have decreased after drawing down the funds held as a deposit on the bank account.
0101
Financial Statement
Movement of short-term financial investments
Financial investments on fair value througt IPI Financial investments in proprety till maturity Financial investments available for sale
(in EUR) Gross value Status as at 31. 12. 2009 Increases New loans, aquistions Revaluation exchange difference Capitalisation of Interests Transfer from long-term Revaluation to fair value Decreases Amortisation, sale Revaluation exchange difference Write-off Revaluation to fair value Status as at 31. 12. 2010 Value adjustment Status as at 31. 12. 2009 Increases Transfer from long-term Allowance in the year Decreases Recovered write-off receivables Write-off Status as at 31. 12. 2010 NET VALUE 31. 12. 2009 NET VALUE 31. 12. 2010
Loans
Total
72,562,856
72,562,856
11,842,568 992,313 3,370,138 (15,756,843) 73,011,032
11,842,568 992,313 3,370,138 (15,756,843) 73,011,032
72,562,856 73,011,032
72,562,856 73,011,032
Note 9
(in EUR) Short-term operating trade receivables: Domestic market Foreign market Trade accounts receivable from group companies Short-term advance payments and deposits Trade accounts receivable in connection with financial income Other short-term receivables Short-term portion of long-term operating accounts receivable Impairment of short-term operating receivable TOTAL
Short-term operating receivables

31. 12. 2010
115,935,347 EUR
31. 12. 2009
1,341,400 68,862,160 48,347,003 199,415 14,644 11,546,553 703,575 (15,079,403) 115,935,347
1,764,862 68,750,218 55,555,243 204,528 15,751 10,171,703 (15,083,452) 121,378,853
Short-term trade receivables in the foreign market are denominated in EUR and in USD. In the automotive industry, business is done by placing orders for the year and no contracts are concluded for a specific period. Given the nature of the business, it is not common to insure trade receivables. In comparison with 2009, receivables due from the group companies decreased and claims on foreign countries for the refund of value added tax increased. In accordance with the companys accounting policy, the criteria for value adjustments of trade receivables are defined on a case-by-case basis by taking into account whether the debt in question can be collected or not. The value of the receivables pledged for the loans received is 12 million euros.
0102
Financial Statement
Trade receivables structure (excluding receivables from group companies)
(in EUR) Non past due Past due: 30 days 60 days 90 days more than 90 days TOTAL 3,524,570 496,724 295,186 1,608,482 55,235,633 2,644,065 550,778 200,852 2,721,116 55,543,104 31. 12. 2010 49,310,671 31. 12. 2009 49,426,293
Value adjustment of short-term operating receivables

(in EUR) STATUS AS AT 1.1. Increases Creation of value adjustments during the year Decreases Write-off of receivables STATUS AS AT 31.12. (4,049) 15,079,403 15,083,452 25,142 31. 12. 2010 15.083.452 31. 12. 2009 15.058.310
Note 10
(in EUR)
Cash and cash equivalents 3,510,350 EUR

31. 12. 2010 1,146 3,493,032 16,172 3,510,350 31. 12. 2009 1,323 268,748 14,121 284,192
Cash in hand national currency Cash in banks national currency Cash in banks foreign currency TOTAL
Note 11
(in EUR)
Deferred costs and accrued revenue 783,728 EUR

31. 12. 2010 698,043 85,685 783,728 31. 12. 2009 308,827 23,797 332,624
Short-term deferred costs and expenses Short-term accrued revenues TOTAL
Under short-term accrued and deferred items the company discloses deferred costs of insurance premiums, short-term deferred expenses for tools, VAT receivables and short-term accrued interest income.
0103
Financial Statement
Note 12 Equity capital 112,802,420 EUR
The share capital of Cimos d.d. is 69,480,250 euros. This amount is specified in the Companys Articles of Association and entered into the Court Register of Companies. The share capital is divided into 16,650,247 ordinary no-par value shares. As at 31 December 2010, 1,204 shareholders were registered with the Central Securities Clearing Company (KDD). There are 2,221, 189 treasury shares in the value of 13,384,021 euros and they account for 13.3 per cent of all shares. The company carries its treasury shares in a designated account. The treasury shares are valued at the average purchase price. The company has acquired the treasury shares from the shareholders in a debt-for-equity swap in December 2004,. The share buy-back was the only way for Cimos to collect debts. There was no trading with the Cimos shares in 2010. The companys authorised subscribed capital amounted to 34,740,125 euros. Other profit reserves were reduced in order to form provisions for jubilee and retirement benefits in the amount of 1,992,083 euros, and were increased by the amount of the deferred tax assets of 199,208 euros. The calculated share book value of as at 31 December 2010 and 31 December 2009is 7.82 euros and 7.77 euros respectively. To arrive at the value, the number of treasury shares is subtracted from the total number of issued shares. In 2010, the profit after tax amounted to 2,392,306 euros and earnings per share to 0.17 euros. The restated earnings per share in 2010 are the same as the earnings per share. Earnings per share are calculated by dividing net profit after tax attributable to the companys shareholders, by the total number of equity shares excluding treasury shares. In 2009, the net earnings per share was 0.14 euro. Share premium
(in EUR) Capital paid in excess Gains on sales of own shares General equity revaluation adjustment TOTAL 31. 12. 2010 4,958,334 4,275,973 3,953,654 13,187,961 31. 12. 2009 4,958,334 4,275,973 3,953,654 13,187,961
Distributable profit
(in EUR) Net profit of the financial year Net loss of the financial year Retained net profit Retained net loss Decrease of capital reserves Decrease of reserves from profit 1. Decrease of legal reserves 2. Decrease of reserves from own shares and own stakes 3. Decrease of statutory reserves 4. Decrease of other reserves from profit Increase of reserves from profit 1. Increase of legal reserves 2. Increase of reserves from own shares and own stakes 3. Increase of statutory reserves 4. Increase of other reserves from profit TOTAL DISTRIBUTABLE PROFIT 2010 2,392,306 714,831 2,254,878 119,615 568,173 1,567,090 852,259 2009 2,006,542 1,241,595 2,533,306 100,327 476,553 1,956,426 714,831
0104
Financial Statement
Revaluation surplus
Revaluation surplus in the amount of -54,696 euros has been formed on the account of the revaluation of long-term financial investments, measured at fair value through equity capital: Prva Group plc, Ljubljana in the amount of -46,616 euros and Zavarovalnica Triglav d.d., Ljubljana in the amount of -8,080 euros
Note 13
Provisions and long-term accured costs and deferred revenue 1,906,489 EUR
Pensions, anniversary bonuses, retirement benefits 1,992,083 1,992,083
(in EUR) STATUS AS AT 31 DECEMBER 2009 Allowance after closing balance Status as at 1 January 2010 Changes during the year: Settings Drawing STATUS AS AT 31 DECEMBER 2010
Total 1,992,083 1,992,083
146,116 (231,710) 1,906,489
146,116 (231,710) 1,906,489
In 2010, Cimos d.d. has changed its accounting policies and formed provisions for jubilee bonuses and retirement benefits. The total value for the year 2009, calculated by authorised actuary was 1,992,083 euros. Additional provisions of 146,116 euros have been formed for the financial year 2010, while the decrease in provisions of 231,710 euros is due to the fact that payments of jubilee and retirement benefits have been made.
Note 14
(in EUR)
Long-term financial liabilities 149,323,227 EUR

31. 12. 2010 150,991,455 9,794,445 20,000,000 26,664,199 (58,126,872) 149,323,227 31. 12. 2009 127,137,989 12,081,945 20,000,000 24,669,107 (22,909,197) 161,370,588
Long-term loans from banks and companies within the state Long-term loans from banks and companies from abroad Long-term financial liabilities connected with bonds Long-term debts from financial lease Short-term part of long-term financial liabilities TOTAL
The balance of long-term financial liabilities as at 31 December 2010 decreased yearon-year mostly due to the transfer of long-term financial liabilities arising from the bonds issued to short-term financial liabilities. The long-term bank loans with maturity between three and ten years are collateralised by a mortgage i.e. by registering a lien on real property of Cimos d.d. and with equity holdings. The interest rate on the borrowings is between 6-month EURIBOR + 0.8 per cent and 10-year interest SWAP rate + 4.5 per cent. Other long-term financial liabilities include liabilities deriving from long-term finance lease. Liabilities will fall due within the period from 3 to 5 years, interest rates range from 3-month LIBOR + 0.8 percentage to 3-month LIBOR + 2.95 per cent. Liabilities from finance lease are denominated in euros and in Swiss Franks. A portion of the companys long-term financial liabilities to banks is secured with a pledge of short-term trade receivables in the amount of 12 million euros.
0105
Financial Statement
Movement in long-term financial liabilities
Principal of debt as of 1st January New loans in In the year Transfer from short-term loans Exchange differences Repayments in the year Principals of debt as of 31st December Portion due in 2011
(in EUR) Bonds issued Bonds issued Lender State banks Foreign banks Other lenders TOTAL LONG-TERM LOANS OBTAINED
Long-term part
20,000,000
20,000,000
(20,000,000)
113,072,507 9,000,000 19,298,081
14,021,535 253,241
23,897,413 794,445 3,502,433
3,612,601
(2,157)
150,991,455 9,794,445 26,664,199
(28,174,033) (3,206,945) (6,745,894)
122,817,422 6,587,500 19,918,305
161,370,588
14,274,776
28,194,291
3,612,601
(2,157)
207,450,099
(58,126,872)
149,323,227
Note 15
(in EUR) Short-term loans from group companies Short-term loans from banks and companies within the state Short-term loans from banks and companies from abroad Other long-term financial liabilities Short-term part of long-term financial liabilities TOTAL
Short-term financial liabilities 107,478,324 EUR

31. 12. 2010 1,490,000 45,135,207 2,711,855 14,390 58,126,872 107,478,324 31. 12. 2009 63,681,495 2,408,596 4,199,317 22,909,197 93,198,605
Increase in short-term financial liabilities as at 31 December 2010 in comparison with a year earlier is a result of the transfer from long-term financial liabilities for the bonds issued. Interest rates charged on the companys short-term financial liabilities range between 5.8 percent and 8 percent In the 2004, the Cimos d.d. issued 200,000 bonds at a fixed interest rate of 5.75 percent with the bond nominal value of 100 euros. The principal will fall due on 1 August 2011. The bonds are traded on the Ljubljana Stock Exchange; as at 31 December 2010, the Cimos bond traded at 102.90 euros.
Movements in short-term financial liabilities

Principal of debt as of 1st January New loans in In the year Transfer from long-term loans Transfer from long-term loans Repayments in the year Principal of debt as of 31st January
(in EUR) Bonds issued Bonds issued Lender State banks Foreign banks Group companies Other lenders TOTAL SHORT-TERM LOANS OBTAINED
20,000,000
20,000,000
77,746,978 5,490,541 9,961,086
7,328,000 734,915 1,490,000 276,558
(23,897,413) (794,445) (3,502,433)
28,174,033 3,206,945 6,745,894
(16,042,358) (2,719,156) (6,720,821)
73,309,240 5,918,800 1,490,000 6,760,284
93,198,605
9,829,473
(28,194,291)
58,126,872
(25,482,335)
107,478,324
0106
Financial Statement
Note 16
(in EUR) Short-term operating liabilities to group companies Short-term operating trade payables Domestic market Foreign market Short-term liabilities on the basis of advance payments, provisions of security Short-term liabilities to employees Short-term liabilities to state and other institutions Short-term liabilities to fund financiers Other short-term operating liabilities TOTAL 13,586,783 20,755,145 1,485,910 1,582,555 2,837,085 467,513 21,848,129 95,570,200 14,062,795 20,205,167 757,720 1,557,353 2,402,864 490,101 20,648,036 92,223,202
Short-term operating liabilities 95,570,200 EUR

