2014 in review and outlook
Rising up to ur challenges




Group revenue (in EUR million)

The Group increased its revenue over the 2013 figure by higher core activity revenue in Germany, Austria, Czech Republic, Slovakia, Hungary, Slovenia, Bosnia and Herzegovina, Romania, Bulgaria, markets of the Caucasus region, Australia, North America, and Russia. Moreover, sales of upmarket appliances rose by 2 percentage points. Thus, premium appliances accounted for 16.4% of total major appliance sales. Performance of our portfolio companies also contributed to the revenue growth.




EBIT (in EUR million) and EBIT margin

Improvement in EBIT by 19.8% relative to 2013 is a result of improved sales structure by products and regions, restructuring of manufacturing operations and sales network that resulted especially in lower labour costs, lower costs of services, and sound management of raw and processed material prices.




Net profit or loss (in EUR million) and ROS

Despite the dramatic aggravation of conditions in Russia and Ukraine, both of which are important markets for us in terms of sales volume and return on sales, we improved our net result and wrapped up the year 2014 with a net profit of EUR 1.2 million.




Total and net financial liabilities (in EUR million)

With improved cash flow from operating activities, lower investment, third capital increase, and lower working capital, we cut our net debt to EUR 331.8 million. As the EBITDA improved by 10.6% to EUR 86.5 million, the net debt to EBITDA ratio was cut to 3.8, a low of several years. This year, we are looking to bring the indicator down to 3.5.




Our revenue in markets beyond Europe amounted to EUR 109,0 million in 2014. The strong, nearly 11-percent growth is a result from higher sales in the markets of North America, Australia, and the Far East.




Our investment into new appliance development was increased by 0.4 percentage point to 2.9% of total core activity revenue. New launches included the new generation of ovens, cooking hobs, and other cooking appliances under our main brand Gorenje, under the global premium brand Asko, and under the local premium brand Atag. New generation cooking appliances remain the key new products that consolidate our market position.



Symbolical launch of dishwasher production in Velenje

The symbolical launch of the five-station sheet metal processing conveyor line marked the successful completion of the transfer of dishwasher production from Sweden to Velenje and the completion of the project of strategic relocation of manufacturing operations that took place in 2012 and 2013. Dishwashers have been produced in Velenje since September 2013.



Distribution partnership with the American manufacturer Sub-Zero Group Inc.

We signed a long-term distribution agreement with the leading US premium home appliance manufacturer Sub-Zero Group Inc., for our premium brand Asko. Thus, Sub-Zero Group Inc. has been the exclusive distributor of Asko washing machines, dryers and dishwashers in North America since April 1, 2014. The partnership is a part of our strategic activities aimed at boosting the Group's presence beyond Europe and promoting the sales of our upmarket products.


Design awards

The exceptional quality of design of our appliances was again recognized at the international Red Dot design contest. The forty-member expert jury was impressed twice: by the design of the built-in oven with interactive colour touch screen of the Gorenje brand, and the design of the built-in oven of the Asko ProSeries™ line of kitchen appliances. In 2015, we received as many as 8 Red Dot awards for our appliances.


Issue of commercial paper

On March 25, we successfully issued 9-month commercial paper with a total face value of EUR 35 million and an interest rate of 4 percent.



Asko Pro Series™ Asko premièred

Our new line of kitchen appliances Asko Pro Series™ was unveiled at the Milan Design Week. The line expands our offer under the Asko brand which has thus far enjoyed a reputation of a wet appliance specialist.



Gorenje among the most trusted brands in Slovenia

Gorenje was again voted the most trusted home appliance brand in Slovenia. Such was the decision of the Reader's Digest magazine. Gorenje brand received this flattering title again in 2015, for the ninth consecutive year.



Plus X Award for the 11th year in a row

We received the Plus X Award for the eleventh year in a row. The expert jury, consisting of representatives from 25 different industries, was impressed by the latest combined steam oven of the Gorenje+ line. This appliance won the award in the categories of quality, design, user-friendliness, and functionality.



Completion of the third capital increase

We carried out the last of the three capital increases approved by the shareholders at the Assembly in 2013. A debt-to-equity swap agreement for 1,005,020 newly issued shares was signed with the International Finance Corporation (the IFC). Before that, Gorenjska banka also converted its receivables into 1,315,166 Gorenje shares which it subsequently sold.


Cooking appliance plant celebrates 50 years

On July 3, 1964, Gorenje held a festive opening ceremony for the cooking appliance factory in Velenje. Production of cookers had started in 1958, but they were initially manufactured in the village of Gorenje, and – after 1960 – in leased facilities in Velenje. To date, over 30 million cooking appliances have been made in Velenje.


Asko awards in Australia and France

Asko D5894 washing machine ranked second in the »What to Buy?« section of the most recent test by Australian independent consumer advocacy group Choice. The brand also won the French innovation award for the Asko IQcook cooking hob.



Gorenje the best choice from ethical standpoint

Gorenje brand is the winner of three recommendations for the so-called »best choice« as presented by the Ethical Consumer magazine, in the categories of dishwashers, fridge freezers, microwave ovens, and washing machines.



Back at the IFA tradeshow

During our appearance at the world's leading consumer electronics and home appliance tradeshow IFA in Berlin, which celebrated 90 years, we unveiled the latest generation of built-in cooking appliances of the Gorenje brand. We also exhibited our new line of kitchen appliances Pro Series™ Asko and other new launches.


Gold for innovative refrigerators

We won the gold award presented by the Slovenian Chamber of Commerce and Industry for the new generation of free standing fridge freezers.


European Works Council

We are the first international corporation headquartered in Slovenia to have a European Works Council. It consists of 17 employees from our major subsidiaries in Slovenia and other EU member states (Germany, Austria, Czech Republic, the Netherlands, Denmark, Sweden, and Croatia), and one employee from Serbia. The founding session of Gorenje's European Works Council took place on September 25, 2014, in Velenje.



First issue of bonds

We issued 5-year bonds in the total nominal amount of EUR 73 million. This was out first issue of bonds since our transformation into a public limited (joint stock) company.




The best financial report

Our financial report for the 2013 fiscal year is the best in Slovenia. Such was the decision by the expert jury of the Finance daily paper, evaluating the annual reports by Slovenian companies. We also received the award in the 2013 contest.


Energy Saving Award in Hungary

Washing machines W8824I and W7543L, fridge freezer RK- 6193KX, and vacuum cleaner VCK1622AP-ECO won the »E.On Energy Saving Award 2014« at the contest held in Hungary by the energy company E.ON. Thus, they were recognized as appliances that, owing to low power consumption, bring savings to their users.



Award for innovation in sustainable development

In Britain, the RK6193 fridge freezer won the Designer Kitchen & Bathroom Award for innovation in sustainable development.


Dear shareholders,

Gorenje Group considerably improved the profitability of its operations and strengthened its financial structure in 2014. Economic and political conditions in the world were highly unstable, with the Russian-Ukrainian crisis and major currency fluctuations being of particular relevance for our operations. As with many major companies this had an impact. 

Gorenje Group entered the year 2014 ready and in good form, after completing extensive strategic relocations of manufacturing operations in the previous two years. Cooking appliance production was moved from Finland to the Czech Republic; production of Asko washing machines, dryers, and dishwashers was transferred from Sweden to Slovenia; and most of cold appliance production was shifted from Slovenia to Serbia. Thus, the number of manufacturing sites was reduced from five to three, which allowed optimizing the labour and other costs in the current strategic locations. The effects of manufacturing operations restructuring were a key element of our results in 2014.


Simultaneously with the relocations of manufacturing operations, we also partly restructured our sales network. This involved merging the sales organizations in the Czech Republic and Slovakia, and adjusting the operations to new business models in markets like the USA and France. With restructuring, operating costs were optimized in this field as well.


In 2014, Gorenje Group notably reduced its debt and strengthened its equity. Deleveraging thus de-risking was particularly substantial in the last quarter of the year when we also saw record-breaking positive free cash flow. Moreover, lower debt is also a result of sound working capital management, divestment of non-operating assets, and capital increases.


Based on these achievements and forecasts of growth of demand for home appliances in our key markets, we were planning even higher growth for 2014 and a stronger turnaround in terms of profitability. However, the events in some markets took a different turn than expected and forecasted by relevant institutions at the start of last year.


Especially the sudden and dramatic turmoil in Ukraine and Russia prevented us from fully attaining our goals. Our home appliances and brands are well-known in both markets and for a number of years, we had seen excellent results contributing notably to Gorenje Group’s growth and profitability.


In the first months of last year, the conditions in Ukraine worsened as war broke out in the eastern part of the country, which in turn more than halved the demand for home appliances. In the second half of the year, the Russian economy started to slow down, and we witnessed the most dramatic depreciation of the rouble in recent years. In the course of 2014, the rouble dropped 37% relative to the euro. Depreciation was the strongest in the last quarter of the year when sales are typically the strongest and which is very important in terms of our profitability.


Gorenje Group promptly responded to the changes and risks resulting from the developments in these two markets by adopting the measures that at least partly alleviated the negative effects of hostile business environment in Russia and Ukraine.


By boosting our sales in other markets, especially beyond Europe, where we have been working over the last few years, improving our product structure with new product development, optimization of costs, and restructuring our manufacturing operations as described above, we succeeded in notably improving the 2014 results relative to the year before. This is an important achievement of the entire managerial team and all Gorenje employees, as well as members of the Supervisory Board and all of its committees, whose clear and critical views were very helpful in our quest to attain the specified targets.


EBIT was improved by nearly 20% to EUR 43.5 million; profit before taxes amounted to EUR 4.9 million; and net profit reached EUR 1.2 million. We shaved nearly EUR 30 million off of our debt and brought the net debt to EBITDA ratio down to 3.8.


One highlight of our financing activities was the highly successful issue of 5-year bonds in the amount of EUR 73 million. This was our first issue of bonds since Gorenje had become a public limited company, and the demand for them exceeded our expectations. Maturity profile of our debt was improved considerably in 2014; our long-term liabilities accounted for nearly three quarters of overall debt at the end of the year.


We are pleased to see our revenue from home appliance sales in 2014 increase in many European markets, as well as in markets beyond Europe where our revenue rose by 10.7% relative to 2013. Revenue from non-European markets thus account for over 10% of our total core activity revenue, which is consistent with one of our major strategic goals.


It is also very important that we sold more premium appliances and our upmarket appliances of the Atag and Asko brand than in 2013. Revenue from these appliances was increased by 2 percentage points to 16.4% of total Gorenje Group major appliance sales.


Our focus on brand management is showing early results. The increase of premium appliance sales remains a key strategic goal for us in 2015. The increase of the share of this price segment in our sales structure will also be based on the new generation of ovens and other built-in cooking appliances developed for several brands and unveiled already in last year. Moreover, Asko brand, defined as our global premium brand, will also play an important part in this respect. Further development of the brand has been supported with a new organizational structure and experienced international experts have been added to the team.


Especially due to the uncertain situation in Eastern Europe, the year 2015 remains very challenging and unpredictable. For the first time after a decade of continuous growth, we are not planning growth in Russia. Due to the economic slowdown and lower consumer confidence in this market, we also developed different versions of our business plan. According to the realistic scenario, we are planning somewhat lower revenue at the Group level. However, we will do our best to continue to improve our performance indicators. We are looking to attain this, as described above, by increase in premium appliance sales and sales beyond Europe, especially in the Middle and Far East, Australia, and the USA. In these two markets, our market position is strong especially with the Asko brand. In Australia, we are introducing the Gorenje brand as well. We also continue our inventory and complexity management activities, and we are looking to cut all types of costs, including material, logistics and other services, and labour costs.


Cooperation with our strategic partner Panasonic will also have a positive effect on our operating volume. We have completed the joint development of a new generation of washing machines, and their production has been launched this year. This is the third product category produced for Panasonic. The project was all the more important as we were tasked with managing the development activities.


Major projects of this year involve in particular the improvement of business process efficiency, supported by a reputable international consultancy, and introduction of lean manufacturing.


Dear shareholders,


Gorenje Group is not merely Slovenia’s largest manufacturing company and one of the top two exporters in the country. In recent years, it has strongly developed the international aspect of its identity. We have internationalized our manufacturing, increased the number of our markets, carried out three acquisitions within the industry, expanded the offer of our brands, and welcomed international investors into our ownership structure. All this, paired with continuous investment into development of new products that stand out with innovative solutions and superior design has allowed us to grow and to stand side-by-side with the top players in the industry. Conditions in global markets remain challenging and highly unpredictable in 2015, especially in the first half of the year. With the broad team of colleagues and all Gorenje Group employees, and with further development of corporate governance at all levels of our international corporation, we shall continue to gear all our activities and efforts towards the provision of permanent and sustainable competitive edge of Gorenje Group in order to generate maximum value of our shareholders, customers, employees, and other Gorenje Group stakeholders.


We remain confident in the future of the company.


Franjo Bobinac

President and CEO



Dear shareholders,


The war in Ukraine and strong rouble depreciation relative to the euro had a profound impact on the region in last year, and thereby also affected the Gorenje Group operations and performance. Gorenje Group wrapped up the first three quarters with the net profit still at EUR 4 million; by the end of the year, the figure was down to EUR 1.2 million. Historically, last quarter performance improved the overall profit for the year, in addition to the third quarter. Last year, however, last quarter results were negative due to the dramatic depreciation of the Russian currency. On the other hand, the Group improved its operations notably in last year. Despite the dramatic aggravation of conditions in Ukraine and Russia, the Group ended the year 2014 with a positive result that is a considerable improvement over 2013. Revenue was up by 0.4% to EUR 1.24 billion, and EBIT was increased by 19.8% to EUR 43.5 million. The Group also deleveraged by EUR 27.1 million to cut its net debt and improve its financial stability. Investment into development was beefed up by 0.4 percentage points to 2.9% of core activity revenue, and new products were launched, including the latest ovens and other cooking appliances that boost the Group’s reputation and market positioning. The Supervisory Board supports the Management Board in the measures geared towards further improvement of competitiveness and focusing on Gorenje Group’s core activity, which we expect to result in improved profitability in the future.




In 2014, the Supervisory Board supervised the operations of the company Gorenje, d.d., and the Gorenje Group within the powers and authorizations specified by the relevant legislation, company Articles of Association, Supervisory Board resolutions, and Code of Conduct, as well as performed other tasks.


Since the approval of the 2013 Annual Report, the Supervisory Board has held eleven sessions, of which seven were regular sessions and four were correspondence meetings.


Up to and including July 19, 2014, the Supervisory Board consisted of the following members: chairman Uroš Slavinec, deputy chairwoman Maja Makovec Brenčič, Marcel van Assen, Bachtiar Djalil, Keith Miles, and Bernard Pasquier as shareholder representatives, and deputy chairman Krešimir Martinjak, Peter Kobal, Drago Krenker, and Jurij Slemenik as employee representatives. As of July 20, 2014, the Supervisory Board consists of: Marko Voljč, chairman; Uroš Slavinec, deputy chairman; Bernard Pasquier, deputy chairman; Bachtiar Djalil, Corinna Graf, Keith Charles Miles, Toshibumi Tanimoto (shareholder representatives); and Krešimir Martinjak, deputy chairman, Peter Kobal, Drago Krenker, and Jurij Slemenik (employee representatives).


All Supervisory Board members representing capital signed a written statement that they are entirely independent in their work and free from any conflict of interest, which the company has publicly announced on its website.


The new Supervisory Board has continued the practice of keeping up to date with major business events, benchmark studies comparing the Group to its competition, sales conditions in the markets, changes in the prices of raw and processed materials, and risk management. The Management Board informed the Supervisory Board about its activities on a monthly basis, either in the form of a report on Management Board meetings or in a letter by the President and CEO, describing to the Supervisory Board the current events in major areas of business. In my view, communication between the Supervisory Board and the Management Board is suitable. The Management Board has provided information in a timely fashion and we have always received replies to our questions, which allowed the Supervisory Board to fully perform its function consistently with the relevant legislation and best practices.


On July 20, the Supervisory Board started its new term of office in a slightly different and extended line-up. At our first session held in August, we appointed the Supervisory Board chairman and deputy chairmen, as well as the Supervisory Board committees and their respective chairpeople. Thus, we took very little time before fully committing to our duties entrusted to us by the shareholders. At the first session, we started the induction process for new Supervisory Board members and reviewed the key documents and processes at the company. In the future, we will carry on this process to learn about the company from even more aspects.


We received regular reports on performance and company activities


Based on Management Board proposal and Shareholders Assembly resolution we approved the increase of share capital by just under EUR 10 million by debt-to-equity swap that involved Gorenje’s creditor banks. This allowed immediate decrease of the Group’s debt by the above amount.


The Management Board presented in detail the entire process of investment approval at the Group. In our view, the procedure is appropriate and transparent. Monitoring returns on the projects carried out is of particular importance in this respect as it allows the company to clearly see whether and to what extent the business plan, of which the investment plan is a part, is being implemented and accomplished and whether the assumptions upon the approval of the business plan were realistic. Such practice is surely suitable and it allows the responsible persons at the Group to improve further business plans.


It is a fact that the future is always difficult to predict and therefore, it is important for the companies to be prepared to manage respective risks as well as possible. We were presented the Gorenje Group risk management model and we found it appropriate. We also believe a major step ahead has been done in this respect in the last year. Risks are being monitored in a systematic manner and in all fields. Moreover, the risk management team was strengthened, which we also welcomed.


We approved the rules on the membership of Management Board members and other Gorenje Group executives, directors, or senior officials in supervisory bodies beyond the Group. We certainly find it appropriate for Gorenje Group’s broad management to be focused on their work at Gorenje as much as possible. Challenges abound at all times. The company is operating in a highly competitive environment and saturated industry, in nearly every global market. Therefore, it is essential that all employees are fully devoted to their work at the Group.


The Supervisory Board was also presented the Management Board policy on the Group’s portfolio investments. The Supervisory Board agrees with the Management Board’s view of this segment, subject to the caveat that is of utmost importance for the company to be focused as closely as possible on its core activity, i.e. home appliances production. A good business opportunity can certainly arise outside the company’s core activity and pursuit of such opportunities should not be excluded from the Group’s activities; however, such pursuits should in no way stand in the way of the company’s core activity.


Strategic partnership with the Panasonic Corporation is surely of immense importance for the future of the Group. We have been regularly informed about the progress of cooperation which probably has not reached the desired level yet. The Supervisory Board is fully aware that it is essential to consolidate the cooperation gradually, as well as of the stringent legislation preventing any restriction of competition.


As we reviewed the results, we were pleased to see the improvement in working capital management and reduction of operations complexity. Progress has been noted, although we are aware we still have a long way to go to be on a par with the best in the industry. We were somewhat less pleased about the sales growth in new markets. The Management Board has to make efforts for faster penetration and growth in new markets. This will be the easiest way to offset the loss of revenue in Russia and Ukraine and potentially on other traditional markets.


Early in the year, the Supervisory Board adopted the 2015 Annual Plan which involves slightly lower sales than in the year before, due to uncertain future in Russia and Ukraine. On the other hand, profitability is planned to improve on account of better structure of sales in terms of products and geographical segments, adjustment of pricing policy, and improved cost efficiency. Moreover, we are planning further deleveraging and to maintain a stable maturity profile of our financial liabilities.


We regularly monitored the implementation and fulfilment of the resolutions adopted at our sessions, and we found that the Management Board observed and implemented them successfully. As the new Supervisory Board commenced its term in July last year, self-evaluation procedures have not yet been carried out; this will be done in the next period.


Gorenje Group must improve its competitiveness


The Supervisory Board was informed in detail about the project to optimize the business processes at the Gorenje Group and it fully supports it. The process is managed and steered by the company Management Board, with consulting service provided by the globally renowned Boston Consulting Group. Benchmark with competitors and the best players in respective fields was of particular interest. There is certainly a lot of untapped potential for improvement of performance and processes at the Gorenje Group. Individual projects are already in place at the company, the results of which will be palpable to some extent in this year, and especially in the years ahead. This includes the entire procedure of new product development, more accurate sales planning, optimization of logistics routes and sales network, and other business process optimization, which is a part of the most recent project.


