We build business networks and relationships ... - skupina kd group

“With extended pictures and images
that stretch beyond the margins,
we wanted to show that we are exploring
new dimensions and turning new pages.
We do not believe in the local stereotypes
on the diverse markets
on which the KD Holding Group operates,
but search for the most incisive people
and develop the most daring initiatives,
from ways of providing services
to cutting-edge approaches on an individual market.”
Matjaž Gantar
Chief Executive Officer
Piran saltpans, Slovenia

And something else reveals itself: that in our corner of Europe, an extraordinary
history has evolved; a valuable experience for the people, who despite a turbulent
and difficult past, have always known how to handle money.
3

Contents
Company profile
Important data on operations in 2007
Activities of the KD Holding Group
Address by the Chief Executive Officer of KD Holding
7
5
8
11
Address by the Chairman of the Supervisory Board
of KD Holding
KD Holding Group organization
KD Holding Group brands
Significant milestones of the KD Holding Group
Events that characterised 2007
Important events following the end of the 2007 financial year
13
21
25
27
28
32
5
1. Business report
35
2. Operations of the Companies within the
Strategic orientations of the KD Holding Group
38
KD Holding Group
103
Shares, dividends and ownership structure
41
Asset management
109
Corporate governance report
46
Insurance
148
Operations of the KD Holding Group in 2007
53
Sales of financial services
166
Risk management
64
Capital investments
172
Human resource management
72
Private equity fund
172
Corporate communications
82
Closed-end investment funds
Information support
84
in South Eastern Europe
173
Research and development
85
Cinematography and entertainment business
Report on the corporate social responsibility
of the KD Holding Group
175
of the KD Holding Group
90
Real estate
180
Other activities of selected subsidiaries
181
A selection of the most important activities of associated companies
185
3. Financial Statements 193

The values that form the foundation of KD Holding Group
are trust, openness, and equality.
We are not afraid to look for new angles and find new solutions.
But if you want to harvest trust, you must sow responsibly:
to people, nature, and time.
Only in this way is it possible to weather the great global tides and
the smaller local ripples, to take from the sea the salt that enriches the day,
before a new wave comes along and carries it away.
6
Piran saltpans, Slovenia

Company profile
Parent company:
KD Holding, finančna družba, d. d.
Abbreviated company name: KD Holding d. d. 1
Registered office:
206 Celovška cesta, Ljubljana 1000, Slovenia
Telephone: +386 1 582 67 00
Fax: +386 1 518 41 00
E-mail: info@kd-group.com
Website: www.kd-group.com
Activity: 64.200 - Activity of holdings 2
Legal status: Public limited company
Company registration number: 1585126
Tax number: 66296374
VAT identification number: SI66296374
Entry in the Company Register: District Court
of Ljubljana, no. 2000/15252 dated 3 January
2001, reg. no. 1/34049/00
Share capital: 98,215,756.97 EUR
Number of no-par-value shares issued:
2,942,053
Number of ordinary registered shares KDHR:
2,675,640
Number of participating preference shares KDHP:
266,413
Date of incorporation: 3 January 2001
Important data on operations in 2007
7
Unit KD Holding Group KD Holding d. d.
Net revenue from sales of goods and services in EUR thousand 77,232 501
Revenue from insurance premiums in EUR thousand 294,759 -
Net finance income in EUR thousand 56,687 35,248
Net profit or loss in EUR thousand 34,946 17,336
Assets in EUR thousand 956,047 402,554
Equity capital in EUR thousand 340,264 225,857
Return on equity % 11.2 7
Share book value EUR 116.40 90.46
Earnings per share EUR 12.38 6.36
1 The names of companies in the Annual Report are used with markings of organisational form (e.g. d. d. - PLC) when they are first mentioned and when the full or abbreviated official name is given, but they are omitted in the rest
of the text for easier reading.
2 Until 31 December 2007: 74.150 - Activity of holdings.

Activities of the KD Holding Group
The KD Holding Group 3 is one of the largest
business groups in Slovenia and is developing into
one of the largest groups in Central
and South Eastern Europe.
The Group currently manages 24 mutual funds and
two investment companies as part of its investment
fund management. KD Skladi d. o. o. 4 is the leading
asset management company in Slovenia, managing
12 mutual funds and one investment company. In
The Group’s principal business activities are:
asset management:
investment fund management,
private wealth management and stockbroking;
insurance:
the region, the Group manages four mutual funds
in Croatia, three in Romania, two mutual funds and
one investment company in Bulgaria, two mutual
funds in Slovakia and one in Serbia. It is planning
to enter the Macedonian market in 2008.
life insurance,
8
property and health insurance;
sales of financial services;
capital investments.
The principal business activity of the parent
company KD Holding d. d. is the management of
listed and non-listed investments and the generation
of financial returns in accordance with the structure
of its portfolio. The parent company makes
decisions regarding all the KD Holding Group’s
major strategic investments.
The KD Holding Group has almost 2,000
employees in 12 countries and was entrusted with
the management of more than EUR 1 billion of
assets by more than 120,000 clients in 2007.
Asset management
The Group’s asset management is divided into:
investment fund management,
private wealth management and stockbroking.
Private wealth management and stockbroking
is becoming an increasingly important business
activity for the Group. It is gaining strength both
in Slovenia and abroad, where the Group has
companies in Bulgaria, Croatia and Romania.
Insurance
The KD Holding Group’s insurance business
comprises life, property and health insurance.
It has two public limited companies in Slovenia:
KD Življenje d. d., a life insurer, and Adriatic
Slovenica d. d., a universal insurer that markets life
insurance and non-life insurance, including health
insurance. Adriatic Slovenica was ranked second
among insurers in Slovenia in 2007, while KD
Življenje, was ranked third among life insurers.
The Group has been developing and marketing life
insurance in other countries at branches of KD
Življenje and at independently established insurance
companies. It is currently present in Bulgaria,
Romania, Ukraine, the Czech Republic and Slovakia.
3 Hereinafter: the Group.
4 On 16 January 2008, the company KD Investments, družba za upravljanje, d. o. o. was renamed KD Skladi,
družba za upravljanje, d. o. o. (abbreviated name: KD Skladi, d. o. o.). The company’s English name is KD Funds
– Management Company LLC (abbreviated name: KD Funds LLC).

Sales of financial services
Last year, the Group established KD Finančna
točka, d. o. o. which combines all the financial
services offered within the KD Holding Group. It
is not merely a collective sales channel, but also
represents a tangible upgrade in services for clients,
with the entire range of financial services available
at a single point.
Capital investments
The Group’s capital investments are managed by
the parent company KD Holding and the newly
established company KD Kapital, d. o. o. Cinema
and entertainment are also included in the Group’s
principal business activities and last year it was
more active in the area of real estate. Other
principal business activities include publishing,
9
the management of closed-end investment funds
in South Eastern Europe and private equity
management.

10
Address by the Chief Executive Officer
of KD Holding
The big picture
In 2007, the KD Holding Group proved itself to be strong,
diversified and contemporary enough to rise to every
challenge in the interest of its customers, investors and
policyholders. Such opportunities clearly indicate the
importance of not only the portfolio of investments, but also
the diverse markets on which the globally ambitious regional
financial group operates today. Yes, it was a good year.
Those of you who know us will not be surprised that some
of the photographs in this year’s report go beyond the
typical format. With extended pictures and images that
stretch beyond the margins, we wanted to show that we are
exploring new dimensions and turning new pages. We do
not believe in the local stereotypes on the diverse markets
on which the KD Holding Group operates, but search for the
most incisive people and develop the most daring initiatives,
from ways of providing services to cutting-edge approaches
on an individual market. It is proven time and time again
that there are sometimes more similarities between the
streets of Sofia and Bratislava than between two street
corners in one Parisian quarter. And something else reveals
itself: that in our corner of Europe, an extraordinary history
has evolved; a valuable experience for the people, who
despite a turbulent and difficult past, have always known
how to handle money.
It is in this that I see the message of our operations in 2007.
We are a diverse Group: we respect the environment and
customs where we operate, but a global society demands
that we constantly introduce new dimensions. In this way,
new horizons are continually opening before us. We grow
and expand together with our users, with our customers.
This is growth that they can trust - and trust that grows.
Both the mission and the vision of the Group are derived
from the intertwining of responsible developmental growth
and partnerships with users, employees and owners.
Therefore, the Group, as a respected, modern and socially
responsible financial group, is already helping to shape the
future trends of financial services in Central, Southern and
Eastern Europe.

When we gathered together at the first strategic conference
of Group companies, we were able to establish, without false
modesty, that we have made great strides in all key areas
of operations: the amount of assets in our investment funds
has risen, insurance revenues are up and our investment
activities have strengthened. Internally, the ever increasing
synergy of the Group’s operations can be seen in the
introduction of divisions. Externally, with a uniform corporate
image, the user most directly feels this synergy through the
new brand (and company!) KD Finančna točka, which has
opened the door to an entirely new, never before experienced
complete service: a unique supermarket of financial services
and asset advisory services in one place.
Now let us look in more detail at the bigger picture.
The Group performed extremely well in 2007, as reflected
in the improvement of all key performance indicators. Total
operating revenues were up 25 percent from the previous
year, reaching EUR 455.6 million. Net profit for the year was
EUR 34.9 million, a 67 percent increase from 2006. Total
capital was up 20 percent from the previous year, reaching
EUR 340.3 million. The high growth in net profit was also
evident in our return on equity of 11.2 percent in 2007, a
significant improvement from 2006. The Group is already
present in 12 countries and has nearly 2,000 employees.
More than 120,000 customers have demonstrated their trust
in us.
In the area of asset management, the assets in all
investment funds, including those under private wealth
management, exceeded EUR 1 billion for the first time in
2007. We were extremely successful in this area, as the
majority of funds (17) exceeded established benchmarks.
The oldest Slovenian mutual fund, KD Galileo, celebrated its
15 th anniversary. In Croatia, marketing of a fourth mutual
fund, KD Nova Europa, began, with nearly EUR 1 million
paid into the fund in its first five days of operations. With
the public subscription of units of the KD Ekskluziv fund in
Belgrade, the Group’s 26 th investment fund was born. All of
the Group’s funds are professionally sound and operationally
strong, enabling us to market them outside the countries
in which they were established. We are thus becoming
an important channel to global investments for customers
from the region, and a key expert in financial and business
opportunities in this part of Europe for the rest of the world.
Our plans for the insurance sector are also clearly ambitious.
We have renamed Slovenica Življenje KD Življenje and
consolidated our life insurance products. As the second
largest insurance company in Slovenia, the universal insurer
Adriatic Slovenica also marketed life and property insurance,
including health insurance, in 2007.
The Group also demonstrated its social responsibility in the
insurance sector in 2007, with Adriatic Slovenica putting
forth maximum effort in the hardest hit areas in the Celje
and Gorenjska regions following September’s catastrophic
storms. Policyholders were repaid an enormous amount in
property damages. This however had no significant impact
on the company’s operating results due an appropriate level
of reinsurance. The Group’s market share in the area of life
insurance is growing rapidly. Last year, we improved our
market share to 15 percent, placing third amongst life insurers
at the end of the year. In 2008, we are planning further
growth with the aim of achieving second place amongst life
insurance providers. Our life insurance products are present
abroad in the Czech Republic, Slovakia, Romania
and Bulgaria, with plans to expand to Ukraine and Croatia.
A significant step forward with regard to the sale of financial
services is the aforementioned establishment of KD Finančna
točka, equally owned by the insurer KD Življenje and the asset
management company KD Skladi. It is not just Slovenian
users, with access to more than 80 investment funds,
stockbroking services and private wealth management, who
benefit from this network of financial supermarkets; the Group
also uses it to develop its contemporary marketing know-how,
which it employs to its advantage on all new markets. KD
Finančna točka has also joined the founding companies of our
prestigious service, Club KD Plus.
In addition to more efficient and transparent operations, the
benefits of the Group’s division-based organisation include
the transfer of non-strategic investments to KD Kapital, which
will facilitate improved capital investment management. The
Group is present in a broad range of segments: it manages
a private equity fund; it is active in cinematography and
entertainment and in education and publishing. The activities
of its subsidiaries include the design and manufacture of
watercraft, retail trade, the food industry and others. With the
acquisition of building rights for the Šumi project in the centre
of Ljubljana and the establishment of KD Kvart, the Group’s
real estate division has become increasingly more active.
And what is the Group’s biggest project and my greatest wish
for 2008?
Without a doubt the Group’s entry into the banking sector. In
2007, we brought together a team of experienced banking
experts. The realisation of these plans in 2008 will bring the
KD Holding Group’s range of products and services full circle
- and surely broaden our picture, not merely by a page or two,
but with an entire new chapter. Even as we take this new step
together, we are very conscious of the fact that our growth as
partners is based solely on the values of trust, openness and
equality.
Only in this way can trust grow - and only that growth
stimulates trust.
Matjaž Gantar
11

Address by the Chairman of the
Supervisory Board of KD Holding
In its third year in office, the Supervisory Board continued
to actively monitor the company’s operations. There were
no changes in the Board’s composition. We were regularly
informed about the company’s operations at five regular
and two correspondence sessions. By being familiar with
the work of the Management Board and its decisions and
through discussions and initiatives, the Supervisory Board
performed its corporate governance role consistently and
responsibly, in accordance with the capacities and duties
prescribed by the law.
We paid particular attention to the professional
supervision of operations, the risk management system
and the realisation of KD Holding’s strategies. We
regularly monitored the operations of the KD Holding
Group’s companies abroad, focusing primarily on the
expansion of life insurance activities on the markets of
South Eastern Europe. Sustained development plays
an important role in the company’s long-term strategy.
Therefore, the Supervisory Board initiated and supported
such development activities. Based on the resolution of
the General Meeting of Shareholders of 30 August 2007,
the Supervisory Board approved the recommendations
regarding the remuneration of its members.
Last year, the company underwent a reorganisation and
began introducing division-based operations which will
facilitate more efficient and transparent operations. Group
companies also took significant steps to improve and
develop their approach to customers. This is reflected
by the favourable results in key areas of operations,
the management of investment funds, private wealth
management and in the life insurance sector. With its
approval, the Supervisory Board demonstrated its full
support for the project to develop banking services. The
Group began actively implementing the project last year.
Banking services will compliment existing insurance
and financial products, further spurring the growth and
development of the KD Holding Group. Real estate
projects will also play an important role in the future.
Our results indicate that the Management Board and
co-workers fulfilled the company’s plans and managed
the company’s operations in accordance with its
long-term strategic policies. The Supervisory Board is
therefore justifiably satisfied with the achievements of KD
Holding and the entire Group in 2007.
In the future, the Group will face new challenges such as
penetrating the markets of Central, Southern and Eastern
Europe and strengthening its market position in Slovenia.
The Supervisory Board will support the Group in these
activities in accordance with its competencies.
13
Aleš Vahčič, PhD

Management Team
14
Janez Bojc, Deputy Chief Executive Officer, KD Holding
The photographs of the KD Holding Group management were taken in the City Museum of Ljubljana

Peter Grašek, Business Director, KD Holding
15

16
Aljoša Tomaž, Assistant to the Chief Executive Officer, KD Holding

Dag Kralj, President of the Management Board, KD Skladi
17

18
Matija Šenk, President of the Management Board, KD Življenje

Who’s who in the KD Holding Group *
Matjaž Gantar
Chief Executive Officer, KD Holding d. d.
Telephone: +386 1 582 67 89
Fax: +386 1 519 28 47
E-mail: matjaz.gantar@kd-group.si
Mojca Burkelca
Director of Finance and Accounting, KD Holding d. d.
Telephone: +386 1 582 68 88
Fax: +386 1 518 41 00
E-mail: mojca.burkelca@kd-group.si
Janez Bojc
Deputy Chief Executive Officer, KD Holding d. d.
Telephone: +386 1 582 67 96
Fax: +386 1 518 41 00
E-mail: janez.bojc@kd-group.si
Simona Jamnik
Director of Legal Affairs, KD Holding d. d.
Telephone: +386 1 582 68 88
Fax: +386 1 518 41 00
E-mail: simona.jamnik@kd-group.si
Peter Grašek
Business Director, KD Holding d. d.
Telephone: +386 1 582 68 88
Fax: +386 1 518 41 00
E-mail: peter.grasek@kd-group.si
Aljoša Tomaž
Assistant to the Chief Executive Officer,
KD Holding d. d.
Telephone: +386 59 220 000
Fax: +386 1 582 67 20
E-mail: aljosa.tomaz@kd-group.si
Samo Logar
Director of Human Resource and Organisation,
KD Holding d. d.
Telephone: +386 1 582 68 88
Fax: +386 1 518 41 00
E-mail: samo.logar@kd-group.si
Polona Pergar Guzaj
Director of Internal Audit, KD Holding d. d.
Telephone: +386 1 582 68 88
Fax: +386 1 518 41 00
E-mail: polona.pergar@kd-group.si
19
Gregor Sluga
Advisor to the Chief Executive Officer,
KD Holding d. d.
Telephone: +386 1 582 67 38
Fax: +386 1 519 28 47
E-mail: gregor.sluga@kd-group.si
Matjaž Potokar
Director of Corporate Communications,
KD Holding d. d.
Telephone: +386 1 582 68 88
Fax: +386 1 518 41 00
E-mail: matjaz.potokar@kd-group.si
*As at 1 may 2008

KD Holding Group key divisions
Investment fund management
Mojca Ribič
Director of Marketing, KD Holding d. d.
Telephone: +386 1 582 68 88
Fax: +386 1 582 66 52
E-mail: mojca.ribic@kd-group.si
Dag Kralj
President of the Management Board, KD Skladi d. o. o.
Telephone: +386 1 58 62 780
Fax: +386 1 518 40 88
E-mail: dag.kralj@kd-group.si
Pavel Škerlj
Private wealth management and stockbroking
Director of Information Technology and General
Affairs, KD Holding d. d.
Telephone: +386 1 582 68 88
Fax: +386 1 518 41 00
E-mail: pavel.skerlj@kd-group.si
Benjamin Jošar
President of the Management Board, KD BPD d. o. o.
Telephone: +386 59 220 000
Fax: +386 1 582 67 20
20
E-mail: benjamin.josar@kd-group.si
Insurance
Matija Šenk
President of the Management Board, KD Življenje d. d.
Telephone: +386 1 582 65 50
Fax: +386 1 518 19 95
E-mail: matija.senk@kd-zivljenje.si

KD Holding Group organisation
KD Holding d. d.,
Ljubljana
KD Investments d. o. o., Ljubljana*
100%
KD Investments d. o. o., Zagreb
100%
KD Investments d. o. o., Belgrade
100%
SAI KD Investments S. A., Bucharest
100%
KD Investments EAD, Sofia
100%
KD Investments, sprav. spol.,a. s., Bratislava
100%
KD Investments, Sp. Z. o. o., Warsaw
100%
KD BPD, d. o. o., Ljubljana
100%
KD Upravljanje imovinom d. o. o., Zagreb
100%
KD Capital Management S. A., Bucharest
100%
KD Securities EAD, Sofia
100%
KD Asset Management B.V., Amsterdam
100%
KD Life jsc, Kiev
100%
KD Življenje d. d., Ljubljana 91.17%
Bratislava Branch
KD Life Asigurari S.A., Bucharest
100%
KD Life a.d., Sofia
100%
SC KD Fond De Pensii SA, Bucharest
99.00%
Adriatic Slovenica d. d., Koper
95.72%
KD Kapital d. o. o., Ljubljana
100%
KD Private Equity d. o. o., Belgrade
100%
Ljubljanski kinematografi d. d., Ljubljana
96.61%
Kinematografi Maribor d. o .o., Maribor
69.99%
75.01%
30.01 %
Kolosej Celje d. o. o., Celje
100%
KD Mark d. o. o., Ljubljana
100%
R.E. Invest d. o. o., Ljubljana
100%
KD Kvart d. o. o., Ljubljana
100%
Coloseum Multiplex Holdings b. v., Amsterdam
100%
Firsthouse Investments ltd., Cyprus
100%
Fontes Group d. o. o., Belgrade
95.00%
GEA College d. d., Ljubljana
63.63%
* Since 16 January 2008 KD Skladi
ABDS d. d., Sarajevo
58.79%
KD Finančna točka d. o. o., Ljubljana
50.00%
KD Funds Advisors, LLC, ZDA
90.00%
KD Finančna točka d. o. o., Ljubljana
50.00%
KD ViFin s. r. o., Bratislava
83.98%
Zap d. o. o., Murska Sobota
100%
ČZD Kmečki Glas d. o. o., Ljubljana
80.08%
KD Mont a. d., Podgorica
80.50%
Vrtnarstvo Celje d. o. o., Celje
50.46%
VIB a.d., Banja Luka
51.00%
Globus Film d. o. o., Koper
100%
KD Kinematografi Funds Advisors, Kolosej LLC, d. o. ZDA o., Tuzla
100%
Kolosej Ljubljana d. o. o., Ljubljana
100%
GEA College PIC d. o. o., Ljubljana
100%
100%
(as at 31 December 2007)
2INVEST s. r. l., Bucharest
70.00%
KD Life s. r. o., Praga
100%
Oklev d. o. o., Ljubljana
100%
Kolosej Maribor d. o. o., Maribor
47.58 % 100%
52.20%
Zabavni Centri d. o. o., Zagreb
100%
Onisac d. o. o., Ljubljana
0.22 % 70.00 %
100%
GEA College CVŠ d. o. o., Ljubljana
100%
30 %
21
*

Companies in the KD Holding Group by division (as at 31 December 2007)
KD Holding d. d., Ljubljana
Investment fund management
KD Investments d. o. o.,
Ljubljana*
KD Investments správ. spol., a. s,
Bratislava
SAI KD Investments S. A.,
Bucharest
KD Investments EAD, Sofia
KD Investments d. o. o., Zagreb
KD Investments a. d., Belgrade
KD Investments Sp. Z. o. o.,
Warsaw
Private wealth management
and stockbroking
KD BPD, d. o. o., Ljubljana
KD Upravljanje imovinom,
d. o. o., Zagreb
KD Capital Management S. A.,
Bucharest
KD Securities EAD, Sofia
Insurance Real estate Capital investments
Adriatic Slovenica d. d., Koper
KD Življenje, d. d., Ljubljana
ZAP d. o. o., Murska Sobota
KD Life AD, Sofia
KD Life jsc, Kiev
KD Life Asigurari S. A.,
Bucharest
2INVEST s. r. l., Bucharest
KD ViFin, Bratislava
KD Life s. r. o., Prague
R.E. Invest, d. o. o.,
Ljubljana
KD Kvart, d. o. o.,
Ljubljana
KD Kapital, d. o. o., Ljubljana
Ljubljanski kinematografi
d. d., Ljubljana
Globus Film d. o. o., Koper
Oklev d. o. o., Ljubljana
Kinemtografi Kolosej
d. o. o., Tuzla
Kolosej Ljubljana d. o. o., Ljubljana
Kolosej Maribor d. o. o., Maribor
Zabavni Centri d. o. o., Zagreb
Onisac d. o. o., Ljubljana
Kinematografi Maribor
d. o. o., Maribor
Kolosej Celje, d. o. o.
GEA College d. d., Ljubljana
GEA College PIC d. o. o., Ljubljana
GEA College CVŠ d. o. o., Ljubljana
KD Private Equity d.o.o., Belgrade
22
KD Fund Advisors, LLC, USA
KD Asset Management, b. v.,
Amsterdam
ČZS Kmečki glas d. o. o., Ljubljana
Vrtnarstvo Celje d. o. o., Celje
ABDS d. d., Sarajevo
KD Mont a. d., Podgorica
VIB a. d., Banja Luka
Firsthouse Investments Ltd., Cyprus
Colosseum Multiplex Holdings b.v.,
Amsterdam
Sales of financial services
KD Finančna točka, d. o. o., Ljubljana
KD Mark d. o. o., Ljubljana
Fontes Group d. o. o.,Belgrade
* Since 16 January 2008 KD Skladi, d. o. o.
In addition to subsidiaries, KD Holding Group also has the following associated enterprises owned by KD
Holding or its subsidiaries:
Company Ownership share (in %)
KD Concorde d. o. o. 50.00
Seaway Group d. o. o. 50.00
Zabavna znanost d. o. o. 50.00
Zellner Holdings Limited, Cyprus 48.65
Nama d. d. 48.46
KD Private Equity, b. v. The Netherlands 48.21
* more than 20 percent together with the parent company, KD Group d. d.
Company Ownership share (in %)
Kinematografi Kranj d. o. o. 45.00
Deželna banka Slovenije d. d. 33.68
Semenarna Ljubljana d. d. 29.90
Žičnice Vogel d. d. 21.54
Radio Kranj d. o. o. 20.00
KD ID d. d.* 9.93

KD Holding Group corporate structure
Management
Chief Executive
Officer
Deputy, Assistant, Advisor to CEO
Business
Director
Directors
Finance
and Accounting
Divisions
Information
Technology and
General Affairs
Human Resource
Management
and Organisation
Corporate
Comunications
Marketing Legal Affairs Internal Audit
Investment
Fund Management
Private Wealth
Management and Stockbroking
Insurance
Real Estate
Capital
Investments
Core products
…
extended range of services
Major projects
new investment
opportunities
in Slovenia and
the countries
of the former
Yugoslavia
Investments
Slovenije
23
KD Finančna točka - sales of financial services

24
Piran saltpans, Slovenia

KD Holding Group brands
The Group enhances growth by constantly
developing, strengthening and upgrading existing
established brands and by creating new ones.
into consideration and reflects it. The objective was
to create a flexible graphic identity structure to allow
each company to retain its own level of identity,
while contributing to the synergies within the Group
The KD corporate brand is not merely a corporate
as a whole.
brand, but is above all the most recognisable and
credible connecting element of the company’s
financial services and product brands. These are
the Group’s key and most visible element. KD
is synonymous with the effective and profitable
management of long-term and short-term
investments. Through its strategic management, the
Group ensures the establishment and increasing
recognition of the KD corporate brand and individual
product brands on new markets. Through the
expansion of operations, new management
companies, stockbroking companies, investment
funds and other investments and with other new
financial corporations and products, the Group is
building a diverse yet solid architecture for the KD
brand. It focuses special attention on the consistent
use of its corporate image.
The reasons for the change to KD’s graphical
corporate image lie in the rapid growth and
expansion of the Group in recent years. The
previous image was launched in 2001, when
the company began operating under the new,
abbreviated name of KD (previously Kmečka
družba). The old image was monolithic and no
longer fit the system of the new organisation.
There is a hierarchy of subsidiaries in the KD
system. KD’s new brand image takes this hierarchy
In 2007, the Group established the new company,
KD Finančna točka, which is the most important
distribution channel for products and services
and the main ambassador of KD’s image to the
public. The company offers a unique and integrated
concept of points of sale for financial services under
the name Finančna točka, both in its network of
sales offices around Slovenia, and via its web portal
at www.financna-tocka.si.
With regard to insurance, Adriatic Slovenica is an
established brand and one of the most successful
insurers on the Slovenian market. Another major
brand in the Group is Kolosej, a byword for
state-of-the-art cinematography in Slovenia, known
for the quality of its film experience. Gea College
also has a rising profile in the area of education in
Slovenia and throughout the region.
25

26
Ljubljanica River, Slovenia

Significant milestones of the
KD Holding Group
1994
2001
The KD Holding Group has its origins in 1994
The letters KD replace the name Kmečka družba
when the asset management company Kmečka
družba, družba za upravljanje investicijskih skladov,
d. d, is established.
1996
Kmečka družba becomes the manager of the
oldest Slovenian mutual fund - KD Galileo. Two
more mutual funds, the equity fund KD Rastko and
the bond fund KD Bond, are established in that
year from the assumed part of four mutual funds of
another asset management company.
Purchase of Slovenica d. d. insurance company.
1997
The total value of assets under management
in the three Kmečka družba mutual funds exceeds
SIT 1 billion (more than EUR 4.1 million).
1998
PID Kmečka družba d. d. shares are listed on
the Ljubljana Stock Exchange.
2000
Kmečka družba becomes the first Slovenian
asset management company to obtain a licence to
invest assets from its mutual funds on foreign stock
markets.
Establishment of the Kmečka družba d. d.
Group (now KD Group d. d.) by spinning off a part
of Kmečka družba.
with the introduction of a new corporate image.
Kmečka družba is renamed KD Investments, družba
za upravljanje, d. d.
PID Kmečka družba is divided into three
companies, one of them being Kmečka družba
Holding d. d. later renamed KD Holding d. d.
Formal opening of Kolosej Ljubljana, the first
cinema multiplex in Slovenia.
With the opening of the first Financial Point
(Finančna točka) in Ljubljana, the development and
expansion of a network of financial supermarkets
outside the company’s registered office begins in
Slovenia.
2002
Tenth anniversary of the Galileo mutual fund.
The twenty thousandth investor makes a
payment into KD mutual funds. Total assets under
management in the three KD mutual funds exceed
SIT 30 billion (more than EUR 125 million).
KD Rastko and KD Galileo are the most profitable
Slovenian funds.
2004
Operations of the stockbroking company KD
BPD begin.
The fifty thousandth investor makes a payment
into KD mutual funds. Assets under management in
KD mutual funds exceed SIT 90 billion (EUR 375.5
million).
27

2005
Establishment of the first specialised Slovenian
insurance company, Slovenica Življenje d. d.
Events that
characterised 2007
Changes in the composition of the KD
Holding Group
The new insurance company, Adriatic Slovenica
Zavarovalna družba d. d., is entered in the
Company Register.
The Financial Point web portal comes online.
2006
The mutual funds KD Rastko, equity mutual
fund and KD Bond, bond mutual fund celebrate
their tenth anniversary.
2 February
Share capital of R.E. Invest is increased to
EUR 2 million with a contribution in kind by
KD Holding.
6 February
Slovenica Življenje increases the capital of the
company Vifin and renames it KD Vifin, s. r. o.
Club KD Plus, the first financial club in
28
Slovenia, begins operations.
Establishment of the Private Equity fund, valued
at EUR 70 million, with investments focused in
South Eastern Europe.
8 March
The life insurance company KD Life Bulgaria
is established with the entry into the Company
Register.
9 March
KD Holding receives a decision from the District
Court of Ljubljana whereby the court as of 6 March
2007, entered into the Company Register a change
in share capital due to the transition to the euro
and the resulting amendments to the Articles of
Association. Share capital in the amount of
SIT 23,536,424,000 is replaced by the amount
EUR 98,215,756.97.

8 May
KD Holding concludes an agreement with
Slovenska odškodninska družba d. d., Ljubljana for
the acquisition of 195,824 ordinary shares of
Nama d. d., or 20.53 percent of all issued shares.
26 October
Due to the withdrawal from the region of local
partner, SEB Fund Services S. A., an extraordinary
shareholder’s meeting of KD DeLux, SICAV,
Luxembourg adopts a decision to cease operations
and begin liquidation proceedings.
1 July
KD Kapital is established.
30 October
KD Življenje in Ukraine receives authorisation as
5 July
a financial institution.
KD Holding successfully carries out a takeover
bid for Nama d. d., resulting in an ownership share
of 48.46 percent following the transaction.
10 December
The General Meeting of Shareholders of Adriatic
Slovenica adopts a decision regarding the exclusion
24 July
of minority shareholders from the company.
The company KD Kvart is established as the
result of the transfer of the Šumi project from R.E.
Invest.
22 August
Slovenica Življenje, življenjska
zavarovalnica, d. d., is officially renamed
KD Življenje, zavarovalnica, d. d. The resolution is
adopted at the General Meeting of Shareholders of
10 July 2007.
25 October
Establishment of a new company within the
KD Holding Group, KD Finančna točka. The
insurance company KD Življenje and asset
management company KD Investments (now
KD Skladi) hold equal ownership shares.
24 December
KD Kapital sells its entire share in
Globtour d. o. o.
27 December
The open-end investment fund KD Eksklusiv,
managed and marketed by KD Investments,
Belgrade, is entered in the Serbian register of
investment funds. With entry in the register, all
conditions for the official start of operations of the
KD Eksklusiv fund are met.
31 December
The General Meeting of Shareholders of
KD Življenje passes a decision regarding the
exclusion of minority shareholders from the
company.
29

30
Key events in 2007
January
The oldest Slovenian mutual fund, KD Galileo,
celebrates its 15th anniversary of operations. For all
Slovenian babies born on the first day of 2007, KD
Investments, Ljubljana, prepares a special present as a
part of the celebration of the 15th anniversary of the KD
Galileo mutual fund. They all receive, on the basis of an
application form, EUR 200 in units of the mutual fund
which was established on 1 January 1992.
The insurance companies KD Življenje and
Adriatic Slovenica develop and begin marketing
investment package life insurance which provides
a choice between three investment packages:
conservative, balanced and dynamic.
Under the sponsorship of KD Investments
from Bratislava and Gorenje, a delegation of ten
Slovakian reporters from major media: the daily
SME, the newspaper Hospodárske noviny, the
magazine Trend, two news agencies, a web portal,
the magazine Profit and the Slovakian national
television broadcaster, visit Slovenia.
February
The mutual funds KD MM and KD Rastko
receive “Gold V” awards, the former awarded as the
best money market mutual fund and the latter as
the best equity mutual fund in the group of
Europe-oriented funds.
Peter Grašek assumes the role of Business
Director of KD Holding. As business director, he is
primarily responsible for the operational execution
of KD Holding transactions and for monitoring the
operations of its subsidiaries which operate within
the KD Holding Group.
Vice President of Adriatic Slovenica’s
Management Board, Matija Šenk, assumes
leadership of Slovenica Življenje’s Management
Board. Gabrijel Škof assumes the function of Vice
President of the Management Board at Adriatic
Slovenica, with Milena Georgievski as member of
the Management Board.
Slovenica Življenje receives the ISO 9001:2000
certificate.
March
The number of customers who entrust KD BPD with
funds for private wealth management grows to 250.
Adriatic Slovenica introduces a new feature in
the area of automobile third party liability insurance
that offers the contemporary alternative of renewing
this type of insurance via the internet, and vehicle
registration renewal via the same channel.
Start of marketing of the product of Slovenica
Življenje and Adriatic Slovenica, life insurance AZIJA
GARANT PLUS, with investments in an index of six
equity hedge funds (dbX-Equity Select Asia Index)
and two equity mutual funds - HSBC GIF INDIAN
EQUITY and HSBC GIF CHINESE EQUITY.
Deželna banka Slovenije, d. d. in KD BPD, d. o. o.
formally open common business premises in the BTC
City shopping centre in Ljubljana.
Slovenica Življenje creates a group life insurance product.
KD Investments Zagreb opens a new Financial
Point in Pula.

April
Slovenica Življenje creates Group Life Package, a
group life insurance product.
Grand opening of Casino Rio, a new gaming centre in
the Arena Vodafone live! entertainment centre.
May
Kolosej receives the Superbrands 2007 mark as
one of the top brands in Slovenia.
KD Life, Bulgaria is officially presented at a press
conference in Sofia.
June
KD Life in Bulgaria launches the new life
insurance product, Fondpolica - “Fund of funds”.
The KD Maximus fund celebrates its third anniversary.
Assets under management of the KD Holding
Group, including all mutual funds and private
wealth management, exceed EUR 1 billion.
KD Holding Group successfully participates in the
capital increase of Deželna banka Slovenije d. d.
July
KD Holding launches its new corporate website
at www.kd-group.com.
August
The Financial Point in Bratislava opens.
Adriatic Slovenica introduces new health
insurance products with three packages of
supplementary health insurance, especially adapted
to three age groups: Mladi, Aktivni and Senior.
It also introduces a unique new product on the
Slovenian market, becoming the first insurance
company in Slovenia to reward experienced and
safe drivers with a 55 percent bonus for automobile
third-party liability insurance as part of its new
range of automobile insurance products.
September
KD Življenje and Adriatic Slovenica develop Renta
Garant, a life insurance with a lump-sum premium,
linked to composite debt securities and with a
guaranteed annuity payment.
The subscription amount for private wealth
management at KD BPD is increased from
EUR 50 thousand to EUR 100 thousand.
KD Investments in Serbia receives authorisation
to organise and manage open-end, closed-end and
private investment funds.
KD Holding organises the first strategic conference
of Group companies at the Trevisini Palace in Piran.
October
KD Investments in Croatia begins marketing a
fourth mutual fund, KD Nova Europa.
Nearly EUR 1 million is paid into the fund in its first
five days of operation.
KD Life in Bulgaria begins marketing the new life
insurance product, “Fondpolica - Renta Garant”.
Gabrijel Škof assumes the function of President
of the Management Board of Adriatic Slovenica,
with Milena Georgievski as member of the
Management Board.
31

November
KD Investments in Slovenia transfers
authorisation for marketing mutual fund investment
coupons under its management to KD Finančna
Important events
following the end of the 2007
financial year
Changes in the composition of the
KD Holding Group
točka.
KD Investments in Croatia records the ten
thousandth investor in its funds.
KD Investments in Serbia receives a licence for
the establishment of the KD Eksklusiv open-end
investment fund from the local regulator and begins
15 January
A decision on the transfer of shares of minority
shareholders of KD Življenje to the majority
shareholder, KD Holding, is entered in the Company
Register.
the public subscription of units.
32
The first professional meeting of the Group’s
accountants is organised.
The establishment of Club KD Plus in Slovakia
begins.
KD Kvart receives building rights for the Šumi
project.
December
Adriatic Slovenica and KD Življenje sign an
agreement on the transfer of the life insurance
portfolio to KD Življenje, planned for 2008. The
agreement will enter into force following the receipt of
authorisation from the Insurance Supervision Agency.
KD Življenje sponsors one of the most important
cultural events of the year: a performance of the
RTV Slovenia Symphony Orchestra with piano
virtuoso Ivo Pogorelić.
For the second time in 2007, KD Holding Group
successfully participates in the capital increase of
Deželna banka Slovenije d. d.
16 January
The asset management company KD Investments,
d. o. o. is renamed KD Skladi, d. o. o.
A decision on the transfer of shares of minority
shareholders of Adriatic Slovenica to the majority
shareholder, KD Holding, is entered in the Company
Register.

Other important events
January
Adriatic Slovenica’s personal insurance
marketing network is transferred to KD Življenje.
Adriatic Slovenica begins marketing the life
insurance products of KD Življenje through a
universal marketing network.
Three Bulgarian companies, KD Investments,
KD Securities and KD Life, are the exclusive
sponsors of the 15th anniversary of Bulgaria’s
largest private radio station, Darik. The companies
also organise a media event, marking the first joint
appearance of Group companies in Bulgaria.
Premiere of UNICEF’s charity video spot “Some
of Them”, brought about by the financial support of
KD Holding. It is the first charity video spot which
directly appeals for the collection of money for
long-term programmes aimed at helping children.
GEA College presents the results of an
entrepreneurial competition based on innovation
for secondary school students. The company
organised the competition in cooperation with
the Public Agency of the Republic of Slovenia for
Entrepreneurship and Foreign Investment, with the
support of the Ministry of the Economy.
February
Adriatic Slovenica’s Management Board
becomes a four-member board comprising President
of the Management Board Gabrijel Škof, member
Milena Georgievski and two new members,
Matej Cergolj and Marko Rems.
The KD Holding Group introduces a new, more
contemporary corporate image. The reasons for
the change lie primarily in the rapid growth and
expansion of the Group in recent years.
KD Življenje organises a large family event
at Postojna Cave called Days of Culture and
Attractions.
March
The asset management company KD Skladi
reassumes the function of providing asset
management services for investment funds. The
stockbroking company KD BPD previously provided
these services.
The stockbroking company KD BPD moves to
new business premises at Neubergerjeva 30 in
Ljubljana.
The life insurance company KD Življenje begins
marketing a premium investment life insurance
product in Slovenia - Fondpolica Dirigent,
a life insurance with active management.
Fondpolica with an investment package
from the Bulgarian company KD Life receives an
award as best financial product of 2007 in the life
insurance category.
April
Benjamin Jošar assumes the function of
President of the Management Board of the
stockbroking company KD BPD.
33

34
Old city centre, Ljubljana, Slovenia

1.
KD Holding Group business report
Behind every number is an idea, behind every idea a face.

1.
Poslovno poročilo Skupine KD Holding
in finančne družbe KD Holding d. d.
Za vsako številko je misel, za vsako mislijo obraz.
38

Naše poslanstvo je
uspešno poslovanje.
Z učinkovitim, varnim
in donosnim upravljanjem
izkazujemo odgovornost
do finančnega premoženja.
Dober posel je vedno
tudi družbeno odgovorno
partnerstvo zaposlenih
in uporabnikov.
Zato skrbimo za zaposlene,
korporativno komuniciramo,
upravljamo s tveganji in
gradimo blagovne znamke.
39

1.1
Strategic orientations
of the KD Holding Group
Mission, vision and values
Trust is the basis of our present and future growth.
We act responsibly in mutual partnerships and take
particular care to respect the individuality of our
customers and employees.
The Group‘s operations are best summarised by the
central notion: Trust that grows.
Openness means providing access to all services, as
well as openness to new knowledge and solutions.
We therefore give a great deal of consideration to
Mission: responsible partnerships with customers,
employees and shareholders.
learning, knowledge and the recognition of new
development opportunities.
The Group responsibly, efficiently, safely and
38
profitably manages the financial assets of its
customers. The Group provides its employees the
best working conditions, training, the possibility of
advancement and incentives for quality work. The
Group generates expected growth and profit for
its shareholders and creates socially responsible
partnerships between equals.
Equality does not mean merely abiding by equal
opportunities; it also means actively striving for
respect between genders, nationalities, religions and
beliefs on a daily basis.
Realisation of strategic objectives and
orientations
Vision: developmental growth and responsive
expansion.
We are a respected, dynamic and socially
responsible financial group. Trustworthy experts
fulfil the expectations of customers with services
that are a step ahead of the times. Accessible in one
location, we shape the trends of financial services in
Southern and Eastern Europe.
We realise our mission and vision by taking into
account values which are the foundation of our
growth and development.
Our strategic objectives and orientations were
realised again in 2007 by seeking the best solutions
and taking advantage of opportunities for the growth
and development of all companies in the Group.
Consolidating and increasing market share
for activities in target markets
With EUR 107 million in net inflows and a 24.5
percent market share, we maintained our leading
position in Slovenia in the area of mutual funds.
We also consolidated our position in other markets
by successfully introducing new mutual funds. The
Group currently manages 24 mutual funds and two
investment companies throughout the region.

We achieve excellence in financial asset
Utilising synergies in the Group
management with our expert approach, long years
of experience in the domestic and regional capital
markets and through international links. This is
reflected in the operating results of our investment
funds which are, to a great extent, dependent on
developments on individual capital markets.
We were extremely successful in this area, as
the majority of funds (17) exceeded established
benchmarks. Several investment funds managed
by management companies within the Group have
received various domestic and international awards
for successful asset management.
The Group holds a 15 percent share of the
Slovenian life insurance market, while the Group’s
specialised life insurance company has risen to
second position. The Group successfully markets life
insurance in other markets in the region.
Unit-linked life insurance products, primarily
Fondpolica, stand out as the most successful
insurance products in the past year, both in Slovenia
and across the entire region. With an 18 percent
market share, the insurance company Adriatic
Slovenica consolidated second position among
composite insurance companies in Slovenia in 2007.
We began to actively carry out a project to
develop banking services. The project included a
group of experienced banking experts. Banking will
complement other insurance and financial products
and bring the Group’s range of products and
services full circle.
We accelerated the development of a new real
estate division. Our main project in this regard is the
Šumi business complex in Ljubljana.
In the past year, we reorganised the Group
and began introducing division-based operations.
Thus the Group operates in the following divisions:
investment fund management, private wealth
management and stockbroking, insurance, capital
investments and real estate. Division managers are
the presidents of the management boards of the
largest companies within a specific division. The
new arrangement will facilitate more efficient and
transparent operations.
We continued our growth in regional markets
where we are already present by introducing
complementary products to complete our offer of
mutual funds, private wealth management, life
insurance, stockbroking and sales of financial
services.
The strengths of several companies within KD
Holding Group both at home and throughout the
region were also successfully combined in the area of
financial-insurance products.
39

Continuing along the same path in 2008
40
We will continue introducing mutual funds,
classic and unit-linked life insurance products,
private wealth management and stockbroking
services, other financial products and the expansion
of the sales network in the region. We will enter the
markets of Macedonia and Ukraine and consolidate
our position in counties where we are already present.
In the area of investment fund management,
we will maintain our leading position in Slovenia
and strengthen our market share in South
Eastern Europe by increasing recognition. We will
complement our portfolio of products in accordance
with industry trends, guided by our aim to remain
innovative and maintain the customer as the centre
of activities.
In the area of private wealth management
and stockbroking, we plan to continue growing
our market shares to become one of the leading
providers of these services in the region. We will
improve management processes and employee
training and enhance private wealth management
services with a broad range of other financial
services.
In the area of life insurance, we plan to
collect more than EUR 100 million in premiums,
representing growth of 35 percent, and to continue
consolidating these insurance products at
KD Življenje. Together with the organic growth of
the company, KD Življenje will assume second
position among life insurance companies in 2008.
In the area of property insurance (including health
insurance), we plan to collect more than EUR 252
million in premiums, representing 7.6 percent
growth in property insurance and 8.5 percent
growth in health insurance.
We will also dedicate a great deal of energy to
the establishment of banking services in 2008.
These will complement the Group’s current range
of products and services and facilitate further
development and growth. We will therefore continue
developing banking services, which we will offer to
the market at the beginning of 2009.
We will strengthen the uniform approach of
all companies that operate on individual markets.
We will improve our position on all markets and
increase synergies.

1.2
Shares, dividends and ownership
structure
Basic information on shares, dividends
and equity
KD Holding’s share capital totalled EUR
98,215,756.97 as at 31 December 2007 and was
divided into 2,942,053 no-par-value shares (of which
2,675,640 were regular shares of KDHR, while
266,413 were preference participating shares of
KDHP). Share capital is defined in the company’s Articles
of Association, registered with the court and fully paid.
During the liquidation of the company, priority
in the payment of residual assets before holders of
ordinary shares in the amount of EUR 33.38.
Authorised capital totalled EUR 49,107,878 as
at 31 December 2007. Pursuant to the resolution
passed at the 8 th General Meeting of Shareholders
on 13 October 2005, the Management Board is
authorised to increase the company’s share capital
by a maximum of EUR 49,107,878 by issuing new
shares for cash or contributions-in-kind within five
years following the entry of the amendment to the
Articles of Association in the companies register (16
November 2005). The Management Board has not
Ordinary shares of KD Holding (KDHR) have been
listed on the OTC market of the Ljubljana Stock
Exchange since 5 February 2001. At incorporation,
all issued shares were defined as ordinary registered
shares with voting rights and a nominal value of EUR
33.38 each. The first General Meeting of Shareholders
held in May 2001 passed a resolution converting a
maximum of 595,691 ordinary registered shares into
cumulative preference shares with no voting rights.
Preference shares (KDHP) have been listed on the
OTC market of the Ljubljana Stock Exchange since 12
July 2001. The rights of holders of these shares include:
The right of priority in the payment of dividends
before holders of ordinary shares in the amount of
EUR 1.67, for a cumulative period of five years;
In the event of a dividend payout to holders of
ordinary shares, the right to the payment of additional
dividends of at least EUR 1.67, bringing the total
dividend to a maximum of EUR 3.34;
yet used the authorised capital.
The book value of the KDHR and KDHP shares
(KD Holding Group) was EUR 116.4 as at 31
December 2007 (2006: EUR 97.53). The book
value of a share is calculated as the book value of
the equity of majority shareholders as at the end of
the accounting period under the IFRS, divided by the
number of all shares, excluding treasury shares, as at
the end of the accounting period.
Net earnings per share pertaining to the majority
shareholders amounted to EUR 12.38 in 2007, up 78.1
percent compared to 2006, when it stood at EUR 6.95.
Net earnings per share was calculated as the net profit
pertaining to majority shareholders less dividends
paid on preference shares (excluding treasury
shares) for the accounting period, divided by the
average number of all issued ordinary shares,
excluding treasury shares, in the accounting period.
41

Share price movement
There were 3,259 transactions in ordinary
shares of KDHR with a total volume of EUR
16,097,473.19 made on the OTC market of the
Ljubljana Stock Exchange in 2007. The share price
stood at EUR 47.00 at the beginning of the year, its
low for the year. The share price had risen relatively
steadily to around EUR 110 by the middle of the
year. It then leapt to its high of EUR 191.05 in a
the price began to fall, reaching EUR 90.88 by the
end of November, when it underwent an upward
correction. The price stood at EUR 108.37 at the
end of the year. The daily volume of trading in these
shares was relatively low, and generally did not
exceed EUR 100,000. The only spike in trading
volume came in June, when it broke the
EUR 1 billion threshold.
single day, on 3 August 2007. After this sharp rise
Basic indicators for ordinary shares of KDHR:
Share details As at 31 December 2007 As at 31 December 2006 Index 2007/2006 (in %)
42
Number of shares 2,675,640 2,675,640 0
Market price (in EUR) 108.37 47.15 129.84
Market capitalisation (in million EUR) 289.96 126.16 129.84
P/E 8.76 6.78 29.20
Source: Ljubljana Stock Exchange, Bloomberg, own calculations of KD Holding
Comparison of changes in SBI20 (in points) and the share price of KDHR (in EUR) in 2007:
14,000
12,000
10,000
8,000
6,000
4,000
2,000
SBI20
KDHR
200
180
160
140
120
100
80
60
40
20
SBI20
0
0
KDHR
28. 12. 06
28. 1. 07
28. 2. 07
28. 3. 07
28. 4. 07
28. 5. 07
28. 6. 07
28. 7. 07
28. 8. 07
28. 9. 07
28. 10. 07
28. 11. 07
28. 12. 07
Source: Ljubljana Stock Exchange

There were 949 transactions in preference shares
of KDHP with a total volume of EUR 691,613.10
made on the OTC market of the Ljubljana Stock
Exchange in 2007. The share price began the year
at EUR 32.13, its low for the year. The price rose
moderately in the first half of the year compared
with the rest of the year. The price had risen from
EUR 32.13 to EUR 42.00 by the end of June.
in the price to EUR 100 on 19 February, its high
for the year. The price reached the same level on
12 and 15 October 2007. The price rose past
EUR 70 in the second half of the year and then
ended the year at EUR 65.60. The volume of
trading in preference shares of KDHP in 2007 was
significantly lower than that of the ordinary shares,
rarely breaking EUR 5,000 per day.
During this period there was a single-day spike
Basic indicators for preference shares of KDHP:
Share details As at 31 December 2007 As at 31 December 2006 Index 2007/2006 (in %)
Number of shares 266,413 266,413 0
Market price (in EUR) 65.60 32.13 104.17
Market capitalisation (in million EUR) 17.48 8.56 104.17
43
Source: Ljubljana Stock Exchange, KD Holding
Comparison of changes in SBI20 (in points) and the share price of KDHP (in EUR) in 2007:
14,000
12,000
10,000
8,000
6,000
4,000
2,000
SBI20
KDHP
120
100
80
60
40
20
SBI20
0
0
KDHP
28. 12. 06
28. 1. 07
28. 2. 07
28. 3. 07
28. 4. 07
28. 5. 07
28. 6. 07
28. 7. 07
28. 8. 07
28. 9. 07
28. 10. 07
28. 11. 07
28. 12. 07
Source: Ljubljana Stock Exchange

Ownership structure
The largest shareholder of the company KD Holding
is the company KD Group d. d., owning 1,776,657
registered ordinary shares, or 66.40 percent of all
shares, and 60.39 percent of all shares issued.
Ownership structure of KD Holding as at 31 December 2007:
Number of shareholders Number of shares Share (in %)
KDHR - registered ordinary shares
Domestic entities 31,224 2,506,886 85.21
Legal entities 130 2,185,593 74.29
Individuals 31,094 321,293 10.92
Foreign entities 254 168,754 5.74
Legal entities 51 166,534 5.66
Individuals 203 2,220 0.08
Total KDHR 31,478 2,675,640 90.94
44
KDHP - registered participating preference 0
Domestic entities 12,982 265,958 9.04
Legal entities 31 136,844 4.65
Individuals 12,951 129,114 4.39
Foreign entities 52 455 0.02
Legal entities 9 23 0.00
Individuals 43 432 0,01
Total KDHP 13,034 266,413 9,06
Total 44,512 2,942,053 100
Ten largest holders of ordinary shares (KDHR) as at 31 December 2007:
Shares KDHR
Shareholder Location Number of KDHR Share (in %)
1 KD Group d. d. Lljubljana 1,776,657 66.40
2 Auctor d. o. o. Lljubljana 118,168 4.42
3 Caranthania Investments Luxembourg 102,409 3.83
4 KDH Naložbe, d. o. o. Luxembourg 101.409 3.79
5 Avra d. o. o. Lljubljana 91,281 3.41
6 KD Holding d. d. Lljubljana 62,201 2.32
7 Zveza bank reg. z. zo. j. bank und revisions Klagenfurt 32,981 1.23
8 Kingshouse Investments Limited Limassol 15,746 0.59
9 Nordic Investments LLC Cheyenne 8,889 0.33
10 Šifrer Peter Medvode 7,982 0.29
Total of the top ten holders of KDHR shares 2,317,723 86.62
Other 357,917 13.38
Total KDHR 2,675,640 100

Ten largest holders of preference shares (KDHP) as at 31 December 2007:
Shares KDHP
Shareholder Location Number of KDHP Share (in %)
1 KD Holding d. d. Ljubljana 51,306 19.26
2 Spira pet d. o. o. Domžale 41,710 15.66
3 NLB d. d. Ljubljana 28,221 10.59
4 Marles d. d. Maribor 9,636 3.62
5 Vovk Boštjan Ljubljana 7,060 2.65
6 Tomažin Matej Ljubljana 2,050 0.77
7 DBS d. d. Ljubljana 1,298 0.49
8 Goldinar d. o. o. Koper 1,222 0.46
9 Kadič Cirila Koper 1,118 0.42
10 Vahčič Marjan Aleš Ljubljana 985 0.37
Total of the top ten holders of KDHP shares 144,606 54.28
Other 121,807 45.72
Total KDHP 266,413 100
Ten largest holders of regular (KDHR) and preference shares (KDHP) jointly as at 31 December 2007:
Shares KDHR and KDHP together
Shareholder Location Number of KDHR and KDHP Share (in %)
1 KD Group d. d. Ljubljana 1,776,657 60.39
2 Auctor d. o. o. Ljubljana 118,168 4.02
3 KD Holding d. d.
Ljubljana 113,507 3.86
4 Caranthania investments Luxembourg 102,409 3.48
5 KDH Naložbe, d. o. o. Ljubljana 102,298 3.48
6 Avra d. o. o. Ljubljana 91,281 3.10
7 Spira pet d. o. o. Domžale 41,710 1.42
8 Zveza bank reg.z.zo.j.bank und revisions Klagenfurt 32,981 1.12
9 NLB d. d. Ljubljana 28,221 0.96
10 Kingshouse investments limited Limassol 15,746 0.54
Total of the top ten holders of KDHP and KDHP shares 2,422,978 82.36
Other 519,075 17.64
Total KDHP and KDHP 2,942,053 100
45
Treasury shares
10 percent of the company’s share capital. Pursuant to
the eighth indent of Article 247 of the Companies Act, the
The company KD Holding held 113,507 treasury shares as
at 31 December 2007, as follows: 62,201 ordinary KDHR
shares and 51,306 KDHP preference shares, together
representing 3.86 percent of the company’s share capital.
General Meeting of Shareholders defined the minimum
and maximum purchase and sales price at which the
Management Board may acquire treasury shares. The General
Meeting of Shareholders of KD Holding, as parent company,
extended the authorisation for the purchase of KD Holding
On 30 August 2007, the General Meeting of Shareholders
authorised KD Holding’s Management Board to purchase
treasury shares in a total nominal amount not to exceed
treasury shares to the subsidiaries thereof, to companies in
which KD Holding holds a majority stake and to the third
persons set out in Article 251 of the Companies Act.

1.3
Corporate governance report
Responsible corporate governance is the basis for
all the KD Holding Group’s activities. This mission
Supervisory Board of the parent company, which
has a two-tier management system.
is pursued by the Management Board and the
Management bodies at KD Holding - tasks and responsibilities
General Meeting of Shareholders
Appointing and recalling Superisory
Board members
Awarding discharge
Deliberating on Supervisory Board members’ remuneration
Formation of proposals for resolutions
Reporting and notifying
Authorisation to convene the General Meeting
Formation of proposals for resolutions
Authorisation to convene the general
meeting
Report on the verification and
confirmation of the annual report and
stand regarding the auditor’s report
Awarding discharge
Deliberation on remuneration
linked to the appropriation of
undistributed profit
Reporting and notifying
46
Supervisory Board
Presenting the annual report
Proposal for the appropriation
of undistributed profits
Appointing and recalling
Management Board members
Management Board
Signing contracts with members of the
Management Board and deliberation
regarding their remuneration, approvals of
loans to members of the Management Board
Regular monitoring of the Management
Board’s operations
General Meeting of Shareholders
portion of balance sheet profit in the amount of EUR
18,801,026.54 as follows:
The General Meeting of Shareholders of KD Holding adopts
the basic decisions leading to the realisation of the central
economic objective: creating value for shareholders.
A portion of the balance sheet profit in the amount
of EUR 889,819.42 from profit brought forward was
earmarked for payments to holders of preference
cumulative participating KDHP shares.
At the General Meeting of Shareholders held on
30 August 2007, 77percent of shares with voting
rights were represented. The General Meeting of
Shareholders passed a resolution on the use of a
A portion of the balance sheet profit in the amount
of EUR 8,562,048.00 was earmarked for payments of
dividends to holders of ordinary KDHR shares. The gross
dividend per ordinary share of KDHR was EUR 3.20.

