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Varteks d.d. holds General Shareholders' Meeting

Varazdin, September 7, 2012 – The General Shareholders' Meeting of the Croatian textile and fashion company Varteks d.d. was held today at the Turist Hotel in Varazdin.

The General Shareholders' Meeting was attended by 49.28 percent of votes excluding treasury shares or 44.57 percent of the share capital: The Association of Small Varteks Shareholders, Karlovacka banka d.d., Varteks ESOP d.o.o., Societe Generale-Splitska banka d.d. for the Croatian War Veterans' Fund and Societe Generale-Splitska banka d.d. for FIMA EQUITY OIF.
The present shareholders adopted all submitted reports and proposed decisions by majority vote.

In 2011, Varteks d.d. reduced its loss by HRK 36.4 million or 37.6 percent in relation to 2010 despite extremely adverse conditions in its surroundings.

Operating results as seen through regular business activities show further positive progress as the operating loss in 2011 amounted to HRK 25.8 million, while it had amounted to HRK 65.2 million in 2010, which constitutes a loss reduction of 60.5 percent. Total revenues amounted to HRK 329.8 million, which constitutes an increase of 4.8 percent in relation to the revenues realized in the same time period in 2010. Total expenditures amounted to HRK 390.1 million, which constitutes a reduction of 5.2 percent in relation to 2010. Operating income amounted to HRK 327.1 million, which is 6 percent more in relation to 2010. In the operating income structure, sales revenues constituted 90.8 percent in 2011.
Exports are also on the rise. On the foreign market, exports worth HRK 129.9 million were realized, which constitutes an increase by 6.2 percent or HRK 7.6 million in relation to the exports realized in 2010. The majority of exports are realized in the European Union.

Pursuant to the elements of the Integral Business and Financial Restructuring Plan, the Company carried out set objectives in 2011 aimed at increasing business and management efficiency and the implementation of the defined savings measures. On this basis, the Company's production segment started operating through three separate limited liability companies in May 2011, while the B2B segment (sales aspect related to corporate clothing and the production of special-purpose clothing) was detached through its subsidiary Varteks Trgovina d.o.o. after the first quarter of 2010.
In order to mitigate the adverse effects of the crisis on liquidity, additional funding sources were planned through the sale of property, but given the negative trend on the real estate market, we were prevented from realizing the planned property sales and to thus significantly affect the stabilization of the Company's liquidity. Given these business circumstances, the timely procurement of primarily raw materials, production materials and merchandise was not realized. The delays led to problems in production capacity utilization, to problems with the timely supply of the retail and wholesale network and partial cancellations. In such circumstances, above mentioned delays and process disturbances further negatively impacted the efficiency of operations. High financing costs also continued to significantly affect the negative result.  
Regardless of the continuation of the crisis, the 2011 operations indicate positive trends, although the realization of the set objectives has been made more difficult due to the slow implementation of property sales and the announced Croatian Government measures to strengthen the competitiveness of labor-intensive manufacturing industries.

“By consistently implementing the planned Integral Business and Financial Restructuring Plan, Varteks achieved positive progress in its business operations in 2011 and managed to mitigate the negative effects of the protracted crisis on the expenditure side. However, the stabilization of business operations, and thus the realization of all strategic guidelines defined for the existing businesses and the development of new businesses, require that relations with the State are urgently resolved and later relations with the banks. In addition, in the current market conditions it is essential that the State initiates as soon as possible the announced measures to revive the economy, primarily the local industry, and the announced investment cycles.”, said Zoran Koscec, the president of the Management Board of Varteks.


Decisions of the General Shareholders’ Meeting

Pursuant to article 277 of the Companies Act, the General Shareholders’ Meeting of Varteks d.d. passed the following decisions at the session on September 7, 2012:

1. Adoption of the annual reports:

a) Management Report on the State of the Company for 2011
b) Auditor’s Report for 2011
c)  Supervisory Board Report on the Supervision of Company Operations for 2011
d) Annual Financial Statements and Consolidated Financial Statements of Varteks Group for 2011

2. Adoption of decision to cover the 2011 loss of HRK 60,328,044.48, which will be partially covered from capital reserves amounting to HRK 17,748,231.16, while the remainder amounting to HRK 42,579,813.32 will be covered from profits in the coming business years.  

3. Approvals were issued for the actions of members of the Management Board and the Supervisory Board in 2011.

4. The company HLB Revidicon d.o.o. from Varazdin was elected as the Company’s auditor for the business year 2012.
The Management Board of the Company is authorized to enter into the appropriate audit agreements with the selected auditing company and to determine the compensation for its work.

5. Igor Zonja was elected member of the Supervisory Board for a time period of four years.

6. These decisions shall enter into force upon their adoption.
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