Supervisory Board committees contribute notably to the efficiency of the Supervisory Board’s work


Supervisory Board hereby commends the Supervisory Board committees for their work. There are many issues that are being addressed by the committees and we can see that their continuous and diligent work has contributed to improvement of Group operations. The Supervisory Board is regularly presented the reports reviewed by respective committees. The committees are meticulous in their work and they are examining their respective fields in an in-depth manner and with a high standard of expertise. We are again proud to find that no circumstances are present with regard to any of the Supervisory Board members or committee, which would lead to a conflict of interest or dependence, and that the composition of the Supervisory Board is appropriate.


The Audit Committee, consisting of chairman Bachtiar Djalil, Keith Miles, Drago Krenker, and Aleksander Igličar, acted pursuant to the powers granted to it by the relevant legislation. The Audit Committee reviewed the compliance with the principle of prudence and consistency of reporting in quarterly reports, and resolved most ambiguities in these reports by raising relevant questions before they were discussed at a Supervisory Board session.


Since the approval of the most recent Annual Report, the Audit Committee has held six sessions. In addition to reviewing the periodic or interim reports, the Committee regularly reviewed the compliance with the covenants laid down in the loan agreements signed with respective banks, periodic reports on the work of the Internal Audit, and other financial and accounting issues related to the Group’s operations. It was constantly monitoring the risk management process as well. It also reviewed the implementation of the auditors’ recommendations provided in the Management Letter, and received a presentation of Gorenje Group’s policy on currency and loan management. Pursuant to the Code of Conduct, the Audit Committee is – in addition to the Management Board secretary – the body that may be addressed by every employee if she or he has reasonable doubts about the compliance of operations with the legislation and ethical standards. In 2014, the Audit Committee discussed several cases in this respect. The Supervisory Board believes such method of identifying any non-compliance is suitable. The Audit Committee is a body inseparable from the Supervisory Board. Constant care for improvement of performance and detailed analyses of reports received by the Audit Committee and the Supervisory Board are of great assistance in the Supervisory Board’s work.


Benchmark Committee consists of chairman Keith Miles, Corinna Graf, Bernard Pasquier, Toshibumi Tanimoto, Peter Kobal, and Maja Makovec Brenčič as an independent member. In recent period, the Benchmark Committee has expanded the fields that they monitor and held seven sessions. In addition to regular monitoring of events and developments in the markets, efforts to reduce complexity, improvement of operational excellence, faster launch of new appliances, and entering new markets, which was the scope of work of the previous Benchmark Committee, the new Committee also requires regular financial benchmarks and comparative information on cost cutting, IT, logistics, efficiency of production etc. As a result, the Supervisory Board is more easily presented the benchmarks in a number of fields, and it makes it easier to identify the strengths and opportunities of the Group for closing the gap to the biggest and best players in the industry.


Corporate Governance Committee did not hold any sessions last year. The Committee played its key role in 2011 when it selected the Roland Berger consulting company to work with Gorenje Group on the required changes to its organization. In the period ahead, the Committee will hold sessions in case of any major changes in corporate governance, either within the parent company or the entire Group.


Human Resource and Remuneration Committee, consisting of chairman Bernard Pasquier, Keith Miles, Uroš Slavinec, Marko Voljč, Drago Krenker, and Jurij Slemenik held one session in the last year, to evaluate the work of the Management Board in the year 2014 and to propose to the Supervisory Board the payment of rewards to the Management Board for the fiscal year 2014, consistently with the adopted Management Board Performance Criteria.


The Supervisory Board Nomination Committee is currently not active as the current Supervisory Board members commenced their terms of office on July 20, 2014. Last year, the Committee consisting of chairman Bernard Pasquier, Uroš Slavinec, Tadeja Čelar, Hiroyuki Furumura, Eric Stupp, and Mitja Svoljšak nominated, evaluated, and interviewed the Supervisory Board candidates. At the end of the process, the Committee proposed to the Supervisory Board the list of candidates for Supervisory Board members, and the Supervisory Board approved the proposal and proposed the candidates for appointment to the Shareholders Assembly.




On April 16, 2015, the company Management Board presented to the Supervisory Board for adoption the audited Annual Report of Gorenje, d.d., and the Gorenje Group, for the year 2014. The Supervisory Board reviewed and discussed the Annual Report at the meeting held on April 22, 2015.


The Annual Report of the company Gorenje, d.d., and the Gorenje Group for the year 2014 was audited by the auditing company Deloitte Revizija, d.o.o. The audit was also conducted at all subsidiaries of the Gorenje Group. On April 13, 2015, the auditing company issued an unqualified opinion on the Annual Report of Gorenje, d.d., and the consolidated Annual Report of the Gorenje Group for 2014.


Pursuant to the sound practice to date, the Audit Committee examined with due diligence before the Supervisory Board session the 2014 Annual Report, complete with Audit Report and Management Letter, to propose amendments and put forth their positions and opinions, which were observed.


Had it not been for the crisis in Ukraine and the dramatic depreciation of the Russian rouble relative to the euro, Gorenje Group’s annual plan would have been met. The Management Board adopted in due time the measures to alleviate the unexpected impact occurring in particular in the last quarter of last year. In light of this, the Supervisory Board finds the Group performance successful, especially considering the very harsh conditions at the end of last year. The Group again managed to deleverage significantly. Moreover, the manufacturing operations relocations completed in recent years also contributed to the Group’s results. Recently, the focus has been on cutting the inventories and complexity, and the results of these efforts are already visible as well. In addition, maturity profile of Gorenje Group’s debt has been improved notably, too. Next year, Gorenje has to be more profitable. It should be noted, however, that it is impossible to predict the end of crisis in the countries of the former Soviet Union and any crises elsewhere.


The Supervisory Board’s Human Resource and Remuneration Committee reviewed in detail the goals laid down by the Management Board and compared them against the adopted criteria for determining the variable reward to the Management Board members. The Human Resource and Remuneration Committee proposed to the Supervisory Board to approve the payment of a bonus in the amount of three and a half salaries to Management Board members for their performance in 2014; the Supervisory Board approved the proposal.


The Supervisory Board confirmed that the 2014 Annual Report prepared by the Management Board and audited by a certified auditor was compiled in a clear and intelligible manner and in compliance with the provisions of the Companies Act and effective International Accounting Standards. The Supervisory Board reviewed and confirmed the Auditor’s Report to which no objections were made. Therefore, the Board finds that the Annual Report presents a true and fair account of the property, liabilities, financial position, and income, as well as a fair account of the development of operations and the business position of the parent company and the Gorenje Group.


Based on these findings the Supervisory Board approved at the session held on April 22, 2015 the Annual Report for the company Gorenje, d.d., and the consolidated Gorenje Group Annual Report for the fiscal year 2014, as presented by the Management Board.




In the determining the distributable profit for the year 2014, the Management Board and Supervisory Board observed the effective provisions of the Companies Act and Gorenje’s Articles of Association.


Net profit of the company Gorenje, d.d., for 2014 amounts to EUR 6,333,707.34, and distributable profit amounts to EUR 4,219,490.55. The proposal on the allocation of distributable profit for the year 2014 will be announced in the convocation of the Shareholders Assembly where the decision on this proposal will be made.


The Supervisory Board compiled this report in compliance with the provisions of Article 282 of the Companies Act (ZGD-1); it is intended for the Shareholders Assembly.


Velenje, April 22, 2015


Marko Voljč

Supervisory Board Chairman


Sales by region



Characteristic features of region include presence of many home appliance brands, excess manufacturing capacity, and strong pressure on downstream pricing. Highly energy-efficient and user-friendly appliances with quality design are in highest demand by the users. In 2014, home appliance sales were up by 4% relative to the year before. Growth of sales volume was the highest in Portugal, Italy, Greece, and Spain, which had all seen drops in white goods demand in the years before. Home appliance demand was slightly higher in Germany as well, where sales have been increasing for a few years in a row. White goods sales in Scandinavia were on a par with the 2013 figures.


Following is the information for Western Europe, Scandinavia, and Benelux combined*.


Basic characteristics of the region


356 million

Average number of persons per household


Share of urban population


GDP growth in 2014 (estimate)


Number of major home appliances sold in the region (in millions)

Value of major home appliances sold in the region (in EUR million)

Major appliance market penetration in Germany in 2014 (in %)



In terms of purchasing power and major appliance market development, this is a highly diverse region. Moreover, some countries in the region are also very politically unstable.


In Eastern Europe, the major appliance market has grown in 2014 by 7% by volume. The growth was mostly fuelled by the exceptional sales increase in Romania, Slovakia, Hungary, and the Baltic countries. Poland saw positive growth as well. The only two markets with a slight drop in sales by volume in 2014 were Slovenia and Serbia.


Major appliance sales volume in the Commonwealth of Independent States rose by 5% in 2014, mostly due to the increase in Russia, especially in December when consumption rose by over 50%, spurred by the rapid depreciation of the rouble as the consumers sought ways to protect their income from the failing currency. Other markets of the Commonwealth of Independent States saw considerable decreases, with Ukraine seeing the biggest drop. In 2015, the market is expected to shrink by 20-percent, including in our key markets of Russia and Ukraine.


Following are the highlights for the Eastern Europe and Commonwealth of Independent States combined*.


Basic characteristics of the region


391 million

Average number of persons per household


Share of urban population


GDP growth in 2014 (estimate)




Number of major home appliances sold in the region (in millions)

Value of major home appliances sold in the region (in millions)

Major appliance market penetration in Russia in 2014 (in %)



This is an extensive and diverse region consisting of highly developed economies like Australia, underdeveloped countries, and developing countries and emerging markets (like China) characterized by a rapid pace of urbanization. Just like the regions and segments differ, so do the trends in home appliance demand. In 2104, home appliance sales volume in Eastern and Southeastern Asia increased, especially on account of its largest markets. In China, major appliance sales volume was up 2% relative to 2013 while in India, sales by volume rose by as much as 12%. The trend in Australia was negative in 2014 and the number of major appliances sold decreased by 6%. Drop of demand for home appliances was also seen in South America, especially due to the largest markets of Brazil and Argentina. In Africa, sales were up in the Northwestern part, while e.g. Egypt and Republic of South Africa saw a negative trend.


Basic characteristics of the region*



3,307 million

Average number of persons per household


Share of urban population


GDP growth in 2014 (estimate)


*Data source: Gfk and Gorenje Group company estimates


Number of major home appliances sold in the region (in millions)*

Major appliance market penetration in Australia in 2014 (in %)*


Operations in 2014 were negatively affected by the Ukrainian political turmoil and the aggravation of economic conditions in Russia. However, 2014 was also the year when our revenue outside Europe rose by 10.7% relative to the year before; when our sales also rose in many European markets (including Russia); when we launched new products that consolidate our market position; and when we signed a distribution agreement for the Asko brand in the USA. Following is a summary of the core activity operations and performance by regions as specified internally by Gorenje.




The region of Western Europe and Scandinavia includes the following countries: Austria, Germany, Italy, Spain, Portugal, France, Great Britain, Ireland, Lithuania, Latvia, Estonia, Sweden, Norway, Finland, Denmark, Belgium, Switzerland, and Greece.


Operations and performance in 2014


In 2014, we saw improvement in the basic economic indicators for the Western European markets, leading to stronger demand for home appliances. However, increasingly stringent competition in the industry and in retail resulted in further drops of average downstream prices.


As in previous years, we continued to note an increase in online home appliance sales which now account for one fifth of total technical consumer goods spending in Europe. We further explored this channel and provided promotion of our innovative and designer appliance lines in all product categories. As we expect further growth in the online sales channel, we adjusted our sales and marketing strategies to allow research of this dynamic channel and boosting of our market position in this segment. Sales within construction projects and at kitchen studios still account for only a small part of our overall sales structure; however, these two channels remain in the centre of our attention in terms of development of our further business activities. Thus, we considerably upgraded the line-up of our Gorenje+ brand offered in kitchen studios. New products were added in the categories of builtin ovens, cooking hobs, and cooker hoods, thus taking even better care of our customers in this growing segment.


Supported by all this, we further expanded our operations and increased our market shares in the traditionally key markets of Western Europe, i.e. in Germany, Austria, and Denmark. In Germany, Europe's largest white goods market (over 15 million major appliances are sold each year in this country), our market share in terms of volume rose to 4.2%; in Austria it now amounts to 5.2%; and in Denmark it is at 7.2%. Our position in other markets was still affected by the optimization process involving our sales structure, brands, and sales channels. Our sales and brand management activities at the Benelux countries were coordinated and optimized. In Scandinavian countries, we are pursuing our business restructuring path which involves re-focusing our sales activities to our global brands Asko and Gorenje.


Plans for 2015


Expert forecasts for 2015 anticipate further growth of demand in Western Europe, with Germany, an important market for us, remaining among the leading markets by sales volume. As European households are already highly equipped with home appliances, replacement purchases are the most robust source of demand in the market. Along with energy savings, this continues to drive most purchase decisions of the consumers.


In order to improve the efficiency of our sales teams and make their work easier, we will gradually start to implement at our sales companies the advanced »Salesforce CRM« customer relationship management system in 2015. It use is expected to relieve the information retrieval process, activity planning, and other administrative work in sales by 30%. The system has already been implemented at our sales company in Germany.




The region consists of Belgium, the Netherlands, and Luxembourg. This description pertains to sales under local brands Atag, Pelgrim, and Etna.


Operations and performance in 2014


In 2014, growth of the Dutch and Belgian economy was limited. Although consumer confidence and willingness to spend improved in the Netherlands, indexes were still below zero while in Belgium they continued to drop.


Lower economic growth, constantly decreasing prices of our competitors' products, and ever stronger online sales resulted in a huge pricing pressure on our regional brands (Atag, Pelgrim, and Etna). Both in the Netherlands and in Belgium, business in the kitchen retail channel which represents an important part of our activity was difficult. Nevertheless, we succeeded in maintaining our position.


The new line of Pelgrim built-in ovens, added to our offer in 2014, was well-received in the market. A new line of premium built-in ovens, called Magna, will be introduced under the Atag brand in late April 2015. Laundry care appliances are picking up pace, as are the added service concepts offered in 2014.


In the electronic retail channel, our sales increased relative to the year before despite the aggressive competition. In this channel as well, excellence of our operating processes, such as reliable and rapid product delivery and efficient after-sales services, is also of key importance. In the construction project channel, stagnation in new property development led to poorer results than in 2013, which was an exceptionally good year, after 2011. In general, customers within property development projects are becoming more demanding regarding supply and after-sales services.


Plans for 2015


Considering the positive changes in the construction industry, we expect our position in 2015 to improve. Taking into account the changes in the consumer journey, we are adapting our marketing efforts to build our brands with top-class digital presence.




The Eastern European region extends from Poland to the Mediterranean to include Poland, Czech Republic, Slovakia, Hungary, Slovenia, Croatia, Serbia, Bosnia and Herzegovina, Montenegro, Macedonia, Kosovo, Albania, Bulgaria, and Romania. These countries vary considerably in terms of the level of economic development. On the one hand, there are highly developed economies strongly integrated into international trade (Czech Republic, Slovakia, Poland, Hungary, Slovenia); on the other hand, there are countries with feeble economies (Albania, Montenegro, Macedonia). In addition to economic development, the countries differ considerably in terms of general population's purchasing power as well..


Operations and performance in 2014


The home appliance sales trend was positive as volumes rose in virtually all countries of the region relative to the year before. However, along with the increase in demand, the downward pressure on prices mounted as well. Particular countries are highly challenging regarding pricing aggressiveness. This applies especially to Poland which is Europe's second biggest home appliance manufacturer as most major players in the industry built or acquired home appliance factories in this country. On the other hand, pricing is also highly aggressive in the Balkans region.


In 2014, our sales in the region increased in terms of both volume and value, compared to 2013. We also attained a higher profit margin and regained our market shares where we had lost them the year before. In some countries, our sales network was reorganized (Croatia, Slovenia, Serbia, Poland) to cut operating costs. We also launched the restructuring of logistics processes. The restructuring process is not complete yet and it is carried on in 2015.


Our position in the region differs from country to country. Our market share exceeds 30 percent in some countries despite the strong competition (Slovenia, Serbia, Croatia, Bosnia and Herzegovina); there are a few countries where our market shares are between 10 and 20 percent (Czech Republic, Hungary, Slovakia, Macedonia); and there are some where our market shares are below 10 %. The latter are the countries where we see our growth potential in the years ahead.


We market our main Gorenje brand in all countries of the region. A uniform product range was specified for this region in order to cut complexity on the one hand while increasing the range of appliances available in each country on the other. In the markets of Czech Republic, Slovakia, and Hungary, we also market the Mora brand, which is considered a domestic brand in the former two. The appliances offered under this brand afford reasonable strong sales and high market shares. In Croatia and Slovenia, we also offer appliances of the entry-level brand Körting, in addition to the Gorenje brand.


Plans for 2015


Early in the year, we launched a new generation of built-in cooking appliances (ovens, hobs, hoods) which are expected to improve our sales and profit margins. We are also carrying on the processes of reorganization by which we are adjusting the operating costs and improving our services for our customers. Relying on marketing support, we are planning to boost our sales in Poland which we see as a promising market on account of its sheer size, although it is, as noted, also a highly challenging market with formidable domestic competition. Our Czech sales team has started to use the advanced customer relationship management system called »Salesforce CRM« which is improving the efficiency of our sales teams.




The region of Commonwealth of Independent States (CIS) includes the following countries: Russia, Belarus, Ukraine, Moldavia, Kazakhstan, Kyrgyzstan, and the countries of the Caucasus region (Armenia, Georgia, Azerbaijan, Tajikistan, Turkmenistan, and Uzbekistan). Characteristic challenges of the region include political instability, currency fluctuations, import customs duties and other charges, requirement for special appliance certificates, and particularly strong competition as some major Western players manufacture their products locally in this region.


Operations and performance in 2014


Performance in this region was strongly challenged by some external circumstances in 2014. Early in the year, political turmoil in Ukraine aggravated to the point of war in the eastern part of the country. This also affected home appliance demand. While the GDP dropped by about 7.5 percent, the major appliance market plummeted in value terms by nearly 25%. Many of our business customers went bankrupt, or supply to the areas of crisis was cut. Pressure on reduction of prices mounted and we also faced currency risks and risks of default. Our revenue in Ukraine in 2014 was 50% below the 2013 figure. In Ukrainian market, our presence includes the Gorenje brand, and, to a lesser extent, the Asko brand. We are present in all sales channels (retail, wholesale, kitchen studios, and online sales). Our Kiev representative office also manages sales activities in Moldavia.


Russia is one of our most important markets both in terms of volume and profitability of sales. In this country, we mostly market the Gorenje and Mora brands, while a smaller share of revenue is generated with the brands Asko and Körting. Sales involve all channels: retail stores, wholesalers, kitchen studios and specialists, and online stores which already account for 22% of total major appliance sales. Last year, 9% of our major appliances were sold online.


In 2014, we faced currency risks throughout the year, which presented an additional challenge for us, compared to some of our competitors who manufacture their products locally. The rouble depreciated by 37% relative to the euro in 2014, with the largest drop taking place in the last quarter of the year, when sales typically peak. The climax of rouble depreciation occurred in December, spurring the population into a spending frenzy in which Gorenje was among the most sough-after brands among white goods products. Despite the rouble depreciation and aggravation of macroeconomic conditions, we succeeded in increasing our revenue in 2014 relative to 2013; however, the revenue was considerably lower than planned.


Currency depreciation was also a problem in Kazakhstan where the local currency tenge depreciated by 30% early in the year and sales value in euro terms dropped by 9.1%. Competition, especially from China and South Korea, introduced additional pressure on prices. As a result, our revenue in this market was lower in 2014 than it was in 2013. The brands marketed in this country include Gorenje and Mora. In 2014, we expanded our cooperation with business customers, especially retail stores, and we also won a new wholesale partner who now manages the supply of our appliances to kitchen studios. Our Kazakhstan office also manages our operations in Kyrgyzstan.


In the Caucasus region, our 2014 revenue was higher than in the year before despite the depreciation of local currencies ranging from 9 to 23 percent. Tajikistan was the only country where our revenue dropped, especially because the purchasing power in this market depends on influx of money from economic emigrants working in Russia.