Based on a resolution of the General Meeting of
Shareholders, a portion of the balance sheet profit
in the amount of EUR 77,185.00 was used to pay
bonuses to the Supervisory Board and the Management
Board, EUR 34,185.00 going to the members of the
Supervisory Board in office on 31 December 2006,
and EUR 43,000.00 to the Management Board.The
remainder of the balance sheet profit in the amount of
EUR 9,271,974.12 was unused and the decision on its
the Management Board to purchase treasury shares, which:
granted the management board of KD Holding, the
subsidiaries in the Group and third parties the power to
purchase treasury shares in the parent company and
approved the conditions, in line with legislation, under
which purchases and disposals can proceed;
set terms under which the Management Board
can acquire or dispose of treasury shares outside the
organised market.
appropriation was deferred until the next year.
For the purpose of complying with the Corporate
At the same General Meeting of Shareholders,
shareholders granted relief to the Management Board and
the Supervisory Board, confirming and approving the work
of their members in the 2006 financial year. They also
appointed an auditor and approved a resolution authorising
Governance Code, the General Meeting of Shareholders
also passed a resolution amending the company’s
Articles of Association and a resolution defining monthly
payments to Supervisory Board members in place of the
previous session fees.
47
Supervisory Board
Aleš Vahčič, PhD
Aleš Vahčič, PhD, was first appointed member
The business of the parent company KD Holding is
supervised by a three-member Supervisory Board. Its
powers and responsibilities are set out by its own Rules
of Procedure, the company’s Articles of Association
and the applicable legislation. The Supervisory Board’s
current term of office runs from 7 March 2005 to 7
March 2009.
of the Supervisory Board on 6 March 2001 and
became Chairman of the Supervisory Board on 18
November 2004.
He has a doctorate in economics and is a professor at
the University of Ljubljana’s Faculty of Economics. He
has been a member of the Supervisory Board of the
Seaway Group since 2001.
Composition of the Supervisory Board:
Name and surname Function in Supervisory Board Profession (company/organisation) Function
Aleš Vahčič, PhD Chairman Faculty of Economics, Ljubljana Full professor
Alojz Penko Deputy Chairman Retired -
Bojan Sekavčnik Member PM&A FA d. d., Ljubljana Member of the Management Board

Alojz Penko
Alojz Penko was first appointed member of the
Supervisory Board on 20 August 2004.
He has been a member or chairman of the
supervisory boards of companies in the KD Group
(the legal predecessors of KD Holding) since 1995,
when he was appointed Chairman of the Supervisory
Board of PID Kmečki sklad 4 d. d., after which he
was a member of the supervisory boards of KD PID
d. d. and, between 2001 and 2004, KD Naložbe
d. d. Following the latter’s merger with KD Holding,
he was appointed to the Supervisory Board of KD
Holding in November 2004.
Work of the Supervisory Board
KD Holding’s Supervisory Board held five ordinary
sessions and two correspondence sessions in 2007.
It passed a total of 25 resolutions. The Supervisory
Board performed its duties responsibly during
the course of the year, and gave its unqualified
approval to the company’s annual report for 2007.
The Supervisory Board regularly monitored the
company’s operations, compiled the Supervisory
Board’s report on the review of the annual report,
gave its opinion on the audit report, monitored the
work of the Management Board and reviewed the
implementation of resolutions passed.
48
He is an engineer in agronomy and was educated
extensively in the field of economics during his
career. He retired in 2000. In the 1980s, he was a
member of the Management Board of the Postojna
Regional Chamber of Industry and Commerce and
was a member of the Executive Council of the
Municipality of Postojna. In the last ten years, he has
served two terms as Chairman of the Supervisory
Board of Zadružna kmetijska družba d. o. o., and one
as Chairman of the Supervisory Board of Postojnska
jama d. d., ending in 2003.
The remuneration of the members of the
Supervisory Board in the 2007 financial year was
as follows:
Session fees in the amount of EUR 27,784 gross;
Bonus payments in the total amount of
EUR 32,250 gross.
Bojan Sekavčnik
Bojan Sekavčnik was first appointed member of the
Supervisory Board on 6 March 2001.
He was a member of the Supervisory Board of
R.E. Invest between 2003 and 2005, prior to its
transformation to limited liability status.
He is currently a member of the Management Board
of PM&A FA d. d. (previously PM&A BPD d. d.).

Management Board
The Management Board of KD Holding consists
solely of Chief Executive Officer Matjaž Gantar, who
was first appointed on 6 March 2001. His current
four-year term of office began on 7 March 2005.
The CEO holds the following offices on management and supervisory bodies of other companies:
Company
Function
KD Group d. d., Ljubljana CEO since 2001
Adriatic Slovenica, d. d., Koper Member of the supervisory board since 2006
Seaway Group, d. o. o., Bled Member of the supervisory board since 2001
Petrol, d. d., Ljubljana Member of the supervisory board since April 2005 (until May 2008)
DRI Naložbe, d. o. o., Ljubljana General Manager since 2005
Vila Vzhod d. o. o., Ljubljana General Manager since 2005 (until May 2008)
Vila Zahod, d. o. o., Ljubljana General Manager since 2005
KDH Naložbe d. o. o., Ljubljana General Manager since 2007
KDH Naložbe d. o. o., Ljubljana General Manager since 2007
The CEO of KD Holding, Matjaž Gantar, received the following gross payments in 2007 (in EUR thousand):
49
Name and surname Fixed earnings Variable earnings Profit participation Option plan Other earnings Total
Matjaž Gantar 71,255 - 37,037 - - 108,292
Cooperation between the Management Board
and the Supervisory Board
Equity stakes of the Management Board and
Supervisory Board
In performing their respective roles, the
Management Board and the Supervisory Board
strictly implement their missions within the
two-tier management system as defined in the
applicable legislation and the company’s Articles of
Association. This includes regular communication
to allow the members of the Supervisory Board
to be kept informed of the company’s current and
planned operations.
As at 31 December 2007, CEO Matjaž Gantar held
2,643 ordinary registered shares of KDHR in the
company. The Chairman of the Supervisory Board,
Aleš Vahčič, PhD, held 594 ordinary registered
shares of KDHR in the company and 985 preference
participating shares of KDHP. Deputy Chairman of
the Supervisory Board Aleš Penko held 321 ordinary
registered shares of KDHR in the company and
Supervisory Board member Bojan Sekavčnik held 5
ordinary registered shares of KDHR.

The members of the Management Board and the
Supervisory Board currently hold no stock options in
KD Holding.
In 2007, we conducted an external assessment of
the quality of operations of the KD Holding Group’s
largest internal audit department, in accordance with
international standards for the professional practice of
internal auditing. The external assessor (the auditing
firm KPMG) issued the opinion that the internal audit
department, in all material aspects, operates costeffectively,
efficiently and successfully in accordance
with all standards for the professional practice of
internal auditing, the code of professional ethics for
internal auditors and principles of internal auditing.
Auditing and the internal control system
Transparency of the company’s operations
The financial statements of KD Holding Group for
2007 were audited by the independent auditors
PriceWaterhouseCoopers d. o. o. The certified
auditor issued an unqualified opinion on the annual
reports of the Group for 2007.
Transparency of operations is provided primarily by
keeping shareholders and the general public informed,
namely by providing regular bulletins and information
about particular events. Information regarding
operations, business plans and other important
At its inception, KD Holding established an internal
control system to protect the company’s assets and
reputation. In 2006, the company introduced an
activities is published on the company’s website
at www.kd-group.com and on the Ljubljana Stock
Exchange’s SEOnet website at http://seonet.ljse.si.
50
internal audit department at the parent company to
contribute to the generation of added value and to
improve the operations of the entire Group.
At the beginning of 2007, the KD Holding Group
adopted a strategy for the functioning of the internal audit
department, as well as uniform rules on the planning
and reporting of the internal audit department. We thus
established uniform bases for the collective development
of internal auditing activities and improved the oversight
of risk management within the Group.
Management of associated companies
Associated companies are actively managed via the
parent company’s representatives on their supervisory
boards. The policy for managing newly established
companies in new markets involves partnership
between experienced senior staff from the Group and
expert senior staff familiar with the local environment.

STATEMENT OF THE MANAGEMENT BOARD
AND THE SUPERVISORY BOARD OF KD
HOLDING D. D. REGARDING COMPLIANCE
WITH THE CORPORATE GOVERNANCE CODE
this information, being stated and available on the
company’s official website.
2. MANAGEMENT BOARD
The Management Board and Supervisory Board of
Items 2.3.2 and 2.3.3:
KD Holding d. d., finančna družba, Celovška 206,
1000 Ljubljana, Slovenia, hereby declare that the
management of KD Holding d. d. complies with
the Corporate Governance Code (Official Gazette of
the Republic of Slovenia, No. 118/05, amended on
5 February 2007), available on the website of the
Ljubljana Stock Exchange at http://www.ljse.si in
The policy for determining payments,
reimbursements and other benefits is not set out
in advance, as the company has a single-member
Management Board.
3. SUPERVISORY BOARD
Slovene and English, and below disclose and explain
the deviations from the individual provisions of the
Items 3.1.7 , 3.1.10 and 3.1.11:
Code identified at the time that this statement was
prepared.
1. RELATIONSHIP BETWEEN THE
COMPANY, SHAREHOLDERS AND OTHER
STAKEHOLDERS
Items 1.2.6 and 1.3.12:
The Supervisory Board functions as a collective
body and usually holds sessions in full composition,
with the participation of all members who at all
times strive for quality work and professional
decision-making. The Supervisory Board had not
introduced the evaluation of individual members’
work at the time this statement was issued.
51
KD Holding d. d. did not organise the collection of
proxy forms at the General Meeting of Shareholders
in 2007, either directly or via financial institutions,
other organisations or authorised persons. Nor did it
state on its website that the members of Management
and Supervisory Boards or employees at the company
were accepting proxy forms for voting at the General
Meeting of Shareholders. Should the Management
Board judge that there is sufficient interest to organise
the collection of proxy forms, it will provide for

7. AUDITING AND THE SYSTEM OF
INTERNAL CONTROLS
Item 7.1.3:
Item 8.6:
Before appointing the auditor at the General Meeting
of Shareholders, the company did not specifically
inform the shareholders of any other services that
the auditor provides or has provided to the company
in professional areas related to auditing. This
disclosure is expected to be made to shareholders at
the next General Meeting of Shareholders.
To date, the company has not published the
financial calendar for the next financial year
on its official website. The company ensures
that important business events are announced
periodically and on an ad hoc basis, at the earliest
opportunity, and thus endeavours to provide quality
information to investors.
8. DISCLOSURES
Item 8.7.2:
52
Item 8.2:
Given the existing shareholder structure, the cost
burden and the fact that most of the company’s
business partners are from the Republic of Slovenia
or neighbouring countries, the company feels that
at the time this statement was prepared, there was
no need to make ad hoc public announcements
in English. All principal information about the
company for the English-speaking business
community is included in the annual report
published in English.
The company does not directly monitor or publish
possible cross-affiliations with other companies
(ownership of a significant share of voting rights in
another company, which also holds a significant
share of the voting rights in KD Holding). The
company discloses notifications regarding changes
to the ownership of a significant share of voting
rights in KD Holding in a transparent manner,
and informs other public limited companies about
possible changes to the significant shares of voting
rights in the latter, in accordance with applicable
regulations.
Matjaž Gantar
Chief Executive Officer
Aleš Vahčič, PhD
Chairman of the
Supervisory Board

1.4
Operations of the KD Holding
Group in 2007
The KD Holding Group performed well in 2007, as
all key performance indicators improved compared to
2006:
operating revenue rose 25 percent compared
to the previous year, totalling EUR 455.6 million.
Net revenue from insurance premiums (EUR 294.8
million) represented the largest share of sales, an
increase of 16 percent compared to 2006;
net profit for the financial year was EUR 34.9
total assets stood at EUR 956 million at the end of
the year, an increase of 23 percent compared to
total assets at the end of 2006;
total equity was EUR 340.3 million, up 20
percent compared to the previous year;
high growth in net profit was also reflected in
return on equity, which was 11.2 percent in 2007,
representing a significant improvement compared to
2006.
million an increase of 67 percent compared to 2006;
Important indicators:
Indicator 2007 2006 Index
Net profit / capital (in %) 11.2 7.7 147
Independence rate (capital / total assets) (in %) 35.6 36.5 98
Earnings per share relating to majority shareholders (in EUR) 5 12.38 6.95 178
Share book value (in EUR) 6 116.40 97.53 119
Market capitalisation / capital book value 7 0.90 0.47 191
53
5 Earnings per share relating to majority shareholders:
Net profit of majority shareholders – dividend payout on preference
shares (excluding treasury preference shares)
The average number of total issued shares excluding treasury shares
7 Market capitalisation / capital book value:
Market capitalisation of both share classes
(excluding treasury shares) (as at 31 December 2007
Capital book value of majority shareholders (as at 31 December 2007)
6 Share book value:
Capital book value of majority shareholders (as at 31 December 2007)
The number of total issued shares excluding treasury shares (as at 31
December 2007)
Diluted earnings per share also take into account any granted options,
convertible bonds or other similar financial instruments. As the company
issued no such financial instruments this indicator is identical to earnings
per share relating to majority shareholders.

Highlights from the income statement
Income statement (in thousand EUR) 2007 2006 Index 2007 / 2006
Operating revenue 455,642 365,083 125
Net revenue from sales of goods and services 77,232 55,464 139
Net revenue from insurance premiums 294,759 253,274 116
Other operating revenue 26,964 15,812 171
Net finance income from investments* 56,687 40,533 140
Operating expenses 412,774 335,220 123
Cost of goods, material and services 91,908 80,926 114
Labour costs 59,251 50,057 118
Amortisation/depreciation and impairment 8,216 6,918 119
Net expenses for claims 231,813 186,343 124
Other insurance expenses 7,248 4,567 159
Other operating expenses 14,338 6,409 224
Operating profit or loss 42,869 29,863 144
Finance cost 6,553 5,514 119
Accrued profit from associates 11,141 4,373 255
Corporate tax 12,511 7,846 159
Net profit or loss for the year** 34,946 20,877 167
* The share of profits of associated companies is not included.
** Includes the portion of net profit for the financial year relating to minority owners.
54
Highlights from the balance sheet
Balance sheet (in thousand EUR) 31. 12. 2007 31. 12. 2006 Index 2007 / 2006
Assets 956,047 775,420 123
Intangible and tangible fixed assets 171,764 158,585 108
Investment property 20,602 20,592 100
Financial assets 500,830 378,752 132
Investments in shares and participations in associates 71,688 45,120 159
Inventories, loans and other receivables 150,761 141,966 106
Reinsurance contracts 11,005 8,632 127
Deferred tax assets 0 1,464 0
Cash and cash equivalents 29,398 20,310 145
Liabilities and equity 956,047 775,420 123
Equity* 340,264 282,806 120
Liabilities arising from insurance contracts 368,922 295,191 125
Investment contracts 15,604 13,791 113
Financial and operating liabilities (excluding insurance contracts) 231,257 183,632 126
Financial liabilities 170,563 117,750 145
Operating and other liabilities 58,166 65,882 88
Deferred tax liabilities 2,528 0 -
* Also includes minority interest.

Operating revenue
Structure of operating revenue
Total operating revenue was EUR 455.6 million in
2007, up 25 percent compared to 2006.
Net revenue from insurance premiums represents
the largest share of total revenue (65 percent of
revenue of the entire Group). This revenue was up
16 percent compared to the previous year.
Net finance income from investments recorded even
higher growth (40 percent), as did net revenue from
sales of goods and services (39 percent) and other
operating revenue (71 percent). Net revenue from
sales of goods and services was EUR 77.2 million
in 2007, and represents the second highest share of
total revenue. This growth is primarily the reflection
of a large jump in revenue from management and
subscription fees.
55
Operating revenue and changes in 2007 and 2006 (in thousand EUR):
2007
77,232 294,759 26,964 56,687
Net revenue from sales of goods
Net revenue from indurance premiums
Other operating revenue
Net financial revenue from investments
(The share of profits of associated
companies is not included)
2006
55,464 253,274 15,812 40,533
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000

Sales revenue
Sales revenue 8 amounted to EUR 372 million in
2007. Financial intermediation (insurance and
financial services in the graph below) represents
the majority (87 percent) of sales revenue of the KD
Holding Group, maintaining a level similar to that
achieved in 2006 when the share was 88 percent.
Structure of sales revenue by business segment in 2007 (in %):
Property insurance 35%
Health insurance 24%
Life insurance 20%
Financial services 8%
Cinematography 5%
Other 8%
56
Sales revenue by business segment in 2007 and 2006 (in thousand EUR):
2007
2006
Life insurance
Property insurance
76,083
54,236
131,459
122,691
Health insurance
89,220
77,884
Financial services
28,552
14,902
Cinematography
18,679
16,083
Other
27,998
22,915
ddddddddddddddddddddd
0 20,000 40,000 60,000 80,000 100,000 120,000 140,000
8 Sales revenue: Net revenue from sales of goods and services + net sales revenue from insurance premiums

In 2007, the highest relative and absolute growth
Net finance income from investments
was achieved in life insurance (40 percent growth)
and financial services (92 percent growth). Life
insurance revenue (EUR 76 million) is approaching
the level of health insurance (EUR 89.2 million),
which ranks second, while property insurance (EUR
131.5 million) still ranks first, despite lower growth
of 7 percent compared to the previous year. Growth
was also achieved in cinematography (16 percent).
Finance income from investments recorded 40
percent growth in 2007 compared to the previous
year, totalling EUR 56.7 million. The largest
contribution came from favourable trends in capital
markets which, with successful management of
financial assets, were the biggest contributors to
improved results from financial operations.
A large increase in the net financial result of the
life insurance segment stems from unit-linked
investments. Because of the nature of the product
however, the positive result can be attributed to
premium payments by policyholders.
57
Net finance income from investments by business segment in 2007 and 2006 (in thousand EUR):
2007
2006
Life insurance
Property insurance
27,130
12,986
25,448
11,173
Health insurance
2,479
1,508
Financial services
1,984
14,505
Cinematography
55
-5
Other
-5,000 ddddddddddddddddddddd
0 5,000 10,000 15,000 20,000 25,000 30,000
-409
369

Operating expenses
Operating expenses amounted to EUR 412.8
million in 2007. In 2007, the Group increased
its cost efficiency compared to the previous year,
as operating expenses grew at a slower rate than
operating revenue (operating expenses rose by
23 percent, while operating revenue rose by
25 percent).
The cost structure did not change significantly.
Net expenses for damages paid still account for
the largest share of total operating expenses, and
remain at the previous year’s level (56 percent).
Labour costs rose by 18 percent compared to 2006,
and accounted for 14 percent of operating expenses,
a decrease of 1 percentage point.
58
Structure of operating expenses and changes in 2007 and 2006 (in thousand EUR):
2007
91,908 59,251
231,813 14,33862.966
8,216 7,248
Costs of goods, material and services
Labour costs
Amortisation/depreciation and impairment
Other insurance costs
Net costs for claims
2006
80,926
50,057
6,918
253.274
186,343
6,409
4,567
Other operating expenses
0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000

Business performance
Net profit for the financial year was EUR 49.2
million, representing an increase of 44 percent
compared to 2006. The largest contributors to the
profitability of the KD Holding Group were insurance
and financial services.
Realised profit by business segment in 2007 and 2006 (in thousand EUR):
Life insurance
-101
2,623
Property insurance
28,124
16,246
Health insurance
4,628
2,146
Financial services
11,269
8,578
Cinematography
151
-736
2007
2006
Other
-1,203
1,006
59
-5,000 ddddddddddddddddddddd
0 5,000 10,000 15,000 20,000 25,000 30,000
Operating margin
Net profit for 2007 was EUR 34.9 million,
demonstrated above-average growth is noteworthy,
up 67 percent compared to the previous year.
while cinematography generated loss.
In terms of margin, property insurance, which
Net profit of the KD Holding Group in 2007 and 2006 (in thousand EUR):
34,946
2007
2006
20,877
0 ddddddddddddddddddddd
5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

Net profit by business segment in 2007 and 2006 (in thousand EUR):
Life insurance
71
1,876
Property insurance
22,272
12,368
Health insurance
3,019
1,530
Financial services
14,546
6,394
Cinematography
-2,422
-1,300
2007
2006
Other
-2,540
-5,000 0 5,000 10,000 15,000 20,000 25,000
9
60
Assets
Total assets of the Group stood at EUR 956 million
at the end of the year, an increase of 23 percent
compared to total assets of EUR 775.4 million at
the end of 2006.
Assets and changes in 2007 and 2006 (in thousand EUR):
In the structure of assets, investments in shares and
participations in associates (59 percent growth) and
financial assets (32 percent growth) recorded the most
significant increases. Financial assets also account for
the largest share of total assets (52 percent).
The majority of assets were represented by the
insurance segment (58 percent) and financial
services (33 percent).
Intangible and tangible fixed assets
Investment property
31. 12. 2007
171,764 500,830
71,688
20,602
150,761
29,398
11,005
Financial assets
0
Investments in shares and participations
in associates
Inventories, loans and other receivable
Reinsurance contracts
Deferred tax receivables
Cash and cash equivalents
31. 12. 2006
7.248
158,585 20.592 378,752
45,120 141,966
20,310
8,632
1,464
0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1.000.000

Similar to 2006, the largest increase in assets in 2007
was in the life insurance segment (63 percent growth
compared to 2006), and was followed by property
insurance and financial services. In terms of volume,
the life insurance segment (EUR 249 million) is
approaching the level of property insurance
(EUR 272 million). One of the primary reasons for
growth in the life insurance segment is strong growth
in premiums collected in Slovenia and abroad,
resulting in an increase in premium reserves.
Structure of assets by business segment as at 31 December 2007 (in %):
Financial services 33%
Property insurance 28%
Life insurance 26%
Cinematography 6%
Health insurance 4%
Other 3%
61
Assets by business segment as at 31 December 2007 and 2006 (in thousand EUR):
Life insurance
249,388
153,263
Property insurance
272,022
231,675
Health insurance
42,218
42,073
Financial services
308,331
271,659
Cinematography
58,546
61,335
31. 12. 2007
31. 12. 2006
Other
25,542
15,415
0 ddddddddddddddddddddd
50,000 100,000 150,000 200,000 250,000 300,000 350,000

Financing
Due to the high growth in assets in the insurance
segment (primarily in the life insurance segment),
liabilities arising from insurance contracts recorded
significant growth (25 percent) on the liability side.
The expansion of the Group to markets and capital
increases in existing companies also required
As a result, the independence level of capital
indicator fell from 36.5 to 35.6. It should be
mentioned here that this indicator is low due to
the specific nature of insurance balance sheets,
which disclose a high level of liabilities arising from
insurance contracts on the liability and equity side.
financing in the form of additional equity and debt
sources. In this regard, financial liabilities rose by
45 percent, reaching EUR 170.6 million at the end
of 2007 (two issues of KD Holding d. d. bonds
accounted for EUR 79.1 million of this amount),
while equity increased by 20 percent compared to
Finance expenses rose by 19 percent in 2007
compared to the previous year. Interest on
KD Holding d. d. bonds issued and interest on
bank loans represent the largest portion of finance
expenses.
2006, totalling EUR 340.3 million.
62
Liabilities and equity and changes as at 31 December 2007 and 2006 (in thousand EUR):
31. 12. 2007 340,264 368,922 15,604 170,563 62.966 58,166
2,528
31. 12. 2006
282,806
295,191
13,791 117,750 65,882
7.248
0
0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000
Equity
Liabilities arising from insurance contracts
Investment contracts
Financial liabilities
Deferred tax liabilities
Operating and other liabilities

Ljubljansko barje wetlands, Slovenia
63

1.5
Risk Management
64
The Management Board of KD Holding d. d.
manages risks at the company and for the entire
Group. Since the company is a holding company,
it is extremely important that risks at subsidiaries
are also appropriately managed. The controlling
company establishes guidelines regarding the
ratios between risks, return and capital, carries
out periodic reviews and provides guidelines for
implementing business policies and strategies for
individual Group companies.
Strategic risk
Strategic risks related to the long-term development
of the Group include the risk of loss arising
from incorrect business decisions, inappropriate
implementation of adopted decisions and
insufficient responsiveness to changes in the
business environment. Strategic risks are managed
through the implementation and regular review of
the adequacy of defined strategies of the company
and its subsidiaries. The adoption of investment
decisions for specific areas and activities is of vital
strategic importance given the extremely diverse
activities of the companies owned by KD Holding.
The corporate governance system is adapted to the
development and growth of individual areas and
to achieving expected returns. All projects that are
reasonable in terms of synergy effects are carried
out and coordinated at the Group level. These are
primarily development projects, projects introducing
information solutions and other projects important
for strategic development. Risks in this area are
mitigated through planning and the continuous
monitoring of project progress in accordance with
Project Management Rules.
General business risks
Our activities have no direct impact on
developments in economic, legislative and other
environments. Thus risks are more difficult to
measure and model. We manage these risks by
regularly monitoring legislation, capital markets
and macroeconomic parameters. Amendments
to legal regulations which significantly affect our
business environment are quite frequent. A series of
legislative changes have occurred in Slovenia and
the countries of South Eastern Europe in the past
year that have affected our key areas of operations
and required numerous activities to adapt them.
Financial risks
The primary purpose of financial risk management
is to achieve stable operations and reduce exposure
to specific risks to an acceptable level. The Group is
exposed to financial risks through its financial assets
and liabilities, reinsurance receivables and insurance
liabilities. The possibility that inflows from financial
investments will not be sufficient to cover outflows
from insurance contracts represents the main risk.
Given that most companies in the Group are involved
in regulated activities, this area is already controlled

to a great extent by observing legislative provisions.
The most significant components of financial risk
are changing interest rates and securities prices and
currency and credit risk.
acts. Operational risk also includes IT risk, which is
the risk of loss resulting from inadequate information
technology and processing, particularly in terms
of manageability, access, integrity, supervision
and continuity. Operational risk is managed
The risks related to market risk management are
managed independently by Group companies using
methods linked primarily to the legal aspects of
specific industries and may vary significantly by
individual divisions. Group companies monitor
and manage market risks from investments in
other issuers of securities by carefully selecting
the industrial and geographical composition of
investments. In the asset management activity,
market risks are monitored, measured and managed
using quantitative risk measurement methods
compared with selected profitability criteria (beta
parameter values compared to a benchmark,
tracking error and relative risk). In accordance with
the Insurance Act, insurance companies are obliged
to match long-term business fund investments with
their liabilities arising from insurance contracts, the
amount of which depends on changes in exchange
rates, interest rates and securities prices.
Operational risk
Operational risk (including legal risk) is the risk
of loss arising primarily due to inadequate or
incorrect implementation of internal controls, other
inappropriate conduct by personnel involved in
the company’s internal operations, inadequate or
incorrect functioning of systems that relate to the
company’s internal operations and external events or
by companies by identifying opportunities and
threats in their respective areas and by managing
business processes. The management of these
risks is subordinate to the strategic and business
objectives of individual areas and companies. The
Group manages operational risk by introducing
the ISO standards and using standard software for
accounting and investments. Risks are also mitigated
by a standardised system of annual planning and
reporting that enable the parent company to be
informed about the operations of subsidiaries in a
timely manner.
Insurance risks
Within the framework of insurance risk the
company’s operations are exposed to underwriting
process risk, product design risk, pricing risk,
economic environment risk, policyholder behaviour
risk, reserving risk and claims risk.
Insurance companies in the Group have developed
their own policy for concluding insurance contracts
with the aim of spreading assumed risks. Insurance
risks are managed as follows:
Risks that exceed a predetermined amount are
transferred to a reinsurance company;
Assumed risks are spread and we achieve,
within each individual category, a sufficient number
of risks to reduce the variability of expected results;
65

66
Parameters defining the insurance premium are
assessed adequately when new insurance products
are developed.
Human resource risk
The risk in this area is carefully managed at the
Group level, as employees are the key to our
success. To mitigate the risk of excessive employee
turnover, we constantly educate and train our
employees, attend to the working environment
and general employee satisfaction (by measuring
organisational climate and culture), organise
meetings of all employees, stimulate affiliation with
the Group, implement a system of annual interviews
with co-workers and strengthen the social security
of employees with additional insurance (accident,
pension, etc.). We also give special attention to the
system of remuneration and advancement.
Reputation risk
A potential loss due to a negative corporate or Group
image is difficult to measure and even more difficult
to correct. We maintain and augment the Group’s
reputation and boost the value of our brands in the
eyes of our customers, business partners, owners,
investors and regulators through good performance
and by managing all other risks. We constantly
communicate with the community and financially
support numerous cultural and sporting events, and
humanitarian campaigns.
IT-related risk
We constantly introduce new information support
(or improve existing support) for work process at all
companies in the Group. We manage this process
through an appropriate organisational structure,
the inclusion of specialist departments, internal
auditing, diligent testing and project management.
In 2007, the entire information system functioned
practically without interruption in the companies of
KD Holding Group. Group companies also have a
well-structured business continuity plan.
Reporting risk
Risk in the areas of information and communication
is managed by proactively communicating at
the same level with the media and stakeholders.
In doing so, we comply with applicable legal
standards, rules of supervisory bodies and
communication requirements of stock exchanges.
Management of this type of risk is indirectly
reflected through the strengthening of the
company’s reputation and its brand, products and
services.
Legal risk
Legal risk is the risk of loss arising from the violation
of or improper adherence to laws, implementing
regulations, instructions, recommendations,
contracts, good practices or ethical standards. These
risks are managed through the adoption of internal

ules of operation aimed at reducing the probability
of harmful consequences and preventing actions
caused by such circumstances. The legal function is
integrated into the adoption of business decisions,
providing for the timely detection of legal risks.
Incidental risk
Incidental events are quite rare but may have severe
consequences for operations. The company protects
itself against incidental risk through insurance or
reinsurance contracts.
Risk related to securities issued by KD
Holding
The holders of securities issued by KD Holding are
exposed to the following risks:
67
Market risk: shares and bonds are sensitive to
changes which the issuer cannot influence such as
changes in the economy or legislation, crises, and
natural and ecological disasters;
Liquidity risk: the risk of a security holder not being
able to sell a security or only being able to sell it at a
lower price owing to insufficient demand;
Credit risk: the risk of the bond issuer failing to pay
interest and principal.
KD Holding can only impact the exposure to credit
risk by managing other risks and thus influencing the
stability and long-term growth of the Group.

68
Bratislava, Slovakia

Sarajevo, Bosnia and Herzegovina
69

70
Croatian Istria - portrait

Bratislava, Slovakia - portrait
71

1.6
Human resource management
At the KD Holding Group, we strive for highly committed
and motivated personnel. We therefore facilitate
Number of employees, educational and age
structure
Number of employees
advancement and career development at companies in the
Group. We will continue to dedicate a great deal of time
to promoting the acquisition of new, quality knowledge
that will provide employees the opportunity to develop
universally. We are aware that the success of any company
depends on satisfied, loyal and motivated employees and
The Group has undergone rapid and intensive growth
since its establishment. This constant development is
the result of the expansion of operations in Slovenia and
on foreign markets, the opening of new companies and
ownership consolidation within the Group.
that they are a key factor in the successful realisation of the
Group’s vision, mission and strategic objectives.
The Group had 1,927 full-time employees at the end
of 2007, 1,720 in Slovenia, and 207 abroad. This
represents an increase of 6 percent compared to the
previous year. Adriatic Slovenica has the largest number
of employees (1,090) in the KD Holding Group. Adriatic
72
Slovenica is followed by KD Finančna točka, with a staff
of 137 and Kolosej kinematografi, with 90 employees.
Number and share of employees as at 31 December 2007 compared to 2006 and 2005 at individual KD Holding Group companies:
Company 31. 12. 2005 31. 12. 2005 31. 12. 2006 31.12.2006 31. 12. 2007 31. 12. 2007
(share in %) (share in %) (share in %)
ABDS d. d., Sarajevo - - 7 0.39 6 0.31
Adriatic Slovenica d. d., Koper 1,123 63.92 1,106 61.38 1,090 56.56
Arena Film Kft, Budapest 0 0 - - - -
Coloseum Multiplex holdings, b. v.,
Amsterdam
1 0.06 0 0
0 0
ČZD Kmečki glas, d. o. o., Ljubljana 39 2.22 39 2.16 36 1.87
GEA College d. d., Ljubljana - - - - 14 0.73
GEA College - CVŠ d. o. o., Ljubljana - - - - 4 0.21
GEA College - PIC d. o. o., Ljubljana - - - - 3 0.16
Globus Film d. o. o., Koper 0 0 0 0 0 0
Globtour d. o. o., Ljubljana 88 5.01 79 4.38 - -
Firsthouse Investments ltd., Cyprus 0 0 0 0 0 0
Fontes Group d. o. o., Belgrade - - - - 0 0
KD Asset Management d. o. o., Amsterdam 1 0.06 1 0.06 1 0.05
KD BPD, d. o. o., Ljubljana 48 2.73 68 3.77 46 2.39
KD Capital Management S. A., Bucharest 8 0.46 14 0.78 16 0.83
KD Finančna točka, d. o. o., Ljubljana - - - - 137 7.11
KD Found Advisors LLC, Woodlands - - - - 0 0

Number and share of employees as at 31 December 2007 compared to 2006 and 2005 at individual KD Holding Group companies:
Company 31. 12. 2005 31. 12. 2005 31. 12. 2006 31. 12. 2006 31. 12. 2007 31. 12. 2007
(share in %) (share in %) (share in %)
KD Holding d. d., Ljubljana 51 2.90 62 3.44 60 3.11
KD Investments d. o. o., Ljubljana* 40 2.28 34 1.89 35 1.82
KD Investments a. d., Belgrade 0 0 0 0 12 0.62
KD Investments správ. spol., a. s, Bratislava 8 0.46 8 0.44 9 0.47
KD Investments EAD, Sofia 30 1.71 36 2.00 11 0.57
KD Investments d. o. o., Zagreb 21 1.20 24 1.33 29 1.50
KD Investments b. v., Amsterdam 0 0 0 0 0 0
KD Investments Sp. Z. o. o., Warsaw 0 0 0 0 0 0
KD Kapital d. o. o., Ljubljana - - - - 1 0.05
KD Kvart d. o. o., Ljubljana - - - - 5 0.26
KD Life AD, Sofia - - - - 25 1.30
KD Life, Kiev - - - - 9 0.47
KD Life Asigurari S. A., Bucharest - - 21 1.17 26 1.35
KD Life s. r. o., Prague - - - - 7 0.36
KD Mark d. o. o., Ljubljana 0 0 0 0 1 0.05
KD Mont a. d., Podgorica 4 0.23 4 0.22 6 0.31
KD Private Equity d. o. o., Belgrade - - - - 0 0
KD Securities EAD, Sofia - - - - 15 0.78
KD Upravljanje imovinom d. o. o., Zagreb 5 0.28 6 0.33 8 0.42
KD ViFin s. r. o., Bratislava - - - - 9 0.47
KD Življenje d. d., Ljubljana** 107 6.09 116 6.44 78 4.05
Kinematografi Kolosej d. o. o., Tuzla 0 0 0 0 0 0
Kinematografi Maribor d. o. o., Maribor 1 0.06 1 0.06 0 0
Kolosej kinematografi, d. o. o., Ljubljana 95 5.41 97 5.38 90 4.67
Kolosej Celje d. o. o., Celje 0 0 0 0 0 0
Kolosej Maribor d. o. o., Maribor 5 0.28 3 0.17 2 0.10
Ljubljanski kinematografi d. d., Ljubljana 7 0.40 6 0.33 4 0.21
Oklev d. o. o., Ljubljana - - - - 0 0
Onisac d. o. o., Ljubljana 1 0.06 0 0 27 1.40
R.E. Invest d. o. o., Ljubljana 5 0.28 4 0.22 1 0.05
SAI KD Investments S. A., Bucharest 32 1.82 13 0.72 5 0.26
SC KD Fond De Pensii S. A., Bucharest - - - - 8 0.42
Svet zavarovanj d. o. o., Ljubljana, Bucharest 20 1.14 36 2.00 - -
VIB a. d., Banja Luka - - - - 4 0.21
Vrtnarstvo Celje d. o. o., Celje - - - - 86 4.46
Zabavni Centri d. o. o., Zagreb 0 0 0 0 0 0
ZAP d. o. o., Murska Sobota 17 0.97 15 0.83 0 0
2INVEST s. r. l., Bucharest 0 0 2 0.11 1 0.05
Skupaj 1,757 100 1,802 100 1,927 100
73
* KD Skladi, d. o. o., since 16 January 2007
** Slovenica Življenje d. d. in 2005 and 2006

Employee educational structure
More and more people with higher educational
levels are employed at the Group every year. At the
end of 2007, 48.78 percent of employees held an
educational level VI or higher, in line with the job
systemisation and the requirements of key areas
such as asset management and insurance. Level V
The number of employees with Level VII or higher
education was again higher than in the previous
year. Quality, highly educated personnel, continually
searching for new knowledge and skills in the
stimulating Group environment, are another reason
for optimism.
education was held by 42.03 percent of employees,
with the remaining 9.19 percent holding Level I to
IV education.
74
Educational structure of employees as at 31 December 2007 compared to 2006 and 2005:
0 % 10% 20 % 30% 40% 50% 60%
VIII level
VII/2 level
0.26
0.22
0.29
4.72
3.69
3.23
VII level
31.24
30.41
27.48
VI level
12.56
12.73
12.97
2007
2006
2005
V level
I-IV level
ddddddddddddddddddddd
42.03
45.73
48.95
9.19
7.22
7.08

Employee age structure
The age structure of employees indicates that
three-quarters of the Group’s entire workforce are
less than 45 years of age, although this figure is
down slightly from previous years. The workforce
thus primarily consists of young people. At the end
between 26 and 40 years of age. The largest group
of employees (19.51 percent of the total workforce)
were those between 26 and 30 years of age, followed
by those between 31 and 35 years of age (17.96
percent) and those aged 36 to 40 (16.40 percent).
of the year, more than half of all employees were
Employee age structure as at 31 December 2007 compared to 2006 and 2005:
0% 5% 10% 15% 20% 25%
above 56
51-55
3.74
4.03
4.24
8.35
8.48
8.90
75
46-50
12.77
11.29
11.73
41-45
15.15
15.81
15.64
36-40
16.40
15.87
16.37
31-35
17.96
18.40
16.77
26-30
19.51
19.83
19.83
6.07
2007
2006
2005
21-25
under 20
ddddddddddddddddddddd
6.01
6.35
0.05
0.28
0.17

Number and educational structure of
KD Holding employees
Employee educational structure in 2007 compared to 2006:
The average number of employees at KD Holding
in 2007 was 57.7, or 9.56 percent less than in
2007 when the average number of employees
0 % 10% 20% 30% 40% 50% 60% 70%
VIII 0.00
0.00
was 63.8.
VII/2
10.00
11.29
76
The educational structure of employees at KD
Holding shows that the majority (60 percent) of
employees had a level VII education in 2007.
Ten percent of employees had level VII/second
cycle education, 5 percent had a level V education
and just 1.67 percent of employees had a lower
level of education (levels I to IV). A comparison
with 2006 indicates the largest increase was
recorded by employees with a level V education,
with slight decreases in other educational levels.
VII
VI
V
I-IV
ddddddddddddddddddddd
2007
2006
60.00
61.29
5.00
8.06
23.33
16.13
1.67
3.23
Human capital development
Recruitment process
We pursue the Group’s vision and mission in the
recruitment processes. In addition to meeting all
requirements of a position, we are particularly
diligent in choosing ambitious, competitive
candidates, with the potential to develop and with
values and interests in line with the strategy of the
KD Holding Group. In 2007, we again applied our
principle of putting the right people in the right
positions with the expert, high quality selection
of personnel to ensure the best support of all our
activities.
Employee development oriented investing
Investing in employee knowledge is considered
investing in the future of the KD Holding Group.
We therefore make planned investments to improve
the professional qualifications and general work
competencies of our employees. We will continue
to provide this through education and training. In
particular, we will strive to establish more
in-house training and include all potential in-house
educators in the process of continuous education,
while ensuring the constant transfer of knowledge
between employees.

Employees have undergone training and education to
obtain higher degrees of formal education and to gain
special expertise and soft managerial skills such as
efficient management, communication, motivation and
teamwork.
Regular annual interviews with employees and
organisational climate measurements have been
conducted by several companies in the KD Holding
Group. In the future, we intend to further strengthen
such job performance measurements and introduce
them to as many companies in the Group as
possible and further improve employee satisfaction.
Human resources activities in 2008
The introduction and development of tools and
mechanisms to raise employee performance and
commitment, applying the principle that only the
best is good enough for our employees;
The continuation of the process of strategic
planning and management of the Group. Special
attention will be placed on ensuring that the Group’s
divisional strategies match those of the subsidiaries;
Greater emphasis on the education and training
system: particular focus on special programmes for
training sales teams in asset products using
in-house and outside trainers;
Health and safety at work, social security
Health and safety at work is one of our basic
responsibilities. All companies in the Group organise
seminars on safety at work which are attended by
all employees. The principle of social security for
employees is a pillar of HR policy at all companies
in the KD Holding Group. Employees may also opt
for supplementary collective pension and accident
insurance.
The development of a system of rewarding
performance in the division, in the Group and in
project work;
The continuing organisation of the most diverse
social events for employees.
77
Events for employees in their spare time
The employees of the Group continued to enjoy
social events in 2007. There are a number of
sporting societies at the Group that organise
different sporting activities for the active enjoyment
of employees in their free time. Most of these
societies organise internal social events at the
end of the year for employees and presentation of
Christmas gifts for employees’ children.

78
Kalemegdan - Belgrade, Serbia

Kalemegdan - Belgrade, Serbia
79

80
Belgrade, Serbia

Terazije - Belgrade, Serbia
81

1.7
Corporate communications
Internal communications
82
Efficient communication management in the Group
is based on clearly defined long-term communication
objectives that support the operations and
strategic orientation of the entire Group.
Realisation of communication objectives
Corporate communication is a strategic function
with an emphasis on success, efficiency, soundness
and the justification of relationships between the
organisation and its stakeholders. The Corporate
Communications Department plans, coordinates
and implements communication activities that
provide for a professional approach to everyday
communication with employees, the media,
suppliers, customers, the local community,
decision-makers and other relevant publics.
Activities in 2007 were focused on the realisation of
the following long-term objectives:
support of operations and the strategic
orientation of the Group,
strengthening the reputation of the Group in the
eyes of key publics,
building a “coalition” of journalists and
maintaining a positive media image,
enforcing the division-based organisational
structure in the area of corporate communications,
creating a positive organisational climate.
With contemporary, planned internal
communication, our objective is do to more than
inform; we also aim to motivate and enthuse
employees and stimulate them to increased
productivity while creating a positive atmosphere at
the company. With open, two-way communication
between employees and management, we build
a strong alliance. Employees are informed about
key current events via the intranet. In the weekly
electronic business news, we present in detail
the activities of KD Holding Group subsidiaries in
Slovenia. We also prepare a bi-weekly publication
in English to inform employees about events at
companies abroad. We recognise the importance
of a personal, direct form of communication. We
therefore prepared a number of conferences and
consultations last year intended for management
and specialist staff within the Group and organised
various social events.
External communications
Last year, the Group continued to develop mutually
beneficial relationships with important external
publics, such as shareholders, the local community,
decision makers, investors, policyholders and other
customers. The different activities of companies
within the Group require a tailored approach to
specific publics. Regular communication with
them has contributed positively to the successful
operations and development of the entire Group.

Communication of priority projects of the KD
Holding Group
Last year, the Group continued its cooperation with
the media regarding the communication support of
key projects. The companies of the Group operate in
with clear profiles. We therefore give a great deal
of attention to the public positioning of experts for
various areas within the Group.
Internet communications
an extremely competitive environment. It therefore
makes sense to continue proactively communicating
key projects in order to consolidate our market
position. Financial and insurance services are, to a
great extent, subject to brand recognition. At the KD
Holding Group, we treat every large project as an
opportunity to present the project and its benefits
for consumers and as an opportunity to build our
corporate recognition and image.
In 2007, we launched our corporate website,
www.kd-group.com.
In addition to its new look, the updated website
offers comprehensive information. It includes five
major headings: About the Group, Financial Centre,
Press Room, Social Awareness and Employees. The
Group’s more visible web approach has only just
begun. We are also planning to update the websites
of individual companies, which will present in detail
Building a “coalition” of journalists
We have enhanced our cooperation with editors and
journalists who regularly monitor economic topics and
the work of the KD Holding Group. The results of these
activities are not necessarily a direct communication
of a specific contribution, but primarily represent
improved journalistic awareness of individual topics.
Thus the Group clearly demonstrates its corporate
value of openness as a readiness to communicate,
which is the basis for building positive relationships
with journalists and editors.
Public appearances of key representatives of
the Group
Due to the diversification of the Group’s services, it
was vital to build and maintain a system of speakers
who make appearances for specialist topics. The
individual activities of the Group require speakers
the products and services of our key activities. At
the Group, we are fully aware of new trends in web
media. We will therefore provide web content with
new dimensions in 2008.
Communication activities in 2008
In 2008, corporate communication as a strategic
function of the Group will continue to emphasis
success, efficiency, soundness and the justification
of relationships between the organisation and its
stakeholders. The enforcement of the division-based
organisational structure in the area of corporate
communication will be one of the Group’s most
important activities. This will entail coordinating
corporate communication at the division or holding
level and entrusting product communication to
individual companies.
83

1.8
Information support
using the system to provide service providers with
comprehensive and extremely up-to-date information
Behind us is a vibrant year, in which the KD Holding
Group continued to expand. Thus there was no lack
of challenges in the area of information support.
Information technology today uses advanced
solutions to actively contribute to the creation of
high-quality business processes within each specific
company, thereby enabling employees to effectively
pursue the company’s established business
objectives.
about the status and details of voluntary health
insurance. The launch of the new INIS integrated
information system has been somewhat slower than
originally planned, and an updated version of the
target information system architecture was therefore
prepared with the aim of mitigating the slower launch
of the new system using new approaches such as a
portal solution for service-oriented architecture (SOA).
In 2008, Adriatic Slovenica will move a step closer to
its target architecture, key elements of which will be
One of the most important IT projects in 2007 was
the installation of a single investment monitoring
a personalised multipurpose portal and an integrated
working environment.
system. This system meets the current needs of
84
all key companies, while in the coming years we
expect to expand it to meet the needs of companies
abroad. The chosen solution also offers a number
of risk management tools, which will facilitate better
monitoring and control of investment risks throughout
the Group.
Worthy of note at KD BPD was the extensive
adaptation to new legislation (the Financial
Instruments Market Act) and the further development
of the company’s key information system with
optimised tools for the best possible client asset
management.
Adriatic Slovenica equipped its network of agents
with portable work stations to facilitate data entry
wherever they are located. The central client register
was upgraded and is now linked with all the relevant
transaction systems, offering a comprehensive
overview of the insurance portfolios of each client
at the company. Adriatic Slovenica was also actively
involved in a Health Insurance Institute (ZZZS) project
to directly link the information systems of healthcare
service providers with the systems of the Institute and
insurers. The purpose of such a solution is to make
data exchange as smooth as possible, with insurers
In 2007, KD Investments (now KD Skladi)
carried out the comprehensive transfer of paper
documentation to electronic format and installed
an electronic archive of scanned documents, which
offers an immediate view of all a particular client’s
documents at a single site. This makes work faster
and more client-friendly. We started to develop new
website and other modern services for clients.
Comprehensive risk analysis was also conducted at
the company and will form the basis for establishing
an integrated plan for business continuity and the

ongoing mitigation of all relevant risks. An integral
1.9
Research and development
information system was installed at the newly
established management company in Serbia to
provide support for the company’s operations.
Research and development in a period of stiff
competition on foreign markets and on the single
European Union market is extremely important. In
An IT management system was set up at
KD Življenje according to the ITIL standard. We
paid particular attention to the system for managing
changes and incidents, for which appropriate
the past, this area has played a significant role in the
Group’s development. In the future, we will reorganise
the research and development function and further
promote such activities.
information support was also established. In the
software support area, a tool for the development
of online applications in a Java environment was
installed. A strict records application was developed
using the tool. An intranet portal was set up and a
document system was established in this framework.
An integral information system was set up at the new
insurer in Ukraine and the new representative office
in the Czech Republic.
In the future information technology will be
increasingly linked to the business processes at the
companies. Understanding business and familiarity
with technology are two aspects to new and
increasingly effective solutions, a permanent guide
that we at KD Holding Group will continue to follow.
In asset management, the Group has established
a new sales concept for marketing mutual funds and
introduced a new sales channel organisation. We
have begun developing new websites for KD Skladi
and other services for contemporary operations with
investors. A great deal of activity was focused on
the start of marketing of KD Skladi mutual funds on
foreign markets and on the development of a new
sales method for wealthier customers and acredited
investors. Development activities were carried out in
the area of managing investment fund assets and with
regard to acredited investors. We were also active in
the development of risk management, information
technology and with regard to methodologies and
organisation due to amendments to related legislation.
85
Last year, the Group developed a number of new
products in the area of insurance. At KD Življenje,
we developed new insurance products adapted to
the needs of specific target groups and enhanced
life insurance linked to Fondpolica investment
funds, which represent the largest proportion of
underwritten insurance in the company’s portfolio.
We introduced a new form of life insurance linked

to Fondpolica investment funds with an investment
package. In cooperation with Deutsche bank AG,
we offered the Slovenian and foreign markets the
life insurance products Fondpolica Azija Garant
Plus and Fondpolica Renta Garant. We were the
first Slovenian insurance company to develop
group life insurance (Group Life Package), which
is completely comparable with other contemporary
life insurance products across Europe. We also
developed a new life insurance product with active
asset management, Fondpolica Dirigent. In addition
developed the new package insurance products,
Mladi, Aktivni and Senior, and upgraded our offer
for athletes with the packages Vrhunski športnik and
Športnik. Adriatic Slovenica also played an active
role in the health insurance card project,
KZZ-Online, in which the Health Institute of
Slovenia (ZZZS) established a new information
system that will directly link the information systems
of healthcare service providers with the systems of
the ZZZS and insurance companies which provide
supplementary healthcare insurance.
to the aforementioned, we developed two products,
86
adapted for marketing via the new company,
KD Finančna točka: life insurance linked to the
investments funds of the investment plans KD
Družina and KD Pokojnina.
At Adriatic Slovenica, we introduced several new
automobile insurance products and supplemented
them with Maxi assistance, completely updated
general liability insurance and developed entirely
new credit insurance products, which are based
on insurance for default due to classic insurance
risks and cover policyholders against unexpected
events such as death, work disability and loss of
employment without fault. Vita Fond investment
packages, Vitafond Azija Garant Plus, Vitafond
Renta Garant in Družinski Paket are new life
insurance products developed in cooperation with
Group members. For borrowers, we prepared
the new Kredit Vita AS, a life insurance product
intended for package sales with new credit
insurance products. In the area of healthcare, we
With regard to sales of financial services, KD
Finančna točka continued developing its own
system for training the sales network. Based
on past experiences and needs identified while
conducting training and feedback from participants,
we began upgrading the system to a three-level
individual development model in the second half
of 2007: (1) advisor, (2) advisor manager and (3)
advisor manager/expert. The objective of training
is to develop and strengthen innovative thinking
of the individual in all areas (organisation and the
development of people and products) to stimulate
the direct contribution of the individual to the
company’s development. KD Finančna točka
also played an active role in the development of
the Fondpolica life insurance products with an
investment package and in the development of
Fondpolica Dirigent.

Research and development in 2008
rationalisation of operations in the areas of support
services, improving the quality of service with new
In 2008, the KD Holding Group will reorganise its
research and development activity through a project
that will be managed by the parent company, KD
Holding. The aim of the project is to increase research
and development’s contribution to the future growth
of the company. The main project is divided into
three sub-projects: (1) the introduction of a targeted,
innovative activity, (2) introduction of a so-called
“walking database” system, i.e. a KD Holding Group
knowledge base and (3) introduction of a system
of useful proposals. The vision of the research and
development project is the establishment of a research
and development department at the KD Holding Group
which will set the bases for identification and work
on key strategic development issues and bases for
adequate long-term growth of the Group.
information and decision-making tools and expanding
communication with customers in terms of content
and form. In the insurance sector, we will continue
developing new products to maintain our leading
position in this area. Regarding sales of financial
services, we plan to introduce new diverse sales
channels. We will also develop a system of recruiting
and training international mentors to ensure the
effective transfer of tested effective work, training and
development processes to foreign markets. One of
the Group’s main development projects in 2008 will
undoubtedly be the establishment and development of
a new bank. Banking services will compliment other
insurance and financial products and bring the KD
Holding Group’s range of products and services full
circle.
87
Subsidiaries will also continue with projects to develop
new products and services tailored to the needs of
consumers, which will facilitate the continued growth
of the Group in Slovenia and throughout the region.
In the area of asset management, development
activities will be primarily focused on the development
of methodologies, sales techniques and new
sales channels, as well as the modernisation and
development of information technology. In addition
to the development of funds, in particular the fund
of funds, we intend to give special attention to the
development of asset management services for
acredited investors in Slovenia and abroad. We will
continue developing the information system for the

88
Belgrade, Serbia

1.10
Report on the corporate social
responsibility of the KD Holding
Group
90
In addition to good performance, one of the Group’s
most important objectives is to create a pleasant but
stimulating work environment for all employees and
a responsible and reliable partnership with its social
environment.
We are aware that we are inseparably linked to the
environment in which we operate. Close relations
with the local community represent an opportunity
for development, but also entail responsibility, as
our business has far-reaching consequences. Our
concern and sensitivity for the social and natural
environment is realised in cooperation with the
local and the wider community. We strive to act
in concert with them to create and improve the
environment in which we live and work.
Employees
At the KD Holding Group, we are aware that
social responsibility begins with our treatment
of employees. We encourage innovation and
cooperation and provide support for education and
development. Our concern for employees’ social
security needs is reflected in our collective voluntary
supplementary pension insurance, which is offered
to all interested employees. We are introducing the
concept of a family-friendly company at the Group,
which will allow parents to take advantage of
shorter hours or shared hours and other significant
adaptations. Our focus on our employees is
presented in greater detail in the section on Human
resources management.
Natural environment
The principle activities of KD Holding Group
companies are not directly linked to environmental
impacts. However, in our everyday activities we
act responsibly by saving electricity and separating
waste. We also consider the environmental aspect
in our investments. Thus in 2006, KD Investments
(today KD Skladi) established KD Nova energija,
an equity mutual fund that primarily invests in
companies in the renewable energy sector.
Social environment
Our concern for the social environment is primarily
reflected in our sponsorship activities and donations.
We direct our sponsorship towards activities that
contribute to social development, particularly
culture and sport. Sponsorship demonstrates and
communicates a clear link with our corporate values
of trust, openness and respect for equality.
Culture and education
At the KD Holding Group, we give a great deal of
significance to supporting culture and education.
We have cultivated long-term partnerships with

cultural institutions and with individuals and have
invested in a number of educational projects.
KD Holding supported the publication of Vitomil
Zupan’s collection of poetry Pesmi s prostosti, was
involved in the exhibition Delo slovenskih slikarjev
(Works of Slovenian Painters) at the Ljubljana
Town Hall organised by the Institute of Sculpture,
and purchased a work by Aleš Lenassi entitled
Oba (Both). We were again involved as sponsor
in the P.A.R.A.S.I.T.E. Institute competition for
the OHO Group prize and purchased the winning
entry. Other events we supported again were the
Cerkno Jazz Festival and the Days of Comedy at the
cooperation with Ljubljana’s University Medical
Centre and the Zveza prijateljev mladine
(Association of Friends of Youth), they are actively
stimulating children’s interest in the art of puppetry
and opening the doors to hospitals, institutions
and foundations where children live far from the
joys of a carefree childhood. We are aware that
for most children, puppets are their first contact
with theatre. Numerous kindergartens and primary
schools from all over Slovenia were taken to puppet
performances, many of them enjoying shows in
their own local area, particularly those in the more
remote parts of the country.
Celje Public Theatre. We supported the permanent
exhibition about Oton Župančič at the City Museum.
In cooperation with the Slovenian Bralna značka
(Reading Badge) project, we purchased books
to allow first and second grade students in
less-wealthy
regions to get their first picture book,
Levstik’s Martin Krpan, with illustrations by Hinko
Smrekar, thus helping to spread the culture of
reading among the young.
We also helped the group Želve, which operates
under the aegis of the Third Age University, to
publish a collection of works, thus confirming our
commitment to and understanding of the older
members of society.
We assumed the role of central sponsor of the EFA
and EISB conferences at the Faculty of Economics
in Ljubljana.
The insurance company KD Življenje has been
working with the Ljubljana Puppet Theatre on
strategy and business for three years now. In
We are continuing our work with the RTV Slovenija
Symphony Orchestra as its general sponsor in the
2007/2008 season, a sign of our appreciation of
its artists, mission and immense cultural relevance.
Our support went to an exceptional concert season,
which featured numerous distinguished soloists and
conductors, including the piano virtuoso Ivo Pogorelić.
In 2007, KD Življenje organised a major family
event at the Postojna Cave called Day of Culture
and Attractions. Together with our partners, the
Ljubljana Puppet Theatre, RTV Slovenija, Slovenske
Novice and Postojnska jama, we arranged a fun,
family day for more than 2,000 visitors. Children
and their parents were able to watch a puppet show
and a performance by Romana Kranjčan, while
the caves hosted the RTV Slovenija Big Band and
Alenka Gotar. There was also a rich programme of
accompanying attractions.
91

Adriatic Slovenica cooperates with the Ljubljana
Festival, Koper Theatre, Koper School of Music, and
the University of Primorska in the area of culture
and education. The Ljubljana Festival’s excellent
programme is making it one of Europe’s prime
cultural destinations, while the Koper Theatre and
Koper School of Music are established institutions
in the company’s home town and long-standing
partners of the insurer that offer a real quality of
culture. Our long-term support of the University
of Primorska since its very inception has been
aimed at establishing high-quality, competitive
and advanced education programmes, and at
contributing to education projects at the University.
100,000 copies of four issues of a newspaper with
the same name, with the campaign reaching a total
of 270,000 people.
Humanitarian activities
We organise blood drives at the KD Holding Group,
as we want our employees to get actively involved
in humanitarian projects. Last year also saw the
Let’s Show Solidarity campaign, in which employees
collected money for their fellow citizens in Železniki
who were affected by the disastrous weather in
September. KD Holding doubled the money
collected by its employees.
92
Adriatic Slovenica has been working on two major
new projects in road safety education since 2007.
Their main purpose is to increase driver awareness
of the importance of safe driving, with drivers
invited to test their knowledge of safe driving on
the internet. The Z glavo na zabavo (Party Smart)
foundation is a project that the company first
supported in 2007. It focuses on warning of the
dangers of alcohol consumption among the young,
and the incompatibility of alcohol with safe driving.
More than 40 events have been held as part of the
project, calling for better health and a more active
approach to free time among the young. We have
also been actively involved in NE-ODVISEN.SI, a
campaign to raise awareness of the consequences
of different forms of dependence in the Primorska
region supported by 23 local municipalities.
The project covered more than 140 primary and
secondary schools and kindergartens, and produced
Adriatic Slovenica showed maximum engagement
in the worst-affected areas in the Celje and
Gorenjska regions. The money was earmarked for
the municipality of Vojnik for repairing damaged
roads, the aid coming as a joint contribution from
the company and its employees, who volunteered to
take part in the campaign.
KD Holding also works with UNICEF, helping
children in some of the world’s poorest regions. We
supported Some of Them, a music video project
aimed at collecting money for long-term programmes
for helping children. In cooperation with its Bosnian
subsidiary ABDS, KD Holding organised holidays
at Debeli Rtič for a group of Bosnian children from
under-privileged families via BH4, the
Bosnia-Herzegovina student society in Slovenia.