31. 12. 2010 33,007,080 31. 12. 2009 32,099,166
In comparison with the same period in 2009, short-term operating liabilities were up by 3.6 per cent. The largest increase was registered under short-term operating trade payables and liabilities to group companies, advance payments received for tools from our customers and in other short-term operating liabilities.
Note 17
(in EUR)
Short-term accrued costs and deferred revenues 715,710 EUR

31. 12. 2010 702,077 13,633 715,710 31. 12. 2009 766,883 1,100 767,983
Short-term accrued costs and expenses Short-term deferred revenues TOTAL
Short-term deferred revenues are short-term deferred input revenues arising from the sale of tools. Short-term accrued expenses refer to calculated interest on borrowings and interest on the bonds issued.
Note 18
(in EUR)
Off-balance sheet liabilities 6,763,200 EUR

31. 12. 2010 6,763,200 6,763,200 31. 12. 2009 144,243 3,321,875 3,466,118
Foreign material in stock Given guarantees and pledges TOTAL
Note 19
Net sales
(in EUR)
Operating revenues 362,015,116 EUR
2010 4,883,910 96,938,442 5,208,690 249,561,332 28,464 356,620,838
2009 5,041,594 83,760,204 5,011,989 225,918,543 28,487 319,760,817
Sales from products and services on domestic market Sales from products and services on foreign market Sales form sales of merchandise and materials on domestic market Sales form sales of merchandise and materials on foreign market Revenues from rentals TOTAL
0107
Financial Statement
Net sales revenues of 356,620,838 euros are stated at the invoiced value. In comparison with a year earlier, sales revenues are by 11 per cent higher. 97 per cent of sales revenues was generated in foreign markets. Incomes according to sales markets
(in EUR) Revenue (sales) in Slovenia: group companies other costumers Revenue (sales) in European Union: group companies other costumers Revenue (sales) outside European Union: group companies other costumers TOTAL 48,968,071 12,824,818 356,620,838 44,224,803 6,963,986 319,760,817 486,695 284,220,190 769,191 257,720,767 5,454,818 4,666,246 4,859,863 5,222,207 2010 2009
Capitalized own products and services

(in EUR) From intangible assets From property, plant and equipment From inventories TOTAL 2010 2,735,351 2,546,664 10,604 5,292,619 2009 318,334 51,064 369,398
Capitalised own products of euros 5,292,619 refere to self-constructed or produced items used for operating business purposes. These items are carried under intangible and tangible fixed assets and inventories and they are measured at direct costs of material, services and labour. Modification to value of stocks of finished goods and work in progress
(in EUR) Change in inventory of finished goods and work in progress TOTAL 2010 (1,342,415) (1,342,415) 2009 75,254 75,254
Modification to the value of stocks of -1,342,415 euros is the difference between the initial and the final status of the stock of work in progress and finished goods, products during the year under review measured at cost of production. Other operating revenues
(in EUR) Subvention, grant Revaluation operating revenues Sale of property, plant and equipment Write-offs of liabilities TOTAL 703,503 14,560 1,444,074 13,592 81,095 117,687 2010 726,011 2009 23,000
0108
Financial Statement
Note 20 Operating expenses 344,925,047 EUR
Expense analysis
(in EUR) Cost of goods, material and services Cost of goods and material sold Cost of material Cost of services Labour costs Wage and salaries Social insurance - pension insurance cost Costs of additional pension insurances Other labour costs Write-offs Depreciation of intangible long-term assets Depreciation of tangible fixed assets Revaluation operating expenses of intangible and tangible fixed assets Revaluation operating expenses associated with operating current assets Other operating expenses Cost of settings reserves Other costs TOTAL 146,116 147,849 344,925,047 155,121 306,903,099 1,167,793 10,533,568 53,590 815 962,308 10,945,132 61,873 301,110 16,924,791 2,753,816 1,660,707 149,552 2,934,824 16,622,420 2,707,797 1,483,849 148,368 3,041,984 232,680,570 59,974,342 17,457,421 200,225,111 54,482,962 17,248,913 2010 2009
Costs per functional groups

(in EUR) Cost of goods, material and services Cost of goods and material sold Cost of material Cost of services Labour costs Write-offs Depreciation Revaluation operating expenses of intangible and tangible fixed assets Revaluation operating expenses associated with operating current assets Other operating expenses Total in 2010 Total in 2009 Cost of goods sold in 2009 8,440,734 85,985,384 79,692,844 128,847 815 239,852,178 206,205,253 200,225,111 58,446,631 5,523,979 13,574,040 232,680,570 78,692 5,986,343 976,911 Production costs Costs of sales
General and administrative costs
Total
232,680,570 1,449,019 5,947,099 8,212,032 3,131,780 53,590 293,965 19,087,485 21,005,002 59,974,342 17,457,421 22,762,983 11,701,361 53,590 815 293,965 344,925,047 306,903,099
0109
Financial Statement
Note 21
(in EUR) Financial revenues from participations Financial revenues from stakes in other companies Financial revenues from loans granted Financial revenues from loans granted to group companies Financial revenues from loans granted to others Financial revenues from operating receivables Financial revenues from operating receivables to group companies Financial revenues from operating receivables to others TOTAL 562,749 184,758 2,942,684 5,648 2,099,322 1,410,142 735,238 1,881,115 180,943 49,797 31,616
Financial revenues 2,942,684 EUR

2010 2009
Note 22
(in EUR) Financial expenses from impairment and write-offs of financial investments Financial expenses for financial liabilities Financial expenses for loans received from group companies Financial expenses for loans received from banks Financial expenses for bonds issued Financial expenses for other financial liabilities Financial expenses for operating liabilities Financial expenses for operating liabilities to group companies Financial expenses for liabilities to suppliers and bill of exchange liabilities Financial expenses for other operating liabilities TOTAL
Financial expenses
2010 65 310 10,515,916 1,150,000 4,912,327 52,979 650,663 435,270 17,717,530
17,717,530 EUR
2009 1,541,465 8,841,343 1,151,317 1,473,224 13,152 247,999 97,032 13,365,532
Note 23
Other revenues 51,318 EUR
(in EUR) Received compensations for damages Other revenues TOTAL
2010 50,422 896 51,318
2009 190,674 177 190,851
Note 24
(in EUR) Damages claimed Other expenses TOTAL
Other expenses 112,890 EUR

2010 52,604 60,286 112,890 2009 9,097 5,255 14,352
0110
Financial Statement
# 22.3 Other disclosures
Related party disclosures
Sale to related companies
(in EUR) Group companies: Cimos TAM Ai, d.o.o., Maribor Livarna Vuzenica, d.o.o., Vuzenica LIP, d.o.o., Ljubljana P.P.C. Buzet, d.o.o., Buzet Labinprogres TPS, d.o.o., Labin Cimos TMD Ai, d.o.o., Gradaac Cimos Srebrenica, d.o.o., Srebrenica NT Forging, d.o.o., Novi Travnik Cimos TMD Casting, d.o.o., Zenica Cimos France, S.A.S, Nanterre Cedex Cimos BRD, GmbH, Muenchen Livnica Kikinda Ai, d.o.o., Kikinda FAM Seanj Ai, d.o.o., Seanj AD Kruik Precizni liv, Mionica Litostroj Power, d.o.o., Ljubljana Mainogradnja d.o.o., Kikinda Cimos Titan, d.o.o., Kamnik TOTAL 4,635,087 161,340 643 20,679,060 6,313 15,650,666 601,169 2,415 284,733 487,552 (857) 5,094,241 6,463,734 46,128 568,473 139,612 89,275 54,909,584 4,404,005 15,064 6,803 16,552,433 38,924 12,290,172 429,943 1,380 3,777,413 769,191 3,446,680 7,627,174 25,001 344,633 35,686 89,358 49,853,857 2010 2009
Purchases from related companies

(in EUR) Group companies: Cimos TAM Ai, d.o.o., Maribor Livarna Vuzenica, d.o.o., Vuzenica LIP, d.o.o., Ljubljana P.P.C. Buzet, d.o.o., Buzet Labinprogres TPS, d.o.o., Labin Cimos TMD Ai, d.o.o., Gradaac Cimos Srebrenica, d.o.o., Srebrenica NT Forging, d.o.o., Novi Travnik Cimos TMD Casting, d.o.o., Zenica Cimos France, S.A.S, Nanterre Cedex Cimos BRD, GmbH, Muenchen Livnica Kikinda, AD, Kikinda Livnica Kikinda Ai, d.o.o., Kikinda FAM Seanj Ai, d.o.o., Seanj Lira, d.o.o., Kikinda AD Kruik Precizni liv, Mionica Litostroj Power, d.o.o., Ljubljana Mainogradnja d.o.o., Kikinda TOTAL 59,195,900 4,949,822 2,357,732 47,450,825 55,817,205 1,534,005 1,269,217 1,867,524 981,980 (1,116) 39,909,442 8,373,154 1,191,223 31,566 326,745 225,255,224 50,029,478 5,537,646 478,346 41,033,446 1,347,600 52,020,855 1,804,984 11,725 46,054 1,951,302 2,502,270 4,240,517 37,569,398 8,831,760 4,015 25,521 29,013 114,603 207,578,533 2010 2009
0111
Financial Statement
Outstanding account items from sale to purchase from related companies
(in EUR) Accounts receivable from group companies Group companies: Cimos TAM Ai, d.o.o., Maribor Livarna Vuzenica, d.o.o., Vuzenica LIP, d.o.o., Ljubljana P.P.C. Buzet, d.o.o., Buzet Labinprogres TPS, d.o.o., Labin Cimos TMD Ai, d.o.o., Gradaac Cimos Srebrenica, d.o.o., Srebrenica NT Forging, d.o.o., Novi Travnik Cimos TMD Casting, d.o.o., Zenica Cimos France, S.A.S, Nanterre Cedex Livnica Kikinda, AD, Kikinda Livnica Kikinda Ai, d.o.o., Kikinda FAM Seanj Ai, d.o.o., Seanj AD Kruik Precizni liv, Mionica Litostroj Power, d.o.o., Ljubljana Mainogradnja d.o.o., Kikinda Cimos Titan, d.o.o., Kamnik TOTAL 16,517,666 1,712,428 20,507,682 6,395 4,150,009 616,203 18,155 321,511 191,148 29,254 3,370,709 1,670,146 71,902 419,962 175,298 627,183 50,405,651 12,547,146 1,634,699 3,346 21,984,891 16,567 5,340,382 191,613 12,257 218,741 194,083 29,254 4,577,316 9,612,337 25,775 442,593 35,686 747,205 57,613,891 31. 12. 2010 31. 12. 2009
(in EUR) Operating liabilities to group companies Group companies: Cimos TAM Ai, d.o.o., Maribor Livarna Vuzenica, d.o.o., Vuzenica LIP, d.o.o., Ljubljana P.P.C. Buzet, d.o.o., Buzet Labinprogres TPS, d.o.o., Labin Cimos TMD Ai, d.o.o., Gradaac Cimos Srebrenica, d.o.o., Srebrenica NT Forging, d.o.o., Novi Travnik Cimos France, S.A.S, Nanterre Cedex Cimos BRD, GmbH, Muenchen Livnica Kikinda, AD, Kikinda Livnica Kikinda Ai, d.o.o., Kikinda FAM Seanj Ai, d.o.o., Seanj Lira, d.o.o., Kikinda AD Kruik Precizni liv, Mionica OOO Cimos-ZKS, Togliatti Litostroj Power, d.o.o., Ljubljana Mainogradnja d.o.o., Kikinda Cimos Titan, d.o.o., Kamnik TOTAL
31. 12. 2010
31. 12. 2009
994,299 776,666 1,078,805 7,556,446 180,626 10,487,223 144,744 396,277 25,500 (1,116) 5,572,813 5,379,080 4,015 158,620 490 3,023 236,370 13,199 33,007,080
675,608 29,349 512,041 7,418,836 549,000 19,839,447 185,455 11,725 470,689 1,974,780 289,741 455 27,437 114,603 32,099,166
0112
Financial Statement
Loans given to related companies
(in EUR) Group companies: Cimos TAM Ai, d.o.o., Maribor Livarna Vuzenica, d.o.o., Vuzenica P.P.C. Buzet, d.o.o., Buzet Labinprogres TPS, d.o.o., Labin Cimos BRD, GmbH, Muenchen Litostroj Power, d.o.o., Ljubljana Cimos Titan, d.o.o., Kamnik TOTAL 14,171,952 15,245,215 1,800,000 500,000 515,913 8,915,904 14,808,261 55,957,245 13,323,887 13,405,600 800,000 515,913 9,115,437 12,226,848 49,387,685 31. 12. 2010 31. 12. 2009
Restatement of equity capital

