Download Unaudited Consolidated Financial Statements

Unaudited Consolidated Financial Statements
of the MERCATOR GROUP for the year 2004
On the basis of stipulations of the Securities Market Act and the Listing Rules of Ljubljana Stock
Exchange, the company Poslovni sistem Mercator, d.d., with its headquarters in Ljubljana, Dunajska
cesta 107, is publishing the unaudited consolidated financial statement of the Mercator Group for
the year 2004 with important comments. Several significant changes of the data included in the listing
leaflets are published simultaneously in the daily newspaper DELO and also in Ljubjlana Stock
Exchange electronic information dissemination system SEOnet.
The Supervisory Board of the company Poslovni system Mercator, d.d., discussed the unaudited
consolidated financial statements of the Mercator Group for the year 2004 on its session on 22
February, 2005.
Consolidated financial statements
Consolidated financial statements of the Mercator Group represent the consolidation of accounting
statements of the controlling and controlled companies of the group, whereas the total excludes the
effects of transactions among the companies within the group.
Consolidated financial statements of the Mercator Group for the year 2004 are prepared in
accordance with the Slovenian accounting standards.
The companies included in the consolidation
Beside the parent company Poslovni sistem Mercator,d.d. which is the controlling company, the
unaudited consolidated financial statements of the Mercator Group for the year 2004 include all the
controlled companies in which the controlling company holds directly or indirectly the majority
ownership share :


in Slovenia: Mercator – SVS, d.d., Živila Kranj, d.d., Mercator – Gorenjska, d.d. (merged to the
controlling company on 29 October, 2004), Mercator – Dolenjska, d.d, Mercator – Goriška, d.d.,
Mercator – Degro, d.d. (merged to the cotrolling company on 10 September, 2004), Mercator Modna Hiša, d.o.o., Alpkomerc Tolmin, d.d., (from 6 August, 2004), Emona Maximarket, d.d. (from
11 November, 2004), Eta, d.d., Pekarna Grosuplje, d.d, Mercator – Emba, d.d., Mercator –
Optima, d.o.o., and M Hotel, d.o.o.
on new markets: Mercator – H, d.o.o., Croatia, Belpana, d.o.o., Croatia, Mercator – S, d.o.o.,
Serbia and Montenegro, Mercator – TC Sarajevo, d.o.o., Bosnia and Herzegovina (this company
was merged to the company Mercator - BH, d.o.o. on 1 November, 2004), and Mercator – BH,
d.o.o., Bosnia and Herzegovina.
Important business events in the year 2004
 In January 2004 the liquidation process of the company Intermercator, GmbH., Austria
began.
 On 1 March 2004 the process of integration of the company Živila Kranj, d.d., to the company
Poslovni sistem Mercator, d.d., started.
 In June 2004 the company Poslovni sistem Mercator started with the acquisition process of
the company Alpkomerc Tolmin, d.d., which was the associated company of Poslovni sistem
Mercator, d.d. On 31 December, 2004 the company Poslovni sistem Mercator, d.d. had a
77.12 % ownership share in the company Alpkomerc Tolmin, d.d.
 On 13 August 2004 the company Poslovni sistem Mercator,d.d. started takeover process of
the company C Market, a.d. Belgrade (Serbia and Monte Negro). The takeover process made
by Mercator and two competing offers was stopped in October 2004, which, however, will not
affect the strategy of further expansion of the Mercator retail network on this market.
 On 10 September 2004 the company Poslovni sistem Mercator,d.d. formally merged the
company Mercator – Degro,d.d.
 On 15 September 2004 the company Poslovni sistem Mercator,d.d. started takeover process
of the retail company Emona Maximarket, d.d., and on 21 September the offer for Emona
Maximarket, d.d., share purchase was announced. On 17 October 2004 the threshold of bid
efficiency at 49.4 % of all issued shares was achieved and the bid prolonged until 3 November
2004. As of 31 December, 2004 the company Poslovni sistem Mercator, d.d. held a 70.59 %
ownership share in the company Emona Maximarket, d.d, without own shares, and 98.18 %
with its own shares included.
 In September and October 2004 the company Poslovni sistem Mercator,d.d. carried out and
successfully completed the first issue of bonds in the total value of EUR 36,540,000.
 On 29 October 2004 the company Poslovni sistem Mercator, d.d., formally merged the
company Mercator – Gorenjska,d.d.