The main focus at Adriatic Slovenica remains
the support of healthcare. The company works
closely with health service providers and supports
education and initiatives contributing to the progress
and standing of the medical profession. As the
Federation for many years now. KD Holding also
supported societies and individuals from the worlds of
gymnastics, motor sports and football (including ŠD
Trnovo, AMD Šentvid pri Stični, NK Ormož and NK
Kolpa).
principal sponsor, it again supported the national
My Doctor campaign, in which more than 14,000
health service users were involved in selecting the
best, most respected physicians in the country.
At the end of the year, the money that had been set
aside for holiday gifts was donated to institutions
with a social mission, particular in the healthcare
sector. Gifts were presented to the general hospital
in Novo Mesto, the kindergarten in Kranj, a welfare
KD Skladi has continued to work with the Tacen
Kayak-Canoe Club and also provided support to the
Federation of Skating Sports and the AŠD water polo
club in Koper. Together with the Biosfera society, we
sponsored a project aimed at revitalising the Ljubljanica
River. In the spring and summer months, the project
organised free canoe hire for groups accompanied by a
guide, as well as a number of fun competitions.
work centre in Stara Gora, medical centres in
Sežana, Murska Sobota and Hrastnik, the University
Medical Centre in Ljubljana, under-privileged
inhabitants of the City of Maribor, and the Elvira
Vatovec Training Centre in Strunjan.
We continued UNICEF Slovenia’s Safe Points project
in 2007, thus contributing to greater safety for
children and adolescents in major urban areas. In
its second year of support for the project, all the
offices of Adriatic Slovenica and their employees
were involved as safe points.
Sport
Our support for a variety of sporting activities is aimed at
spreading the idea of the active and sociable enjoyment
of free time. We work with sports clubs throughout
Slovenia. KD Holding, KD Življenje and Adriatic
Slovenica have been supporting the Slovenian Chess
KD Življenje supported the Rog Cycling Society and
is a major sponsor of the family marathon as part of
the Barcaffe Franja Marathon. We also supported the
children’s race at the Ljubljanica Triathlon, a major
sporting event.
Adriatic Slovenica’s support for sport is diverse, but
since 1993 the majority of its assistance has gone to
top athletes and Olympic representatives, in cooperation
with the Slovenian Olympic Committee. One recipient of
its support is Vasilij Žbogar,
a sailor from Izola who won a gold medal at the Athens
Olympic games. It also provided significant support to
national sporting federations, including the Slovenian
FA and the Horseracing Federation and a number of
different sports, societies and clubs.
These include the Cimos Koper Handball Club, Koper
Basketball Club, Triglav Kranj Skiing Club, Izola Sailing
Club and the Portorož Sporting Society.
93

94
Eastern Orthodox priest, Macedonia

Corporate social responsibility in 2008
The Group will continue to provide sponsorship for
culture, education and sport in 2008, in keeping
with our established policies.
In the area of donations and humanitarian activities,
our aims are even higher in 2008. The Group
established the AJDA Foundation back in 1995 to
support the financially and socially disadvantaged.
The purpose of the Foundation was to fund the
education of children of farmers and investors in
KD funds or their children and those with aboveaverage
results, but an under-privileged social
background. Careful monitoring of the situation
revealed that the Foundation’s original purpose
had become too narrow. We will continue to
support education, but with the establishment of
the KD Fundacija Foundation in 2008 we intend
95
to build on our previous objectives and set a wider
approach. The Foundation will fund talented youth
in various areas of schooling, science and sport who
have made progress in the aforementioned fields.
It will provide financial support for young people
from under-privileged families, providing them better
conditions for education. Via material and financial
donations, the Foundation will help less wealthy
regions of Slovenia to encourage and provide
education. In the event of natural disasters or other
extensive catastrophes, the Foundation will quickly
respond with financial support or other resources
in keeping with the needs of those affected. The
KD Fundacija Foundation will also be active in the
organisation of charitable campaigns for mobilising
material and financial resources.

96 Bratislava, Slovakia

Kalemegdan - Belgrade, Serbia
97

98 Sarajevo, Bosnia and Herzegovina

Slovenija - solinar
Fisherman, island of Brač, Croatia
99

100
Slovenia, portrait

Celica Hostel, Ljubljana, Slovenia
101

102

2.
Operations of the companies within the KD Holding Group
The sun never sets
on a truly global company.
Kalemegdan - Belgrade, Serbia

Confluence of the Sava and Danube, Belgrade, Serbia
106

107

It is the meeting of two currents - supply and demand,
that creates an even stronger flow,
bringing water to the field, energy to the city and journey to the people.
106
Confluence of the Sava and Danube, Belgrade, Serbia

In asset management business,
our imagination always expands
toward the horizons that are most promising,
and our view reaches the farthest.
It is here where our experience and knowledge
intersect with the greatest expectations of our clients,
and this confluence provides
the best image of and the best metaphor for our business.
107

108
Confluence of the Sava and Danube, Belgrade, Serbia

2. 1
Asset management
The Group’s asset management is divided into:
investment fund management,
private wealth management and stockbroking.
which included 24 investment funds and two
investment companies at year-end within the KD
Holding Group.
The Group currently manages 24 funds and two
Operations in 2007
investment companies as part of its investment
fund management. KD Investments (now KD
Skladi) is the leading asset management company
in Slovenia, managing 12 mutual funds and one
investment company. In the region, the Group
manages four mutual funds in Croatia, three in
Romania, two mutual funds and one investment
company in Bulgaria, two mutual funds in Slovakia
and one in Serbia. We are planning to enter the
Macedonian market in 2008.
Private wealth management and stockbroking
is becoming an increasingly important business
activity for the Group. It is gaining strength both
in Slovenia and abroad, where the Group has
companies in Bulgaria, Croatia and Romania.
Investment fund management
Mutual funds remain the key product for the
KD Holding Group. Our core strategy is to offer
investors, primarily from South Eastern Europe,
the widest possible selection of investment
opportunities, while also providing comprehensive
investment opportunities in the region to investors
from around the world. This is also the guiding
principle for growth in the investment fund portfolio,
Assets under management in all mutual funds
grew by nearly 50 percent, or by over EUR 333
million, exceeding the magic billion euro threshold
(EUR 1,002.4 million) by the end of the year.
At year-end, our investment funds had over 93
thousand investors.
We again confirmed our acknowledged
management excellence, with the majority of funds
(17) exceeding benchmark indices and all but one
closing the year with positive returns.
In the key region of South Eastern Europe, we
opened a new asset management company, KD
Investments in Belgrade, Serbia.
Two new funds were added to our global
product range - KD Nova Europa (in Croatia) and
KD Ekskluziv (in Serbia).
The start-up of operations in the life insurance
division abroad (Romania, Bulgaria, and Slovakia)
has provided a significant distribution channel.
Due to the withdrawal of a partner company
(SEB Fund Services) from the region and the
subsequent end to our cooperation and the
assessment that our investment funds offer
customers a sufficiently broad selection of quality
products, we decided to liquidate the company KD
DeLux and its four sub-funds.
109

110 Slovenia

Challenges in 2008:
Maintaining our leading position in Slovenia
and strengthening market shares in South Eastern
Europe by increasing recognition;
Upgrading our product portfolio in line with
industry trends, while maintaining innovation and
customer-orientation as the main guides;
Strengthening the range of funds in Slovakia,
Romania and Bulgaria, where we are already
present and this is permitted by law, by registering
Slovenian funds for local sales;
Registering an asset management company and
investment funds in Macedonia;
Transferring the asset management function
back to KD Skladi, Ljubljana, in order to
consolidate, manage and continue to achieve
excellence in asset management;
Strengthening our presence on the Slovenian
111
market by consolidating retail sales knowledge
and activities in Slovenia within the company KD
Finančna Točka and expanding the concept abroad
in line with capacities;
Incorporating asset management companies
abroad more closely into the divisional model of
our corporate governance, via the Ljubljana parent
company;
Continuing to achieve the highest possible
level of satisfaction for current and future investors
in accordance with new regulatory guidelines
and opportunities to adapt the operations of
management companies, investment funds and
investor relations.

112
Bled, Slovenia

Slovenia
KD Investments, družba za upravljanje, d. o. o.,
Ljubljana
in the future, we are continuing to develop information
technology and strengthening the company’s
personnel. Our objective is to further consolidate our
On 16 January 2008, the company was renamed
KD Skladi, družba za upravljanje, d. o. o.
(abbreviated name: KD Skladi, d. o. o.).
position as the leading investment asset management
company in Slovenia by providing competitive
terms for existing and new investors.
The company’s English name is KD Funds
– Management Company LLC (abbreviated name:
Operations in 2007
KD Funds LLC).
By the end of the year the company was
Address: 206 Celovška cesta, Ljubljana, Slovenia
Telephone: +386 1 582 67 80
Fax: +386 1 582 40 88
E-mail: kd-skladi@kd-group.si
Website: www.kd-skladi.si
Management Board (31 December 2007):
Roman Androjna, President of the Management
Board
Dušanka Malerič, Member of the Management
Board (term expired 31 December 2007)
Management Board (1 May 2008):
Dag Kralj, President of the Management Board
Roman Androjna, Member of the Management Board
The volume of the company’s assets rose
significantly in 2007 as the result of new payments
by investors to mutual funds, particularly for
professional asset management. The number of
investors also rose significantly. A great deal of the
company’s attention was focused on sales activities,
including the co-founding of a new sales company.
In order for the company to operate more efficiently
managing 12 mutual funds and the investment
company, KD ID delniška investicijska družba, d. d.
The total net value of assets under management
(all mutual funds and KD ID) rose by 49 percent,
from EUR 594.6 million at the end of 2006 to
EUR 884.1 million by the end of 2007. We thus
maintained our position as the leading investment
asset management company in Slovenia.
The total number of investors in the company’s
mutual funds rose by 20 percent, from 69,651 at
the end of 2006 to 83,918 by the end of 2007.
Net payments into mutual funds managed by
the company totalled EUR 107.6 million in 2007.
At the end of 2007, we acquired a 50 percent
stake in KD Finančna točk and signed an agreement
on the marketing of mutual fund investment
coupons.
113

Challenges in 2008:
114
To consolidate our position as the leading
investment asset management company in
Slovenia;
To supplement our existing range of mutual fund
products and services with various geographic and
sector-oriented investment policies;
To continue the diligent management of the
company’s mutual fund brands and increase
activities to raise the awareness thereof;
To increase activities related to the marketing of
products to acredited investors;
To focus a great deal of attention on aligning
the company’s operations, investment funds and
relationships with investors due to legislative
changes;
Pursuant to the KD Holding Group’s mission,
our primary objective remains the satisfaction of
investors. We will achieve this through efficient
operations, a professionally trained sales network
and, above all, a competitive and high-quality range
of products and services that will be of interest to
existing and new investors.
At the end of 2007, investments in Slovenia
(52 percent), the United Kingdom (10 percent),
Germany (8 percent) and Croatia (8 percent)
represented the largest proportion of the mutual
fund’s assets.
Two factors resulted in an increase in the
proportion of Slovenian securities in 2007: the
above-average returns of securities compared to
other key investment regions (the Slovenian stock
exchange index, the SBI20, rose by 78.1 percent
in 2007), and due to new, favourable purchase
opportunities.
In the autumn, KD Galileo took part in a public
tender of Nova kreditna banka Maribor shares,
acquiring the most shares of any mutual fund.
Due to more favourable conditions on the debt
securities market of the EU15, the proportion of
bonds from Slovenian issuers fell in 2007, while the
proportion of bonds of issuers from the EU15 rose.
Due to positive changes in equity security
prices, the proportion thereof rose in 2007 in
comparison with the proportion of debt securities.
KD Galileo
- a flexible asset structure mutual fund
The KD Galileo flexible investment structure
mutual fund is the oldest mutual fund in Slovenia.
On 1 January 2007, the fund celebrated its 15th
anniversary.
KD Galileo’s investment structure is
continuously adapted to market conditions in
accordance with its flexible asset structure policy.
Data regarding the fund as at 31 December 2007
Unit price (in EUR) 17.20
Net value of the fund (in EUR) 359,004,014.96
Number of units in circulation
20,876,044.40
Number of investors 34,989

KD Rastko
- an equity mutual fund
At the end of 2007, 63 percent of the KD
Rastko equity mutual fund’s assets were invested
in Slovenian securities, followed by 9 percent in
German securities, 6 percent in Croatian securities
and 5 percent in securities from UK issuers.
In 2007, the SBI20, the Slovenian stock market
index, gained 78.1 percent, while the DAX30, the
core German stock market index, and the Croatian
CROBEX share index rose by 22.3 percent and
63.2 percent, respectively. This had a positive
impact on growth in the fund’s unit price.
Contributing to the growth in the proportion
of Slovenian securities in KD Rastko compared to
2006 were the purchase of Nova kreditna banka
Maribor shares and favourable developments on the
Slovenian stock exchange.
In February 2007, the KD Rastko mutual fund
received the “Zlati V” (Gold V) award from the
magazine Kapital as the best European-oriented
equity mutual fund of 2006.
KD Bond
- a bond mutual fund
The KD Bond mutual fund is intended for
investors looking for a safer investment with a
better (or at least equal) return than classic forms of
savings. Fixed-yield securities represent the majority
of the fund’s investments.
Growth in interest rates on key capital markets
slowed in 2007, resulting in improved conditions on
the debt security market. As a consequence, mood
on the bond market improved compared to 2006.
At the end of 2007, investments in Slovenian
debt securities (56 percent), followed by
investments in UK (21 percent) and German (11
percent) debt securities, represented the most
significant proportion of the mutual fund’s portfolio.
The proportion of bonds rose by 4 percentage
points compared to 2006 to 73 percent of the
fund’s portfolio. The proportion of shares rose 5
percentage points to 12 percent.
115
Data regarding the fund as at 31 December 2007
Unit price (in EUR) 42.86
Net value of the fund (in EUR) 172,171,606.39
Number of units in circulation 4,017,132.13
Number of investors 19,798
Data regarding the fund as at 31 December 2007
Unit price (in EUR) 13.21
Net value of the fund (in EUR) 11,300,196.44
Number of units in circulation 855,392.64
Number of investors 3,835

116
KD Prvi izbor
- a mutual fund of equity funds
The KD Prvi izbor mutual fund of equity funds
invests in a wide range of selected investment funds
of well-known fund managers to ensure optimal
diversification of investments. Thus the fund is
appropriate for first-time investors in mutual funds.
Investments in other equity funds were
predominant in 2007, while investments in equity
securities represented slightly less than 5 percent
of assets. The most significant proportion of assets
was invested in the US, Western Europe, emerging
markets and Japan in accordance with the mutual
fund’s MSCI World reference index.
Driven by positive expectations regarding future
developments on the Russian capital market,
the proportion of investments in Russian equity
securities rose in the second half of 2007.
Data regarding the fund as at 31 December 2007
Unit price (in EUR) 6.16
Net value of the fund (in EUR) 36,307,369.06
Number of units in circulation 5,889,949.93
Number of investors 4,797
KD MM
- a money market mutual fund
The KD MM money market mutual fund is a
low-risk mutual fund with no subscription fee and
a low management fee. It is an alternative to bank
deposits intended primarily for investors looking for
a short-term and extremely safe investment.
In 2007, 99 percent of the fund’s assets were
allocated to deposits at the nine largest commercial
banks based in Slovenia, as deposits represented
more favourable investments than money market
instruments.
In February 2007, the KD MM mutual fund
received the “Zlati V” (Gold V) award from the
magazine Kapital as the best money market mutual
fund of 2006.
Data regarding the fund as at 31 December 2007
Unit price (in EUR) 46.51
Net value of the fund (in EUR) 8,641,443.67
Number of units in circulation 185,788.98
Number of investors 599
KD Balkan
- an equity mutual fund
In accordance with its regional investment
policy, the KD Balkan equity mutual fund invested
in the markets of South Eastern Europe. At the end
of 2007, investments were primarily focused on the
capital markets of Croatia (35 percent), Romania
(14 percent), Slovenia (12 percent), Bulgaria (10
percent) and Serbia (10 percent).
In the first half of 2007, securities prices on key
Balkan capital markets rose significantly,
as reflected by inflows into mutual funds. In the

second half of the year, prices began falling on
Balkan markets, driven to a great extent by the
worsening political situation in that area of South
Eastern Europe, resulting in a decrease in inflows of
investors’ assets towards the end of the year.
Data regarding the fund as at 31 December 2007
Unit price (in EUR) 7.70
Net value of the fund (in EUR) 76,293,062.22
Number of units in circulation 9,902,223.13
Number of investors 10,408
KD Novi trgi
- an equity mutual fund
The capital markets of Russia, China, Hong Kong
and Brazil dominated the geographic investment structure
of the KD Novi trgi equity mutual fund in 2007.
The fund increased investments in the securities
of Russian and Chinese companies in the second
half of 2007. By the end of the year, this decision
proved to be correct.
A significant amount of assets were invested
in emerging global markets in 2007. In the largest
developing countries, earnings growth continued,
while the standard of living and internal purchasing
power rose, making investments in these countries
even more attractive. Expectations and forecasts
for future years regarding the continued economic
growth and development of these countries remain
positive, indicating great hidden potential.
KD Severna Amerika
- an equity mutual fund
KD Severna Amerika is an equity mutual fund
with a regionally-oriented investment policy. Its
objective is to achieve long-term returns on assets
invested in US, Canadian and Mexican companies.
At the end of 2007, 72 percent of the fund’s
assets were invested in shares, 17 percent in other
funds and 11 percent in liquid forms of deposits.
In terms of geographical structure, investments
in the securities of US-based companies were
predominant, with investments in the shares of
Mexican and Canadian companies representing a
smaller proportion.
The value of the US dollar fell 10.5 percent
versus the euro in 2007, as reflected in the fund’s
returns. Most of the fund’s investments in securities
are denominated in dollars, while its unit price is
calculated in euros.
Data regarding the fund as at 31 December 2007
Unit price (in EUR) 3.65
Net value of the fund (in EUR) 980,705.08
Number of units in circulation 269,019.65
Number of investors 194
117
Data regarding the fund as at 31 December 2007
Unit price (in EUR) 5.97
Net value of the fund (in EUR) 21,798,900.44
Number of units in circulation 3,651,527.34
Number of investors 3,813

118
KD Surovine in energija
- an equity mutual fund
Ever increasing demand for limited inventories
of raw materials and energy is the reason that
the sector-oriented KD Surovine in energija is a
perspective equity mutual fund in the long-term.
At the end of the year, 59 percent of the fund’s
assets were invested in the securities of energy
sector companies, while 28 percent were invested
in securities from the raw materials sector.
In 2007, KD Surovine in energija’s proportion of
investments in the equity securities of issuers from
developing countries rose.
A sharp rise in the prices of oil, gold, silver
and other energy and raw materials in 2007 had a
positive effect on growth in the fund’s unit price.
Data regarding the fund as at 31 December 2007
Unit price (in EUR) 5.62
Net value of the fund (in EUR) 7,111,761.39
Number of units in circulation 1,264,717.77
Number of investors 1,268
KD Tehnologija,
- an equity mutual fund
KD Tehnologija is a sector-oriented equity
mutual fund. Its objective is to achieve long-term
growth driven by technological progress, solutions
and innovations.
At the end of the year, the fund’s assets were
widely diversified: equity securities and mutual
funds represented 83 percent and 4 percent of
assets, respectively, while the remaining assets were
invested in bonds, cash and deposits.
At the end of the year, most of the fund’s
assets (36 percent) were invested in the
telecommunications sector, followed by information
technology (31percent) and companies from
the healthcare sector (20 percent). The mutual
fund’s investments in securities from the
telecommunications sector rose by 9 percent
compared to 2006, driven by favourable
assessments and expectations on the market.
Data regarding the fund as at 31 December 2007
Unit price (in EUR) 5.15
Net value of the fund (in EUR) 2,499,514.55
Number of units in circulation 485,126.20
Number of investors 427
KD Vitalnost,
- an equity mutual fund
The KD Vitalnost equity mutual fund is a
sector-oriented mutual fund that invests in the
shares of companies whose products and services
directly or indirectly prolong longevity, preserve life
and improve the quality thereof.
The fund’s medium and long-term objective is to
encompass global demographic and lifestyle changes
linked to the ageing of the population and increased
expenditure for healthcare and consumer goods.
Following a transition period, the composition
of the fund’s investments was aligned with its
investment policy at the beginning of 2007.
At the end of 2007, 90 percent of the fund’s
assets were invested in shares. Investments in the
healthcare sector represented 41 percent of assets,
followed by the manufacturing sector (37 percent)
and the consumer goods sector (17 percent).

The structure of the portfolio, comprising
investments in the healthcare and consumer goods
sector, exceeds the scope of similar funds on the
market which only invest in healthcare. With its
diversification of investments, the fund is less exposed
to fluctuations and has tremendous growth potential.
Data regarding the fund as at 31 December 2007
Unit price (in EUR) 1.01
Net value of the fund (in EUR) 2,171,020.38
Number of units in circulation 2,154,158.21
Number of investors 436
KD Nova energija,
- an equity mutual fund
The KD Nova energija equity mutual fund is the
only Slovenian mutual fund that invests the majority
KD ID, delniška investicijska družba, d. d.
Address: 206 Celovška cesta, Ljubljana, Slovenia
Telephone: +386 1 582 67 80
Fax: +386 1 518 40 88
E-mail: kd-skladi@kd-group.si
Website: www.kd-skladi.si
The principle activities of the investment company
KD ID were focused on the timely alignment of
the company’s portfolio to market conditions.
Investments in the financial sector fell, as did the
proportion of non-listed investments (from 14.9
percent at the end of 2006 to 12.7 percent at the
end of 2007). A gross dividend of EUR 1 per share
was paid in October 2007.
of its assets in companies that produce alternative
and renewable sources of energy. Due to increasing
global demand for new, cleaner energy sources, this
119
sector is considered by some analysts to be one of
the most promising.
The fund’s assets are globally diversified and
cover the most important and perspective forms of
producing alternative sources of energy. In 2007,
investments in companies that produce energy with
wind-driven power stations and solar panels were
predominant.
Data regarding the fund as at 31 December 2007
Unit price (in EUR) 1.49
Net value of the fund (in EUR) 18,834,394.82
Number of units in circulation 12,670,201.32
Number of investors 3,351

120
Island of Brač, Croatia

Croatia
KD Investments d. o. o., Zagreb
Adress: 39 Radnička cesta, Zagreb, Croatia
Telephone: +385 1 6274 555
Fax: +385 1 6274 510
E-mail: info@kd-group.hr
Webside: www.kd-group.hr
Management Board (31 December 2007):
Hrvoje Japunčić, President of the Management
Board
Branko Gladović, Member of the Management
Board
Challenges in 2008:
Growth in volume of assets under management,
which will exceed the level of market growth, and
further increase of the company’s market share;
Ensuring attractive returns for investors;
Expanding the range of funds with two new
open-ended investment funds;
Further strengthening of cooperation and
partnerships with local institutional investors and
brokers;
Increasing access to our range of products and
further expansion of sales channels;
Operations in 2007
Transforming the Financial Point network into a
financial supermarket;
The volume of assets managed in all four KD
Generating positive financial returns for owners.
funds in Croatia more than doubled (to EUR 82.9
million) in 2007, while our share of the Croatian
121
market exceeded 2 percent.
The number of active investors increased by 63
percent, from 3,626 at the beginning of the year to
5,936 at the end of the year. The investor base is
becoming increasingly local.
The new KD Nova Europa, an equity mutual
fund, started operating in October.
All four funds generated attractive returns in the
local currency (Croatian kuna - HRK); returns were
even higher in euros, given the slight increase in the
value of the HRK against the euro.
In general, the Croatian investment fund sector
developed significantly during the year in every
category (volume of assets under management, net
value of assets and share of the financial market).

KD Victoria
- an equity mutual fund
KD Victoria, established in 1999, is the first
equity mutual fund in Croatia. In 2001, 2002 and
2004, the fund received the “Zlati udjel” (Golden
Share) award as the best performing and fastest
growing (in terms of the volume of assets under
management) equity mutual fund in Croatia.
In 2007, the fund’s assets were primarily
invested in the equity securities of companies
from Croatia, the European Union, Bosnia and
KD Balanced
- a balanced mutual fund
In accordance with the mixed structure of
investments in the portfolio, the proportion of equity
securities never exceeded the 70 percent limit.
The fund’s assets are primarily invested in
equity and debt securities issued by Croatian,
Slovenian, Bosnian and Macedonian companies.
In terms of geographical structure, the largest
share of investments is in Croatia, followed by
Bosnia and Herzegovina.
Herzegovina and Macedonia.
In accordance with expectations regarding
the development of regional capital markets, the
geographical structure of assets was similar to
2006.
122
Data regarding the fund as at 31 December 2007
Unit price (in HRK*) 61.40
Net value of the fund (in HRK*) 501,805,704
Number of units in circulation 8,172,214.71
Number of investors 4,939
* HRK - Croatian kuna
Data regarding the fund as at 31 December 2007
Unit price (in HRK*) 14.48
Net value of the fund (in HRK*) 39,928,792
Number of units in circulation 2,757,121.88
Number of investors 479
* HRK - Croatian kuna

KD Adria Bond,
- a bond mutual fund
The fund’s assets are invested primarily in the
equity and debt securities of Croatian, Slovenian,
Bosnian and Macedonian issuers.
In accordance with the fund’s investment
policy, the proportion of debt securities must be at
least 80 percent of the mutual fund’s total assets at
all times.
In terms of geographic structure, the largest
share of assets is invested in the securities of
Croatian and Bosnian issuers.
KD Nova Europa,
- an equity mutual fund
The KD Nova Evropa equity mutual fund was
established in October 2007. In accordance with
the fund’s investment policy, assets are primarily
invested in the countries of Central, Eastern and
South Eastern Europe.
The fund will invest at least 60 percent of its
assets in equity securities.
At the end of 2007, the fund’s assets were
invested in the securities of issuers from Russia,
Serbia, Bosnia and Herzegovina, Macedonia and
the European Union.
Data regarding the fund as at 31 December 2007
Unit price (in HRK*) 12.03
Net value of the fund (in HRK*) 6,335,918
Number of units in circulation 526,699.81
Number of investors 27
* HRK - Croatian kuna
Data regarding the fund as at 31 December 2007
Unit price (in HRK*) 10,98
Net value of the fund (in HRK*) 59,416,826
Number of units in circulation 5,411,982.70
Number of investors 969
* HRK - Croatian kuna
123

124
Bratislava, Slovakia

Slovakia
KD Investments, správ. spol., a. s., Bratislava
Address: 3 Laurinská, Bratislava, Slovakia
Telephone: +421 2 5910 49 00
Fax: +421 2 5910 49 10
E-mail: info@kd-group.sk
Website: www.kd-group.sk
Management Board (31 December 2007):
Borut Gorjup, President of the Management Board
Gabriel Hinzeller, Member of the Management Board
Rastislav Podhorec, Member of the Management Board
Management Board (1 May 2008):
Borut Gorjup, President of the Management Board
Gabriel Hinzeller, Member of the Management Board
Feasibility study on using the Slovak legal
framework to register additional funds that could be
distributed outside of the Slovak registered office.
KD Prosperita
- an equity-bond mutual fund
The KD Prosperita equity-bond mutual fund was the
best performing balanced mutual fund in Slovakia in
2007.
The fund’s assets are primarily invested in the
shares, bonds and other financial instruments of
companies from Central and Eastern Europe. The
fund’s flexible investment policy permits the proportion
of shares, bonds and other financial instruments to fall
Operations in 2007
to 50 percent, making it easier to achieve investment
KD Prosperita ranked among most successful
balanced funds on the Slovak market.
Distribution to the Czech market, which started in
2006, began to increase.
The volume of assets under management in our
funds increased by more than 2.5 times (to over EUR
16.5 million), while the number of investors more
than doubled.
Challenges in 2008:
Feasibility study on distribution to neighbouring
Central European markets;
Addition of new distribution channels, with
special emphasis on banks, brokerage houses and
agent networks;
Cooperation with the KD Life fund and support
of its efforts for cross-border sales of unit-linked life
insurance in Slovakia;
objectives.
The fund generated very positive returns in 2007.
Following negative developments on international
financial markets, the fund rebounded at the end of
the year. Central, Southern and Eastern Europe remain
attractive for investors, as the countries in the region are
still achieving solid economic growth, while companies
are favourably valued.
Data regarding the fund as at 31 December 2007
Unit price (in SKK*) 1.30
Net value of the fund (in SKK*) 310,531,886
Number of units in circulation 238,575,797
Number of investors 887
* SKK - Slovak crown
125

KD Russia
- an equity mutual fund
The assets of the KD Russia mutual fund are
primarily invested in equity securities and other financial
instruments traded on the markets of the Russian
Federation and the former Soviet Union.
The Russian stock market achieved several record
highs in 2007 and ended the year close to record
levels, as evidenced by the fund’s operations.
Despite international conditions still affected by
the US market, our expectations for 2008 are positive.
There are no shocks on the political stage, as the
presidential election in March 2008 went smoothly,
according to expectations. Although the prices of energy
and other commodities remain high, the country is
experiencing solid economic growth.
Data regarding the fund as at 31 December 2007
Unit price (in SKK*) 1.14
Number of units in circulation 213,224,752
Net value of the fund (in SKK*) 243,793,737
Number of investors 409
* SKK - Slovak crown
126

Bratislava, Slovakia
127

128
Romanian fields

Romania
SAI KD Investments Romania, S.A., Bucharest
Address: 5 Gheorghe Manu, Bucharest, Romania
Telephone: +40 21 650 04 44
Fax: +40 21 650 04 42
We transferred the management of the Financial
Point network to the local brokerage house KD Asset
Management in Bucharest, which will allow the
network to be reorganised as a financial supermarket.
E-mail: info@kd-group.ro
Website: www.kd-group.ro
Management Board (31 December 2007):
George Alberts, President of the Management Board
Peter Groznik, Member of the Management Board
Katja Kraškovic, Member of the Management Board
Challenges in 2008:
The “import” of other KD funds (mainly Slovenian)
into the EU for distribution in Romania, continuing
expansion and strengthening of our product range for
Bulgarian investors;
Expanding distribution channels, particularly
Operations in 2007
third-party channels;
Continued strengthening of cooperation and
We generated attractive returns for our fund
investors, including the best annual return on the local
open-end fund market, achieved by our own equity
fund KD Maximus.
With two additional open-ended funds introduced
to the market at the end of 2006 (the balanced
mutual fund KD Optimus and KD MultiFond, the
first fund of funds on the Romanian market), the
Romanian KD Investments now covers a range of
investment strategies for investing in Romania, and
therefore offers the widest range of funds of any local
fund provider in Romania.
We considerably extended our distribution
channel network.
We increased focus on local institutional investors
that have contributed significantly to increasing the
total volume of assets under management by almost
80 percent (to over EUR 13 million).
partnerships with local institutional investors and
brokers;
Increased cooperation with two Group companies
registered in Romania - KD Capital Management and
KD Life - to further enhance recognition of KD Holding
Group as a major player on Romanian financial
markets.
129

KD Maksimus
- an equity mutual fund
In 2007, the fund received an award from the
Romanian financial daily newspaper, Ziarul Financiar,
as best equity fund on the Romanian capital market.
Assets under management reached EUR 12.06
million. Assets rose by more than 65 percent
compared to 2006. The fund had 1,436 investors in
2007, of which 947 were active.
In 2007, the fund’s investment policy was
expanded, together with the range of financial
instruments in which its assets are invested.
At the beginning of 2007, the fund was not yet
aligned in terms of investments, but had achieved the
KD Optimus
- a balanced mutual fund
At the end of 2007, the fund celebrated its first
year of operations.
Assets under management nearly doubled in
2007, reaching EUR 487,835.
Due to a transition period at the beginning of
2007, the fund was not yet aligned in terms of
investments. By the end of the year, it had achieved
the desired structure.
The proportion of equity securities at the end of
2007 was 55.79 percent, followed by deposits and
cash (31.28 percent) and debt securities (12.93
percent).
desired structure by year end. The proportion of equity
and balanced funds was 80.31 percent, followed by
130
deposits and cash (16.69 percent).
Data regarding the fund as at 31 December 2007
Unit price (in RON*) 20.22
Net value of the fund (in RON*) 43,532,076
Number of units in circulation 2,152,858.44
Number of investors 926
* RON - Romanian lei
Data regarding the fund as at 31 December 2007
Unit price (in RON*) 11.25
Net value of the fund (in RON*) 1,761,182
Number of units in circulation 156,500.69
Number of investors 18
* RON - Romanian lei

KD Multifond
- a fund of funds
At the end of 2007, the fund celebrated its first
year of operations.
Assets under management nearly doubled in
2007, reaching EUR 251,146.
At the beginning of 2007, the fund was not yet
aligned in terms of investments, but had achieved the
desired structure by year end. The proportion of equity
and balanced funds was 80.31 percent, followed by
deposits and cash (16.69 percent).
Data regarding the fund as at 31 December 2007
Unit price (in RON*) 10.53
Net value of the fund (in RON*) 906,687
Number of units in circulation 86,088.87
Number of investors 2
* RON - Romanian lei
131

132
Church of St. Nicholas – Russian church in Sofia, Bulgaria

Bulgaria
KD Investments EAD, Sofia
Address: 9 Frityof Nansen Blvd., Sofia, Bulgaria
Telephone: +359 2 810 26 51
Fax: +359 2 981 21 65
E-mail: info@kd-group.bg
Website: www.kd-group.bg
Management Board (31 December 2007):
Yanko Nikolov, Executive Director and President of
Management Board
Krasimir Mishlakov, Executive Director
Katja Kraškovic, Member of the Management Board
Aleš Oražem, Member of the Management Board
Roman Androjna, Member of the Management
Challenges in 2008:
The “import” of other KD funds (mainly
Slovenian) into the EU for distribution in Bulgaria,
continuing expansion and strengthening of the
product range for Bulgarian investors;
Continuing to strengthen cooperation and
partnership with local institutional investors and
brokers;
Cooperation with two other Group companies
registered in Bulgaria - KD Securities and KD Life -
to further enhance recognition of KD as major player
on the Bulgarian financial market;
Increasing market share.
Board
Operations in 2007
133
The number of investors in our funds almost
doubled, while the volume of assets under
management more than doubled (to over EUR 7
million).
Our funds are ranked among the most
successful funds on the Bulgarian market, while
the KD Equity fund achieved the best results of any
Group company fund.
The customers we attracted included pension
funds.

KD Pelikan
- a balanced investment company, AD
KD Pelikan’s portfolio is balanced in accordance
with its investment policy. Equity securities represent
48.66 percent of assets, 1.5 percent of which are
invested in Romania, while the rest are invested on the
Bulgarian securities market.
Bonds and deposits represent 17.91 percent and
25.67 percent of the fund, respectively, while cash
KD Bonds Bulgaria
- a bond mutual fund
The fund celebrated its first anniversary in the
middle of 2007.
By the end of 2007, assets under management had
reached EUR 396 thousand.
Bonds represented 48.4 percent of assets, followed
by deposits (29.9 percent), equity securities (19.3
percent) and cash (2.4 percent).
accounts for the remaining 7.76 percent.
Assets under management totalled EUR 3.47
million at the end of the year, an increase of 31 percent
compared to 2006.
134
Podatki o skladu na dan 31 December 2007
Market price per share (in BGN*) 23.07
Net value of the fund (in BGN*) 6,788,748
Number of shares in circulation 294,293
Number of investors 229
* BGN - Bulgarian lev
Data regarding the fund as at 31 December 2007
Unit price (in BGN*) 125.22
Net value of the fund (in BGN*) 774,906
Number of units in circulation 6,188.42
Number of investors 22
* BGN - Bulgarian lev

KD Equity Bulgaria
- an equity mutual fund
The fund celebrated its first anniversary in the middle
of 2007.
Assets under management reached EUR 3.367
million by the end of 2007, or 6.4 times more than at
the end of 2006.
In 2007, the investment region was expanded from
just the Bulgarian market to include markets of Eastern
and Southern Europe.
At the end of 2007, the Bulgarian market still
represented the primary investment region (63.27
percent), followed by investments in Croatia (16.78
percent), Romania (4.5 percent) and Serbia (3.10
percent). Equity securities represent 87.65 percent of
total assets under management. Cash (2.58 percent)
and deposits (8.78 percent) represent the remaining
assets.
135
Data regarding the fund as at 31 December 2007
Unit price (in BGN*) 2.00
Net value of the fund (in BGN*) 6,585,687
Number of units in circulation 3,292,892.77
Number of investors 493
* BGN - Bulgarian lev

136
Kalemegdan, Belgrade, Serbia

Serbia
KD Investments, a. d., Belgrade
Address: 13 Zmaj Jovina, Belgrade, Serbia
Telephone: +381 11 263 59 18
Fax: +381 11 328 23 31
E-mail: info@kd-investments.co.yu
Generation of investment returns that will be among
the best in Serbia to the benefit of our customers;
Participation in the establishment of an association
of asset management companies;
Improvement of local recognition of the KD brand.
Website: www.kd-investments.co.yu
Management Board (31 December 2007):
Dušan Lahe, Director and President of Management Board
Dag Kralj, Member of the Management Board
Aleksander Sekavčnik, Member of the Management Board
KD Ekskluziv
- an equity mutal fund
The KD Ekskluziv equity mutual fund was
established at the end of December 2007 to achieve
returns with an investment of a minimum of 75 percent
Operations in 2007
of assets in equity securities and shares of the largest
Serbian companies.
At the beginning of September, KD Investments
was registered as a company for the establishment,
organisation and management of investment funds.
At the end of November, the company issued a
public call for payments of units in the prestigious
investment fund KD Ekskluziv.
The public call for payments of units in the
open-end equity fund KD Ekskluziv was successfully
concluded on 20 December 2007, and on 27
December the fund was registered in the Securities
Commission’s fund register, and was able to start
operations on the Serbian financial market.
Through Serbian group member, KD Investments
Belgrade, KD Holding has expanded its operations
to a capital market with tremendous growth and
development potential in the coming years.
Data regarding the fund as at 31 December 2007
Unit price (in RSD*) 1,000.32
Net value of the fund (in RSD*) 24,354,173
Number of units in circulation 25,920.79
Number of investors 58
* RSD - Serbian dinar
137
Challenges in 2008:
Registration of a second open-ended investment
fund;
Development of new financial products in
cooperation with banks;
Development of sales, particularly via agencies,
banks and stockbroking companies;

Private wealth management and stockbroking
Operations in 2007
Challenges in 2008:
To continue growth in market shares for private
138
In a very successful 2007, we gained the trust of
90 new customers in Slovenia, introduced an increased
minimum initial investment of EUR 100 thousand to
the market and increased payments into funds by 29
percent compared to the previous year.
In terms of the number of customers and volume of
assets entrusted for management, we are one of the top
Slovenian brokerage houses and banks providing these
services.
Private wealth management has been established
as a key product abroad as well: at the end of the year
we were managing the assets of almost 350 customers
in three countries, with a total value of approximately
EUR 11 million.
We successfully maintained and improved private
wealth management services as the basic pillar of our
services.
All companies abroad involved in stockbroking
services successfully increased their market share.
In terms of human resources and organisation
we have adapted to new regulatory guidelines and
directives in all countries and strengthened the
foundations for continued growth.
wealth management services and stockbroking to
become one of the leading providers of these services in
the region;
To improve management processes, staff training
and upgrade individual management services to include
a wide range of other financial services;
Closer integration between companies abroad (via
the Ljubljana-based company KD BPD) in a divisional
model of corporative governance;
To begin calculating new return indices for markets
where we invest, which will better reflect and indicate
the liquidity of these markets and the performance of
assets invested;
To intensify cooperation between KD Holding Group
companies and implement joint actions to increase
recognition of the KD brand.

Slovenia
KD BPD, borznoposredniška družba, d. o. o.,
Ljubljana
Address: 206 Celovška cesta, Ljubljana, Slovenia
Telephone: +386 1 582 67 30
Fax:+386 1 582 67 20
management department also manages foreign
mandates from institutional investors. Last year,
exceptional growth was recorded in this sector, as
the value of assets under management increased by
15 times.
E-mail: info@kd-group.si
Website: www.kd-bpd.si
Management Board (31 December 2007):
Milena Zrnec, President of Management Board
Management Board (1 April 2008):
Benjamin Jošar, President of Management Board
In 2007, we placed a great deal of focus on the
continued improvement of management processes.
Group management, introduced in 2006, was
further strengthened and enhanced last year.
We also began selecting and testing programme
solutions for management support and continued
Asset management
CFA training.
KD BPD managed in 2007 the funds of the asset
Private wealth management
management company KD Investments (now KD
Skladi). In 2007, 12 mutual funds and the KD ID
investment company were managed in this manner.
The past year was successful for our investors.
Assets under management grew by 48.7 percent
in 2007, which can be attributed to the returns
generated, as well as net inflows. In the second half
of the year, the sub-prime mortgage crisis in the
USA increased volatility on global capital markets.
The increased political uncertainty regarding the
resolution of Kosovo’s status also had an impact
on Balkan markets. In 2008, we expect the
cooling of global economic growth to lead to more
difficult conditions on capital markets. We believe
however that these conditions will provide further
opportunities for our management team to prove
their level of professionalism and expertise.
In addition to the funds of KD Skladi, the asset
Private wealth management is becoming a more
desirable and sought-after way of investing available
surplus assets. This reflects changing savings
habits, investment decisions and a more
capital-oriented investment approach from investors
in the future. In the three years since private wealth
management was first provided by the company, we
have ensured that investment opportunities offered
have been continually updated. We are introducing
new investment policies, more closely tailored to
clients in terms of risk, as they are adapted to their
investment and savings habits.
139

Operations in 2007
Challenges in 2008:
To further improve management processes and the
In a very successful 2007, we gained the trust
of 90 new customers, successfully introduced an
increased minimum initial investment of EUR 100
professional development of analysts and managers;
To attract new global and regional institutional
investors;
thousand to the market and increased payments into
140
funds by 29 percent compared to the previous year.
In terms of the number of customers and
volume of assets entrusted for management, we
are one of the top Slovenian brokerage houses and
banks providing these services.
We successfully maintained and improved
private wealth management services as the basic
pillar of our services.
Investment performance and vision
Despite poorer returns on global capital markets at
the end of 2007 (due to the mortgage crisis and
liquidity shocks), we successfully achieved a 15.40
percent return on assets in 2007, as we managed
to invest primarily in developing markets that were
not directly affected by the negative consequences
of the mortgage crisis. The economies of these
countries are achieving above-average growth,
which permits an optimistic view of growth and
development for these markets in the future.
To begin calculating new return indices for
markets in which we invest, which will better reflect
and indicate the liquidity of these markets and the
performance of assets invested;
To increase emphasis on personal contact and
communication with customers;
To provide a more favourable and wider selection
of fees to facilitate the optimisation of product costs;
To actively integrate with new local colleagues in
regions where Group companies operate;
To achieve a leading position in the region for
private wealth management;
To strengthen and make better use of private
wealth management as a market niche within the
sector;
To upgrade private wealth management services
with a wide range of financial services.
Stockbroking
Operations in 2007
We employed a new stockbroker, improving the
responsiveness and quality of stockbroking services.
We introduced investment consultancy services
for major customers, offering useful information to
facilitate investment decision-making.

We successfully responded to Slovenia’s first year
with the euro and increased the number of customers
on the growing domestic market and on all foreign
markets. We formed a new partnership in Romania,
started discussions in Serbia, and renewed our
partnership with the Bank of New York Group.
As part of the derivates portfolio, we offered
warrants and turbo-certificates listed on the Stuttgart
stock exchange.
Croatia
KD Upravljanje imovinom, d. o. o., Zagreb
Naslov: 39 Radnička cesta, Zagreb, Croatia
Telephone: +385 1 627 44 44
Fax: +385 1 627 44 08
E-mail: kdam@kd-group.hr
Website: www.kd-group.hr
Management Board (31 December 2007):
Zvonimir Marić, Member of the Management Board
Boštjan Tancer, Member of the Management Board
The majority of our trading continued to be on
the domestic and Balkan markets and increasingly on
Operations in 2007
other foreign markets, primarily Hong Kong, the US
and Germany.
We offered customers investments on the new
markets of Estonia, Latvia, Lithuania, South Africa and
South Korea.
We successfully adapted to the new Financial
Instruments Market Act, and notified customers of the
new European MIFID directive.
Challenges in 2008:
To continue our successful cooperation with
existing customers and offer them additional
services (the provision of information with the help
of a strengthened analytical department);
To offer quality services to those new customers
wishing to be more active on all stock markets;
To successfully participate in a project of
establishing a bank.
We established ourselves as a new provider on
the private wealth management services market,
with assets under management totalling EUR 2.5
million and a market share at the end of 2007 of
over 2 percent (as at 31 December 2007).
We attracted a significant number of new
individual customers with the initial public offering
of a large Croatian telecommunications company.
In 2007, we almost doubled our revenues from
stockbroking, increased our market share on the
Zagreb Stock Exchange (ZSE) to over 2 percent,
while increasing the relative volume of transactions
outside the Group.
At the end of the year, we witnessed a
major crisis on the market, which constricted the
investment fund and private wealth management
market.
141

Challenges in 2008:
Operations in 2007
To strengthen the reputation of the company as
142
a high-quality provider of private wealth management
services, which we believe will continue to develop
despite demanding conditions on the market;
To complete the infrastructure and international
individual portfolio management services;
To strengthen private wealth management
services and internet-supported stockbroking;
To implement new distribution methods for private
wealth management (in addition to own employees);
To build the KD brand in Croatia.
Romania
SSIF KD Capital Management S. A., Bucharest
Address: 5 Gheorghe Manu, Bucharest, Romania
Telephone: +40 21 650 04 47
Fax: +40 21 650 04 48
Website: www.kd-capital.ro, www.kd-group.ro
E-mail: office@kd-capital.ro
Management Board (31 December 2007):
Silviu Enache, President of the Management Board
Uroš Gorišek, Member of the Management Board
Dag Kralj, Member of the Management Board
In March 2007, KD Capital Management
received trading licence from the National Securities
Commission. We achieved our objective to offer a
comprehensive range of services to KD customers in
Romania.
The number of private wealth management
customers increased by 125 percent compared to
2006, reaching 181, while assets under management
reached nearly EUR 5 million. Our most important
customers are from Romania, Slovenia, France, Greece
and Croatia.
We increased stockbroking revenues in 2007 by
more than six times, and achieved a position in the top
half of all stockbroking companies in Romania.
Through seminars, at which our analysts and
portfolio managers presented KD products and markets,
we improved recognition of the KD brand.
Challenges in 2008:
Our primary objective is to increase our portfolio of
private wealth management customers and to invest in
foreign markets in accordance with customers’ profiles
and expert management;
We will consolidate activities by attracting new
foreign investors, promoting KD products on foreign
markets and structuring new products such as initial
public offering projects;
Since the KD brand is already familiar to the
Romanian market, we will focus on increasing our
market share and developing a competitive advantage
on the capital market.

Bulgaria
KD Securities EAD, Sofia
Naslov: 9 Frityof Nansen, Sofia, Bulgaria
Telephone: +359 2 810 26 95
Fax: +359 2 981 01 08
E-mail: kds.office@kd-group.bg
KD Securities became the only investment agent
offering the mutual funds of foreign management
companies via our Financial Points (currently Sofia
and Plovdiv). The sales volume at these points
increased ten-fold compared to 2006.
Website: www.kd-group.bg
Management Board (31 December 2007):
Uroš Gorišek, President of Management Board
Desislava Petkova, Member of Management Board
Dag Kralj, Member of Management Board
Challenges in 2008:
To expand and further improve private wealth
management services and continue growth in assets
under management and the number of customers;
To strengthen the interest and loyalty of KD
Operations in 2007
Securities’ customers, and extend that interest to
other services within the KD Holding Group;
In 2007, KD Securities succeeded in steadily
increasing assets under management. Results at the
end of year significantly exceeded plans. Individually
managed assets exceeded EUR 3.5 million
(a four-fold increase), while the number of private
wealth management customers exceeded 100
(an increase of more than three times).
Stockbroking revenues increased by more than
eight times in 2007. We were ranked in the top half
of all stockbroking companies in Bulgaria and in the
top quarter of all non-banking investment agents by
transaction volume on the Bulgarian stock market.
KD Securities established itself as one of the
leading local investment agents, offering services on
the regional market via associated companies and
other partners. KD Securities became a recognised
player on the local market. The company can thus
legitimately strive to improve and expand services.
To improve private wealth management services
on foreign markets by strengthening cooperation
between local KD branches in the region, especially
at the portfolio management level;
To begin offering foreign KD funds in Bulgaria to
increase our competitive advantage;
To expand the services on offer at Financial
Points and develop them into “fund supermarkets”
with a wide range of mutual funds from own
and foreign management companies and expert
consultancy services and to expand the Financial
Point network.
143

144
Ljubljanica River, Slovenia

Our insurance activities embody
the values of the company:
openness to the new, contemporary models,
and the equality of each and every client.
This is how we build trust.
When nature conspires against us,
we also help each other
on an individual level.
The employees and companies added
charitable contribution to victims of misfortune.
145

146
Ljubljanica River, Slovenia

147

2.2
Insurance
The insurance-related activities of the Group include
life, property and health insurance. The Group
has two public limited companies in Slovenia: KD
Življenje, a life insurer, and Adriatic Slovenica, a
universal insurance company that is marketing
life insurance and property insurance, including
Market position
The Group’s two insurance companies achieved
a market share of 17 percent in Slovenia, firmly
establishing it in second position on the Slovenian
insurance market. In 2007, the Group collected
EUR 307.9 million in premiums.
health insurance. The Group has been developing
and marketing life insurance in other countries
at branches of KD Življenje and at independently
established insurance companies.
In 2007, the Group actively operated abroad
through the life insurance companies KD Life
Asigurari in Romania and KD Life in Bulgaria.
KD Življenje operated in the Czech Republic and
148
The Group achieved its objectives for the insurance
sector in 2007. The insurance companies increased
total premiums collected by 34.5 percent, while
the Group also strengthened its position in property
insurance, including health insurance, where total
premiums rose by 8 percent.
through a branch in Slovakia. In 2007, these
insurance companies collected over a million EUR
in total premiums.
The Group’s share of the Slovenian insurance market:
The insurance companies within the Group made
major expansions and improvements to their range
of products and services, developed new packages
and more specialised products for individual
target groups, modernised sales channels and
introduced new ones. One of the most important
developments was the establishment of the sales
company, KD Finančna točka, while the past year
was also marked by the expansion of life insurance
operations abroad.
KD Holding Group 17%
Other 83%

Structure of insurance within KD Holding Group by
insurance type:
The Group’s share of life insurance on the Slovenian
insurance market:
Property insurance 47%
Life insurance 29%
Helth insurance 24%
The Group has a 15.3 percent market share in
life insurance and an 18.2 percent market share
in property insurance (including health insurance)
among universal insurance companies on the
Slovenian insurance market.
KD Holding Group 15.3%
Other 84.7%
The Group’s share of property insurance on the Slovenian
insurance market:
149
KD Holding Group 18.2%
Other 81.8%

Features of the Slovenian insurance market in
2007
Structure of property insurance premiums (excluding
health insurance) within the Group by insurance type:
Legislative changes, which followed adaptations to
EU guidelines, characterised 2007, while the year
was also marked by loss events.
In health insurance, a number of legislative
amendments came into force, which led to Adriatic
Slovenica paying out EUR 11.8 million in old-age
provisions to 276 thousand policyholders. The
collection of these provisions was terminated by the
law and included in full in supplementary health
insurance equalisation schemes on 30 September
2007, as the legally-defined transition period for
150
equalisation ended at that time.
Catastrophic storms and floods in September
characterised loss events in the area of property
insurance. These caused extensive property
damage, exceeding EUR 200 million, including
EUR 2.9 million from Adriatic Slovenica claimants,
although adequate reinsurance meant there was no
significant impact on the company’s results.
Motor liability insurance 40%
Land motor vehicle insurance 25%
Accident insurance 14%
Fire and natural disaster insurance 7%
Other insurance against loss and damage 6%
General liability insurance 4%
Kredit and surety insurance 1%
Other 3%
Property insurance
Within the Group, property insurance is marketed in
Slovenia by Adriatic Slovenica. Collected premiums
totalled EUR 114.3 million, representing growth of 4.35
percent compared to 2006.
Health insurance
Health insurance is offered within the Group by
Adriatic Slovenica, which recorded premium growth of
14.3 percent in 2007 compared to the previous year,
collecting EUR 89.5 million in premiums. Adriatic
Slovenica has achieved an almost 24 percent share of
the Slovenian supplementary health insurance market,
while its share of the above-standard health insurance
market is over 50 percent.

Structure of health insurance premiums within the Group
by insurance type:
collected EUR 74.1 million in premiums. Life
insurance was marketed abroad by KD Življenje
in the Czech Republic and through a branch in
Slovakia and by KD Life Romania and KD Life
Bulgaria in their respective countries.
Structure of life insurance within the Group by insurance
type on the Slovenian market:
Suplementary health insurance 95%
Health insurance abroad with CORIS assistance 3%
Above-standard insurance 2%
151
Life insurance
Gross life insurance premiums have been growing
for a number of years. Last year, total premiums
collected by insurance companies were 16.3
percent higher than the previous year. The main
Unit-linked life insurance 79%
Mixed and risk-cover life insurance 20%
Voluntary supplementary pension insurance 1%
reason is the considerable success in the marketing
of new life insurance products, primarily insurance
in which policyholders assume the investment risk.
Given the 13.7 percent growth in life insurance
in Slovenia in 2007 and the 16.3 percent rise
in 2006, the Slovenian life insurance market is
growing at a faster pace than in other EU Member
States (growth in the EU-15 was 12.8 percent).
In 2007, life insurance was marketed within the
Group by two insurance companies in Slovenia:
KD Življenje and Adriatic Slovenica, which together

152
Challenges in 2008:
To grow and consolidate the market position of the
Group’s insurance companies, and maintain a leading
role in the development of new insurance products;
To upgrade existing insurance products, particularly
the development of cross-sales of insurance, offering
policyholders additional services;
To continue specialisation of KD Holding Group
insurance companies in life and property insurance;
To collect life insurance premiums of over EUR 100
million, meaning growth of 35 percent;
In property insurance (including health insurance),
we plan to collect over EUR 252 million in premiums,
with 7.9 percent growth in property and 8.5 percent
growth in health insurance;
Transfer of the life-insurance portfolio from Adriatic
Slovenica to KD Življenje;
To develop and upgrade the existing network of
specialist agents;
To modernise existing property insurance,
particularly by developing new standardised and
supplementary insurance packages, developing
supplementary and enhanced assistance services,
and developing new after-sales activities.
Slovenia
ADRIATIC SLOVENICA
Zavarovalna družba, d. d., Koper
Address: 3a Ljubljanska cesta, Koper, Slovenia
Telephone: +386 5 664 31 00
Fax: +386 5 664 31 09
E-mail: info@adriatic-slovenica.si
Website: www.adriatic-slovenica.si
Management Board (31 December 2007):
Gabrijel Škof, President of the Management Board
Milena Georgievski, Member of the Management Board
Management Board (11 February 2008):
Gabrijel Škof, President of the Management Board
Milena Georgievski, Deputy President of the
Management Board
Matej Cergolj, MSc., Member of the Management Board
Marko Rems, Member of the Management Board
Adriatic Slovenica is the only universal insurance
company where policyholders can find all types
of insurance: health, property, life and pension
insurance. In 2007, the company achieved a
solid second position on the Slovenian insurance
market, with a market share of 14.7 percent and
EUR 250.8 million in collected premiums. The
company has an extensive marketing network,
with 149 points-of-sale, and 109 complementary
marketing channel points-of-sale, making a total of
258. It offers the widest range of property and life
insurance on the market. The “Company Reputation
2007” (Kline & Partner) research indicates that
the company achieves above-average recognition
among the general public and business community,

was above average in terms of reputation and
investment attractiveness and was an impressive
36th position on the list of the top-108 Slovenian
companies in 2007, according to the business
community, and second place among Slovenian
insurance companies.
Structure of premiums by insurance type:
Development of key insurance areas and
continued development of the sales network,
providing policyholders with better access and
higher quality services, as well as development of
new sales channels.
Higher quality insurance services and
development of new, additional assistance services.
Property insurance 57%
Life insurance 36%
Health insurance 7%
Operations in 2007
The company continued with the full integration
of the merged insurance companies in the areas of
insurance products, standardised operations and the
modernisation and standardisation of the internal
organisation.
Projects relating to the new organisation, job
systemisation and the pay system (completed at
end of March 2007) and the upgrading of the
information system were carried out.
Start of procedures for the transfer of the life
insurance network to KD Življenje.
Development of new products: new motor
vehicle insurance, new Vita Fond life insurance
investment packages, Vitafond Azija Garant
Plus and Vitafond Renta Garant, a new Family
Package and Kredit Vita AS, new health insurance
packages aimed at the young, active and seniors
(Mladi, Aktivni and Senior) and the upgrade of
two packages for athletes, Top Athlete and Athlete
(Vrhunski Športnik and Športnik).
Life insurance
In 2007, the insurance company offered a broad,
flexible and attractive range of all types of life
insurance products that meet the need and desire
for security or savings throughout life.
The insurance company achieved 4.8 percent
growth in premiums collected compared to the
previous year.
153

Life insurance products
Structure of life insurance premiums by insurance type:
Vita AS - mixed life insurance for endowment or
death,
Vita AS Plus - mixed life insurance with critical
illness coverage,
Kredit Vita AS - decreasing term life insurance
according to an amortisation schedule and an optional
restriction on transferability in favour of a lender,
VitaFin AS za vse življenje - life insurance for the
entire life span,
VitaFin AS za določen čas - term life insurance,
VitaFin AS with a decreasing insurance amount
(linked to a loan contract),
154
Vitafond AS - unit-linked life insurance,
Vitafond AS investment package - life insurance
with investments in three different investment
packages,
Vitafond Azija Garant - a unique unit-linked
life insurance with a guaranteed principal upon
endowment,
Vitafond Azija Garant Plus - new version differing
from AG in terms of investments (investment in sharebased
mutual funds in addition to hedge funds),
Additional accident insurance,
Term annuities,
Pension annuity - annuity insurance for life.
Voluntary supplementary pension insurance:
Pokojninski temelj AS - a voluntary supplementary
pension insurance.
Mixed and risk-cover life insurance 50%
Unit-life insurance 46%
Voluntary supplementary pension insurance 4%
Property insurance
Insuring property and services is the largest
area of operations for Adriatic Slovenica. It offers
policyholders a comprehensive, contemporary
range of products with effective management of
accumulated premiums used to generate new
assets. Measured by premiums collected in 2007,
the largest insurance type was automobile
third-party liability insurance, followed by motor
vehicle hull insurance, accident insurance, fire
insurance and other damage insurance.

