5.5 NOTES TO THE FINANCIAL STATEMENTS

5.5.1 Non-current assets

Note PS 1: Intangible assets

Year 2020

Year 2019

Licences are disclosed in property rights. In 2020 these relate to the new business and information system. The value of different software is disclosed in other intangible assets.

Rate of amortisation of intangible assets

The historical cost of intangible assets whose carrying amount is equal to zero comprises different types of software purchased between 2004 and 2017: applications for monitoring reported disruptions and functioning of IT equipment (Desk Manager), central registers, telegraphy, the computerisation and digitalisation of the main office, the upgrading of UPC equipment (module used in the sale of merchandise and delivery service), electronic invoicing, wrist terminals, inventory of fixed assets, software for computer-

supported construction and drawing, the recording of drivers’ logs, and the monitoring and processing of tachographs in road freight transport, occupational health and safety software, etc. As at 31 December 2020, those intangible assets accounted for 63% of the historical cost of all intangible assets.

Trade payables for the acquisition of intangible assets

The Company did not pledge intangible assets as collateral for its liabilities.

Note PS 2: Property, plant and equipment

a) Property, plant and equipment excluding right of use assets

Year 2020

Year 2019

In 2020 we opened new premises with equipment for the Šentjanž pri Dravogradu parcel transhipment centre and set up a third energy phase at the Maribor Mail Sorting and Logistics Centre. The increase in the value of equipment is the result of the purchase of vehicles and trailers, forklifts and bicycles, containers for the transport of postal items (cargo), furniture and computer equipment (servers, workstations, computers, printers and signature tablets), DWS devices at the mail sorting and logistics centre, purchase of generators, air-conditioning devices and other equipment. In terms of investments in foreign fixed assets, premises for delivery were arranged at the Lenart post office.

Disclosed in investments in progress are the purchase of real estate and equipment that were not yet activated during the accounting period. Major investment items include: real estate in Ptuj, Videm pri Ptuju, Murska Sobota, Idrija and Koper, the Celje parcel transhipment post office and the Ljubljana Mail Sorting and Logistics Centre (MSLC).

Advances were paid for the purchase of means of transport (two-wheeled vehicles) and for the upgrade of software and hardware for the existing standard letter sorting machines at the Ljubljana MSLC.

The transfer of assets to investment property is explained in Note PS 3.

The transfer of assets to assets held for sale is explained in Note PS 10.

The transfer of assets between groups relates to the rebooking of the value of land under buildings that were transferred in 2020 from ‘real estate’ to the item ‘land’.

Obsolete, damaged and unusable items of property, plant and equipment with a total present value of EUR 19.504 were written off during the year and on the basis of the annual inventory.

Liabilities for the purchase of property, plant and equipment

Liabilities for the purchase of property, plant and equipment relate to computer equipment, bicycles, forklifts, electric delivery carts, furniture and office chairs, and construction works.

Rate of depreciation of property, plant and equipment

The largest group of assets whose carrying amount is equal to zero comprises computer equipment purchased between 2006 and 2016, as well as furniture, postal equipment and various means of transport. The rate of depreciation of property, plant and equipment in 2020 decreased down to 22% relative to 2019.

In the process of assessing indication of the impairment of fixed assets, the Company identified 76 properties that were subject to valuation.

The selected properties were appraised by an external firm as at 30 November 2020. Their fair value less cost to sell was appraised. Valuation approaches used: the market approach and the income approach. A detailed analysis was performed in the scope of the market approach for each property using transactions involving comparable properties in the direct vicinity of the property subject to valuation. Restatements were also made to approximate the indicative price of comparable properties. Those restatements relate to surface area, location and other functional characteristics of real estate subject to valuation, taking into account other comparable sold or advertised real estate. The income capitalisation approach (in the scope of the income approach) was used, which is based on verifying data on offered and obtained lease payments (rent) for similar real estate in the vicinity, estimated expected annual returns and their capitalisation at an adequate capitalisation rate. A capitalisation rate ranging from 7.15% to 8.49% was applied.

Based on the valuations of real estate a total of 47 properties were impaired in the total amount of EUR 2,900,451.