 On 1 November 2004 the company Mercator – TC Sarajevo, d.o.o., Bosnia and Herzegovina
was merged to the company Mercator - BH, d.o.o. Bosnia and Herzegovina.
 In November 2004, companies Poslovni sistem Mercator,d.d. and Petrol, d.d. signed an
agreement on the basis of which the companies will round up their previous co-operation in
the fields of trade, petrol-station building and the use of payment cards.
 In December 2004 the Management Board of the company Poslovni sistem Mercator, d.d.
sold Mercator shares in accordance with the new Income tax Law coming into force on 1
January, 2005, imposing high taxation of return on capital .
Expansion of the Mercator Group retail trade network:












22 January, 2004 – opening of Mercator Centre in Celje with the additional facility of Kolosej
cinema,
27 February, 2004 – opening of Trade Centre in Metković – Croatia,
4 March 2004 – opening of Mercator hypermarket in Kranj, Savski otok.
10 March 2004 - opening of Mercator Centre in Tuzla, Bosnia and Herzegovina.
8 April, 2004 - opening of Mercator Centre in Domžale,
16 September, 2004 opening of Trade Centre in Čakovec – Croatia,
14 October, 2004 – opening of Trade Centre in Đakovo – Croatia,
1 December, 2004 – opening of Supermarket in Alipašino polje, Bosnia and Herzegovina,
2 December, 2004 - opening of Mercator Centre in Osijek , Croatia,
4 December, 2004 - opening of Trade Centre Ivančna Gorica, Slovenia,
17 December, 2004 – opening of Supermarket in Podpeč, Slovenia
Opening of 4 Hura! discount stores:
 8 September 2004 – opening of the first Hura! discount store, and the first modern M
Centre of Technical goods in Ljubljana,
 18 November, opening of Hura! discount in Metlika,
 15 December, opening of 4 Hura! discount in Murska Sobota,
 16 December, opening of 4 Hura! discount in Cerknica.
Important events after the end of the business year
 On 10 February 2005 the bonds of the company Poslovni sistem Mercator, d.d. with trading
code MEO 1 were listed on a free market of Ljubljana Stock Exchange. The bonds of the
company Poslovni sistem Mercator, d.d. with trading code MEO 1 were issued in the process
of non-public offer of securities in the total nominal value of the total issue: EUR 36,540,000.
The total issue of bonds comprises 365.400 denominations each having the nominal value of
EUR 100.
 On 24 January 2005 the company Poslovni sistem Mercator, d.d. established an associate
company in Macedonia – Market trade, d.o.o. in which it helds 90 % ownership share.
Unaudited consolidated financial statements of the Mercator Group for the year 2004
Unaudited consolidated balance sheet of the Mercator Group as of 31. December 2004
in SIT 000
A
NON - CURRENT ASSETS
I
Intangible assets
II
Property plant and equipment
III Non - current financial investments
31.12.2004
(unaudited)
31.12.2003
(audited)
199.058.068
183.399.378
1.365.729
1.335.781
194.546.834
179.193.392
3.145.505
2.870.205
B
CURRENT ASSETS
73.956.578
66.049.428
I
Inventories
39.120.156
35.360.635
II
Trade and other receivables
31.124.160
26.471.518
III Current financial investments
1.048.262
1.946.605
IV Cash and cash equivalents
2.664.001
2.270.670
C
Prepaid expenses
TOTAL ASSETS
229.833
794.214
273.244.478
250.243.020
A
CAPITAL
90.649.469
86.140.120
I
Equity
88.338.514
83.739.175
II
Minority interest
B
PROVISIONS
C
BORROWINGS AND TRADE PAYABLES
I
Non - current borrowings
II
Non - current trade and other payables
2.310.955
2.400.945
11.783.074
12.048.614
169.091.570
150.472.977
62.918.609
47.005.479
7.944.468
8.453.132
III Current borrowings
47.512.400
49.987.491
IV Current payables
50.716.094
45.026.875
D
Accruals
TOTAL EQUITY AND LIABILITIES
1.720.365
1.581.309
273.244.478
250.243.020
Unaudited consolidated Income Statement of the Mercator Group for the period from 1.1.2004
to 31.12.2004
I - XII 2004
(unaudited)
in SIT 000
A
I - XII 2003
(audited)
B
SALES
Cost of sales
C
GROSS PROFIT
105.627.297
91.745.067
D
Selling and distribution costs
-76.655.713
-65.634.637
E
Administrative expenses
-21.123.423
-18.957.222
F
Other operating revenues