In 2007 Adriatic Slovenica’s work in this field
included:
Eight types of accident insurance,
Legal expense and assistance insurance.
Intense modernisation of standardised insurance
products and the upgrading of existing insurance and
the adaptation of insurance underwriting to the new
information system and modern marketing channels;
Offering a new comprehensive motor vehicle
insurance and enabling the renewal of automobile
third-party liability insurance via the internet;
Introducing a 55 precent bonus for careful drivers
and increasing the minimum insurance amount by five
times, in accordance with the law;
In credit insurance, offering a completely new
product, as new credit insurance is based on insuring
non-payment due to traditional insurance risks (death
of the insured, work disability, non-culpable loss of
employment);
In the field of housing insurance, the company
started preparing for a new, standardised product with
enhanced assistance, which will be introduced to the
market in 2008 and is also planning a standardised
and updated range of accident insurance.
Property insurance products:
Insurance of land motor vehicles and motor
vehicle hull insurance,
Automobile third-party liability insurance,
Transport insurance, including the insurance of
vessels,
Fire and natural disaster insurance,
Fifteen other types of damage insurance,
Fourteen types of general liability insurance,
Credit and surety insurance,
Miscellaneous financial loss insurance,
Health insurance
The company has developed its health insurance
in line with legislative possibilities, formulating its
products to meet policyholders’ needs and offering
the option of individual supplementary and parallel
insurance as well as packages supplemented with
new coverage and designed for specific target
groups. Adriatic Slovenica offered its customers new
packages of above-standard insurance aimed at
the young, active, and seniors (Mladi, Aktivni and
Senior) with additional coverage for
top-quality diagnostic tests and special new
packages for athletes in the national and youth
categories (Vrhunski Športnik and Športnik - Top
Athlete and Athlete).
Health insurance products:
Supplementary health insurance,
Parallel health insurance - insurance for private
payment of specialist outpatient services,
Additional health insurance:
Health insurance for increased rights
or higher standard of services,
Health insurance for additional rights,
Health insurance abroad with
CORIS assistance.
155

Challenges in 2008:
Achieving a 18.7 percent market share and
consolidating second position among Slovenian
insurance companies, maintaining the company’s
share of the supplementary health insurance market
and its leading position as provider of above-standard
health insurance;
Focusing on satisfying customers’ needs and
desires, particularly in the field of high quality advice
during the sale of services and settlement of claims;
Implementing projects to develop new
KD Življenje, zavarovalnica, d. d., Ljubljana
Address: 206 Celovška cesta, Ljubljana, Slovenia
Telephone: +386 1 582 65 50
Fax: +386 1 518 19 95
E-mail: info@kd-zivljenje.si
Website: www.kd-zivljenje.si
Management Board (31 December 2007):
Matija Šenk, President of Management Board;
Mateja Keržič, Member of the Management Board,
Darko Medved, PhD, Member of the Management
Board
insurance and financial products and sales channel
156
diversification;
Optimising and standardising all business
processes, primarily by introducing contemporary
marketing channels, and modernising back office
information support;
Developing the most up-to-date, price-competitive
insurance and financial services, particularly assistance
services;
Specialising in property and health insurance and
winding down life insurance operations;
Start up of the newly-established insurance
subsidiary in Serbia, AS Osiguranje and expansion in
South Eastern Europe.
The life insurer KD Življenje, zavarovalnica, d. d.,
began operations on 3 January 2005 under the
name Slovenica Življenje d. d., as the first specialised
insurance company in Slovenia. It was established
as a spin-off from the insurance company Slovenica d. d.
The newly-established insurance company offered
policyholders a full range of life insurance products,
with its central product line being life insurance
linked to KD investment funds. Customers can
choose from among sixteen KD investment funds,
both Slovenian and foreign.

Structure of KD Življenje premiums by insurance type:
Unit-linked life insurance for borrowers,
Additional insurance products (additional
accident insurance, additional insurance for critical
diseases).
Operations in 2007
On 22 August 2007, Slovenica Življenje d. d.
was officially renamed KD Življenje,
zavarovalnica, d. d. with an entry in the court register
of companies. The change in name was accompanied
by the redesign of the company’s visual identity to
Unit-linked life insurance 89%
Mixed and risk-cover life insurance 11%
match the visual identity of the KD Holding Group.
A full range of life insurance products was
available; the main products in 2007 were again
Life insurance products:
Fondpolica, unit-linked life insurance,
Fondpolica with an investment package,
Fondpolica Wellness, unit-linked life insurance,
including preventive services,
Fondpolica Azija Garant, unit-linked life
insurance with a lump-sum premium payment and
guaranteed principal upon endowment,
Fondpolica Azija Garant Plus, enhanced version
of Fondpolica Azija Garant (investment in sharebased
mutual funds in addition to hedge funds),
Fondpolica Renta Garant, unit-linked life
insurance with a guarantee,
Mixed life insurance,
Entrepreneur’s life insurance package, group life
insurance,
Seniorplus,
Whole of life insurance,
Whole of life insurance for borrowers,
unit-linked life insurance, led by Fondpolica.
At the end of October, KD Življenje d. d.
participated as 50 percent owner in the
establishment of the largest sales company in the
Group, KD Finančna točka.
The company closed the year as number three
among Slovenian insurance companies by gross life
insurance premiums collected and number two in
unit-linked life insurance.
We collected EUR 57.6 million in gross
premiums, an increase of 49.3 percent compared to
the previous year. Claims paid in 2007 amounted to
over EUR 5 million, up 5.6 percent from last year.
The company actively developed its products
and engaged in activities related to corporate social
responsibility.
157

On the last day of 2007, the company’s General
Meeting of Shareholders approved a proposal from
its main shareholder, KD Holding and passed a
resolution excluding minority shareholders from the
company.
At the end of the year, the company prepared
all procedures required for the transfer of the life
insurance business from Adriatic Slovenica to KD
Življenje.
Challenges in 2008:
Growth in operations: 33.1 percent growth in
gross insurance premiums in 2008;
To increase market share in Slovenia: we plan
to achieve a 14.1 percent market share among life
insurance companies by the end of 2008;
158
To increase EEV (European embedded value) by
16 percent compared to 2007;
To expand operations abroad: conclusion of
preparations to enter the Ukrainian and Croatian
markets;
To maintain the company’s leading position in
the area of new product development;
To introduce new, diverse sales channels;
To utilise synergies with other members of the
KD Holding Group;
To consolidate the division of KD Holding Group
life insurance activities.

Romania
KD Life Asigurari S. A., Bucharest
Operations in 2007
Address: 5 Gheorghe Manu Street, Bucharest,
Romania
Telephone: +40 21 650 55 06
Fax: +40 21 650 55 04
E-mail: office@kd-life.ro
Website: www.kd-group.ro
Board of Directors (31 December 2007):
Matija Šenk, Chairman of the Board of Directors
Ian Harrocks, Deputy Chairman of the Board of
Directors
Carmen Radu, Member of the Board of Directors and
Executive Director
Lilijan Belšak, Member of the Board of Directors
Zefir Castris, Member of the Board of Directors.
The company successfully continued life insurance
sales and consolidated its reputation and market
position.
Focus was placed on sales of unit-linked life
insurance, which represented 92 percent of sales in
2007.
Despite pension system reforms, the company
managed not only to maintain, but to increase life
insurance sales.
The company collected EUR 1.4 million in annual
premiums and concluded more than 4 thousand
insurance policies, which the company markets
through insurance agents.
The life insurance company KD Life Asigurari S. A.
began operations on 21 June 2006 and was the
first life insurance company established abroad by
the Group. The insurance company’s long-term
objective is to achieve an 8.5 percent share of
the Romanian life insurance market in ten years.
Products: Rentabilis - unit-linked life insurance,
Prudentis - mixed life insurance, Probabilis - whole
of life insurance and Medicalis - additional accident
insurance. In 2007, the insurance company also
marketed a guaranteed life insurance product with a
fixed-term premium collection - ProfitabilUno (Azija
Garant Plus).
Challenges in 2008:
To expand the sales network and introduce
innovative products to the life insurance market (joint
life insurance, health insurance).
159

Bulgaria
KD Life AD, Sofia
Address: 5 Stara Planina, Sofia, Bulgaria
Telephone: +357 2 933 79 11
Fax: +357 2 933 79 19
E-mail: office@kd-life.bg
Website: www.kd-life.bg
Challenges in 2008:
To expand own sales network to cover all of
Bulgaria;
To present innovative forms of unit-linked life
insurance that will increase the recognition and
presence of KD Življenje on the Bulgarian market.
Board of Directors (31 December 2007):
Matija Šenk, Chairman of the Board of Directors
Lilijan Belšak, Member of the Board of Directors and
Executive Director
Stefan Stefanov, Member of the Board of Directors
Galabin Galabov, Member of the Board of Directors
KD Life AD is one of the rare companies to offer
unit-linked life insurance on the market, and even
life insurance with investment packages, which
160
is completely new to the Bulgarian market. It is
therefore justified in marketing itself as a
“unit-linked expert”. Products: Fondpolica - unitlinked
life insurance, Život classic insurance - mixed
life insurance, additional accident insurance and
additional accident insurance for children. Special
product: Renta Garant.
Operations in 2007
KD Life AD built recognition of the company and
brand by using innovative sales methods, supported by
specialists from KD Življenje.
The company began sales activities in retail
centres, schools and through a call centre.

Slovakia
KD LIFE, Insurance company plc, pobočka
zahraničnej poisťovne, Bratislava
Address: 3 Laurinská, Bratislava, Slovakia
Telephone: +421 2 5910 49 06
Fax: +421 2 5910 49 10
E-mail: info@kd-life.sk
Website: www.kd-life.sk
Challenges in 2008:
To expand own sales network to cover all of
Slovakia;
To present the Fondpoistka (Fondpolica)
product and other innovative forms of unit-linked
life insurance that will increase the recognition and
presence of KD Življenje on the Slovak market.
Management Board (31 December 2007):
Henrich Kelenyei, Branch Director
In accordance with the Third Life Insurance
Directive, which permits cross-border sales of life
insurance, KD Življenje sold life insurance indirectly
in the Slovak Republic in 2007 through a number
of sales channels. The branch was established on 1
August 2007, with insurance sales beginning on 1
January 2008. Products: Fondpoistka - unit-linked
161
life insurance, Kapitálpoistka - mixed life insurance,
Investprogram - unit-linked life insurance and
additional accident insurance, as well as additional
accident insurance for children. Special products:
Ázia Garant Plus and Renta Garant.
Operations in 2007
The branch was established on 1 August 2007.
The marketing of insurance products commenced.

Czech Republic
KD LIFE s. r. o., Prague
Address: 1699/5 Doudlebská, Prague, Czech
Republic
Telephone: +420 2 3302 67 40
Fax: +420 2 3302 67 49
E-mail: www.kd-life.cz
Contact person (31 December 2007):
Ukraine
KD Life jsc, Kiev
Address: 17 Lineynaya, Kiev, Ukraine
Telephone: +380 44 499 59 99
Fax: +380 44 499 59 90
E-mail: office@kd-life.com.au
Contact person (31 December 2007):
Kevin Phillips, Executive Director
Prof. Ing. Jaroslav Vostatek, CSc.
Operations in 2007
After receiving authorisation to perform cross-border
operations in the Czech Republic, KD Življenje
started life insurance sales in September 2007 with
The requisite authorisation for a financial institution
was obtained on 30 October 2007.
support from a local company. Products: Renta
Garant, under the name Fondpojistka Renta 2
Garance.
Challenges in 2008:
To establish a sales network to ensure the
162
Operations in 2007
company’s presence in major Ukrainian cities;
To begin life insurance sales.
Marketing of the Renta Garant product under the
name Fondpojistka Renta 2 Garance began. Very good
sales results were achieved in a short period.
Challenges in 2008:
To start active operations of a branch in Prague in
June 2008.

Eastern Orthodox priest, Macedonia
163

In one place, clients can find the amazing variety of services offered
by the whole KD Holding Group,
from investments funds to insurance policies,
while also benefiting from the expert professional services of our financial consultants.
164
Adriatic Sea

Do you think it is possible to combine
in one company the variety offered
in a modern shopping mall
and the quality of services of a distinguished boutique?
This is precisely what KD Finančna točka offers -
a financial supermarket with personalised services.
165

2.3
Sales of financial services
At the Group, we value the expectations of our customers
above all else. We therefore pursue their wishes and
needs when developing financial services. These efforts
do not end with the development of services, but
continue in the search for the best distribution channels
through which these services are offered.
products of the Group in Slovenia and one of the
leaders in selected countries, with the largest range
of products and services in one location and the
highest standard of service. At the company, we
have combined three powerful sales chains: the
agent network of the life insurer KD Življenje, its
own agency Svet zavarovanj and the existing KD
Back in 2006, we created Club KD Plus, which
offers customers a number of benefits. In 2007, we
realised one of the Group’s most important strategic
objectives with the establishment of KD Finančna
točka, a common sales channel that brings
BPD branch network of the Financial Points, which
to date has marketed all KD investment funds with
authorisation for marketing and the complementary
mutual funds of other management companies with
authorisation for marketing and stockbroking.
together our entire range of financial services within
166
the Group. Since that time, complete financial
services are available to customers in one location,
accessible through a single entry point.
KD Finančna točka,
premoženjsko svetovanje, d. o. o., Ljubljana
Address: 206 Celovška cesta, Ljubljana, Slovenia
Telephone: +386 1 582 67 51
Fax: +386 1 582 66 52
E-mail: info@kd-financnatocka.si
Website: www.financna-tocka.si
Management Board (31 December 2007):
Gregor Jelerčič, President of the Management Board
Darja Gabrovšek Polajnar, Member of the
Management Board
On 23 October 2007, the Group established the
company KD Finančna točka, whose objective is
to become the leading sales company of financial
The main advantages of KD Finančna točka are its
offer of complete financial services in one location
and a powerful sales network that includes 20
regional branches, a mobile network with 100
market representatives and 520 contracted sales
representatives as at 31 December 2007. Additional
support is also offered through the website,
www.financna-tocka.si, and a call centre.
KD Finančna točka’s range of products and services
includes life insurance through KD Življenje and
information, consultancy and entry to the investment
funds of KD Skladi and other management companies
that have met conditions for the marketing of
investment funds. In 2008, the company’s offer will
be supplemented by the marketing of property and
health insurance, while intermediary services relating
to bank loans and leasing as well as other financial
services will be offered in the future.

Operations in 2007
To increase sales of all financial and insurance
products of companies within the KD Holding
Sales channels were merged in October:
Finančna točka branches, the Svet zavarovanj
agency and the mobile network of KD Življenje.
Group;
To achieve synergies with other members of the
KD Holding Group.
By the end of the year, we had recorded inflows
of EUR 140 million by more than 45 thousand
Plan in numbers
2008
investors at financial points throughout Slovenia.
We underwrote 23 thousand new insurance
policies, with total premiums written of
EUR 30 million.
Amount of direct inflows to investment funds (in EUR million) 153
New insurance premiums paid (in EUR million) 30.2
Number of new declarations of accession 20,800
Number of new insurance policies underwritten 35,450
Number of employees 155
In January 2007, more than 31 thousand
different users visited the website
www.financna-tocka.si. By December 2007, the
number had risen to more than 51 thousand.
During 2007, more than 309 thousand different
users visited the website, 21 thousand of which
were registered.
Challenges in 2008:
To develop innovative, high-quality products;
To offer the widest range of financial products at
one location, supplemented by health and property
insurance and other financial services;
To provide a high standard of sales accompanied
by a high level of professionalism of financial advisors;
To expand the fixed and mobile sales networks;
To assume a leading role in the distribution of
investment funds and life insurance products;
To increase sales (with 15 percent annual growth
in inflows in Slovenia);
To actively expand operations abroad: to become
one of the top three marketing companies in specific
countries;
KD Mark, Storitveno podjetje, d. o. o.,
Ljubljana
Address: 206 Celovška cesta, Ljubljana, Slovenia
Telephone: +386 1 582 67 12
Fax: +386 1 58 26 652
E-mail info@kdplus.si
Website: www.kdplus.si
Management Board (31 December 2007):
Špela Klun, Director
The company’s main activity is the operations of
Club KD Plus. The Club was established in response
to the KD Holding Group companies’ awareness of
the importance of customer satisfaction. The Club’s
services represent additional benefits for members.
The company’s primary task is to acquire new
and interesting benefits for loyal customers and
to link the services of companies within the KD
Holding Group, thus establishing and strengthening
synergies among companies.
167

The benefits the company offers are permanent.
Members receive additional benefits during the
purchase of products and services which include
the entire financial pillar: mutual and investment
funds, stockbroking, banking and insurance services
and the services provided by all associated partners,
including members of the Group and external
Initially, Club KD Plus was joined by Adriatic
Slovenica, Deželna banka Slovenije, KD BPD, KD
Investments (now KD Skladi) in Slovenica Življenje.
In December 2007, these companies were joined by KD
Finančna točka.
In 2007, we began establishing a Club KD Plus in
Slovakia.
partners of the Club. All benefits are updated on
the website www.kdplus.si. Members also receive
regular notifications regarding services and new
products and information regarding their providers
via electronic news and mailings.
Challenges in 2008:
To exceed 55 thousand Club members;
To establish clubs in other countries where KD is
present with its products;
To adapt the range of benefits to the wishes of
Operations in 2007
At the beginning of 2007, the company took over
the operations of Club KD Plus.
members;
To increase cross-sales and adapt services for the
easier creation of benefits.
14.
168
The Club’s 14 thousand existing members were joined
by 23 thousand new members, substantially exceeding
expectations (an increase of more than 53 percent).
Realized and projected growth in Club KD Plus membership
100,000
90,000
95,000
80,000
70,000
75,000
60,000
50,000
40,000
30,000
37,123
55,000
20,000
10,000
0
14,175
25,000
10,000
May 2006 2006 2007 2008 2009 2010
Actual
Plan

Terazije, Belgrade, Serbia
169

We build business networks and relationships among people.
170
Pokonji dol, off the island of Hvar, Adriatic Sea

But we also build literally:
we have made capital investments
in cinemas that project global blockbusters
on to the screens of multiplex theatres.
And we are successfully building sailing boats
that sail out on the world’s seas
in search of new winds and friends.
Two kinds of journey, millions of people,
and countless emotions.
Pokonji dol, off the island of Hvar, Adriatic Sea
171

2.4
Capital investments
The Group’s capital investments are managed by
the parent company KD Holding and the newly
established company KD Kapital. Cinema and
KD Kapital will invest proceeds and debt funds in
new, typically controlling shares in companies in
Slovenia and South Eastern Europe.
entertainment are also included in the Group’s
principal business activities and last year it was
more active in the area of real estate. Other
principal business activities include publishing,
the management of closed-end investment funds
in South Eastern Europe and private equity
management.
In the first capital increase, 26 investments totalling
EUR 44.8 million were made. During the next
capital increase in December 2007, KD Kapital’s
capital was increased up to the investment value
of assets of EUR 72.1 million (a total of 31
investments) and by certain receivables linked to
investments. Thus the total value of assets as at 1
January 2008 was EUR 77.7 million, while equity
KD Kapital, finančne storitve, d. o. o., Ljubljana
totalled EUR 74.3 million.
172
Address: 206 Celovška cesta, Ljubljana, Slovenia
Telephone: +386 1 582 67 70
Faks: +386 1 582 41 00
E-mail: info@kd-group.si
Website: www.kd-group.com
Management Board (31 December 2007):
Janez Bojc, President of the Management Board
Mira Koporčič Veljič, Member of the Management
Board
KD Kapital was established on 1 July 2007 and
its capital increased on 27 July 2007 with a 100
percent contribution in kind from KD Holding.
In 2007, KD Kapital generated net profit from
operations of EUR 1.217 million. The company had
8 employees as at 1 January 2008.
Private equity fund
The fund’s investment policy will involve the
purchase of majority stakes in fast-growing
companies not yet identified by strategic and
large financial investors but which could become
interesting to such investors with adequate growth.
With the establishment of KD Kapital, we separated
the management of non-listed investments and
specific significant shares of listed investments from
strategic and net portfolios of listed investments.

Investment strategy
The amount invested in selected fast-growing
companies will be between EUR 2 and EUR 10
million.
The fund’s geographic structure is focused on
Slovenia, Croatia, Bosnia and Herzegovina, Serbia,
Macedonia, Romania, Bulgaria, Moldavia and
Albania, with an emphasis on the countries of the
former Yugoslavia.
The fund will strive to gain access to companies with
the ability to become leaders in a specific niche or on a
particular market through their products and services.
Investments will be focused on companies from
the fields of financial services, distribution and
logistics, communications and media, healthcare
Challenges in 2008:
To make at least three investments;
To attract additional investors to the fund.
Closed-end investment funds in South
Eastern Europe
KD Kapital owned two subsidiaries among
management companies established in the
privatisation process in the Federation of Bosnia and
Herzegovina, the Republic of Srpska and Montenegro:
A stake of 80.5 percent in KD Mont a. d.,
Podgorica which manages the investment fund MIG;
A stake of 51.0 percent in VIB a. d., Banja Luka
which manages the investment fund VIB.
and environmental protection. Investments will
focus on small and medium-sized enterprises with
annual revenues of between EUR 5 and EUR 75
million.
By providing capital and maintaining an active
management policy, the fund’s managers aim to
increase the value of these companies and prepare
them for sale to strategic investors.
Operations in 2007
The fund began operating in 2007 and acquired
liabilities in the amount of EUR 31 million.
The largest investor is KD Holding while other
investors are primarily Slovenian banks and the Swiss
fund SECO. In 2007, the fund established an office in the
area of investing and reviewed more than 120 potential
investments.
As at 31 December 2007, the company
ABDS d. d. was managed by KD Kapital on behalf
of KD Investments (now KD Skladi) which owned a
58.79 percent stake. ABDS manages the investment
fund BIG. KD Kapital purchased ABDS from KD
Skladi in 2008 (15 February 2008).
KD Kapital also holds direct investments in the
following privatisation funds:
A 12.13 percent stake held directly in BIG and
17.01 percent of shares of MIG.
Significant stakes in these management companies
enable KD Kapital to actively participate in their
management. The total value of the three investment
funds was EUR 126 million as at 31 December 2007.
Based on the management companies’ reports, the
net value of the funds was EUR 220 million.
173

174
Investment fund MIG AD,
Podgorica, Montenegro
With the transformation of the privatisation
investment fund MIG into Fond zajedničkih ulaganja
MIG AD, Podgorica, a number of investment
opportunities have been open since 2005. The fund
continued its successful operations in 2007.
The fund can invest, without restrictions, in foreign
or domestic markets, in securities listed on organised
stock markets, in real estate and deposits.
In 2007, the fund sold 27 investments (or stakes
from investments) from its portfolio for EUR 9.6 million
and purchased 37 investments in shares totalling EUR
10.5 million and three investments in real estate valued
at EUR 2.8 million.
Investments in securities represented 92.3 percent.
Of this amount, 92.6 percent of investments were in
Montenegro. Investments in real estate and deposits
represented 6.8 percent and 0.8 percent, respectively.
Data regarding the fund as at 31 December 2007
Net share price (in EUR) 0.37
Number of shares 109,685,100
Net value of the fund (in EUR million) 39.99
Market price per share (in EUR) 0.25
Closed-end investment fund VIB a. d.,
Banja Luka, Republic of Srpska
In 2007, the privatisation fund VIB a. d. from Banja
Luka was successfully transformed into a closed-end
investment fund in accordance with local legislation.
Consolidation of the ownership structure has facilitated
the quality management of investments within the fund,
together with the execution of investment activities. The
investment structure of the fund is appropriately adapted
to the requirements for transforming the privatisation
fund into a closed-end investment fund.
The fund sold four investments valued at more than
EUR 1 million. The value of purchases in 2007 was
EUR 0.8 million.
The proportions of investments in securities
and deposits were 94.3 percent and 5.7 percent,
respectively.
In accordance with the transformation from a
privatisation fund to a closed-end investment fund,
the fund will begin taking advantage of investment
opportunities in countries of the region (Croatia,
Montenegro, Serbia and Macedonia) and countries of
the European Union.
Data regarding the fund as at 31 December 2007
Net share price (in EUR) 5.64
Number of shares 1,987,956
Net value of the fund (in EUR million) 11.2
Market price per share (in EUR) 3.68

Closed-end Investment fund BIG d. d.,
Sarajevo, Federation of Bosnia and
Herzegovina
In 2007, the fund sold or divested ownership shares
in 17 issues valued at more than EUR 10 million. The
fund continued its policy of strengthening the portfolio in
2007, with purchases valued at EUR 3.6 million.
The alignment of the investment structure and
Cinematography and entertainment
business of the KD Holding Group
Seven Group companies are involved in cinematography.
The following companies play a central role:
Ljubljanski kinematografi,
Kolosej kinematografi and
Onisac.
start of adaptations to the new framework legislation
for management companies and investment funds in
Bosnia and Herzegovina will continue in 2008. Until
the new law is adopted, the company can only invest in
securities listed on stock exchanges in the Federation of
Bosnia and Herzegovina and the Republic of Srpska.
Data regarding the fund as at 31 December 2007
Net share price (in EUR) 15.00
Number of shares 10,633,509
Net value of the fund (in EUR million) 159.5
Market price per share (in EUR) 8.66
Motion picture distribution
Ljubljanski kinematografi, d. d.
Address: 152 Šmartinska, Ljubljana, Slovenia
Telephone: +386 1 520 55 02
Fax: +386 1 520 56 00
E-mail: info@kolosej.si
Management Board (31 December 2007):
Tevž Tavčar, President of the Management Board
175
The core activity of Ljubljanski kinematografi in 2007
was the distribution of Warner Bros motion pictures
and independent films from Slovenia and other
European and Asian countries. In addition to its core
activity, the company also leased halls and catering
establishments. The Kino Komuna and Kinoklub Vič
theatres were leased to Kolosej kinematografi.
Operations in 2007
In 2007, the motion picture distribution department
recorded 572 thousand viewers, almost 7,500 of
which were viewers of own motion pictures.

Harry Potter and the Order of the Phoenix was
top foreign film in terms of viewers (74 thousand),
while Petelinji zajtrk topped Slovenian films with
122 thousand viewers.
The company’s market share in Slovenia as motion
picture distributor was nearly 24 percent.
last year. Kolosej owned or managed four cinema
multiplex centres in 2007: Kolosej in Ljubljana
(12 theatres), Koper (3 theatres), Celje (5 theatres)
and in Maribor with 10 theatres, as well as Kino
Komuna in Kinoklub Vič in Ljubljana and Kino
Center Kranj.
Top five movies in 2007 distributed by Ljubljanski
kinematografi:
Operations in 2007
Place Movie Gross revenue
(in EUR)
Number of
viewers
1 Petelinji zajtrk 478,510 122,431
2 Harry Potter and the 304,542 122,431
Order of the Phoenix
3 Ocean’s 13 195,911 47,228
4 Rush Hour 3 173,194 40,753
5 300 143,78 33,923
In conjunction with Osinac, the company opened
the Arena Vodafone live! entertainment centre in March
2007. Casino Rio, a new gaming centre which will
complement the offer and spice up activities in the
Arena Vodafone live! entertainment centre, was opened.
The existing theatre at the Koper cinema centre was
176
Presentation of motion pictures and
entertainment activities
Kolosej kinematografi, d. o. o., Ljubljana
Address: 152 Šmartinska, Ljubljana, Slovenia
Telephone: +386 1 520 55 00
Fax: +386 1 520 56 00
E-mail: info@kolosej.si
Website: www.kolosej.si, www.arenalive.si
upgraded with XpanD technology, including digital 3D
projection and special effects on seats and in the hall.
The company received a Superbrands award,
confirming the Kolosej brand as one of the best in Slovenia.
In July 2007, the company opted to close the
Celje cinema centre, as it did not achieve the desired
operating results.
Top five movies in 2007 in the Kolosej network:
Management Board (31 December 2007):
Sergej Racman, President of the Management Board
Movie
Revenue
(in EUR)
Number of
viewers
Number
of shows
Kolosej, with a number of cinema centres and by
providing the high-quality presentation of a wide
selection of movies and through its additional offers,
has been the largest company showing motion
pictures in Slovenia since 2001, with a market
1
2
Pirates of the
Caribbean:
At World’s
Petelinji
zajtrk
3 Mr Bean’s
Holiday
4 Shrek the
Third
352,5667 79,812 1,330
337,071 78,845 821
311,492 70,663 1,115
257,903 60,666 1,654
share of 65.7 percent. The Kolosej cinema network
5 Ratatouille 236,703 56,284 1,546
was visited by approximately 1.6 million people

Challenges in 2008:
The company’s greatest challenge in 2008 will
be the internal restructuring and modernisation of
the Kranj cinema centre, which by the middle of
2008 will offer visitors from the Gorenjska region
new forms of entertainment and a larger selection
of movies in three contemporarily equipped movie
theatres, pool hall and lounge;
only organiser in Ljubljana and the surrounding area
with the progressive Fort Knox system on twelve IGT
gaming machines. In addition to gaming machines,
guests of the gaming centre may visit the Copacabana
catering facility. More than 100 thousand guests
visited the Casino Rio gaming centre in 2007.
Operations in 2007
The company plans to sell the Kolosej property
in Celje;
In the area of cinematography, the company’s
aim is to increase the efficiency of operations and
maximise revenue-generating sources with existing
cinema multiplex centres and the Arena Vodafone
live entertainment centre.
The Casino Rio gaming centre with 200 gaming
positions opened on 31 March 2007 in the Arena
Vodafone live! entertainment centre.
Advertising for the gaming centre and the
organisation of prize competitions in 2007 were
extremely successful, as the centre attracted a large
Onisac, igre na srečo in gostinstvo d. o. o.,
Ljubljana
Address: 152 Šmartinska, Ljubljana, Slovenia
Telephone: +386 1 520 55 02
Fax: +386 1 520 56 00
E-mail: info@casino-rio.si
Website: http://www.arenalive.si/si/casino-rio
Management Board (31 December 2007):
Sergej Racman, Director
The Casino Rio gaming centre is located in the
Arena Vodafone live! entertainment centre and offers
games of chance at 200 gaming positions, including
168 gaming machines from internationally known
manufacturers IGT; Aristocrat and Novomatic, as
well as 32 gaming positions on 4 electronic roulette
systems from internationally known Slovenian
manufacturers Elektronček and ICIT. Casino Rio is the
number of new guests.
Challenges in 2008:
In 2008, the company will begin converting games
(10 games in April and 10 games in September),
with the aim of increasing the frequency of visits and
maintaining the interest of the centre’s visitors through
new, attractive games;
The organisation of a VIP area for special guests,
where they will feel better and more relaxed;
Following the successful opening and start-up of
the gaming centre, the company will continue to ensure
the 24/7 availability of the system and implement the
necessary measures to comply with the requirements of
the Office for Gaming Supervision;
Introduction of EZ-Pay Playable tickets;
Purchase of the Ancient Chinese Secret progressive
system which will increase the company’s competitive
advantage over other games of chance organisers.
177

178
Village in Notranjska, Slovenia

179

Real estate
Real estate represents a new division of the Group,
which we began to actively develop last year at R.E.
Invest and KD Kvart. The Šumi business complex in
Ljubljana is currently the main project in this area.
KD Kvart, nepremičninska in holdinška
dejavnost, d. o. o., Ljubljana
Address: 14 Levstikova, Ljubljana, Slovenia
Telephone: +386 1 244 50 50
Fax: +386 1 244 50 55
E-mail: kdkvart@kd-group.si
Website: www.kd-group.com
R.E. Invest, promet z nepremičninami in
investicije, d. o. o., Ljubljana
Management board (31 December 2007):
Sergej Racman, Director
Address: 14 Levstikova, Ljubljana, Slovenia
180
Telephone: +386 1 244 50 50
Fax: +386 1 244 50 55
E-mail: reinvest@re-invest.si
Website: www.kd-group.com
Management board (31 December 2007):
Anton Škrlj, Director
The company’s core activities are trade in real
estate and investment engineering. The company
also manages and implements investments for
companies of the KD Holding Group. The liquidation
of the company is foreseen in 2008.
Operations in 2007
The company prepared a distribution plan and
carried out all necessary activities for transfer of the
Šumi project to a newly established company.
The company continued preparatory work
for the Šumi project, including the transfer of
employees with the registration of KD Kvart.
The company provided technical support and
advice on the expansion of the KD Finančna točka
network throughout Slovenia.
KD Kvart was established on 24 July 2007 through
the division of R.E. Invest as the sole legal successor
for the construction of the commercial-residential
building Šumi. The company’s core activities are
trade in real estate and investment engineering. The
company also manages and implements investments
for companies of the KD Holding Group.
Operations in 2007
Acquisition of project documentation and necessary
approvals and authorisations for the Šumi project.
Continued archaeological research at the Šumi site.
The start of construction of public utilities and
water supply.
The purchase of new properties on Soteska and
Slovenska streets due to the expansion of the Šumi project.
Technical support and consulting on the
expansion of the KD Finančna točka network
throughout Slovenia.

Challenges in 2008:
To obtain the requisite building permit for the
Šumi project;
To begin excavating the construction pit;
To search for new investment opportunities in
Slovenia and the countries of the former Yugoslavia;
To provide appropriate information support for
the monitoring of projects;
To begin marketing activities and the sale and/or
rent of apartments and business premises;
To design and establish a new website to
seminars to postgraduate studies. The GEA College
system includes education, from the acquisition
of level VI education via higher education and
college programmes to postgraduate studies,
where students advance a level at a time. Study
programmes at the Business College are in line with
the Bologna Declaration (3+2 system). The system
is supplemented by functional programmes for our
graduates and other university students.
Operations in 2007
present the Šumi project to potential customers.
Other activities of selected subsidiaries
GEA College Group
The GEA College Group comprises the parent
company GEA College, the Business College, the
Centre for Higher Education and the PIC - Business
Education Centre.
GEA College d. d., Ljubljana
Address: 156 Dunajska, Ljubljana, Slovenia
Telephone: +386 1 588 13 00
Fax: +386 1 588 13 33
E-mail: info@gea-college.si
Website: www.gea-college.si
Management Board (31 December 2007):
Andrej Baričič, President of the Management Board
GEA College continued to rationalise operations in
2007. In the scope of the reorganisation of operations,
a portion of common functions, performed by the
company for the Business College, were transferred
to the latter. In addition to revenue generated by GEA
College, revenue was also generated by the leasing of
business premises in 2007.
GEA College - Visoka šola za podjetništvo, Piran
Address: 2 Kidričevo nabrežje, Piran, Slovenia
Telephone: +386 1 588 13 00
Fax: +386 1 568 82 13
E-mail: info@gea-college.si
Website: www.gea-college.si/vsp
Management Board (31 December 2007):
Andrej Baričič, President of the Management Board
Operations in 2007
181
GEA College’s mission is to educate entrepreneurs.
Today, GEA College’s organisational units provide
lifelong educational opportunities, from one-day
In the scope of the Business College, undergraduate
and postgraduate business studies were carried out
in accordance with the Bologna Declaration (3+2

system). Full-time studies are carried out in Piran and
Ljubljana, while part time studies are held in Ljubljana
and Slovenske Konjice. New locations in Maribor
and Radovljica were accredited in 2007 to carry out
part-time undergraduate and postgraduate studies. A
all necessary study material via the internet. Further
development of new programmes and the expansion
of operations are in the planning stage. The
company, whose capital was increased in 2007, is
100 percent owned by GEA College.
department for international undergraduate business
studies, which enrolled its fourth class of students in
2007, operates within the scope of part-time studies.
Further development of new programmes and the
expansion of operations are in the planning stage. To
that end, GEA College increased cooperation with two
foreign universities in 2007.
GEA College CVŠ, Družba za višješolsko
izobraževanje - Center višjih šol, d. o. o., Ljubljana
GEA College PIC poslovnoizobraževalni
center, d. o. o., Ljubljana
Address: 156 Dunajska, Ljubljana, Slovenia
Telephone: +386 1 588 13 11
Fax: +386 1 588 13 33
E-mail: pic@gea-college.si
Website: www.gea-college.si/pic
Management Board (31 December 2007):
Andrej Baričič, President of the Management Board
182
Address: 156 Dunajska, Ljubljana, Slovenia
Telephone: +386 1 588 13 00
Fax: +386 1 568 82 13
E-mail: cvs@gea-college.si
Website: www.gea-college.si/cvs
Management Board (31 December 2007):
Andrej Baričič, President of the Management Board
Operations in 2007
In 2007, CVŠ (Centre for Higher Education) carried
out part-time higher-education study programmes to
obtain the titles of sales officer, business secretary
and accountant. All programmes were carried out
in Ljubljana, while the accountant programme
was also carried out in Piran and in the form of
open study in Ptuj. In 2007, the Centre for Higher
Education introduced E-College, a flexible study
programme which provides students with access to
Operations in 2007
In 2007, PIC (Business Education Centre) carried out
one-day seminars and seminars lasting several days,
workshops, programmes lasting several months, oneyear
professional education programmes for obtaining
level 5 education (economics and management) and
business and specialised education for small groups at
companies. The company, whose capital was increased
in 2007, is 100 percent owned by GEA College.
Challenges in 2008:
In 2008, Higher Education Centre will continue
to increase the quality of its educational process.
In the 2008/2009 academic year, we will
begin implementing an updated higher education
business secretary programme and a new higher
education economic programme, where students

may choose between the following majors:
sales officer,
accountant,
tourism organiser,
real estate agent,
banking assistant,
insurance specialist.
We therefore expect a greater financial effect
at the Centre for Higher Education in 2008 and an
increased market share in area of higher education.
The objectives of the Business College are primarily
an increase in the quality of the educational
process, development of new programmes and
the intensification and expansion of international
cooperation.
ČZD Kmečki glas d. o. o., Ljubljana
Address: 14 Železna cesta, Ljubljana, Slovenia
Telephone: +386 1 473 53 50
Fax: +386 1 473 53 77
E-mail: info@czd-kmeckiglas.si
Website: www.kmeckiglas.com
Management Board (31 December 2007):
Peter Zadel, Director
Operations in 2007
In addition to the Kmečki glas weekly, the company
also publishes the magazines Moj mali svet, Svet in
ljudje and Revijo o konjih. Subscribers to the Kmečki
glas weekly received 25 supplements in addition to the
newspaper. Some supplements were included in other
monthlies. In accordance with planned activities, the
company published an exclusive calendar called Traktorji
183
and a special supplement entitled. The magazine
is not linked to the weekly in terms of the contents;
it represents fresh programme content, as it covers
contemporary trade and consumer topics.The publication
programme in 2007 was further supplemented by 14
book titles, issued in 30 thousand copies.
Challenges in 2008:
This year, the company is again planning new
projects from journalistic-informative activities linked
to agriculture, the modernisation of the company’s
websites and the issue of more supplements than
last year. A year-long campaign will be carried out
to promote the company and its publications and to
increase the number of readers and subscribers to the
newspaper and magazine.

184

A selection of the most important
activities of associated companies
KD Concorde
Operations in 2007
KD Concorde successfully continued its work
in all areas and increased revenues by one-third
Deželna banka Slovenije
Deželna banka Slovenije is a universal
medium-sized bank present throughout Slovenia,
primarily focused on business with retail customers
and small and medium-sized enterprises, as well as
all forms of securities. It has traditionally cooperated
with the food processing industry, which will receive
even greater attention in the future.
compared to the previous year as a result.
The company recruited 82 new consultants.
Due to legislative changes, we were able to
re-establish contractual cooperation at the end of
the year with KD Skladi in the area of marketing
funds (cooperation was suspended in 2004).
The company concluded a new cooperation
agreement on the trading of precious metals with
new partner Elementum d. o. o.
Challenges in 2008:
To attract new consultants;
To increase support of active consultants and
reduce the number of inactive consultants;
To adapt the consultant training system;
To introduce asset consulting as an
independent profession through an asset academy
and other activities;
To update informative material and online
support;
To restart sales of funds due to legislative
changes.
The bank manages a branch network with 90
outlets throughout Slovenia, placing it number three
among Slovenian banks. The bank provides all
basic banking services, from loans to various forms
of savings, payment card operations, e-banking and
payment transactions to investment banking and
leasing. The latter is performed by the subsidiary
DBS Leasing d. o. o., forming the DBS banking
group together with the parent company Deželna
banka Slovenije.
Operations in 2007
In 2007, Deželna banka Slovenije operated in
accordance with the bank’s strategy and its guidelines
and adopted business policy and exceeded established
objectives in the most important areas of operations.
Through its successful operations, the bank
maintained a 1.8 percent market share. Total assets
as at 31 December 2007 totalled EUR 756.9
million, a nominal increase of EUR 147.1 million,
or 24 percent, matching the growth of the banking
system. Thus the bank nearly achieved planned
growth and total assets. Total assets per employee
185

(productivity) rose 21 percent in 2007, totalling EUR
1.8 million as at 31 December 2007.
The bank made significant progress in terms of
achieving return on equity in 2007. The return on
equity of 18.8 percent was more than double that
achieved the previous year.
The bank generated gross profit (pre-tax
profit) of EUR 9.1 million in 2007. Thus the
bank exceeded 2006 gross profit and planned
profit for 2007 by 158 percent and 184 percent,
respectively. Net profit from ordinary operations was
more than EUR 7 million.
To increase the efficiency of operations by
strengthening the commercial banking function
in the area of corporate customers, by enhancing
marketing and sales in retail banking, by increasing
cooperation with customers engaged in agriculture
and food processing and by increasing the number of
customers in securities operations;
To begin introducing transactions with derivatives
and obtain a license to perform transactions relating
to the sale of insurance products.
Seaway Group
In 2007, the bank successfully carried out two
186
capital increases by issuing new shares, resulting in
EUR 36 million in fresh capital. The basic ownership
structure remained unchanged following both capital
increases. This was necessary for the continued
successful operation of the bank given the ambitious
objectives set for 2007 and to achieve the strategic
objectives set out by the bank until 2009. With
the aforementioned capital increases and given
technical and substantive factors, the bank was able
to meet capital requirements at the end of 2007 in
accordance with Basel II capital standards.
Challenges in 2008:
To increase total assets by 16 percent to EUR
864 million;
To achieve a market share of 2 percent;
To generate pre-tax profit of EUR 12.1 million;
To provide appropriate risk management and
the prescribed liquidity level and maintain capital
adequacy at a minimum of 10 percent;
In 2007, Seaway Group continued its creative path
in both its areas of operations: the development of
new sailboats and motorboats for series shipbuilders
and the development and building of its own brand
boats - Shipman carbon-fibre sailboats and Skagen
motor boats. Unfortunately, 2007 was marked by a
fire in which Seaway lost three Shipman sailboats
and its entire workshop for the manufacture of
carbon-fibre boats, including all equipment.
Two-thirds of the year was characterised by
tremendous efforts to re-establish the company’s
work and business processes. This was also
reflected in the company’s operating results: while
income rose by 25 percent, profit and EBITDA
remained at the previous year’s level.
Operations in 2007
The company designed and developed two
motor boats, Windy 44 and 48 for the Norwegian
shipyard Windy.

The company designed, developed and built a
prototype motor boat Commuter 11 for Askeladden.
It is the first boat in Europe equipped with the new
Zeus propulsion system.
Seaway Group designed and developed a new
line of sailboats (31, 34, 38 and 40) and two motor
boats (34 and 37) for its largest customer, the
German company Bavaria.
The Swedish factory Marex took possession
of the new motor boat Marex 37, a completely
innovative design.
At the same time, the company purchased
additional land measuring 43,000 m 2 , with 260
metres of coast line, intended for the manufacture of
motor boats.
The company purchased land in a newly
established industrial zone in Puconci pri Murski
Soboti where the company will build a workshop
for developing and manufacturing products from
composite materials.
At the end of the year, orders for Shipman and
Skagen exceeded EUR 50 million.
The fire on 11 April 2007, caused by welding
work on the roof, resulted in EUR 9 million in
direct damages and several million euros in indirect
material damages. The new workshop (located on
the site of the old workshop) began operating in
December 2007.
The company launched the work boat Atlas 50,
based on the hull of the Skagen 50. The boat was
completed at the shipyard in Oglej and delivered to
the buyer in Portorož.
In the last quarter of the year, the company’s
Shipman 72 and 80 sailboats (22 and 24 metres in
length, respectively) were launched. They represent
the most expensive Slovenian products on global
markets and are distinguished by a completely new
scheme, design and technology. They open the way
for the large boats the company intends to build on
the coast.
At the end of the year in Tržič (Friuli - Julian
region), Seaway signed an agreement on the
construction of a new shipyard, with a deadline of
one year and an investment of approximately EUR
22 million.
Challenges in 2008:
The company is looking forward to 2008 with
optimism, as the overcoming of difficulties posed by
the fire has given the company additional strength
and enthusiasm. The company’s plans include the
increased manufacturing of Shipman sailboats and
the start-up of the new workshop on the coast.
187

188
Sofia, Bulgaria

Sofia, Bulgaria
189

3.
Consolidated Financial Statements for the year ended
31 December 2007 of KD Holding Group
The more attentive we are to the small differences between people,
the easier to understand the words of each of them - and the better the bottom line.
191
Wooden icons, Bulgaria
Fibula from the late Iron Age, 1 st century B. C., Ljubljanica River,
Slovenia
Venecian Lion, the city of Korčula, Brač, Croatia

KD Holding Group
Consolidated Financial Statements as at and for the year ended 31 December 2007
CONTENT
STATEMENT OF MANAGEMENT’S RESPONSIBILITIES
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED BALANCE SHEET
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED CASH FLOW STATEMENT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. General information
2. Summary of Significant Accounting Policies
3. Critical accounting estimates and judgements
4. Comparatives
5. Risk management
6. Reporting by Business Segment and Geographical Segment
7. Property, plant and equipment
8. Investment property
9. Intangible assets
10. Investments in associated companies
11. Financial assets
12. Loans and other receivables
13. Inventories
14. Cash and cash equivalents
15. Capital
16. Other reserves and retained earnings
17. Borrowings
18. Insurance contracts
19. Derivative financial instruments
20. Trade and other payables
21. Deferred income taxes
22. Revenue
23. Expenses
24. Investment income
25. Net realised gains on financial assets available for sale
26. Net fair value gains on assets at fair value through profit and loss
27. Finance costs
28. Income tax expense
29. Earnings per share
30. Dividends per share
31. Acquisitions and disposals
32. Related-party transactions
33. Events after the balance sheet date
196
197
198
199
200
202
202
202
230
235
236
279
283
284
285
288
291
295
297
297
297
299
300
301
304
304
305
307
308
310
310
311
311
311
312
313
313
315
317
193

KD Holding Group
Consolidated Financial Statements as at and for the year ended 31 December 2007
Independent Auditor’s Report
194

KD Holding Group
Consolidated Financial Statements as at and for the year ended 31 December 2007
195

KD Holding Group
Consolidated Financial Statements as at and for the year ended 31 December 2007
Statement of management’s responsibilities
The Management of the Company confirms the
consolidated financial statements of KD Holding
d.d. for year ended 31 December 2007, the
applied accounting policies, and the notes to the
prepared under the assumption of a going concern
and in compliance with the relevant legislation
and International Financial Reporting Standards as
adopted by the EU.
financial statements.
The Management is also responsible for proper
The Management of the Company is responsible for
the preparation of the annual report so that it gives
a true and fair view of the financial position of the
Group as at 31 December 2007 and the results of
management of accounting, for taking appropriate
measures to protect the Group's assets and to
prevent and discover fraud, other irregularities or
illegal acts.
its operations for the year then ended.
The tax authorities may at any time inspect the
196
The Management of the Company confirms that the
accepted accounting policies have been used on a
consistent basis and that the accounting estimates
have been made in compliance with the principle
of prudence. The Management of the Company also
confirms that the financial statements have been
books and records within 5 years subsequent to
the reported tax year, and may impose additional
tax assessments and penalties. The Company's
Management is not aware of any circumstances
which may give rise to a potential material liability
in this respect.
Ljubljana, 23 May 2008
Chief Executive Officer
Matjaž Gantar

KD Holding Group
Consolidated Financial Statements as at and for the year ended 31 December 2007
Consolidated income statement
(in EUR) Note 2007 2006
Insurance premium revenue 305,052,580 262,823,197
Insurance premium ceded to reinsurers (10,293,797) (9,549,683)
Net insurance premium revenue 22 294,758,783 253,273,514
Investment income 24 13,844,863 14,401,754
Net gains on available-for-sale financial assets 25 24,197,926 17,339,348
Impairment of available-for-sale financial assets 25 (2,596,286) (9,633,386)
Net gains / (losses) on assets at fair value through profit and loss 26 21,240,218 18,425,773
Net financial income 56,686,721 40,533,489
Sales of goods and services 22 77,232,270 55,463,925
Other operating income 22 26,964,325 15,812,224
Other income 104,196,595 71,276,149
Insurance contracts benefits and claims 23 (243,398,171) (190,394,487)
Insurance contracts benefits and claims, recovered from reinsurers 11,584,697 4,051,152
Net insurance contracts benefits and claims (231,813,474) (186,343,335)
Raw materials and consumables used 23 (7,184,227) (5,038,503)
Costs of services (84,724,041) (75,887,790)
Employee benefits expense 23 (59,250,777) (50,056,653)
Depreciation and amortisation expense 23 (8,215,555) (6,917,704)
Other insurance expenses 23 (7,248,001) (4,567,005)
Other expenses 23 (14,337,515) (6,408,821)
Other costs (180,960,116) (148,876,476)
197
Operating profit 42,868,509 29,863,341
Finance costs 27 (6,552,633) (5,513,800)
Share of profit of associates 10 11,141,024 4,372,830
4,588,391 (1,140,970)
Profit before income tax 47,456,900 28,722,371
Income tax expense 28 (12,511,316) (7,845,602)
Net profit for the year 34,945,584 20,876,769
Attributable to:
Equity holders of the Company 33,059,887 18,569,269
Minority interest 1,885,697 2,307,500
34,945,584 20,876,769
Earnings per share for profit attributable to the equity holders
of the Company during the year (expressed in EUR per share)
- basic and diluted 29 12,38 6,95

KD Holding Group
Consolidated Financial Statements as at and for the year ended 31 December 2007
Consolidated balance sheet
(in EUR) Note 2007 2006
ASSETS
Property, plant and equipment 7 83,867,010 71,220,402
Investment property 8 20,601,521 20,592,116
Intangible assets 9 87,896,641 87,364,290
Investments in associates 10 71,687,821 45,119,877
Financial assets:
- at fair value through profit or loss 11 176,025,625 115,622,983
- held to maturity 11 7,590,164 6,987,877
- available for sale 11 317,214,328 256,141,399
500,830,117 378,752,259
Loans and other receivables 12 135,690,971 132,080,595
Reinsurance contracts 18 11,004,824 8,631,597
Deferred income tax assets 21 - 1,463,913
Income tax receivable 2,870,170 1,765,148
Inventories 13 12,200,210 8,120,189
Cash and cash equivalents 14 29,398,117 20,309,729
Total assets 956,047,402 775,420,115
198
EQUITY
Capital and reserves attributable to equity holders of the Company
Share capital 15 198,758,114 198,758,114
Other reserves 16 54,078,273 24,371,950
Retained earnings 16 76,416,444 52,739,049
329,252,831 275,869,113
Minority interest 11,011,536 6,936,747
Total equity 340,264,367 282,805,860
LIABILITIES
Insurance contracts 18 368,921,813 295,190,504
Investment contracts 15,604,274 13,791,387
Financial liabilities 17 164,250,682 117,749,922
Derivative financial instruments 19 6,312,735 -
Trade and other payables 20 50,869,018 54,020,158
Income tax liability 7,296,627 11,862,284
Deferred income tax liabilities 21 2,527,886 -
Total liabilities 615,783,035 492,614,255
Total equity and liabilities 956,047,402 775,420,115

KD Holding Group
Consolidated Financial Statements as at and for the year ended 31 December 2007
Consolidated statement of changes in equity
Attributable to equity holders
Minority
Note
Retained
Total equity
Share capital Other reserves
interest
(in EUR)
earnings
Balance at 1 January 2006 199,553,094 20,005,855 34,594,554 8,697,816 262,851,319
Fair value gains and losses, net of tax
– available for sale financial assets
16 - 4,147,441 - 559,902 4,707,343
Currency translation differences - 218,654 - - 218,654
Net income recognised directly in equity - 4,366,095 - 559,902 4,925,997
Profit for the year - - 18,569,269 2,307,500 20,876,769
Total recognised income of equity holders - 4,366,095 18,569,269 2,867,402 25,802,766
Transactions with equity holders:
- issue of share capital - - - 29,899 29,899
- purchase of treasury shares 15 (1,472,959) - - (172,429) (1,645,388)
- disposal of treasury shares 15 677,979 - - - 677,979
Dividends and other payments relating to 2005 - - (424,774) (342,605) (767,379)
Minority interest arising on business
combinations
- - - 1,237,310 1,237,310
Increase in equity share of subsidiaries - - - (5,380,646) (5,380,646)
Total (794,980) - (424,774) (4,628,471) (5,848,225)
Balance at 31 December 2006 198,758,114 24,371,950 52,739,049 6,936,747 282,805,860
Balance at 1 January 2007 198,758,114 24,371,950 52,739,049 6,936,747 282,805,860
Fair value gains and losses, net of tax
– available for sale financial assets
16 - 31,402,685 - 775,281 32,177,966
Currency translation differences - (1,696,362) - (733) (1,697,095)
199
Net income recognised directly in equity - 29,706,323 - 774,548 30,480,871
Profit for the year - - 33,059,887 1,885,697 34,945,584
Total recognised income of equity holders - 29,706,323 33,059,887 2,660,245 65,426,455
Issue of share capital to minority shareholders - - - 107,551 107,551
Dividends and other payments relating to 2006 - - (9,382,492) (743,642) (10,126,134)
Minority interest arising on business combinations
- - - 2,402,190 2,402,190
Increase in equity share of subsidiaries - - - (351,555) (351,555)
Total - - (9,382,492) 1,414,544 (7,967,948)
Balance at 31 December 2007 198,758,114 54,078,273 76,416,444 11,011,536 340,264,367

KD Holding Group
Consolidated Financial Statements as at and for the year ended 31 December 2007
Consolidated cash flow statement
(in EUR) Note 2007 2006
CASH FLOWS FROM OPERATING ACITIVITIES
Profit before income tax 53,736,363 28,722,371
Adjustments for:
- Depreciation of PPE 7 6,120,831 5,178,423
- Depreciation of investments property 8 621,363 647,193
- Amortisation 9 1,473,361 1,092,088
- (Profit)/loss on sale of PPE (34,334) 103,088
- (Profit)/loss on sale of intangible assets (3,617) 24,420
- (Profit)/loss on sale of investments property (162,014) 4,027
- Impairment of goodwill 9 - 1,569,005
- Net movements in provisions for liabilities and charges 18,1 71,358,082 43,008,662
- Net movements in investments contracts 1,812,887 1,276,824
- Net movements in employee benefits 20 2,268,096 300,371
- Excess on acquisition of subsidiary 22,2 (3,564,250) (120,535)
- Gain from increase the share capital of subsidiary 22,2 (1,069,808) (1,308,354)
- Investments income 24 (13,411,214) (14,401,754)
- Net fair value gains on available-for-sale securities 25 (24,197,926) (17,339,348)
- Impairment of AFS 25 2,596,286 9,633,386
- Net fair value gains on assets at fair value through P&L 26 (27,519,681) (18,425,774)
200
- Impairment of trade receivables 10,613,355 4,014,664
- Finance cost 27 6,552,633 5,513,800
- Share of profit of associates 10 (11,141,024) (4,372,830)
Changes in working capital
- Inventories 13 (2,950,518) (1,324,261)
- Trade and other receivables (19,051,870) (21,226,602)
- Trade and other payables (2,495,722) 17,576,598
Net (purchase)/proceeds of operating assets 11
- Available-for-sale financial assets 3,511,162 13,241,262
- Financial assets at fair value through profit or loss (32,893,866) (36,617,989)
- Investments held-to-maturity (239,781) (81,844)
Dividends received 4,976,014 2,973,393
Cash generated from operations 26,904,808 19,660,284
Interest paid (6,772,376) (5,625,875)
Income tax paid (19,756,407) (3,211,759)
NET CASH GENERATED FROM OPERATING ACTIVITIES 376,025 10,822,650