Gorenje brand is positioned in the mid or upper-mid price segment in all markets of this region. In 2014, we successfully launched new IonGeneration cold appliances with a height of 200 and 185 cm; in the third quarter, we started to launch the new generation of built-in cooking appliances in Russia and Ukraine (in other countries, new ovens, hobs, and hoods will be introduced in 2015), in addition to Classico and Simplicity microwave ovens, and new dishwashers. In Russia, we offered our customers a new line of built-in cooking appliances and cold appliances of the Asko brand.


Plans for 2015


In 2015, we expect a strong decline in home appliance sales in the region. After a decade of continuous revenue growth, we are expecting our revenue in Russia to drop this year. We are focusing on the improvement of our market position, which we are looking to accomplish with new appliances that are being launched or that are scheduled for launch by the end of the year. New generation cooking appliances play a particularly important part in this respect. We are also revising the offer of fridge freezers and washing machines, and we will also add some niche products (Classico refrigerator and built-in microwave ovens).




The region includes the following territories: North America, Australia and the Pacific region, Middle East and Africa, Far East, and South America.


Operations and performance in 2014


Compared to 2013, revenue in non-European markets rose by 10.7% in 2014.


USA are one of our most important markets in the region, in which we have been present for a number of years with the Asko brand, under which we offer dishwashers, dryers, and washing machines to American customers. In April last year, distribution of these appliances was taken over for us by the manufacturer of premium refrigerators and ovens SubZero Group Inc., which allowed us to enter a much broader distribution network than before. By assigning the distribution of appliances to the SubZero Group Inc., our operations in the USA was rationalized to the level that supports our new business model. In the USA, the white goods market expanded by 2.2% in 2014 relative to the year before. The Group also generated more revenue.


In boosting our revenue beyond Europe, we are also counting on Australia where, like in the USA, we had only marketed Asko washing machines, dryers, and dishwashers. In 2014, our offer was expanded with Asko cooking and cooling appliances. Preparations are under way to beef up our presence in Australia with the Gorenje brand. In Australia, our revenue in 2014 was higher than in 2013.


We also saw our revenue grow in the Middle East and North Africa, despite the highly unstable business environment. We specified our key markets (Saudi Arabia, United Arab Emirates, Iran, Iraq, and Egypt) and we worked with our business partners in charge of our distribution in these markets to revise our sales strategy to pave the way for further growth in these markets. Our sales company in Dubai, in charge of sales in the Middle East and North Africa, started to build its own infrastructure to support our sales plans.


In the Far East, our activities are focused on sales in the sector of contractual supplies and construction projects where we have the status of a European premium home appliance provider. Our key markets in this region are Hong Kong, Singapore, China, and Taiwan. We also operate our own sales company in Shanghai. In 2014, our revenue rose relative to the year before. However, the biggest challenge for us in the near future is the slowdown in property development. In China, we signed a contract with a new distributor who will be able to support our plans for the future.


In South America, we operate a representative office in Brazil. Due to the arduous import and certification procedures, we entered the Brazilian market with the strategy of focusing exclusively on the premium segment. This is a market where we have only been present for a short period of time and where our revenue is rather low.


Plans for 2015


Consistently with our strategic goals, we are looking to boost our sales in these markets. In 2015, we are planning a 2.2-percent growth of our revenue relative to 2014, counting on particular on the Middle and Far East, and Australia.

Sales by value under own brands by countries in 2013

Sales by value under own brands by countries in 2014

Brand development

In recent years, we have expanded our portfolio of own brands, which allows us to address the customers of varying demands and desires, in a number of markets. We are building our global presence with the Gorenje and Asko brands, while also developing our local brands, such as Atag, Pelgrim, Mora, Etna, Upo, and Körting. Majority of our revenue is generated with the Gorenje brand which accounted for 70% of our total major appliance sales in 2014. This is followed by Atag with 8 percent share and Asko with 4 percent of the total major appliance sales.


In the last period, the sales under our own brands were increased. In 2004, the Group's in-house brands accounted for 72% of total revenue; today, this share is at 95%.




Gorenje is our main brand present in the vast majority of the countries of our operations. It also includes our designer lines upon which we are building our distinction and competitive edge relative to the competition. It is also the only brand that includes the entire range of home products, including major and small domestic appliances, HVAC equipment, and kitchen furniture. The markets with the highest revenue under this brand in 2014 were Russia, Germany, and Serbia; our revenue generated with Gorenje brand appliances also rose in the markets beyond Europe.


The central new launch of the last year was the new generation of built-in cooking appliances unveiled at the world's largest consumer electronics and home appliance tradeshow IFA in Berlin. Our offer of appliances was expanded with an updated range of free standing cookers, free-standing refrigerators with a height of 200 cm, and a brand new generation of refrigerators and freezers with a height of 185 cm in all energy efficiency classes. In the segment of washing machines and dryers, we continued to market the dryer with a heat pump which ranks in the A+++ energy class, and new highly energy-efficient washing machines with an inverter motor in the A+++ energy class. Moreover, we entirely revised the offer of the Gorenje+ line which is marketed especially in the kitchen studio channel. The line was extended with new innovative built-in ovens, compact cooking appliances, cooking hobs, and cooker hoods. Pursuant to the requirements of the European directive on power consumption, we revised our offer of vacuum cleaners. In addition, we also revised our range of HVAC equipment. This included launching a new generation of Aerogor Compact air-water heat pumps, new generation of inverter heat pumps Aerogor Eco Inverter, new generation of air conditioners, tankless gas water heater, and a medium-capacity domestic hot water heat pump.


In 2015, our offer under this brand is further expanded with new home appliances resulting from in-house development. This involves new fridge freezers of the IonGeneration, while the key new launch in 2015 is the new generation of built-in ovens, cooking hobs, and cooker hoods, as noted above. Last but not least, a revised Gorenje brand image will be introduced in all markets under the slogan Life Simplified.




Asko brand ranks in the premium segment. It generates the most revenue in Australia, USA, and Scandinavia. Asko had previously been reputed in particular as a dishwasher, washing machine, and dryer specialist; in 2014, we expanded the range offered under this brand with ProSeries™ kitchen appliances that were premièred at the Tortona Design Week in Milan, and showcased at the international consumer electronics and home appliance tradeshow IFA in Berlin. Response by our business partners was good, and the expert jury of the international Red Dot design contest awarded the design of the oven from this line. Furthermore, we took a major step forward in expanding the presence of our Asko brand in the USA by signing the American premium refrigerator and cooking appliances manufacturer SubZero Group Inc. as our distributor for the Asko dishwashers, washing machines, and dryers.


We entered the year 2015 with an entirely revised organization and a beefed up international team in charge of further development of the brand. We continue to introduce the Pro Series™ appliances, and our offer will be further extended with a new line of designer kitchen appliances. We are also launching a new generation of dishwashers which still represent the largest share in Asko brand sales. The most Asko dishwashers are sold in the key markets for this brand, i.e. Australia, USA, and Scandinavia.




Atag is a premium brand of built-in kitchen appliances marketed in the Benelux countries. Appliances under the Atag brand are mostly available in kitchen studios and the brand is reputed as a specialist for high-quality gas hobs. In the period ahead, we are looking to build our reputation and stress our competencies in other product categories as well.


In 2014, we launched under this brand a new line of designer kitchen appliances called Magna which won the Red Dot award in 2015, as well as a new line of gas hobs Matrix and a new induction hob with expandable induction zones. We also improved our offer of refrigerators, dishwashers, and cooker hoods in high energy-efficiency classes. Recognition of Atag as a kitchen appliance specialist was supported by a new multimedia marketing campaign.


In 2015, the key new launch under the Atag brand will be the new line of Matrix ovens which is to increase our market shares in this very important product segment.




Pelgrim brand has been an important player in the offer of kitchen appliances in the Dutch market for over a decade. The brand includes an entire range of kitchen appliances in the mid price segment, and the appliances stand out in terms of simplicity of use.


In 2014, we reached a new milestone in this brand's development as we increased its market shares in the electro retail stores and kitchen studios by introducing a new line of ovens. Revised gas hob with a burner in the A+ energy class was very well received by the customers.




Key markets for the Mora brand are the Czech Republic and Slovakia, where it is considered a local brand. The brand is also marketed in Russia and Hungary. In 2014, we expanded our offer with small domestic appliances.


We also conducted a brand reputation survey in 2014, which showed that the brand is powerful and recognized as a traditional brand trusted by the consumers. In order to bring it closer to the target group and to win new customers, we have developed a revised brand identity which is to be introduced, along with the revised visual identity, in 2015. To this end, we also beefed up our market communication activities.




The Etna brand is the leading entry-level home appliance brand marketed in electro retail and DIY stores. The brand's market share in terms of volume in the segment of built-in and free standing cooking appliances is on the rise, and we are consolidating its position in the sales channels of kitchen studios and property development projects. In 2014, the brand's offer was extended with new gas hobs and combined microwave ovens. We also specified more precisely the brand's pricing position, defining it as the first-choice budget brand in the Netherlands.




Upo is a traditional Finnish brand with a strong recognition rate. Customers in Finland perceive it as a reliable brand offering a good price-to-quality ratio. In 2014, its offer was extended with new models of refrigerators and freezers, washing machines, and built-in ovens, and we updated the brand's visual identity. In 2015, we continue to add new products in order to make use of the brand's power in the local market and to retain our market shares. Our marketing activities will be aimed at convincing the end buyers to purchase Upo appliances for their technical features rather than for their price.




Our budget brand Körting is marketed in Greece, Slovenia, Croatia, and Russia. In 2014, we maintained the product structure and no major changes in the range of products are planned. The share of sales under this brand in our total revenue from own major appliance brands has decreased slightly; this share was offset by sales under other brands, ranked in higher price segments.

Product development and design

As stated in our vision, we are looking to become the best design-driven home appliance innovator in the world. Therefore, we devote particular attention to new product development and design. This is also reflected in increasing R&D investment. In 2014, it accounted for 2.9% of core activity revenue, or 0.4 percentage point more than in 2013. In 2014, we are planning to further increase the investments into new product development. Innovation is also among the fundamental values encouraged among our employees.


Development of different product categories is the task of our teams at development competence centres in Slovenia, the Netherlands, and Sweden, while a group of designers working at our in-house design studio located in Slovenia and boasting over five decades of industrial design tradition and know-how is in charge of the design. Occasionally, we also work with third-party designers, especially with globally renowned designer stars.


The key goal in the development of every new appliance is a happy user. Therefore, we seek to understand the habits and the needs of our customers in a number of markets, and to anticipate the trends affecting their purchase decisions. In this pursuit, we are focusing on the areas that improve the competitiveness of our products and services, as follows:

  • development of technological innovation that brings added value to the users and simplifies their lives;
  • energy efficiency which requires permanent care, both because of consumer expectations and because of regulations in this field; this is a key area that we will continue to focus on in the future;
  • new materials that will improve the functionality of the products while reducing the burden to the environment;
  • platform-oriented thinking and a quest for solutions that allow better management of complexity;
  • carefully thought-out and advanced design that receives our full attention and commitment already in the early stages of development. Superior design is a key element upon which we build our distinction and competitive edge in a highly saturated industry.

Activities in 2014

In the segment of fridge freezers, we were focused on the second stage of the project of developing a new platform of free standing fridge freezers with a width of 60 centimetres. We have developed free standing refrigerators and freezers with a height of 185 and combined fridge freezers with a height of 200 cm. These appliances stand out with innovative solutions for maintaining the quality of the food stored, and high energy efficiency.


An important part of our development activities also included the development of a new platform of premium built-in ovens. Two built-in heights (45 and 60 cm), three levels of control interfaces, and steam, microwave, and convection technology for food processing are the key features of the new ovens first launched in 2014.


The key project in the dishwasher segment was to develop entirely new modular dishwasher platforms; appliances based on them will be launched in 2015.


Moreover, we worked with our strategic partner Panasonic to develop a new generation of washing machines, the manufacture of which started in 2015. They stand out with innovative laundry care technology and a large capacity, as well as high energy efficiency.


In the segment of heating systems development, we revised the entire range of our water heaters.


We also carried on with our activities to develop connectible appliances; these activities are continued in this year.


Following the completion of the strategic manufacturing operations relocations from Sweden to Slovenia, from Finland to the Czech Republic, and from Slovenia to Serbia, which were highly challenging for our employees from a number of departments and taxing on the production processes, 2014 was a year of consolidation of our manufacturing plants.


We were primarily focused on the improvement of operational excellence in a number of fields, ranging from timeliness and reliability of supply, reduction of inventories, improvement of productivity and other indicators, to occupational health and safety and cost efficiency. We carried on the implementation of the lean manufacturing principles at all plants. These principles are aimed at cutting short the days in inventory and the average inventory levels, and improving the usage of machinery and organization of manufacturing facilities. Moreover, we carried out continuous improvement workshops based on the renowned Kaizen method. We worked with our strategic partner, the Panasonic Corporation, to exchange the best practices. Organizational changes were implemented at the Velenje plant, including the transfer of operational maintenance and quality control to production programs in order to highlight the responsibility of respective production programs.


Structure of production by plants in 2014


In 2014, particular attention in raw and processed material sourcing was paid to the improvements in the segment of strategic supply, risk management to hedge from raw material price volatility, optimization of inventory and material, and, as a result, to improvement of cost efficiency of purchasing. These activities are carried on in 2015.


We continued to development our network of stable and competitive suppliers that meet our criteria regarding quality, capacity to follow and support our development projects, flexibility, and costs. The number of suppliers was cut by 7% to reduce the complexity in this area; at the same time, our cost efficiency was improved. Lower number of suppliers is consistent with our goal laid down and this activity is carried on in 2015.


Risk management regarding volatile raw material prices also has an important role in purchasing cost management. As the political and macroeconomic uncertainty is rising in several parts of the world, volatility of markets and raw material prices is increasing as well. We hedge the risk of changes in prices by monitoring a number of factors affecting the changes in raw material prices (macroeconomic indicators, key market factors, technical analysis, currency fluctuations, and other events). Identification and evaluation of exposure to particular raw material prices, which is a part development of the purchasing plan the portfolio of suppliers, also plays an important part in our risk hedging policy. Based on prompt identification of changes in the highly dynamic commodity markets, we are striving to make the right decisions at the right time, in order to prevent or alleviate the risks of unfavourable price changes. We have developed the necessary tools and methods for protecting against such risks.

  • In case of base metals, we use futures to hedge the risk of price fluctuations. This allows us to fix the prices through our suppliers according to the listings on the LME futures exchange, while the agreements are based on immediate translation of the LME listings to euros, which also hedges the currency risk.
  • Risk of changes in steel sheet metal prices is hedged with price index model agreements that include the clauses for adapting to the market conditions and clauses restricting the price escalation. 
  • In the market for plastics, there are no available tools for long-term hedging as prices are defined on a monthly basis due to numerous unpredictable factors in the petrochemicals supply chain. Therefore, we are looking to obtain offers with competitive terms by including a larger share of suppliers and by calls for bids. 

In 2014, we witnessed further decrease in raw material prices. Oil price dropped by 30% relative to the year before; steel sheet metal price was down by 4.7%, and plastics prices dropped by 1 to 5%. This was mostly a result of the geopolitical conditions (Iraq, Ukraine etc.), slowdown in the economic growth in China and the recovery of the global economy, deflationary pressures in the euro zone (measures by the European Central Bank), excessive withdrawal of US stimulus policies (response by the Federal Reserve Board to the latest economic indicators), more flexible economic policy in Japan, excess manufacturing capacity, and lower demand for raw materials. Negative trend in raw and processed material prices had a favourable impact on our raw and processed material costs. Moreover, our costs in this respect were cut by sound management of our supply chain, all of which led to the attainment of our goals. Our cost efficiency was also improved by cutting the days in inventory for raw and processed material inventories by 6 days.

Share of raw and processed materials in the Group's purchasing

Supply chain management and complexity

Within our supply chain, we are looking to provide the best for our customers by optimal engagement of our fixed and current assets and cost optimization. Our supply chain is coordinated by careful planning of all processes and activities affecting the supply of our products to the end users (supplier management, optimum planning and execution of production processes, optimization of inbound, internal, and outbound logistics costs, inventory management, providing after-sales services for our customers, and optimization of the IT system and distribution channels).


In order to improve the performance of our supply chain, we introduced in 2014 the monitoring of indicators on customer relationships, fixed and current asset management, and management of processes and costs in the entire Group.

Inventory management

Our asset management in 2014 was focused in particular on working capital management, especially inventories with regard to which we controlled the inventories of finished products and materials. We also carefully monitored the slow moving appliance inventories and reacted if the inventory was slower than planned. Thus, the inventories at the end of the year were close to the planned levels. In 2015, we will develop a strategy for better inventory management during seasonal and other peaks for particular product categories, as well as seek to improve the sales forecasting system and cut short the lead time from order to product delivery.

Complexity management

Particular care was devoted to the management of product, process, and organizational complexity; special tools were developed to this end. Regarding product complexity, we specified our internal criteria for improve component complexity management, for cutting the number of finished product codes/IDs for products under our in-house brands marketed in Europe, and for cutting the number of product types. With respect to the latter two areas, our goals for 2014 were attained as component complexity was slashed by 17% and good 8% was shaved off of the number of finished product IDs under our own brands. Reduction in the number of finished product IDs and appliance types will also be aided by modular approach to introduction of new appliance platforms or new generations of appliances in the production process.


Notable results were also seen regarding the decrease in the number of IDs required to attain a 1-percent market share. From 2012 to the end of 2014, the number of IDs required to attain this share was cut by 11%.


Process and organizational complexity is reduced by standardization of business processes, organizational structures, and IT systems. By mid-2015, we shall establish a comprehensive system of business process implementation which will involve specifying the process architecture, assigning process owners, and establishing a systematic approach to change management. The key part of business process management is amendment and synchronization of all process indicators (key performance indicators) toward support for attainment of our strategic goals. Simultaneously with execution of these activities, we also carry on our standardization processes which will result in greater standardization and unification of business models.

Improved cost efficiency

Regarding cost efficiency, we have defined the process of cost planning and monitoring, the process of coordinating the activities for cost optimization, and developed a program of preventive measures for the attainment of longterm cost efficiency.

Monitoring the attainment of strategic goals

Balanced Scorecard system is in place for consistent monitoring of the attainment of our annual goals as per the strategic plan, and of our response to the changes in the environment and the needs of our customers.


Number of finished product IDs/codes*

*Systematic optimization of the number of finished product IDs/ codes started in the second quarter of 2014.


At Gorenje Group, we continuously examine and develop opportunities for long-term stability of our operations, long-term growth, and creation of value for the Group's stakeholders. In doing so, we are aware that in conducting our business activities, we are exposed to numerous risks, and that maximization of business results and opportunities requires assuming some of these risks. Taking risks is a constituent part of the decision-making process and entrepreneurship. Appropriately structured risk management process allows us to identify, measure and adopt the business decisions and the risks related to them in a controlled and balanced manner.


A process of continuous risk monitoring is in place for the purposes of planning and especially attainment of our business goals. This process is focused on the risks that have a direct and/ or indirect impact on the Group's operations. The identified risks are classified based on the effect of their occurrence on the completion of business activities, and the probability of such occurrence. In addition to identifying, measuring, and monitoring of risks, the risk management system put into place also defines the controls and risk management measures. The risk management process is established at all levels of business management and decision-making.


Risk management is an important building block of corporate governance and management. In 2014, we founded the Risk Management Department that prepared a revised model for identification, analysis and evaluation of risks. The model was approved by the Management Board, and its contents were reviewed and approved by the departments in charge of respective business processes. A revised risk management process has already been established at the parent company level. In 2015, we are planning to expand and implement the process throughout the entire Group. This will allow a uniform approach to risk management at the Group level.


The revised process of integrated risk management system pursues the following goals:

  • reducing the risks of business goal attainment to acceptable levels;
  • providing up-to-date review of the most critical risks, complete with prepared and implemented controls for their monitoring and the measures for their mitigation and maintenance of acceptable levels thereof;
  • maintaining steady and uninterrupted operation and reducing the element of unforeseen events and related costs, interruptions, and failures;
  • development, establishment, and adjustment of the risk management model that is the best match for the Group's business needs and goals;
  • monitoring risk management and comparing select risks to the competitors within the industry;
  • improvement of capital and asset allocation to decrease their overall exposure in comparison to the preceding period;
  • promoting employee awareness that risk management is a constituent part of any process and making sure the employees understand and do the work and the tasks consistently with the risk management guidelines.