The Company did not pledge items of property, plant and equipment as collateral for its liabilities.

b) Right-of-use assets in connection with property, plant and equipment

Company as lessee

2020

2019

Amount recognised in the income statement in connection with leases

Proportion of variable lease payments

Company as lessor

The Company discloses rental income in Note PS 29 Sales revenue.

Maturity of future lease payments

Expected future lease payments relate to leased land, business premises and equipment, taking into account the expiry of associated agreements.

All information services for the market, which to that point were provided in the scope of Pošta Slovenije, will be gradually transferred to a subsidiary, resulting in a decrease in the proportion of rental payments from the lease of computer equipment.

Note PS 3: Investment property

Year 2020

Year 2019

Investment property includes:

holiday apartments and

business premises with the appertaining land or portions of business premises that are or will be rented out.

Investment property is classified to Level 3 (assets and liabilities whose value cannot be determined on the basis of market observables and thus cannot be classified to Level 1 or Level 2).

No properties were transferred to investment property in 2020. Properties Zgornja Polskava, Bled and Kostanjevica na Krasu were transferred from investment property back to property, plant and equipment, since based on the relevant internal act they no longer meet the criteria for classification as investment property (i.e. less than 30% of the entire surface area), or they involve post offices

leased out to contractual partners where the core postal activity is still performed.

Income and expenses from investment property

In 2020 revenues of EUR 463,752 were generated by investment property, while expenses totalling EUR 340,132 were incurred, of which depreciation costs accounted for EUR 136,885. Rental income reduced with respect to holiday apartments, as they were unoccupied for a lengthier period and also due to the sale of certain buildings. Rental payments were not lowered due to the consequences of the COVID-19 pandemic. However, were did extend the payment period to 60 days to all lessees who submitted applications therefor.

The fair value of investment property is verified periodically. The Company assesses that the fair value of investment property does not deviate significantly from its carrying amount.

The Company did not pledge investment property as collateral for its liabilities.

Note PS 4: Investments in subsidiaries

General data regarding subsidiaries

Balance of investments in subsidiaries

Changes in investments in subsidiaries

Pursuant to the provisions of the Takeovers Act. Pošta Slovenije published a mandatory takeover bid for the purpose of facilitating the withdrawal of Intereuropa’s other shareholders from the ownership structure of Intereuropa d. d. That takeover bid was valid from 10 December 2019 to 13 January 2020. The bid price was EUR 1.45 per share, Pošta Slovenije acquired an additional 2,408,846 ordinary shares at the standard price of EUR 1,45 per share for the total amount of EUR 3,492,826 (representing an 8.76% participating interest). Following the completion of its takeover bid. Pošta Slovenije held 22,235,236 shares of Intereuropa d. d., representing 80.89% of all shares issued by the aforementioned company.

In accordance with legislation governing takeovers, Pošta Slovenije announced a takeover bid for the purchase of the remaining shares of Intereuropa’s subsidiary in Montenegro by the legally prescribed deadlines. The mandatory takeover bid for Zetatrans A.D.. Podgorica expired on 26 January 2020. Following the completion of the mandatory takeover bid and mandatory additional purchase, Pošta Slovenije acquired a total of 864,863 shares, representing a 10.52% participating interest in Zetatrans A.D.. Podgorica valued at EUR 1,383,781. Thus, Pošta Slovenije and Intereuropa d. d. together hold 6,559,288 shares, or 79.79% of the shares of Zetatrans A.D.. Podgorica.

In accordance with legislation governing takeovers, Pošta Slovenije announced a takeover bid for the purchase of the remaining shares of Intereuropa’s subsidiary in Serbia by the legally prescribed deadlines. Following the completion of the mandatory takeover bid and mandatory additional purchase, Pošta Slovenije acquired a total of 4,672 shares, representing a 24.49% participating interest in AD Intereuropa, Belgrade valued at EUR 2,273,905 (RSD 267,203,921). Thus, Pošta Slovenije and Intereuropa d. d. together hold 18,714 shares, or 98.11% of the shares of AD Intereuropa, Belgrade.