KD Holding Group
Consolidated Financial Statements as at and for the year ended 31 December 2007
(in EUR) Note 2007 2006
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of subsidiary, net of cash acquired 31 (223,875) (385,278)
Increase in equity share of subsidiaries (232,997) (4,178,856)
Acquisition of associates 10 (23,412,841) (24,324,775)
Disposals of associates 10 4,129,768 3,029,540
Purchases of property, plant and equipment 7 (16,530,617) (13,884,138)
Proceeds from sale of property, plant and equipment 2,633,737 156,819
Purchases of intangible assets 9 (1,801,679) (3,231,260)
Proceeds from sale of intangible assets 237,746 146,870
Purchases of investment property 8 (197,384) (653,622)
Proceeds from sale of investment property 209,888 586,355
Loans granted to related parties (18,142,104) (24,356,581)
Loans repayment received from related parties 24,615,492 26,013,149
Loans and deposits granted (175,019,809) (383,812,757)
Loans and deposits payment received 171,226,358 419,295,018
Interest received 3,123,927 4,816,579
Dividends received from associates 10 2,487,951 129,473
NET CASH USED IN INVESTING ACTIVITIES (26,896,439) (653,464)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of ordinary shares – minority interest 107,551 29,899
Purchase of treasury shares - (1,472,959)
Disposals of treasury shares - 677,979
Proceeds from borrowings 53,785,083 17,216,784
Repayments of borrowings (8,210,747) (19,074,771)
Dividends paid to Company's shareholders 16 (9,382,490) (424,774)
Dividends paid to minority interest (743,642) (342,605)
NET CASH USED IN FINANCIAL ACTIVITIES 35,555,755 (3,390,447)
NET INCREASE IN CASH AND CASH EQUIVALENTS 9,035,341 6,778,739
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 20,309,729 13,527,658
Exchange gains on cash and cash equivalents 53,047 3,332
CASH AND CASH EQUIVALENTS AT END OF THE YEAR 29,398,117 20,309,729
201

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Notes to the Consolidated Financial Statements
1. General information
liabilities at fair value through profit or loss and
available for sale financial assets.
The principal activities of KD Holding d. d. (‘‘the
Company’’) and its subsidiaries (‘‘the Group’’) are
quite diversified, namely, from insurance to asset
management financial services, cinematography and
many others (tourism, publishing, etc.).
The preparation of consolidated financial statements in
conformity with the IFRS as adopted by the European
Union requires the use of certain critical accounting
estimates. It also requires management to exercise
its judgement in the process of applying the Group’s
KD Holding d.d. is a public limited company with its
registered office in Ljubljana, Celovška 206, Slovenia.
Its shares are listed on the OTC market of the Ljubljana
Stock Exchange. The Company’s ultimate parent entity
is KD Group d.d., with its registered office in Ljubljana,
Celovška 206, Slovenia.
accounting policies. The areas involving a higher degree
of judgement or complexity, or areas where assumptions
and estimates are significant to the consolidated
financial statements are disclosed in Note 3.
a) Amendments and interpretations to published
standards effective in 2007
202
These consolidated financial statements have been
approved for issue by the Chief Executive Officer on
23 May 2008 and can be obtained at the Company’s
registered office in Ljubljana, Celovška 206, Slovenia.
2. Summary of Significant Accounting Policies
2.1 Basis for the preparation of financial statements
According to Regulation (EC) No 1606/2002 of the
European Parliament and of the Council of 19 July
2002 on the application of International Accounting
Standards, the consolidated financial statements
of the Group are prepared in accordance with the
International Financial Reporting Standards (IFRS)
as adopted by the European Union.
The consolidated financial statements have been
prepared under the historical cost convention as
modified by the revaluation for financial assets and
Amendments and interpretations to published
standards effective in 2007 which are presented
below do not have a material impact on the financial
statements of the Group:
- IFRIC 7, Applying the Restatement Approach
under IAS 29 - Financial Reporting in
Hyperinflationary Economies (effective from
periods beginning on or after 1 March 2006).
None of the companies in the Group operates in a
hyperinflationary economy.
- IFRIC 8, Scope of IFRS 2 (effective from periods
beginning on or after 1 May 2006). The
interpretation applies to transactions in which
unidentifiable goods and services are received in a
share-based payment transaction. The Group has
no such trasactions.
- IFRIC 9, Reassessment of Embedded Derivatives
(effective from periods beginning on or after 1 June

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
2006). Subsequent reassessment of embedded
derivatives is prohibited, unless there is a change in
the terms of the contract that significantly modifies
b) Standards, amendments and interpretations that are
not yet effective and have not been early adopted by
the Group
the cash flows that otherwise would be required
under the contract. The Group assesses it will be
able to comply with the amendment.
- IFRIC 10, Interim Financial Reporting and
Impairment (effective from periods beginning on
or after 1 November 2006). The interpretation
prohibits the impairment losses recognised in an
interim period on goodwill and investments in
equity instruments and in financial assets carried
at cost to be reversed at a subsequent balance
sheet date. The Group does not expect this to
have any impact on its financial statements.
- IFRS 1 (Amendment), First-time Adoption of IFRS
and IFRS 6 - Exploration for and Evaluation of Mineral
Resources. There are no companies in the Group that
these amendments could have an impact on.
- IFRIC 4, Determining whether an Asset Contains a
Lease. This interpretation specifies the conditions
under which assets not classified as leases must be
accounted in accordance with the IAS 17 Leases.
There are no assets in the Group that should be
considered in accordance with these interpretations.
- IFRIC 5, Rights to Interests arising from
Decommissioning, Restoration and Environmental
Rehabilitation Funds. The interpretation is not
relevant to the Group’s operations.
- IFRIC 6, Liabilities arising from Participating in a
Specific Market – Waste Electrical and Electronic
Equipment. There are no companies in the Group
that would be affected by this interpretation.
Certain new standards, amendments and interpretations
to existing standards have been published that are
mandatory for the Group’s accounting periods beginning
on or after 1 January 2008 but which the Group has
not adopted early, as follows:
- IAS 1, Presentation of financial statements, (effective
for annual periods beginning on or after 1 January
2009). IAS 1 prohibits the presentation of items
of income and expenses (that is “non-owner
changes in equity”) in the statement of changes in
equity, requiring “owner changes in equity” to be
presented separately from “non-owner changes in
equity”. In addition, entities making restatements or
reclassifications of comparative information will be
required to present a restated balance sheet as at
the beginning of the comparative period.
- IFRS 8, Operating Segments (effective from periods
beginning on or after 1 January 2009). This
standard replaces IAS 14 Segment Reporting.
- IAS 23 (Amendment), Borrowing Costs (effective
1 January 2009). It requires an entity to
capitalise borrowing costs directly attributable
to the acquisition, construction or production of
a qualifying asset (one that takes a substantial
period of time to get ready for use or sale) as part
of the cost of that asset. The option of immediately
expensing those borrowing costs will be removed.
The group will apply IAS 23 (Amended) from 1
January 2009.
203

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
- IAS 27, Consolidated and Separate Financial
Statements (effective from annual periods beginning
2.2 Consolidated Financial Statements
2.2.1 Subsidiaries
on or after 1 July 2009). IAS 27 (revised) requires
204
the effects of all transactions with non-controlling
interests to be recorded in equity if there is no change
in control. They will no longer result in goodwill or
gains and losses. The standard also specifies the
accounting when control is lost. Any remaining
interest in the entity is remeasured to fair value and a
gain or loss is recognised in profit or loss.
- IFRIC 11, IFRS 2, Group Treasury Share
Transactions (effective from periods beginning on
or after 1 March 2007). The Group does not grant
shares or share options to employees, consequently
the interpretation will not affect the Group’s financial
statements.
- IFRIC 12, Service Concession Agreements (effective
from periods beginning on or after 1 January
2008). The interpretation will not affect the Group’s
financial statements.
- IFRIC 13, Customer Loyalty Programmes (effective
from 1 January 2008). IFRIC 13 clarifies that where
goods or services are sold together with a customer
loyalty incentive (for example loyalty points or
free product). IFRIC 13 will not affect the Group’s
financial statement because none of the Group’s
companies operate any loyalty programmes.
- IFRIC 14, IAS 19, The Limit on a Defined Benefit
Asset, Minimum Funding Requirements and their
Interaction (effective from 1 January 2008).
Subsidiaries are those companies in which the
Company and its subsidiaries hold, directly or indirectly,
more than one half of voting rights. Subsidiaries are
fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from
the date on which control of the Company ceases.
The purchase method of accounting is used to
account for the acquisition of subsidiaries. The
cost of an acquisition is measured as the fair value
of the assets given, equity instruments issued
and liabilities incurred or assumed at the date of
exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business
combination are measured initially at fair values
at the acquisition date. The excess of the cost of
acquisition over the fair value of the Group’s share
of the identifiable assets, liabilities and contingent
liabilities is recorded as goodwill. If the cost of
acquisition is less than the fair value of the Group’s
share of net assets acquired, the difference is
recognised directly in the income statement.
Inter-company transactions, balances and unrealised
gains on transactions as well as income, expenses and
dividends between group companies are eliminated.
Subsidiaries’ accounting policies have been changed
or adequately adjusted where necessary to ensure
consistency with the policies adopted by the Group.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
2.2.2 Transactions and minority interests
The Group’s share of its associates’ post-acquisition
profits or losses is recognised in the income statement.
The Group applies a policy of treating transactions
with minority interests as transactions with parties
external to the Group. Purchases from minority
The Group’s share of post-acquisition movements in
associate’s reserves is recognised as a movement in the
Group’s reserves.
interests result in goodwill (excess), being the
difference between any consideration paid and the
relevant share acquired of the carrying value of
net assets of the subsidiary. Disposals to minority
interests result in gains and losses for the Group
that are recorded in the income statement. Minority
interests are disclosed as a separate item of the
Group’s equity. Net profit or loss is divided into net
profit (loss) of the majority owner and net profit
(loss) of the minority owner.
If the Group’s share of losses of an associate equals or
exceeds its interest in the associate, including unsecured
receivables to the associate, the Group discontinues
recognising its share of further losses unless the Group
has any legal or other liabilities assumed on behalf of
the associate. If the associate subsequently reports
profits, the Group resumes recognising its share of those
profits only after its share of the profits equals the share
of losses not recognised.
2.2.3 Associates
Associates are all entities over which the Group has
a significant influence but not control, generally
accompanying a direct or indirect shareholding of
between 20.00% and 50.00% of the voting rights.
Investments in associates are accounted by the
equity method of accounting according to which such
investments are initially recognised at cost and are
subsequently increased or decreased by the Group’s
share of the associate’s profit or loss. Dividends
received from an associate reduce the carrying
amount of the investment.
Unrealised gains on transactions between the Group
and its associates are eliminated to the extent of
the Group's interest in the associates. Accounting
policies of associates have been changed where
necessary to ensure consistency with the policies
adopted by the Group.
The Group’s investments in the internally managed
mutual funds, where the Group has a significant
influence are treated as investments in the associated
companies and are accounted by the equity
method. The investment-linked insurance funds are
categorised as financial assets designated at fair
value through profit or loss at inception as permitted
by IAS 28, Investments in Associates (see Note 10).
205

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
2.2.4 Subsidiaries of the Group
Registered office
Percentage of ownership
Members of the Group – direct:
KD Investments d. o. o. Ljubljana
KD Investments d. o. o. Zagreb
KD Investments a.d. Belgrade
SAI KD Investments s. a. Bucharest
KD Investments plc Sofia
KD Investments a. s. Bratislava
Slovenia
Croatia
Serbia
Romania
Bulgaria
Slovakia
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
206
KD Investments d. o. o. Varshaw
KD BPD d. o. o. Ljubljana
KD Upravljanje imovinom d. o. o. Zagreb
KD Capital Management s. a. Bucharest
KD Securities EAD, Sofia
KD Asset Management b. v. Amsterdam
KD Life d.d. Kiev
KD Življenje d.d. Ljubljana
KD Life Asigurari S.A., Bucharest
KD Life a.d., Sofia
SC KD Fond De Fond SA Bucharest
Adriatic Slovenica d. d. Ljubljana
KD Kapital d.o.o. Ljubljana
KD Private Equity d.o.o., Belgrade
Ljubljanski kinematografi d.d. Ljubljana
Kolosej Ljubljana d.o.o.
Kinematografi Maribor d.o.o.
Kolosej Celje d.o.o.
KD Mark d.o.o. Ljubljana
R.E. Invest d.o.o. Ljubljana
Poland
Slovenia
Croatia
Romania
Bulgaria
Netherlands
Ukraine
Slovenia
Romania
Bulgaria
Romania
Slovenia
Slovenia
Serbia
Slovenia
Slovenia
Slovenia
Slovenia
Slovenia
Slovenia
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
91.17%
100.00%
100.00%
99.00%
95.72%
100.00%
100.00%
96.61%
100.00%
75.01%
100.00%
100.00%
100.00%
KD Kvart d.o.o. Ljubljana
Coloseum Multiplex Holdings b.v., Amsterdam
Firsthouse Investments Itd., Cyprus
Fontes Group d.o.o., Belgrade
Gea College d.d., Ljubljana
Asistance Coris d.o.o. Ljubljana
Slovenia
Netherlands
Cyprus
Serbia
Slovenia
Slovenia
100.00%
100.00%
100.00%
95.00%
63.63%
37.94%
Members of the Group through subsidiaries:
ABDS d.d. Sarajevo
KD Finančna točka d.o.o. Ljubljana
KD Fund Advisors, LLC
2Invest s.r.l. Bucharest
KD Vifin s.r.o. Bratislava
KD Life s.r.o. Prague
ZAP d.o.o. Murska Sobota
ČZD Kmečki Glas d.o.o. Ljubljana
KD Mont a.d., Podgorica
Vrtnarstvo Celje d.o.o. Celje
VIB a.d. Banja Luka
Globus Film d.o.o. Koper
Oklev d.o.o. Ljubljana
Kinematografi Kolosej d.o.o. Tuzla
Kolosej Maribor d.o.o.
Zabavni centri d.o.o. Zagreb
Onisac d.o.o. Ljubljana
Gea College PIC d.o.o. Ljubljana
Gea College CVŠ d.o.o. Ljubljana
FBIH
Slovenia
USA
Romania
Slovakia
Chech Republic
Slovenia
Slovenia
Montenegro
Slovenia
FBIH
Slovenia
Slovenia
FBIH
Slovenia
Croatia
Slovenia
Slovenia
Slovenia
58.79%
50.00%
90.00%
70.00%
83.98%
100.00%
100.00%
80.08%
80.50%
50.46%
51.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
2.3 Segment reporting
in compliance with Council Regulation (EU) No.
1086/2006 and Article 123(5). The official exchange
Business and geographical segments are parts of the
Group’s operations that are subject to different rates of
profitability, opportunities for growth, future prospects,
rate was used as the basis for the calculation of items
in financial statements for 2006 (comperative year)
from tolar to euro.
and risks. A business segment is a distinguishable
component of the Group that is engaged in providing
a group of related products or services and that is
subject to risks and returns that are different from
those of other business segments. A geographical
segment is a distinguishable component of the Group
that is engaged in providing products or services within
a particular economic environment and that is subject
to risks and returns that are different from those of
segments operating in other economic environments.
Transactions and balances
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such
transactions and from the translation of
year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are
recognised in the income statement.
2.4 Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of
the Group’s entities are measured using the currency of
the primary economic environment in which the entity
operates (the “functional currency”). The consolidated
financial statements are presented in Slovenian tolars,
which is the Group’s presentation currency.
The functional and presentation currency of the Group
was the Slovenian tolar until 31 December 2006,
while on 1 January 2007 the Group introduced the
euro as the functional and presentation currency,
following the changes in legislation in the Republic
of Slovenia introducing the euro as the legal local
currency. The official exchange rate of 239.64
tolars for one euro was appointed on 11 July 2006
Foreign currency monetary items are translated on the
balance sheet date using the reference rate of the ECB
or the Bank of Slovenia exchange rates (for currencies
for which the ECB does not publish reference rates)
on the last day of the year. Non-monetary items that
are measured in terms of historical cost in a foreign
currency are translated using the mean exchange
rate of the Bank of Slovenia applicable at the date of
transaction and non-monetary items that are measured
at fair value in a foreign currency are translated using
the reference rate of the ECB applicable at the date
when the fair value was determined.
Changes in the fair value of monetary securities
denominated in foreign currency classified as available
for sale are analysed between translation differences
resulting from changes in the amortised cost of the
207

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
security and other changes in the carrying amount
of the security. Translation differences related to
changes in the amortised cost are recognised in profit
or loss, and other changes in the carrying amount are
recognised in equity.
On consolidation, exchange differences arising
from the translation of the net investment in foreign
entities are taken to shareholders’ equity. When a
foreign operation is sold, such exchange differences
are recognised in the income statement as part of
the gain or loss on sale.
Translation differences on non-monetary financial
assets and liabilities are reported as part of the fair
2.5 Property, plant and equipment
208
value gain or loss. Translation differences on nonmonetary
financial assets and liabilities such as
equities held at fair value through profit or loss are
recognised in profit or loss as part of the fair value
gain or loss. Translation differences on non-monetary
financial assets such as equities classified as available
for sale are included in the available-for-sale reserve in
equity.
Group companies
The financial statements of all group entities (none
of which has the currency of a hyperinflationary
economy) that have a functional currency different
from the presentation currency of the Group are
translated into the presentation currency as follows:
- assets and liabilities for each balance sheet
presented are translated at the reference rate of
the ECB or the Bank of Slovenia exchange rates
on the date of the balance sheet,
- income and expenses for each income statement
are translated at the average annual reference rate
of the ECB or the Bank of Slovenia exchange rates,
- all resulting exchange differences are recognised
as a separate component of equity (reserves).
After initial recognition, property and equipment
are carried at historical cost less accumulated
depreciation and accumulated impairment losses, if
any (cost model). Historical cost includes expenditure
that is directly attributable to the acquisition of the
items. Subsequent costs are included in the asset’s
carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will flow to
the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged
to the income statement during the financial period in
which they are incurred.
Property and equipment is derecognised upon
disposal or when no further economic benefits are
expected from the item. The gain or loss arising
from the derecognition of an item of property and
equipment is determined as the difference between
the disposal proceeds and the carrying amount
of the item and is recognised in other operating
income.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Depreciation
The Group systematically allocates to profit or loss
the cost less residual value (depreciable amount)
over the useful life of each individual item of property
and equipment. The Group uses the straight-line
depreciation method. Land is not depreciated.
The recognition and derecognition policies and
methods of accounting for depreciation are defined
under property, plant and equipment (Note 2.5).
The cost of day-to-day servicing of the investment
property are repairs and maintenance and are
expensed.
Useful lives are as follows:
2.7 Intangible assets
Property, plant and equipment:
Buildings
Vehicles and machinery
Furniture, fittings and equipment
20 to 59 years
3 to 10 years
2 to 7 years
After initial recognition, an intangible asset shall be
carried at its cost less any accumulated amortisation
and any accumulated impairment losses (cost
Assets’ residual values and useful lives are reviewed at
each balance sheet date and adjusted if appropriate.
If an asset’s recoverable amount is lower than its
book value, the asset is written down immediately
to its recoverable amount and the impairment loss is
recognised in the income statement. The recoverable
amount is the higher of an asset´s value in use and
fair value less costs to sell (see Note 2.9.2).
2.6 Investment property
Investment property is property (land or a building
- or part of a building - or both) held to earn
rentals and/or for capital appreciation or both,
rather than for administrative purposes or sale
in the ordinary course of business. Investment
property is initially measured at cost. After initial
recognition, investment property of the Group is
carried at its cost less accumulated depreciation and
accumulated impairment losses, if any (cost model),
i.e. the same as property, plant and equipment.
model). An entity shall assess whether the useful
life of an intangible asset is finite or indefinite. If
finite, it is amortised on the basis of its useful life.
An intangible asset with an indefinite useful life is
not amortised.
Goodwill
Goodwill represents the excess of the cost of an
acquisition over the fair value of the Group’s share of
the net identifiable assets, liabilities and contingent
liabilities of the acquired subsidiary and is disclosed
under intangible assets with an indefinite useful life.
Goodwill on acquisition of subsidiaries is included in
intangible assets and carried at cost less accumulated
impairment losses. Goodwill on acquisitions of
associates is included in investments in associates.
Separately recognised goodwill is tested annually and
any impairment is recognised in the income statement.
Impairment losses on goodwill are not reversed. Gains
and losses on the disposal of an entity include the
carrying amount of goodwill relating to the entity sold.
209

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Excess of fair value of the acquired identifiable
assets, liabilities and contingent liabilities above the
cost of their acquisition is reassessed and any excess
remaining after the reassessment is recognised as
income in the income statement.
following categories:
- financial assets at fair value through profit or loss;
- loans and receivables;
- held-to-maturity investments;
- available-for-sale financial assets.
Management determines the classification of its
Goodwill is allocated to cash generating units for the
investments at initial recognition.
purpose of impairment testing. Goodwill is allocated to
the Group’s cash-generating units that are expected to
2.8.1 Financial assets at fair value through profit or loss
benefit from the synergies of the combination.
This category has two sub-categories: financial
Other intangible assets
The Group’s intangible assets with a definite useful
assets held for trading, and those designated at fair
value through profit or loss at inception.
life include computer software and licences. The
210
cost of acquired software comprises the costs
of acquisition and preparation of the asset for
its intended use, and for licences it is the cost
of acquisition. Throughout the useful life of an
individual item of an intangible asset the Group
consistently allocates the amount of its amortisation
to individual accounting periods as depreciation
at that time. Amortisation is calculated using the
straight-line method.
Amortisation is charged individually. The periods of
amortisation of intangible assets with a finite useful life
are the following:
A financial asset is classified as held for trading if it
is acquired or incurred principally for the purpose
of selling or repurchasing in the near term or if it is
part of a portfolio of identified financial instruments
that are managed together and for which there is
evidence of a recent actual pattern of short-term
profit-taking.
Financial assets and financial liabilities are
designated at fair value through profit or loss when:
- doing so significantly reduces measurement
inconsistencies that would arise if the related
derivatives were treated as held for trading and
the underlying financial instruments were carried
Intangible assets:
Licences
Computer Software
2.8 Financial assets
3 to 5 years
3 to 5 years
at amortised cost for loans and advances to
customers or banks and debt securities in issue;
- Certain investments, such as equity investments,
are managed and evaluated on a fair value
The Group classifies its financial assets in the
basis in accordance with a documented risk

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
management or investment strategy and reported
2.8.4 Available-for-sale financial assets
to key management personnel on that basis are
designated at fair value through profit and loss.
Available-for-sale investments are those intended to
be held for an indefinite period of time, which may
2.8.2 Held-to-maturity financial assets
be sold in response to needs for liquidity or changes
in interest rates, exchange rates or equity prices.
Held-to-maturity investments are non-derivative
financial assets with fixed or determinable payments
and fixed maturities that the Group’s management has
the positive intention and ability to hold to maturity.
If the Group were to sell other than an insignificant
amount of held-to-maturity assets, the entire category
Regular-way purchases and sales of financial assets
at fair value through profit or loss, held to maturity
and available for sale are recognised on trade-date
– the date on which the Group commits to purchase
or sell the asset.
would be reclassified as available for sale.
Financial assets are initially recognised at fair value
2.8.3 Loans and receivables
plus transaction costs for all financial assets not
Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are
not quoted in an active market, other than: (a) those
that the entity intends to sell immediately or in the
short term, which are classified as held for trading,
and those that the entity upon initial recognition
designates as at fair value through profit or loss;
(b) those that the entity upon initial recognition
designates as available for sale; or (c) those for
which the holder may not recover substantially all
of its initial investment, other than because of credit
deterioration.
carried at fair value through profit or loss. Financial
assets carried at fair value through profit and loss
are initially recognised at fair value, and transaction
costs are expensed in the income statement.
Financial assets are derecognised when the rights
to receive cash flows from the financial assets
have expired or where the Group has transferred
substantially all risks and rewards of ownership.
Financial liabilities are derecognised when they
are extinguished − that is, when the obligation is
discharged, cancelled or expires.
Available-for-sale financial assets and financial
assets at fair value through profit or loss are
subsequently carried at fair value. Loans and
receivables and held-to-maturity investments are
carried at amortised cost using the effective interest
method. Gains and losses arising from changes in
211

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
the fair value of the “financial assets at fair value
through profit or loss” category are included in
the income statement in the period in which they
2.9 Impairment of assets
2.9.1 Impairment of financial assets
arise. Gains and losses arising from changes in
212
the fair value of available-for-sale financial assets
are recognised directly in equity, until the financial
asset is derecognised or impaired. At this time,
the cumulative gain or loss previously recognised
in equity is recognised in profit or loss. However,
interest calculated using the effective interest
method and foreign currency gains and losses on
monetary assets classified as available for sale are
recognised in the income statement. Dividends on
available-for-sale equity instruments are recognised
in the income statement when the entity’s right to
receive payment is established.
The fair values of quoted investments in active
markets are based on current bid prices. If there
is no active market for a financial asset, the Group
establishes fair value using valuation techniques.
These include the use of recent arm’s length
transactions, discounted cash flow analysis and
other valuation techniques commonly used by
market participants.
a) Financial assets carried at amortised cost
The Group assesses at each balance sheet date whether
there is objective evidence that a financial asset or
group of financial assets is impaired. A financial asset or
a group of financial assets is impaired and impairment
losses are incurred if, and only if, there is objective
evidence of impairment as a result of one or more events
that occurred after the initial recognition of the asset
(a “loss event”) and that loss event (or events) has an
impact on the estimated future cash flows of the financial
asset or group of financial assets that can be reliably
estimated. Objective evidence that a financial asset or
group of assets is impaired includes observable data that
comes to the attention of the Group about the following
loss events:
- significant financial difficulty of the issuer;
- a breach of contract, such as a default or
delinquency in interest or principal payments;
- the Group granting to the borrower, for economic
or legal reasons relating to the borrower’s financial
difficulty, a concession that the lender would not
otherwise consider;
- it becoming probable that the borrower will enter
bankruptcy or other financial reorganisation;
- the disappearance of an active market for that
financial asset because of financial difficulties; or
- observable data indicating that there is a
measurable decrease in the estimated future cash
flows from a group of financial assets since the

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
initial recognition of those assets, although the
decrease cannot yet be identified with the individual
financial assets in the Group, including:
- adverse changes in the payment status of
borrowers in the Group, or
- national or local economic conditions that
correlate with defaults on the assets in the Group.
investment has a variable interest rate, the discount
rate for measuring any impairment loss is the
current effective interest rate determined under the
contract. As a practical expedient, the Group may
measure impairment on the basis of an instrument’s
fair value using an observable market price. The
calculation of the present value of the estimated
future cash flows of a collateralised financial
The Group first assesses whether objective evidence
of impairment exists individually for financial
assets that are individually significant. If the Group
asset reflects the cash flows that may result from
foreclosure less costs for obtaining and selling the
collateral, whether or not foreclosure is probable.
determines that no objective evidence of impairment
exists for an individually assessed financial asset,
whether significant or not, it includes the asset in
a group of financial assets with similar credit risk
characteristics and collectively assesses them for
impairment. Assets that are individually assessed
for impairment and for which an impairment loss is
or continues to be recognised are not included in a
collective assessment of impairment.
If there is objective evidence that an impairment
loss on loans and receivables or held-to-maturity
investments carried at amortised cost has been
incurred, the amount of the loss is measured as the
difference between the asset’s carrying amount and
the present value of estimated future cash flows
(excluding future credit losses that have not been
incurred) discounted at the financial asset’s original
effective interest rate. The carrying amount of the
asset is reduced through the use of an allowance
account and the amount of the loss is recognised in
the income statement. If a loan or held-to-maturity
For the purposes of a collective evaluation of
impairment, financial assets are grouped on the basis of
similar credit risk characteristics. Those characteristics
are relevant to the estimation of future cash flows
for groups of such assets by being indicative of the
debtors’ ability to pay all amounts due according to the
contractual terms of the assets being evaluated.
Future cash flows in a group of financial assets that are
collectively evaluated for impairment are estimated on the
basis of the contractual cash flows of the assets in the
Group and historical loss experience for assets with credit
risk characteristics similar to those in the Group. Historical
loss experience is adjusted on the basis of current
observable data to reflect the effects of current conditions
that did not affect the period on which the historical loss
experience is based and to remove the effects of conditions
in the historical period that do not exist currently.
Estimates of changes in future cash flows for groups of
assets should reflect and be directionally consistent with
213

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
changes in related observable data from period to period
(for example, changes in unemployment rates, property
prices, payment status, or other factors indicative of
changes in the probability of losses in the group and their
magnitude). The methodology and assumptions used
for estimating future cash flows are reviewed regularly
by the Group to reduce any differences between loss
estimates and actual loss experience.
If, in a subsequent period, the amount of the
impairment loss decreases and the decrease can
be related objectively to an event occurring after the
impairment was recognised (such as an improvement
in the debtor’s credit rating), the previously recognised
impairment loss is reversed by adjusting the allowance
account. The amount of the reversal is recognised in the
income statement.
considered in determining whether the assets are
impaired. If any such evidence exists for availablefor-sale
financial assets, the cumulative loss –
measured as the difference between the acquisition
cost and the current fair value, less any impairment
loss on that financial asset previously recognised
in profit or loss – is removed from equity and
recognised in the income statement. Impairment
losses recognised in the income statement on equity
instruments are not reversed through the income
statement. If, in a subsequent period, the fair value
of a debt instrument classified as available for sale
increases and the increase can be objectively related
to an event occurring after the impairment loss was
recognised in profit or loss, the impairment loss is
reversed through the income statement.
214
When an asset is uncollectible, it is written off against
2.9.2 Impairment of non-financial assets
the allowance account for the asset. Such assets are
written off after all the necessary procedures have
been completed and the amount of the loss has
been determined. Subsequent recoveries of amounts
previously written off decrease the amount of the
impairment charge in the income statement.
Intangible assets which are not subject to
amortisation are tested annually for impairment.
Assets that are subject to amortisation are reviewed
for impairment whenever events or changes in
circumstances indicate that the carrying amount
may not be recoverable. An impairment loss is
(b) Financial assets classified as available-for-sale
recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount.
The Group assesses at each balance sheet date
whether there is objective evidence that a financial
asset or a group of financial assets is impaired.
In the case of equity investments classified as
available-for-sale, a significant or prolonged decline
in the fair value of the security below its cost is
Recoverable amount is determined for an individual
asset, unless the asset does not generate cash
inflows that are largely independent of those from
other assets or groups of assets. In such case,
the recoverable amount is established for a cashgenerating
unit i.e. the smallest identifiable group

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
of assets that generates cash inflows that are largely
independent of the cash inflows from other assets
receipts or payments, and items of income or expense
associated with investing or financing cash flows.
or groups of assets. The criterion for determining the
cash-generating units are individual business areas
2.13 Share capital and dividend distribution
of the Group. The recoverable amount of an asset or
a cash-generating unit is the higher of its fair value
less costs to sell and its value in use.
Ordinary and preference-shares are equity.
Incremental costs directly attributable to the issue
of new shares or options or to the acquisition of a
2.10 Offsetting financial instruments
business are shown in equity as a deduction, net of
tax, from the proceeds.
Financial assets and liabilities are offset and the net
amount reported in the balance sheet only when there
is a legally enforceable right to offset the recognised
amounts and there is an intention to settle on a net
basis, or to realise the asset and settle the liability
simultaneously.
2.11 Inventories
Dividends on ordinary and preference-shares are
recognised as liability in the period in which they
are approved by the Company’s shareholders.
Dividends for the year that are declared after
the balance sheet date and before the financial
statements are authorised for issue are disclosed in
the subsequent events note (see Note 30).
215
Inventories are stated at the lower of cost and
net realisable value. Cost is determined using the
weighted average cost method. Net realisable
value is the estimated selling price in the ordinary
course of business, less applicable variable selling
expenses.
Where the Company or other members of the
Group purchases the Company’s equity share
capital, the consideration paid is deducted from
total shareholders’ equity. Where such shares are
subsequently sold or reissued, any consideration
received is included in shareholders’ equity.
2.12 Cash and cash equivalents
2.14 Insurance and investment contracts
Cash and cash equivalents include cash in hand
and deposits held at call with banks. The Group
report cash flows from operating activities using the
indirect method, whereby profit or loss is adjusted for
the effects of transactions of a non-cash nature, any
deferrals or accruals of past or future operating cash
The Group issues contracts that transfer insurance
risk or financial risk or both. Insurance contracts are
those contracts that transfer significant insurance
risk. Such contracts may also transfer financial
risk. As a general guideline, the Group defines as

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
significant insurance risk the possibility of having to
pay benefits on the occurrence of an insured event
that are at least 10% more than the benefits payable
if the insured event did not occur.
profits in the segments of life insurance and
annuity insurance at the end of the financial period
and/or with regard to the profitability of assets
if higher than the pre-calculated amounts. The
basis for determining the amounts of discretionary
Investment contracts are those contracts that
transfer financial risk with no significant insurance
risk.
participation of the insured and the % vary between
individual insurance products, and are defined in
the insurance terms.
216
Traditional life insurance contracts and investment
contracts include the possibility of discretionary
participation in the positive result realized through
management of assets from the said contracts
(hereinafter referred to as DPF). The possibility of
discretionary participation is a contractual right to
additional benefits supplementary to guaranteed
benefits, namely:
- benefits which are likely to represent a significant
share of the total contract benefits;
- benefits whose amount or timeframe is specified
by the insurer; and
- benefits which are contractually based on:
- the success of a given category of contracts or
certain types of contracts;
- realized and/or unrealized investment returns on
a specified pool of assets held by the issuer; or
- the profit of the company, fund or other entity
that issues the contract.
Traditional life insurance contracts with DPF and
investment contracts with DPF contain an agreed
insurance sum or annuity (calculated under the
premise of achieving a certain rate of return on
accumulated assets) and additional possibility of
the insured's participation in the Group's realised
Insurance and financial life insurance contracts are
defined as contracts with DPF because the interest
rate used at the time of preparing the product and
calculating the agreed insurance sum or annuity
was lower than the expectations at the time with
regard to commercial interest rates. Additional
benefits for policy holder were expected at the
stage of preparing the insurance product, which
represents a discretional right to additional benefits.
2.14.1 Insurance contracts
2.14.1.1 Recognition and measurement
The Group is dealing with 4 main categories of
insurance contracts, depending on the duration of
risk and whether or not the terms and conditions
are fixed:
- Property insurance contracts
- Health insurance contracts
- Life insurance contracts with DPF
- Life insurance contracts where the policy holder
takes on investment risk.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
2.14.1.2 Property insurance contracts
injured party for damages incurred as a result of the
use or possession of the vehicle causing the damage.
This category includes accident insurance, insurance
of land vehicles, fire and other damage insurance,
liability insurance, financial loss insurance, transport
insurance, credit and suretyship insurance and
insurance of assistance and costs of procedure. This
mainly involves short-term insurance contracts, with
The insurance also provides coverage of property
(destruction, accident damage) as well as non-property
damage (bodily injury, health conditions or death),
providing the insured with total property security. The
amount of indemnification is limited in both cases by
the legally defined minimal insurance sum.
the exception of credit insurance.
Fire insurance covers real and moveable property
In accident insurance, in addition to the basic insured
risks such as disability and death, the policy holders
mainly opt for additional insurance coverage such as
daily accident insurance, daily insurance for the event
of hospital treatment due to an accident, and daily
insurance fee in the event of prolonged treatment in
a medical facility due to accidents. In addition to the
aforementioned risks, an insurance policy may also be
taken out for the event of death in a traffic accident,
reimbursement of medical expenses, funeral costs in
the event of the insured's death, and reimbursement
of accommodation costs for adult supervisors in the
event of insuring schoolchildren.
Land motor vehicle insurance covers material damage
(partial or total loss of the vehicle's value) which might
result from traffic accident, natural disasters, theft, fire,
malicious acts and other insured risks.
Car insurance falls under the category of mandatory
traffic insurance and must be ensured by every owner
of a motor vehicle prior to beginning to use the vehicle
in traffic. This applies to all types of motor vehicles
which require registration. The Group reimburses the
from the risk of fire, lightning, explosion, hailstorm,
windstorm, crash of the insured's motor vehicle
and work machinery, airplane crash and public
manifestations and demonstrations. By special
agreement and subject to an additional premium,
it is also possible to include insurance coverage
in the event of flooding, water spill, landslide,
avalanche, spill of fluids or gasses, self-combustion
of inventories and spill of glowing mass in industrial
environments. Additionally insurance coverage
can extend to earthquake and torrential flooding.
Insurance can be taken out on new or actual value.
In the context of the insurance category “Other
damage insurance”, the following subcategories are of
significance according to the amount of the premium:
home insurance for insuring domestic non-fixed
assets, machinery malfunction to ensure machinery
and their parts, burglary insurance to ensure moveable
property from burglary and theft, building insurance,
insurance of computers and glass.
217

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
General liability insurance covers damages from
indemnification claims enforced by third parties against
the insured due to a sudden event which resulted
in damage to persons or things. The key element
of this insurance category is insurance of general
liability, including employer liability. Other important
subcategories include: forwarding, manufacturer,
project engineering, medical and accounting liability.
To a smaller degree other forms of professional liability
insurance are traded: professional liability of attorneys,
insurance agents, real estate agenty, surveyors,
members of boards of managers and supervisory
boards, liability of auditing firms and other legally
prescribed professional liability insurance types.
Transport insurance includes coverage of goods in
domestic and international transport, comprehensive
insurance of boats and airplanes, liability insurance
of the owner or authorized user of the boat or
airplane, insurance of transporter's liability in road
traffic, insurance of the forwarding agent's liability
and insurance of maritime agents. The quote is
customised to fit the needs of the policy holder, also
in the field of liability insurance in case of damage
to goods under the FIATA bill of lading, and we also
design and provide more specific insurance policies
such as liability coverage for repairers of boats, marina
and harbor managers and insurance of risk borne by
constructors of boats/ships.
218
The category of financial loss insurance includes
insurance for the event of halting of the working
process due to fire or machine breakage and
insurance of public events. The former two are taken
as additional insurances to fire and machine breakage
insurance, and events are insured independently.
Insurance of halted production process involves
insurance of fixed costs which the insured was unable
to cover due to the fire or machine breakage. By
special agreement insurance may also include profits
which the policy holder was unable to realise during
the halt in production. Insurance of events covers
damages incurred by the organizer in the event of
cancellation of the event due to the weather, and by
special agreement also if the cancellation occurs as
a result of natural or administrative force majeure, or
due to fire or explosion.
Credit insurance marketed by the Group cover failure
to pay contractual obligations for whatever reason and
comprise insurance of commercial loans, insurance of
loans for investment in real property, bank overdraft
limits etc. In the segment of suretyship insurance
the policy holder is provided with a guarantee for
earnest deposits, good performance of works, repair of
malfunctions during the warranty period, payment of
customs duties, for the event of insolvency of tourist
organisations, for ensuring the payment of goods
and services acquired through use of the credit card,
guarantees for TIR carnets, etc.
Insurance of assistance costs provide the policy
holder with emergency assistance either in relation
to vehicles in the event of malfunction or traffic
accident, or in relation to an apartment or house when
normal residence is impossible due to the sudden

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
emergence of events, or when emergency assistance
2.14.1.3 Health insurance contracts
is needed when traveling abroad. In insuring the
costs of procedures, the most important feature is the
insurance of legal aid which provides the policy holder
with coverage of attorney fees.
The Group offers three of four types of optional
health insurance as set by the Health Care
and Health Insurance Act (ZZVZZ), namely
supplementary health insurance, extra health
In all of the above contracts, premiums accrue
insurance and parallel health insurance.
when they become payable by the policy holder.
Premiums contain all costs in addition to premiums,
including the agency fee, except taxes. The part of the
premiums from valid insurance contracts which refers
to unexpired insurance coverages on the balance
sheet date is presented as unearned premium reserve
and represents a liability of the Group. Recognised
as revenue are accrued premiums less changes in
unearned premium reserves.
Supplementary health insurance covers the difference
between the healthcare costs under Art. 23 of the
ZZVZZ and the share of these costs which is covered
under mandatory health insurance, or part of this
difference where the extra payable amount relates to
the right to medical products included in the list of
interchangeable medical products, medication aids
and technical accessories.
219
The amounts of damage and appraisal costs are
recognised as liability at the time the damage was
incurred. Damages incurred but not fully resolved as
at the balance sheet date are recognised as liabilities
for damages. Liabilities for damages incurred and
reported as at the balance sheet date are formed on
the basis of individual appraisal of damages. Liabilities
Extra health insurance covers the costs of health
services and related services and supply of
medical products and medical aids and technical
accessories, and the costs involved in the cash
payouts which are not part of mandatory health
insurance and are not covered under supplementary
or substitute health insurance.
for damages incurred but not reported as at the
balance sheet date are assessed through statistical
analysis. Liabilities for damages are further increased
by the estimated costs of resolving such damage
cases. Accrued indemnifications/insurance amounts,
including costs of appraisal and resolution of damage
cases, increased by the difference of liability for
damages, are recognised as an expense.
Parallel health insurance covers the costs of health
services and related services, and supply supply of
medical products and medical aids and technical
accessories which, although they constitute
entitlement under mandatory health insurance, are
pursued by the insured under alternative procedures
and under different conditions than that regulated
under mandatory health insurance.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
damage cases, increased by the difference of
The Group concludes long-term insurance contracts
liability for damages, are recognised as an expense.
on the basis of monthly or annual premiums.
Insurance companies offering supplementary
In addition to the above, the Group also offers
travel health insurance abroad with assistance from
CORIS which covers the costs of medical treatment
and emergency transport. These insurance policies
are short-term in nature.
health insurance are included in compensatory
schemes under ZZVZZ, which offset the differences
in the medical costs between different structures
of insured with individual insurance companies
with regard to gender and age. As a compensatory
scheme payer, the Group recognises these expenses
The premium is recognised as a revenue when the
as damage expenses
policyholder's obligation to pay falls due. Premiums
contain all costs in addition to premiums, including
the agency fee, except taxes. The part of the
2.14.1.4 Long-term insurance contracts with included
guarantes and DPF
premiums from valid insurance contracts which refers
220
to unexpired insurance coverages on the balance
sheet date is presented as unearned premium reserve.
Recognised as a revenue are accrued premiums less
changes in unearned premium reserves.
The amounts of damage and appraisal costs are
recognised as an appraised liability at the time
the damage was incurred. Damages incurred but
not fully resolved as at the balance sheet date are
recognised as liabilities for damages. Liabilities for
damages incurred and reported as at the balance
sheet date are formed on the basis of individual
appraisal of damages. Liabilities for damages
incurred but not reported as at the balance sheet
date are assessed through statistical analysis.
Liabilities for damages are further increased by the
estimated costs of resolving such damage cases.
Accrued indemnifications/insurance amounts,
including costs of appraisal and resolution of
These contracts include contracts insuring events
related to the insured's life (e.g. death, maturity,
additional insurances), over a longer period of time.
The premium is recognised as a revenue when the
policyholder's obligation to pay falls due. Premiums
are disclosed before deduction of expenses.
Liabilities stemming from the insurance contract are
recorded as expenses as they are incurred.
Liabilities for anticipated future contract entitlements
are recorded at the recognition of premiums. For longterm
life insurance contracts with included guarantees
the liabilities on the valuation date are formed in the
amount of current values of the Group's anticipated
future liabilities less the current estimate of future
premiums to be paid-in on the basis of concluded
insurance policies (prospective method). According

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
to IFRS4, BC 116, the Group uses reduction in
insurance liabilities in terms of Zillmer method.
The Zillmer method is an actuarial method used in
traditional life business for deferral of acquisition
costs (reduction in mathematical provisions). The
of profits attributable to life insurance is within
the discretion of the management, which passes
a resolution each year setting the amount of
participation in the surplus. This amount is not
specified in the internal regulations.
Zillmer amount for an individual contract does
not exceed 3.5% of the insured sum. Negative
mathematical provisions are set to 0.
In the case of insurance contracts with a single
payment of the premium, or when the period of
premium payments is shorter than the period during
The premises for evaluation of liabilities also take into
account the risk adjustment.
which the entitlements from the insurance contract
are created, the surplus of premiums which have
fallen due is deferred and recognised as a revenue as
Liabilities also include liabilities connected with the
distribution of the surplus to holders of life insurance
policies. In accordance with the insurance terms, only
a valid contract of mixed insurance and insurance
in annuities which has been in place for at least 24
months at the end of the financial period is included
in the distribution of surplus.
The surplus in endowment life insurance is added
at the end of each year as an additional premium
and consequently the sum insured is increased. An
additional insured sum is paid out in the event of
death or maturity. For annuity insurance the addition
of the surplus during the time of postponement of
pension increases the agreed sum of the annuity.
The surplus can be distributed due to higher yield
of investments, under mortality (over mortality for
annuities) or lower expenses than anticipated and
provided for.
In accordance with insurance terms, the distribution
entitlements from the insurance contract fall due, i.e.
in accordance with anticipated future entitlements.
Deferred revenue on the balance sheet date is
recognised as a liability. For life insurance (with the
exception of extra accident insurance policies) this
part is recognised under liabilities from insurance
contracts. For extra accident insurance policies,
this part is disclosed as a liability for the unearned
premium. The liability is formed using the pro-rata
method for all insurance contracts which do not
involve monthly payments and is calculated for each
insurance contract individually.
As the Group has no reinsurance to partially cover its
liabilities from such contracts, the reinsurance part of
liabilities is zero as at 31 December 2007.
Liabilities are calculated on the balance sheet date on
the basis of the assumptions applicable at the time
of concluding such contracts, or in certain cases on
the assumptions which the Group adopted during the
221

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
insurance term. The assumptions additionally take into
2.14.1.5 Long-term insurance contracts related to unit link
account an adjustment for unanticipated deviations.
Insurance contracts related to unit link cover insurance
Liabilities from damages incurred and reported and
from damages incurred but not reported represent
estimated amounts for:
- claim satteled, but not paid out as of the balance
sheet date;
- incurred but not reported claims as of the balances
sheet date (IBNR);
- incurred but insufficiently reported claims as of the
balance sheet date (IBNER);
- estimated expenses related to claims handling.
events referring to the life of the policyholder (in the
event of death and maturity) for a long term. An
insurance contract related to unit links is a contract
where the contractual payments are invested in units
of an investment fund selected by the policyholder. In
accordance with the accounting standard, the financial
and insurance parts of the contract do not need to be
separated and their accounting does not need to be
conducted separately. Liabilities arising from these
contracts are recognised at fair value to income.
222
Liabilities for reported but not yet resolved claims are
recognised based on the estimated amount and are
regularly reviewed. Accident Insurance liabilities related
to incurred but not reported claims are determined: for
the accident insurance base on the statistical method,
for other life insurances base on the trend method.
The premium is recognised as revenue when the
policyholder's obligation to pay falls due. The Group
discloses its liabilities to its policyholders under
liabilities related to unit link insurance contracts tied to
investment fund units, in accordance with the relevant
individual insurance contract and product.
The liabilities also include expenses related to claims
handling in the lump sum amount of 2.5% of total
liabilities. Claims liabilities are not discounted. In
accordance with the reinsurance contract, the Group
discloses the reinsurance part of its liabilities attributable
to damages as reinsurance assets.
Liabilities are increased by premiums and decreased
by costs. Furthermore, the amount of liabilities takes
into account changes in the value of funds´ unit prices
and is reduced by the management fees and risk
premium. In the event of redemption, the liabilities
are reduced and the redemption value equals the
Group's liabilities less exit fees charged in the event of
redemption or upon termination of insurance.
It is assumed that the risk premiums charged in
an individual time period for expected population
mortality are adequate to cover the damage

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
insurance claims from entitlements in the event of
death which exceed the value of units on individual
personal accounts of the policyholders. Additional
liabilities in regard of such claims are therefore
not disclosed. The risk premium for an individual
For life insurance contracts with DPF and investment
contract with DPF, DAC is deducted from mathematical
provisions.
2.14.1.7 Liability adequacy test
insurance contract is calculated on a monthly basis
according to the asset value.
On every balance sheet date, contract liability
adequacy tests are carried out. The Group assesses at
For an individual long-term life insurance contract tied
to investment fund units, the balance of liabilities as
at the balance sheet date equals the value of units
increased by unallocated premiums and premiums
recognised on an accrual base.
In case of unit-linked contracts, commission expenses
are deferred where the period of reduction in
premium aimed at covering acquisition expenses
does not match with the period in which commission
expenses are paid. Commissions are deferred and
amortised so as to achieve matching of premiums
and commissions in relation to the first two or three
years of policy life in which commissions are paid and
premium allocation reduction take place.
2.14.1.6 Deferred policy acquisition costs (DAC)
Commissions and other acquisition costs for unit-linked
insurance contracts that vary with and are related to
securing new contracts and renewing existing contracts
are deferred and charged to the income statement
in proportion to and over the period when premium
allocations to the unit-linked insurance liability are
reduced for upfront charges. For non-life insurance
contracts a proportional share of acquisition costs is
deducted from the unearned premium reserves (UPR).
each reporting date whether its recognised insurance
liabilities are adequate, using current estimates of
future cash flows under its insurance contracts,
appraisal costs and administration cost. Future cash
flows are discounted using the current market risk free
interest rate. If this estimate shows that the carrying
amount of insurance liabilities is not appropriate from
the aspect of estimated future cash flow, the entire
amount of the deficit is recognised in the profit or loss.
The liability adequacy test is done on the basis of
recognised gross liabilities. The relevant insurance
assets are considered separately. In carrying out the
liability adequacy test the insurance considers only
liabilities which stem from contracts listed under the
insurance contracts category according to the standard.
These liabilities include liabilities for the unearned
premium, liabilities from insurance contracts, deferred
agency fee costs, damage liabilities and other liabilities.
If the liability adequacy test indicates inadequate
liabilities, the calculation of liabilities from such
insurance contracts in future periods is done on the
basis of the assumption of the test which showed
inadequate disclosure of liabilities.
223

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
2.14.1.8 Reinsurance contracts
2.14.1.9 Receivables and payables related to insurance
contracts
Contracts entered into by the Group with reinsurers
under which the Group is compensated for losses on
one or more contracts issued by the Group and that
meet the classification requirements for insurance
contracts are classified as reinsurance contracts held.
Receivables and payables are recognised when due.
These include amounts due to and from agents, brokers
and insurance contract holders. If there is objective
evidence that the insurance receivable is impaired, the
Group reduces the carrying amount of the insurance
The benefits to which the Group is entitled under
its reinsurance contracts held are recognised as
receivable accordingly and recognises that impairment
loss in the income statement.
reinsurance assets. These assets consist of shortterm
balances due from reinsurers, as well longer
2.14.1.10 Salvage and subrogation reimbursements
term receivables that are dependent on the expected
224
claims and benefits arising under the related reinsured
insurance contracts. Amounts recoverable from or
due to reinsurers are measured consistently with the
amounts associated with the reinsured insurance
contracts and in accordance with the terms of each
reinsurance contract. Reinsurance liabilities are
primarily premiums payable for reinsurance contracts
and are recognised as an expense when due.
The Group assesses its reinsurance assets for
impairment on a regular basis. If there is objective
evidence that the reinsurance asset is impaired, the
Group reduces the carrying amount of the reinsurance
asset to its recoverable amount and recognises that
impairment loss in the income statement.
Some insurance contracts permit the Group to sell
(usually damaged) property acquired in settling a
claim (i.e. salvage). The Group may also have the
right to pursue third parties for payment of some or
all costs (i.e. subrogation).
Estimates of salvage recoveries are included
as an allowance in the measurement of the
insurance liability for claims, and salvage property
is recognised in other assets when the liability
is settled. The allowance is the amount that can
reasonably be recovered from the disposal of the
property.
Subrogation reimbursements are also considered as
an allowance in the measurement of the insurance
liability for claims and are recognised in other assets
when the liability is settled. The allowance is the
assessment of the amount that can be recovered
from the action against the liable third party.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
2.14.2 Investment contracts
insured retires. Each policy is entitled to distribution of
surplus from higher returns than the guaranteed return,
Investment contracts are contracts which involve
financial risk without significant insurance risk.
which are generated through the long-term business
fund. The generated profit is distributed among the
insured in the form of regular and final bonuses, as per
All of the Group's investment contracts include
the option of discretionary participation, giving
policyholders the right to participate in the generated
surplus over the guaranteed returns through
management of assets which relate to such investment
contracts. The attribution of the generated surplus is the
discretionary right of the management.
the insurance conditions. The amount of the regular
bonus is set each year by the management depending
on the market value of assets held in the long-term
business fund.
Limited-time annuity insurance is a new form of
savings which represents a source of income for a
In this category the Group includes optional extra
pension insurance under the PN-A01 pension plan,
and annuity contracts with specific periods of pay-ins
and pay-outs with a fixed (technical) interest rate.
Optional extra pension insurance is based on the
Pension and Disability Insurance Act. Its allows extra
pension savings and ensures receiving pension benefits
until death. The pension basis is a collective pension
plan which a company, subscribing to the collective
insurance contract and wishing to take care of its
employees, may join with a minimum of 51% of all
employees. Through this type of insurance employees
of the company subscribing to the insurance contract,
invest in assets held on special personal pension
accounts. The paid-in assets accrue interest with
guaranteed returns which is at least 60% of the interest
rate on long-term government securities with a maturity
of more than one year. Based on accumulated assets
an additional pension will be calculated when the
specific period, and the insured chooses the term of
savings and the term of annuity payouts. The Group
guarantees the payout of agreed annuities, which can
be increased during the term of the contract at the
expense of the insured's participation in the profits
realized within the insurance category.
Premiums attributable to investment contracts with
DPF are recognised under revenues, and increase of
liabilities is recognised under expenses. Premiums,
damages and provisions are recognised the same way
as with life insurance contracts with DPF.
At the end of the business year the Group determines
the DPF distribution based on the relaised result/returns
on the pool of assets relating to the investment contracts
(DPF portion). This amount is added to the liabilities
from investment contracts with DPF and no unallocated
DPF portion remains as of the end of the year.
225

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
The liability for these contracts is established in the
same way as for universal life insurance contracts
liability for surplus returns over the guaranteed returns
(for attribution of regular and final bonus).
with DPF without applying shadow accounting for
unrealised gains recorded on available for sale financial
investments recognised in equity. Revenue is also
recognised in the same way.
The measurement of the liabilities under investment
contracts with DPF is similar to that of insurance
contracts with guaranteed and fixed terms. However,
the impact of interest rate risk is different due to the
Where the resulting liability is lower than the sum of
presence of the DPF.
the amortised cost of the guaranteed element of the
contract and the intrinsic value of the surrender option
2.15 Borrowings
embedded in the contract, it is adjusted and any shortfall
is recognised immediately in the income statement.
Borrowings are recognised initially at fair value,
net of transaction costs incurred. Borrowings
226
Investment contracts with DPF refers to contract
which do not take significant insurance risk and give
additional benefits to the policyholders.
Unearned premium and claims reserves are calculated
same as in case of life insurance contracts with DPF.
Mathematical reserves for annuities contracts for
limited time are calculated based on the prospective net
Zillmer method. Its value is calculated as the current
value of future payments of agreed annuities, including
payment commissions, adjusted for current value of
future technical premiums that will be paid based on
these annuity contracts.
Liabilities from long-term pension insurance contracts
are computed as the mathematical product of the value
per unit of the long-term business fund and the number
of units held on the reporting date. The calculation is
made for each policy. This covers the liability towards the
policy holder. In addition, the Group forms an additional
are subsequently stated at amortised cost; any
difference between the amount at initial recognition
and the redemption value is recognised in the
income statement over the period of the borrowings
using the effective interest method.
Borrowings are classified as current liabilities unless
the Group has an unconditional right to defer
settlement of the liability for at least 12 months after
the balance sheet date.
If the Group purchases its own debt, it is removed
from the balance sheet and the difference between
the carrying amount of the liability and the
consideration paid is included in investment income.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
2.16 Derivative financial instruments and accounting
point of hedging
be and have been highly effective in offsetting changes
in fair values or cash flows of hedged items. The
Group assesses the success of hedging at the time of
Derivative financial instruments including futures and
forwards, swaps and options are initially recognised at
fair value in the balance sheet. Fair values are obtained
from quoted market prices in active markets, including
recent market transactions, and valuation techniques,
including discounted cash flow models and options
pricing models, as appropriate. All derivatives are
carried as assets when fair value is positive and as
liabilities when fair value is negative.
transaction and in duration of hedging.
Cash flow hedges
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash flow
hedges is recognised in equity. The gain or loss relating
to any ineffective portion is recognised immediately in
the income statement within net fair value gains on
financial assets at fair value through income.
The method of recognising the resulting fair value
gain or loss depends on whether the derivative is
designated as a hedging instrument, and if so, the
nature of the item being hedged. The Group uses
derivative financial instruments for hedging of future
cash flows, which are attributable to assets, liabilities
and future business.
From the accounting point of view hedging is used
only under specific conditions.
The Group documents at the inception of the
transaction the relationship between hedging
instruments and hedged items, as well as its risk
management objective and strategy for undertaking
various hedging transactions. The Group also
documents its assessment, both at hedge inception
and on an ongoing basis, of whether the derivatives
that are used in hedging transactions are expected to
Amounts accumulated in equity are recycled to the
income statement in the periods in which the hedged
item affects profit or loss.
When a hedging instrument expires or is sold, or
when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in
equity at that time remains in equity and is recognised
when the forecast transaction is ultimately recognised
in the income statement. However, when a forecast
transaction is no longer expected to occur, the
cumulative gain or loss that was reported in equity is
immediately transferred to the income statement.
2.17 Trade Payables
Trade payables are recognised initially at fair value
and subsequently measured at amortised cost using
the effective interest rate method.
227