Net profit or loss for the accounting period after the equity capital restatement for the change in the consumer price index:
(in EUR) Capital (Growth of consumer prices) Capital 31. 12. 2009 112,172,437 % of growth 1.90 Effect 2,131,276 Restated profit 261,030
Corporate tax
(in EUR) Income established with accounting standards Expenses established with accounting standards Accounting gains/loss Reduction of tax basis and reliefs Increase of tax basis Tax basis LEVY OF INCOME TAX IN INCOME STATEMENT 2010 365,009,118 (362,755,467) 2,253,651 (2,675,395) 421,744 2009 322,613,329 (320,282,983) 2,330,346 (2,718,802) 1,930,380 1,541,924 323,804
Indicators
2010 Debt to equity ratio Debt ratio Operating fixed assets rate Assets investments ratio Equitiy ratio Cash ratio Quick ratio Current ratio Operating efficiency ratio Return on equity 0.24 0.56 0.14 0.53 1.68 0.02 0.59 1.08 1.05 0.02 2009 0.24 0.60 0.14 0.52 1.69 0.00 0.65 1.19 1.04 0.02
0113
Financial Statement
Other disclosures
Gross salaries, bonuses, holiday pay and reimbursement of costs of the President of the Board of Management amount to 150,560 euros. Gross salaries, bonuses, jubilee benefits and holiday pays to employees, which are contract based and for which apply the scales of premiums that is an integral part of the collective agreement, amount to 2,715,385 euros.
# 22.4 Statement of management responsibility

The Management Board hereby confirms the financial statements of Cimos d.d. for the financial year ending at 31 December 2010. At the same time, it confirms the groundwork and structure model of the consolidated financial statements, breakdown and notes on the accounts as reported on pages from 88 to 114. The Management Board is accountable for the authenticity and objectivity thereof. The Management Board hereby states that all the relevant accounting guidelines have been consistently used in drafting the financial statements. The accounting estimates have been prepared in line with the principles of prudence and good governance. The Management Board can confirm that the Annual Report is a true and fair reflection of the assets and operating results of the Company Cimos d.d. in 2010. The Management Board is also responsible for properly kept accounting, timely adoption of the measures to secure the property, and prevention and detection of any fraud and other illegal practices. The financial statements have been prepared by taking into account the principles of the ongoing concern of the company Cimos d.d. in line with the law and the Slovenian Accounting Standards. The independent auditors Renoma, druba za revizijo in svetovanje (Auditing and Consulting) d.o.o. were entrusted with auditing the financial statements of Cimos d.d., of which the report was issued and published on page 115.
0114
Financial Statement
Independent Auditors Report for Cimos d.d.
0115
Financial Statement
# 23. [Cimos group]

# 23.1 Financial statements
Balance sheet
(in EUR) A. I. 1. 2. 3. 4. 5. II. 1. a. b. 2. 3. 4. a. b. 5. III. IV. 1. a. b. c. . 2. a. b. c. V. 1. 2. 3. VI. B. I. II. 1. 2. 3. 4. III. 1. a. b. c. 2. a. b. c. IV. 1. 2. 3. V. C. NON-CURRENT ASSETS Intangible assets and long-term deferred items Long-term property rights Goodwill Advances for intangible assets Long-term deferred development expenses Other long-term deferred items Tangible fixed assets Land and buildings Land Buildings Production machinery Other devices and equipment Tangible fixed assets under construction of manufacturing Tangible fixed assets under construction of manufacturing Advances for acquisition of tangible fixed assets Vineyards, orchards and other perennial plantations Investment property Long-term financial investments Long-term financial investments, except for loans Shares and stakes in the group Shares in stakes of associated companies Other shares and stakes Other long-term investments Long-term loans Long-term loans to members of the group Long-term loans granted to others Long-term subscribed capital unpaid Long-term operating receivables Long-term operating receivables from group companies Long-term accounts receivable Other long-term operating receivables Deferred tax assets CURRENT ASSETS Assets (or disposal groups) classified as held for sale Inventories Material Work in progress Products and merchandise Advances for inventories Short-term financial investments Short-term financial investments, except for loans Shares in stakes in the group Other shares and stakes Other short-term financial investments Short-term loans Short-term loans to group companies Short-term loans granted to others Short-term subscribed capital unpaid Short-term operating receivables Short-term operating receivables from group companies Short-term accounts receivable Short-term operating receivables from others Cash SHORT-TERM DEFERRED ITEMS TOTAL ASSETS 1 Note 31. 12. 2010 472,186,880 89,181,681 9,204,182 79,944,049 33,450 375,203,021 107,624,529 43,667,573 63,956,956 110,387,192 18,380,321 138,803,832 138,674,479 129,353 7,147 883,777 523,932 523,932 359,845 359,845 5,334,793 5,302,910 31,883 1,583,608 263,470,906 10,247,870 97,236,487 31,943,843 26,321,658 32,561,236 6,409,750 36,711,766 36,711,766 515,913 36,195,853 103,367,370 80,278,447 23,088,923 15,907,413 11,170,865 746,828,651 31. 12. 2009 444,804,746 73,157,306 4,495,720 1,912,051 66,724,453 25,082 357,596,626 104,313,506 42,782,383 61,531,123 115,438,786 19,084,772 118,753,130 118,483,475 269,655 6,432 9,373,232 8,727,094 3,775 8,715,800 7,519 646,138 646,138 3,145,382 3,104,014 41,368 1,532,200 266,723,771 20,577,559 93,693,666 32,559,441 26,048,861 32,079,688 3,005,676 41,183,361 41,183,361 515,913 40,667,448 102,328,574 80,096,215 22,232,359 8,940,611 9,092,655 720,621,172
5 6 7
10 11
0116
Financial Statement
(in EUR) A. I. 1. 2. II. III. 1. 2. 3. 4. 5. IV. V. VI. VII. VIII. B. 1. 2. 3. C. I. 1. 2. 3. 4. II. 1. 2. 3. 4. 5. III. I. II. 1. 2. 3. 4. III. 1. 2. 3. 4. 5. D. CAPITAL Called-up capital Subscribed capital Uncalled capital (deduction item) Capital reserves Profit reserves Legal reserves Reserves for own shares and stakes Own shares and own stakes (as deductible item) Statutory reserves Other reserves from profit Revaluation surplus Net profit/loss brought forward Net profit or loss in the accounting period Adjustment of the capital of the group Minority interest PROVISIONS AND LONG-TERM ACCRUED ITEMS Provisions for pensions and similar liabilities Other provisions Long-term accrued items LONG-TERM LIABILITIES Long-term financial liabilities Long-term financial liabilities to group companies Long-term financial liabilities to banks Long-term liabilities arising from bonds issued Other long-term financial liabilities Long-term operating liabilities Long-term operating liabilities from group companies Long-term operating liabilities to suppliers Long-term liabilities arising from bills of exchange Long-term operating liabilities arising from advances Other long-term operating liabilities Deferred tax liability SHORT-TERM LIABILITIES Liabilities included in disposal groups Short-term financial liabilities Short-term financial liabilities to group companies Short-term financial liabilities to banks Short-term financial liabilities arising from bonds issued Other short-term financial liabilities Short-term operating liabilities Short-term operating liabilities to group companies Short-term operating liabilities to suppliers Short-term liabilities arising from bills of exchange Short-term operating liabilities arising from advances Other short-term operating liabilities SHORT-TERM ACCRUED ITEMS TOTAL LIABILITIES
Note 12
31. 12. 2010 133,130,504 69,480,250 69,480,250 13,187,961 28,589,349 3,416,882 13,384,021 (13,394,074) 6,787,190 18,395,330 333,790 18,066,979 2,826,439 (905,710) 1,551,446 11,949,727 7,113,313 4,303,365 533,049 283,232,211 279,167,992 245,814,943 33,353,049 4,017,832 506,037 2,376,550 1,135,245 46,387 311,005,299 161,404,380 125,474,780 20,000,000 15,929,600 149,600,919 56,217 94,749,710 7,090 14,012,232 40,775,670 7,510,910 746,828,651
31. 12. 2009 121,335,729 69,480,250 69,480,250 13,187,961 28,127,231 3,297,267 13,384,021 (13,394,188) 6,219,017 18,621,114 (85,247) 18,920,183 2,548,297 (11,854,654) 1,011,708 11,500,030 7,585,182 3,827,979 86,869 278,399,502 273,336,508 215,231,216 20,000,000 38,105,292 5,049,401 702,985 2,952,610 1,393,806 13,593 304,666,658 164,677,364 149,294,656 15,382,708 139,989,294 245,321 93,064,987 359,862 9,457,652 36,861,472 4,719,253 720,621,172
13
14
15
16
17
18
19
0117
Financial Statement