External events


External events that had the strongest effect on our operations in 2014 certainly include political turmoil in Russia and Ukraine; both are very important markets for us. Political and macroeconomic instability in these two markets have had a notable effect on both our business activities there and on the operations and performance of the Group as a whole. Instability in the market was reflected in lower sales due to a drop in the purchasing power of the population and lower profitability in these markets, which was – in addition to the lower purchasing power – a result of more stringent and concentrated competition, depreciation and high volatility of the local currencies relative to the euro, and a shift of demand to lower price segments.


In Ukraine, our revenue was nearly fifty percent lower than in 2013 (EUR –26.9 million). Our sales volume and revenue in Russia rose relative to the year before; however, the extreme rouble depreciation resulted in actual revenue falling short of the expectations.


We succeeded in alleviating the negative effects in these two markets to a substantial degree with the following measures:

  • ur business model and operating costs were adjusted to lower demand; 
  • our downstream (sales) prices were adjusted to the volatility of the local currencies as much as possible;
  • particular attention was paid to credit risk – in Ukraine alone, our credit exposure in 2014 was reduced by nearly EUR 10 million;
  • we insured most of our Russian cash flows with forward exchange contracts;
  • we offered new products in the markets and improved the choice of products to adapt to the consumers and their changed behaviour.

These measures restricted the occurrence of negative risk events. Despite the extraordinary volatility in these two markets, we succeeded in maintaining operating profitability and market position, and in stabilizing our operations. Thus, we have built a solid foundation for the time when the circumstances normalize.


Internal events


Internal events with the greatest effect on the risk management process in 2014 certainly involve establishment of a department that included revising the risk management model, presenting the model and providing training and education at the level of all business processes at the company. Training and education were followed by revision of the risk catalogue/ register with segmental process risks.


The implemented model is based on internationally recognized segmental practices and standards using as guidelines the ISO31000, Guide73, and COSO risk management models.


The model is based on determining the risk level as a product of the estimated probability of a scenario and the effect of the occurrence of such scenario on the Group's performance. In determining the probability, the method is based on event history or frequency of occurrence. In determining the magnitude of the effect, we consider the financial impact, possible consequences for employee health or the investment, probability of interruption of business processes or operation in general, effects for the Group's reputation, or consequences regarding the attainment of the Group's goals. Both the effect and the probability of occurrence are estimated on a five-level scale. Clearly specified classification levels of the effect and probability based on their intensity ensures the risk assessment is based on well-grounded objective analysis rather than subjective opinion.


Responsibilities and activities in the risk management process


A number of functions at the Group level actively take part in specifying and adjusting the risk management process. Thus, we are making sure the risk management process is in tune with the business requirements of our business processes and with the context of the Gorenje Group. The risk management process is conducted from the business process activities towards the management (bottom-up approach). Here, risk and business process owners are actively involved and put in charge of continuous progress of the process of identifying, evaluating, and managing the risks. The role of the risk management development is to develop the model and the methodology, and to link and coordinate all activities, including training, education, and reporting. At the same time, the company management, by adopting strategic and business decisions, provides to the risk management department and the persons in charge of respective processes the guidelines for evaluating the strategic risks and grounds for identification of new risk related to the changes in the context of the organization (top-down approach).


With risk evaluation, control monitoring, and implementation of risk management measures, the risk management model forms the process of continues improvement in risk management.


In this way, the risk management model follows the decisions or changes in the context of the organization (changes in vision or strategy, the Group's business model) and the model is being continuously improved by monitoring of operations (external audits and reviews), monitoring of the performance of controls and measures (execution/implementation), and by staying up to date with the standards, recommendations, and sound practice. The model is designed to include continuous audit of both the set of risks and the set of controls and measures.

Risk catalogue


All risks are recorded and evaluated in the risk register/catalogue. In the catalogue, the risks are classified into several categories: financial risks, operational risks, and reputation and goodwill risks. All risk categories are additionally broken down into risks of external and internal origin.

Based on the risk evaluation, the risk catalogue also includes the risk management scenario.

































Management scenario


Low, infrequent

Not very likely



Almost certain




Some of the identified risks are directly related to the environment or the industry in which we are active. Our results depend to a considerable extent on the macroeconomic situation in respective key markets in which we conduct our activities. Our performance is especially affected by factors like the GDP in individual markets and fluctuations thereof, inflation rate, exchange rates, interest rates, transport costs, fuel prices, unemployment rate, changes in purchasing power of consumers, and the fiscal and monetary policy in the countries where we are active. Unfavourable changes of the general macroeconomic situation in the EU or globally can result in a drop of demand for our products and services, which in turn can cause a decrease in our revenue and have a negative impact on our financial position. Moreover, instability or disturbances in financial markets, which may in particular stem from the macroeconomic environment, can restrict access to external sources of financing. Such restrictions of access to external financing or increase of the costs thereof may affect our ability to efficiently carry out our investment projects and strategies. Macroeconomic situation can also increase the risk of insolvency of our customers, which may lead to problems in collection of receivables or debt, and loss of key customers. Such unfavourable circumstances may have a material adverse effect on our operations, financial statements, financial position, and our development potential.


The largest cost component is the cost of raw and processed materials, which is exposed to volatility of commodity prices in commodity and non-commodity markets. Raw material price volatility is further aggravated by the fluctuations in the exchange rate of US dollar relative to the Group's functional currency (the euro). In order to alleviate the risk of changes in raw material prices we employ relevant risk mitigation instruments, especially long-term contractual relationships with our key suppliers, and, to a lesser extent, futures contracts. Monitoring the trends in raw material prices and expectations in supply chains, and a wide supplier chain are the key controls employed to mitigate the risks in this field to acceptable levels.




We are exposed to many financial risks that include especially the following: credit risk, liquidity risk, currency risk, risk of change in interest rates, and other risks related to changes in market terms and conditions. Following is an account of the key financial risks and the measures for their management. For more explanations regarding financial risks, please see the Financial Report part of the Annual Report, chapter Financial Instruments and Financial Risks.




As our operations are broadly internationalized, we are exposed to the risk of changes in exchange rates. Namely, a change in the exchange rate between a particular currency and the Group's functional value (the euro) could result in a decrease of economic benefits for the Group. The currency risk pertains mainly to our business activities in the markets of Russia, Serbia, Australia, Great Britain, the Czech Republic, Poland, Hungary, Croatia, Ukraine, and all US dollar markets.


In these currencies, the Group balance sheet reports an excess of assets over liabilities, which is treated as a long currency position. Key accounting categories constituting a currency position include trade receivables (from end users) and trade payables (to suppliers). The exception is the US dollar for which we have an excess of liabilities over assets as the purchases from the dollar markets exceed our sales in this currency. To a lesser extent, the exposure of financial position is related to our debt in local currencies.


In 2014, the Group adopted the Currency Risk Management Policy which, inter alia, specifies the following:

  • methodology of currency risk exposure measurement; 
  • powers and responsibilities in currency risk management;
  • methods and required scope of currency risk management hedging;
  • acceptable currency risk hedging instruments;
  • acceptable currency risk hedging partners; and
  • method for evaluating the performance of currency risk management.

In addition to natural currency risk hedging with internal techniques that involve adjusting the purchasing and sales in respective currencies, taking out loans in the currencies with asset exposure, and other internal mechanisms, we also actively hedge our currency risks. Thus, we regularly and continuously, on a 12-month basis, take out acceptable currency hedging instruments .The level of such hedging normally includes 60 to 80 percent of the planned cash flow. Hedging with shortterm forward exchange contracts is based on planned cash flows in each currency. Required level of hedging was defined based on the ratio between the effect of each currency on the Group performance (operations volume) and probability of a change in the exchange rate (currency volatility).


Currency risk management is centralized. A currency risk management council was also appointed. The parent company is signing currency risk hedging instruments both on its behalf and on behalf of other Group companies, transferring them contractually to the companies locally exposed to such risk. To a limited extend, the subsidiaries sign instruments in local markets as well, while the parent company provides support and credit limits with acceptable hedging partners. By employing the centralized approach to currency risk management we can come closer to optimum effects of currency risk hedging.




Our operations extend over a number of geographical regions and as a result, the Group has many customers from around the globe. While they are mostly legal persons, our customers also include natural persons in the retail segment. As a general rule, we only work with customers with suitable credit rating which we regularly monitor. In addition, we have defined clear rules regarding credit limit approval for each customer. To this end, we adopted the revised receivables management policy which defines the receivables management processes, responsible persons, and acceptable credit risk management or insurance instruments. This policy, adopted at the Group level, also provides a mandatory framework for the receivables management rules and policies adopted and integrated into their processes by our subsidiaries. Simultaneously, we are implementing at all companies in the business segment Home the credit risk management information module, in order to automate the process of monitoring and collection of receivables and credit limits, which in turn will lead to a lower share of overdue or delinquent receivables, and to gradual increase of the share of insured receivables.


Changing macroeconomic environment affects our business partners as it can cause instant changes in their credit rating, liquidity or solvency. Therefore, there is still some probability of payment delinquency on the part of our customers or even default, despite the receivables management process in place at the Group. Considering the fact that our Group involves a highly diversified sales model with little concentration of receivables on individual customers or a group of customers related through mutual equity ownership, we find the Group's credit risk moderate. No single customer or a group of customers related through mutual equity ownership represents 10 percent or more of the Group's total sales, and exposure to a particular customer or group of customers does not represent 10 percent of the Group's total receivables.


All customers whose receivables exceed EUR 5,000 are included in the credit rating control process that also includes insuring the receivables with acceptable insurance instruments. Consistently with the receivables management policy, the following acceptable insurance instruments have been defined:

  • receivables insurance by credit insurance companies;
  • receivables insurance with bank guarantees and letters of credit;
  • factoring without recourse;
  • exceptionally, subject to special approval, pledge or mortgage of the 1st order.

At the end of 2014, 61.6% of total Group trade receivables were insured with acceptable insurance instruments, which is 5.6 percentage points better than at the end of the preceding period. The share of insured receivables in the business segment Home is 64.7%, or 5.9 percentage points more than at the end of 2013. Most trade receivables are insured by SID - Prva kreditna zavarovalnica. A part of the receivables is also insured by credit insurance companies in respective local markets, and by other acceptable insurance instruments. It should be added that no insurance is required from a minor share of customers, confirmed in a special procedure, due to their excellent credit rating which we are regularly monitoring. In case of some trade receivables with no insurance, we have offsetting transactions, i.e. our customers are also our suppliers. Moreover, there are many small customers who are highly dispersed, leaving the credit risk regarding each individual customer very low.


We are carefully monitoring the credit risk in other business segments as well. Short-term surplus of funds and cash in commercial bank accounts is allocated in compliance with our corporate policies that also include the methodology of determining acceptable financial partners or parties. These policies also specify the methodology of determining the acceptable financial partners in signing derivative financial instruments.




Liquidity risk is the risk that the Group will fail to meet commitments in stipulated period of time due to the lack of available funds.


Liquidity depends on efficient cash management and investment dynamics. At the Group, we actively manage the liquidity risk by centralized monitoring and balancing the liquidity of our assets (especially receivables and inventories), liabilities, and cash flows from operating and investing activities. Cash management for the entire Group is centralized and supported by cash flow planning and daily monitoring software. A lot of attention is paid to drawing up and monitoring of the cash flow plan. Successful liquidity planning allows us optimum management of any short-term surpluses or deficits of liquid assets.


We have implemented a uniform and centralized approach to banking partners both in Slovenia and abroad, through which the parent company manages optimum debt of the entire Group, taking into account the aspects of extent, costs, maturity, and currency balance.


In order to diversify the financing sources, we successfully issued in 2014 for the second time short-term commercial paper in total nominal amount of EUR 35,000 thousand. Short-term issues of commercial paper, which we continue to employ in 2015 (the third issue of short-term commercial paper was offered in February 2015 in the nominal amount of EUR 27,000 thousand), are intended for balancing the seasonal dynamics of cash flow from operating and investing activities. These cash flows are, as a general rule, negative in the first half of the year, followed by gradual improvement throughout the rest of the calendar year. Short-term cash flow disbalance is additionally managed by taking out short-term revolving loans and credit limits on current accounts with commercial banks in Slovenia and abroad. At the end of the year, the liquidity reserve, consisting of unused approved credit lines, available cash and cash equivalents in accounts, and fixed-term deposits with commercial banks amounted to EUR 109,349 thousand. Liquidity reserve is intended for short-term cash flow management and it considerably mitigates the Group's short-term liquidity risk.


The Group has in place a long-term plan for servicing its financial liabilities which is regularly updated. In 2014, we extensively restructured the maturity profile of our debt. This included replacing all borrowings gradually maturing in 2014 with long-term financing sources. This process included the following:

  • improving the maturity profile of our financial liabilities by 23.5 percentage points – at the end of 2014, long-term financial liabilities accounted for as much as 73.5% of total financial liabilities;
  • issuing 5-year amortizing bond (note) GV01 in the total nominal amount of EUR 73,000 thousand, thus diversifying the financing sources in the long-term part of our debt as well. In addition to short-term commercial paper, the issue of long-term bond provides extra assurance that other investors, besides the banks, have confidence in the Group;
  • carrying out the third round of parent company capital increase from authorized capital pursuant to the Shareholders Assembly resolution dating from 2013. Consistently with the Shareholders Assembly decision, the capital increase amount was EUR 10,000 thousand, and it was carried out by means of a debt-to-equity swap;
  • reducing the Group's total financial liabilities by EUR 29,807 thousand;
  • notably decreasing the amount of required financing for the year 2015.



Financing of the Group's current operations and its investment activities involves interest rate risk, since a good part of the loans taken out depends on the variable interest rate Euribor or other local variable reference interest rates. Interest rate risk exposure thus includes especially changes (increase) in the Euribor that are unfavourable for the Group's financial liabilities. A large part of financial liabilities involve a variable interest rate that depends on the 3-month or 6-month Euribor.


The interest structure of financial assets and liabilities is not balanced as the Group has considerably more financial liabilities than interest-earning financial assets. In 2014, we considerably increased the amount of our financial liabilities with a fixed variable rate, which is largely the result of the issue of the GV01 bond (note) with a fixed nominal rate of 3.85% in 2014. The proceeds from the issue of the bond replaced the financial liabilities with a variable interest rate. The share of non-derivative financial liabilities with a fixed interest rate rose by 20 percentage points and amounted to 28% of total financial liabilities as at December 31, 2014. After 2014, the share of liabilities with a fixed interest rate was further increased.


As at December 31, 2014, we also held interest rate swaps in the amount of EUR 28,300 thousand. Both currency and interest rate derivatives are only signed with acceptable partners. We therefore find the risk of failure on the part of our contractual partners to fulfil their contractual obligations minimal.


In 2014, variable interest rates were mostly on a downward trend. Therefore, we did not sign new derivative financial instruments intended for hedging the risk of an increase in the variable interest rate. The share of financial liabilities for which fixed interest rates were agreed or hedging instruments were signed was 35% at the end of 2014. Despite the fact that we did not take out interest rate risk hedging instruments in 2014, we are regularly and continuously monitoring the financial markets in order to allow timely measures in case of macroeconomic changes.




Operational risks include the following: operational risks of operating activities, legislative and regulatory risks, and risks of interruptions or failures in operating activities. Operational risks, for which we find the probability of occurrence of risk events very low, while their effect on the operation of business processes is found to be the highest possible, are further addressed in the uninterrupted operation plan.




Operational risks of operating activities pertain to the operation of the basic processes and to the sources required for uninterrupted operation of business processes.

Procurement risks


In addition to the risks related to upstream prices which are affected especially by external factors, Group operations are also significantly affected by suitable supply chain organization. Raw materials, components, and merchandise are sourced from a large number of external suppliers. As a result, we are exposed to the risk that the suppliers fail to deliver the orders within agreed deadlines or in the agreed amount or that the quality of the delivery is inadequate. Although the Group is pursuing the rule of two or more alternative suppliers, this rule is not entirely complied with in a certain segment, especially where more pre-development cooperation between the Group and the selected supplier is required. The risk of uninterrupted operation is managed or mitigated by constant implementation of acceptable suppliers and by provision of adequate level of safety inventory. A supplier evaluation model is in place, which evaluates the suppliers based on a number of aspects and criteria.


Supply chain management, and reliability of sales and production planning have an important effect on our operations. Poorly managed process can result in higher procurement costs, sub-optimal amount of inventory in the supply chain, and in problems for other business processes.


Changing macroeconomic circumstances affect our suppliers as well. Although no materially relevant effects were seen last year due to aggravation of financial stability of our suppliers, we continue to regularly monitor the operations and performance of our key suppliers.


IT risks


Risks associated with the operation of the IT system stem especially from the risks of IT infrastructure operation, support at the service level, and development at the level of IT systems.


IT risks are managed by providing IT infrastructure that is set up in a high availability operating mode. In addition to the primary location, the IT system also includes a secondary remote computer centre location. As a result of the IT system architecture and maintenance contracts with third-party service providers, the expected infrastructure operation failures are within the required availability parameters as set by the business requirements and processes.


In order to provide the support function in IT system operation for the entire Group, the 24/7 regime support department was finally set up in 2014, assuring response and support for service operation for Group companies located in different time zones as well.


The biggest risks to cost-efficiency and comprehensiveness of the IT system are related to the non-homogeneity of IT systems within the Group, and the non-homogeneity of the very business processes. Projects involving integration of subsidiaries into a uniform IT system reduce the risks of non-homogeneity of IT systems as they reduce the IT system complexity while increasing the cost efficiency and usage of the infrastructure. Project to standardize or make uniform the business processes or certain segments of business process execution will be carried out in 2015 and beyond in order to provide simpler and more transparent operation. Until business information systems are made uniform or standardized, or until their ultimate set is defined, there is a risk pertaining to operation of the system or to provision of comprehensiveness of information during transfers between different IT systems.


Production risks


The Group's production processes depend on certain critical machinery, equipment, and other resources. Although the Group's production processes and assets are generally modern and well maintained, there can be no full assurance that there will not be failures or breakdowns in machinery and equipment used in the production process. Any failure or breakdown of such equipment, which would result in partial or full interruption of the production process or a decrease of the Group's production capacity could have a significant negative impact on operations, operating results, financial position, and development prospects.


Production risks are a very important group of risks. The Group operates three major production locations where majority of the products we market are produced.


Risks of uninterrupted production are most frequently related to adequate availability of required resources. Risks addressed within the production processes are divided into availability of human resources, risks related to materials and supply, risks related to technological equipment and risks related to work process methods.


On the one hand, risks related to human resource availability are related to the fluctuations in the required or planned production volume; on the other hand, they may be a result of force majeure (natural disaster, broken traffic connections etc.). Such risks are resolved on the go by adjusting the working capacity and internal reallocation of human resources between production programs located at the same manufacturing site.


Risks related to provision of materials and supply may result from inadequate material supply (deficient quality) or untimely supply. In optimizing the production processes, we set up a system of minimum inventories. As a result, material may not be available in due time due to situations affecting our suppliers' production capacities or situations related to material logistics. These risks are managed with an orderly process of procurement and logistics, which include systems of alternative suppliers and deliveries.


Risks related to technological equipment are a category of production risks pertaining directly to the production process. These risks involve risks of machinery breakdowns, which are mitigated by systems of regular preventive maintenance; risks related to energy supply failures (gas and electricity), which are managed within our contractual relations with suppliers; and risks related to the compliance of our technical equipment with the relevant technical and legislative standards, which are managed by regular compliance checks (internal and external inspections and audits).


Since the Group is paying particular attention to product quality, product quality monitoring is involved in all production stages of the final product. Required quality levels are attained with tried and tested work procedures that are regularly monitored, reviewed and revised as necessary. Only products of high quality will allow us to keep our users and convince new ones. In addition to monitoring the quality of our products, production process quality indicators also include cost efficiency of the process, and provision of safe, worker-friendly workplace.