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
2.18 Income Tax
liabilities are recognised as income or expense in the
Group’s income statement unless the tax arises from a
2.18.1 Current income tax
The Group charges taxes in accordance with the
provisions of the legislation applicable in individual
countries in which the Group’s subsidiaries are located.
In Slovenia, the corporate income tax rate for the year
2007 is 23%. In 2008 the tax rate will be 22%, in
2009 21% and by 2010 the corporate income tax rate
will be reduced to 20%.
transaction that has been recognised directly in equity
or a business combination.
Deferred income tax is provided on temporary
differences arising on investments in subsidiaries and
associates, except where the Group controls the timing
of the reversal of the temporary difference and it is
probable that the temporary difference will not reverse
in the foreseeable future.
2.18.2 Deferred income tax
2.19 Employee benefits – other long-term employee
Deferred income tax is provided in full, using the balance
benefits
228
sheet liability method, on temporary differences arising
between the tax bases of assets and liabilities and their
carrying amounts in the consolidated financial statements. this
In accordance with the initial recognition exemption,
deferred taxes are not recorded for temporary differences on
initial recognition of an asset or a liability in a transaction
other than a business combination if the transaction,
when initially recorded, affects neither accounting nor
taxable profit. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantively
enacted by the balance sheet date and are expected
to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the
extent that it is probable that future taxable profit
will be available against which the temporary
differences can be utilised.
The effects of recognising deferred tax assets and
The Group provides benefits to employees as a legal
obligation: jubilee rewards and retirement benefit bonuses.
According to Slovene legislation employees retire after 40
years of working life, when, if fulfilling certain conditions,
they are entitled to benefits paid in a lump sum amount.
Employees are also entitled to a long service bonus for
every ten years of employment with the Group.
The Group recognised all actuarial gains and losses
immediately in the income statement.
These liabilities are valued by an independent
certified actuary. The main actuarial assumptions
included in the calculations of the obligations for
long-term employee benefits are:
- discount rate of 4.5%,
- future salary increases using inflation index
increased by 4.8%,
- the rate of employee turnover of 4%.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
2.20 Revenue recognition
c) Interest income and expenses
Interest income and expense for all interest-bearing
Revenue comprises the fair value of the consideration
received or receivable for the sale of goods and
services, in the ordinary course of the Group’s
activities. Revenue is shown net of value-added tax,
returns, rebates and discounts and after eliminated
sales within the Group. The Group recognises revenue
when the amount of revenue can be reliably measured
and it is probable that future economic benefits will
flow to the entity and specific criteria have been met
for each of the Group’s activities as described below.
The amount of revenue is not considered to be reliably
measurable until all contingencies relating to the sale
have been resolved. The Group bases its estimates on
historical results, taking into consideration the type of
customer, the type of transaction and the specifics of
each arrangement.
a) Sales of goods
Sales of goods are recognised when a group entity has
delivered products to the customer and the customer
has accepted the products. Revenue is recognised when
it is probable that the economic benefits associated
with the transaction will flow to the group entity and the
group entity has transferred to the buyer the significant
risks and rewards of ownership of the goods.
b) Sales of services
Sales of services are recognised in the accounting
period in which the services are rendered, by reference
to completion of the specific transaction assessed on
the basis of the actual service provided as a proportion
of the total services to be provided.
financial instruments, except for those classified as
held for trading or designated at fair value through
profit or loss, are recognised within ‘interest income’
and “interest expense” in the income statement using
the effective interest method.
The effective interest method is a method of
calculating the amortised cost of a financial asset
or a financial liability and of allocating the interest
income or interest expense over the relevant period.
The effective interest rate is the rate that exactly
discounts estimated future cash payments or receipts
through the expected life of the financial instrument
or, when appropriate, a shorter period to the net
carrying amount of the financial asset or financial
liability. When calculating the effective interest
rate, the Group estimates cash flows considering
all contractual terms of the financial instrument (for
example, prepayment options) but does not consider
future credit losses. The calculation includes all
fees and points paid or received between parties
to the contract that are an integral part of the
effective interest rate, transaction costs and all other
premiums or discounts.
Once a financial asset or a group of similar financial
assets has been written down as a result of an
impairment loss, interest income is recognised using
the rate of interest used to discount the future cash
flows for the purpose of measuring the impairment loss.
229

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
d) Dividend income
Dividend income is recognised when the right to
receive payment is established.
3. Critical accounting estimates and
judgements
3.1 Critical accounting estimates and judgements in
e) Premium income
Income from insurance premiums includes net income
from insurance premiums, calculated on the basis of
gross written premiums accrued in the accounting period,
less the share of gross written premiums ceded to the
reinsurer and adjusted for changes in net unearned
premium reserves.
applying accounting policies
The Group makes estimates and assumptions that
affect the reported amounts of assets and liabilities
within the next financial year. Estimates and
judgements are continually evaluated and based
on historical experience and other factors, including
expectations of future events that are believed to be
230
Income from insurance contracts is recognised as
premium income in the following way:
- Income arising from single premium is recognised
when the insurance policy is incepted and bills
charged;
- Income arising from long-term insurance contracts
in which the premium is paid in instalments
(monthly, quarterly, annually) is recognised upon
the recognition of premium receivables.
The premium charged by the Group covers
transaction costs (the fees of concluding the
contract, management and collection) and
represents income in the period of settlement. If
a period of more than one year is concerned, a
portion of the premium is deferred as liability and
transferred to income over the life of the contract.
reasonable under the circumstances.
3.1.1 Estimated impairment of goodwill
The Group annually tests goodwill for potential
impairment in accordance with the accounting
policy stated in Note 2.7. The recoverable amounts
of cash-generating units have been determined
based on value-in-use calculations. These
calculations require the use of estimates.
3.1.2 The ultimate liability arising from claims made
under insurance contracts
The estimation of the ultimate liability arising from claims
made under insurance contracts is the Group’s most
critical accounting estimate. There are several sources of
uncertainty that need to be considered in the estimate
of the liability that the Group will ultimately pay for such
claims. At each balance sheet date, liability adequacy
tests are performed to ensure the adequacy of liabilities.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
In performing these tests, current best estimates of
future contractual cash flows and claims handling and
administration expenses, as well as investment income
from the assets backing such liabilities, are used. Any
deficiency is charged to profit or loss by establishing a
provision for losses arising from liability adequacy tests.
is summarised and presented by insurance contract
category.
Expected cash flows are generated for:
- premiums (life insurance contracts and extra
accident insurance),
- payout of damages (death, maturity, annuities,
redemptions, accident loss),
At each balance sheet date, liability adequacy tests
are performed to ensure the adequacy of the contract
liabilities net of related deferred acquisition cost (DAC)
- costs (remaining commission fees, administrative
fees, costs of damages), and
- revenues from investments.
assets. In performing these tests, current best estimates
of future contractual cash flows and claims handling and
administration expenses, as well as investment income
from the assets backing such liabilities, are used. Any
deficiency is immediately charged to profit or loss initially
by writing off DAC and by subsequently establishing a
provision for losses arising from liability adequacy tests
(the unexpired risk provision).
Long-term insurance contracts with fixed terms are
measured based on assumptions set out at the inception
of the contract. When the liability adequacy test requires
the adoption of new best estimate assumptions, such
assumptions (without margins for adverse deviation) are
used for the subsequent measurement of these liabilities.
Any DAC written off as a result of this test cannot
subsequently be reinstated.
The test is carried out separately for life and non-life
insurance.
1. Liability adequacy test for life insurance
The test is carried out for each contract which was
valid on the balance sheet date, and the outcome
For individual future cash flows the following items are
taken into consideration:
- provisions of individual insurance policies (amount
of the premium, premium payment dynamics,
amount of the insured sum for the event of death
and maturity, amount of annuities),
- technical bases of the relevant products (mortality
tables, interest rate, initial fee costs, other
administrative costs), and
- assumptions (the realised mortality rates for life
insurance policies, mortality in annuity insurance,
rates of redemption, future profitability, level of realised
administrative costs, future inflation, damage outcome
from accident insurance policies, profitability...).
Assumptions are individually explained.
The cash flows for individual years (development up to
80 years) are discounted on the balance sheet date.
Economic and operative assumptions
1. Risk discount rate
In order to calculate the present value of future cash
flows the euro area risk discount rate graph is used
231

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
(AAA-rated euro area central government bonds)
based on the mortality tables used at the time when
the product was issued on the market. Therefore for,
2. Investment return
In the calculation a 5.5% rate of return was used
for the first 10 years and 5.16% years for the
subsequent years, with a 7% rate of return for
products involving investment risk.
the LAT calculation, 55% of the probability included
in the moratlity tables was used.
For annuities contracts, the Group used the Austrian
annuity tables from 1996, which, based on the
opinion of the Management, shows the actual life
expectancyof the population.
3. Inflation
232
The expected inflation rates were considered in the
estimate of expected costs.
Year
Annual Rate
2008 2.60%
2009 2.45%
2010 2.30%
2011 2.15%
≥2012 2.00%
4. Costs
Costs of operations (administration, administration,
costs of payout of damages ...) were calculated on
the basis of estimates contained in the technical
bases of the product, multiplied by a factor which
represents an estimate of expected realised costs
compared to those calculated into the products,
under the assumption that one-half of the costs is
not subject to inflation. Other costs are increased at
the inflation rates listed in the above table.
Management believes that the use of different tables
presents the best estimation of the liabilities related to
life insurance contracts with DPF.
6. Redemption rates
Based on an analysis of redemptions of life insurance
policies and investment risk insurance policies, the
following rates of redemption are used:
Year after agreement
Rate of buy-out
Life
Unit Link
insurances
0 12.80% 7.37%
1 7.60% 5.20%
≥2 3.00% 3.00%
7. Damage from extra accident insurance contracts
Based on historical data the future damage from
extra accident insurance is estimated at 40% of the
extra accident insurance premium.
5. Mortality
Within the calculation of the liabilitity adequacy test
for life insurance contracts with DPF, mortality rates
were used based on the last 10 years’ experience.
This shows that the acutal probability of the insured
population is only 55% of the probability which is
Result of the adequacy test
The present value of future cash flows from life
insurance contracts is compared to the amount of
liabilities from life insurance, which includes the
calculation of mathematical provisions, provisions
for damages and unearned premium reserve.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
The opinion on the adequacy of liabilities for 2007
- to be added when the test is carried out
Liabilities as calculated using LAT as per
31.12.2007 are lower than liabilities the Group
recognised in its financial statements using its own
methodology. The test has proven the adequacy of
liabilities formed for life insurance contracts.
The Group first adopted LAT for fiscal year 2006.
expenses attributable to the unexpired periods of
policies in force at the balance sheet date with the
amount of unearned premiums in relation to such
policies after. Expected cash flows relating to claims
and expenses are estimated by reference to the
experience during the expired portion of the contracts,
adjusted for significant individual losses which are not
expected to recur.
The test proved the adequacy of liabilities for life
insurance contracts as at 31.12.2006.
The opinion on the adequacy of liabilities for 2007
The results show no deficiency in the liabilitiy
2. Liability adequacy test for property and health
amount for either 2007 or 2006.
insurance
The liability adequacy test for property insurance
contracts is carried out for liabilities attributable to
3.1.1 Estimate of future benefit payments and
premiums arising from long-term insurance contracts
the unearned premium reserve and related DAC. We
consider that the formed liabilities for damages and
liabilities for bonuses and discounts are based on
undiscounted test estimates of management using
actuarial techniques are adequate so no further
adequacy test is considered necessary.
The liability adequacy test for property and health
insurance was performed for all insurance liabilities.
Insurance liabilities related to incurred and reported
claims and incurred but not reported claims are
calculated by using current assumptions and therefore
represent the best estimation of the current liabilities
from the insurance contracts.
The liability adequacy test is therefore limited to the
unexpired portion of existing contracts. It is performed
by comparing the expected value of claims and
The determination of the liabilities under long-term
insurance contracts is dependent on estimates
made by the Group. Estimates are made as to the
expected number of deaths for each of the years in
which the Group is exposed to risk. The Group bases
these estimates on standard industry and national
mortality tables that reflect recent historical mortality
experience, adjusted where appropriate to reflect the
Group’s own experience. For contracts that insure
the risk of longevity, appropriate but not excessively
prudent allowance is made for expected mortality
improvements. The estimated number of deaths
determines the value of the benefit payments and the
value of the valuation premiums. The main source
of uncertainty is that epidemics such as AIDS, SARS
and wide-ranging lifestyle changes, such as in eating,
smoking and exercise habits, could result in future
mortality being significantly worse than in the past for the
233

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
age groups in which the Group has significant exposure
to mortality risk. However, continuing improvements
in medical care and social conditions could result in
improvements in longevity in excess of those allowed
for in the estimates used to determine the liability for
contracts where the Group is exposed to longevity risk.
as a result of damage claims. On the balance sheet
date liability adequacy tests are carried out in order
to ensure the adequacy of the disclosed contractual
liabilities. In the performance of these tests the Group
uses its best estimates of future cash flows, appraisal
and administrative costs and investment incomes from
assets which cover these liabilities. Through formation of
234
For long-term insurance contracts with fixed and
guaranteed terms, estimates are made in two stages.
Estimates of future deaths, voluntary terminations,
investment returns and administration expenses are
made at the inception of the contract and form the
assumptions used for calculating the liabilities during
the life of the contract. A margin for risk and uncertainty
is added to these assumptions. These assumptions
are “locked in” for the duration of the contract. New
estimates are made each subsequent year in order to
determine whether the previous liabilities are adequate
in the light of these latest estimates. If the liabilities are
considered adequate, the assumptions are not altered.
If they are not adequate, the assumptions are altered
(“unlocked”) to reflect the best estimate assumptions. A
key feature of the adequacy testing for these contracts
is that the effects of changes in the assumptions on the
measurement of the liabilities and related assets are not
symmetrical. Any improvements in estimates have no
impact on the value of the liabilities and related assets
until the liabilities are derecognised, while significant
enough deterioration in estimates is immediately
recognised to make the liabilities adequate.
There are several areas of uncertainty which must be
taken into consideration when preparing the estimation
of liabilities which the Group will be required to pay
provisions for losses stemming from the liability adequacy
tests, the found deviations affect the profit or loss.
Long-term insurance contracts with certain guarantees
are measured on the basis of assumptions used at the
signing of the contract. If the liability adequacy test
requires the use of new assumptions based on the best
estimate, these are used for subsequent measurement
of these liabilities (without the adjustment for
unfavourable experience).
3.1.4 Impairment of available-for-sale equity financial
assets
The Group determines that available-for-sale equity
financial assets are impaired when there has been a
significant or prolonged decline in the fair value below
its cost. This determination of what is significant
or prolonged requires judgement. In making this
judgement, the Group evaluates, among other factors,
the normal volatility in share price, the financial health
of the investee, industry and sector performance,
changes in technology and operational and financing
cash flow. Impairment may be appropriate when there
is evidence of deterioration in the financial health of the
investee, industry and sector performance, changes in
technology, and financing and operational cash flows.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
3.1.5 Impairment losses on loans and receivables
3.1.7 Employee benefits
In determining whether an impairment loss should be
recorded in the income statement, the Group makes
judgments as to whether there is any observable
data indicating that there is a measurable decrease in
the estimated future cash flows. This evidence may
include observable data indicating that there has been
The employee benefits obligations (jubilee rewards
and retirement benefit bonuses) are measured using
the actuarial valuations, therefore some actuarial
estimates and assumptions are needed, such
as rates of employee turnover, early retirement,
discount rate, future salary levels, etc.
an adverse change in the payment status of borrowers
in a group, or national or local economic conditions
3.1.8 Income taxes
that correlate with defaults on assets in the group.
Management uses estimates based on historical loss
experience for assets with credit risk characteristics
and objective evidence of impairment similar to those
in the portfolio when scheduling its future cash flows.
The methodology and assumptions used for estimating
both the amount and timing of future cash flows are
reviewed regularly to reduce any differences between
loss estimates and actual loss experience.
3.1.6 Held-to-maturity investments
The Group follows the guidance of IAS 39 on classifying
non-derivative financial assets with fixed or determinable
payments and fixed maturity as held-to-maturity. This
classification requires significant judgement. In making
this judgement, the Group evaluates its intention and
ability to hold such investments to maturity. If the Group
fails to keep these investments to maturity other than
for the specific circumstances – for example, selling an
insignificant amount close to maturity – it will be required
to reclassify the entire class as available-for-sale. The
investments would therefore be measured at fair value
and not at amortised cost.
The Group is subject to income taxes in different
jurisdictions. Some estimates are required in
determining the amount of provision for income
taxes. There are many transactions and calculations
for which the ultimative tax determination is
uncertain during the ordinary course of business.
Due to changes in the future income tax rate some
estimates regarding the disposals of available-forsale
portfolio have to be made by the management
when calculating the deferred tax liability. Additionally
the management best estimates of future taxable
profits are used for calculating the deferred tax asset
regarding the carry-forward income tax losses.
4. Comparatives
Some changes in the presentation of the financial
statements have been made in order the financial
statements would give better understanding of the
activities and transactions of the Group. Where
necessary, comparative figures have been adjusted
to conform with changes in presentation in the
current year, as follows:
235

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
- Net income – financial assets for trading and
financial assets at initial recognition – dividends,
interests have been reclassified from net income
- financial assets at fair value through P&L to
investment income;
- Impairment – intangible assets (goodwill) has been
reclassified from other expenses to depreciation
and impairment expenses;
- Expenses from other liabilities have been
reclassified from finance costs to other expenses;
- Income tax receivable and liability are presented as
The strategic risk refers to the Group’s
long-term development as much as to the each
of its subsidiaries. The management of the Group
manages these risks defining its vision and strategy
and monitoring their appropriateness on a regular
basis. According to the variety of Group’s businesses
the appropriate long-term investment decisions are
the key factor when managing strategic risks. The
corporate governance of the Group helps it to follow
the long-term business development and growth to
achieve the required rate of return.
a separate line in the balance sheet.
236
Income statement
(in EUR)
2006
adjusted
2006
reported
Investment income 14,401,754 12,791,790
Net income-at fair value through
P&L
18,425,773 20,035,737
Depreciation, amortisation and
impairment charges
(6,917,704) (8,486,709)
Other expenses (6,408,821) (5,683,799)
Finance costs (5,513,800) (4,669,817)
Operating profit/(loss) 29,863,341 29,019,358
Balance sheet
(in EUR)
2006
adjusted
2006
reported
Assets
Loans and other receivables 132,080,595 133,845,743
Income tax receivable 1,765,148 -
Liabilities
Trade and other payable 54,020,158 65,882,444
Income tax liability 11,862,286 -
5. Risk management
The Group's activities expose it to a variety of
risks: strategic risks, insurance and financial risks,
operating risks and general business risk.
The Group is exposed to financial risks through
its financial assets and liabilities, reinsurance
receivables and insurance liabilities. The principal
financial risk is the possibility that the inflows from
financial investments will not be sufficient to cover
the outflows arising from insurance contracts.
The most significant components of this risk are
the change in the interest rate risk, the prices of
securities risk, currency and credit risk.
The purpose of financial risk management process
is above all to maintain the stability of operations
and reduce the exposure to individual risks to an
acceptable level. Because of highly diversified
activities, the Group is mainly faced with insurance
and financial risks.
Risk management is a continuous cyclical process,
which can be divided into three stages. At the first
stage, potential risks are identified. At the second
stage, individual risks are modelled and measured.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
These models serve as a basis for measuring the
level of exposure an individual company in the Group
and the Group to individual risks. On the basis
of identification and measurement of risks in the
Group, the management adopts adequate measures
for reducing or controlling these risks (stage three).
insurer is the possibility that claims and benefits
exceed the amount of insurance liabilities (technical
provisions) created for a portfolio of insurance
contracts using statistical methods. This may happen
because of the change in the frequency of claims or
their amount which can be higher than expected.
Measures used by the management are different and
depend on the level of exposure and the type of risk.
Insured events are incidental which means that
their number and amount varies in individual years
The management of the Group manages risks present
in individual companies in the Group and on the level
of the Group as a whole. It thereby sets guidelines
concerning the balance between the risks, returns and
capital, performs periodic controls and sets guidelines
for implementation of business policies and strategy
and in relation to statistically established averages.
Experience shows that the larger the portfolio of
similar insurance contracts, the smaller the relative
variability of the expected outcome will be. In
addition, a more diversified portfolio is less likely to
be affected by a change in any subset of the portfolio.
for individual companies in the Group.
Individual companies in the Group have established
a system of reporting for the needs of management
that enables regular monitoring of risks to which
they are exposed. The insurance companies in
the Group have set up investment and liquidity
committees, which take care of the ALM function.
Types of risks
Insurance companies in the Group have developed
their own policy of concluding insurance contracts
with the aim of spreading the assumed risks and
achieve, within each individual category, a sufficient
amount of risk population to reduce the variability of
expected results. The principal means for reducing
insurance risks is reinsurance, i.e. the transfer of
risks that exceed the predetermined amount to the
reinsurance company.
237
5.1 Insurance risk
Risk related to the insurance policy represents the
possibility that the event insured against actually
occurs and uncertainty in relation to the amount
of the sum insured or indemnity. It is the nature of
insurance contracts that insurance risks are incidental
and unpredictable; however, the main risk for the
When developing a new insurance product it is
very important that the parameters defining the
insurance premium are assessed adequately. The
risk accepted by the Group at the inception of an
insurance contract is reflected in the price, i.e. the
insurance premium. If the parameters defining the
insurance premium are not assessed adequately
when developing a new insurance product, this is a

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
risk for the Group to which it is exposed during the
entire life cycle of the insurance product.
In the management's opinion, the important risks
faced by the Group in its operations are the following:
In the context of insurance risk the Group is
exposed to underwriting process risk, product
design risk, pricing risk, economic environment
risk, policyholder behaviour risk, reserving risk,
claims risk. Insurance risks are also managed with
reinsurance protection.
- Underwriting process risk, the danger of
misevaluation of accepted risk. This risk involves
mistaken decisions to underwrite a risk regardless
of the risk exposure of the insured, insurance on the
basis of inaccurate and incomplete information on the
insured, incorrect information about the amount of
maximum potential damage, or potential inappropriate
5.1.1. Description of risks
acquisition of reinsurance coverage by the reinsurer.
238
Insurance activities are based on managing insurance
risks. Insurance risks apply to risks accepted by
the insurer from the policyholder. Insurance risks
are random and unpredictable. At the signing of an
insurance contract the insurer accepts the risk to repay
the insured the agreed contractual amount if an insured
event occurs or if the contract expires, whereas when
the insured event will occur is uncertain.
Insurance cases are random, their number and
amounts vary from year to year and deviate from
statistical averages. The Group is therefore engaging
in diversifying and increasing its portfolio. This allows
it to disperse the risk and lower the variability of
expected events. An important instrument to lower
insurance risks is reinsurance, i.e. the transfer of
risks which exceed a predetermined amount, to a
reinsurer. The Group further manages insurance risks
through effective performance of internal controls,
internal audits and forming appropriate insurance
technical provisions to cover potential future liabilities
stemming from existing insurance contracts.
The Group manages the aforementioned risk through
providing guidelines for accepting insurance risks, using
software for accepting insurance risks, strict criteria and
procedures for accepting insurance risks, especially for
large insured sums and coverages. Also, the Group has
concluded an obligatory reinsurance contract with its
reinsurer, by which the reinsured risks over a certain
contractually agreed insured sum are automatically
reinsured. The Group also monitors damage results and
analyses any worsening thereof.
- The risk of inadequate assessment of liabilities
stemming from insurance contracts
(reserving risk) is the risk that these reserves will not be
adequate to cover the liabilities stemming from accepted
risks, or the risk that future damage payments will
exceed the evaluated amount of liabilities.
The Group regularly checks the adequacy of liability
calculations and the adequacy of used assumptions
in the calculation of higher liabilities stemming from
insurance contracts. The Group also carries out

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
liability adequacy tests. If the liability adequacy test
indicates that the liabilities are under-presented, they
are increased.
products) to 4% (older products). The adequacy of
returns on investments of insured liabilities in the
future is checked on a regular basis.
For isurance contracts with DPF component
and insurance contracts related to unit-linked
assumptions on future mortality, interest rates,
contract terminations and administrative costs are
applied. These assumptions are used to determine
liabilities stemming from the insurance contract. The
assumptions also include a risk adjustment.
On each reporting date the assumptions are reset
to reflect current assumptions and are used to
check whether the liabilities have been adequately
evaluated. If the liabilities are inadequate, the
assumptions are changed to reflect the current
state. Current assumptions do not contain the risk
adjustment.
For estimations on the mortality rate, mortality tables
are used, as in the past the portfolio of insurance
contracts has been too small for it to be able to
rely on its own experience. Thus, for insurance
for the event of death and insurance for the event
of death and maturity, the Group uses Slovenian
mortality tables made in 1990-1992, and for annuity
insurance it uses Austrian annuity tables from the
year 1996. In comparison with 2006, the Group has
not changed its assumptions regarding population
mortality. In the context of managing insurance risk,
actuarial services are constantly checking the applied
assumptions against the actual damage result, by
individual insurance products.
It is the management's assessment that Slovenian
mortality tables adequately reflect expectations with
regard to maturity and mortality rate of the Slovenian
population.
In its long-term insurance products the Group uses
interest rates ranging from 2.75% (new insurance
The assumption on mortality is determined using
the statistical mortality rate and analyses of actual
mortality of the insurance portfolio in the past and
current year. Also, in cases of disability statistical
tables and the insurance, own experience is used.
The Group also regularly analyses the duration of
insurance contracts and monitors the movements of
such durations over the period by main products and, as
necessary, by sales channels if more significant deviations
occur. These analyses are used when estimating the
duration of insurance contracts with a view to providing
the best possible assessment of the insured's behavior.
The return on investment affects the amount of
future payouts from insurance contracts. When
determining returns, the Group considers government
bonds as risk-free securities, and for other securities
risk adjustments are applied. Considering this and
considering the structure of investments for covering
liabilities, pondered returns of the investment
portfolio are calculated.
239

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Future costs are determined on the basis of current
costs. Additionally, the assumption of future inflation
is also used, which is based on the EU's long-term
projections for the EUR currency.
product, amount of the commission to insurance
agents and other potential costs. The Group also
measures and monitors the profitability of individual
products
- Pricing risk applies to the risk that the amount
of the insurance premium is not adequate for
covering the insurance liabilities stemming
from damage claims and operating costs. The
reasons can vary, e.g. unsuitable statistical
data, inadequate assessment of damage events,
- Product design risk is the risk that, when calculating
the insurance premium, the Group will be exposed to
the danger of non-consideration of the potential for the
occurrence of new diseases and accidents which could
significantly affect the movement of future damage
claim cases. This risk is important for life insurance.
low premium due to competition, unsuitable
240
premium for new products, unsuitable mortality,
annuity, morbidity tables, inadequate amount of
expenses calculated into the price of the product.
Furthermore we can speak about the adequacy of
the used probability tables, which further expose
the Group to risks of natural death, longevity,
critical illness and accident.
Already at the new product planning stage,
the Group diligently checks and acquires the
necessary statistics which confirm the suitability
of the assumptions used. In the case of high-risk
products such as additional coverage for critical
illness, the Group's general terms and conditions
allow the possibility of subsequent change in the
amount of the insurance premium if new statistics
or damage events indicate that the premium is too
low. Similarly, the Group diligently monitors the
amount of actual costs and, after analysing these
costs, calculates the amount of costs to include in
the price of individual products, which depends on
the type of product, special costs involved in the
As already mentioned under pricing risk, in certain
higher-risk insurance products the Group does not
guarantee the amount of the insurance premium
during the insurance coverage period. In addition
certain increases are used in the mortality and
morbidity tables. The Group also follows mortality
and morbidity trends. Certain modern illnesses are
excluded from the insurance terms and conditions.
In this context the Group has established cooperation
with a reinsurer, which transfers certain knowledge
and findings to the Group.
- Cost risk is the risk for potential losses which
could occur as a result of misevaluation of costs
when setting prices and misevaluation of changed
circumstances in the macroeconomic environment
which could cause excess growth in the Group's
operating costs.
The procedures for managing risk related to
unsuitable cost assessment are based on an
established system of recording and allocating

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
costs under cost centers and cost units, on
constant monitoring of the movement of costs,
and on adopting appropriate measures in case of
unfavourable developments.
In property insurance a significant risk factor is
climate change, which increases the frequency
of extreme weather events (flooding, hail, etc).
For liability insurance, characterised by lengthy
procedures which can take several years for damage
- The risk that social circumstances will change
so as to have an adverse effect on the Group can
be classified under economic environment risk.
cases to be resolved, a significant risk factor is the
increase of legal actions, especially involving
non-material claims (coverage and amount).
Increase in the unemployment rate and reduction
of purchase power can cause more damage
in credit insurance, fewer insurance contracts
concluded, more cancellations of life and pension
insurance contracts. This group may also include
the risk of change in case-law when adjudicating
damage claims.
In the interest of managing insurance risk, the
Group has concluded reinsurance contracts whereby
it transfers a portion of this risk to the reinsuring.
Each financial year the management adopts a
planned reinsurance program which includes
calculations of all maximum own insurance shares
- Policyholder behavior risk - insurance fraud.
- Claims risk involves the risk that damages will be
higher than expected in number and/or amount,
and the risk of excessive portion of self-coverage
due to inadequate reinsurance coverage, especially
in cases of catastrophic events.
In life insurance contracts with coverage for the
event of death, the number and amount of damages
is most affected by epidemics, change in lifestyle
such as change in dietary habits, physical exercise
and smoking. For life insurance contracts where the
insured event is maturity, and for health insurance
contracts, the greatest risk factor is the advancement
of medicine and improvement of the population's
social status, along with increasing longevity.
by insurance category, as well as the maximum
coverage table and certain procedures, bases
and criteria for determining the largest possible
damage. The reinsurance program consists of
traditional proportional and nonproportional forms of
reinsurance coverage, and it also includes a contract
for natural disasters.
5.1.2. Frequency and amount of damages
Concentration of insurance risk can stem from a
single insurance contract or from a smaller number
of contracts covering low-probability events with
high damage potential, such as insurance for
earthquakes and other natural disasters.
In insurance for the event of death, the greatest
effects which can increase the frequency of damage
241

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
claims are epidemics and lifestyle changes (e.g.
changed dietary habits, exercise, smoking) which
could lead to premature damage or greater damage
than anticipated. For insurance contracts where the
insured event is survival, the greatest risk factor is the
guarantees coverage up to the insured sum during
the insurance coverage period. During the coverage
period under a mixed life insurance contract, the
Group guarantees the payment of the insured sum
in the event of death or maturity.
advancement of medicine and improvement of the
population's social standard, along with increasing
longevity.
With a view of managing the Group's exposure
to insurance risk, the management concluded
a reinsurance contract transferring a part of the
The insurance contract portfolio contains insurance
insurance risk onto the reinsurer.
contracts where the Group accepts the risk
of coverage in the event of death. In cases of
insurance coverage for the event of death the Group
The following table represents the dispersal of the
insurance portfolio and exposure to large insurers.
Share of the largest insured in the joint insurance porfolio:
242
(in EUR)
Total premium
of the largest 10
clients
Share in total
premium
Total premium of
the largest 100
clients
2007
Share in total
premium
Life insurance 40,970 0.64% 212,634 3.33%
Unit-linked insurance 431,550 1.25% 1,506,120 4.37%
Non-life and health insurance 10,165,000 4.35% 20,926,000 8.95%
Total: 10,637,520 22,644,754
(in EUR)
Total premium
of the largest 10
clients
Share in total
premium
Total premium of
the largest 100
clients
2006
Share in total
premium
Life insurance 20,923 0.13 % 176,590 1.10%
Unit-linked insurance 1,005,558 2.57 % 2,191,316 5.60%
Non-life and health insurance 12,113,608 5.60 % 25,818,999 11.93%
Total: 13,140,089 28,186,905
The table above lists the premium of the 10 or
100 largest insured in the insurance portfolio.
Considering the fact that their share is relatively
small in comparison with the overall portfolio, we
can deduce that the Group's portfolio is sufficiently
diversified and that it is not overly exposed to a few
large clients.
In the property insurance segment the risks to which
the Group is exposed vary depending on the industry
in which the insured are active. The table below
shows the concentration of liabilities from property
insurance by industry in which the insured are active.
The maximum loss (maximum sum insured) shown
is categorised by size into three categories.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
2007 42 – 210 thousand EUR 210 - 830 thousand EUR over 830 thousand EUR
Without With Without With Without With
reinsurance reinsurance reinsurance reinsurance reinsurance reinsurance
Construction 57,516 51,764 37,536 31,557 410,152 275,192
Manufacturing 263,465 236,547 392,417 349,739 1,859,570 1,120,263
Our services 5,836,710 5,252,264 2,009,133 1,795,019 5,522,750 2,827,036
Total: 6,157,691 5,540,576 2,439,085 2,176,314 7,792,471 4,222,491
2006 42 – 210 thousand EUR 210 - 830 thousand EUR over 830 thousand EUR
Without With Without With Without With
reinsurance reinsurance reinsurance reinsurance reinsurance reinsurance
Construction 17,595 15,836 43,151 37,665 290,997 245,082
Manufacturing 336,844 302,817 424,881 374,310 1,769,138 638,285
Our services 6,292,461 5,662,236 1,720,943 1,534,179 5,061,720 2,609,417
Total: 6,646,900 5,980,888 2,188,975 1,946,155 7,121,855 3,492,784
In the life insurance segment a potential concentration
of insurance risk can be seen in contracts with
extremely high sums insured.
The table below indicates the concentration of
insurance risk for life insurance, with the total sum
insured risk categorised into four categories, depending
on the amount of the sum insured involved in the
individual insurance contract.
243
Total sum insured risk of all contracts as at 31.12.2007
Without reinsurance
With reinsurance
0 – 29,999 EUR 1,370,044,137 1,345,759,964
30,000 – 59,000 EUR 295,329,593 215,449,399
60,000 – 99,999 EUR 22,729,364 8,124,951
More than 100,000 EUR 6,085,931 635,008
Total: 1,694,189,025 1,569,969,322
Total sum insured risk of all contracts as at 31.12.2006
Without reinsurance
With reinsurance
0 – 29,999 EUR 912,403,505 871,013,610
30,000 – 59,000 EUR 167,183,667 141,821,950
60,000 – 99,999 EUR 4,561,306 1,692,547
More than 100,000 EUR 3,289,250 1,100,042
Total: 1,087,437,728 1,015,628,149
For annuity insurance we present risk concentration
with total annual annuities classified into five
categories, depending on the amount of the annual
annuity per individual insured. As the annual annuity
we consider the amount which the insured would
receive if the contract was already due for payouts.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Structure of the amount of annual annuities
(in thousand EUR)
Annual annuity per insured on the final
TOTAL ANNUAL ANNUITIES 2007 TOTAL ANNUAL ANNUITIES 2006
date of the year
amount % amount %
0 – 999 EUR 822 14.95 875 15.44
1,000 –1,999 EUR 1,946 35.38 2.027 35.74
2,000 – 2,999 EUR 1,133 20.61 1.145 20.20
3,000 – 3,999 EUR 664 12.06 681 12.00
More than 4,000 EUR 935 17.00 943 16.63
Total: 5,500 100.00 5.671 100.00
5.1.3 Non-life and health insurance contracts - assumptions
and changes of assumptions
balance sheet date (IBNR)
IBNR liabilities are established on the level of
a) procedure of establishing assumptions
insurance categories using a triangle (chain ladder)
method or statistical method.
The main assumptions which affect disclosure of
244
liabilities stemming from property insurance contracts
relate to establishing liabilities for damage claims. The
procedure for assessing liabilities varies depending
on the nature of incidence of loss and takes place
on the insurance categories level. The calculation of
provisions for damage claims is divided into two parts,
considering the nature of individual damage:
balance sheet date
On the basis of a review of all damages reported but not
yet paid out as at the balance sheet date, an assessment
is made on expected liabilities stemming from future
payouts of individual damage claims. Larger cases of
material damage are appraised by in-house appraisers,
and non-material damages (e.g. liability claims) and
claims in legal proceedings are assessed by in-house
legal experts (lawyers). Liabilities from damages which
are paid out in the form of annuities are assessed by the
Group as the present value of future payouts, where a
2.6% discount factor is applied.
The Chain Ladder method can be based on recognised
or accrued damages with monthly or annual
development factors, depending on the characteristics
of the incidence of loss and procedures for resolving
damage claims. The damages are arranged in a
triangle, where the rows represent the year the
damage was incurred, and the columns represent
the number of years from the time the damage was
incurred to recognising or accrual of the damage.
Prediction of final damages is based on the calculation
of average annual development factors.
The statistical method is based on reviewing past
damage claims. The IBNR calculation is made on
the level of individual insurance category as the
mathematical product of the estimated number of
IBNR damages and the estimated value of IBNR
damages. The estimated number of IBNR damages
reported after 1 January 2007 is calculated by

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
multiplying the number of reported damages in 2006
b) Changes of assumptions
by the average factor of damages reported later in
relation to all reported damages over the past three
years. The estimated value of IBNR damages equals
There were no changes of assumptions for
insurance contracts in 2007 according to 2006.
the average value of IBRN damages in the past year
or the average value of damages paid in the past year
c) Development of claims
if there were a relatively small number of damages.
The tables below show claims development for nonlife
insurance and extra accident insurance as part
of life insurance policies.
Non-life insurance (excl. optional health insurance) in thousand EUR for the 2007
Year in which
claims were
Cumulative claim payments in relation number of years passed between the reporting date and date of payment
incurred
0 1 2 3 4 5 6 7 8
1999 29,121 41,968 45,344 47,052 48,042 48,690 49,363 49,705 50,006
2000 30,890 45,437 48,806 50,788 51,569 52,024 52,538 52,897
2001 33,180 50,050 54,080 56,386 57,373 57,930 58,636
2002 33,403 51,210 54,992 57,189 57,811 58,524
2003 38,141 58,733 64,094 66,976 68,168
2004 47,218 69,325 73,273 75,673
2005 47,541 69,220 74,561
2006 46,268 73,223
2007 61,395
245
Non-life insurance (excl. optional health insurance) in thousand EUR for the 2006
Year in which
claims were
Cumulative claim payments in relation number of years passed between the reporting date and date of payment
incurred
0 1 2 3 4 5 6 7 8
1998 18,363 27,505 29,501 30,706 31,342 31,816 32,259 32,570 32,828
1999 22,867 33,893 36,923 38,454 39,419 40,061 40,621 40,959
2000 26,841 40,164 43,352 45,238 46,016 46,461 46,917
2001 30,494 46,527 50,392 52,578 53,491 54,039
2002 31,975 49,421 53,167 55,269 55,883
2003 37,558 57,878 62,955 65,513
2004 41,858 63,798 67,694
2005 44,941 66,107
2006 43,182

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Life insurance - extra accident insurance in thousand EUR for the 2007
Year in which
claims were
Cumulative claim payments in relation number of years between the reporting date and date of payment
incurred
0 1 2 3 4 5 6 7 8
1999 294 516 556 598 624 625 625 625 626
2000 284 473 540 558 558 558 568 568
2001 242 477 552 602 610 615 619
2002 233 432 492 520 531 538
2003 151 246 300 319 324
2004 182 293 319 330
2005 196 396 462
2006 278 552
2007 302
Life insurance - extra accident insurance in thousand EUR for the year of 2006
246
Year in which
claims were
Cumulative claim payments in relation number of years between the reporting date and date of payment
incurred
0 1 2 3 4 5 6 7 8
1998 306 538 597 613 613 624 631 632 634
1999 358 672 773 818 849 852 873 873
2000 414 746 903 948 958 958 968
2001 368 775 946 1,049 1,060 1,065
2002 439 798 923 974 1,005
2003 383 804 984 1,019
2004 430 854 977
2005 490 1,073
2006 719
5.1.4 Long term life insurance – assumptions, changes
of assumptions and sensitivity
Preparing the financial statements in accordance
with IFRS require best estimations of liabilities
using assumptions which reflect the current market
(a) procedure of establishing assumptions
situation.
Liabilities from life insurance contracts with DPF were
calculated using assumptions on future mortality from
statistical tables; the portfolio of insurance contracts
was too small in the past so for the purpose of
estimation of mortalitiy the statistical tables are used:
- for life insurance contracts with DPF Slovenian
mortality tables from 1992 were used;
These assumptions are set at the time of concluding
the contract and remain the same throughout the
term of insurance, or safer assumptions are used in
the calculation of liability to provide for the possibility
of unfavourable deviation from expectations. An
additional adjustment is applied to these assumptions
to account for the risk and uncertainty.
- for annuity products German mortalitiy tables from
1987 were used.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
New estimates are made for each subsequent financial
year with the purpose of checking the adequacy of
liabilities determined in this manner. If it is determined
that established liabilities are adequate, assumptions
remain unchanged. If the established liabilities prove
to be inadequate, assumptions are revised to reflect
new expectations. Consequently the provisions are
measured according to the appropriate level.
The Group established assumptions for returns on
investments by taking into account present returns
on government-issued securities and other financial
instruments on the market. In addition to this, the
structure of assets which are used to cover liabilities
stemming from life insurance contracts (longterm
business fund) is taken into consideration by
determining weighted average returns.
The assumptions used for insurance contracts
described hereunder are as follows:
Future costs are determined on the basis of current
costs. The future inflation assumption was also applied.
Depending on the type of contract the appropriate
mortality table is chosen and adjusted to reflect
(b) Changes in assumptions
actual mortality of the insurance portfolio in past
years and the current period.
An analysis of the Group's experience of the past
3 years is carried out by application of statistical
methods, and the appropriate cancellation percentage
is determined. Cancellation percentages vary by type
of product and term of the insurance period. The
analysis is carried out in order to determine the best
estimate of the policyholders' behavior.
In 2007 the Group made no changes to the assumptions
used in the calculation of insurance contracts.
5.1.5. Sensitivity analysis
The Group made a sensitivity analysis of net profits
before taxes on the last day of the financial year,
with consideration of various parameters.
247
Sensitivity test – parameters
Sensitivity factor
Factor description
Technical interest rate (insurance contracts only) Effect of the change of the technical interest rate by ±1%
Costs and Expenses
Mortality (life insurance only)
Mortality in annuity insurance (pension and annuity insurance)
Claims ratio (property and health insurance only)
Effect on the increase/decrease of all costs except the costs of
acquisition by ±5%
Effect of the 5% increase in mortality
Effect of the 5% decrease in mortality
Effect of the 5% increase in the claims ratio
The above factors were used in actuarial and
statistical models for calculating the changes of net
effect of changes of key factors on the net earnings
of the Group before taxes.
profits of the Group. The table below shows the

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Effect on the Group’s net profit before tax for 2007
(in EUR)
Life insurance
policies with
DPF
Life insurances
with
investment
risk
Property insurance
excluding
health insurance
policies
Health insurance
policies
Financial
contracts
with DPF
Factor
Costs +5% (177,013) (161,000) (2,130,000) (786,000) (16,000) (3,270,013)
Costs -5% 177,013 161,000 2,130,000 786,000 16,000 3,270,013
Technical interest rate +1% 7,051,662 - - - 1,301,000 8,352,662
Technical interest rate -1% (8,908,662) - - - (1,651,000) (10,559,662)
Mortality +5% (231,050) - - - - (231,050)
Mortality in annuity insurance -5% (187,477) - - - - (187,477)
Claims ratio +5% (393,064) (385,000) (6,706,000) (4,427,000) (74,000) (11,985,064)
Claims ratio -5% 393,064 385,000 6,706,000 4,427,000 74,000 11,985,064
Total
Effect on the Group’s net profit before tax for 2006
248
(in EUR)
Life insurance
policies with
DPF
Life insurances
with
investment
risk
Property insurance
excluding
health insurance
policies
Health insurance
policies
Financial
contracts
with DPF
Factor
Costs +5% (175,739) (117,000) (2,080,000) (772,000) (8,000) (3,152,739)
Costs -5% 175,739 117,000 2,080,000 772,000 8,000 3,152,739
Technical interest rate +1% 10,382,935 - - - 1,630,000 12,012,935
Technical interest rate -1% (13,118,935) - - - (2,073,000) (15,191,935)
Mortality +5% (230,576) - - - - (230,576)
Mortality in annuity insurance -5% (207,665) - - - - (207,665)
Claims ratio +5% (357,365) (384,000) (6,119,000) (3,857,000) (72,000) (10,789,365)
Claims ratio -5% 357,364 384,000 6,119,000 3,857,000 72,000 10,789,364
Total
5.1.6. Risk management in the area of reinsurance
protection
based on the amount of the Group's own shares and
insurance portfolio profiles.
General description of the purpose and goals of
reinsurance protection
The Group has unified the maximum of own shares
at civil liability insurance. The maximum of own
shares in other types of insurance compared with
The basic purpose of reinsurance protection is the
the past year is unchanged.
transfer of insurance risks which the group is unable to
offset with its own assets to reinsurers. In this context
we strive towards optimal protection from large-scale
individual losses as well as mass losses. The decision
on the scale and structure of reinsurance protection is
Proportional and non-proportional reinsurance
protection ensures automatic coverage of the vast
majority of underwritten risks, even in the event of
potential risk assessment errors. For exceptional risks

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
which exceed the contractual reinsurance protection by
scale, special optional reinsurance protection is ensured.
Analysis of the Groupʼs portfolio from the aspect of
reinsurance risk
Basic assumptions used in sensitivity tests
In the largest group of other property insurance
contracts we analysed the sensitivity of individual
We assume two types of reinsurance protection
risks. The first risk is whether the structure
and scale of protection have been adequately
chosen, which can be checked by simulation of
whether decreasing reinsurance protection would
significantly decrease net profit or loss, which
would consequently jeopardise the Group's capital
adequacy. The second risk is whether the profit
or loss would worsen significantly if an aboveaverage
number of large-scale and mass losses
(which would also involve above-average amounts)
occurred in a given period.
Two income sensitivity tests have been designed to
assess reinsurance protection risk. Firstly, the test
of sensitivity to a decrease in reinsurance protection
and secondly, the test of sensitivity to an
above-average incidence of loss (for large-scale and
mass losses).
portfolios of insurance categories/groups of
insurance categories to large-scale and mass
losses, with the aim of focusing the reinsurance
risk management analysis on the most exposed
insurance categories. This analysis showed that
reinsurance risk is most significantly affected, both
in terms of the amount and number of potentially
large-scale and mass losses, by the portfolio of
auto liability insurance and the portfolio of fire
and other damage insurance. These portfolios
also significantly affect profit or loss, therefore the
sensitivity analysis was made on the basis of these
reinsurance contracts.
249

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Concentration of reinsurance for 2007
Contract year 2007
Type of reinsurance
Own
share/
priority in
EUR
Reinsurance
premium
Structure
of the reinsurance
premium
Accrued
reins.
losses
(in thousand EUR)
Reserved
reins.
losses
Effect of
the reins.
outcome on
the profit
Surplus reinsurance of fires 1,000 1,425 14.79% 470 195 391 (369)
Quota share reinsurance of fires 900 666 6.91% 226 137 78 (225)
Surplus reinsurance of technical reserves 300 701 7.28% 165 221 227 (88)
Quota share reinsurance of technical reserves 270 586 6.08% 147 204 196 (39)
Quota share reinsurance of earthquakes - 1,254 13.01% 314 - - (940)
Risk XL reinsurance of fires 300 428 4.44% - 575 - 147
Risk XL technical reinsurance 120 51 0.53% - - - (51)
Cat XL property reinsurance excl. vehicle insurance 300 591 6.13% - 1,115 167 691
Total Fire and technical insurance - 5,702 59.18% 1,322 2,447 1,059 (874)
XL reinsurance of auto liability and green card 250 1,292 13.41% - - 928 (364)
XL reinsurance of comprehensive auto insurance 150 71 0.74% - - - (71)
Cat XL property reinsurance - vehicle insurance 300 876 9.09% - 228 48 (600)
Total auto insurance - 2,239 23.24% - 228 975 (1,036)
Other property insurance - 1,476 15.31% 32 292 - (1,152)
Health insurance policies - - 0.00% - - - -
Life insurance - 218 2.27% 70 1 3 (144)
TOTAL CONTRACT YEAR 2007 - 9,635 100.00 1,424 2,968 2,037 (3,206)
250
Concentration of reinsurance for 2006
Contract year 2006
Type of reinsurance
Own
share/
priority in
EUR
Reinsurance
commission
Reinsurance
premium
Structure
of the reinsurance
premium
Reinsurance
commission
Accrued
reins.
losses
(in thousand EUR)
Reserved
reins.
losses
Effect of
the reins.
outcome on
the profit
Surplus reinsurance of fires 1,000 1,844 18.88% 424 6,323 48 4,951
Quota share reinsurance of fires 900 628 6.44% 214 362 32 (20)
Surplus reinsurance of technical reserves 300 889 9.11% 200 380 694 385
Quota share reinsurance of technical reserves 270 611 6.25% 153 379 68 (11)
Quota share reinsurance of earthquakes - 1,419 14.54% 340 - 5 (1,074)
Risk XL reinsurance of fires 300 127 1.30% - - - (127)
Risk XL technical reinsurance 120 49 0.50% - - - (49)
Cat XL property reinsurance excl. vehicle insurance 300 524 5.36% - 401 45 (78)
Total Fire and technical insurance 6,091 62.38% 1,331 7,845 892 3,977
XL reinsurance of auto liability and green card 250 1,276 13.06% - - 664 (612)
XL reinsurance of comprehensive auto insurance 150 55 0.56% - - - (55)
Cat XL property reinsurance - vehicle insurance 300 860 8.80% - 481 120 (259)
Total auto insurance 2,190 22.43% - 481 784 (925)
Other property insurance 1,288 13.19% 72 9 77 (1,130)
Health insurance policies - 0.00% - - - -
Life insurance 195 2.00% 62 10 5 (118)
TOTAL CONTRACT YEAR 2006 9,764 100.00 1,465 8,345 1,758 1,804

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Quantitative analysis of sensitivity test results
used the most important reinsurance contracts
covering groups of insurance categories which
In order to assess the consequences of lowering
the reinsurance protection, both sensitivity tests
were carried out, measuring the quantitative impact
may potentially have the greatest impact on the
Group's corporate income due to the portfolio size or
potential for large-scale or mass losses.
on net profit or loss. In the sensitivity tests we
Test of sensitivity of profit or loss to a decrease in reinsurance protection for 2007
Contract year 2007
Initial own
share
Increased
own share
Change in
net
premium
Change in
net losses
(in thousand EUR)
Change
in net
reserves
Effect of
change to
profit
Total proportional reinsurance unchanged - - - -
Risk XL reinsurance of fires 300 900 408 575 - (167)
Risk XL technical reinsurance 120 120 - - - -
Cat XL property reinsurance excl. vehicle insurance 300 1,000 306 581 - (275)
Total Fire and technical insurance - - 714 1,156 - (442)
XL reinsurance of auto liability and green card 250 300 204 - 100 104
XL reinsurance of comprehensive auto insurance 150 150 - - - -
Cat XL property reinsurance - vehicle insurance 300 1,000 362 119 - 243
Total auto insurance - - 566 119 100 347
251
Test of sensitivity of the profit or loss to the decrease in reinsurance protection for 2006
Contract year 2006
Initial own
share
Increased
own share
Change
in net
premium
Change in
net losses
(in thousand EUR)
Change
in net
reserves
Effect of
change to
profit
Total proportional reinsurance unchanged - - - -
Risk XL reinsurance of fires 300 900 127 - - 127
Risk XL technical reinsurance 120 120 - - - -
Cat XL property reinsurance excl. vehicle insurance 300 1,000 201 303 - (102)
Total Fire and technical insurance - - 328 303 - 25
XL reinsurance of auto liability and green card 250 300 203 - 50 153
XL reinsurance of comprehensive auto insurance 150 150 - - - -
Cat XL property reinsurance - vehicle insurance 300 1,000 427 397 - 30
Total auto insurance - - 630 397 50 183
A decrease of reinsurance protection in 2006 would
affect the amount of the reinsurance premium,
and also may have an impact on decreasing the
reinsurer’s share in claims. In the given year there
was no disproportional reinsurance (XL) used,
which is intended for huge claims and significant
quantities, so the decrease of the reinsurance
premium would be higher compared with the and
decrease of claims, there would be a positive effect
on profit.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
In the case of unfavourable claim events in 2007,
there is a situation of a decrese of reinsurance
protection; the decrease of the reinsurer’s share in
claims would be higher from the decrease of the
reinsurance premium, which would have a negative
effect on profit.
Test of sensitivity of profit or loss to the above-average number and amount of large-scale and mass losses for 2007
Contract year 2007
Change in net
premium
Change in net
losses
Change in net
reserves
(in thousand EUR)
Effect of change
to profit
Total proportional reinsurance - 4,054 - (4,054)
Risk XL reinsurance of fires (146) (420) - 274
Risk XL technical reinsurance (51) (150) - 99
Cat XL property reinsurance excl. vehicle insurance (578) (2,817) - 2,239
Total Fire and technical insurance (775) 667 - (1,442)
XL reinsurance of auto liability and green card - 625 625 (1,250)
XL reinsurance of comprehensive auto insurance - - - -
Cat XL property reinsurance - vehicle insurance (123) 53 - (176)
Total auto insurance (123) 678 625 (1,426)
Test of sensitivity of profit or loss to the above-average number and amount of large-scale and mass losses for 2006
252
Contract year 2006
Change in net
premium
Change in net
losses
Change in net
reserves
(in thousand EUR)
Effect of change
to profit
Total proportional reinsurance - 4,054 - (4,054)
Risk XL reinsurance of fires (89) (420) - 331
Risk XL technical reinsurance (49) (150) - 101
Cat XL property reinsurance excl. vehicle insurance (531) (2,817) - 2,286
Total Fire and technical insurance (669) 667 - (1,336)
XL reinsurance of auto liability and green card - 625 625 (1,250)
XL reinsurance of comprehensive auto insurance - - - -
Cat XL property reinsurance - vehicle insurance (113) 53 - (166)
Total auto insurance (113) 678 625 (1,416)
In the two tables above the following losses have been
added to the actual incidence of loss:
- Fire damage in the amount of EUR 800,000, which
was the subject of quota and fire risk XL reinsurance.
- Installation damage in the amount of EUR
subject to surplus reinsurance to a small degree, and
the remaining portion was covered under quota and
property Cat XL reinsurance.
- Car liability claims in the amounts of EUR 250,000,
750,000, 1,500,000, 3,000,000 and 15,000,000.
6,000,000, which was the subject of surplus (95%)
and technical risk XL reinsurance.
- Storm damage in the amount of 2x flood damage in
September 2007, i.e. EUR 5,652,000, which was
In car liability insurance we assumed that 50% of
additional damages remains in the reservation and
for all other added damages we simulated payout in

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
the course of the year. Change of net damages and
net reserves have the same effect on profit.
The risk of unfavourable changes in investment
values can be the consequence of foreign exchange
rates, as well as changes of interest rates or stock
In total, EUR 32,952,000 in gross damages were
prices.
added, which would have affected profit in 2006 in
the amount of 8.35% of additional damages, and
8.7% of the amount of added damages in 2007.
The Group manages and controls the risks to which
it is exposed by constantly monitoring cash flows and
ensuring that it always has enough liquid assets at its
5.2 Financial risks
disposal to settle its liabilities, by investing its assets
in a manner which ensures stable long-term returns
Group is exposed to financial risks through its
financial assets and liabilities, reinsurance receivables
and insurance liabilities. Financial risks are risks that
due to changes in the capital markets and ratings
which exceed the amount of returns on insurance
liabilities, by matching the terms of financial assets
against financial liabilities, and by ensuring adequacy
of financial assets.
of the Group’s clients inflows will not be sufficient
to cover outflows. The most significant components
of this financial risk are liquidity risk, credit risk and
market risk, the Group is exposed to the risks of
changes in interest rates, securities market prices and
currency rates.
Currency risk is less important for the Group because
of ERM2 and adopting the euro in 2007.
253
Liquidity risk is the risk that the Group may be
unable to repay all of liabilities, including potential
liabilities, without threat to its normal activities. The
Group maintains capital adequacy with a sufficient
adequate amount of capital in order to be able to
ensure liquidity at any moment and so that it is
sustainably able to meet its obligations (solvency).
Market risks appear especially in investment of
assets, where there is the potential that expectations
regarding the value of investments are not met or are
not met entirely.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Analysis of assets and liabilities for financial risk management
Life insurance contracts
with DPF
Life insurance
contracts
with
DPF
Financial life
insurance
contracts
with DPF
Non life
insurance
contracts
without health
insurance
contracts
Short term Insurance
contracts
Health
insurance
contracts
Financial
contracts
with DPF
Unit-linked
Other assets
(in EUR)
contracts
and liabilities Total
ASSETS
Debt securities 47,642,410 10,307,343 534,066 86,505,046 4,173,591 1,035,240 250,038 150,447,734
At fair value through P&L: 3,233,084 408,989 418,879 16,245,051 1,673,222 380,654 229,640 22,589,519
- listed 3,233,084 408,989 418,879 11,242,965 1,516,746 145,344 229,640 17,195,647
- unlisted - - - 3,957,376 69,014 198,919 - 4,225,309
- government bonds - - - 1,044,710 87,462 36,391 - 1,168,563
Available for sale 36,823,247 9,898,354 115,187 70,259,995 2,500,369 654,586 16,313 120,268,051
- listed 4,189,418 1,345,454 - 25,157,872 348,566 279,907 16,313 31,337,530
- unlisted - - - - - - - -
- government bonds 32,633,829 8,552,900 115,187 45,102,123 2,151,803 374,679 88,930,521
Held to maturity 7,586,079 - - - - - 4,085 7,590,164
- listed 6,360,995 - - - - - 4,085 6,365,080
- unlisted 115,486 - - - - - - 115,486
- government bonds 1,109,598 - - - - - - 1,109,598
Equity securities 25,100,583 2,657,885 112,467,705 76,689,593 18,219,095 1,784,565 113,462,957 350,382,383
At fair value through P&L: 9,276,424 370,524 112,467,705 15,847,531 2,917,422 1,645,563 10,910,937 153,436,106
2007
254
- listed 9,276,424 370,524 112,467,705 15,847,531 2,917,422 1,645,563 10,910,937 153,436,106
- unlisted - - - - - - - -
Available for sale 15,824,159 2,287,361 - 60,842,062 15,301,673 139,002 102,552,020 196,946,277
- listed 14,825,948 2,287,361 - 57,122,573 14,203,547 139,002 70,170,846 158,749,277
- unlisted 998,211 - - 3,719,489 1,098,126 - 32,381,174 38,197,000
Investment in associates - - - - - - 71,687,821 71,687,821
Loans and receivables 2,417,912 296,580 5,843,346 45,000,990 17,750,847 283,266 64,098,030 135,690,971
Loans and deposits 1,187,980 - 4,808,922 6,150,347 2,064,209 281,983 43,257,651 57,751,092
Insurance receivables 600,195 188,275 970,464 31,526,968 11,946,210 - 1,704,633 46,936,745
Other receivables 629,737 108,305 63,960 7,323,675 3,740,428 1,283 19,135,746 31,003,134
Investment properties 465,103 - - 1,318,521 - - 18,817,897 20,601,521
Reinsurance assets 175,242 - - 10,829,582 - - - 11,004,824
Cash and cash equivalents 1,117,861 4,326 2,554,420 1,853,608 313,987 2,652 23,551,263 29,398,117
Other assets 27,880 8,748 127 42,416,320 772,735 4,549 143,603,672 186,834,031
Total assets 76,946,991 13,274,882 121,399,664 264,613,660 41,230,255 3,110,272 435,471,678 956,047,402
LIABILITIES
Insurance contracts 4,917,859 - 112,998,283 172,595,677 15,861,968 - - 306,373,787
Long-term liabilities 321,412 - 112,978,279 63,914,425 196,930 - - 177,411,046
Short-term liabilities 4,596,447 - 20,004 108,681,252 15,665,038 - - 128,962,741
Insurance contracts with
DPF
62,548,026 - - - - - - 62,548,026
Long-term liabilities 62,548,026 - - - - - 62,548,026
Investments contracts
with DPF
- 12,381,669 - - - 3,222,605 - 15,604,274
Long-term liabilities - 12,289,555 - - - 3,222,605 - 15,512,160
Short-term liabilities - 92,114 - - - - - 92,114
Borrowings - - - 4,019,040 - - 166,544,377 170,563,417
Other liabilities 2,779,867 - 2,204,500 25,515,731 9,521,918 13,207 20,658,308 60,693,531
Total liabilities 70,245,752 12,381,669 115,202,783 202,130,448 25,383,886 3,235,812 187,202,685 615,783,035