(in EUR) 1. a) b) 2. 3. 4. 5. a) b) 6. a) b) c) 7. a) b) c) 8. 9. a) b) c) ) 10. a) b) 11. a) b) 12. a) b) 13. a) b) c) ) 14. a) b) c) 15. 16. 17. 18. 18. 18.a 18.b Net sales Net sales on home market Net sales on foreign markets Changes in inventories of products and work in progress Capitalised own products and own services Other operating revenues Costs of goods, material and services Costs of goods and material sold and costs of material used Costs of services Labour costs Wages and salaries Social insurance Other labour costs Write-downs Depreciation Revaluation operating expenses of intangible and tangible fixed assets Revaluation operating expenses associated with operating current assets Other operating expenses Financial revenues from participations Financial revenues from stakes in group companies Financial revenues from stakes in associated companies Financial revenues from stakes in other companies Financial revenues from other companies Financial revenues from loans granted Financial revenues from loans granted to group companies Financial revenues from loans granted to others Financial revenues from operating receivables Financial revenues from operating receivables from group companies Financial revenues from operating receivables form others Financial expenses from impairment and write-offs of financial investments Financial expenses from impairment and write-offs of financial investments of group companies Financial expenses from impairment and write-offs of financial investments of others Financial expenses for financial liabilities Financial expenses for loans received from group companies Financial expenses for loans received from banks Financial expenses for bonds issued Financial expenses for other financial liabilities Financial expenses for operating liabilities Financial expenses for operating liabilities to group companies Financial expenses for liabilities to suppliers and bill of exchange liabilities Financial expenses for other operating liabilities Other revenues Other expenses Corporate income tax Deferred taxes NET PROFIT OR LOSS FOR THE ACCOUNTING PERIOD NET PROFIT OR LOSS ATTRIBUTABLE TO THE PRINCIPAL SHAREHOLDER NET PROFIT OR LOSS OF MINORITY SHAREHOLDERS 25 26 24 24 24 23 23 22 23 22 22 21 21 21 22 Note 21 2010 419,749,668 26,432,693 393,316,975 245,456 17,400,361 7,386,914 273,840,161 237,746,764 36,093,397 93,521,096 68,141,502 14,233,781 11,145,813 36,613,088 35,758,764 690,527 163,797 4,547,665 3,970,899 51,465 3,919,434 3,603,001 3,603,001 5,340,887 5,340,887 98,590 98,590 35,340,859 25,438,356 1,150,000 8,752,503 8,570,880 7,048,370 1,522,510 1,117,786 1,129,718 1,041,769 51,408 4,059,738 4,366,486 (306,748) 2009 367,467,199 16,568,508 350,898,691 (8,527,758) 18,833,686 8,037,107 226,589,874 191,606,462 34,983,412 89,883,959 66,538,704 13,211,980 10,133,275 33,912,075 33,204,234 322,680 385,161 3,085,343 115,233 33,845 81,388 802,655 802,655 4,988,547 4,988,547 26,066,022 21,693,443 1,151,317 3,221,262 8,006,576 6,993,277 1,013,299 1,211,152 813,243 532,984 205,151 3,832,594 3,840,008 (7,414)
0118
Financial Statement
(in EUR) Profit or loss for the accounting period Changes in revaluation surplus regarding intangible and tangible fixed assets Changes in revaluation surplus regarding available-for-sale financial investments Gains and losses arising from translating the financial statements of a foreign operation Other comprehensive income TOTAL COMPREHENSIVE INCOME RECOGNISED IN THE PERIOD Total comprehensive income of majority interest Total comprehensive income of minority interest 2010 4,059,738 (43,848) 30,552 (145,866) (1,288,560) 2,612,016 2,072,278 539,738 2009 3,832,594 (283,223) (3,516,341) 33,030 355,121 (322,091)
0119
Financial Statement
Cash flow for the year ended 31 December
(in EUR) CASH FLOWS FROM OPERATING ACTIVITIES Income statement items: Operating revenues and financial revenue from operating receivables Operating expenses excluding depreciation financial expenses from operating liabilities Income taxes and other taxes not included in operating expenses Net working capital changes, balance sheet items: Opening less closing operating receivables Opening less closing deferred costs and accrued revenue Opening less closing deferred tax assets Opening less closing assets (disposal groups) held for sale Opening less closing inventories Closing less opening operating liabilities Closing less opening accrued costs and deferred revenue and provisions Closing less opening deferred tax liabilities Net cash flow from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Cash receipts from interests and dividends: Received from investing activities Cash receipts from disposal of intangible assets Cash receipts from disposal of property, plant and equipment Cash receipts from disposal of investment property Cash receipts from disposal of long-term financial investments Cash receipts from disposal of short-term financial investments Cash disbursements from investing activities: Cash disbursements for aquisition of intagible assets Cash disbursements for acquisition of property, plant and equipment Cash disbursements for acquisition of investment property Cash disbursements for acquisition of long-term financial investments Cash disbursements for acquisition of short-term financial investments Net cash flow from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Cash receipts from financing activities: Cash proceeds from paid-in capital Cash proceeds from increase in long-term financial liabilities Cash proceeds from increase in short-term financial liabilities Cash disbursements from financing activities: Cash disbursements for interest paid on financing activities Cash repayments of equity Cash repayments of long-term financial liabilities Cash repayments of short-term financial liabilities Cash payments of dividends and other shares of profit paid Net cash flow from financing activities CLOSING BALANCE OF CASH AND CASH EQUIVALENTS Cash and cash equivalents changes in period Opening balance of cash and cash equivalents (35,340,859) (3,359,773) (6,559,693) (120,255,121) (36,142,132) 15,907,413 6,966,802 8,940,611 (26,066,022) (3,799,564) (4,233,435) (101,797,750) 15,096,143 8,940,611 743,248 8,197,363 79,298,415 50,074,899 78,122,936 72,869,978 (26,564,599) (47,032,711) (31,047) (44,794,424) (37,858,364) (28,087,987) (55,446,226) (5,163) (62,682) (50,186,782) (73,994,898) 7,573,900 5,524,115 9,778,471 8,360,598 49,327,333 917,888 4,312,791 21,701,798 530,818 14,914,324 17,416,323 (3,228,207) (2,078,210) (51,408) 10,329,689 (3,542,821) 8,580,056 3,241,354 32,794 80,967,298 (6,332,228) (1,660,200) 205,595 (11,189,860) 23,705,329 (8,387,145) 1,115,994 (444) 59,642,003 451,241,072 (382,463,844) (1,093,177) 392,009,933 (329,086,836) (738,135) 2010 2009
0120
Financial Statement
0121
Financial Statement
(in EUR) BALANCE ON DECEMBER 31, 2009 Adjustment for the previous years (errors correction) Adjustment for the previous years (changes in accounting polices) BALANCE ON JANUARY 1, 2010 Changes in equity transactions with owners Entry of called-up share capital Entry of uncalled share capital Call of registered share capital Entry of added deposit of capital Purchase of own shares and own business interests Disposal or withdrawal of own shares Repayment of capital Payment of dividends Payment of bonuses to Management and Supervisory Board Other changes of own capital Total changes in equity transactions with owners Total comprehensive income for the period Entry of net profit of the period Change in revaluation adjustments of intangible assets Change in revaluation adjustments of tangible assets Change in revaluation adjustments of financial investments Other components of the comprehensive income for the period Total comprehensive income for the period Transfers in equity Allocation of the rest of the profit of the comparative period on ather equity components Allocation of the rest of the profit on ather equity components decision of headquarters and supervisory board Allocation of the rest of the profit on ather equity components decision of the assembly Loss settlement Setting reserves for own shares from other components of equity Release of reserves for own shares Other changes in equity Total transfers in equity BALANCE ON DECEMBER 31, 2010
Capital reserve 13,187,961 13,187,961
Legal reserve 3,297,267 3,297,267
114 114
69,480,250
13,187,961
119,615 119,615 3,416,882
13,384,021
(13,394,074)
0122
Financial Statement
Statutory reserve
Other reserves from profit 18,621,114 (1,792,874) 16,828,240
Total reserves from profit 28,127,231 (1,792,874) 26,334,357
Revaluation surplus (85,247) 432,333 347,086
Net profit/loss brought forward 18,920,183 (2,344,384) 1,792,874 18,368,673
Consolidation adjustment of equity (11,854,654) 11,094,810 (759,844)
Total majority interest capital 120,324,021 9,182,759 129,506,780
Minority interest capital 1,011,708 1,011,708
Total 121,335,729 9,182,759 130,518,488
6,219,017 -
6,219,017
114 114
(43,848) 30,552 (13,296)
(2,135,160) (2,135,160)
4,366,486 4,366,486
(145,866) (145,866)
4,366,486 (43,848) 30,552 (2,280,912) 2,072,278
(306,748) 846,486 539,738
4,059,738 (43,848) 30,552 (1,434,426) 2,612,016
568,173 568,173
852,259 714,831 1,567,090 18,395,330
1,540,047 714,831 2,254,878 28,589,349
1,833,466
(1,540,047) (714,831) (1,833,466) (4,088,344) 2,826,439
(905,710)
131,579,058
1,551,446
133,130,504
333,790
1,833,466 18,066,979
6,787,190
0123
Financial Statement