Product quality risks


Quality standards and regulations apply to the appliances we produce. Although we are continuously improving our production practices and although we employ appropriate product testing protocols, the possibility of faults or operation failures of our products cannot be entirely eliminated. The Group has set up a model of systematic monitoring of the costs of inadequate product quality and the levels and causes of product failures, in order to perceive the risks related to product quality and to be able to act accordingly to eliminate the problems in a timely manner within all processes. The risks are mitigated with appropriate development and quality assurance systems as a part of the production, sales, and after-sales processes. A quality management system according to the requirements of SIST EN ISO 9001/2000 has been implemented, as well as a system of accredited methods pursuant to ISO 17025, and the Six Sigma system. The use IT tools allows us to cut the time required to identify any extensive failures and thus to limit the costs that would be incurred in case of an epidemic defect. At the same time, we are constantly expanding the set of tests in the purchasing, development, and production process.


In addition to the internal product risk mitigation measures, we have also obtained insurance coverage from an international insurance company, which also includes coverage for manufacturer's liability for damage resulting from any faults or operation failures, in the amount which we deem sufficient to provide adequate coverage for any loss events. Nevertheless, we cannot guarantee that the insurance coverage will be sufficient for all and any loss events.


In addition to the direct financial effect, product failures and potential loss events pertaining thereto also have a significant negative impact on the reputation of the Gorenje Group, our brands, and the relations with our customers in the wholesale and retail process.


Development risks


Key development risks are risks related to compliance and risks related to the new product development process. With regard to compliance we observe the technical standards of the industry, which our end products have to comply with, and the relevant legislation and restrictions regarding intellectual rights and patents. We devote a lot of attention to provision of compliance of our end products with safety standards as this assures safe use of appliances for our customers. Failure in terms of any aspect of compliance may have a major impact on our operations and performance, and on the reputation of the Group and its brands.


New product development process is designed to include checkpoints. By working in compliance with such process, discrepancies between the planned goals and actual results of development of a product are controlled. We also included in the development procedures the required measurements and monitoring of product development in its respective stages. Nevertheless, scenarios have been laid down for cases of discrepancies, which involve – in addition to development activities – the measure of replacement of a non-compliant or unsuitable component.


In order to obtain an independent opinion regarding the quality and usefulness of the final product, user tests conducted by consumer organizations are included in the testing stage. Such tests are planned in the annual development plans and they involve relevant sets of products.


Risks directly affecting the new product development process involve the risk of availability of the development department which may be restricted due to lack of key personnel, inclusion of unplanned development projects, expressed or identified additional requirements in the course of the development project, or even a finding that the development concept is inappropriate. All risks pertaining to the temporal components are managed by careful project planning as early as during the annual planning which is a part of the medium-term new product development planning.


The most critical risk observed in the development process, present regardless of the introduced internal controls, is the risk of an inappropriate or unsuccessful product concept. The Group has no guarantee that the product we develop will find commercial success or that the consumers will recognize the useful value of the product features we develop. This risk is all the more important when developing new product categories or platforms. These risks are managed over the entire development cycle – from continuous monitoring of consumer behaviour, needs, and trends, to market analyses and monitoring of technological trends in the industry.


Human resource risks


Group performance and competitiveness depend on our ability to keep, motivate, and attract new qualified and experienced employees for all business processes in operations, administration, and management. Performance and success of long-term and short-term business strategy relies on adequately trained employees. In 2014, we launched the succession planning project which is to assure uninterrupted operations despite any losses of key personnel. Moreover, particular attention is paid to employee training and education at all levels and in all professions and fields of expertise within the Group. In addition, our recruitment efforts also include providing scholarships to talented students.


Availability and flexibility of adequately trained employees is the key to correct and timely execution and implementation of strategic, development, and other projects conducted at the Group in addition to regular business activities.


Logistics risks


Logistics risks are related to the changes in the costs of transport services and provision of efficient logistics support to the Group's sales and sourcing process. With regard to sea transport, supply and demand are the most important factors affecting the prices. The market for sea transport services has stabilized after last year's price hike. However, major fluctuations of prices in the future are still possible. In case of road transport, oil prices are the key factor, in addition to recent increases in road tolls in Europe. Also contributing to the instability of the market and higher risks is the lack of trucks in the market, which is characteristic of the entire European area. We are mitigating the logistics risks by managing the logistics processes and by employing a wider base of logistics service providers. In 2013, we completed our manufacturing operations relocation project, which has also resulted in changes to logistics routes and at least temporarily increases the risks related to logistics processes.


Operational risks can appear at the operational level of logistics processes. These are managed as risks of system failures in systems that allow operation of logistics centres, and risks of business-logistics partners managing the logistics transfers between our logistics centres or to our business partners' warehouses. Operation of local customs authorities also has a notable effect on our logistics activities. Logistics risks of business logistics partners are managed by maintaining a range of alternative options – in terms of partners and in terms of alternative logistics routes or means of transport. Risks of major transport damage are adequately insured and business relations with our partners are based on long-term cooperation, which means that lost, stolen or destroyed cargo can be replaced with the next shipment.




Legislative and regulatory risks include risks related to any breaches of the relevant local legislation, regulations, or operating standards. Legislative and regulatory risks may affect the Group's ability to successfully conduct business activities. To this end, we have established many controls and processes: environmental management, occupational health and safety management, human resource management, and legal consultation provided by our in-house legal department and third-party legal consultants in respective markets where keeping an in-house legal office would not be reasonable.


Due to our sales model which involves marketing our products in over 90 countries, including some in which our market shares are relatively high, we are exposed to the risk of compliance with the competition law. We have been observing closer control by the national competition protection offices. Any unwanted final result of such control could have a material effect on our operations and performance. Therefore, the Group has adopted a policy and operating instructions for conduct in compliance with the provisions of the competition law, which pertain to the entire Group.


Our business activities and operations, including manufacturing processes and end products, affect our environment. All our facilities hold the necessary environmental permits, depending on the type and scale of their operations, pollution and/or other environmental considerations. We perform all periodic environmental, health, and safety measurements, including monitoring of effluence, air emissions and noise levels, checking of waste production and hazardous substance storage, as well as legal regulation of working conditions etc. In addition, lowering of environmental, health and safety risks is a component of the Group's environmental, health and safety risk management systems, which are in compliance with the ISO 14001 standard, the European regulation EMAS, as well as the OHSAS 18001 standard.


Our operations are fully compliant with the currently effective environmental, health and safety laws and regulations (including fire safety). However, in the years ahead we should expect a continued move towards more stringent environmental requirements, as determined by local and/or international regulations that we shall have to comply with. In the period ahead, this can result in higher operating costs or require capital expenditure, while any failure to comply with the effective legislation could have a notable effect on the company's reputation and goodwill.


We operate subsidiaries or representative offices in over 30 countries. In other markets, our products are marketed by designated local distributors. Some of these countries are new business environments to us. With the expansion of our business activities to markets with which we are less familiar, we are increasingly exposed to the risk of changes in local legislation and regulations, as well as to political risks.


Due to centralization of the IT system and relocation of parts of infrastructure of our subsidiaries to the Velenje site (relocation of manufacturing operations from Sweden), we launched in 2014 the project of internal audit for all legislative commitments regarding the operation of Gorenje's IT system, which have to be complied with by the parent company and all subsidiaries. Provision of IT system compliance with the relevant legislation includes regular monitoring of IT system contents that is protected by law.


Information protection risks pertain to risks of maintaining confidentiality, availability, and comprehensiveness or completeness of information. As a recommendation for information security, the Group employs the ISO 27001 standard as a reference. In 2014, we amended the plan for uninterrupted operation, and extended and adopted the umbrella information security policy. For 2015, we are planning to develop the security policies for particular segments of information security management system.


Tax risks are related to correct interpretation of the tax legislation and the related correct and timely accounting and payment of charges; to potential changes in the tax legislation; implementation of tax legislation in day-to-day business processes; provision of relevant documentation etc. The fundamental measure for management of tax risks is consistent compliance with the provisions of the tax legislation. This measure is being implemented by monitoring the tax legislation and legal practice related to taxation; establishing adequate internal control mechanisms; regular cooperation between distinct departments and companies; cooperation in all stages of business activities; development of relevant documentation to support the adopted solutions etc. Reorganization of sales between the Group companies (inter-company operations) has increased the complexity of risk management with regard to value-added tax. This is managed by increased standardization of tax treatment of our transactions. In transactions with our subsidiaries, risks are managed by implementing a coordinated transfer pricing policy and development of relevant documentation.




Sales risks are related to competitiveness in sale of products and services in particular markets. Efficiency of the Group's sales strategies depends on numerous factors, most importantly the implementation of appropriate and effective marketing strategies. These include in particular the right choice of brands for our products and services, pricing mechanisms, and competitiveness with regard to product functionality and design.


Competitiveness of sales is also affected by the negotiating power of the industrial (OEM) customers and retail chains we work with, the quality of our products, recognition and power of the brands in respective markets, and the scope and quality of our after-sales activities.


We are facing powerful competition in all markets of our operations. In the last year, we have observed increased ownership concentration of our competitors, which has increased their competitive ability in the markets and boosted their negotiating power relative to the customers. Some of our competitors have more recognizable brands, broader consumer bases, and ampler financial and other sources they can use to improve their recognition in the markets, for marketing activities, and for launches of new and more competitive products in the markets. The risks related to competitors' activities aimed at increasing their market shares directly affect our operations and performance. In order to remain competitive and to maintain our market shares, we may have to increase our marketing expenses, boost marketing activities, or even adjust the pricing of our products. Although we believe we are currently competitive in the market, we cannot make any assurance that we will remain equally competitive in the future and that we will be able to maintain or even increase our market shares with the current scope of sales activities.


Our products and services are marketed in over 90 markets. However, concentration of sales, especially in European markets that have not seen any improvement or growth in the macroeconomic environment, is high. Therefore, we have adopted a strategic goal to increase our sales in the markets beyond Europe, i.e. markets with higher growth of demand for home appliances. Gradual growth of our sales in these markets, which we have attained in 2014 as well, mitigates our dependence on the highly competitive European environment.




Our competitiveness and performance also depends on our recognition and reputation, which pertains to our brands and to compliance at all levels of our operations. Decrease in the value of our own brands resulting from product recall, customer complaints, negative publicity, court proceedings, or other factors may have a negative impact on our performance. Moreover, reputation and goodwill risks are affected by most of the risks referred to in this chapter.


Therefore, particular attention is paid to compliance of our operations at all levels, suitable and proactive communication with all stakeholders of the Group, and transparent communication with the general public regarding the results of our operations, and significant events that affect our operations and performance.


We have specified a range of activities geared towards the attainment of the following goals pertaining to the improvement of our risk management process:

  • completion of the project of determining legislative compliance and IT system operation;
  • review and, if necessary, amendment of the risk catalogue (register);
  • expansion of the risk management process to all Group subsidiaries (process revision);
  • amendment of the uninterrupted operations process for all identified risks with regard to which a catastrophic effect was evaluated along with the probability status of low/ infrequent.



The current Management Board commenced its term of office on July 19, 2013. On April 28, 2014, the President and CEO Franjo Bobinac, and Management Board members Branko Apat, Peter Groznik, Marko Mrzel, and Drago Bahun, were joined by a new Management Board member Peter Kukovica.

President and CEO



Franjo Bobinac, President and CEO


Franjo Bobinac graduated in international economic relations at the Faculty of Economics, University of Ljubljana, in 1982. He completed his MBA studies at the École Supérieure de Commerce in Paris in 1997. He has international experience in various business fields, and he possesses in-depth theoretical and practical knowledge.


He started his career with a three-year stint at Emo Celje. In 1986, he joined Gorenje Commerce as assistant director of exports. In 1990, he was appointed director of exports at Gorenje Gospodinjski aparati (»Gorenje Home Appliances«); a year later, he took over as head of marketing. From 1993 to 1998 he was the managing director at Gorenje's sales subsidiary in Paris. After Gorenje's transformation into a public limited company in 1997, he became a member of the temporary Management Board; in 1998, he was appointed Management Board member in charge of sales and marketing. In 2003, he was started his first term as the President and CEO. On July 19, 2013, he commenced his third term as Gorenje President and CEO.


He is a member of the General Assembly of CECED (European Committee of Domestic Equipment Manufacturers); board member at the Slovenian Chamber of Commerce and Industry; Supervisory Board member at the IEDC Bled School of Management; member of the Governing Boards of the University of Ljubljana; member of the Board of Governors at the Research Institute Jožef Štefan; member of the Advisory Board at the Faculty of Economics, University of Ljubljana; and President of the Handball Association of Slovenia. He is also vice president of the Managers' Association of Slovenia, and he previously served a five-year term as the president of this Association. He is a Management Board member of the Summit of 100 business leaders of Southeastern Europe.


He occasionally lectures at the IEDC – Bled School of Management and at the Faculty of Economics of the University of Ljubljana. He is a visiting professor at the International Postgraduate School of the Jožef Štefan Institute.


He was awarded the decoration of Knight of the National Order of Merit of the Republic of France; he received the award of the Slovenian Chamber of Commerce and Industry for exceptional economic achievements in 2007; and the Janez Vajkard Valvasor medal for businessmen, presented by the Jožef Štefan International Postgraduate School.

  • He holds 4,096 Gorenje shares.

Branko Apat, Chief Operations Officer / Management Board member in charge of major appliance operations and heating equipment operations and sales


Branko Apat graduated at the Faculty of Economics in Maribor in 1984, majoring in international trade. In 1988 he completed his specialist studies at the Cleveland State University, Ohio, USA.


At Gorenje, he started out as a sales manager for products sourced from outside Gorenje's parent company. His next assignment was the head of exports to Middle East. In 1988, he became assistant director of exports for products other than white goods; moreover, he was in charge of marketing Gorenje products in South America. In 1990 he was appointed purchasing director; three years later, he was the marketing director. From 1999 until the end of 2009, he was managing director of Gorenje Tiki, a water heater manufacturing company. In 2003, he took over as executive director the coordination of Gorenje Group companies dealing with heating equipment, toolmaking, and machine building; as of 2006, he was also in charge of the complementary program.


In 2007 he was first appointed to the company Management Board in charge of complementary programmes, purchasing and logistics. As a Management Board member, his responsibilities as of 2009 included the entire Home Appliance Division, including sales. On January 1, 2012 he was appointed Management Board member in charge of major appliance operations and heating systems operations and sales. He continues to hold this position in the 2013–2018 Management Board term of office.

  • He holds 626 Gorenje shares.

Peter Groznik, PhD, Chief Finance Officer / Management Board member in charge of finance and economics


After graduating in economics at the Faculty of Economics in Ljubljana in 1996, he further pursued his academic career with a master's degree in the same discipline. He completed his master's studies at the Kelley School of Business, Indiana University, USA, and received his PhD in finance in 2003.


After completing his PhD, he launched his professional career as a consultant on financial regulation for the company Mobitel, followed by employment at various companies of KD skladi, where he was in charge of fund management from 2005 to 2009. In March 2009, he was appointed CEO of KD skladi, a position he held until September 2010.


Since 1996, he has been a lecturer for several courses at the Faculty of Economics in Ljubljana. He was also a lecturer and visiting professor at the Kelley School of Business and the International Graduate Business School in Zagreb.


He is a Supervisory Board member at Pivovarna Laško and NLB. He is the founder of the investment consultancy firm NorthGrant Consulting and a partner in the personal finance company BTP Indegra. His cooperation with Gorenje dates back to September 2011 when he was hired as an independent consultant for financial issues. He was first appointed Management Board on April 19, 2012.


Since 2005, he has held several positions in expert and strategic bodies of the Government of the Republic of Slovenia, including that of Chairman of the Strategic Council of Economic Development from 2007 to 2009.


He was also a Management Board at Pivovarna Union.


He has received several academic awards; he has taken part in many seminars and conferences at home and abroad; and he has published several articles in Slovenian and international expert journals.

  • He holds 7,140 Gorenje shares.

Marko Mrzel, Chief Sales and Marketing Officer / Management Board member in charge of sales and marketing


Marko Mrzel graduated in 1995 at the Technical Faculty of the University of Maribor, majoring in automation. He followed up his university studies with the MBA postgraduate program in Radovljica under the auspices of the Faculty of Economics in Ljubljana, and obtained his Master's degree in economics in 1999.


He started out his professional career at the Velenje Coal Mine, and then continued in the finance department of the Era trade company where he was soon promoted to head of wholesale. In 2001, he was hired by the Gorenje Group as head of complementary program at the parent company. Two years later he was assigned managing director of Gorenje's sales subsidiary in Belgrade.


He was first appointed Management Board member in March 2011 when he took over the position of CFO, i.e. Management Board member in charge of finance. On January 1, 2012, he was assigned to the position of CSMO, i.e. Management Board member in charge of Sales and Marketing. He continues to be in charge of this field in the Management Board's 2013–2018 term of office.

  • He holds 450 Gorenje shares.

Peter Kukovica, PhD, Management Board member in charge of supply chain management, logistics, quality, organization, and IT


After graduating at the Faculty of Mechanical Engineering, University of Ljubljana, in 1989, he followed up his studies with a post-graduate program at the Faculty of Economics in Ljubljana where he first earned title of management specialist, followed by the title Master of Business Policy and Organization. In 1998, he was awarded the PhD title in business administration and organization at the same school.


Throughout his business career, he performed a number of functions. After completing his undergraduate studies, he was a system analyst at Iskra Zorin/Mike software, d.o.o. Then, he was the director of a sector at Nissan Adria, and assistant director at Suzuki, Wolf, and partners. From 2001 to 2007, he was the assistant general manager in charge of strategic development and marketing at ACH. He then further pursued his career as deputy director at AMZS, d.d. In 2012, he was appointed president of Iskra Sistemi, after working as Management Board member, and later President and CEO, at Iskra MIS, d.d., from 2009 to 2012.


From 2003 to 2008, he was a lecturer at the Faculty of Economics in Ljubljana, and the head lecturer for the course Commercial operations and Introduction to Marketing II.


From mid-June 2013 until the start of his term of office in the Gorenje Management Board on April 28, 2014, he was the advisor to the President and CEO. His field of work included development of solutions for improvement in complexity and supply chain management, improvement of cost efficiency, and monitoring of accomplishment of strategic projects and goals.


He is the Supervisory Board Chairman at Nova KBM and a member of the Strategic Council for Internationalization at the Slovenian Chamber of Commerce and Industry.


He has also worked as the Supervisory Board member of Vzajemna (health insurance company), deputy Supervisory Board chairman at Pošta Slovenije (Slovenian postal service), Supervisory Board chairman at AMZS, d.d., president of the Slovenian Athletics Association, and president of the Sports Foundation.

  • He does not own any Gorenje shares.

Drago Bahun, Management Board member – labour director


Drago Bahun completed his studies of sociology (majoring in human resources) at the Faculty of Sociology, Political Sciences, and Journalism of the University in Ljubljana in 1979. This was followed by postgraduate studies of human resource management at the same school.


He started his career at the Mining and Energy Engineering State Combine in Velenje in 1979, where he headed the department of business system organisation until the end 1984. He has been employed at Gorenje since 1985 when he was hired as deputy chairman of the management committee of the composite organisation for the field of socio-economic relations. From 1987 to 1990 he was a Management Board member of Gorenje Gospodinjski aparati in charge of human resources; from 1990 to 1997, he was the director of human resources and general affairs.


After the company was restructured to a public limited company in 1997, he became a member of the temporary Management Board. In 1998, he was appointed Management Board member in charge of human resource management, and labour director. From 2003 to the end of 2011 he was the Management Board member in charge of human resources and organisation, and the labour director. Since January 1, 2012, he has been the Management Board – labour director. He continues to hold this position in the 2013–2018 Management Board term of office.


He has been active in various institutions and professional organisations (Slovenian Chamber of Commerce and Industry, Ministry of Labour, Employers' Association). He is a Supervisory Board member at the Credy bank, deputy chairman of the executive committee of the Skiing Association of Slovenia, and President of the organizational committee of the Planica ski jumping event.

  • He holds 9,082 Gorenje shares.




The Management Board is responsible for the development and compilation of the Annual Report of Gorenje, d.d., and the Gorenje Group, as well as the financial statements, in a manner that provides to the interested public a true and accurate account of the financial position and performance of the company and its subsidiaries in 2014.