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Life insurance contracts
with DPF
Life insurance
contracts
with
DPF
Financial life
insurance
contracts
with DPF
Non life
insurance
contracts
without health
insurance
contracts
Short term Insurance
contracts
Health
insurance
contracts
Financial
contracts
with DPF
Unit-linked
Other assets
(in EUR)
contracts
and liabilities Total
ASSETS
Debt securities 45,937,977 10,173,696 - 80,999,091 5,785,290 626,334 560,432 144,082,820
At fair value through P&L: 3,151,911 293,937 - 11,262,606 1,400,309 - 495,783 16,604,546
- listed 2,017,409 293,937 - 1,980,967 - - 495,783 4,788,096
- unlisted - - - - - - - -
- government bonds 1,134,502 - - 9,281,639 1,400,309 11,816,450
Available for sale 35,806,301 9,879,759 - 69,736,485 4,384,981 626,334 56,537 120,490,397
- listed 4,124,329 1,273,923 - 23,296,429 987,865 165,681 56,537 29,904,764
- unlisted 310,495 - - 382,954 - 1,381 - 694,830
- government bonds 31,371,477 8,605,836 - 46,057,102 3,397,116 459,272 - 89,890,803
Held to maturity 6,979,765 - - - - - 8,112 6,987,877
- listed 5,868,227 - - - - - 8,112 5,876,339
- unlisted - - - - - - - -
- government bonds 1,111,538 - - - - - - 1,111,538
Equity securities 17,310,606 3,318,246 55,196,020 49,364,789 15,535,323 441,266 93,503,190 234,669,439
At fair value through P&L: 4,916,919 1,233,570 55,196,020 10,816,980 1,812,765 - 25,042,183 99,018,437
2006
- listed 4,916,919 1,233,570 55,196,020 10,816,980 1,812,765 - 25,042,183 99,018,437
- unlisted - - - - - - - -
Available for sale 12,393,687 2,084,676 - 38,547,809 13,722,558 441,266 68,461,007 135,651,002
- listed 12,207,104 1,921,481 - 37,849,917 13,278,952 441,266 35,014,151 100,712,870
- unlisted 186,583 163,195 - 697,892 443,606 - 33,446,856 34,938,132
Investment in associates - - - - - 45,119,877 45,119,877
Loans and receivables 3,659,240 213,833 2,954,118 51,765,180 19,047,176 451,332 53,989,716 132,080,595
Loans and deposits 2,663,254 - 208,646 20,678,081 83,480 451,198 36,215,092 60,299,751
Insurance receivables 481,924 133,773 1,483,982 26,798,612 11,263,967 - 1,029,881 41,192,139
Other receivables 514,062 80,060 1,261,490 4,288,487 7,699,729 134 16,744,743 30,588,705
Investment properties 472,191 - - 5,441,566 - - 14,678,359 20,592,116
Reinsurance assets 174,224 - - 8,457,373 - - - 8,631,597
Cash and cash equivalents 1,103,591 54,679 3,874,649 979,124 370,705 2,788 13,924,193 20,309,729
Other assets - - - 30,301,626 - - 139,632,316 169,933,942
Total assets 68,657,829 13,760,454 62,024,787 227,308,749 40,738,494 1,521,720 361,408,083 775,420,115
LIABILITIES
Insurance contracts 4,166,509 - 57,911,692 160,213,336 15,133,783 - - 237,425,320
Long-term liabilities 687,211 - 57,882,765 47,874,971 174,871 - - 106,619,818
Short-term liabilities 3,479,298 - 28,927 112,338,365 14,958,912 - - 130,805,502
Insurance contracts with
DPF
57,765,184 - - - - - - 57,765,184
Long-term liabilities 57,765,184 - - - - - - 57,765,184
Investment contracts
with DPF
- 11,610,103 - - - 2,181,284 - 13,791,387
Long-term liabilities - 11,370,022 - - - 2,181,284 - 13,551,306
Short-term liabilities - 240,081 - - - - - 240,081
Borrowings - - - 4,017,217 - - 113,732,705 117,749,922
Other liabilities 1,256,452 - 595,944 25,421,265 14,606,516 4,357 23,997,909 65,882,442
Total liabilities 63,188,145 11,610,103 58,507,636 189,651,818 29,740,299 2,185,641 137,730,614 492,614,255
255

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
5.2.1 Liquidity and Interest rate risk
The Group is exposed to interest rate risk via
financial assets and liabilities, reinsured receivables
Liquidity risk is the risk that cash may not be
available to pay obligations due at a reasonable cost.
and insured liabilities. Due to the nature of its
investments and liabilities, the Group is particularly
facing the risk of changed interest rates.
Exposure to liquidity risk is reflected in the
acceptance of insurance risk and the Group's ability
to meet its contractual obligations from existing
insurance contracts and liabilities related to the
insurer's day-to-day operations.
In the following the liquiditiy risk with maturity of
assets is presented according to contractual cash
flows, which are compared with expected cash
flows of insurance and financial contracts.
256
Liquidity risk stems from an imbalance in inflows
and outflows and manifests itself in the potential that
the Group, despite having adequate financial assets,
would find itself in a position of having to cash in
its investments under less favourable circumstances
(e.g. lower price, higher transaction costs) in order to
meet its contractual obligations, which would result
in a lower return on investments.
The Group manages its liquidity risk through:
- maintaining a suitable structure of investments;
- diversification of the investment portfolio;
- planning future cash flows, ensuring a suitable
volume of cash flows from operating and investing
activities (payout of interest and principal) to cover
future foreseeable liabilities;
- providing an adequate volume of high-liquidity
investments which are readily cashable without loss
in order to cover future unforeseeable liabilities.
Contractual cash flows for debt securities are
calculated with data of issuers. The amorisation
schedule and coupon rate at the date of calculation
is used. For each time interval the future cash
flows (principal and coupon rate) are considered,
which will be according to the situation of the debt
securities portfolio.
For the purpose of presenting cash flows of life
insurance contracts with DPF and life insurance, in
which the insured are exposed to investment risk,
all cash flows of the future payments of claims and
costs, which come from life insurance contracts as
at 31 December 2007 are generated.
For the purpose of presenting cash flows of financial
contracts, all the cash flows of the future payments
of claims and costs which come from financial
contracts as at 31December 2007 are generated.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Expected cash flows of non-life insurance and
health insurance present an assessment of
payments for claims (which have already been
incurred) including costs and the release of liability
from unearned premiums and for provisions.
Own assets of the Group are not intended for
covering liabilities from insurance and financial
contracts and this is the reason why the mean
duration of assets is not presented.
257

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Universal life insurance contracts with DPF in 2007
(in EUR)
Carrying
amount
No stated
maturity
Contractual cash flows (undiscounted)
0 - 5 years 5 - 10 years 10 - 15 years 15 - 20 years More than 20 years
258
Debt securities 47,642,410 - 32,338,119 17,979,968 6,373,613 636,406 7,848,174
At fair value through P&L 3,233,084 - 1,541,508 2,213,686 438,900 - -
Listed securities 3,233,084 - 1,541,508 2,213,686 438,900 - -
- fixed interest rate 2,554,872 - 1,200,479 2,053,719 - - -
- floating interest rate 678,212 - 341,029 159,967 438,900 - -
Available for sale 36,823,247 - 24,179,744 13,483,549 5,801,391 636,406 7,848,174
Listed securities 4,189,418 - 4,334,013 2,689,276 359,925 65,143 -
- fixed interest rate 3,392,541 - 3,737,928 2,304,938 359,925 65,143 -
- floating interest rate 796,877 - 596,085 384,338 - - -
Government bonds 32,633,829 - 19,845,731 10,794,273 5,441,466 571,263 7,848,174
- fixed interest rate 32,633,829 - 19,845,731 10,794,273 5,441,466 571,263 7,848,174
Held to maturity 7,586,079 - 6,616,867 2,282,733 133,322 - -
Listed securities 6,360,995 - 5,531,029 1,931,461 110,750 - -
- fixed interest rate 6,151,904 - 5,486,842 1,685,273 110,750 - -
- floating interest rate 209,091 - 44,187 246,188 - - -
Unlisted securities 115,486 - 138,736 - - - -
- fixed interest rate 115,486 - 138,736 - - - -
Government bonds 1,109,598 - 947,102 351,272 22,572 - -
- fixed interest rate 1,109,598 - 947,102 351,272 22,572 - -
Equity securities 25,100,583 25,100,583 - - - - -
At fair value through P&L 9,276,424 9,276,424 - - - - -
Listed securities 9,276,424 9,276,424 - - - - -
Available for sale 15,824,159 15,824,159 - - - - -
Listed securities 14,825,948 14,825,948 - - - - -
Unlisted securities 998,211 998,211 - - - - -
Investment property 465,103 465,103 - - - - -
Loans and receivables 2,417,912 - 2,417,912 - - - -
Reinsurance assets 175,242 - 175,242 - - - -
Cash and cash equivalents 1,117,861 1,117,861 - - - -
Total assets 76,919,111 26,683,547 34,931,273 17,979,968 6,373,613 636,406 7,848,174
Carrying No stated
Expected cash flows (undiscounted)
(in EUR)
amount maturity 0 - 5 years 5 - 10 years 10 – 15 years 15 - 20 years More than 20 years
Liabilities
Insurance contracts with
DPF
67,465,885 - 40,656,040 12,499,323 29,821,560 24,855,974 45,195,933
Total liabilities 67,465,885 - 40,656,040 12,499,323 29,821,560 24,855,974 45,195,933
Difference between contractual
and expected cash
26,683,547 (5,724,767) 5,480,645 (23,447,947) (24,219,568) (37,347,759)
Mean duration of assets 6.15 years - - - - - -
Mean duration of liabilities 9.81 years - - - - - -

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Universal life insurance contracts with DPF in 2006
(in EUR)
Carrying
amount
No stated
maturity
Contractual cash flows (undiscounted)
0 - 5 years 5 - 10 years 10 - 15 years 15 - 20 years More than 20 years
Debt securities 45,937,977 - 24,939,934 14,112,268 13,971,454 246,816 5,408,836
At fair value through P&L 3,151,911 - 2,113,371 1,096,624 814,588 - -
Listed securities 2,017,409 - 1,103,834 722,846 810,166 - -
- fixed interest rate 1,073,038 - 675,481 484,790 243,544 - -
- floating interest rate 944,371 - 428,353 238,056 566,622 - -
Government bonds 1,134,502 - 1,009,537 373,778 4,422 - -
- fixed interest rate 1,134,502 - 1,009,537 373,778 4,422 - -
Available for sale 35,806,301 - 16,179,308 11,405,751 13,032,769 246,816 5,408,836
Listed securities 4,124,329 - 2,659,663 2,121,080 320,543 48,557 -
- fixed interest rate 3,708,572 - 2,537,975 1,712,405 320,543 48,557 -
- floating interest rate 415,757 - 121,688 408,675 - - -
Unlisted securities 310,495 - 60,000 311,996 - - -
- fixed interest rate 310,495 - 60,000 311,996 - - -
Government bonds 31,371,477 - 13,459,645 8,972,675 12,712,226 198,259 5,408,836
- fixed interest rate 31,371,477 - 13,459,645 8,972,675 12,712,226 198,259 5,408,836
Held to maturity 6,979,765 - 6,647,255 1,609,893 124,097 - -
Listed securities 5,868,227 - 5,658,153 1,243,681 119,765 - -
- fixed interest rate 5,659,185 - 5,476,386 1,180,207 116,125 - -
- floating interest rate 209,042 - 181,767 63,474 3,640 - -
Government bonds 1,111,538 - 989,102 366,212 4,332 - -
- fixed interest rate 1,111,538 - 989,102 366,212 4,332 - -
Equity securities 17,310,606 17,310,606 - - - - -
At fair value through P&L 4,916,919 4,916,919 - - - - -
Listed securities 4,916,919 4,916,919 - - - - -
Available for sale 12,393,687 12,393,687 - - - - -
Listed securities 12,207,104 12,207,104 - - - - -
Unlisted securities 186,583 186,583 - - - - -
Investment property 472,191 472,191 - - - - -
Loans and receivables 3,659,240 - 3,659,240 - - - -
Reinsurance assets 174,224 - 174,224 - - - -
Cash and cash equivalents 1,103,591 1,103,591 - - - - -
Total assets 68,657,829 18,886,388 28,773,398 14,112,268 13,971,454 246,816 5,408,836
259
Carrying No stated
Expected cash flows (undiscounted)
(in EUR)
amount maturity 0 - 5 years 5 - 10 years 10 - 15 years 15 - 20 years More than 20 years
Liabilities
Insurance contracts with
DPF
61,931,693 - 34,592,178 33,769,214 27,920,787 23,034,983 41,974,793
Total liabilities 61,931,693 - 34,592,178 33,769,214 27,920,787 23,034,983 41,974,793
Difference between contractual
and expected cash flow
18,886,388 (5,818,780) (19,656,946) (13,949,333) (22,788,167) (36,565,957)
Mean duration of assets
Mean duration of liabilities
5.96 years
10.62 years

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Financial life insurance contracts with DPF in 2007
(in EUR)
Carrying
amount
No stated
maturity
Contractual cash flows (undiscounted)
0 - 5 years 5 - 10 years 10 - 15 years 15 - 20 years More than 20 years
Debt securities 10,307,343 - 7,340,301 3,894,673 1,080,348 255,864 2,885,106
At fair value through P&L 408,989 - 119,181 492,614 - - -
Listed securities 408,989 - 119,181 492,614 - - -
- fixed interest rate 408,989 - 119,181 492,614 - - -
Available for sale 9,898,354 - 7,221,120 3,402,059 1,080,348 255,864 2,885,106
Listed securities 1,345,454 - 1,864,478 976,102 253,378 45,859 -
- fixed interest rate 1,345,454 - 1,864,478 976,102 253,378 45,859 -
Government bonds 8,552,900 - 5,356,642 2,425,957 826,970 210,005 2,885,106
- fixed interest rate 8,552,900 - 5,356,642 2,425,957 826,970 210,005 2,885,106
Equity securities 2,657,885 2,657,885 - - - - -
At fair value through P&L 370,524 370,524 - - - - -
Listed securities 370,524 370,524 - - - - -
Available for sale 2,287,361 2,287,361 - - - - -
Listed securities 2,287,361 2,287,361 - - - - -
Loans and receivables 296,580 - 296,580 - - - -
Cash and cash equivalents 4,326 4,326 - - - - -
Total assets 13,266,134 2,662,211 7,636,881 3,894,673 1,080,348 255,864 2,885,106
260
(in EUR)
Carrying
amount
No stated
maturity
Expected cash flows (undiscounted)
0 - 5 years 5 - 10 years 10 - 15 years 15 - 20 years More than 20 years
Liabilities
Insurance contracts with DPF 12,381,669 - 6,253,603 7,181,699 385,825 3,095,406 5,403,150
Total liabilities - 6,253,603 7,181,699 385,825 3,095,406 5,403,150
Difference between
contractual and expected
cash flows
- 2,662,211 1,383,278 (3,287,026) 694,523 (2,839,542) (2,518,044)
Mean duration of assets
Mean duration of liabilities
7.4 years
9.2 years

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Financial life insurance contracts with DPF in 2006
(in EUR)
Carrying
amount
No stated
maturity
Contractual cash flows (undiscounted)
0 - 5 years 5 - 10 years 10 - 15 years 15 - 20 years More than 20 years
Debt securities 10,173,696 - 4,342,993 3,946,466 3,384,522 127,477 2,128,561
At fair value through P&L 293,937 - 179,109 195,023 - - -
Listed securities 293,937 - 179,109 195,023 - - -
- fixed interest rate 293,937 - 179,109 195,023 - - -
Available for sale 9,879,759 - 4,163,884 3,751,443 3,384,522 127,477 2,128,561
Listed securities 1,273,923 - 408,287 983,994 282,891 49,456 -
- fixed interest rate 1,273,923 - 408,287 983,994 282,891 49,456 -
Government bonds 8,605,836 - 3,755,597 2,767,449 3,101,631 78,021 2,128,561
- fixed interest rate 8,605,836 - 3,755,597 2,767,449 3,101,631 78,021 2,128,561
Equity securities 3,318,246 3,318,246 - - - - -
At fair value through P&L 1,233,570 1,233,570 - - - - -
Listed securities 1,233,570 1,233,570 - - - - -
Available for sale 2,084,676 2,084,676 - - - - -
Listed securities 1,921,481 1,921,481 - - - - -
Unlisted securities 163,195 163,195 - - - - -
Loans and receivables 213,833 - 213,833 - - - -
Cash and cash equivalents 54,679 - 54,679 - - - -
Total assets 13,760,454 3,318,246 4,611,505 3,946,466 3,384,522 127,477 2,128,561
(in EUR)
Carrying
amount
No stated
maturity
Expected cash flows (undiscounted)
0 - 5 years 5 - 10 years 10 - 15 years 15 - 20 years More than 20 years
Liabilities
Insurance contracts with DPF 11,610,103 - 5,449,606 6,603,094 5,390,420 3,269,165 5,213,896
Total liabilities 11,610,103 - 5,449,606 6,603,094 5,390,420 3,269,165 5,213,896
261
Difference between
contractual and expected
cash flows
- 3,318,246 (838,101) (2,656,628) (2,005,898) (3,141,688) (3,085,335)
Mean duration of assets
Mean duration of liabilities
7.6 years
10 years

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Unit-linked contracts in 2007
(in EUR)
Carrying
amount
No stated
maturity
Contractual cash flows (undiscounted)
0 - 5 years 5 - 10 years 10 - 15 years 15 - 20 years More than 20 years
Debt securities 534,066 - 635,288 45,307 - - -
At fair value through P&L 418,879 - 495,912 45,307 - - -
Listed securities 418,879 - 495,912 45,307 - - -
- fixed interest rate 114,218 - 90,612 45,307 - - -
- floating interest rate 304,661 - 405,300 - - - -
Available for sale 115,187 - 139,376 - - - -
Government bonds 115,187 - 139,376 - - - -
- fixed interest rate 115,187 - 139,376 - - - -
Equity securities 112,467,705 112,467,705 - - - - -
At fair value through P&L 112,467,705 112,467,705 - - - - -
Listed securities 112,467,705 112,467,705 - - - - -
Loans and receivables 5,843,346 - 5,843,346 - - - -
Cash and cash equivalents 2,554,420 2,554,420 - - - - -
Total assets 121,399,537 115,022,125 6,478,634 45,307 - - -
(in EUR)
Carrying
amount
No stated
maturity
Expected cash flows (undiscounted)
0 - 5 years 5 - 10 years 10 - 15 years 15 - 20 years More than 20 years
Liabilities
Insurance contracts 112,998,283 18,770,946 79,014,592 52,048,537 54,633,573 118,676,530
Total liabilities 112,998,283 - 18,770,946 79,014,592 52,048,537 54,633,573 118,676,530
262
Difference between contractual
and expected cash flo
115,022,125 (12,292,312) (78,969,285) (52,048,537) (54,633,573) (118,676,530)
Mean duration of assets
Mean duration of liabilities
4.30 years
14.73 years

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Unit-linked contracts in 2006
(in EUR)
Carrying
amount
No stated
maturity
Contractual cash flows (undiscounted)
0 - 5 years 5 - 10 years 10 - 15 years 15 - 20 years More than 20 years
Equity securities 55,196,020 55,196,020 - - - - -
At fair value through P&L 55,196,020 55,196,020 - - - - -
Listed securities 55,196,020 55,196,020 - - - - -
Loans and receivables 2,954,118 - 2,954,118 - - - -
Cash and cash equivalents 3,874,649 3,874,649 - - - - -
Total assets 62,024,787 59,070,669 2,954,118 - - - -
(in EUR)
Carrying
amount
No stated
maturity
Expected cash flows (undiscounted)
0 - 5 years 5 - 10 years 10 - 15 years 15 - 20 years More than 20 years
Liabilities
Insurance contracts 57,911,692 6,295,947 20,223,741 28,622,328 19,008,772 30,586,914
Total liabilities 57,911,692 - 6,295,947 20,223,741 28,622,328 19,008,772 30,586,914
Difference between contractual
and expected cash flow
59,070,669 (3,341,829) (20,223,741) (28,622,328) (19,008,772) (30,586,914)
Mean duration of assets
Mean duration of liabilities
0 years
14.30 years
263

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Non-life insurance contracts without health insurance contracts in 2007
(in EUR)
Carrying
amount
No stated
maturity
Contractual cash flows (undiscounted)
0-1 year 1-2 years 2-3 years 3-4 years 4-5 years More than 5 years
264
Debt securities 86,505,046 - 7,458,607 5,780,712 9,109,293 12,852,777 9,518,399 66,891,035
At fair value through P&L 16,245,051 - 2,372,178 599,369 599,369 599,369 599,369 16,581,994
Listed securities 11,242,965 - 1,842,605 528,685 528,685 528,685 528,685 11,671,504
- fixed interest rate 11,242,965 - 1,842,605 528,685 528,685 528,685 528,685 11,671,504
Unlisted securities 3,957,376 - 65,000 65,000 65,000 65,000 65,000 4,325,000
- fixed interest rate 3,957,376 - 65,000 65,000 65,000 65,000 65,000 4,325,000
Government bonds 1,044,710 - 464,573 5,684 5,684 5,684 5,684 585,490
- fixed interest rate 1,044,710 - 464,573 5,684 5,684 5,684 5,684 585,490
Available for sale 70,259,995 - 5,086,429 5,181,343 8,509,924 12,253,408 8,919,030 50,309,041
Listed securities 25,157,872 - 1,963,692 3,021,535 5,952,739 3,546,946 2,899,364 13,889,806
- fixed interest rate 25,157,872 - 1,963,692 3,021,535 5,952,739 3,546,946 2,899,364 13,889,806
Government bonds 45,102,123 - 3,122,737 2,159,808 2,557,185 8,706,462 6,019,666 36,419,235
- fixed interest rate 45,102,123 - 3,122,737 2,159,808 2,557,185 8,706,462 6,019,666 36,419,235
Equity securities 76,689,593 76,689,593 - - - - - -
At fair value through P&L 15,847,531 15,847,531 - - - - - -
Listed securities 15,847,531 15,847,531 - - - - - -
Available for sale 60,842,062 60,842,062 - - - - - -
Listed securities 57,122,573 57,122,573 - - - - - -
Unlisted securities 3,719,489 3,719,489 - - - - - -
Investment property 1,318,521 1,318,521 - - - - - -
Loans and receivables 45,000,990 - 34,319,355 3,832,500 4,250,528 3,837,568 4,008,360 1,360,795
Reinsurance assets 10,829,582 - 5,918,528 1,005,573 725,641 540,704 518,001 2,121,135
Cash and cash equivalents 1,853,608 1,853,608 - - - - - -
Total assets 222,197,340 79,861,722 47,696,490 10,618,785 14,085,462 17,231,049 14,044,760 70,372,965
Carrying No stated
Expected cash flows (undiscounted)
(in EUR)
amount maturity 0-1 year 1-2 years 2-3 years 3-4 years 4-5 years More than 5 years
Liabilities
Debt securities (issued) 4,019,040 - 262,080 262,080 4,137,696 - - -
Insurance contracts 172,595,677 - 108,681,254 16,877,525 11,268,610 7,944,134 6,496,303 21,327,851
Total liabilities 176,614,717 - 108,943,334 17,139,605 15,406,306 7,944,134 6,496,303 21,327,851
Difference between contractual
and expected cash flo
- 79,861,722 (61,246,844) (6,520,820) (1,320,844) 9,286,915 7,548,457 49,045,114
Mean duration of assets
Mean duration of liabilities
4.9 years
1.7 years

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Non-life insurance contracts without health insurance contracts in 2006
(in EUR)
Carrying
amount
No stated
maturity
Contractual cash flows (undiscounted)
0-1 year 1-2 years 2-3 years 3-4 years 4-5 years More than 5 years
Debt securities 80,999,091 - 7,023,719 5,800,652 5,670,667 6,696,536 11,576,203 73,495,104
At fair value through P&L 11,262,606 - 927,354 843,625 595,752 681,703 1,704,818 10,388,815
Listed securities 1,980,967 - 425,332 229,622 171,328 179,666 187,221 1,500,276
- fixed interest rate 1,980,967 - 425,332 229,622 171,328 179,666 187,221 1,500,276
Government bonds 9,281,639 - 502,022 614,003 424,424 502,037 1,517,597 8,888,539
- fixed interest rate 9,281,639 - 502,022 614,003 424,424 502,037 1,517,597 8,888,539
Available for sale 69,736,485 - 6,096,365 4,957,027 5,074,915 6,014,833 9,871,385 63,106,289
Listed securities 23,296,429 - 3,607,492 1,916,289 2,968,462 3,525,890 2,377,544 18,929,835
- fixed interest rate 23,296,429 - 3,607,492 1,916,289 2,968,462 3,525,890 2,377,544 18,929,835
Unlisted securities 382,954 - 14,800 14,800 14,800 14,800 14,800 371,825
- fixed interest rate 382,954 - 14,800 14,800 14,800 14,800 14,800 371,825
Government bonds 46,057,102 - 2,474,073 3,025,938 2,091,653 2,474,143 7,479,041 43,804,629
- fixed interest rate 46,057,102 - 2,474,073 3,025,938 2,091,653 2,474,143 7,479,041 43,804,629
Equity securities 49,364,789 49,364,789 - - - - - -
At fair value through P&L 10,816,980 10,816,980 - - - - - -
Listed securities 10,816,980 10,816,980 - - - - - -
Available for sale 38,547,809 38,547,809 - - - - - -
Listed securities 37,849,917 37,849,917 - - - - - -
Unlisted securities 697,892 697,892 - - - - - -
Investment property 5,441,566 5,441,566 - - - - - -
Loans and receivables 51,765,180 - 51,383,691 348,513 32,566 - 14 396
Reinsurance assets 8,457,373 - 5,042,984 984,780 670,770 461,751 405,983 891,105
Cash and cash equivalents 979,124 979,124 - - - - - -
Total assets 197,007,123 55,785,479 63,450,394 7,133,945 6,374,003 7,158,287 11,982,200 74,386,605
265
Carrying No stated
Expected cash flows (undiscounted)
(in EUR)
amount maturity 0-1 year 1-2 years 2-3 years 3-4 years 4-5 years More than 5 years
Liabilities
Debt securities (issued) 4,017,217 - 262,080 290,496 290,496 4,297,152 - -
Insurance contracts 160,213,336 - 107,879,828 15,922,896 10,398,777 6,983,887 5,366,221 13,661,727
Total liabilities 164,230,553 - 108,141,908 16,213,392 10,689,273 11,281,039 5,366,221 13,661,727
Difference between contractual
and expected cash flo
- 55,785,479 (44,691,514) (9,079,447) (4,315,270) (4,122,752) 6,615,979 60,724,878
Mean duration of assets
Mean duration of liabilities
5.2 years
1.4 years

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Health insurance contracts in 2007
(in EUR)
Carrying
amount
No stated
maturity
Contractual cash flows (undiscounted)
0-1 year 1-2 years 2-3 years 3-4 years 4-5 years More than 5 years
266
Debt securities 4,173,591 - 215,510 205,200 205,200 839,500 171,106 4,023,364
At fair value through P&L 1,673,222 - 104,105 93,795 93,795 93,795 93,795 1,982,095
Listed securities 1,516,746 - 88,397 88,397 88,397 88,397 88,397 1,826,872
- fixed interest rate 1,516,746 - 88,397 88,397 88,397 88,397 88,397 1,826,872
Unlisted securities 69,014 - 1,050 1,050 1,050 1,050 1,050 75,250
- fixed interest rate 69,014 - 1,050 1,050 1,050 1,050 1,050 75,250
Government bonds 87,462 - 14,658 4,348 4,348 4,348 4,348 79,973
- fixed interest rate 87,462 - 14,658 4,348 4,348 4,348 4,348 79,973
Available for sale 2,500,369 - 111,405 111,405 111,405 745,705 77,311 2,041,269
Listed securities 348,566 - 14,460 14,460 14,460 14,460 14,460 391,818
- fixed interest rate 348,566 - 14,460 14,460 14,460 14,460 14,460 391,818
Government bonds 2,151,803 - 96,945 96,945 96,945 731,245 62,851 1,649,451
- fixed interest rate 2,151,803 - 96,945 96,945 96,945 731,245 62,851 1,649,451
Equity securities 18,219,095 18,219,095 - - - - - -
At fair value through P&L 2,917,422 2,917,422 - - - - - -
Listed securities 2,917,422 2,917,422 - - - - - -
Available for sale 15,301,673 15,301,673 - - - - - -
Listed securities 14,203,547 14,203,547 - - - - - -
Unlisted securities 1,098,126 1,098,126 - - - - - -
Loans and receivables 17,750,847 - 17,750,847 - - - - -
Cash and cash equivalents 313,987 313,987 - - - - - -
Total assets 40,457,520 18,533,082 17,966,357 205,200 205,200 839,500 171,106 4,023,364
(in EUR)
Liabilities
Carrying
amount
No stated
maturity
Expected cash flows (undiscounted)
0-1 year 1-2 years 2-3 years 3-4 years 4-5 years More than 5 years
Insurance contracts 15,861,968 - 15,665,039 - - - - 196,930
Total liabilities 15,861,968 - 15,665,039 - - - - 196,930
Difference between contractual
and expected cash flo
- 18,533,082 2,301,318 205,200 205,200 839,500 171,106 3,826,434
Mean duration of assets
Mean duration of liabilities
3.3 years
0.6 years

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Health insurance contracts in 2006
(in EUR)
Carrying
amount
No stated
maturity
Contractual cash flows (undiscounted)
0-1 year 1-2 years 2-3 years 3-4 years 4-5 years More than 5 years
Debt securities 5,785,290 - 369,726 250,919 611,326 250,919 2,362,190 3,336,823
At fair value through P&L 1,400,309 - 96,780 61,902 61,902 61,902 681,704 743,937
Government bonds 1,400,309 - 96,780 61,902 61,902 61,902 681,704 743,937
- fixed interest rate 1,400,309 - 96,780 61,902 61,902 61,902 681,704 743,937
Available for sale 4,384,981 - 272,946 189,017 549,424 189,017 1,680,486 2,592,886
Listed securities 987,865 - 40,058 40,058 400,465 40,058 40,058 802,703
- fixed interest rate 987,865 - 40,058 40,058 400,465 40,058 40,058 802,703
Government bonds 3,397,116 - 232,888 148,959 148,959 148,959 1,640,428 1,790,183
- fixed interest rate 3,397,116 - 232,888 148,959 148,959 148,959 1,640,428 1,790,183
Equity securities 15,535,323 15,535,323 - - - - - -
At fair value through P&L 1,812,765 1,812,765 - - - - - -
Listed securities 1,812,765 1,812,765 - - - - - -
Available for sale 13,722,558 13,722,558 - - - - - -
Listed securities 13,278,952 13,278,952 - - - - - -
Unlisted securities 443,606 443,606 - - - - - -
Loans and receivables 19,047,176 - 19,047,176 - - - - -
Cash and cash equivalents 370,705 370,705 - - - - - -
Total assets 40,738,494 15,906,028 19,416,902 250,919 611,326 250,919 2,362,190 3,336,823
Carrying No stated
Expected cash flows (undiscounted)
(in EUR)
amount maturity
0-1 year 1-2 years 2-3 years 3-4 years 4-5 years More than 5 years
Liabilities
Insurance contracts 15,133,783 - 14,958,912 - - - - 174,871
Total liabilities 15,133,783 - 14,958,912 - - - - 174,871
267
Difference between contractual
and expected cash flow
- 15,906,028 4,457,990 250,919 611,326 250,919 2,362,190 3,161,952
Mean duration of assets
Mean duration of liabilities
3.2 years
0.6 years

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Investment contracts with DPF in 2007 – Pension in 2007
(in EUR)
Carrying
amount
No stated
maturity
Contractual cash flows (undiscounted)
0 - 5 years 5 - 10 years 10 - 15 years 15 - 20 years More than 20 years
268
Debt securities 1,035,240 - 430,412 840,349 49,599 1,922 -
At fair value through P&L 380,654 - 132,558 344,413 - - -
Listed securities 145,344 - 42,354 175,063 - - -
- fixed interest rate 145,344 - 42,354 175,063 - - -
Unlisted securities 198,919 - 81,745 139,750 - - -
- fixed interest rate 198,919 - 81,745 139,750 - - -
Government bonds 36,391 - 8,459 29,600 - - -
- fixed interest rate 36,391 - 8,459 29,600 - - -
Available for sale 654,586 - 297,854 495,936 49,599 1,922 -
Listed securities 279,907 - 187,372 112,135 44,041 1,922 -
- fixed interest rate 279,907 - 187,372 112,135 44,041 1,922 -
Government bonds 374,679 - 110,482 383,801 5,558 - -
- fixed interest rate 374,679 - 110,482 383,801 5,558 - -
Equity securities 1,784,565 1,784,565 - - - - -
At fair value through P&L 1,645,563 1,645,563 - - - - -
Listed securities 1,645,563 1,645,563 - - - - -
Available for sale 139,002 139,002 - - - - -
Listed securities 139,002 139,002 - - - - -
Loans and receivables 283,266 - 283,266 - - - -
Cash and cash equivalents 2,652 2,652 - - - - -
Total assets 3,105,723 1,787,217 713,678 840,349 49,599 1,922 -
(in EUR)
Liabilities
Carrying
amount
No stated
maturity
Expected cash flows (undiscounted)
0 - 5 years 5 - 10 years 10 - 15 years 15 - 20 years More than 20 years
Insurance contracts with DPF 3,222,605 - 1,401,084 3,002,291 4,055,913 5,055,988 15,647,492
Total liabilities 3,222,605 - 1,401,084 3,002,291 4,055,913 5,055,988 15,647,492
Difference between contractual
and expected cash
- 1,787,217 (687,406) (2,161,942) (4,006,314) (5,054,066) (15,647,492)
Mean duration of assets
Mean duration of liabilities
5 years
16.6 years

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Investment contracts with DPF in 2006 – Pension in 2006
(in EUR)
Carrying
amount
No stated
maturity
Contractual cash flows (undiscounted)
0 - 5 years 5 - 10 years 10 - 15 years 15 - 20 years More than 20 years
Debt securities 626,334 - 236,883 337,011 209,369 1,416 -
Available for sale 626,334 - 236,883 337,011 209,369 1,416 -
Listed securities 165,681 - 107,417 51,697 32,796 1,416 -
- fixed interest rate 165,681 - 107,417 51,697 32,796 1,416 -
Unlisted securities 1,381 - 267 1,340 - - -
- fixed interest rate 1,381 - 267 1,340 - - -
Government bonds 459,272 - 129,199 283,974 176,573 - -
- fixed interest rate 459,272 - 129,199 283,974 176,573 - -
Equity securities 441,266 441,266 - - - - -
At fair value through P&L 441,266 441,266 - - - - -
Listed securities 441,266 441,266 - - - - -
Loans and receivables 451,332 - 451,332 - - - -
Cash and cash equivalents 2,788 2,788 - - - - -
Total assets 1,521,720 444,054 688,215 337,011 209,369 1,416 -
(in EUR)
Liabilities
Insurance contracts with
DPF
Carrying
amount
No stated
maturity
Expected cash flows (undiscounted)
0 - 5 years 5 - 10 years 10 - 15 years 15 - 20 years More than 20 years
2,181,284 - 1,017,806 2,162,277 3,497,338 4,238,656 13,069,180
Total liabilities 2,181,284 - 1,017,806 2,162,277 3,497,338 4,238,656 13,069,180
269
Difference between contractual
and expected cash
- 444,054 (329,592) (1,825,266) (3,287,970) (4,237,240) (13,069,180)
Mean duration of assets
Mean duration of liabilities
5.2 years
17.6 years

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Other assets and liabilities (own assets) in 2007
(in EUR)
Carrying
amount
No stated
maturity
Contractual cash flows (undiscounted)
0-1 year 1-3 years 3-5 years More than 5 years
270
Debt securities 250,038 - 7,150 6,131 6,131 300,838
At fair value through P&L 229,640 - - - - 291,643
Listed securities 229,640 - - - - 291,643
- fixed interest rate 229,640 - - - - 291,643
Available for sale 16,313 - 3,065 6,131 6,131 9,195
Listed securities 16,313 - 3,065 6,131 6,131 9,195
- fixed interest rate 16,313 - 3,065 6,131 6,131 9,195
Held to maturity 4,085 - 4,085 - - -
Listed securities 4,085 - 4,085 - - -
- fixed interest rate 4,085 - 4,085 - - -
Equity securities 113,462,957 113,462,957 - - - -
At fair value through P&L 10,910,937 10,910,937 - - - -
Listed securities 10,910,937 10,910,937 - - - -
Available for sale 102,552,020 102,552,020 - - - -
Listed securities 70,170,846 70,170,846 - - - -
Unlisted securities 32,381,174 32,381,174 - - - -
Investment property 18,817,897 18,817,897 - - - -
Loans and receivables 64,098,030 - 63,860,110 1,338,617 - -
Investment in associates 71,687,821 71,687,821 - - - -
Cash and cash equivalents 23,551,263 23,551,263 - - - -
Total assets 291,868,006 227,519,938 63,867,260 1,344,748 6,131 300,838
Liabilities
Debt securities (issued) 71,349,685 - 3,704,081 8,179,864 7,177,599 79,665,468
Borrowings 88,881,957 - 49,031,695 30,508,053 14,006,061 8,475,909
Derivative financial instruments 6,312,735 - 6,279,463 33,272 - -
Trade and other payables 20,658,308 - 20,432,923 148,869 32,718 98,299
Total liabilities 187,202,685 - 79,448,162 38,869,458 21,216,378 88,239,676

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Other assets and liabilities (own assets) in 2006
(in EUR)
Carrying
amount
No stated
maturity
Contractual cash flows (undiscounted)
0-1 year 1-3 years 3-5 years More than 5 years
Debt securities 560.432 - 62.135 152.752 158.304 349.845
At fair value through P&L 495.783 - 51.508 123.386 137.049 317.903
Listed securities 495.783 - 51.508 123.386 137.049 317.903
- fixed interest rate 495.783 - 51.508 123.386 137.049 317.903
Available for sale 56.537 - 10.627 21.255 21.255 31.942
Listed securities 56.537 - 10.627 21.255 21.255 31.942
- fixed interest rate 56.537 - 10.627 21.255 21.255 31.942
Held to maturity 8.112 - - 8.112 - -
Listed securities 8.112 - - 8.112 - -
- fixed interest rate 8.112 - - 8.112 - -
Equity securities 93.503.190 93.503.190 - - - -
At fair value through P&L 25.042.183 25.042.183 - - - -
Listed securities 25.042.183 25.042.183 - - - -
Available for sale 68.461.007 68.461.007 - - - -
Listed securities 35.014.151 35.014.151 - - - -
Unlisted securities 33.446.856 33.446.856 - - - -
Investment property 14.678.359 14.678.359 - - - -
Loans and receivables 53.989.716 - 53.892.947 1.389.117 - -
Investment in associates 45.119.877 45.119.877 - - - -
Cash and cash equivalents 13.924.193 13.924.193 - - - -
Total assets 221.775.767 167.225.619 53.955.082 1.541.869 158.304 349.845
Liabilities
Debt securities (issued) 71.307.750 - 3.865.574 8.179.264 7.177.599 83.254.265
Borrowings 42.424.955 - 12.936.286 12.522.526 8.636.185 16.519.978
Trade and other payables 23.997.909 - 23.770.801 31.224 32.718 216.880
Total liabilities 137.730.614 - 40.572.661 20.733.014 15.846.502 99.991.126
271
5.2.2 Credit risk
further limits on individual amounts and on already
specified amounts of maximum exposure of individual
Credit risk is the consequence of an inability on the part
of a contracting party to fully repay its obligations or
overdue debts. In terms of financial instruments included
in investments, the risk that one party in a contract
regulating the financial instrument will cause the other
party to incur financial loss due to default on obligations
as a result of difference between actual and contractually
agreed fulfillment of obligations.
securities. In order to minimise the risk exposure, the
Group analyses the credit rating scores of issuers of
securities. It also manages its credit risk exposure through
investments in government-issued securities, and through
investments in low-risk securities. The procedures for
checking the credit rating of foreign issuers of securities
are based on acquiring credit rating information from such
international firms as Standard & Poor’s, Fitch-IBCA and
Moody’s.
The Group manages its credit risk exposure by introducing

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Issuers of securities in Slovenia do not have ratings,
but the insurance part of the Group hase the highest
concentration of investments in debt securities, bank and
government bonds. The credit risk of investment coupons
and equity securities are controlled by diversification of
investments.
In the context of reinsurance, as for financial asset
investment, credit risk management procedures relate
to verifying the reinsurer’s credit rating. In accordance
with the strategy of credit risk management, reinsurancerelated
liabilities are reinsured by prime-grade reinsurers.
This does not, however, discharge the Group’s liability
as primary insurer. If a reinsurer fails to pay a claim for
Procedures of verifying credit ratings are based on
obtaining and reviewing publicly accessible data on
the current financial status of the issuer of financial
instruments and the issuer’s future solvency. The credit
any reason, the Group remains liable for the payment
to policyholder. The creditworthiness of reinsurers is
considered on an annual basis by reviewing their financial
strength prior to finalisation of any contract.
rating of domestic the issuer’s of financial instruments is
determined by the Group itself. In checking the issuer’s
credit using its own sources, the Group checks the issuer’s
future solvency, in particular the issuer’s adequacy of
expected future cash flows from regular activities offset
The Group restructures credit risk through establishing
limits to the counterparty and also according to territory
and industry. These risks are changing regulary.
272
against the outflows for settlement of future liabilities.
Maximum credit risk exposure
(in EUR) AAA-A BBB-B Without rating Total
2007 2006 2007 2006 2007 2006 2007 2006
Debt securities 107,619,183 24,513,164 6,031,103 10,075,785 36,797,448 109,493,871 150,447,734 144,082,820
At fair value through P&L 3,613,689 2,819,810 999,623 - 17,976,207 13,784,736 22,589,519 16,604,546
Available for sale 101,702,133 21,484,312 3,666,648 7,960,728 14,899,270 91,045,357 120,268,051 120,490,397
Held to maturity 2,303,361 209,042 1,364,832 2,115,057 3,921,971 4,663,778 7,590,164 6,987,877
Loans and receivables - - - - 135,690,971 132,080,595 135,690,971 132,080,595
Loans and deposits - - - - 57,751,092 60,299,751 57,751,092 60,299,751
Insurance receivables - - - - 35,598,232 32,395,529 35,598,232 32,395,529
Recourse receivables - - - - 11,338,513 8,796,610 11,338,513 8,796,610
Other receivables - - - - 31,003,134 30,588,705 31,003,134 30,588,705
Reinsurance assets - - - - 11,004,824 8,631,597 11,004,824 8,631,597
Cash and cash equivalents 44,572 - 692,174 - 28,661,371 20,309,729 29,398,117 20,309,729
Other assets - - - - 2,870,170 1,765,148 2,870,170 1,765,148
Total assets 107,663,755 24,513,164 6,723,277 10,075,785 215,024,784 272,280,940 329,411,816 306,869,889

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Recourse receivables - recourse claims and assets
acquired in the course of settlement of damages
The Group may deal with the selling of items damaged
in insurance cases which are acquired in the course
of resolving damage cases. The net recoverable value
of damaged items in damage cases which the Group
manages to sell is recognised as revenue on the
transaction date (sale of the damaged item).
Exercised recourse receivables are recorded
separately as receivables insured by mortgage and
other recourse receivables, which is the basis for
impairment calculation. The Group makes impairment
of exercised recourse receivables and receivables on
redemption based an individual estimation of the
financial situation and liquidity of the insurance policy
holder. Liquidity of debtors and other receivables,
With the payment of damages, the rights in relation to
those responsible for the damage are also transferred
from the policy holder to the Group (subrogation). The
Group exercises that right through a recourse claim,
or partial payment of the insurance amount. In the
event that the insured person of compulsory liability
insurance loses his or her rights (intoxication etc.) the
Group demands recourse from the policy holder or
the person responsible for the damage for the entire
or partial portion of the paid damages. Exercised
recourse claims are recognised as insurance revenue.
Expected recourse amounts are also included in the
calculation of damage liabilities.
Recourse receivables are recorded separately, as
exercised and unexercised, whereas unexercised
recourse receivables are kept in off-balance-sheet
records and no impairment are formed with regard
to them.
except deferred tax receivables are assessed
individually and likewise for impairment calculation.
Loans
The Group approves loans to its subsidiaries and
associates in order to take advantage of synergy. The
Group can get loans under advantageous conditions
compared with subsidiaries and associates because
of its financial power and intensive cooperation with
financial institutions. It uses the interest rate for
interest on loans according to related parties. Loans
are not insured.
In some cases loans are also approved to companies
outside the Group if exists mutual interest for
business cooperation. Loans are not insured and the
interest rate is higher.
273

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
274
Neither
Past due but not impaired Past due and impaired
Total
Individually Collective carrying
past due
Assets (in EUR)
More
amount
and nor Up to 30 31-90 91-270
Gross value Impairment
than 271
days days days
Gross Impairment
impaired
days value
Up to 31-60 61-90 91-270 More than Up to 30 31-60 61-90 91-270 More than
30 days days days days 271 days days days days days 271 days
2007
Debt securities 150,447,734 - - - - - - - - - - - - - - - - 150,447,734
Loans 57,749,747 974 - - 371 1,327,883 (1,327,883) - - - - - - - - - - 57,751,092
Receivables 41,908,915 4,206,593 514,557 523,470 320,250 17,755,186 (15,193,669) 7,181,936 2,741,113 5,924,646 12,396,462 34,042,881 (991,676) (930,398) (3,008,894) (6,567,524) (22,883,969) 77,939,879
- insurance receivables 17,091,945 3,219,250 130,283 135,831 35,379 - - 6,164,206 2,193,799 1,895,053 5,510,524 12,490,703 (477,869) (553,217) (480,968) (2,407,909) (9,348,778) 35,598,232
- recourse receivables - - - - - - - 278,009 495,314 3,977,593 6,833,562 19,248,544 (146,372) (350,357) (2,501,102) (4,132,541) (12,364,137) 11,338,513
- other receivables 24,816,970 987,343 384,274 387,639 284,871 17,755,186 (15,193,669) 739,721 52,000 52,000 52,376 2,303,634 (367,435) (26,824) (26,824) (27,074) (1,171,054) 31,003,134
Reinsurance assets 11,004,824 - - - - - - - - - - - - - - - - 11,004,824
TOTAL 261,111,220 4,207,567 514,557 523,470 320,621 19,083,069 (16,521,552) 7,181,936 2,741,113 5,924,646 12,396,462 34,042,881 (991,676) (930,398) (3,008,894) (6,567,524) (22,883,969) 297,143,529
2006
Debt securities 143,403,068 - - - - 2,479,462 (1,799,710) - - - - - - - - - - 144,082,820
Loans 60,178,678 - - 3,992 117,081 907,816 (907,816) - - - - - - - - - - 60,299,751
Receivables 31,507,266 3,819,168 211,936 124,313 10,229,910 17,635,173 (15,083,300) 6,318,707 2,525,347 4,387,325 9,743,178 17,400,940 (830,930) (891,300) (1,744,421) (5,303,130) (8,269,338) 71,780,844
- insurance receivables 7,915,938 1,732,432 58,564 38,865 9,811,992 - - 5,281,127 2,137,807 1,980,767 4,345,341 9,854,678 (343,086) (615,832) (571,578) (2,006,140) (7,225,346) 32,395,529
- recourse receivables - - - - - - - 217,513 387,540 2,291,262 5,346,666 5,346,408 (115,085) (275,468) (1,145,631) (3,249,205) (7,390) 8,796,610
- other receivables 23,591,328 2,086,736 153,372 85,448 417,918 17,635,173 (15,083,300) 820,067 - 115,296 51,171 2,199,854 (372,759) - (27,212) (47,785) (1,036,602) 30,588,705
Reinsurance assets 8,631,597 - - - - - - - - - - - - - - - - 8,631,597
TOTAL 243,720,609 3,819,168 211,936 128,305 10,346,991 21,022,451 (17,790,826) 6,318,707 2,525,347 4,387,325 9,743,178 17,400,940 (830,930) (891,300) (1,744,421) (5,303,130) (8,269,338) 284,795,012

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
5.2.3 5.2.3 Sensitivity analysis
2007
(in EUR) Impact on profit before tax Impact on equity
change in interest rate by + 25 bt (295,647) (1,829,762)
change in interest rate by - 25 bt 171,261 1,805,234
+ 5% change in the price of shares 7,671,805 9,847,313
- 5% change in the price of shares (7,671,805) (9,847,313)
Change in management fee (investment + 5%) 722,067 -
Change in management fee (investment -5%) (722,067) -
2006
(in EUR) Impact on profit before tax Impact on equity
change in interest rate by + 25 bt (214,560) (1,995,402)
change in interest rate by - 25 bt 211,385 1,949,627
+ 5% change in the price of shares 4,950,922 6,782,550
- 5% change in the price of shares (4,950,922) (6,782,550)
Change in management fee (investment + 5%) 464,864 -
Change in management fee (investment -5%) (464,864) -
275

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
5.2.4 Currency risk
The Group takes on exposure to effects of fluctuations
in the prevailing foreign currency exchange rates on
its financial position and cash flows. The Group’s
currency risk is not considered to be significant
due to the fact that Slovenia has been in the ERM2
The table below summarises the Group’s exposure
to foreign currency exchange rate risk as at 31
December. Included in the table are the Group’s
financial assets and financial and insurance liabilities
in carrying amounts, categorised by currency.
system with fixed foreign currency rates and the euro
was introduced in Slovenia on 1 January 2007.
276
2007
(in EUR) EUR Other Total
Assets
Financial assets at fair value through P&L 143,040,153 32,985,472 176,025,625
- Equity securities 120,450,634 32,985,472 153,436,106
- Debt securities 22,589,519 - 22,589,519
Available for sale 294,319,323 22,895,005 317,214,328
- Equity securities 174,765,769 22,180,508 196,946,277
- Debt securities 119,553,554 714,497 120,268,051
Held to maturity 7,590,164 - 7,590,164
- Debt securities 7,590,164 - 7,590,164
Investment property 20,601,521 - 20,601,521
Loans and receivables 129,018,868 6,672,103 135,690,971
Reinsurance assets 11,004,824 - 11,004,824
Cash and cash equivalents 22,623,434 6,774,683 29,398,117
Total assets 628,198,287 69,327,263 697,525,550
Liabilities
Debt securities (issued) 75,368,725 - 75,368,725
Loans 88,463,016 418,941 88,881,957
Derivative financial instruments 6,312,735 - 6,312,735
Insurance contracts 306,070,319 303,468 306,373,787
Insurance contracts with DPF 62,446,521 101,505 62,548,026
Investment contracts with DPF 15,588,746 15,528 15,604,274
Total liabilities 554,250,062 839,442 555,089,504

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
2006
(in EUR) EUR Other Total
Assets
Financial assets at fair value through P&L 85,536,213 30,086,770 115,622,983
- Equity securities 68,931,667 30,086,770 99,018,437
- Debt securities 16,604,546 - 16,604,546
Available for sale 241,365,987 14,775,412 256,141,399
- Equity securities 121,493,205 14,157,797 135,651,002
- Debt securities 119,872,782 617,615 120,490,397
Held to maturity 6,979,766 8,111 6,987,877
- Debt securities 6,979,766 8,111 6,987,877
Investment property 20,592,116 - 20,592,116
Loans and receivables 126,865,409 5,215,186 132,080,595
Reinsurance assets 8,631,597 - 8,631,597
Cash and cash equivalents 16,474,497 3,835,232 20,309,729
Total assets 506,445,585 53,920,711 560,366,296
Liabilities
Debt securities (issued) 75,324,967 - 75,324,967
Loans 42,225,314 199,641 42,424,955
Insurance contracts 237,389,001 36,319 237,425,320
Insurance contracts with DPF 57,330,326 434,858 57,765,184
Investment contracts with DPF 13,791,387 - 13,791,387
Total liabilities 426,060,995 670,818 426,731,813
5.3 Operational risk
Operational risks are risks related to errors in the
functioning of business processes, information
technology, organisation and similar areas.
The operational risks of the Group are managed
in the subsidiaries by monitoring the weaknesses
and opportunities of their businesses and by
controlling the business processes. Operational risk
management is based on the Groupʼs strategic and
companiesʼ operational objectives.
The Group manages operational risks by introducing
the ISO standards at the level of the Group and in
its individual members with which the Group wants
to standardise business processes. The Group uses
standardised and uniform software in the area of
accounting and investments.
5.4 General business risk
General business risks are related to the Group’s
operations in the environment, such as the
economic environment, legislation and similar, on
which the Group has no direct impact.
Such risks are quite difficult to measure or
model. In order to manage such risks, the Group
regularly monitors legislation through its technical
services, developments on capital markets and
macroeconomic parameters of the markets in which
it is present.
277

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
The global market in 2007 was very changeable. In
second half of the year, the real estate crisis in the
USA was bigger that was expected, causing distrust in
the money market; short term interest rates increased,
and liquidity in the inancial market decreased.
in Slovenia; a decision on dividends distribution is
taken by the shareholders’ meeting.
KD Holding has no specific aims about ownership by
employees and has no program for share options. In the
Group there were no changes in managing capital in
5.5 Capital managment
2007.
278
Management Board takes decisions for maintenance of
significant (large) capital scope to ensure the confidence of
all participants and development of KD Holding. As one of
the strategic indicators, the Group defines return on equity
as the ratio between net profit for the year of the majority
ownerʼs and the average value of majority owner equity.
The Group seeks to keep the balance of large returns
which can be reached by higher indebtedness, and the
advantages and safety of powerful capital structure.
According to the shareholders’ meeting decision, the
parent company KD Holding has established its own
share fund. On 31 December 2007 there were 62,601
ordinary shares with the mark KDHR, which is 2.11%
of issued capital, and 51,306 preference shares with
the mark KDHP, which is 1.74% of issued capital.
The investment plan, optimal capital structure
policy, expectation and the interests of shareholders
are basis for the development of dividend policy.
The entity distributes a dividend once a year.
Management and Supervisory Boards of the
parent company take a decision on the amount of
proposed dividends. Dividends are distributed from
accumulated profit of the parent company which
is regulated with compliance of valid regulations
The parent company is not a subject to the capital
requirements which could be set by the regulatory
authority.
An entity has subsidiaries in the field of financial and
insurance segment, the capital requirements of which are
provided by the regulatory authority. The management
of the entities provides the proper amount of capital
(capital adequacy) according to the scope and type
of operation, which are managed by management
and according to the risk which are they exposed to.
5.6 Fair value of financial assets and liabilities
Fair value is the amount for which an asset could be
exchanged or a liability settled, between knowledgeable,
willing parties in an arm’s length transaction.
The Group establishes the fair value of financial
assets in the following way:
- The fair value of investments in equity instruments
that have a quoted market price in an active market
is determined as the product of the number of units of
the instrument and its quoted market price.
- If there is no active market for the financial
instruments, the methods of assessing the fair

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
value of a financial instrument are used. Valuation
techniques include using recent arm’s length market
transactions between knowledgeable, willing parties,
if available, reference to the current fair value of
another instrument that is substantially the same,
and discounted cash flow analysis. The Group has
developed a model for assessing the fair value of
non-listed equity instruments; its appropriateness was
assessed by an independent qualified expert. Using
- The estimated fair value of borrowings not quoted in
an active market is based on discounted cash flows
using current market rates. The aggregate fair value
of quoted debt securities are calculated based on
quoted market prices.
- Current receivables and liabilities are assumed their
carrying value reflects their fair value.
- For a contract containing a discretionary participation
feature the fair value cannot be measured reliably.
this model, the fair values of significant financial
investments in non-listed companies are estimated
once a year on the basis of data available.
- The fair value of loans and deposits represents the
discounted amount of estimated future cash flows
expected to be received. Expected cash flows are
discounted at current market rates to determine fair value.
The following table summarises the carrying amounts
and fair values of those financial assets and liabilities
not presented on the Group’s balance sheet at
their fair value. Bid prices are used to estimate fair
values of assets, whereas offer prices are applied to
liabilities.
Carrying value
Fair value
(in EUR)
2007 2006 2007 2006
Financial assets
Investment securities (held-to-maturity) 7,590,164 6,987,877 7,610,152 7,178,651
Loans and bank deposits 57,751,092 60,299,751 57,751,092 60,299,751
65,341,256 67,287,628 65,361,244 67,478,402
Financial liabilities
Borrowings 88,881,957 42,424,955 88,903,456 42,272,588
Bonds issued 75,368,725 75,324,967 75,052,404 75,463,983
164,250,682 117,749,922 163,955,860 117,736,571
279
6. Reporting by Business Segment and
Geographical Segment
The Group’s main activities i.e. business segments
are the following:
- Property insurance
- Life insurance
- Health insurance
- Financial operations (asset management and other
- Cinematography
- Other (tourism, publishing, etc.).
As at 31 December 2007, the Group operated
in Slovenia and the countries: Bulgaria, Cyprus,
Czech Republic, FBIH, Croatia, Netherlands,
Poland, Slovakia, Romania, Serbia, Montenegro,
Ukraine, USA.
financial operations)

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
6.1 Primary reporting format – business segment
6.1.1 Performance by business segment
The segment results for the year ended 31 December 2007 are as follows:
Property Life Health Financial Cinema-
Other Group
(in EUR)
insurance insurance insurance operations tography
Total gross segment sales 123,271,148 54,579,703 77,890,381 18,146,895 16,108,308 23,130,838 313,127,273
Inter-segment sales (580,450) (317,192) (6,001) (3,245,230) (25,342) (215,619) (4,389,834)
Sales 122,690,698 54,262,511 77,884,380 14,901,665 16,082,966 22,915,219 308,737,439
Operating profit/Segment result 16,246,123 2,622,709 2,146,382 8,578,393 (736,000) 1,005,734 29,863,341
Finance costs – net (271,683) 21,194 5,262 (3,985,445) (1,314,797) 31,669 (5,513,800)
Property Life Health Financial Cinema-
Other Group
(in EUR)
insurance insurance insurance operations tography
Total gross segment sales 131,995,552 87,014,283 89,226,380 34,570,638 18,699,600 28,344,158 389,850,611
Inter-segment sales (536,557) (10,930,946) (6,049) (6,019,053) (20,629) (346,324) (17,859,558)
Sales 131,458,995 76,083,337 89,220,331 28,551,585 18,678,971 27,997,834 371,991,053
Operating profit/Segment result 28,124,164 (101,495) 4,628,423 11,269,112 151,272 (1,202,966) 42,868,509
Finance costs – net (429,606) 1,107,568 (46,050) (4,142,700) (1,704,774) (1,337,071) (6,552,633)
Share of profit of associates 898,260 262,634 - 9,973,103 (6,022) 13,049 11,141,024
Profit before income tax 28,592,818 1,268,707 4,582,373 17,099,515 (1,559,524) (2,526,988) 47,456,900
Income tax expense (6,321,004) (1,198,100) (1,563,428) (2,553,139) (862,618) (13,027) (12,511,316)
Profit for the year 22,271,814 70,607 3,018,945 14,546,376 (2,422,142) (2,540,015) 34,945,584
The segment results for the year ended 31 December 2006 are as follows:
2007
280
2006
Share of profit of associates 2,057,261 206,685 - 2,134,693 (31,614) 5,805 4,372,830
Profit before income tax 18,031,701 2,850,588 2,151,644 6,727,641 (2,082,411) 1,043,208 28,722,371
Income tax expense (5,663,729) (974,587) (622,137) (333,588) 782,862 (1,034,423) (7,845,602)
Profit for the year 12,367,972 1,876,001 1,529,507 6,394,053 (1,299,549) 8,785 20,876,769
The costs are allocated to segments as they originally
occur in the operations of the each business segment
and as it is reported by the subsidiaries which are
included in the relevant segment.
Other segment items included in the income statement for the year ended 31 December 2007 are as follows:
2007
Property Life Health Financial Cinema
(in EUR)
insurance insurance insurance operations tography
Other Group
Depreciation and amortisation (1,649,232) (739,127) (751,799) (659,514) (4,156,186) (259,698) (8,215,555)
Impairment of trade receivables (8,771,977) (237,771) (1,107,971) (114,118) (103,372) (181,630) (10,516,839)
Other segment items included in the income statement for the year ended 31 December 2006 are as follows:
2006
Property Life Health Financial Cinema
(in EUR)
insurance insurance insurance operations tography
Other Group
Depreciation and amortisation (2,231,485) (380,792) (62,185) (574,691) (3,501,736) (166,816) (6,917,705)
Impairment of land and property - - - (1,569,005) - - (1,569,005)
Impairment of trade receivables (2,048,932) (47,046) (1,468,736) (6,948) (407,774) (35,231) (4,014,667)

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Inter-segment transfers or transactions are entered
into under the normal commercial terms and
conditions that would also be available to unrelated
third parties.
The segment assets and liabilities at 31 December 2007 and for the year then ended are as follows:
2007
Property Life Health Financial Cinema
(in EUR)
insurance insurance insurance operations tography
Other Group
Assets 265,357,582 247,703,125 42,217,794 244,993,866 58,545,874 25,541,340 884,359,581
Associates 6,664,165 1,685,290 - 63,338,366 - - 71,687,821
Total assets 272,021,747 249,388,415 42,217,794 308,332,232 58,545,874 25,541,340 956,047,402
Liabilities 202,134,934 209,930,611 26,332,435 136,298,707 36,804,548 4,281,801 615,783,035
Capital expenditure 8,946,181 2,062,174 24,094 1,571,356 3,202,725 2,525,766 18,332,296
The segment assets and liabilities at 31 December 2006 and for the year then ended are as follows:
2006
Property Life Health Financial Cinema
(in EUR)
insurance insurance insurance operations tography
Other Group
Assets 224,123,410 151,628,664 42,072,734 236,200,071 61,328,756 14,946,603 730,300,238
Associates 7,551,135 1,634,698 - 35,459,418 6,022 468,604 45,119,877
Total assets 231,674,545 153,263,362 42,072,734 271,659,489 61,334,778 15,415,207 775,420,115
Liabilities 189,711,567 140,161,755 30,388,182 88,223,840 38,114,797 6,014,115 492,614,256
Capital expenditure 4,211,588 814,614 139,351 1,146,270 10,589,730 132,015 17,033,568
281
Segment assets consist primarily of property, plant
6.2 Secondary reporting format - geographical segment
and equipment, intangible assets, inventories,
financial assets, receivables and operating cash.
6.2.1 Performance by geographical segment
Segment liabilities comprise financial and operating
liabilities.
The Group’s business segments operate in three
main geographical areas, even though they are
managed on a worldwide basis. The home country
Losses from impairment of available-for-sale financial
assets in the total amount of EUR 2,596,286 (2006:
EUR 9,552,771 in financial operations and EUR
81,076 in other operations) were recognised in the
income statement in the business segment.
of the Group is Slovenia. The areas of operation are
principally property insurance, life insurance, health
insurance, financial services (asset management and
other financial operations), cinematography and other
(tourism, publishing, etc.).