Called-up capital 69,480,250 69,480,250 Capital reserve 13,187,961 13,187,961 Legal reserve 3,196,940 3,196,940 Reserves for own shares and stakes 13,384,021 13,384,021 Own shares and own stakes (as deductible item) (13,394,129) (13,394,129)
(in EUR) BALANCE ON DECEMBER 31, 2008 Adjustment for the previous years (errors correction) Adjustment for the previous years (changes in accounting polices) BALANCE ON JANUARY 1, 2009 Changes in equity transactions with owners Entry of called-up share capital Entry of uncalled share capital Call of registered share capital Entry of added deposit of capital Purchase of own shares and own business interests Disposal or withdrawal of own shares Repayment of capital Payment of dividends Payment of bonuses to Management and Supervisory Board Other changes of own capital Total changes in equity transactions with owners Total comprehensive income for the period Entry of net profit of the period Change in revaluation adjustments of intangible assets Change in revaluation adjustments of tangible assets Change in revaluation adjustments of financial investments Other components of the comprehensive income for the period Total comprehensive income for the period Transfers in equity Allocation of the rest of the profit of the comparative period on ather equity components Allocation of the rest of the profit on ather equity components decision of headquarters and supervisory board Allocation of the rest of the profit on ather equity components decision of the assembly Loss settlement Setting reserves for own shares from other components of equity Release of reserves for own shares Other changes in equity Total transfers in equity BALANCE ON DECEMBER 31, 2009
(59) (59)
69,480,250
13,187,961
100,327 100,327 3,297,267
13,384,021
(13,394,188)
0124
Financial Statement
Statutory reserve
Other reserves from profit 16,664,688 16,664,688
Total reserves from profit 25,593,984 25,593,984
Revaluation surplus 197,976 197,976
Net profit/loss brought forward 14,715,854 14,715,854
Consolidation adjustment of equity (8,653,049) (8,653,049)
Total majority interest capital 119,968,900 119,968,900
Minority interest capital 1,333,799 1,333,799
Total 121,302,699 121,302,699
5,742,464 -
5,742,464
(59) (59)
(283,223) (283,223)
3,840,008 3,840,008
(3,201,605) (3,201,605)
3,840,008 (283,223) (3,201,664) 355,121
(7,414) (314,677) (322,091)
3,832,594 (283,223) (3,516,341) 33,030
476,553 476,553
714,831 1,241,595 1,956,426 18,621,114
1,291,711 1,241,595 2,533,306 28,127,231
(85,247)
4,204,329 4,204,329 18,920,183
(1,291,711) (5,445,924) (6,737,635) 2,548,297
(11,854,654)
120,324,021
1,011,708
121,335,729
6,219,017
0125
Financial Statement
# 23.2 Notes on the financial statements
Intangible assets and long-term deferred costs 89,181,681 EUR and accrued revenue
Note 1
(in EUR) Procurement value December 31, 2009 Allowance after closing balance January 1, 2010 Direct acquisitions Acquisitions own production Increase due the acquisition Carry-forwards of investments in progress Disposals Transfers to short-term assets Weakening Re-evaluations to fair value Exchange differences Re-classifications December 31, 2010 Written-off value December 31, 2009 Allowance after closing balance January 1, 2010 Depreciation in the year Increase due the acquisition Disposals Transfers to short-term assets Weakening Re-evaluations to fair value Exchange differences Re-classifications December 31, 2010 Present value DECEMBER 31, 2009 JANUARY 1, 2010 DECEMBER 31, 2010
Deferred development costs
Trade marks, patents, licenses and other rights
Assets in progress
Other deferned costs
Goodwill
Total
83,745,227 83,745,227 721,748 20,182,377 (3,667,328) (1,009,525) 99,972,499
10,948,929 10,948,929 5,418,645 213,065 (4,540) (25,382) 356,039 16,906,756
17,282,627 2,735,352 (20,017,979) -
2,438,493 2,438,493 392,794 (377,463) (2,182) (2,253) 2,449,389
1,912,051 (1,912,051) -
99,044,700 (1,912,051) 97,132,649 23,815,814 2,735,352 (6,722) (2,253) (3,692,710) (653,486) 119,328,644
17,020,774 17,020,774 4,058,883 (59,039) (992,168) 20,028,450
6,453,209 6,453,209 954,698 (4,540) 1,390 297,817 7,702,574
2,413,411 2,413,411 2,528 2,415,939
25,887,394 25,887,394 5,016,109 (4,540) (57,649) (694,351) 30,146,963
66,724,453 66,724,453 79,944,049
4,495,720 4,495,720 9,204,182
25,082 25,082 33,450
1,912,051 -
73,157,306 71,245,255 89,181,681
As at 31 December 2010 intangible assets, amounted to 89,181,681 euros of longterm property rights, long-term deferred costs for development and other long-term accrued revenues. The major increase in 2010 was registered for development costs (new products, technologies and production processes).
0126
Financial Statement
Note 2 Tangible fixed assets (property, plant and equipment)
Production device, machinery and Other device equipment and equipment
375,203,021 EUR
Vineyards orchards and other perennial plantations
(in EUR) Procurement value December 31, 2009 Allowance after closing balance January 1, 2010 Direct acquisitions Acquisitions own production Increase due the acquisition Carry-forwards of investments in progress Disposals Transfers to short-term assets Weakening Re-evaluations to fair value Transfers from investment property Transfers to investment property Exchange differences Re-classifications Capitalized financial expenses December 31, 2010 Written-off value December 31, 2009 Allowance after closing balance January 1, 2010 Depreciation in the year Increase due the acquisition Disposals Transfers to short-term assets Weakening Re-evaluations to fair value Transfers from investment property Transfers to investment property Exchange differences Re-classifications December 31, 2010 Present value DECEMBER 31, 2009 JANUARY 1, 2010 DECEMBER 31, 2010
Land
Buildings
Investments in foreign assets
Assets under construction
Advance payments
Total
42,782,383 108,830,247 1,146,537 2,430,476
246,911,544 6,068,478
55,916,068 651,956 56,568,024 1,022,787 3,366,247 (1,873,481) (245,054) (157,572) 573,118 59,254,069
7,293,151 118,483,475 2,468,918
269,655 269,655 577,377 (712,719) (4,960) 129,353
7,264 580,493,787 990 12,767,355
43,928,920 111,260,723 252,980,022 457,870 22,958 (477,761) (264,414) 3,221,163 3,118,823 (7,849,135) (612,107) 398,871 10,704,091 (8,233,396) (1,645,894) 1,346,640 -
7,293,151 120,952,393 724,108 46,177 (85,002) (18,154) (314,376) 7,645,904 36,350,431 2,581,479 (17,258,296) (2,894,698) (1,032,536) (24,294) 138,674,479
8,254 593,261,142 (60) 42,752,607 2,581,479 (22,126,192) (245,054) (3,730,737) 1,576,128 -
43,667,573 109,139,467 255,550,334
8,194 614,069,373
48,235,166 421,338
135,520,497 1,156,892
36,831,296 94,237 36,925,533 5,640,025 (1,734,795) (142,948) (109,354) 236,055 40,814,516
2,309,370 2,309,370 1,021,899 (4,187) (3,235) (296,878) 3,026,969
832 222,897,161 78 1,672,545
48,656,504 136,677,389 3,426,285 (5,963,382) 52,659 (323,289) 45,848,777 20,654,302 (6,939,525) (1,046,306) (170,817) 149,175,043
910 224,569,706 144 (7) 30,742,655 (14,641,889) (142,948) 52,659 (1,482,191) (231,640)
1,047 238,866,352
42,782,383 43,928,920 43,667,573
60,595,081 63,290,690
111,391,047 106,375,291
19,084,772 19,642,491 18,439,553
4,983,781 118,483,475 4,983,781 120,952,393 4,618,935 138,674,479
269,655 269,655 129,353
6,432 357,596,626 7,344 368,691,436 7,147 375,203,021
62,604,219 116,302,633
0127
Financial Statement
Prepersty, plant and equipment of the Cimos Group have increased by two per cent during the year under review. The major increase has been registered within the group Cimos TMD and the Kikinda group. Acquisitions refer mostly to production equipment.
Note 3
(in EUR) Long-term financial investments, excluding loans Shares in interests in group companies Other shares and interests Other long-term financial investments Long-term loans Long-term loans to others TOTAL
Long-term financial investments
883,777 EUR
31. 12. 2010 31. 12. 2009
523,932 359,845 883,777
3,775 8,715,800 7,519 646,138 9,373,232
As at 31 December 2010, Cimos d.d. indirect and direct participation in the capital of the subsidiaries, the value of capital of the subsidiaries and the level of profit or loss in 2010 amounted to:
(in EUR) CIMOS TAM Ai, d.o.o., Maribor (SI) CIMOS TITAN d.o.o., Kamnik (SI) LIP d.o.o., Ljubljana (SI) LITOSTROJ POWER, d.o.o., Ljubljana (SI) KD BLANSKO ENGINEERING A.S. Blansko (CZ) LITOSTROJ BH, d.o.o., Tuzla (BA) LITOSTROJ HYDRO Inc., Bromont (CA) TAM POSLOVNE STORITVE, d.o.o., Maribor (SI) CIMAT, d.o.o., Koper (SI) P.P.C. BUZET, d.o.o., Buzet (HR) CIMOS TMD Ai ,d.o.o. Gradaac (BA) CIMOS SREBRENICA, d.o.o., Srebrenica (BA) NT FORGING, d.o.o., Novi travnik (BA) NIMONIC, d.o.o., Zenica (BA) LIVNICA MAINOGRADNJA, d.o.o. Kikinda (RS) Livarna Vuzenica, d.o.o., Vuzenica (SI) CIMOS TMD CASTING, d.o.o. Zenica (BA) FAM SEANJ Ai, d.o.o., Seanj (RS) LIVNICA KIKINDA Ai, d.o.o. Kikinda (RS) LABINPROGRES TPS, d.o.o., Labin (HR) CIMOS FRANCE, S.A.S., Paris (FR) TPS, d.o.o., Novi Kneevac (RS) LIVNICA KIKINDA, A.D., Kikinda, (RS) LIRA, d.o.o., Kikinda (RS) LIRADOM, d.o.o. Kikinda (RS) KRUIK-PRECIZNI LIV, A.D.,Mionica (RS) FAMOS ADI, d.o.o., Sarajevo (BA) OOO CIMOS-ZKS, Togliatti (RU) Share in% 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 99.72 100.00 98.76 98.57 97.42 94.94 94.48 93.00 93.00 93.00 85.74 66.47 50.00 Capital 13,057,025 (10,923,674) 248,234 28,594,874 3,472,929 (847) 2,745,310 7,500 2,806,346 11,327,654 30,719,655 805,230 13,462,883 2,363 18,896,250 (6,309,580) 12,354,350 14,540,530 65,127,058 4,030,484 627,874 2,181,373 7,103,258 122,147 509,785 193,935 7,516,444 28,101 Profit or loss 8,699 (3,086,833) 113,446 3,242,206 519,451 (1,033) 1,476,461 (4) 255,209 656,216 237 989 103 13,719 (1,778,256) 19 507,332 2,259,883 444,380 6,232 55,154 (5,082,617) 596 (181,735) 268 39,223 21,881
In consolidating the investments into subsidiaries and in consolidating the proportional part of capital of the subsidiaries appertaining to the Cimos group, the investment value of 169,315,063 euros was separated of.
0128
Financial Statement
Movement in long-term financial investments
Financial Financial investments on fair investments in value througt IS proprety till maturity Financial investments available for sale
(in EUR) Gross value Status as at 31. 12. 2009 Increases New loans, aquistions Revaluation exchange difference Capitalisation of Interests Revaluation to fair value Decreases Amortisation, sale Revaluation exchange difference Transfer to short-term Write-off Revaluation to fair value Status as at 31. 12. 2010 Value adjustment Status as at 31. 12. 2009 Increases Allowance in the year Decreases Recovered write-off receivables Write-off Transfer to short-term Status as at 31. 12. 2010 NET VALUE 31. 12. 2009 NET VALUE 31. 12. 2010
Loans
Total
59,650
646,138
8,715,825
9,421,613
(2,149) (6,659) (23,307) 27,535
496 (216,053) (9,422) (61,314) 359,845
30,551 (8,199,730) (1,868) 544,778
496 30,551 (8,417,932) (17,949) (61,314) (23,307) 932,158
48,381
48,381
59,650 27,535
646,138 359,845
48,381 8,667,444 496,397
48,381 9,373,232 883,777
Note 4
(in EUR)
Long-term operating receivables 5,334,793 EUR

31. 12. 2010 15,149 5,319,261 1,305 (540) (382) 5,334,793 31. 12. 2009 101,354 3,002,660 42,451 (540) (543) 3,145,382
Long-term trade credit given in domestic market Long-term given securities and advance payments Other long-term operating receivables Short-term part of long-term operating receivables Impairment TOTAL
The major part of long-term operating receivables is represented by long-term given securities that were given by subsidiaries from the energy pillar, mostly from Litostroj Power to the Indian and Slovene contract givers.
0129
Financial Statement
Note 5 Deferred tax assets 1,583,608 EUR
Receivables from tax, recognised under the head of deductible temporary discrepancy between tax balance and operating balance sheet in the amount of 1,583,608 euros (2009: 1,532,200 euros), are listed among deferred tax assets. Deferred tax assets refer to tax accounted under the head of provisions for jubilee bonuses and retirement benefits and totalled to 1,411,723 euros.
Note 6
(in EUR) Assets available for sale Tangible fixed assets available for sale TOTAL
Assets available for sale 10,247,870 EUR