G OPERATING PROFIT
376.968.999
331.501.623
-271.341.702
-239.756.556
5.942.098
6.660.518
13.790.259
13.813.726
943.990
H
Revenues from investments
487.347
I
Interest revenues from non - current receivables
132.053
78.060
J
Interest revenues from current receivables
822.430
863.534
K
Current and non - current investments in write-offs
L
Interest expenses and other financial expenses
M PROFIT FORM ORDINARY ACTIVITIES
N
-226.882
-2.233.935
-7.620.352
-6.971.732
7.384.855
6.493.643
Extraordinary revenues
343.499
98.630
O Extraordinary expenses
-151.119
-161.240
P
PROFIT FROM EXTRAORDINARY ACTIVITIES
R
Tax
S
GROUP PROFIT
Minority interest
192.380
-62.610
-913.560
-532.442
6.663.675
5.898.591
102.121
-81.705
Unaudited consolidated Cash Flow Statement of the Mercator Group for the period from
1.1.2004 to 31.12.2004
in SIT 000
A
CASH FLOWS FROM OPERATING ACTIVITIES
I
Inflows from operating activities
II
Outflows from operating activities
III Net inflows / (outflows) from operating activities
B
CASH FLOWS FROM INVESTMENT ACTIVITIES
I
Inflows from investment activities
II
Outflows from investment activities
III Net inflows / (outflows) from investment activities
C
CASH FLOWS FROM FINANCING ACTIVITIES
I
Inflows from financing activities
II
Outflows from financing activities
II
I - XII 2004
(unaudited)
I - XII 2003
(audited)
379.166.337
337.973.238
-354.839.420
-309.948.033
24.326.917
28.025.205
1.385.690
943.990
-28.912.036
-34.327.606
-27.526.346
-33.383.616
16.867.612
24.094.242
-13.274.852
-19.659.261
Net inflows / (outflows) from financing activities
3.592.760
4.434.981
D
CLOSING BALANCE OF CASH AND CASH EQUIVALENTS AS AT 31.12
2.664.001
2.270.670
I
Increase / (decrease) in year
II
OPENING BALANCE OF CASH AND CASH EQUIVALENTS AS AT 1.1.
393.331
-923.430
2.270.670
3.194.100
Unaudited consolidated Statement of Changes in Equity for the period from 1.1.2004 to 31.12.2004
I. Called up
capital
V. Net profit or
loss for the
financial year
VI. Equity revaluation
adjustments
VII.Consolidated equity Equity total
adjustment
II. Capital
reserves
(in 000 SIT)
1. Share
capital
31.12.2003
IV. Retained net
profit
III. Revenue reserves
2. Own
shares
1. Legal
3. Statutory
1. Retained net
profit
4. Other
1. Net profit for
1. Revaluation
the financial
adjustment
year
2. Special
revaluation
adjustment
32.085.040
652.538
3.208.504
2.640
0
16.509.767
267.782
1.619.745
29.432.669
67.156
-106.666
83.739.175
0
0
0
0
0
0
0
6.561.554
0
0
0
6.561.554
0
0
0
0
0
0
0
6.561.554
0
0
0
6.561.554
0
0
0
-2.640
0
7.614.186
-3.439.547
-4.171.999
0
0
0
0
0
0
0
0
0
2.552.254
0
-2.552.254
0
0
0
0
Allocation of net profit from the accounting period
following the resolution of general meeting
0
0
0
0
0
5.061.932
-3.442.187
-1.619.745
0
0
0
0
Other reallocations of equity items
0
0
0
-2.640
0
0
2.640
0
0
0
0
0
0
0
0
0
0
-1.604.252
0
0
0
0
-357.963
-1.962.215
Disbursement of dividends and premiums
0
0
0
0
0
-1.604.252
0
0
0
0
0
-1.604.252
Currency translation differences
0
0
0
0
0
0
0
0
0
0
-357.963
-357.963
Majority interest 31. 12. 2004
32.085.040
652.538
3.208.504
0
0
22.519.701
-3.171.765
4.009.301
29.432.669
67.156
-464.629
88.338.514
Minority interest 31. 12. 2004
523.580
346.071
52.373
18.378
0
174.465
465.472
107.905
622.525
187
0
2.310.955
32.608.620
998.609
3.260.877
18.378
0
22.694.165
-2.706.293
4.117.205
30.055.194
67.343
-464.629
90.649.469
Transfer to equity
Input of net profits or loss from the accounting period
Transfer within equity
Allocation of net profit from the accounting period
following the resolution of the Management and
Supervisory Boards
Transfer from equity
Equity total 31.12. 2004
Unaudited consolidated Statement of Changes in Equity for the period from 1.1.2003 to 31.12.2003
I. Called up
capital
V. Net profit
IV. Retained or loss for
net profit
the financial
year
III. Revenue reserves
VI. Equity revaluation
adjustments
VII.Consolidated equity Equity total
adjustment
II. Capital
reserves
(in 000 SIT)
1. Share
capital
2. Own
shares
1. Legal
3. Statutory
1. Retained
net profit
4. Other
1. Net profit
for the
financial
year
1.
