Annual report 2012

Statement of compliance with the corporate governance code for companies with state capital investments

Pursuant to point 73 of the Corporate Governance Code for Companies with State Capital Investments, the Management Board and the Supervisory Board hereby declare that Telekom Slovenije, d. d., in its work and operations, complies 

  • with the Corporate Governance Code for Companies with State Capital Investments, adopted by the Capital Assets Management Agency of the Republic of Slovenia (hereinafter: the AUKN) on 18 January 2011 (hereinafter: the Code), and
  • the Recommendations and Expectations of the Capital Assets Management Agency with regard to State-Owned Enterprises of 17 November 2011 issued on the basis of the Code, as well as
  • subsequent individual recommendations published during the course of this year.

The Code is available to the public in Slovene and English, while the recommendations are available in Slovene on the AUKN’s website.

This statement relates to the previous financial year, i.e. from 1 January 2012 to 31 December 2012.

Telekom Slovenije, d. d. adopted a new Code of Corporate Ethics in 2012 and published it on the Company’s website.

Following the completion of the ERM project, the Company established a comprehensive risk management system on 31 December 2012, and thus functions in accordance with Recommendation 3: Risk management, internal control and internal auditing.

The Management Board and the Supervisory Board explain which recommendations of the Code were not enforced by the Company, as follows:

Selection of candidates for supervisory bodies and formulation of proposals for a general meeting – Recommendation 77: The Supervisory Board’s Human Resource Committee includes no external expert who was selected by the Supervisory Board at the proposal of the AUKN and who assumes the role of the chairman of that committee (or the nomination committee). The Supervisory Board has not yet expressed its opinion regarding this recommendation, since it believes that the AUKN, as the majority owner of the Company, is given enough legal opportunities outside the Supervisory Board to influence human resource policy as regards the selection of members of the Supervisory Board. The selection of members of the Management Board, however, is the responsibility of the Supervisory Board. The Supervisory Board defined a procedure in 2012 for selecting members of the Management Board, as well as a proposal for candidates for members of the Supervisory Board and the desired competences.

The Management Board and the Supervisory Board also explain below which individual recommendations of the AUKN the Company did not comply with, together with the associated reasons:

Recommendation No. 4: Quarterly reporting on the operations of a company/group: The Company adheres to the Guidelines for Reporting of Companies with State Capital Investments and to the provisions of the Financial Instruments Market Act (ZTFI) regarding the publication of annual, semi-annual and quarterly results of the Company and the Telekom Slovenije Group. The aforementioned guidelines are not, however, in line with this recommendation. The Company publishes results by the prescribed deadlines in the form of quarterly reports (three- and nine-month reports) within two months following the end of a period, and an annual report within four months following the end of the previous period. In the future, the Company will continue publishing its results by the aforementioned deadlines on its website and on the Ljubljana Stock Exchange's electronic information system, where it also publishes its financial calendar with projected dates of public announcements and events, which refer to annual, semi-annual and quarterly reports. According to the operating instructions of the AUKN, companies are expected to present information in great detail. In accordance with the operating instructions, we will provide information for the parent company. For other companies and the Group, we will provide the same notifications on the Ljubljana Stock Exchange's electronic information system in accordance with the rules of the Ljubljana Stock Exchange. When reporting on the operations of the Company and/or Group, we take into account our obligations, regulations and internal acts relating to confidential or commercially sensitive data that are deemed trade secrets. These data and information are only disclosed to the Management Board and the Supervisory Board. Due to their nature, they will not be publicly disclosed in the future.

Recommendation No. 5: Three-year business planning by a company/group: With its five-year plan, the Company meets the obligation of three-year business planning. When disclosing business plans, the Company will adhere to its obligations, regulations and internal acts relating to confidential or commercially sensitive data and information that are deemed trade secrets and included in these plans, as their disclosure would have a negative impact on the competitive position of the parent company, Group companies and the Group as a whole. These data and information are only disclosed to the Management Board and the Supervisory Board. Therefore, the Company will not be able to meet all the requirements concerning the submission of business plans pursuant to this recommendation.

Recommendation No. 6: Transparency of transactions involving company expenditure (ordering goods and services, donations and sponsorship): The Company’s Supervisory Board and the Management Board closely examined all actual and legal circumstances in connection with the implementation of this recommendation. The Supervisory Board assesses that the procedures for the selection and concluding of transactions, as envisaged by this recommendation, are already provided by the Company’s internal acts and are being implemented. The use of funds for the purposes of sponsorship, donation and procurement of goods and services is determined through quarterly and annual reports on operations. The Supervisory Board has set up a system of controls, which will be implemented on the basis of mandatory reporting by the Management Board on relevant contractual relationships with contractual partners, where the value of the contractual relationship exceeds EUR 10,000 on an annual basis in the case of sponsorships and donations, EUR 1 million for the procurement of goods and EUR 100,000 for the procurement of services on an annual basis. The Supervisory Board monitors these transactions quarterly. In accordance with the Company's business interests and in order to protect trade secrets from contractual relations and information, the disclosure of which would be detrimental to the competitive position of the Company or could cause damage to the Company, the Supervisory Board recommends that the Company not adhere to AUKN Recommendation No. 6 with regard to notifications on the Company's website with the indication of the eligible recipient (donations, sponsorship) or the selected tenderer (procurement of goods and services), the type of transaction and the value of the concluded transaction, except in cases of major sponsorships and donations, when the recipients of these funds agree in advance to the publication of data on the recipient. Also in this case, data on the value of the transaction is not published.

Recommendation No. 7: Optimisation of labour costs in 2011 and 2012: Total wages in 2012 remained at the 2010 level. The year-end bonus is determined by agreement between the Company and trade unions in accordance with the company-level collective agreement, and will be paid in 2013 if criteria based on audited results following the Supervisory Board’s approval are met. Payment in the amount of 11% of the average employee wage is planned. Together with wages for April 2012, employees were paid an annual leave allowance in accordance with the collective agreement of Telekom Slovenije, d. d., in the gross amount of EUR 763.06 per employee, excluding management staff. A Christmas bonus in the gross amount of EUR 650.00 was paid in December 2012 in accordance with an agreement between the Company and trade unions. A Christmas bonus was not paid to management staff. Given that the trade unions, as contractual partners, did not give their consent to the publication of:

  • the full text of the collective agreement binding for the Company/Group or arrangements with employee representatives, which relate to remuneration for work; or
  • figures for 2010,

the Company will not publish this information.

The Supervisory Board has adopted reporting and risk management methodologies. Through its Audit Committee, it monitors the Company’s operations, while the Management Board is introducing a systematic approach to the improvement of the Company’s cost-efficiency in all areas through the concept of integrated cost management.

Recommendation 14 Achieving quality and excellence in the operations of a company/group: The Company is planning the introduction of an EFQM model for regular use during the second half of this year (from the beginning of the drafting of a plan for 2014) in accordance with this recommendation, following the training of internal assessors and the first self-assessment.

The obligations binding on the Company or its bodies for certain cases will be fulfilled by the Company if and when such cases occur. Any deviations from the given statement of compliance with the Code and the independent recommendations of the AUKN will be published promptly by the Company.

Telekom Slovenije, d. d. will continue to abide by the Code and the independent recommendations of the AUKN in the future, and enhance its system of governance accordingly.

The content of the corporate governance statement is also part of the 2012 annual report.

The corporate governance statement is available on the Company's website.

  rudolf_ skobe.png   berginc3.gif
Rudolf Skobe, MSc
President of the Management Board
Tomaž Berginc, MSc
President of the Supervisory Board