31. 12. 2010 31. 12. 2009
10,247,870 10,247,870
20,577,559 20,577,559
Under property, plant and equipment available for sale, the subsidiary Livnica Kikinda is keeping assets designed for reinstatement of production process in the location Jaa Tomi, Serbia.
Note 7
(in EUR) Materials and consumables Work in progress Products Merchandise Advances for inventories TOTAL
Inventories 97,236,487 EUR

31. 12. 2010 31,943,843 26,321,658 20,671,574 11,889,662 6,409,750 97,236,487 31. 12. 2009 32,559,441 26,048,861 21,631,829 10,447,859 3,005,676 93,693,666
In stating inventories of material, the parent company Cimos and subsidiaries P.P.C. Buzet, Cimos Titan, Labinprogres TPS, CIMOS TMD, CIMOS TAM and Litostroj Power adopted the method of weighted average prices, while other subsidiaries, which have not joined yet the group of the SAP R/3 IT system users, adopted the method of a stable price with deviations. In stating the inventory of work in progress and products, the group applies constant prices. Deviations of actual prices from the constant ones are established at monthly basis per group of inventory. Regular listing of all types of inventories has been performed within all the Cimos companies. The established shortcoming amounted to 110,788 euros and it is within the limits of normal loss in weight. The surplus level established during the listing amounted to 67,728 euros.
0130
Financial Statement
Note 8
(in EUR) Short-term loans Short-term loans to group companies Short-term loans to others TOTAL 515,913 36,195,853 36,711,766 515,913 40,667,448 41,183,361
Short-term financial investments 36,711,766 EUR

31. 12. 2010 31. 12. 2009
Short-term financial investments decreased by 11 per cent in the year 2010. Such reduction derives mostly from the reduction of time deposits on the bank account of the parent company Cimos d.d.
Movement in short-term financial investments

Financial investments in proprety till maturity Financial investments available for sale
(in EUR) Gross value Status as at 31. 12. 2009 Increases New loans, aquistions Revaluation exchange difference Capitalisation of Interests Transfer from long-term Revaluation to fair value Decreases Amortisation, sale Revaluation exchange difference Write-off Revaluation to fair value Status as at 31. 12. 2010 Value adjustment Status as at 31. 12. 2009 Increases Transfer from long-term Allowance in the year Decreases Recovered write-off receivables Write-off Status as at 31. 12. 2010 NET VALUE 31. 12. 2009 NET VALUE 31. 12. 2010
Financial investments on fair value througt IS
Loans
Total
41,183,361
41,183,361
44,240,394 415,748 138,282 61,314 (49,441,617) 114,284 36,711,766
44,240,394 415,748 138,282 61,314 (49,441,617) 114,284 36,711,766
41,183,361 36,711,766
41,183,361 36,711,766
0131
Financial Statement
Note 9
(in EUR) Short-term operating trade receivables: Domestic market Foreign market Short-term advance payments and deposits Short-term operating receivables on behalf of others Trade accounts receivable in connection with financial income Other short-term receivables Short-term portion of long-term operating accounts receivable Impairment of short-term operating receivable TOTAL 18,257,445 77,899,500 4,180,921 590,039 128,659 18,373,972 540 (16,063,706) 103,367,370 13,183,153 82,821,553 4,653,095 241,281 342,940 17,168,735 540 (16,082,723) 102,328,574
Short-term operating receivables

31. 12. 2010
103,367,370 EUR
31. 12. 2009
Short-term operating receivables as at the day of balance sheet result to be higher, in comparison with the previous period, because of higher vat refund claims. The value of pledged receivables for loans received amounts to 12 million euros.
Note 10
(in EUR) Cash in hand national currency Cash in hand foreign currency Cash in banks national currency Cash in banks foreign currency Short-term deposits national currency Short-term deposits foreign currency Cash on specific accounts for specific purposes TOTAL
Cash and cash equivalents 15,907,413 EUR

31. 12. 2010 20,158 11,226 10,960,394 4,858,955 10,156 3,067 43,457 15,907,413 31. 12. 2009 20,380 11,083 4,891,130 3,895,581 119,739 2,698 8,940,611
Note 11
(in EUR) Short-term deferred costs and expenses Short-term accrued revenues VAT from received advance payments TOTAL
Deferred costs and accrued revenue

31. 12. 2010 7,665,663 1,789,788 1,715,414 11,170,865
11,170,865 EUR
31. 12. 2009 7,542,238 32,660 1,517,757 9,092,655
The major part of deferred costs and accrued revenue is formed of short-term deferred costs. One part is the outcome of the increase in short-term deferred expenses resulting from exchange rate differences of the Kikinda group. The other part is formed from the consolidation of the established time difference between the recording of receivables and payables in operating activities between the group companies. In forming accounting reports for 2010 the subsidiaries from the Republic of Serbia considered the following regulations: Regulations of modifications and completions of the Rule book of the accounts framework and of the accounts plan for legal entities. Amendments enable accrual of the net effect of exchange rate differences to longterm liabilities to foreign parts and net effects of the contractual value swap and longterm receivables and payables in the state as at 31 December 2010. Cancellation of accruals for financial assets and liabilities and carry-over into financial revenue shall be performed on the payment day. The Serbian currency has registered, since the beginning of 2011, growth of 3.5 per cent in comparison with the Euro. Because of the
0132
Financial Statement
confidence in the microeconomic stability of the Republic of Serbia, cooperation with the International Monetary Fund, that shall assure stability on the exchange market, has been intensified. The National Bank of Serbia intervened to prevent oscillation of the foreign exchange rates (source: National Bank of Serbia, March 2011). In 2010, deferred financial expenses of 2,517,082 euros were registered from the head of accruals and prepaid expenditure.
Note 12
Capital 133,130,504 EUR
The share capital of the Cimos group as at 31 December 2010 is composed of the majority capital holder in the amount of 131,579,058 euros, and of the capital of the minority holding of the companies Livarna Vuzenica, Labinprogres TPS, Cimos France, Livnica Kikinda and Kruik Precizni liv and Famos ADI, in the total amount of 1,551,446 euros. The distributable profit is not established at the Group level, therefore it is not presented. Only distributable profit of the parent company however it is presented Net profit per share of the majority holder is equal to the adjusted net profit of the majority holder per share in 2010 and amounts to 0.30 euros. The total return on share of the majority holder amounts to 0.14 euros.
Note 13
Provisions and long-term accrued costs 11,949,727 EUR and deferred revenue
The bulk of provisions and long-term accrued costs is represented by jubilee and retiremend bonuses, amounting to 7,113,313 euros. The calculation of provisions has been performed by an entrusted actuary for each company separately and it considers the level of jubilee bonuses and retirement benefits harmonised with the local laws of a single subsidiary. Data of a single employee have been considered for the calculation and a nominal 4.2 per cent interest rate has been applied. Other long-term provisions derive from operations of the energy pillar Litostroj Power and KD Blansko and from operations of the company LIP employing people with disabilities and of Livarna Vuzenica.
Movement in provisions and long-term accrued costs and deferred revenue

Pensions, anniversary bonuses, Provisions for Received grants retirement benefits given guarantees for cost recovery 7,585,182 3,058,717 273,908
(in EUR) STATUS AS AT 31 DECEMBER 2009 Changes during the year: Settings Drawing Withdrawa Exchange rate differences STATUS AS AT 31 DECEMBER 2010
Received grants for fixed assets 105,533
Other provisions 476,690
Total 11,500,030
(471,869) 7,113,313
1,726,009 (411,997) (501,265) 46,509 3,917,973
107,964 (888) (493) 380,491
24,623 (24,844) 105,312
331,856 (374,915) (993) 432,638
2,190,452 (1,284,513) (502,751) 46,509 11,949,727
0133
Financial Statement
Note 14
(in EUR) Long-term loans from banks and companies within the state Long-term loans from banks and companies from abroad Long-term financial liabilities connected with bonds Long-term debts from financial lease Otherlong-term financial liabilities Short-term part of long-term financial liabilities TOTAL
Long-term financial liabilities
279,167,992 EUR
31. 12. 2010 213,769,572 94,684,156 20,000,000 44,389,604 2,811,554 (96,486,894) 279,167,992 31. 12. 2009 153,072,808 98,019,794 20,000,000 45,296,332 2,310,984 (45,363,410) 273,336,508
In 2010, Slovenian banks were the major lenders of financial leases. The major lease holder of new loans is the parent company, providing for the liquidity of the total group. 2010 brought a major span of interest rates for long-term raised loans. Interest rates for long-term loans range from 6 months EURIBOR + 0.8 per cent to 8.056 per cent. The lowest and the highest interest rate for long-term financial liabilities are disclosed by the parent company, Cimos d.d. Cimos d.d. gave guarantees in the amount of 11,051,792 euros for loans, leased from the following subsidiaries: Cimos Titan, d.o.o., Livarna Vuzenica d.o.o. and CIMOS TAM A.i., d.o.o. Movement in long-term financial liabilities
Principal of debt as of 1st January New loans in In the year Reclassification Transfer Principal of from short- Capitalisation Exchange Repayments debt as of 31st Portion due term loans of interest differences in the year December in 2011 Long-term part
(in EUR) Bonds issued Bonds issued Lender State banks Foreign banks Other lenders TOTAL LONGTERM LOANS OBTAINED
20,000,000
20,000,000 (20,000,000)
145,533,325 44,306,904 69,697,891 25,603,015 38,105,292 1,644,597
(655,073)
23,897,413 2,173,301 3,508,942
1,693,552 1,227,573 75,612
191,608 (163,630) 4,719,184
(1,853,230) (3,853,994) (197,396)
213,769,572 (46,146,908) 167,622,664 94,684,156 (16,491,877) 47,201,158 (13,848,109) 78,192,279 33,353,049
273,336,508 71,554,516
(655,073)
29,579,656
2,996,737
4,747,162
(5,904,620)
375,654,886 (96,486,894) 279,167,992
Note 15
(in EUR) Long-term operting liabilities to other domestic suppliers Long-term operating liabilities to other foreign suppliers Long-term acquired advance payments and securities Other long-term operating liabilities Short-term part of long-term operating liabilities TOTAL
Long-term operating liabilities
4,017,832 EUR
31. 12. 2010 506,037 5,830,051 1,236,791 (3,555,047) 4,017,832 31. 12. 2009 213,663 497,496 7,610,843 1,497,469 (4,770,070) 5,049,401
The bulk of long-term operating liabilities derives from operating activities within the energy pillar. Long-term operating liabilities from advance payments received and securities amount to 2,376,550 euros for Litostroj Power.
0134
Financial Statement
Note 16 Deferred tax liabilities 46,387 EUR
Deferred tax liabilities in the amount of 46,387 euros (in 2009: 13,593 euros) refer to revaluation of property, plant and equipment, recognised in the balance sheet of the company KD Blansko and of the company Litostroj Hydro.
Note 17
(in EUR)
Short-term financial liabilities 161,404,380 EUR