The Management Board hereby confirms that the financial statements of Gorenje, d.d., and the Gorenje Group have been prepared pursuant to the relevant accounting policies; that the accounting estimates have been developed according to the principles of prudence and diligence of a good manager; and that the financial statements of the Company and the Group give a true and fair account of their financial position and performance in 2014.


The Management Board is also responsible for adequate and orderly accounting and the adoption of appropriate measures for safeguarding property and other assets. The Management Board confirms that the financial statements of Gorenje, d.d., and the Gorenje Group, complete with the accompanying notes and explanations, were prepared under the assumption of going concern and in compliance with applicable legislation and the International Financial Reporting Standards as adopted by the European Union.


The Management Board confirms that, to the best of its knowledge, the financial report has been prepared in compliance with the accounting reporting framework, and that it provides a true and fair account of the assets and liabilities, financial position, and profit or loss of the parent company and other companies included in the consolidation of the Gorenje Group. The Management Board also confirms that the Business Report delivers a fair account of the information on relevant transactions with related persons or parties, and that it complies with relevant legislation and International Financial Reporting Standards.


The President and CEO, and Management Board members are familiar with the contents of integral parts of the Annual Report of Gorenje, d.d., and the Gorenje Group for 2014, and thus also with their entire Annual Report. We approve the report and confirm such approval with our respective signatures.


Franc Bobinac, President and CEO


Peter Groznik, Management Board member


Marko Mrzel, Management Board member


Branko Apat, Management Board member


Peter Kukovica, Management Board member


Drago Bahun, Management Board member


The Supervisory Board started a new four-year term on July 20, 2014. At their session held on August 20, 2014, the Supervisory Board appointed the chairman and deputy chairmen of the Supervisory Board, as well as chairpeople and members of the Supervisory Board committees.


In addition to its rights and obligations specified by the relevant law, the Supervisory Board endeavours to conduct its work in a manner that surpasses the prescribed, recommended and agreed standards. It devotes its best efforts to ensuring that the highest standards of corporate governance are implemented at the Gorenje Group. A high degree of transparency of operations and proper communication with shareholders and other stakeholders are also recognised in our environment as being Gorenje's values. International composition of the Supervisory Board is particularly important in this respect as its members are able to directly apply their rich international experience in practice.


In addition to receiving regular reports on performance and operations and confirming the annual plan, the Supervisory Board continuously encouraged the Management Board to divest as soon as possible the companies of the portfolio investments segment and to focus on its core activity. Moreover, the Supervisory Board was presented in detail the planning and monitoring of investments at the Gorenje Group. The Supervisory Board also confirmed the Rules on membership of Gorenje, d.d., Management Board members, directors, and other officials in supervisory bodies beyond the Gorenje Group.


The Supervisory Board aims at constantly improving the corporate governance and welcomes the implementation of the Code of Conduct that was adopted at the end of 2011 and amended on April 24, 2014. This document is an important step in the improvement of the transparency of operations and governance. It allows every employee who has any doubts as to the compliance of operations with legislation of ethical standards to address either directly the Audit Committee or the secretary to the Management Board.


All Supervisory Board members meet the independence criterion as defined in the Corporate Governance Code for Public Limited Companies. The powers and obligations of the Supervisory Board members are the same for each member, the only difference being that some members are also members of respective Supervisory Board committees. These committees conduct their activities in accordance with the relevant law and the authorizations granted by the Supervisory Board.


The Supervisory Board is regularly involved in the development of the corporate governance policy which is constantly being upgraded and improved, also based on proposals submitted by its members. The Supervisory Board works transparently and efficiently.




At the 21st session, the Shareholders Assembly approved the increase of the number of Supervisory Board members representing capital from six to seven, thus increasing the total number of Supervisory Board members to eleven. Moreover, it appointed the capital representatives for the term from July 20, 2014, to July 20, 2018.


Following are the Supervisory Board members representing the interests of capital: 

  • Marko Voljč, chairman,
  • Bernard C. Pasquier, deputy chairman,
  • Uroš Slavinec, deputy chairman,
  • Bachtiar Djalil, member,
  • Keith Miles, FCA, member,
  • Toshibumi Tanimoto, member,
  • Corinna Claudia Graf, member.

The interests of the employees in the Supervisory Board are represented by the following members who were appointed for their four-year terms of office starting on July 20, 2014, by the Works Council:

  • Krešimir Martinjak, deputy chairman,
  • Peter Kobal, member,
  • Drago Krenker, member,
  • Jurij Slemenik, member.

Marko Voljč, Supervisory Board chairman


Marko Voljč graduated in economics at the Faculty of Economics in Ljubljana, and earned his Master of Science degree at the Faculty of Economics at the University of Belgrade.


He was an analyst/senior analyst at the National Bank of Slovenia from 1973 to 1976, and Head of the analytical department at the National Bank of Slovenia from 1976 to 1979. From 1979 to August 1992, he was employed at the World Bank in Washington, D.C. Having completed the advanced professionals' educational program by the International Monetary Fund in1978, he joined the World Bank's Young Professional Program in Washington in 1979. He was involved in the World Bank's industrial and financial projects in Latin America (1980-85), and served as a senior economist in the Bank's Industrial Strategy & Policy Division (1986). In 1987, he became the World Bank’s first head of its Mexico City Resident Mission where he served until 1990 when he was promoted to the post of Country Programs Central America and Panama Division, a position he held until August 1992. From September 1992 to January 2004, he was the President and Chief Executive Officer at Nova Ljubljanska Banka (NLB), Slovenia. From February 2004 to April 2006, he was the General Manager at the Central Europe Directorate at KBC Bank and Insurance Holding Company N.V. (now KBC Group N.V.), Belgium. From May 2006 to April 2010, he was the CEO at K&H Bank, Hungary; from May 2010 to December 2012, he was the CEO for Central and Eastern Europe and Russia at KBC Group. From January 1, 2013, to April 30, 2014, he was the CCO – Corporate Change & Support Officer – at KBC Group. From May 1, 2014, until December 31, 2014, he was the advisor to the Management Board of this company; until the end of 2014, he was also a member at several Supervisory Boards of KBC Group subsidiaries and boards of banks and insurance companies in the Central and Southeastern Europe.


During his business career, Marko Voljč has acquired a comprehensive knowledge and practical experience in Slovenian, Central and Eastern European as well international finance and banking. He has written a number of articles and papers concerning financial and industrial issues, about export development and promotion, on restructuring and privatization of public enterprises, as well as about restructuring, turn-around management and privatization of banks in Central and Eastern European transition and post-transition economies. Since 1996, Marko Voljč has served as the Honorary Consul of Mexico to Slovenia. In 1998 he became the Slovenian member of the Trilateral Commission. From September 2000 to September 2003, he was a board member at the Institute of International Finance in Washington, D.C. Between April 2001 and January 2004, he held the position of the President of the Managers’ Association of Slovenia. In his capacity as Director General Central Europe for KBC Group he sat on Supervisory boards of KBC’s banking subsidiaries in Poland, Hungary, and Czech Republic. He was also the Chairman of the Supervisory board of Gorenje, d.d., until July 2006.

  • He does not hold any Gorenje shares.
  • He is a member of the Corporate Governance Committee and the Human Resource and Remuneration Committee.

Bernard C. Pasquier, deputy Supervisory Board chairman


Bernard C. Pasquier has worked as a consultant since 2008. His portfolio of assignments includes advising the parliament of the Principality of Monaco on economic and financial issues, and the World Bank in connection with various projects linked to private sector development. He also represents the International Finance Corporation (IFC) in the Board of Directors of Banco Davivienda, Colombia, and Sogebank, Haiti. In February 2013 he was elected Member of the National Council of the Principality of Monaco. He is also Secretary General of the Monaco Méditerranée Foundation, Secretary General of the Club of Monaco, and Secretary General of I'Association des Monégasques de I'Etranger.


Bernard C. Pasquier obtained a university degree in business administration, majoring in finance and investment analysis at the École Supérieure de Commerce et d’Administration des Entreprises de Montpellier (France) in 1976. He received a Master's degree in public administration, majoring in business and economic development, from the John F. Kennedy School of Government, Harvard University (USA) in 1984.


From 2004 to 2007, he was the secretary general at the Compagnie Monégasque de Banque in Monaco. Before that, he was the director of the Latin America and Caribbean Isles Department at IFC in Washington from 2001 to 2004. He also held many other positions at IFC in the period from 1984 to 2001: Investment Officer via the Young Professional Programme (1984-1985), Principal Economist and Country Officer for the Africa region (1985 to 1990), Manager of the Africa Department (1990 to 1995), Senior Advisor in the Office of the President of the World Bank (1998 to 2001), and Director of the South Asia Department (2001 to 2004). He was a founder and Managing Director of the Dream Food International Company in San Francisco from 1980 to 1983, an Investment Analyst at the Chase Manhattan Bank in Rio de Janeiro from 1977 to 1980, and an Economic Consultant at the Finance Ministry in Rio de Janeiro in 1976 and 1977. In the period from 1998 to 2004 he was a member of the Management Board of SMBP, a private bank based in Monaco, whose shareholders were the banks Dexia and La Caixa de Barcelona.


He served as a Supervisory Board member at Gorenje, d.d., in the 2010–2014 term.

  • He does not hold any Gorenje shares.
  • He is the chairman of the Corporate Governance Committee, chairman of the Human Resource and Remuneration Committee, and a member of the Benchmark Committee.

Uroš Slavinec, deputy Supervisory Board chairman


He was the President and CEO of the company Helios Domžale, d.d., from June 1, 1990, to April 30, 2014 when he retired. He holds a BA degree in economics. He worked at Helios from the very beginning of his professional career. From 1975 to 1986, he held various top management positions, such as the head of planning and analyses department, management council member, and management council president. From 1986 to 1990 he was member of the Executive Council of the Assembly of the Republic of Slovenia for Industry and Civil Engineering.


He was also a member of the Assembly of the Slovenian Chamber of Commerce and Industry. In 1997, he received the Slovenian Chamber of Commerce and Industry Award for outstanding business achievements and in 2006, he was named Manager of the Year.


In the Gorenje, d.d., Supervisory Board 2010–2014 term he held the position of a Supervisory Board chairman.

  • He does not hold any Gorenje shares.
  • He is a member of the Human Resource and Remuneration Committee.

Bachtiar Djalil, Supervisory Board member


Bachtiar Djalil is the president of the management board at Kapitalska družba, d.d. After completing his undergraduate studies at the Faculty of Law in Ljubljana (1998), he continued his academic pursuits with the postgraduate program on European law at the University of Groningen, the Netherlands, where he was awarded the title Master of Laws in European Law.


His firs employment was at NLB in 1999, working in capital investment management. After completing his Master's studies, he was hired by the Competition Protection Office (CPO) of the Republic of Slovenia where he was also a CPO representative in the European Commission's Merger Task Force. In July 2002, he returned to Nova Ljubljanska banka where he worked in the Capital Investment Management and Supervision Sector. He participated in the founding of the company NLB Skladi, d.o.o.; in January 2004, he was appointed head of legal affairs office at this company. From July 2007 to his employment at the Kapitalska družba, he was a Management Board member at NLB Skladi, d.o.o. Table


Previously, he was also a supervisory board member at Modra zavarovalnica (an insurance company), member of the executive board with the Fund and Asset Management Association – Commercial Association (Združenje družb za upravljanje investicijskih skladov – GIZ), and a council member with the National University Library. He also took part in development of legislation on mergers and acquisitions and competition protection, and he was a member of parliamentary group task forces in charge of changes to asset management of the Republic of Slovenia, and bank restructuring. For a number of years, he has contributed to expert teams of the Fund and Asset Management Association in development of regulations on investment funds and asset management companies, taxation, and prevention of money laundering.


He is a supervisory board member at Loterija Slovenije, d.d., and a member of the arbitration tribunal with the Fund and Asset Management Association – Commercial Association (Združenje družb za upravljanje investicijskih skladov – GIZ).


He was first appointed Gorenje, d.d., Supervisory Board member on July 5, 2013.

  • He does not hold any Gorenje shares.
  • He is the Audit Committee Chairman.

Keith Miles, FCA, Supervisory Board member


Keith Charles Miles is a Fellow of the Institute of Chartered Accountants in England and Wales. He is in retirement. He holds Slovenian and British citizenship. He gained his working experience in various companies and enterprises, primarily in the areas of accounting, treasury, finance, and retail.


He worked for G. H. Fletcher & Co (Chartered Accountants), City of London from 1958 to 1970, latterly as a partner, in the Group Accounting Division of the P & O Group (transport activities) from 1970 to 1972, as an Assistant Company Secretary (group accounts) in the Grindlays Bank Group (banking) from 1972 to mid-1973, as Director of the Datnow Group (investments and retail) from mid-1973 to mid-1983, as Director of Finance and Administration at the Greater London Enterprise Board (investments/local administration) from mid-1983 to mid-1985, as Director of Finance and Administration at the Cable Authority (regulatory body) from mid-1985 to 1988, as Director of Finance and Administration at the Institute of Economic Affairs (academic institution) from 1988 to mid-1990, and as Company Secretary and Director of Finance of the Etam Group at ETAM PLC (a retail company) from mid-1990 to October 1998. He was also a non-executive director of a number of companies in England.


From July 2012 to September 2014, he was a Supervisory Board member at NKBM. He is a trustee of the British-Slovene Society and gives lectures on the topics of retail, finance, economics and business, and contributes articles to various Slovenian newspapers.


He served as a Supervisory Board member at Gorenje, d.d., in the 2010–2014 term.

  • He does not hold any Gorenje shares.
  • He is the chairman of the Benchmark Committee and a member of the Human Resource and Remuneration Committee.

Toshibumi Tanimoto, Supervisory Board member


Toshibumi Tanimoto has been retired since September 2012. He spent his entire career at the Panasonic Corporation, previously Matsushita, a company also manufacturing home appliances. Through his career, he has amassed vast experience in the home appliance industry, especially sales and marketing in the European market. He graduated in 1975 business administration, majoring in international trade, at the Doshisha University, Kyoto, Japan.


From December 2009 to October 2012, he was the director of Marketing Management Development Training Center, Human Resources Development Company, at Panasonic Corporation, Japan. From January 1, 2004 to December 2009, he was the managing director at Panasonic Eastern Europe Handelsgesellschaft m.b.H. in Austria. From April 2002 to the end of 2003, he was the managing director at Panasonic Communication & Systems Europe, Panasonic Marketing Europe GmbH in Germany, a company dealing with sales and marketing of office automation equipment and AV systems for the European market. From April 1, 2002 to April 2002, he worked as managing director at Panasonic Polska Spolka Z.O.O., Poland. From November 1997 to April 2000, he was the managing director at Panasonic Hungary Ltd. in Hungary. From April 1994 to November 1997, he was a manager at the Planning Department, Corporate Management Division for Europe and Africa in Japan. From April 1988 to April 1994, he was the managing director at Panasonic Ireland Ltd. in Ireland. From 1985 to April 1988, he was a coordinator at the Africa Sales Department, Corporate Management Division for Europe and Africa, in Japan. From October 1980 to 1985, he was the chief representative at the Panasonic Nairobi Liaison Office in Kenya, responsible for marketing in the East African market. He started his career in 1975 when he joined the company Matsushita Electric Industrial Co. Ltd. in Japan to work in the sales and marketing department for European and African market.

  • He does not own any Gorenje shares.
  • He is a member of the Benchmark Committee.

Corinna Claudia Graf, Supervisory Board member


Corinna Claudia Graf has been a board member at Universal Consulting, S.L., Mallorca, Spain, a consulting firm focused on the service industry, since May 2012. She was a board member at the Spanish company Punta Portals, S.A., Mallorca, Spain, from November 2011 to November 2012; since November 2012, she has been the Chief Executive Officer of this company. The company is active in the service industry, operating a marina. Mrs Graf's responsibilities at this company involve negotiations with local and central government regarding administrative concession, operation of the marina, sale, purchase, and lease of moorings, premises, investment decisions etc., and responsibility for the marina's subsidiary Servirest S.A.U. (a restaurant chain with 5 outlets on the island of Mallorca). She has been a board member at the company Dextra Investments Ltd, Zug, Switzerland, since July 2009. This is a holding company with investments in different business activities and ventures. Since January 2012, she has also been a board member at Rano AG, Appenzell, Switzerland, a holding company with investments in different business activities and ventures.


She graduated in business administration at FHS, Hochschule für Wirschaft, Technik und Soziale Arbeit, St. Gallen, Switzerland.


From October 2005 to October 2012, she was the Vice President, Board Member, and Director for Corporate Strategy at the company Teka Industrial, S.A., Santander, Spain. The company is active in the home appliance industry. Her responsibilities included planning the Group's overall expansion strategy outside the Iberian Peninsula, developing the corporate business plan and industrial activities, investment decisions, establishment of transfer pricing policies, company purchasing processes (due diligence analysis, negotiations etc.), setting up of factories from green field, tutoring of small factories in expansion processes, supervision of all factories and implementation of internal international standards, negotiations with key suppliers, customers and competitors. From September 2001 to September 2002 she was the assistant director of small and medium enterprises at the company Secuoya Capital Privado, Banco Santander, S.A., Madrid, Spain, where her responsibilities involved identifying possible company purchases/takeover targets, company comparisons, company valuations, monitoring of existing participations etc. From January to August 2001, she was employed at the accounting department of the company Casa Buades, S.A., Mallorca, Spain.

  • She does not hold any Gorenje shares.
  • She is a member of the Benchmark Committee.

Krešimir Martinjak, deputy chairman of the Supervisory Board


He holds a university degree in law, and he is employed in Gorenje since 1986. He performed various tasks in the areas of labour, obligation and status or corporate law at the Legal Department of the Company for sixteen years. From 2002 to 2008, he was the chairman of the SKEI trade union of Gorenje, after which he returned to work at Gorenje's legal affairs office. 


He was first elected to the Gorenje, d.d., Supervisory Board in 2002.

  • He holds 115 Gorenje shares.
  • He is a member of the Corporate Governance Committee.

Peter Kobal, Supervisory Board member


He holds the position of assistant director of maintenance at Gorenje. He has been employed at Gorenje since 1971, and has held various maintenance positions, from maintenance technician to assistant director. By vocation, he is an electrical engineering technician. He is successful both in his profession and in the area of worker participation in management.


In 1997 he was first elected chairman of the Gorenje Works Council, and he has held the position ever since, currently serving his fourth term. He was appointed member of the Supervisor Board of Gorenje for the first time in 1998.

  • He holds 1,355 Gorenje shares.
  • He is a member of the Corporate Governance Committee and the Benchmark Committee. 

Drago Krenker, Supervisory Board member


He is the deputy director at Gorenje's cold and dishwashing appliance program. By vocation, he is a sales manager.


He began his career in the field of electronics in 1974. He worked for 14 years at the company Procesna Oprema within the Gorenje system, and two years at Iskra Delta, working primarily with medical electronic equipment. In 1989 he was hired at the refrigerator-freezer program where he worked as plant manager, production planning manager, production manager, and head of the general affairs department.


He is presently serving his fourth term in the Works Council, having served one term as its deputy chairman. He is the chairman of the Occupational Health and Safety Committee, currently in his second consecutive term. He was first elected Gorenje Supervisory Board member in 1998.

  • He does not hold any Gorenje shares.
  • He is a member of the Audit Committee and the Human Resource and Remuneration Committee.

Jurij Slemenik, Member of the Supervisory Board


A mechanical engineering technician by profession, he is currently head of production at the washing machine and dryer program. He has worked for Gorenje since 1978, holding various jobs at the washing machine and dryer program.


He has been a member of the Employee Council since 2002, when he was first elected to the Gorenje Supervisory Board.

  • He holds 2,038 Gorenje shares.
  • He is a Member of the Supervisory Board Remuneration Committee.



Audit Committee


The Audit Committee operates according to the authorizations specified by Article 280 of the Companies Act. The Audit Committee includes Bachtiar Djalil as chairman, members Keith Charles Miles and Drago Krenker, and Aleksander Igličar as an independent member. Mr Igličar is a senior lecturer of accounting and auditing at the Faculty of Economics in Ljubljana.