The capital of subsidiary APS PLUS was increased by EUR 200,660 in 2020.

In the scope of the fair value assessment, an impairment of the investment in APS PLUS was completed in 2020.

In 2020 a certified valuer from KF FINANCE d. o. o. completed a valuation that focused on an assessment of the recoverable amount of non-current assets of the cash-generating unit (hereinafter: CGU), which comprises cash-generating units of APS PLUS at the level of the 100% owner whose ownership is closed, APS PLUS as a whole was defined as the smallest CGU.

The valuer assessed the recoverable amount of APS PLUS’s CGU by applying the present value of expected free cash flow method, establishing it to be most appropriate in the given case, while also verifying the possibility of applying other methods (method of comparable publicly-listed companies or comparable transactions, the assessment of value in use method and the summation method within the scope of the cost approach), which they deemed to be inappropriate.

In the case in question, the applied method adjusted the assessed fair value by the costs of sale, which was the basis for issuing the recoverable amount decision.

The recoverable amount of APS PLUS’s CGU amounted to zero euro as at 31 December 2020, taking account of a discount rate of 10.59%, a 5% discount for the lack of marketability/liquidity and 2% selling costs.

On the basis of this valuation, the investment in subsidiary APS Plus was subject to an impairment of EUR 638,799, for which an impairment loss was recognised.

The Company did not pledge investments in subsidiaries as collateral for its liabilities.

Note PS 5: Investments in associates

General data regarding associates

Balance of investments in associates

Investments in associates were unchanged in 2020. The Company did not pledge investments in associates as collateral for its liabilities.

Note PS 6: Other financial assets

Balance of other financial assets

Changes in other financial assets

Other financial assets include investments in Indoma Maribor and Zavarovalnica Triglav. The investment in Zavarovalnica Triglav was revalued on 31 December 2020. Due to the share price on the stock exchange being lower than the carrying amount as at 31 December 2020, the effect of the decrease in the financial asset in the amount of EUR 4,884 was recognised accordingly in equity.

Financial assets are not pledged as collateral for liabilities.

Note PS 7: Financial receivables

Interest rates on financial receivables

Changes in financial receivables

Financial receivables by maturity

Collateralisation of financial receivables as at 31 December 2020

A deposit of EUR 350,000 is pledged and serves as collateral for guarantees securing the payment of customs duties and other import receivables.

Other financial receivables are not pledged as collateral for liabilities.

Note PS 8: Operating receivables

Receivables from others primarily comprise receivables for the sale of housing, i.e. loans to employees for the purchase of staff housing, which were approved until 27 July 2007 at a fixed annual interest rate of 4%, with a repayment period of up to 20 years, and after that date at an annual interest rate comprising the 6-month EURIBOR +2%.

Operating receivables by maturity

Operating receivables by maturity are disclosed in their gross value.

Receivables from employees are not pledged as collateral for liabilities.

Note PS 9: Other assets

5.5.2 Current assets

Note PS 10: Assets held for sale

Assets held for sale include assets that are planned for sale in 2021 and comprise the Destrnik, Ožbalt, Velenje Gorica and Knežak business premises and the administrative building in Novo Mesto.

Changes in assets held for sale

Note PS 11: Assets from contracts with customers

Changes in adjustments to the value of accrued revenues

Accrued revenues primarily comprise accrued revenues from international invoicing.

Note PS 12: Inventories

Impairments, write-offs, inventory deficit and surplus

Inventories of material primarily relate to forms and tyres, small inventory to work uniforms and protective clothing, and merchandise to top-off cards, greeting cards and postcards.

Inventories valued at EUR 61,480 were written off in 2020 due to obsolescence and damage.

A deficit of EUR 2,341 and a surplus of EUR 1,686 were identified in the inventories of merchandise and materials. Based on a business cooperation agreement between Pošta Slovenije and the subsidiary PS Moj paket, Pošta Slovenije settled liabilities vis-à-vis the aforementioned subsidiary that were recorded from the misappropriation of merchandise that is sold in post office branches in the total amount of EUR 21,878.

The Company had no inventories pledged as collateral as at 31 December 2020.