31. 12. 2010 50,436,519 12,399,476 2,081,491 96,486,894 161,404,380 31. 12. 2009 84,328,156 30,034,203 4,951,595 45,363,410 164,677,364
Short-term loans from banks and companies within the state Short-term loans from banks and companies from abroad Other long-term financial liabilities Short-term part of long-term financial liabilities TOTAL
In 2010, Slovenian banks were the major providers of short-term financial leases. Short-term financial liabilities to banks and other short-term financial liabilities fell in comparison with a year earlier by 54,396,468 euros, of which the major part i.e. 29,579,656 euros refers to conversion into long-term liabilities. The bulk of shortterm financial liabilities is represented by a transfer of a short-term part of long-term liabilities that will be paid back in 2011. Interest rates for short-term financial liabilities range between 6 month EURIBOR + 1.5 per cent in Slovenia and 3 month EURIBOR + 7.5 per cent in Croatia. Movement in short-term financial liabilities
Principal of debt as of 1st New loans in In January the year Transfer from long-term loans Transfer to longterm loans Exchange differences Principal of Repayments in debt as of 31st the year December
(in EUR) Bonds issued Bonds issued Lender State banks Foreign banks Other lenders TOTAL SHORT-TERM LOANS OBTAINED
Reclassification
20,000,000
20,000,000
125,404,065 23,884,098 15,389,201
31,109,661 15,762,782 2,550,268
652,188
46,146,908 16,491,877 13,848,109
(23,897,413) (2,173,301) (3,508,942)
(1,266,065) (233,553) (13,534)
(80,913,729) (24,840,550) (12,987,690)
96,583,427 28,891,353 15,929,600
164,677,364
49,422,711
652,188
96,486,894
(29,579,656)
(1,513,152)
(118,741,969)
161,404,380
0135
Financial Statement
Note 18
(in EUR) Short-term operating liabilities to group companies Short-term operating trade payables Domestic market Foreign market Short-term liabilities from bill of exchange Short-term liabilities on the basis of advance payments, provisions of security Short-term liabilities on behalf of others Short-term liabilities to employees Short-term liabilities to state and other institutions Short-term liabilities to fund financiers Other short-term operating liabilities Short-term part of long-term operating liabilities TOTAL 51,254,212 43,495,498 7,090 12,483,680 5 7,115,404 7,383,701 1,091,205 23,158,860 3,555,047 149,600,919 50,572,803 42,484,011 359,862 4,799,419 5 6,880,103 6,283,154 1,106,884 22,487,662 4,770,070 139,989,294
Short-term operating liabilities 149,600,919 EUR

31. 12. 2010 56,217 31. 12. 2009 245,321
The increase in operations in 2010 caused higher short-term operating liabilities. The major increase was registered in short-term liabilities from advances referring to operations of the companies from the Litostroj group, i.e. Litostroj Power with 5,184,981 euros, Litostroj Hydro 1,923,752 euros and BE 3,682,504 euros.
Note 19
(in EUR) Short-term accrued costs and expenses Short-term deferred revenues VAT from advance payments given TOTAL
Short-term accrued costs and deferred revenue 7,510,910 EUR

31. 12. 2010 4,489,349 2,952,050 69,511 7,510,910 31. 12. 2009 1,750,606 2,924,616 44,031 4,719,253
Short-term accrued costs and deferred revenue represent short-term deferred revenues of the companies from the energy pillar Litostroj Power and accrued charges and expenses, mostly interest expense.
Note 20
(in EUR) Mortgages on real estates Security pledges Given guarantees and pledges Given guarantees Bill of exchange issued Revolving loans Letters of credit from banks Foreign material in stock Other off-balance items TOTAL
Off-balance sheet liabilities
88,719,427 EUR
31. 12. 2010 24,236,552 567,845 54,198,643 861,897 2,145,349 2,500,000 496,610 2,434,901 1,277,630 88,719,427 31. 12. 2009 63,372,133 567,845 49,682,218 1,359,876 2,645,461 2,663,016 1,738,179 122,028,728
0136
Financial Statement
Note 21 Operating revenue 444,782,399 EUR
Net sales revenue

(in EUR) Revenue (sales) in Slovenia: group companies other costumers Revenue (sales) in European Union: group companies other costumers Revenue (sales) outside European Union: group companies other costumers TOTAL 88,563,824 419,749,668 74,199,050 367,467,199 304,753,151 276,699,641 26,432,693 16,568,508 2010 2009
Modification of inventories
Increase of the value of products and of work-in-process stocks in the amount of 245,456 euros (2009: up 8,527,758 euros) is the difference between their value at the end of the financial year and their value at the beginning of the financial year.
Capitalised own products and services

Capitalised own products and services in the amount of 17,400,361 euros (2009: 18,833,686 euros) represent products and services produced/performed by the group companies, and which were recorded among Property, plant and equipment, intangible long-term assets and inventories. Other operating revenues
(in EUR) Revenues from elimination provisions Revenue from business consolidation (Badwill) Subvention, grant Revaluation operating revenues Recovered receivables Sale of intangible assets Sale of property, plant and equipment Sale of investment property Liability write-offs TOTAL 3,024 15 285,085 176,174 7,386,914 10,016 3,916,242 483,953 1,878,597 8,037,107 2010 1,050,232 3,472,521 2,399,863 2009 340,549 1,407,750
0137
Financial Statement
Note 22
(in EUR) Cost of goods, material and services Cost of goods and material sold Cost of material Cost of services Labour costs Wage and salaries Social insurance - pension insurance cost Costs of additional pension insurances Other labour costs Write-offs Depreciation of intangible long-term assets Depreciation of tangible fixed assets Revaluation operating expenses of intangible and tangible fixed assets Revaluation operating expenses associated with operating current assets Other operating expenses Cost of settings reserves Other costs TOTAL 2,473,666 2,073,999 408,522,010 2,043,134 1,042,209 353,080,037 5,016,109 30,742,655 690,527 163,797 3,871,397 29,332,837 322,680 385,161 68,141,502 13,848,683 4,705,731 385,098 11,145,813 66,538,704 12,820,766 3,501,747 391,214 10,133,275 22,658,287 215,088,477 36,093,397 29,397,376 162,209,086 34,983,412
Operating expenses 408,522,010 EUR

2010 2009
Note 23
(in EUR) Financial revenues from participations Financial revenues from stakes in other companies Financial revenues from other investments Financial revenues from loans granted Financial revenues from loans granted to others Financial revenues from operating receivables Financial revenues from operating receivables to others TOTAL
Financial revenues
12,914,787 EUR
2010 2009
51,465 3,919,434 3,603,001 5,340,887 12,914,787
33,845 81,388 802,655 4,988,547 5,906,435
Note 24
(in EUR) Financial expenses from impairment and write-offs of financial investments Financial expenses for financial liabilities Financial expenses for loans received from banks Financial expenses for bonds issued Financial expenses for other financial liabilities Financial expenses for operating liabilities Financial expenses for liabilities to suppliers and bill of exchange liabilities Financial expenses for other operating liabilities TOTAL
Financial expenses
44,010,329 EUR
2010 98,590 25,438,356 1,150,000 8,752,503 7,048,370 1,522,510 44,010,329 2009 21,693,443 1,151,317 3,221,262 6,993,277 1,013,299 34,072,598
0138
Financial Statement
Note 25
(in EUR) Subsidies, grants and similar revenues not connected with business effect Received compensations for damages Received penalties Other revenues TOTAL
Other revenues
1,117,786 EUR
2010 84,932 562,229 470,625 1,117,786 2009 17,777 460,098 58,291 674,986 1,211,152
Note 26
(in EUR) Financial penalties Damages claimed Other expenses TOTAL
Other expenses 1,129,718 EUR

2010 92,300 111,763 925,655 1,129,718 2009 231,006 173,422 408,815 813,243
# 23.3 Other disclosures

Transactions between group companies
Transactions between group companies as at 31 December 2010 that were excluded from consolidation:
(in EUR) Investments and capital Stocks and shares of companies within the group Unpaid called-up share capital Capital Receivables and payables Short-term operating receivables due from group companies Short-term operating liabilities to group companies Long-term operating receivables due from group companies Long-term operating liabilities to group companies Short-term loans to group companies Short-term financial liabilities to group companies Long-term loans to group companies Long-term financial liabilities to group companies Deferred costs and accrued revenue Revenue and expenditure Net sales Procurement value of sold goods and material Costs of material Costs of services Financial revenue from loans given to group companies Financial revenue from operating receivables due from group companies Financial expenditure from loans received from group companies Financial expenditure from operating liabilities to group companies 300,583,485 240,415,097 43,265,946 16,065,221 1,446,033 3,111,414 1,504,766 3,889,902 89,157,786 87,841,065 1,355,073 1,565,925 49,259,347 49,272,462 9,107,638 9,113,140 1,087,252 169,315,063 5,317,831 174,632,894
0139
Financial Statement
Segment reporting
Segment information
Income statement per segments of the Cimos group
(in EUR) Opearting revenues Revenues between segments Operating expences Expences between segments Gross profit segment Unallocated costs Operating Gross profit Net financial revenues / (expences) Net other revenues / (expences) Income tax PROFIT OR LOSS FOR THE ACCOUNTING PERIOD Automotive pillar 363,113,446 526,493 (334,076,421) (526,493) 29,037,025 Energetic pillar 67,420,231 245,042 (60,288,584) (245,042) 7,131,647 Machine building pillar 9,727,886 8,377,419 (9,703,944) (8,377,419) 23,942 Agricultural pillar 4,208,818 286,718 (4,141,043) (286,718) 67,775 Total 444,470,381 9,435,672 (408,209,992) (9,435,672) 36,260,389 36,260,389 (31,095,542) (11,932) (1,093,177) 4,059,738
Assets of the automotive pillar represent 81 per cent of all the groups assets, of these 12 per cent of the energy pillar, 5 per cent of the machine building and tooling pillar and 2 per cent of the agricultural pillar.
Information per geographical segment

Income statement per geographical segments of the Cimos group
(in EUR) Opearting revenues Revenues between segments Operating expences Expences between segments Gross profit segment Unallocated costs Operating Gross profit Net financial revenues / (expences) Net other revenues / (expences) Income tax PROFIT OR LOSS FOR THE ACCOUNTING PERIOD Slovenia 35,407,755 323,541,310 (32,965,236) (323,541,310) 2,442,519 European Union 305,199,614 3,851,727 (275,532,653) (3,851,727) 29,666,961 Other 99,985,556 5,333,929 (95,834,647) (5,333,929) 4,150,909 Total 440,592,925 332,726,966 (404,332,536) (332,726,966) 36,260,389 36,260,389 (31,095,542) (11,932) (1,093,177) 4,059,738
0140
Financial Statement
Recalculation of capital
(in EUR) Capital (Growth of consumer prices) Capital 31. 12. 2009 121,335,729 % of growth 1.90 Effect 2,305,379 Restated profit 1,754,359
Income tax and deferred tax

In 2010, the Cimos Group presented in total 4,314,524 euros of earnings and 1,041,769 euros of income tax. Income tax of the company Litostroj Power amounts to 183,714 euros, income tax of KD Blansko to 138,230 euros, 646,106 euros of Litostroj Hydro, 57,851 euros of P.P.C. Buzet, 8,052 euros of TPS Labinprogres, 2,826 euros of Cimos France, 47 euros of Nimonic and 4,943 euros of Cimos ZKS.
Indicators
2010 Debt to equity ratio Debt ratio Operating fixed assets rate Assets investments ratio Equitiy ratio Cash ratio Quick ratio Current ratio Operating efficiency ratio Return on equity 0.18 0.57 0.62 0.63 0.29 0.05 0.37 0.86 1.05 0.03 2009 0.17 0.57 0.60 0.62 0.28 0.03 0.36 0.89 1.04 0.03
Transactions with related parties / intragroup transactions