Benchmark Committee


The committee has the following members: Chairman Keith Charles Miles, members Bernard C. Pasquier, Corinna Claudia Graf, Toshibumi Tanimoto, and Peter Kobal, and Maja Makovec Brenčič as an independent member. Mrs. Makovec Brenčič is the vice chancellor at the University of Ljubljana and a full professor of international economics and business at the Faculty of Economics in Ljubljana.


The basic task of the Benchmark Committee is to identify the companies to which Gorenje Group will be compared, or against which it will be benchmarked. The Committee deals primarily with methodological issues and specifying the basic benchmarking criteria. When the selection is complete and methods and indicators are specified, the timeline of company activities will be defined to improve the strategic plan. The Committee works closely with the representatives of company management: President and CEO Franjo Bobinac, Management Board members Peter Kukovica and Marko Mrzel, executive director of brand management Aleksander Uranc, and executive regional director Klemen Prešeren.


Corporate Governance Committee


The Committee consists of chairman Bernard C. Pasquier and members Marko Voljč, Krešimir Martinjak, and Peter Kobal.


The task of the Corporate Governance Committee is to find the best possible way of organizing the Gorenje Group given its increasing international recognition and the need for flexibility in all areas of its business operations.


Human Resource/Remuneration Committee


The Committee consists of chairman Bernard C. Pasquier and members Uroš Slavinec, Keith Charles Miles, Marko Voljč, Jurij Slemenik, and Drago Krenker.


Powers of the Committee are specified in Appendix B.2 of the currently effective Corporate Governance Code (the LJSE Code).




President and CEO, and Management Board members signed new employment contracts for the term of office from July 19, 2013, to July 19, 2018. Their reward consists of a fixed and a variable part. The fixed part of their net salary is approximately 10% higher than the net salary they had been receiving from July 2008 on.


At the 37th session held on June 25, 2013, the Supervisory Board adopted the Management Board Performance Criteria. The criteria pertain to the variable part of the reward, and they include both quantitative and qualitative criteria. Performance criteria include sustainable development and non-financial criteria of relevance for generating long-term company value. Variable part of the reward may amount to no more than two thirds of the annual compensation of the President and CEO or respective Management Board member. In case of satisfactory results, the President and CEO and Management Board members shall be entitled to reward amounting to base salary multiplied by up to one; in case of successful results, salary bonus multiplier shall be one to three; in case of very successful results, it shall be four to eight. The quantitative part of the criteria pertains to new product development and innovation, business criteria, financial criteria, and criteria regarding the organization and human resource management. Quantitative criteria are defined by specific quantitative goals.


Considering the fact that Gorenje Group is organized as a corporate group and that Management Board members are also tasked with supervising the operations of Gorenje Group subsidiaries through their formal membership in the Supervisory Board of the holding company Gorenje Beteiligungs GmbH, Vienna, Gorenje Supervisory Board agreed that a part of their total compensation be paid out in the form of reward for their supervisory work at this holding company. President and CEO, and Management Board members, except for labour director Drago Bahun who is not involved in the supervision of subsidiaries, have been receiving since the start of their current term compensation for their work in the Supervisory Board of the company Gorenje Beteiligungs GmbH, Vienna. All taxes and contributions related to this compensation are duly paid, as disclosed in the Annual Report.


Pursuant to Supervisory Board resolution dated August 29, 2013 the President and CEO, and the Management Board members shall be entitled to the payment of session fees for supervision of the companies Gorenje Beteiligungs GmbH and Gorenje Nederland B.V.


Compensation and rewards paid out to Management Board members are fully detailed in the financial report, in the section Notes – Transactions with Related Parties.


The Company has not adopted a stock option remuneration plan.


For their work, the Supervisory board members are entitled to regular monthly payments, session attendance fees, training and the reimbursement of expenses for meeting attendance. These expenses are funded from the company's current operations. Payments to the Supervisory Board members are presented in the Financial Report in the section Notes – Transactions with Related Parties.




Pursuant to relevant laws and the Company rules and regulations, all recipients of internal information, i.e. members of the Management Board, Supervisory Board and the Audit Committee, are required to observe special rules for trading in Gorenje, d.d., shares, which are commonly referred to as »trading windows«. Such persons are not allowed to trade company shares thirty days prior to the announcement of periodical results or other information that could affect the price per share. In case of any other information that may affect the price per share, the restriction of trading shall be valid for the entire duration until such information has been made public. Secretary to the Management Board shall be responsible for compliance with the Rules and Regulations on Insider Information and for informing the relevant persons with regard to trading windows and trading restrictions.


As at December 31, 2014, Supervisory Board members held a total of 3,508 Gorenje, d.d., shares. Compared to the situation as at December 31, 2013, the number of shares did not change.


Total number of shares held by the Management Board members increased in 2014 relative to the year 2013, to a total of 21,394 as Management Board member Peter Groznik acquired on March 17, 2014, during an open trading window, 2,500 Gorenje, d.d., shares.


Gorenje share transactions by Management and Supervisory Board Members



Net acquisition in the year






Supervisory Board total





Marko Voljč1





Uroš Slavinec1,2





Bernard C. Pasquier1,2





Corinna Claudia Graf1





Keith C. Miles1,2





Toshibumi Tanimoto1





Bachtiar Djalil 1,2





Krešimir Martinjak1,2





Drago Krenker1,2





Jurij Slemenik1,2





Peter Kobal1,2





Maja Makovec Brenčič2





Marcel van Assen2






Management Board total





Franjo Bobinac





Drago Bahun





Peter Groznik





Marko Mrzel





Branko Apat





Peter Kukovica





1 Supervisory Board in the term from July 20, 2014, to July 20, 2018

2 Supervisory Board in the term from July 19, 2010, to July 19, 2014




External audit


The financial statements of the parent company and most subsidiaries for the 2014 fiscal year were audited by the auditing company Deloitte Revizija, d.o.o., which was appointed as the company auditor at the Gorenje Shareholders Assembly held on July 4, 2014.


Third-parry (external) auditors report their findings to the Management Board, Supervisory Board, and the Audit Committee of the Supervisory Board. The transactions of the parent company and the Gorenje Group with the company Deloitte Revizija, d.o.o., and the transactions of the Group companies with individual audit companies are presented in the Notes to the Financial Statements.


Internal audit


In 2014, we carried on our activities to improve the quality of internal auditing at the Group. In doing so, we worked with the Supervisory Board Audit Committee, independent auditor, risk management department, corporate security department, and other supervisory bodies or functions at the Group. Pursuant to the Internal Auditing Standard 1110, organizational independence of the internal audit department is periodically reviewed and confirmed.


The quality of internal audit is evaluated by implementing the quality improvement and strategic goal attainment program as defined in the department's strategy. Higher quality was attained with a greater share of consulting or advisory reports and higher rate of use of auditing tools. Working with the IT department, a tool was established that allows continuous auditing.


The program for improvement of internal audit involves regular internal and external audits/ reviews as we look to make sure the operations of internal audit meets the expectations of the Management Board and the Audit Committee. The most recent external audit took place in 2013 when compliance of internal audit at the Group was found to be compliance with the professional rules of the Institute of Slovenian Auditors, which is also evident from the entry on the list of Excellence in Internal Auditing Pursuant to the Internal Auditing Standard 1321, we can also confirm compliance with the International Standards for the Professional Practice of Internal Auditing.


Internal audits in 2014 were conducted as scheduled. Added value of internal audit was created through consulting and recommendations provided in the audit reports.


In order to increase the value added, we are developing in 2015 the basis for provision of comprehensiveness of all systems at the Group, and, as a part of these efforts, appropriate establishment and operation of an internal control system, which will allow comprehensive auditing. We also continue with our activities in consulting and continuous auditing, and monitoring of key controls. In addition to the auditing tools, we will start to use in 2015 the department activity management program, which will automate the numerous auxiliary activities of the department, and, as a result, allow us to devote more time to auditing.




The company Management Board and the Supervisory Board hereby declare that Gorenje, d.d., observes in its work and operations the Corporate Governance Code for Public Limited Companies as adopted on December 8, 2009, by the Ljubljana Stock Exchange, the Slovenian Director's Association, and the Managers' Association of Slovenia, available at the Ljubljana Stock Exchange website at www.ljse.si in Slovenian and English, with particular discrepancies or deviations disclosed and explained below:


The contents of the statement pertain to the period from the adoption of the previous Statement on the compliance with the Corporate Governance Code, i.e. from April 24, 2014, to April 22, 2015, when its contents were jointly drawn up and adopted by the Gorenje, d.d., Management Board and Supervisory Board.


Chapter: Company Management Framework


Recommendation 1:


The fundamental goals of the company are not specified in the Articles of Association; however, they are clearly specified in the company mission: »We create innovative, technologically superior products and services inspired by design, which bring simplicity to the lives of our users.«


Chapter: Relations with shareholders


Recommendation 5.8:


According to the current practice, the General Meeting of Shareholders votes on the discharge to the members of the Management Board and Supervisory Board simultaneously. This has been proven appropriate and consistent with the method of work employed so far, the high standards of cooperation of the two bodies in their joint response to issues of relevance for the Company and its development, the reasonable equal treatment of the duties and responsibilities of their members as stipulated by law, and the attained level of trust.


Chapter: Supervisory Board


Recommendation 8.4:


The Company devotes special care to protection of business secrets. The documents intended for the members of the Supervisory Board are discussed with absolute confidentiality. Materials and notices of meetings are primarily sent to the members of the Supervisory Board as a hard copy.


Recommendation 9:


The Supervisory Board assesses its work and the work of its committees as a whole; in addition, it assesses the work of individual members. Since the current Supervisory Board started its term of office on July 20, 2014, the Supervisory Board did not conduct self-assessment for the period from July 20, 2014, to the date of 2014 Annual Report approval. The Supervisory Board and its committees are generally in full attendance in their meetings; all members regularly participate in discussions and their responsibility, enthusiasm, and professional and other experience contribute to the quality of their work. Thus, the Supervisory Board finds that individual evaluation is not necessary.


Recommendation 13 (13.1–13.6):


The issue of founding Supervisory Board committees is regulated in the Supervisory Board Rules of Procedure as adopted by the Supervisory Board at the session on November 23, 2010. The Supervisory Board has an Audit Committee, a Corporate Governance Committee, a Benchmark Committee, and a Remuneration Committee. The Supervisory Board members assumed their terms of office on July 20, 2014, for a period of four years, and the term of the previous Nomination Committee expired on July 19, 2014; a new Nomination Committee has not yet been appointed by the Supervisory Board.


Chapter: Management Board:


Recommendation 16.3:


Recommendation on severance payments to the Management Board shall be observed and implemented to the greatest extent possible, except for the case of dismissal pursuant to Article 268, Paragraph 2, Section 4 of the Companies Act.




Best Practices for WSE Listed Companies are a set of corporate governance rules that apply to companies listed on the Warsaw Stock Exchange. The purpose of the Best Practices for WSE Listed Companies is to improve transparency of WSE-listed companies, to improve communication between companies and investors, and to protect the rights of shareholders, including the rights not regulated by law, without imposing unnecessary burden on the WSE-listed companies to an extent when such burden would exceed the benefits resulting from market requirements.


The Management Board and the Supervisory Board hereby declare that Gorenje, d.d., complies with the Best Practices for WSE Listed Companies in its work and operations, with particular discrepancies or deviations disclosed and explained hereinafter:


The contents of the statement pertain to the period from the adoption of the previous Statement on the compliance with the Best Practices for WSE Listed Companies, i.e. from April 24, 2014, to April 22, 2015, when its contents were jointly drawn up and adopted by the Gorenje, d.d., Management Board and Supervisory Board.

  • Recommendation 5: in part which refers to the Company adopting rules defining the remuneration policy for the Supervisory Board members:
  • The Company has not adopted rules for defining the remuneration of the members of the Supervisory Board. According to the Articles of Association and the Shareholders Assembly Rules or Procedure, the Shareholders Assembly shall be entitled to set forth the remuneration of the members of the Supervisory Board upon their sole discretion. The Management Board does not have any influence on the decisions of the Shareholders Assembly regarding the remuneration of the Supervisory Board members.
  • PRecommendation 9: in part which refers to the Company ensuring that there is a balanced proportion of women and men holding managerial and supervisory positions.
  • The Company has not adopted any document that would formally ensure a balanced proportion of men and women in the Management Board and Supervisory Board. The Management Board consists of six members, all of whom are men. In the eleven-member Supervisory Board, Corinna Claudia Graf is the only female. The Management Board does not have any influence on the decisions on the bodies of the company adopting the decision on the composition of the Management Board and the Supervisory Board.
  • Best practice II.1, item 9a) stating that a public company should publish, on its website, a recording of the Shareholders Assembly in audio or video format.
  • Record of the Shareholders Assembly is available in writing and it is published on the Company website in accordance with the requirements of the Slovenian Companies Act. Neither of the above mentioned acts nor the Corporate Governance Code (the LJSE Code) or the Rules of Procedure of the Shareholders Assembly require the Company to record the Shareholders Meeting in any other form than in writing; therefore, the company does not publish such recordings in audio and/or video format.
  • Best practice IV.1: allowing the presence of the members of the press (media representatives) at Shareholders Assemblies.
  • According to the Shareholders Assembly Rules of Procedure, only shareholders (and their representatives or proxies) and members of the Management Board and Supervisory Board may be present at the Shareholders Assemblies. This is due to the fact that during the Shareholders Assembly sessions, discussions on matters that are classified as company's business or professional secret may take place, which the company is not willing to share with the general public.
  • Best practice IV. 7 regarding the conditional dividend payment does not apply to the company due to the fact that under the Slovenian Companies Act, the Shareholders Assembly may not vote on or adopt decisions on conditional dividend payment.
  • Best practice IV. 8 regarding the minimum possible nominal value of the shares following the share split does not apply to the company due to the fact that company shares are no par value shares.



The Shareholders Assembly is the highest body of corporate governance at the company. It consists of shareholders who vote and adopt resolutions on all issues specified by law, the most important being the appropriation of accumulated profit (allocation of distributable profit) and statutory issues. The Management Board convenes the Shareholders Assembly at least once per year. The Assembly session takes place in Velenje at the company headquarters. All shareholders have equal voting rights as all shares of the company are of the same class and each share bears the right to one vote. Treasury shares (or own shares) are an exception in this respect as they do not bear voting rights pursuant to the relevant law. Fifty to sixty percent of the capital is usually normally represented at Shareholders Assembly sessions.


Shareholders may participate in the Shareholders Assembly sessions directly or indirectly by selecting one of the proposed proxies who collect shareholder authorizations in accordance with the law. The option of indirect participation in Shareholders Assemblies, which the Company has been providing for several years now, is in particular to encourage minority shareholders to exercise their voting rights. Due to relatively low equity interest, direct attendance is usually not economically viable for them (especially for those living abroad). Indirect participation at the Shareholders Assembly provides them, in addition to the option to vote, improved access to information about the convocation of the Assembly and the decisions or resolutions to be adopted there.


Proposed resolutions and explanations thereof, as well as information on the resolutions adopted by the Shareholders Assembly, are announced pursuant to the Rules and Regulations of the Ljubljana Stock Exchange on the LJSE website (http:// seonet.ljse.si/, at the Warsaw Stock Exchange website (www.gpw.pl)), and on the Gorenje Group corporate website (http://www.gorenjegroup.com). Moreover, information on Shareholders Assembly convocation and resolutions are announced in the Delo daily newspaper (http://www.delo.si/). Such communication ensures equal treatment and information to all shareholders and the interested public. 


Official language of the Shareholders Assembly is Slovenian. Simultaneous translation into English and from English to Slovenian is also provided to allow international shareholders who do not speak Slovenian to take part in and follow the Shareholders Assembly sessions.


Shareholders Assembly sessions are closed to the public and only the shareholders present are aware of the entire contents and the course of the meetings. After the Assembly session, the adopted resolutions are publicly announced and any other events at the session are explained as required in a press release or a public announcement.


New Supervisory Board with an expanded membership approved at the Shareholders Assembly in 2014


At the 21st Shareholders Assembly held on July 4, 2014, the shareholders approved the proposal by the Management Board and Supervisory Board to increase the number of Supervisory Board members representing capital from six to seven and thereby to increase the total number of Supervisory Board members from ten to eleven. In the last four years, the company has become even more international in its operations. Moreover, new international investors entered the ownership structure, increasing its share capital by good 57%. Supervisory Board members representing capital in the new term are Corinna Claudia Graf, Toshibumi Tanimoto, and Marko Voljč as newly appointed members, and Bachtiar Djalil, Keith Charles Miles, Bernard Pasquier, and Uroš Slavinec who were reappointed as Supervisory Board members after they had served as Supervisory Board members in its preceding term from 2010 to 2014.


The shareholders were also informed about the four employee representatives in the Supervisory Board, previously elected by the Works Council. Peter Kobal, Jurij Slemenik, Drago Krenker, and Krešimir Martinjak had already been Supervisory Board members in the preceding term from 2010 to 2014.


In addition to Gorenje Group performance in 2013, the President and CEO Franjo Bobinac also presented to the shareholders the 2014 business plan and the results of the first quarter of 2014. The shareholders then granted discharge to the company Management Board and Supervisory Board for the 2013 fiscal year. Furthermore, they supported the proposal that the distributable profit in the amount of EUR 1.36 million remain unallocated and that no dividend be paid out as the company's result for the 2013 fiscal year was a loss.


Deloitte Revizija, d.o.o., was confirmed by the shareholders as the company auditor for 2014.


No challenging action was announced at the Assembly.


The next Shareholders Assembly will be held on July 3, 2015.


Our fundamental principle in investor relations is equal treatment of all existing shareholders and prospective investors. We look to provide all relevant information about the Group to all shareholders, prospective investors, and the financial community in a timely manner.


All regulated and price-sensitive information is announced in Slovenian and English in the Ljubljana Stock Exchange electronic information dissemination system SEOnet (www.ljse. si), the ESPI system of the Warsaw Stock Exchange (www.gpw.pl), and on our corporate website at www.gorenjegroup.com. Since autumn 2014, our public announcements of quarterly results have also been provided in Polish in order to facilitate communication with the public in Poland. Some information like convocation of the Shareholders Assembly and announcement of the Shareholders Assembly resolutions are, pursuant to Gorenje, d.d., Articles of Association and Rules of Procedure for the Shareholders Assembly, also announced in the Slovenian daily paper Delo.


Public announcements are sent to international press agencies, the media, investors, and analysts via electronic mail distribution system which currently includes 185 international and 125 domestic recipients. Investors and other representatives of the financial community may subscribe to our electronic news feed (e-news).


We also take part in investor meetings that we find the most important for us. In 2014, we held meetings in Ljubljana, Maribor, Zagreb, Stegersbach, Romanian resort of Mamaia, Vienna, and several times in Warsaw. We addressed nearly 200 institutional investors at eight conferences. Before the third capital increase, we held the so-called pre-transaction road show that involved 30 meetings in Maribor, Ljubljana, Zagreb, Warsaw, and Vienna.


Especially after the announcement of our quarterly results, we held 10 conference calls. Upon the announcement of our semi-annual results, we also held a webcast to present our performance. We continued our silent period policy, which means that no meetings with members of the press, investors, or pundits, are organized and no information is disclosed that could hint at our results in the period of fifteen days prior to public announcement of quarterly reports.


We are available by e-mail and telephone for any questions of investors, analysts, and other members of the financial community. All questions are accepted by Mrs Bojana Rojc who is responsible for investor relations. Her contact information can be found on the corporate website at www.gorenjegroup.com.

Third capital increase completed in 2014

Pursuant to the resolution adopted at the 20th Shareholders Assembly on August 23, 2013, on the issue of up to 2,320,186 new ordinary freely transferable registered no par value shares in exchange for in-kind contributions, we successfully completed by the end of July 2014 the third capital increase. Only financial institutions who were our creditors as at the day of the 20th Shareholders Assembly were entitled to take part in this offering. International Finance Corporation subscribed and paid up 1,005,020 new shares, and Gorenjska banka subscribed and paid up 1,315,166 shares. The new shares were issued at the same price as the shares in the first two capital increases that took place in 2013, i.e. at EUR 4.31 per share. After acquiring the shares, Gorenjska banka offered them to third-party investors.