Note PS 13: Financial receivables

A loan was granted to APS PLUS d. o. o. in the amount of EUR 300,000 in 2020. Deposits were concluded at Nova KBM and Sberbank. Deposits at banks comprise deposits bearing an annual interest rate of 0.01%.

Changes in current financial receivables

Financial receivables are not pledged as collateral for liabilities.

Note PS 14: Operating receivables

The increase in receivables from government and other institutions primarily relates to COVID-19 subsidies (crisis bonus, etc.), which will be covered gradually by the reimbursement received in 2021.

Pošta Slovenije’s receivables are generally not collateralised, except those from customers with poor credit ratings. Collateralised receivables totalled EUR 5,717 in 2020.

Operating receivables by maturity and changes in adjustments to the value of receivables are presented in section 4.7 Determination of fair value and financial risks.

Operating receivables are not pledged as collateral for liabilities.

Note PS 15: Advances and other assets

Deferred costs and expenses comprise deferred items relating to 2021 for which invoices were received in 2020.

Note PS 16: Cash and cash equivalents

Cash is disclosed at its original value. It comprises euros in cash registers and on transaction accounts at Nova KBM, Nova Ljubljanska banka, SKB banka and Banka Intesa Sanpaolo and US dollars on account at Nova Ljubljanska banka and Serbian dinars on account at UniCredit Bank Srbija.

Short-term deposits at banks comprise deposits bearing annual interest rates of between -0.2% and +0.0001%.

Deposits were not pledged as collateral for liabilities.

5.5.3 Equity

Note PS 17: Equity

Equity represents the Company’s equity financing, namely its liability to the government as Pošta Slovenije’s owner. The Company’s share capital is the capital registered with the court by the owner in the amount of EUR 121,472,482.

The balance on the share premium account is the result of the elimination of the general capital revaluation adjustment. Pošta Slovenije generated a net profit in 2020 in the amount of EUR 3,130,312, which was reduced for the reallocation of EUR 156,516 to legal reserves.

Changes to all components of equity are presented in the notes to the statement of changes in equity.

Distributable profit

5.5.4 Non-current liabilities

Note PS 18: Provisions

Changes in provisions in 2020

Changes in provisions in 2019

Based on an actuarial calculation, we created additional impairments for loyalty bonuses and severance pay in the amount of EUR 2,427,483, which is disclosed in the income statement as provisioning costs for severance pay and loyalty bonuses in the amount of EUR 1,215,702 and interest expense in the amount of EUR 132,753, and in the balance sheet as a revaluation loss from actuarial recalculations in the amount of EUR 1,079,028.

Provisions for loyalty bonuses and severance pay in the amount of EUR 25,699 were reversed in 2020 due to the reassignment of employees from Pošta Slovenije to IPPS.

Note PS 19: Deferred revenues

Deferred revenues include funds received for the implementation of projects in 2020, but not yet used, and subsidies for electric vehicles that are gradually transferred to revenues.

Changes in deferred revenues

Note PS 20: Financial liabilities

Changes in financial liabilities

Bank loans include the following:

A loan in the amount of EUR 15 million raised from Nova KBM for investments in 2018. The deadline for loan drawdown was 31 December 2018, while the deadline for repayment is 1 October 2025. The loan bears an interest rate comprising the 6-month EURIBOR + 0.50%. Two instalments in the total amount of EUR 2,142,857 were paid in 2020. The portion of liabilities falling due for payment in 2021 was transferred to current financial liabilities at the end of 2020.

A loan from the creditors Nova Ljubljanska banka (NLB). SKB banka and UniCredit banka Slovenija, as follows:

Tranche A was drawn down for the payment of consideration for the purchase of Intereuropa shares in the amount of EUR 20,123,788 in 2019 and EUR 2,444,979 in 2020. The deadline for loan drawdown was 25 March 2020, while the deadline for repayment is 26 June 2026. The loan bears an interest rate comprising the 6-month EURIBOR + 1.00%. Four instalments in the total amount of EUR 3,472,118 were paid in 2020. The portion of liabilities falling due for payment in 2021 was transferred to current financial liabilities at the end of 2020.