Revaluation
adjustment
2. Special
revaluation
adjustment
32.085.040
652.538
3.208.504
0
0
9.827.128
1.435.459
2.600.878
29.432.669
123.200
233.807
79.599.223
0
0
0
0
0
0
0
5.980.296
0
43.956
0
6.024.252
Input of net profits or loss from the accounting
period
0
0
0
0
0
0
0
5.980.296
0
0
0
5.980.296
Specific equity revaluation adjustment
0
0
0
0
0
0
0
0
0
43.956
0
43.956
0
0
0
2.640
0
6.682.639
276.150
-6.961.429
0
0
0
0
Allocation of net profit from the accounting period
following the resolution of the Management and
Supervisory Boards
0
0
0
2.640
0
4.357.911
0
-4.360.551
0
0
0
0
Allocation of net profit from the accounting period
for formation of reserves
0
0
0
0
0
2.324.728
276.150
-2.600.878
0
0
0
0
31.12.2003
Transfer to equity
Transfer within equity
0
0
0
0
0
0
-1.443.827
0
0
-100.000
-340.473
-1.884.300
Disbursement of dividends
0
0
0
0
0
0
-1.443.827
0
0
0
0
-1.443.827
Transfer of specific equity revaluation adjustment
0
0
0
0
0
0
0
0
0
-100.000
0
-100.000
Currency translation differences
0
0
0
0
0
0
0
0
0
0
-340.473
-340.473
Majority interest 31. 12. 2004
32.085.040
652.538
3.208.504
2.640
0
16.509.767
267.782
1.619.745
29.432.669
67.156
-106.666
83.739.175
Minority interest 31. 12. 2004
1.036.722
233.659
43.719
63
16.592
246.018
320.549
-41.844
545.183
284
0
2.400.945
33.121.762
886.197
3.252.223
2.703
16.592
16.755.785
588.331
1.577.901
29.977.852
67.440
-106.666
86.140.120
Transfer from equity
Equity total 31.12. 2004
Important notes to the Unaudited Consolidated Financial Statements of the Mercator Group
Net sales revenues
In the year 2004 the Mercator Group realized SIT 379,969 million net sales revenues. The revenues
exceed those realized in 2003 by 13.7%, and those planned for 2004 by 3.9 %.
In the trading activities 95.8 % of all the revenues were realized, the remaining 4.2 % were realized by
the non-trading activities. The trading companies of the Mercator Group on the markets of Croatia,
Serbia and Montenegro and in Bosnia and Herzegovina realized 13.3 % of total net sales revenues
and companies in the domestic market realized 86.7 % of the net sales revenues in the year 2004.
The increase of the net sales revenues in comparison to the previous year and as regards the
revenues planned for 2004, is mainly the consequence of new retail sales facility opening: 4 Mercator
Centres (MC Celje, MC Domžale, MC Tuzla and MC Osijek), and one hypermarket (Savski otok ,
Kranj), 4 Trade Centres ( TC Metković. TC Čakovec and TC Đakovo in Croatia and TC Ivančna Gorica
in Slovenia) 2 supermarkets (Alipašino polje in Bosnia and Herzegovina, and Podpeč in Slovenia), 4
Hura! discount stores (in Ljubljana, Metlika, Murska Sobota and Cerknica), company takeovers:
Alpkomerc, Tolmin, d.d. and Emona Maximarket,d.d., and also the increase of incomes from the
existing retail sales units sale.