Many legal transactions between group subsidiaries have been performed in 2010. The parent company acted as a customer, supplier, lessor or in another role. Legal basis for such transactions were different contracts, purchase orders, offers and similar. The content of legal transactions and the volume of transactions are shown in account registers i.e. in the enclosed tables and descriptions. CIMOS d.d. did not exercise its influence as a controlling company to force whichever of its subsidiaries to perform adverse legal transactions that would harm their operations.
Other disclosures
Gross wage of managing directors of thirty subsidiaries forming the Cimos group, resulted in 833,976 euros in 2010. The Management Board and the members of the Supervisory Board did not receive receipts from subsidiaries in 2010. In 2010, the group allocated 170,195 euros for audit services.
0141
Financial Statement
Independent Auditors Report for the Cimos group
0142
Financial Statement
0143
Financial Statement
# 23.4 Statement of management responsibility
The Management Board herewith confirms the financial statements of the Cimos Group for the year ended 31 December 2010. The Management Board confirms the groundwork and structure model of the consolidated financial statements, breakdown and notes on the accounts as reported on pages from 116 to 144. The Management Board is accountable for the authenticity and objectivity thereof. The Management Board hereby states that all the relevant accounting guidelines have been consistently used in drafting the financial statements. The accounting estimates have been prepared in line with the principles of prudence and good governance. The Management Board can confirm that the Annual Report is a true and fair reflection of the assets and operating results of the Cimos Group in 2010. The Management Board is responsible for maintaining a system of accounting and reporting which provides for the necessary internal controls to ensure that the Companys assets are safeguarded and to prevent and detect any fraud and other illegal practices The financial statements of the Cimos Group have been prepared on a going concern basis and in accordance with applicable laws and Slovenian Accounting Standards. Renoma, druba za revizijo in svetovanje d.o.o.,the independent auditors appointed to examine the financial statements of the Cimos Group have expressed their opinion in the attached report on pages 142 and 143.
0144
Financial Statement
0145
The Cimos Family
THE CIMOS FAMILY

SLOVENIA
CIMOS d. d. 6000 Koper, C. Mareganskega upora 2 telephone: +386 5 66 58 100 e-mail: info@cimos.eu CIMAT d. o. o. 6000 Koper, C. Mareganskega upora 2 telephone: +386 5 66 58 100 e-mail: info.cimat@cimos.eu CIMOS TAM Ai, d. o. o. 2000 Maribor, Perhaveva ulica 21 telephone: +386 2 45 01 111 e-mail: info.tamai@cimos.eu TAM POSLOVNE STORITVE, d. o. o. 2000 Maribor, Perhaveva ulica 21 telephone: +386 2 45 01 111 e-mail: info.tamai@cimos.eu CIMOS TITAN, d. o. o. 1240 Kamnik, Kovinarska 28 telephone: +386 1 83 09 340 e-mail: info.titan@cimos.eu LIP, d. o. o. 1000 Ljubljana, Litostrojska c. 50 telephone: +386 1 58 39 700 e-mail: info.lip@cimos.eu LITOSTROJ POWER d. o. o. 1000 Ljubljana, Litostrojska c. 50 telephone: +386 1 58 24 115 e-mail: info@litostrojpower.eu LIVARNA VUZENICA, d. o. o. 2367 Vuzenica, Livarska cesta 21/a telephone: +386 2 87 64 200 e-mail: livarna.vuzenica@cimos.eu
CROATIA
P. P. C. BUZET, d. o. o. 52420 Buzet, Most 24 telephone:+385 52 610 800 e-mail: info-ppc@cimos.eu LABINPROGRES TPS, d. o. o. 52220 Labin, Dubrova bb telephone: +385 52 851 845 e-mail: info@labinprogres.hr
BOSNIA AND HERZEGOVINA

CIMOS TMD Ai, d. o. o. 76250 Gradaac, Sarajevska ulica br. 62 telephone: +387 35 822 800 e-mail: info.tmdai@cimos.eu CIMOS SREBRENICA, d. o. o. 75430 Srebrenica, Potoari bb telephone: +387 56 441 009 e-mail: info.srebrenica@cimos.eu NT FORGING, d. o. o. 72290 Novi Travnik, Ul. Mehmede Spahe br. 1 telephone: +387 30 542 621 e-mail: info.novitravnik@cimos.eu NIMONIC d. o. o. 72000 Zenica, Ulica Travnika cesta br. 7 telephone: +387 62 342 792 e-mail: info.nimonic@cimos.eu CIMOS TMD CASTING, d. o. o. 72000 Zenica, Radna zona Zenica-1 bb telephone: +387 32 440 344 e-mail: info.tmdcasting@cimos.eu LITOSTROJ BH, d. o. o. 75000 Tuzla, Ul. Bosne Srebrene br. 14 telephone: +387 35 267 134 e-mail: litostrojbih@yahoo.com FAMOS Adi d. o. o. 71000 Sarajevo, Ilida, Ul. Put FAMOS-a br. 38 telephone: +387 33 476 160
0146
The Cimos Family
SERBIA
LIVNICA KIKINDA, AD 23300 Kikinda, Miloevaki put 34 telephone: +381 230 422 860 e-mail: info.lk@cimos.eu LIVNICA MAINOGRADNJA, d. o. o. 23300 Kikinda, Miloevaki put 34 telephone: +381 230 421 860 e-mail: info.lk@cimos.eu LIVNICA KIKINDA Ai, d. o. o. 23300 Kikinda, Miloevaki put 34 telephone: +381 230 422 862 e-mail: info.lk-ai@cimos.eu FAM SEANJ Ai, d. o. o. 23240 Seanj, Partizanski put bb telephone: +381 23 841 022 e-mail: info.fam-secanj@cimos.eu LIRA, d. o. o. 23300 Kikinda, Miloevaki put 34 telephone: +381 230 423 062 e-mail: info.lira@cimos.eu KRUIK Precizni liv, AD 14242 Mionica, Topliki put 11 telephone: +381 14 616 01 e-mail: info.krusik-precizniliv@cimos.eu TPS, d. o. o. 23332 Novi Kneevac, Nemanjina 102 telephone: +381 230 83 329 e-mail: info.tps@cimos.eu LIRADOM UGOSTITELJSTVO, d. o. o. 23300 Kikinda, Miloevaki put 34 telephone: +381 230 423 062; 22 262 e-mail: info.liradom@cimos.eu
FRANCE
CIMOS FRANCE, S. A. S. 92752 Nanterre Cedex, Rue de Peupliers telephone: +33 147 86 30 69 e-mail: info.cimosfrance@cimos.eu
RUSSIA
CIMOS ZKS, OOO 445043 Togliatti, 11 Borkovskaya telephone: +7 8482 20 60 87 telephone: +7 8482 75 98 67 e-mail: info.cimos-zks@cimos.eu
GERMANY
CIMOS BRD, GmbH 82140 Ilzweg, Olching 9 telephone: +49 2238 942 856 e-mail: cimos@alois-seme.si
CZECH REPUBLIC
KD BLANSKO ENGINEERING, a. s. 678 01 Blansko, apkova 2357/5 telephone: +420 533 309 502 e-mail: gr@cbeng.cz
CANADA
LITOSTROJ HYDRO, Inc. J2L 1J4 Canada, 45, Pacifique Est, Bromont (Quebec) telephone: +1450 534 2929 e-mail: jdornik@litohydro.ca
0147
ANNUAL REPORT OF CIMOS D.D. AND THE CIMOS GROUP FOR 2010
Publisher Cimos d.d. Contents Cimos d.d. Creative concept and Production Emigma d.o.o. Illustrations Ines Marie Flis
CIMOS D.D.
Cesta Mareganskega upora 2 6000 Koper Slovenia Telephone +386 5 66 58 100 Fax +386 5 66 58 250 E-mail info@cimos.eu Website www.cimos.eu

CIMOS Annual Report 2010 WWW

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

CIMOS Annual Report 2010 WWW

Uploaded by

Copyright:

Available Formats

SUMMARY

Letter of the president of the management board

LETTER OF THE PRESIDENT OF THE MANAGEMENT BOARD

Cimos Annual Report 2010

Letter of the president of the management board

Franc Kraovec, President of the Management Board

Cimos Annual Report 2010

No matter what that idea is, every plan is someones brainchild

Financial and operating highlights

FINANCIAL AND OPERATING HIGHLIGHTS

31. 12. 2010 472,186,880 263,470,906 133,130,504 283,232,211 311,005,299 -

31. 12. 2009 444,790,055 266,723,771 121,335,729 278,399,502 304,666,658 -

31. 12. 2010 247,945,661 219,066,981 112,802,420 149,323,227 203,048,524 7.82

31. 12. 2009 238,372,320 221,027,871 112,172,437 161,370,588 185,421,807 7.77

2009 1.04% 8.80% 18.03% 3.20% 0.55% 4.94

2010 0.67% 4.79% 8.09% 2.12% 0.51% 3.15

2009 0.63% 4.20% 8.03% 1.80% 0.46% 3.10

31. 12. 2010 No. of employees 6,864

31. 12. 2009 7,127

31. 12. 2010 995

31. 12. 2009 1,046

Cimos Annual Report 2010

Overview of significant events in 2010

OVERVIEW OF SIGNIFICANT EVENTS IN 2010

New management at P. P. C. Buzet, d. o. o., Buzet

Cimos collaboration with Technical Upper Secondary School in Koper

Lean Manufacturing in-house training

Cimos Handball club awarded by the Municipality of Koper

The Innovators Day

Prevention of alcohol abuse at workplace

New location for the members of IV

Prevention of alcohol abuse during working hours

Cimos Annual Report 2010

Overview of significant events in 2010

Eaton Best supplier award

30th anniversary of existence of AD Kruik precizni liv, Mionica

Components from Koper production facility in new Renault Wind

Development strategies and reorganisation plans

Contract for refurbishment of the hydroelectric power plant Pyhkoski in Finland

Know-how Day in Maribor

There is a Family-friendly company in Maribor

Award for innovation goes to Litostroj Power

Cimos Annual Report 2010

Overview of significant events in 2010

Best innovator award

Managerial skills training programmes

Damages caused by the storm of all storms

Champions of the business

Senoee facility Open doors

Energetic acquisition in Cimos Maribor facility

Visit of the German customer BMW in Cimos production location in Serbia

First work-shop of energy-specialists in Cimos grey cast iron foundry

specialists presented the achievements of Cimos subsidiaries in Bosnia and Herzegovina.

Meeting of the EUREKA partners

Mesi visited Cimos Gradaac

Cimos Annual Report 2010

Overview of significant events in 2010

Fire in production hall

Cimos restaurant distinguished for its culinary specialties

Energy experts work-shop in Cimos aluminium foundries

SiEVA development centre

2nd maintenance and tooling work-shop