After the third capital increase, the share capital of Gorenje, d.d., was increased entirely from authorized capital to amount to a total of EUR 101,922,103.97. It is divided into 24,424,613 ordinary freely transferable registered shares.


Gorenje share at the Ljubljana and Warsaw Stock Exchange


The year 2014 was another year of growth for the Ljubljana Stock Exchange1. The SBI TOP index, which also includes the Gorenje share, wrapped up the year with a positive result, and the increase of share prices and capital increases have also increased the market capitalization. It should especially be noted that the total stock market trading volume increased by 75.2% relative to 2013. Eight new bonds were newly listed on the stock exchange in 2014, with a total face value of EUR 3,671.8 million. Moreover, 6 capital increases were carried out for a total of EUR 214.5 million, along with 5 issues of commercial paper with a total value of EUR 190 million.


The closing price per Gorenje share at the Ljubljana Stock Exchange as the exchange of its primary listing (code GRVG) on the last trading day in December 2014 was EUR 5.62, which is 33.8% more than as at the last trading day in 2013 (EUR 4.20); the SBI TOP listing index rose by 19.6% in the same period. The closing rate at the Warsaw Stock Exchange (code GRV) rose by 42.5% relative to the end of 2013 when the share was only listed, from PLN 16.71 (EUR 4.31) to PLN 23.82 (EUR 5.58).


Total trading volume with Gorenje shares at the Ljubljana and Warsaw Stock Exchange combined was 5,039,393 shares. Average daily trading volume was 18,691 shares per day at the Ljubljana Stock Exchange, and 1,560 shares per day at the Warsaw Stock Exchange.


1 Source: Ljubljana Stock Exchange, d. d.


GRVG price per share and daily trading volume at the Ljubljana Stock Exchange in 2014

GRV price per share and daily trading volume at the Warsaw Stock Exchange in 2014



Basic and diluted earnings per share calculated as the ratio between profit or loss of the parent company and the average number of shares outstanding minus the average number of treasury shares held by the company (22,949,860 shares) amounted to EUR 0.04 (EUR -1.51 for 2013).


Share book value


Book value of Gorenje share as at December 31, 2014 amounted to EUR 15.65 (EUR 17.32 as at December 31, 2013). It is calculated as the ratio between book value of the Group's ordinary share capital and the number of shares issued minus the number of treasury shares as at the last day of the year (24,303,302 shares).


The ratio between market and book value per Gorenje share amounts to 0.36 (0.24 as at December 31, 2013).




In the period 2014–2018, the dividend policy of the Gorenje Group and its parent company Gorenje, d.d., remains the same as before the strategic plan update. The goal is to allocate up to one third of Gorenje Group's profit for dividend each year. Due to the economic crisis which has had a strong impact on our operations and performance since the last quarter of 2008, no dividend was paid out for the years 2008, 2009, 2010, 2012, and 2013. In 2011, dividend amounted to EUR 0.15 gross per share.




As at December 31, 2014, there were 17,000 shareholders entered in the share register, which is 2.5 percent less than at the end of 2013 (17,438).


As laid down by the company Articles of Association, one share bears the right to one vote; treasury shares do not bear voting rights.


Treasury shares


The number of treasury shares relative to the last day of 2013 remained the same at 121,311 shares, which represented 0.4967 percent of total share capital as at December 31, 2014.


Ten largest Gorenje shareholders


Ten largest shareholders

Number of shares

(Dec 31, 2013)

in %

Number of shares



in %





















NFD 1, mešani fleksibilni podsklad – Jug / Alpen.SI, mešani fleksibilni podsklad




















INGOR, d.o.o., & co. k.d.




















Total major shareholders





Other shareholders










2The KDPW fiduciary account includes shares that were subscribed and paid up in Poland in the second equity offering.

Shareholder composition as at December 31, 2014, by countries 

*Shares paid up in the capital increase (equity offering) in Poland in 2013.


Ownership structure as at December 31, 2013

Ownership structure as at December 31, 2014


Responsibility towards the employees

Number of Employees


In 2014, we continued to optimize the number of our employees. We had an average of 10,468 employees, which is 171 less than in 2013. The number of employees was lower especially on account of lower number of employees at the Swedish company Asko Appliances AB from which we transferred a part of our manufacturing operations to Slovenia, keeping in Sweden only a smaller team of employees in charge of dishwasher development, sales, and marketing. In addition, lower number of employees is partly a result of a decrease in the number of employees at the parent company. After restructuring of our sales network in the years 2013 and 2014, we decreased the number of employees at some of our sales companies (in Turkey, France, Slovakia, Czech Republic, Scandinavia, and USA).


In the business segment Portfolio Investments, the number of employees rose due to the expansion of ecology and toolmaking activities to Serbia.


Number of employees by segments and countries on the last day of the year, and average number of employees


Dec 31, 2013

Dec 31, 2014






Gorenje Group










Portfolio investments





Employees in Slovenia





Employees abroad





By countries















Czech Republic

























Other countries (28 countries)





EU countries





Former Yugoslav countries





Average number of employees







In 2014, we continued our policy of selective hiring, scholarships, and part-time studies. This way, we provide highly competent employees for jobs in in new product development, implementation of new advanced technologies, sales, and other areas. By providing scholarships for talented students, we maintain a constant influx of employees especially with technical skills and knowledge, which have been in short supply in recent years. In the last year, we have noticed a larger number of candidates with technical background seeking employment, especially due to the problems or even termination of a large number of enterprises as a result of the crisis. Considering our planned expansion of development competence centres, this is the type of candidates that we currently need. Indeed, our development team has been beefed up considerably in the last two years. Depending on the needs of our operations, we were also hiring in other fields in 2014, primarily sourcing the candidates from within the Group. Most of the requirements for new hirings resulted from departures of other employees, while a part can also be ascribed to increased workload in some areas.


Parent company employees can create their vocational profile on the internal Gorenje Portal to present their skills, knowledge, and professional ambition. Thus, we have access to up-to-date human resource information that allows us to search more efficiently for the most suitable candidates for a particular job or position, while the employees also have better odds of landing a job or position that they find interesting.


New employees in more demanding positions, who lack experience, are included in the socalled induction programs to make sure they obtain, under expert leadership of their mentors, all information they need in order to fit into the new working environment as soon as possible.


Employee monitoring and leadership


Analyzing employee competences, evaluating goal accomplishment, setting new goals, and continuous monitoring and support by the leader in the pursuit of the activities laid down for each employee are the cornerstones of the performance management process at the Gorenje Group. Accordingly, we extended and upgraded in 2013 the contents of the annual interviews and launched leader training for conducting the annual interviews. We carried out 16 workshops and organized for over 280 leaders at companies in Slovenia and over 60 leaders from manufacturing companies in Serbia one-day training for conducting the annual interviews. We presented the process of assuring work performance and annual interviews as a key tool in the process. At the training, the leaders devoted the majority of their time to breakdown and setting of measurable or quantifiable goals. Some wanted to take part in the training for coaching skills to support efficient management of annual interviews with their co-workers. We provided comprehensive support to efficient execution of the process by preparing the forms, instructions, and questionnaires.


In 2014, more than 7,000, out of the total of 10,500 employees, held their annual interviews with their leader. Thus, we consolidated the importance of the annual interview as an important leadership tool. The annual interview is the basis for performance evaluation or appraisal, goal setting, development planning, training, and career path of our employees. Through the annual interview, we communicated the strategic goals to each individual and specified the behaviours stemming from our values and which are of relevance for the attainment of our goals.


We have developed and introduced a fundamental competence model that involves behaviour we are looking to encourage from all employees and which lead to better corporate performance. We are looking to promote cooperation and constructive communication, creative problem-solving, quality and responsible attitude to work, and efficient organization and execution of the goals and tasks specified. We have also developed a competence model for the leaders, which includes descriptions of conduct that promotes and consolidates Gorenje Group values and the work of the leaders in a way that leads to goal-orientation, care for development of co-workers, careful planning and decision-making, development of business relations, and cooperation.


Response to the revised annual interview process was good. Employees recognized the annual interviews as opportunities for an open and straightforward conversation about their past performance and for setting clear guidelines for their work in the future.


In addition to the annual interviews, also reviewed in 2014 in systematically prepared interviews with top management and in human resource councils all key employees, their performance and development potential, and assigned potential successors and examined their career paths. The purpose of such planned review of key employees is to specify the most suitable career path based on relevant information about the candidate at hand and strategic needs of the Group, and to define together with the candidate his or her development activities.


Education and training


We allow different forms of training and education for our employees. The employees are encouraged to acquire and transfer knowledge within the company, to develop skills and competencies, and to acquire experience in order to be able to adapt more quickly to the changes. In 2014, more than 270,000 hours were devoted to employee training and education, while in 2013, this figure was around 200,000. Thus, the average training and education hours per employee increased from 18.6 in 2013 to 24.15 in 2014.




Gorenje Corporate University is a new way of acquiring and pooling knowledge, connecting different business cultures, and consolidating the common corporate identity. It is intended to advance intellectual capital, productivity, competitiveness, and business excellence of the Group and it is a key generator of employee development.


The Corporate University consists of training programs at three levels. Gorenje Executive Business Academy is intended for the Group's top management; talented and key employees are included in the Gorenje Academy of Management which has a tradition dating back 25 years; in 2013, the first generation graduated from the new training program called Gorenje International Business Academy, intended for employees at associated companies and subsidiaries both abroad and in Slovenia and focused on international business. All three programs involve cooperation with lecturers and international experts on particular business fields, with the business school IEDC Bled, and with the Faculty of Economics in Ljubljana.


In 2014, we carried out the 25th Gorenje Academy of Management Twenty-five participants of the program from companies in Slovenia and manufacturing companies in Serbia acquired new skills and knowledge in five modules focusing on business planning, finance, accounting and controlling, sales and marketing, human resource management, business processes and project management. They were also presented the Group's strategic policies and they development their skills of entrepreneurship, management by objectives, business negotiations, and coaching. Program participants then developed business plans to be presented at the final event in 2015.


In 2014, the Gorenje International Business Academy program was completed by the first generation of 19 participants who presented to the top management some current business cases and practical examples of consulting and search for solutions for boosting the performance of individuals, teams, and companies. In 2015, we shall launch the training of the second generation of this program.


As a part of the corporate university, we organized a lecture by an internationally renowned expert on collaborative innovation, Charles Snow, for the top management and key experts.


In 2015, we shall launch a new training program called Gorenje Create Academy, intended for the employees in the process of new product development (marketing, sales, purchasing, R&D, manufacturing, design, quality management, product management, brand management), to allow them to acquire the latest skills and knowledge in business modelling, new product development, marketing, project management etc. The Academy will include 25 participants. The training program will be provided by the University of Ljubljana, as well as two reputable international universities: Chalmers University of Technology, Sweden, and Delft University of Technology, the Netherlands.




As much as 81% of total hours devoted to training and education are allocated to expert training.


In order to improve the flexibility of production and its processes and speed up the implementation of the lean manufacturing system to all our plants, we carried out in 2014 at all manufacturing companies the so-called School of Lean Manufacturing and various other training sessions on lean manufacturing.


We also revised the program of the expatriate academy. The program includes knowledge, experience, and skills in the fields of development, technology, production and organization, quality assurance, logistics, marketing and sales, finance, controlling, IT, environment protection, property security, and strategic policies in resource management. The second academy will take place in 2015 when the contents of the School of Successful Leadership for master assemblers are upgraded and its advanced program is carried out in Velenje and Valjevo.


We carried out teamwork skill training, efficient time management training, and stress management training for leadership groups in respective business fields. Some leaders also acquired financial skills in internally organized training on this subject. Employees from the field of human resources presented to the leaders the respective areas of human resource management policy.


During the year, we also held language courses, IT and computer science courses, courses on quality assurance for products, processes, and services, communication training, efficiency training etc. We carried on the online training and education which has been in place for 8 years. The number of participants on the e-training web portal is increasing as contents are available to all users of the Gorenje IT system. Since the number of users from our international operations is increasing, contents is also created in English and Serbian.


Encouraging innovation


For a number of years, we have been encouraging innovation among our employees with the system of »Sparks« (»Iskrice«), the purpose of which is to collect, review, and reward innovative useful suggestions provided by employees regarding our products, work processes, and work conditions. The system is well-established and it draws many employees in Slovenia and at manufacturing companies abroad. In 2014, our employees submitted more than 6,000 proposals recognized as »sparks«.


In 2014, we also carried out our internal campaign »I Stand behind our Values« by which we were looking to encourage reflection on the Group's corporate values, focusing especially on the two core values of responsibility and innovation.


Social dialogue


Social dialogue is a continuous process of cooperation, agreements for changes, and establishment of trust between the trade union, the employees, and the employer. Major steps have been taken in the past in the field of social dialogue; in 2013, the negotiations were intensified and in 2014 they were carried on. The social dialogue team holds regular meetings to exchange and compare positions and opinions, arguments, and expectations of both sides – the employer's and that of the employees.


Moreover, the employees are informed via a number of internal media vehicles (newsletters in several languages, multilingual internal Gorenje Portal) and Works Council sessions about the events in the Group. Several times a year, we also hold regular employee conventions to present to our employees the key information about our operations and performance.


Average age


We are facing an increase in the average age of our employees with rose by 8 months at the Group level relative to 2013, reaching just over 42 years at the end of 2014. In the last year, average age also increased relative to the year before because there was little hiring of new younger employees, and the number of younger employees at the manufacturing company in Valjevo was decreased; moreover, there were few retirements of our older employees. At manufacturing companies, especially in Velenje and Šoštanj, higher average age is problematic with regard to physically more demanding work which leads to higher health-related absenteeism and higher number of employees with the status of a person with disability. These are also two factors that negatively affect the organization of the manufacturing process and productivity. A number of health promotion activities are designed to encourage every individual to care for her or his physical and mental health. These activities are presented in the section on occupational health and safety.


Care for occupational health and safety


We mitigate the risks in workplaces by introducing new safety concepts. Our activities are geared towards prevention and encouraging a healthy lifestyle of our employees. We have improved the working environment in production with ergonomic workplace design. The Group provides regular theoretical and practical training that reduces the possibility of injury among the employees and improves workplace awareness, periodical and preventive medical examinations, working equipment checks and tests, and measurements of microclimate working conditions and any harmful effects in the workplace. We also regularly conduct training for preventive measures in fire safety, fire extinguishing, rescue, and evacuation.


Most companies in the Group have obtained the OHSAS 18001 certificate for occupational health and safety system. We have adopted the Rules of Procedure for Environment Management and Occupational Health and Safety which is binding for all employees. The duties and responsibilities of responsible persons and employees in occupational safety and health are laid down in the Rules and Regulations on Obligations and Responsibilities for Provision of Safe and Healthy Work.


Regular check-ups of workplaces, control of use of the mandatory personal protective equipment, and danger notifications in the workplace also play an important role in prevention of work accidents. Most work accidents and incidents are still related to cuts and piercing wounds to the hands caused by sheet metal. Therefore, we seek to implement better and safer personal protective equipment pursuant to the relevant standards and legislation. Also contributing to better workplace safety and improvement of working conditions are the employees as their practical proposals put forward within the »Iskrice« (»Sparks«) system often pertain to this field.


In 2014, we succeeded in reducing notably the number of workplace accidents from 125 in 2013 to 89 in 2014. Moreover, the frequency of incidents or accidents relative to the number of hours of work also decreased with one occurring every 16,200 working hours, compared to one incident or accident per 10,852 working hours in 2010. There were no major accidents in 2014 as the ones that did occur mostly involved cuts and contusions.


Caring for safe and healthy work, we carried on in 2014 our project Health(y) for Success, which was aimed at raising the awareness about the importance of a healthy lifestyle, using a number of activities (we issued a motivational brochure with useful instructions for the employees, held health promotion lectures and workshops and lectures on work-related stress management etc.).


We declared 2015 a year of occupational safety and health. We are conducting a number of activities to boost the awareness of the importance of a healthy working environment and care for health which is the greatest human value. We also adopted clear goals that we are looking to attain with our activities.


Goals of the project Year of Occupational Safety and Health:

  • decrease the number of accidents and dangerous incidents;
  • cut costs of health-related absenteeism;
  • improve organization of work and safety of working environment;
  • improve awareness of our own responsibility for safe and healthy work among the employees; and
  • promote a healthy lifestyle and spread the knowledge on safe and healthy work.

Organized exercise is also very important for employee awareness about a healthy lifestyle. Our in-house sports society has a tradition of many years. It organizes a variety of sports activities for the employees and their family members.

Responsibility to natural environment

Pursuit of the environment protection policy has resulted in a decrease of our effects on the environment and in a certified environmental management system pursuant to the ISO 14001 standard in all locations where home appliances are manufactured. Manufacturing plants in Slovenia are included in the EMAS system which represents an even higher level of corporate responsibility to the environment. In 2014, we completed the activities for implementation of the EMAS system at our manufacturing plant in Valjevo, Serbia.




Pursuant to our environment protection policy, long-term and annual goals are specified for each manufacturing plant, which mostly pertain to reduction of waste generation, and consumption of water and energy. Our companies have all required environmental permits. They are regularly controlled by the national inspectorates and their operations are compliant with the environmental legislation.


Water consumption is being reduced by implementation of technological lines and water-saving rinsing, keeping water consumption records, systematic water consumption monitoring within the 20 keys system, and employee training and awareness promotion. Water consumption is monitored with counters located at the entry to the company and at particular manufacturing lines.


Following is the information on water consumption, calculated per product unit in each manufacturing plants; these, however, may differ from each other due to different technological procedures.


Water consumption at Gorenje, d.d., Velenje, Slovenia











 Water consumption m3/unit











Water consumption at Gorenje, d.o.o.,Valjevo, Serbia







Water consumption m3/unit






Water consumption at Mora Moravia, Czech Republic








Water consumption m3/unit







Electricity consumption at Gorenje, d.d., Velenje, Slovenia







Power consumption







Electricity consumption at Gorenje Valjevo, Serbia





Power consumption






Electricity consumption at Mora Moravia, Czech Republic






Power consumption








A key trend in the home appliance industry, which also steers our development activities, is efficient use of power. In terms of the share of appliances in the top energy efficiency classes, we are ahead of the market as 25% of all our major home appliances sold in Europe already boast the A+++ rating, while the average share for the industry is at 14%. In some categories, our advantage relative to the industry average is even higher. Thus, washing machines in the A+++ energy class account for 63% of our European sales (compared to 33% for the industry), and dryers in the A++ account for 31% of our total sales (22% for the industry).

Responsibilty to users of our products



Quality and reliability of our appliances are based on a well though-out system that starts years before the product is actually offered at the stores. Development of new technologies, materials, and technical solutions is a lengthy process involving our engineers and a number of specialists in the industry from around the globe, contributing their most recent achievements for the components of our products. Concept, construction, and exhaustive testing lead to products made in tried and tested assembly processes. Quality is assured with standard control procedures that are constantly reviewed and audited by independent institutions from our target countries. A wide range of certificates awarded by national certification bodies from many countries around the world gives our appliances internationally approved technical and product credibility.




After-sales services are an important element of the purchase decision. Therefore, we do our best to make them as efficient as possible. In 2014, we continued to optimize our spare part supply chain. We also revised the GSD application for technical support to service partners, to make its use easier and more efficient. In our international service network, especially in Southeastern Europe, we elevated the level of our after-sales services. We introduced additional methods for improvement of our services and for work with our service partners.

Responsibility to the local and broader environment

We have supported various institutions in the local environment for a number of years. We are a co-founder of the Velenje Gallery, which is the first example of a private-public partnership in culture in Slovenia, and one of the most important cultural institutions in the Savinjsko-Šaleška Valley. We are also the proud sponsor of the Gorenje Velenje team handball club and the Slovenian Nordic Skiing national team. We also support the Gorenje mixed choir whose members include our employees, and the Gorenje retiree society whose activities spread the Gorenje culture and tradition in the local environment. In 2014, we donated a large number of home appliances and after-sales services with a total value of over EUR 250,000 to the flood victims in Croatia, Serbia, Bosnia and Herzegovina, and Slovenia.

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