Selling and distribution costs
In the year 2004 the Mercator Group realized selling and distribution costs in the amount of SIT
97,779 million. These costs exceed those realized in 2003 by 15.6%, and those planned for 2004 by
6.9 %. From this amount, SIT 52,046 million refers to labour costs and SIT 13,183 million to
depreciation. The increased expenses, compared to those planned for 2004, are mainly the
consequence of the bonus payout to all the employees at the celebration of MERCATOR's 55 th
anniversary in the total amount of SIT 1.1 billion, workers' redundancy payments resulting from
mergers of the trade companies in Slovenia to the controlling company (in the amount of approx. SIT 1
billion), and labour costs increase resulting from the increased number of employees, in accordance
with the opening of new retail sales units in Slovenia and on new markets. In a part the increase of
expenses is also related to the service cost increase. These costs in their major part arise from the
intensive marketing activities connected with celebration of Mercator's 55 th anniversary, and the
opening of new retail trade units.
Profit from ordinary activities
In the year 2004 the Mercator Group realized profit from ordinary activities in the amount of SIT 7,385
million. The profit from ordinary activities exceeds the one realized in 2003 by 13.7%, and represents
79.6% of the one planned for 2004.
Group profit
In the year 2004 the Mercator Group realized group profit in the amount of SIT 6,664 million, which is
by 13.0 % more than the one realized in 2003 and represents 82.3 % of the group profit planned for
2004. In this figure, the net profit of the majority owner amounts to SIT 6,562 million, and net profit of
minor owners to SIT 102 million.
The realized net profit compared to the one planned for 2004 is lower, which is mainly the
consequence of continuous performance of rationalisation and reorganisation activities of the Mercator
Group, pursuing the aim of achieving a long-term business efficiency while maintaining the high level
of social security for the employees.
Earnings before interests and taxes, depreciation and amortisation (EBITDA)
In the year 2004 the Mercator Group realized EBITDA in the amount of SIT 25,964 million, which
exceeds the one realized in 2003 by 5.3 %, and represents 90.2% of the one planned for 2004.
Non-realisation of the planned EBITDA in the year 2004 is mostly the consequence of performing the
measures and activities aiming at the increased business efficiency of the Mercator Group in a long
term, while at the same time maintaining the high level of social security for the employees.
Investment activities in the year 2004.
In the year 2004 the Mercator Group invested SIT 29,738 million to capital expenditures and long-term
financial investments. The majority of capital expenditures refer to the expansion of retail trade
network in Slovenia and on the markets of Croatia, Serbia and Montenegro and in Bosnia and
Herzegovina, mostly to building new Mercator shopping centres. Long-term financial investments in
the amount of SIT 4,478 million refer mainly to additional purchase of shares of the company
Alpkomerc Tolmin, d.d., and to the purchase of the company Emona Maximarket, d.d.
The employees
In the year 2004 the Mercator Group employed 14,395 workers on the basis of working hours which is
by 1,132 workers more than in the year 2003, and a little less than the number of employees planned
for the year 2004. The increase of the employee number is the consequence of intensive opening of
new retail units in Slovenia and on the new markets.
By the end of the year 2004 Mercator concluded the period of a rapid and intensive development. In
the period from 1997 to 2004 Mercator carried out 23 takeovers of mostly trading companies in
Slovenia, opened 24 Mercator Centres, widened its retail network by opening several Trade Centres,
supermarkets, convenience stores and discount stores. Starting from a trading company which in the
year 1997 covered only 50 % of the Slovenian market, Mercator grown into the biggest Slovenian
company, employing more than 15.000 employees (as per the situation), and with 650.000 m2 of net
sales area. Our offer of high quality products and services is bringing happiness to more than 16
million customers on four markets.
The entrance of Slovenia to the European Union had no major impact on the performance of the
Mercator Group. The year 2004 was concluded successfully, in spite of the fact the competition on the
domestic market, as well as on the markets of former Yugoslavia has become more and more keen.
All the processes of maintaining the competitiveness have been continued. All the measures of
reorganisation and consolidation in the Mercator Group have been tackled gradually and will be
proceeded until the year 2008. In that year we hope to have established one trading company on each
market where we operate.
The Management Board and the Supervisory Board of the company Poslovni sistem Mercator, d.d.,
assessed that in the year 2004 the business operations of the Mercator Group were very successful
and in conformity with the planned business objectives.
Poslovni sistem Mercator, d.d.
Management Board