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
The Group particularly operates in Slovenia, in EU countries and other South Eastern European countries.
(in EUR) 2007 2006
Sales
Slovenia 356,223,435 304,404,240
Euro zone 5,474,344 580,709
Other countries 10,293,274 3,752,491
371,991,053 308,737,440
(in EUR) 2007 2006
Total assets
Slovenia 767,825,242 665,415,419
Euro zone 117,270,859 39,345,965
Other countries 70,951,301 70,658,731
956,047,402 775,420,115
Associates
Slovenia 67,722,410 38,341,258
Euro zone 3,294,302 4,821,203
Other countries 671,109 1,957,416
71,687,821 45,119,877
282
(in EUR) 2007 2006
Capital expenditure
Slovenia 14,462,757 14,341,011
Euro zone 822,020 1,931,869
Other countries 3,047,519 760,688
18,332,296 17,033,568
(in EUR) 2007 2006
Analysis of sales by category
Sales of goods 5,055,547 2,481,760
Revenue from services 366,935,506 306,255,680
371,991,053 308,737,440

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
7. Property, plant and equipment
(in EUR) Land & buildings Vehicles & machinery
Furniture, fittings &
equipment
Total
At 1 January 2006
Cost 63,123,577 13,464,981 19,477,541 96,066,099
Accumulated depreciation (9,601,035) (8,601,945) (9,042,660) (27,245,640)
Net book value 53,522,542 4,863,036 10,434,881 68,820,459
Year 2006
Opening net book amount 53,522,542 4,863,036 10,434,881 68,820,459
Exchange differences 50 8,099 7,169 15,318
Acquisition of subsidiary - - 18,344 18,344
Additions 689,816 2,815,871 10,378,451 13,884,138
Disposals - (79,457) (195,768) (275,225)
Depreciation charge (1,183,684) (1,689,296) (2,305,443) (5,178,423)
Transfer to investment property (5,894,467) - - (5,894,467)
Other movements - - (169,742) (169,742)
Closing net book value 47,134,257 5,918,253 18,167,892 71,220,402
At 31 December 2006
Cost 57,599,288 15,752,054 26,832,795 100,184,137
Accumulated depreciation (10,465,031) (9,833,801) (8,664,903) (28,963,735)
Net book amount 47,134,257 5,918,253 18,167,892 71,220,402
Year 2007
Opening net book value 47,134,257 5,918,253 18,167,892 71,220,402
Exchange differences (87,629) (20,023) (7,215) (114,867)
Acquisition of subsidiary (Note 31) 948,626 159,561 334,380 1,442,567
Disposal of subsidiary (Note 31) (338,408) (207,975) (255) (546,638)
Additions 2,928,102 5,323,678 8,278,837 16,530,617
Disposals (1,543,051) (172,533) (883,821) (2,599,405)
Depreciation charge (1,254,881) (2,141,299) (2,724,651) (6,120,831)
Transfer to investment property 4,055,165 - - 4,055,165
Closing net book value 51,842,181 8,859,662 23,165,167 83,867,010
At 31 December 2007
Cost 65,186,188 20,032,673 34,571,658 119,790,519
Accumulated depreciation (13,344,007) (11,173,011) (11,406,491) (35,923,509)
Net book value 51,842,181 8,859,662 23,165,167 83,867,010
283
Bank borrowings are collateralised by land and buildings with the carrying value of EUR 24,640,163
(2006:EUR 20,942,710).

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
8. Investment property
(in EUR) 2007 2006
At 1 January
Cost 22,895,497 16,740,290
Accumulated depreciation (2,303,381) (1,458,688)
Net book amount 20,592,116 15,281,602
Year ended 31 December
Opening net book amount 20,592,116 15,281,602
Acquisition of subsidiary 4,536,423 -
Additions 197,384 653,622
Transfer from property, plan and equipment (4,055,165) 5,894,467
Disposals (47,874) (590,382)
Depreciation charge (621,363) (647,193)
Closing net book amount 20,601,521 20,592,116
At 31 December
Cost 24,058,580 22,895,497
Accumulated depreciation (3,457,059) (2,303,381)
Net book amount 20,601,521 20,592,116
The following amounts have been recognised in the income statement:
284
(in EUR) 2007 2006
Rental income 1,737,018 1,268,461
Direct operating expenses arising from investment properties that generate rental income 1,198,783 345,902
The Group does not have any investment properties
that do not generate rental income. Lease
agreements are short-term and cancellable.
Fair value of the Group’s investment properties as
at 31 December 2007 is EUR 23,538,720 (2006:
EUR 25,631,860) as determined by an external
independent valuer. The determination of fair value
is not supported by the market approach, as there
is no publically available data in Slovenia. Therefore
the method of discounted cash flows is used, with
cash flow projections until 2010 and discount rate
of 5.5%.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
9. Intangible assets
(in EUR) Goodwill Licences Computer software Total
At 1 January 2006
Cost 83,648,882 806,723 8,497,692 92,953,297
Accumulated amortisation and impairment - (495,752) (5,764,384) (6,260,136)
Net book amount 83,648,882 310,971 2,733,308 86,693,161
Year 2006
Opening net book amount 83,648,882 310,971 2,733,308 86,693,161
Exchange differences - 246 10,457 10,703
Additions - 152,286 3,078,974 3,231,260
Acquisition of subsidiary - - 2,166 2,166
Increase in equity share of subsidiaries 115,613 - - 115,613
Disposals - (2,141) (179,836) (181,977)
Disposal of subsidiary - (15,285) - (15,285)
Amortisation charge - (143,895) (948,193) (1,092,088)
Impairment charge (1,569,005) - - (1,569,005)
Other movements - 1,084,222 (914,480) 169,742
Closing net book amount 82,195,490 1,386,404 3,782,396 87,364,290
At 31 December 2006
Cost 83,764,495 1,940,845 11,172,819 96,878,159
Accumulated amortisation and impairment (1,569,005) (554,441) (7,390,423) (9,513,869)
Net book amount 82,195,490 1,386,404 3,782,396 87,364,290
Year 2007
Opening net book amount 82,195,490 1,386,404 3,782,396 87,364,290
Exchange differences - 1,126 (13,874) (12,748)
Additions - 72,092 1,729,587 1,801,679
Acquisition of subsidiaries (Note 31) 403,304 - 54,993 458,297
Increase in equity share of subsidiaries 85,612 - - 85,612
Disposals - - (234,129) (234,129)
Disposal of subsidiary (Note 31) (25,092) - (67,907) (92,999)
Amortisation charge - (84,711) (1,388,650) (1,473,361)
Impairment charge (Note 23.2) - - - -
Other movements - - - -
Closing net book amount 82,659,314 1,374,911 3,862,416 87,896,641
At 31 December 2007
Cost 84,228,319 2,005,457 12,463,933 98,697,709
Accumulated amortisation and impairment (1,569,005) (630,546) (8,601,517) (10,801,068)
Net book amount 82,659,314 1,374,911 3,862,416 87,896,641
285
In January 2007 the Group acquired from minority
shareholders of Ljubljanjski kinematografi d. d.
the additional 5.21% share of the net assets of its
subsidiary. With the investment of EUR 221,937 and
acquired net assets of EUR 136,325 the goodwill of
EUR 85,612 on the transaction was recognised.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
The segment-level summary of the goodwill allocation is presented below:
(in EUR)
Non-life insurance
Financial
operations
Cinematography Other Group
Slovenia 22,849,770 53,952,108 890,682 465,791 78,158,351
Euro zone - 781,079 - 141,179 922,258
Other Countries - 3,578,705 - - 3,578,705
Total at 31 December 2007 22,849,770 58,311,892 890,682 606,970 82,659,314
Slovenia 22,849,770 53,952,108 696,595 490,882 77,989,355
Euro zone - 641,370 - - 641,370
Other Countries - 3,564,765 - - 3,564,765
Total at 31 December 2006 22,849,770 58,158,243 696,595 490,882 82,195,490
Goodwill is allocated mainly to non-life insurance
and to the financial operations segment, and is
annually assessed for impairment.
- unearned premium reserve projection is based on
the premium earning patterns applied to the gross
premium written amount for each calendar year
and line of business separately:
286
In 2007 for the purpose of exclusion of minority
interest an assumption was made in 2006 for the
non-life insurance segment by an independent
qualified expert. It was concluded that operational
results in 2007 and planned results in 2007 were
not substantially different and there is also no
substantial difference in equity.
Key assumptions used in 2006 and in 2007 for the
non-life insurance segment are:
- the Income Approach (discounted cash flows) and
Market Approach methods were used to calculate
a range of values for the non-life business;
- the best management projections and estimates
regarding the future written premium were used
for the period 2006-2011. For the following
years decreasing growth rates consistent with
market growth were used. The forecasted growth
of the Slovenian general insurance market is
approximately 7% annually;
- ceded premium assumptions range from 0% to
35% of the gross earned premium depending on
the line of business. Ceded claims assumptions
range from 0% to 50% of the gross claims
incurred depending on the line of business.
- ultimate loss ratio assumptions for future accident
years range from 35% to 110% depending on the
line on business;
- the risk discount rate 10.2% was derived based on
the CAPM (Capital Asset Pricing Model).
Based on the result of the valuation, which was
performed by an independent qualified expert, the
Group assessed that the goodwill related to the non-life
insurance segment does not need to be impaired.
No impairment charge of goodwill of the financial
segment in 2007 was recognised (impairment charge
in 2006 was EUR 1,569,005). The goodwill of the
financial segment was assessed by an independent

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
qualified expert using the following key assumptions
in 2007:
- present value of future cash-flows without
indebteness;
- estimation was based on analysis of past operations
and estimation of future business opportunities;
- cash return was discounted with the appropriate
weighted arithmetic average of the return rate of
debt and equity securities;
- the CAMP model was used, modified for each
country;
- assumptions: 5% cost growth rate per employee,
4% expected rate of return on non-risk
investments, 7% premium for capital risk, 1.05
The goodwill of the financial segment was assessed
by an independent qualified expert using the
following key assumptions 2006:
- the value of the investment is based on the present
value of future cash-flows;
- the strategic and operational projections of the future
cash flows prepared by the Management. The period
over which the Management has projected cash flows
is 5 years. The growth rate used to extrapolate cash
flow projections is 1%;
- the required rate of return on the investment is
11.10%, the required rate of return on the total
investment is 10.4%,
- 10% discount for lack of liquidity.
systematic risk, 1% premium for particular risk,
10% discount for illiquidity;
- return on equity from 13.2% to 17.1%
- return on capital from 12.3% to 16.0%.
Goodwill has been assessed with the internal
method of evaluation. Goodwill does not need to be
impaired.
287
Based on the result of the assessment the Group
assessed that the goodwill in 2007 does not need to
be impaired.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
10. Investments in associated companies
(in EUR) 2007 2006
Balance at 1 January 45,119,877 20,730,216
Acquisitions 23,412,841 24,324,775
Disposals (4,228,866) (3,047,016)
Business combination (1,076,688) (1,205,909)
Share of profit and revaluation 10,922,133 6,802,550
Dividends (2,487,951) (129,473)
Exchange differences 26,475 56,977
Impairment - (2,412,243)
Balance at 31 December 71,687,821 45,119,877
The Group acquired an additional share of
Nama d.d. and holds a total share of 48.46%.
The additional investment amount was EUR
In 2007 the Group invested EUR 750,009 in a
newly established risk equity fund in Holland and
acquired a 48.21% share of the fund.
8,739,073. In the fair value of net assets aquired
288
of EUR 6,284,317, goodwill is included as a part
of the carrying value of this investment of EUR
2,454,756.
The Group acquired an additional share of Deželna
banka Slovenije d.d., Ljubljana and holds a total
share of 33.68%. The additional investment
amounts to EUR 216,120 and represents
approximately the fair value of net assets acquired;
therefore no goodwill or excess has been calculated.
The Group disposed of a part of its investment
in Žičnice Vogel Bohinj d.d. (19.04%) and holds
a total share of 21.54%. At disposal the Group
incurred EUR 99,098 in losses which is recognised
in the income statement as net financial
income - associates.
In 2007 the Group invested EUR 1,558,081 in its
own internally managed mutual funds and disposed
of EUR 3,835,474 of its own funds. The funds
listed below are treated as associated companies.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Information on associates of the Group:
(in EUR)
Associates
Registered
office
Share of interest
Associates
Designated
at
fair value
through P/L
All together Assets Liabilities Revenue
Profit/ (loss)
– pro rata
share
KD Concorde d.o.o. Slovenia 50.00% - 50.00% 1,075,484 282,816 1,268,063 85,769
Seaway Group d.o.o. Slovenia 50.00% - 50.00% 33,732,822 24,732,822 35,925,934 777,139
Zabavna znanost d.o.o. Slovenia 50.00% - 50.00% 56,874 153,932 46,751 (6,022)
Kinematografi Kranj d.o.o. Slovenia 45.00% - 45.00% 953,542 93,977 45,564 (3,141)
Žičnice Vogel Bohinj d.d. Slovenia 21.54% - 21.54% 12,736,550 6,935,055 2,107,915 28,884
Radio Kranj d.o.o. Slovenia 20.00% - 20.00% 847,952 133,983 747,094 9,687
Deželna banka d.d. Slovenia 33.68% - 33.68% 793,855,000 713,757,000 50,274,000 2,094,222
KD ID d.d.* Slovenia 9.93% - 9.93% 170,048,252 1,572,211 62,658,723 5,261,011
Semenarna Ljubljana Slovenia 29.90% - 29.90% 53,771,498 40,694,038 48,705,558 326,809
Nama d.d. Slovenia 48.46% - 48.46% 17,876,006 3,269,797 20,223,618 794,203
Kd Private Equity b.v. Netherlands 48.21% - 48.21% 906,060 422,476 35,668 (498,308)
Zelnner Holdings Limited Cyprus 48.65% - 48.65% 183,770 15,824 - (3,216)
1,086,043,810 792,063,931 222,038,888 8,867,037
*together with the parent company KD Group d.d. over 20%
289
(in EUR)
Associates
Registered
office
Share of interest
Associates
Designated
at
fair value
through P/L
All together Assets Liabilities Revenue
2006
Profit/ (loss)
– pro rata
share
KD Concorde d.o.o. Slovenia 50.00% - 50.00% 920,168 147,062 939,814 (5,341)
Seaway Group d.o.o. Slovenia 50.00% - 50.00% 22,173,822 14,732,941 16,520,627 709,226
Zabavna znanost d.o.o. Slovenia 50.00% - 50.00% 113,028 100,985 90,060 (31,614)
VIB a.d. Banja Luka FBIH 49.00% - 49.00% 593,878 9,393 77,917 (14,084)
Kino Kranj d.o.o. Slovenia 45.00% - 45.00% 958,267 91,721 97,480 (11,025)
Gea College d.d. Slovenia 38.94% - 38.94% 3,792,464 3,625,142 3,924,553 (80,625)
Žičnice Vogel Bohinj d.d. Slovenia 40.45% - 40.45% 8,166,700 2,480,738 2,183,976 193,987
Radio Kranj d.o.o. Slovenia 20.00% - 20.00% 816,975 112,348 743,945 12,427
Deželna banka d.d. Slovenia 33.39% - 33.39% 620,941,279 581,099,286 38,474,337 930,871
KD ID d.d.** Slovenia 9.93% - 9.93% 128,406,919 3,786,851 30,573,080 2,611,114
Semenarna Ljubljana Slovenia 29.90% - 29.90% 59,236,910 45,613,808 51,103,221 (306,940)
Vrtnarstvo Celje* Slovenia 50.46% - 50.46% 3,070,280 1,670,385 3,163,095 429
849,190,690 653,470,660 147,892,105 4,008,425
* The Group does not control the company
**Together with the subsidiary KD Group d.d. over 20%

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
290
Associates
Registered
office
Associates
Designated at fair
value through P/L
Share of interest 2007
All together Assets Liabilities Revenue
Investment in funds:
KD Balkan Slovenia 1.66% 9.21% 10.87% 76,612,298 319,235 24,390,524
KD Bond Slovenia 2.21% 13.71% 15.92% 11,318,490 18,294 1,629,968
KD Galileo Slovenia 1.02% 9.17% 10.19% 359,239,497 235,482 123,490,393
KD MM Slovenia 2.57% 0.37% 2.94% 9,185,040 543,597 284,151
KD Novi trgi Slovenia 2.76% 15.67% 18.43% 21,989,589 190,688 8,643,124
KD Nova energija Slovenia 1.67% 8.76% 10.43% 19,108,358 273,963 5,238,802
KD Prvi izbor Slovenia 2.98% 12.36% 15.34% 36,380,753 73,384 13,444,249
KD Rastko Slovenia 0.99% 10.69% 11.68% 172,456,376 284,769 63,325,536
KD Severna Amerika Slovenia 37.01% 8.11% 45.12% 982,824 2,119 478,075
KD Surovine in energija Slovenia 7.92% 12.41% 20.33% 7,157,263 45,502 3,313,871
KD Vitalnost Slovenia 9.69% 1.11% 10.80% 2,174,134 3,114 930,952
KD Tehnologija Slovakia 10.33% 26.43% 36.76% 2,516,053 16,538 1,083,585
KD Bonds Bolgarija Bulgaria 88.65% 0.00% 88.65% 401,882 5,624 103,480
KD Equity Bolgarija Bulgaria 14.70% 0.00% 14.70% 3,415,482 48,062 814,079
KD Pelikan AD Bulgaria 16.99% 47.32% 64.31% 3,514,674 43,460 1,151,536
KD Maximus Romania 1.33% 75.35% 76.68% 12,131,600 131,321 5,505,552
FDI KD Multifond Romania 99.94% 0.00% 99.94% 252,894 1,577 23,752
FDI KD Optimus Romania 54.98% 0.00% 54.98% 489,673 6,341 161,458
KD Prosperita Slovakia 7.64% 41.88% 49.52% 9,365,423 118,721 133,196
KD Russia Slovakia 7.28% 50.29% 57.57% 7,339,606 80,160 56,636
KD Adria Bond Croatia 77.71% 0.00% 77.71% 865,250 954 50,106
KD Victoria Croatia 0.44% 6.55% 6.99% 69,318,590 866,148 15,077,807
KD Nova Europa Croatia 4.89% 0.00% 4.89% 8,207,625 102,251 69,061
KD Balanced Croatia 0.00% 0.00% 0.00% 5,727,366 280,576 536,736
Total: 840,150,741 3,691,881 269,936,629
Associates
Registered
office
Associates
Designated at fair
value through P/L
Share of interest 2006
All together Assets Associates
Registered
office
Investment in funds:
KD Severna Amerika Slovenija 46.15% 5.21% 51.36% 841,567 2,717 351,711
KD Surovine in energija Slovenija 13.25% 6.46% 19.71% 3,488,938 10,299 678,952
KD Nova energija Slovenija 18.71% 0.00% 18.71% 1,130,525 5,266 71,653
KD Tehnologija Slovenija 11.29% 5.36% 16.65% 1,990,820 10,353 386,859
KD Novi trgi Slovenija 7.76% 8.84% 16.60% 6,070,873 16,516 2,235,215
KD Prvi izbor Slovenija 4.07% 6.90% 10.97% 33,017,868 11,834 10,811,288
KD Rastko Slovenija 1.01% 7.90% 8.91% 117,355,684 52,333 34,593,186
KD Bond Slovenija 1.52% 6.74% 8.26% 14,888,082 6,960 1,529,561
KD Vitalnost Slovenija 8.15% 0.00% 8.15% 3,052,896 151,390 42,276
KD Galileo Slovenija 1.06% 7.02% 8.08% 251,079,465 114,626 68,789,576
KD Balkan Slovenija 2.52% 2.83% 5.35% 32,029,298 99,036 6,597,117
KD Prosperita Slovaška 38.97% 7.37% 46.34% 2,815,156 213,908 45,602
KD Russia Slovaška 27.01% 6.91% 33.92% 3,617,539 27,971 30,379
KD Bonds Bolgarija 97.39% 0.00% 97.39% 303,305 1,661 19,880
KD Equity Bolgarija 59.35% 0.00% 59.35% 527,086 4,077 103,480
KD Pelikan AD Bolgariija 0.00% 29.85% 29.85% 2,648,168 10,194 448,076
FDI KD Multifond Romunija 100.00% 0.00% 100.00% 251,352 509 1,448
FDI KD Optimus Romunija 94.53% 0.00% 94.53% 266,829 697 2,604
KD Maximus Romunija 0.00% 67.07% 67.07% 7,224,316 37,873 1,907,257
KD Adria Bond Hrvaška 77.57% 0.00% 77.57% 840,039 5,312 24,925
KD Victoria Hrvaška 0.00% 4.89% 4.89% 37,410,570 232,349 8,057,340
KD Delux Luxemburg 16.48% 9.14% 25.62% 16,100,042 33,838 1,485,315
Total: 536,950,417 1,049,720 138,213,700

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
The income from investments in mutual funds which
are presented as associated companies amounts
to EUR 2,107,111 (2006: EUR 2,654,565) and
financial assets designated at fair value through profit
or loss amount to EUR 93,718,387 (2006: EUR
46,144,997).
income from investments in mutual funds which are
presented as financial assets designated at fair value
through profit or loss amounts to EUR 15,282,347
(2006: EUR 6,630,850). Investments in associated
mutual funds presented in the balance sheet as
The associate KD ID d.d. is listed on the Ljubljana
Stock Exchange. The fair value of the Group’s
interest in KD ID d.d. was EUR 13,687,109 at 31
December 2007 (2006: EUR 8,778,480).
11. Financial assets
(in EUR) 2007 2006
At fair value through profit and loss
Current
Held for trading 42,508,318 48,515,149
Initially recognised through profit and loss 133,517,307 67,107,834
176,025,625 115,622,983
Held-to-maturity
Non-current 7,590,164 6,987,877
Available for sale
Non-current 218,916,170 189,872,199
Current 98,298,158 66,269,200
317,214,328 256,141,399
291
Total 500,830,117 378,752,259
11.1 Financial assets at fair value through profit or loss - held for trading
(in EUR) 2007 2006
Equity securities
Listed securities: 39,390,601 43,822,413
Debt securities
Listed securities:
Fixed interest rate 2,155,177 3,748,365
Floating interest rate 678,212 944,371
2,833,389 4,692,736
Government bonds 284,328 -
Total: 42,508,318 48,515,149

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
11.2 Financial assets at fair value through profit or loss - other assets
(in EUR) 2007 2006
Equity securities
Listed securities: 114,045,505 55,196,024
Debt securities
Listed securities:
Fixed interest rate 14,057,597 95,360
Floating interest rate 304,661 -
14,362,258 95,360
Unlisted securities
Fixed interest rate 4,225,309 -
Government bonds 884,235 11,816,450
Total: 133,517,307 67,107,834
11.3 Investments held-to-maturity
(v EUR) 2007 2006
292
Debt securities
Listed securities:
Fixed interest rate 6,155,989 5,667,296
Floating interest rate 209,091 209,043
6,365,080 5,876,339
Unlisted securities:
- fixed interest rate 115,486 -
Government bonds 1,109,598 1,111,538
Total: 7,590,164 6,987,877

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
11.4 Financial assets available for sale
(in EUR) 2007 2006
Equity securities
Listed securities 158,749,277 100,712,870
Non-listed securities 38,197,000 34,938,132
196,946,277 135,651,002
Debt securities
Listed securities:
Fixed interest rate 30,540,653 29,489,007
Floating interest rate 796,877 415,757
31,337,530 29,904,764
Non-listed securities:
Fixed interest rate - 694,830
Government bonds 88,930,521 89,890,803
Total: 317,214,328 256,141,399
11.5 Movements in financial assets
(in EUR)
Fair value through
profit & loss -
trading
Fair value
through profit &
loss - other
Available-forsale
Held-to-maturity
Total
293
At 1 January 2006 22,848,297 36,923,765 271,901,957 6,563,024 338,237,043
Exchange differences on monetary assets (440,769) 259,902 85,295 1,740 (93,832)
Additions 33,256,273 28,541,410 69,776,135 1,632,511 133,206,329
Acquisition of subsidiary - - 427,954 - 427,954
Disposals (sale and redemption) (17,550,805) (5,382,261) (92,815,210) (1,209,398)* (116,957,674)
Impairment of available-for-sale equity
securities
- - (9,633,388) - (9,633,388)
Net fair value gain (loss) - excluding net
realised gains
10,402,153 6,765,018 16,398,656 - 33,565,827
At 31 December 2006 48,515,149 67,107,834 256,141,399 6,987,877 378,752,259
At 1 January 2007 48,515,149 67,107,834 256,141,399 6,987,877 378,752,259
Exchange differences on monetary assets (865,193) (505,740) (53,008) - (1,423,941)
Additions 23,732,024 65,762,997 94,509,089 1,242,045 185,246,155
Acquisition of subsidiary 189,657 8,853 25,145 - 223,655
Disposal of subsidiary - - (23,031) - (29,519)
Disposals (sale and redemption) (32,787,535) (15,052,741) (73,093,232) (639,758)* (121,566,778)
Impairment of available-for-sale equity
securities
- - (2,596,286) - (2,596,286)
Net fair value gains - excluding net realised
gains
3,724,216 16,196,104 42,304,252 - 62,224,572
At 31 December 2007 42,508,318 133,517,307 317,214,328 7,590,164 500,830,117
* only redemption

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Impairment of available-for-sale non-listed equity
securities is recognised whether on the basis
of external independent valuations, using the
discounted future cash flow method or on the basis
of an internal model in which appropriateness has
been assessed by an independent qualified expert.
- the method of discounted cash flows was used
- projections were made for minority shareholder
- cash flow projections for the period of 5 years were
prepared
- revenue growth rates range up to 5% per year
- growth of employee costs was 3% per year
- discount rates range up to 11,6% per year
According to valuations performed in 2007 the
impairment of EUR 2,596,286 (2006: EUR
9,633,388) was recognised. The following key
assumptions were used in these valuations:
Held-to-maturity investments were redeemed in
2007 in the amount of EUR 639,758 (2006: EUR
1,209,398).
The effective interest rates on debt securities were as follows:
2007 2006
294
Debt securities:
– held-to-maturity financial assets 5.08% 5.12%
– available-for-sale financial assets 4.36% – 4.96% 4.00%-4.50%

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
12. Loans and other receivables
12.1 Loans
(in EUR) 2007 2006
Loans to individuals
Non-current 12,096 14,334
Current 266,645 -
Loans to corporate entities
Non-current 1,404,625 1,571,858
Current 18,883,951 15,759,076
Loans to related parties
Current 10,817,163 18,415,494
Bank deposits
Non-current 2,573,327 3,035,428
Current bank deposits 25,143,195 22,652,270
Total loans 59,101,002 61,448,460
Less: allowance for losses on loans and advances
Non-current (696,279) (689,767)
Current (653,631) (458,942)
(1,349,910) (1,148,709)
Total: 57,751,092 60,299,751
295
Current bank deposits are not treated as cash and cash equivalents, mainly due to the liquidity requirements
for insurance companies.
Movement in allowance for losses on loans:
(in EUR) 2007 2006
Balance at 1 January 1,148,709 1,069,867
Impairment in a year 252,198 203,875
Disposal of subsidiaries (50,997) -
Reversal of impairment during the year - (125,033)
Balance 31 December 1,349,910 1,148,709
The effective interest rates on loans were as follows:
2007 2006
Non-current loans 4.65% - 8.00% 4.65% - 7.00%
Current loans 2.53% - 10.00% 2.53% - 9.00%
Loans to related parties 3.29% - 5.45% 3.29% - 7.30%
Short-term bank deposits 2.9% - 4.38% 3.00% - 3.53%

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
12.2 Other receivables
(in EUR) 2007 2006
Trade receivables
Current 22,206,739 25,822,244
Less: provision for impairment of receivables (2,620,257) (3,195,186)
Trade receivables – net 19,586,482 22,627,058
Receivables arising from insurance and reinsurance contracts:
Due from contract holders 43,845,188 39,721,244
Less: provision for impairment of receivables from contract holders (13,140,743) (10,653,668)
Due from agents, brokers and intermediaries 32,700,280 25,904,556
Less: provision for impairment of receivables from agents, brokers
and intermediaries
(19,620,427) (15,434,223)
Due from reinsurers 3,154,077 1,655,860
Less: provision for impairment of receivables from reinsurers (1,630) (1,630)
Receivables arising from insurance and reinsurance contracts – net 46,936,745 41,192,139
Prepayments 851,925 3,396,316
Receivables from related parties 240,142 383,876
Accrued income and deferred expenses 10,324,585 4,181,455
11,416,652 7,961,647
Total: 77,939,879 71,780,844
296
Trade receivables of EUR 734.666 (2006: EUR 462,346) are classified as current assets based on the
normal operating cycle but are expected to be settled more than twelve months after the balance sheet date.
Movement in allowance for losses on trade and other receivables:
(in EUR) 2007 2006
Balance at 1 January 29,284,708 29,030,262
Provision for receivable impairment 10,361,156 11,063,585
Receivables written off during the year as uncollectible (826,621) (5,442)
Amounts recovered during the year (3,436,186) (10,803,697)
At 31 December 35,383,057 29,284,708

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
13. Inventories
(in EUR) 2007 2006
Property intended for sale in the ordinary course of business 10,654,407 7,577,233
Other 1,545,803 542,956
Total: 12,200,210 8,120,189
Other inventories consist of material and raw material (inventories of beverages and food) and inventories of
finished goods (books and special publications). Inventories are not pledged as collateral for liabilities.
14. Cash and cash equivalents
(in EUR) 2007 2006
Cash at bank and in hand 10,730,139 11,217,333
Call deposits 18,667,978 9,092,396
Total: 29,398,117 20,309,729
The effective interest rate on deposits held at call with banks ranged from 3.76% to 4.41% (2006: from
2.35% to 3.18%).
297
15. Capital
15.1 Share capital
(in EUR)
No. of shares
Ordinary
Preference
Ordinary
shares
Preference
shares
Share
premium
Treasury
sharesv
Total
Balance as at 1 January 2006 2,627,990 217,840 89,321,983 8,893,774 104,258,987 (2,921,650) 199,553,094
Purchase of treasury shares (30,001) (2,733) - - - (1,472,959) (1,472,959)
Disposal of treasury shares 15,450 - - - 136,325 541,654 677,979
Balance as at 31 December 2006 2,613,439 215,107 89,321,983 8,893,774 104,395,312 (3,852,955) 198,758,114
Balance as at 1 January 2007 2,613,439 215,107 89,321,983 8,893,774 104,395,312 (3,852,955) 198,758,114
Purchase of treasury shares - - - - - - -
Disposal of treasury shares - - - - - - -
Balance as at 31 December 2007 2,613,439 215,107 89,321,983 8,893,774 104,395,312 (3,852,955) 198,758,114

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
All issued shares are fully paid. The total number of
shares, including treasury shares, is:
- ordinary shares issued 2,675,640 (2006:
2,675,640),
- preference shares issued 266,413 (2006:
266,413).
Preference shares carry no voting rights but provide
their holder with the following rights:
- Preference right to dividend payment in amount
of EUR 1.67 before dividend payments to ordinary
share holders;
- In case of dividend payout to ordinary share
holders, the right to an additional dividend
Share premium in the amount of EUR 104,395,312
include:
- Share premium in the amount of EUR 45,177,164
- Revaluation reserves in the amount of EUR
59,218,148.
payment in amount of EUR 1.67, for a maximum
preference dividend payment of EUR 3.34;
- In case of liquidation of the company, the right of
preference treatment compared to ordinary share
holders, with the pay-out of the remaining assets
after liquidation in the amount of EUR 33.38.
The ordinary shares have been traded on
298
the organised market on the Ljubljana Stock
Exchange since 12 July 2001 and give shareholders
voting rights and participation on dividends.
At the 9th Annual General Meeting of shareholders
of KD Holding d.d. held on 30 August 2006,
the shareholders have adopted a resolution by
which each share, carrying nominal value of SIT
8,000 has been replaced by one non-par-value
share. The share capital and the number of shares
issued have remained unchanged.
15.2 Treasury shares
2007 2006
(in EUR)
Carrying
value Jan 1
Purchase
value
Carrying
value Dec
31
Share (%)
in capital
Carrying
value Jan 1
Purchase
value
Carrying
value Dec
31
Share (%)
in capital
KDHR* 2,424,829 - 2,424,829 2,11 1,564,685 860,144 2,424,829 2,11
KDHP** 1,428,126 - 1,428,126 1,74 1,356,965 71,161 1,428,126 1,74
Total: 3,852,955 - 3,852,955 3,85 2,921,650 931,305 3,852,955 3,85
* ordinary shares
** preference-shares

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
2007 2006
Number Jan 1 Purchase Number Dec 31 Number Jan 1 Disposal Number Dec 31
Number of shares
KDHR 62,201 - 62,201 47,650 14,551 62,201
KDHP 51,306 - 51,306 48,573 2,733 51,306
Total: 113,507 - 113,507 96,223 17,284 113,507
15.3 Accumulated profit of KD Holding d.d.
consists of net profit for the current year, decreases
for increased other reserves in the amount of EUR
The parent company KD Holding d.d. earned
EUR 17,335,788 net profit for 2007. Profit for
6,000,000 and increases for retained earnings in
the amount of EUR 9,642,380.
appropriation is EUR 20,978,168 for 2007 and
16. Other reserves and retained earnings
(in EUR) 2007 2006
Consolidation adjustment (1,463,252) 221,490
Revaluation reserve of financial assets-available for sale 55,574,797 24,150,460
Revaluation of derivative financial instruments (33,272) -
Retained earnings 76,416,444 52,739,049
299
Total: 130,494,717 77,110,999
(in EUR)
Translation reserves-currency
Revaluation
reserve-AFS Hedging reserve differences
Retained
earnings
Balance at 1 January 2006 20,003,020 - 2,836 34,594,554 54,600,410
Revaluation – gross 16,398,655 - - - 16,398,655
Revaluation – tax (3,771,691) - - - (3,771,691)
Net gains transferred to net profit-gross (11,012,369) - - - (11,012,369)
Net gains transferred to net profit-gross
– tax (Note 21)
2,532,845 - - - 2,532,845
Currency translation differences:
- Group - - 161,677 - 161,677
- Associates - - 56,977 - 56,977
Profit of the year - - - 18,569,269 18,569,269
Dividends - - - (424,774) (424,774)
Minority interest - - - - -
Balance as at 31 December 2006 24,150,460 - 221,490 52,739,049 77,110,999
Total

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
(in EUR)
Translation reserves-currency
Revaluation
reserve-AFS Hedging reserve differences
Retained
earnings
Total
Balance at 1 January 2007 24,150,460 - 221,490 52,739,049 77,110,999
Revaluation – gross 42,304,250 - - - 42,304,250
Revaluation – tax (7,063,187) - - - (7,063,187)
Net gains transferred to net profit-gross (4,302,824) - - - (4,302,824)
Net gains transferred to net profit-gross
– tax (Note 21)
1,530,797 - - - 1,530,797
Revalutation-associates (269,420) - - - (269,420)
Revaluation-derivative instrument - (33,272) - - (33,272)
Currency translation differences:
- Group - - (1,627,765) - (1,627,765)
- Associates - - (56,977) - (56,977)
Profit of the year - - - 33,059,887 33,059,887
Dividends - - - (9,382,492) (9,382,492)
Minority interest (775,281) - - - (775,281)
Balance as at 31 December 2007 55,574,797 (33,272) (1,463,252) 76,416,444 130,494,717
17. Borrowings
300
(in EUR) 2007 2006
Non-current
Bank borrowings
In Slovenia 48,373,487 36,318,382
Current portion (5,384,643) (4,735,232)
Loans due to others 227,250 -
Current portion (68,260) -
Bonds issued 75,368,725 75,324,967
Current portion (1,448,951) (1,449,170)
117,067,608 105,458,947
Current
Bank borrowings
In Slovenia 35,791,058 4,130,204
Loans due to others 4,490,162 1,976,369
Current portion of non-current borrowings 6,901,854 6,184,402
47,183,074 12,290,975
Total: 164,250,682 117,749,922
Total borrowings include collateralised liabilities
of EUR 88,032,819 (2006: EUR 17,795,080).
Bank borrowings are collateralised by the land and
buildings of the Group (Note 7).

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
The effective interest rates on borrowings were as follows:
2007 2006
Non-current loans 5.38% - 6.05% 4.78% - 4.93%
Current loans 4.87% - 5.43% 3.39% - 4.80%
18. Insurance contracts
18.1 Insurance liabilities and reinsurance assets
(in EUR) 2007 2006
Insurance contract
Non-life insurance contracts and health contract-gross:
- claims reported and loss adjustment expenses 59,375,825 60,696,455
- claims incurred but not reported 56,290,288 45,380,443
- unearned premiums 69,061,426 64,061,158
- provisions for bonuses, rebates and lapses 140,505 324,573
- mathematical provisions (for health insurance) 196,930 174,871
- other technical provisions (unexpired risk provisions included) 3,392,671 4,709,619
188,457,645 175,347,119
Life insurance contracts-gross:
- claims reported and loss adjustment expenses 1,753,838 1,557,370
- claims incurred but not reported 2,355,148 1,494,971
- unearned premiums 793,971 1,085,146
301
- other technical provisions (unexpired risk provisions included) 34,906 57,949
4,937,863 4,195,436
Long term insurance contracts:
- with DPF 62,548,026 57,765,184
- without fixed terms - unit-linked 112,978,279 57,882,765
175,526,305 115,647,949
Total insurance liabilities, gross 368,921,813 295,190,504

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
302
(in EUR) 2007 2006
Receivables from reinsurers
Non-life insurance contracts:
- claims reported and loss adjustment expenses 8,848,566 7,465,540
- claims incurred but not reported 910,669 295,159
- unearned premiums 1,069,940 688,504
- provisions for bonuses, rebates 407 2,420
- other technical provisions (unexpired risk provisions included) - 5,750
10,829,582 8,457,373
Life insurance contracts:
- claims reported and loss adjustment expenses 127,076 104,795
- claims incurred but not reported 2,144 19,784
- unearned premiums 46,022 49,645
175,242 174,224
Total reinsurers' receivables of insurance liabilities 11,004,824 8,631,597
Non-life insurance contracts and healh contracts-net:
- claims reported and loss adjustment expenses 50,527,259 53,230,915
- claims incurred but not reported 55,379,619 45,085,284
- unearned premiums 67,991,486 63,372,654
- provisions for bonuses, rebates 140,098 322,153
- mathematical provision (for health insurance) 196,930 174,871
- other technical provisions (unexpired risk provisions included) 3,392,671 4,703,869
177,628,063 166,889,746
Life insurance contract-net:
- claims reported and loss adjustment expenses 1,626,762 1,452,575
- claims incurred but not reported 2,353,004 1,475,187
- unearned premiums 747,949 1,035,501
- other technical provisions (unexpired risk provisions included) 34,906 57,949
4,762,621 4,021,212
Long-term insurance contracts:
- with DPF 62,548,026 57,765,184
- without fixed terms - unit-linked 112,978,279 57,882,765
175,526,305 115,647,949
Total insurance liabilities, net 357,916,989 286,558,907
18.2 Movements in insurance liabilities and reinsurance assets
a) Claims and loss adjustment expenses
2007 2006
(in EUR)
Gross Reinsurance Net Gross Reinsurance Net
Notified claims 62,253,827 (7,570,335) 54,683,492 48,995,535 (6,226,260) 42,769,275
Incurred but not reported 46,875,412 (314,943) 46,560,469 45,479,490 (728,852) 44,750,638
Total at the beginning of the year 109,129,239 (7,885,278) 101,243,961 94,475,025 (6,955,112) 87,519,913
Cash paid for claims settled in the year (45,978,724) 2,273,779 (43,704,945) (36,189,427) 2,133,267 (34,056,160)
Increase in liabilities
- arising from current year claims 55,417,401 (2,874,711) 52,542,690 53,634,431 (1,809,602) 51,824,829
- arising from prior year claims 1,207,183 (1,402,245) (195,062) (2,790,790) (1,253,831) (4,044,621)
Total at end of the year 119,775,099 (9,888,455) 109,886,644 109,129,239 (7,885,278) 101,243,961

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
2007 2006
(in EUR)
Gross Reinsurance Net Gross Reinsurance Net
Notified claims 61,129,663 (8,975,642) 52,154,021 62,253,827 (7,570,335) 54,683,492
Incurred but not reported 58,645,436 (912,813) 57,732,623 46,875,412 (314,943) 46,560,469
Total at the end of the year 119,775,099 (9,888,455) 109,886,644 109,129,239 (7,885,278) 101,243,961
b) Unearned premiums
2007 2006
(in EUR)
Gross Reinsurance Net Gross Reinsurance Net
Total at the beginning of the year 65,146,304 (738,149) 64,408,155 57,280,596 (1,145,731) 56,134,865
Increase of liabilities 72,441,980 (1,561,424) 70,880,556 58,424,069 (33,317) 58,390,752
Decrease of liabilities (67,737,367) 1,183,611 (66,553,756) (50,558,361) 440,899 (50,117,462)
Currency differences-net 4,480 - 4,480 - - -
Total at the end of the year 69,855,397 (1,115,962) 68,739,435 65,146,304 (738,149) 64,408,155
c) Unit-liked contracts
(in EUR)
2007 2006
Gross Reinsurance Net Gross Reinsurance Net
Total at the beginning of the year 57,882,765 - 57,882,765 23,196,349 - 23,196,349
Increase linked to premium
payments
43,236,959 - 43,236,959 31,040,559 - 31,040,559
Decrease linked to payouts (1,645,670) - (1,645,670) (885,342) - (885,342)
Decrease due to charged
commission
(2,668,624) - (2,668,624) (1,469,126) - (1,469,126)
303
Change due to change in unit price 16,196,103 - 16,196,103 5,999,232 - 5,999,232
Currency differences-net (23,254) - (23,254) 1,093 - 1,093
Total at the end of the year 112,978,279 - 112,978,279 57,882,765 - 57,882,765
d) Long-term insurance contracts with DPF
2007 2006
(in EUR)
Gross Reinsurance Net Gross Reinsurance Net
Total at the beginning of the year 57,765,184 - 57,765,184 54,139,230 - 54,139,230
Increase linked to premium payments 7,563,285 - 7,563,285 5,382,333 - 5,382,333
Decrease linked to payouts (4,713,079) - (4,713,079) (3,130,787) - (3,130,787)
Increase by the interest 1,184,965 - 1,184,965 1,139,489 - 1,139,489
Increase by the DPF portion for the
current period
748,121 - 748,121 234,919 - 234,919
Currency differences-net (450) - (450) - - -
Total at the end of the year 62,548,026 - 62,548,026 57,765,184 - 57,765,184

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
e) Other insurance contracts
2007 2006
(in EUR)
Gross Reinsurance Net Gross Reinsurance Net
Total at the beginning of the year 5,267,012 (8,170) 5,258,842 2,257,404 (1,415) 2,255,989
Increase of liabilities 3,572,597 (407) 3,572,190 4,693,521 (6,958) 4,686,563
Decrease of liabilities (5,074,597) 8,170 (5,066,427) (1,683,913) 203 (1,683,710)
Total at the end of the year 3,765,012 (407) 3,764,605 5,267,012 (8,170) 5,258,842
19. Derivative financial instruments
The Group has an interest swap in the amount of
EUR 11,000,000 intended to reduce the exposure
of cash flows of interest on loans (cash flow hedge).
The fair value of the interest swap on 31 Decmber
2007 is negative and the amount is EUR 33,272.
Financial derivatives of the Group include future
contracts; the fair value as at 31 December 2007
is EUR 6,279,463. The Group recognised EUR
6,279,463 in losses from valuation of future
contracts.
The effect of valuation of hedge instruments is
recognised in equity.
304
20. Trade and other payables
(in EUR) 2007 2006
Trade payables 20,597,027 26,280,314
Amounts due to related parties 188,603 978,046
Payables-state (without income tax) 1,964,406 1,883,701
Salaries 3,779,780 3,244,118
Employee benefits 4,582,141 3,283,733
Accrued expenses and deferred income 7,220,873 5,568,110
Other insurance payables 12,536,188 12,782,136
Total: 50,869,018 54,020,158

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
21. Deferred income taxes
Deferred income tax assets and liabilities are offset
when there is a legally enforceable right to offset
current tax assets against current tax liabilities and
when the deferred income taxes relate to the same
fiscal authority.
The offset amounts are as follows:
(in EUR) 2007 2006
Deferred tax assets:
– Deferred tax assets to be recovered after more than 12
months
8,938,370 7,844,619
8,938,370 7,844,619
Deferred tax liabilities:
– Deferred tax liabilities to be recovered after more than 12
months
(11,466,256) (6,380,706)
(11,466,256) (6,380,706)
(2,527,886) 1,463,913
(in EUR) 2007 2006
The gross movement in the deferred income tax account is as follows:
Beginning of the year 1,463,913 (3,050,175)
Exchange differences (33,900) 6,063
Acquisition of subsidiaries (543) -
Disposal of subsidiaries (11,562) -
Income statement charge (Note 28) 1,586,596 5,746,871
Tax charged/(credited) to equity (Note 17) (5,532,390) (1,238,846)
At the end of the year (2,527,886) 1,463,913
305
The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting
of balances within the same tax jurisdiction, is as follows:
Deferred tax liabilities:
(in EUR) Fair value gains Other Total
At 1 January 2006 9,005,041 602,429 9,607,470
Charged/(credited) to the income statement (4,087,869) (377,896) (4,465,765)
Charged to equity 3,771,691 - 3,771,691
Charged to equity-transfer to net profit (Note 16) (2,532,845) - (2,532,845)
Exchange differences 13 142 155
At 31 December 2006 6,156,031 224,675 6,380,706
Charged /(credited) to the income statement (287,965) (159,493) (447,458)
Charged to equity-fair value remeasurement 7,063,187 - 7,063,187
Charged to equity-transfer to net profit (Note 16) (1,530,797) - (1,530,797)
Acquisition of subsidiaries - 543 543
Exchange differences - 75 75
At 31 December 2007 11,400,456 65,800 11,466,256

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Deferred tax assets:
Employee Impairment
(in EUR)
benefits losses
Tax losses Other Total
At 1 January 2006 737,803 4,993,382 530,350 295,760 6,557,295
Charged/(credited) to the income statement (197,396) 961,680 241,874 274,948 1,281,106
Exchange differences - - 6,218 - 6,218
At 31 December 2006 540,407 5,955,062 778,442 570,708 7,844,619
Charged/(credited) to the income statement 85,984 (1,703,264) 3,317,710 (561,292) 1,139,138
Disposal of subsidiaries (11,562) - - - (11,562)
Exchange differences 130 - (33,955) - (33,825)
At 31 December 2007 614,959 4,251,798 4,062,197 9,416 8,938,370
The deferred income tax charged to equity during the year is as follows:
(in EUR) 2007 2006
Fair value reserves in shareholders’ equity:
- Available-for-sale financial assets (5,532,390) (1,238,846)
(5,532,390) (1,238,846)
306
Deferred income tax assets are recognised for tax loss
carry-forwards to the extent that the realisation of the
related tax benefit through the future taxable profits
is probable. The Group did not recognise deferred
income tax assets of EUR 2,722,784 (2006: EUR
1,793,465) in respect of losses amounting to EUR
11,773,632 (2006: EUR 8,967,330) that can be
Unrecognised potential deferred tax assets:
carried forward against future taxable income. These
losses have been generated by the subsidiaries
of the Group with a history of loss-making.The
management estimates that the future taxable
profits will not be sufficient to realise the related tax
benefit. According to the new corporate income tax
legislation there are no time limitations to use the tax
loss carry-forwards or tax credits.
(in EUR) 2007 2006
Deductible temporary differences 3,508,088 155,930
Unrecognised tax loss carry forwards 11,773,632 8,967,330
Unrecognised tax credits 1,079,411 102,249
Total: 16,361,131 9,225,509

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
22. Revenue
22.1 Net earned premiums on insurance contracts
(in EUR) 2007 2006
Long-term insurance contracts with DPF 14,273,783 14,469,321
Long-term insurance contracts without fixed terms - unit-linked 59,712,368 39,680,875
Financial contracts with DPF
- Premium receivables 1,486,631 1,440,253
- Change in unearned premium provisions (11,426) 14,162
1,475,205 1,454,415
Non-life insurance contracts and health contracts
- Premium receivables 233,847,233 215,082,493
- Change in unearned premium provisions (4,256,009) (7,863,907)
229,591,224 207,218,586
Premium revenue arising from insurance contracts issued 305,052,580 262,823,197
Short-term reinsurance contract
- Premium payables (9,777,362) (9,303,455)
- Change in unearned premium provisions (67,168) 113,545
Long-term reinsurance contracts (449,267) (359,773)
Premium revenue ceded to reinsurers on insurance contracts issued (10,293,797) (9,549,683)
Net insurance premium revenue 294,758,783 253,273,514
307

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
22.2 Revenue and other operating income (excluding net earned premiums on insurance contracts)
(in EUR) 2007 2006
Sales of goods 5,055,547 2,481,758
Sales of services 72,176,723 52,982,167
77,232,270 55,463,925
Other operating income:
Other insurance income 4,345,868 4,282,136
Other operating income 17,992,188 10,101,199
Excess on acquisition of a subsidiary (Note 31) 768,664 120,535
Excess on disposal of subsidiary (Note 31) 2,795,586 -
Gain from increase the share capital of a subsidiary 1,062,019 1,308,354
26,964,325 15,812,224
Total: 104,196,595 71,276,149
In November 2007 the Group made an additional
increased its holding by 2.38% and recorded a gain.
investment in its subsidiary KD Življenje d.d., which
issued new shares to increase its share capital.
Since the minority shareholders did not participate
The Group disposed of an investment in Globtour d.d.
and recorded a gain of EUR 2,758,865.
in the transaction with their entire share, the Group
308
23. Expenses
23.1 Insurance contracts benefits (net) and claims
2007
(in EUR) Gross Reinsurance Net
Long-term insurance contracts with DPF
- death, maturity and surrender benefits 7,118,590 (115,694) 7,002,896
- increase of liabilities - - -
Long-term insurance contracts without fixed terms (unit-linked)
- death, maturity and surrender benefits 1,959,628 - 1,959,628
- increase of liabilities 55,118,769 - 55,118,769
Net mathematical provisions-insurance contracts with DPF
- death, maturity and surrender benefits 1,801,462 - 1,801,462
- increase of liabilities 4,783,291 - 4,783,291
Non-life insurance and health insurance
- claims and loss adjustment expenses 165,467,815 (11,469,003) 153,998,812
- increase of liabilities 7,148,616 - 7,148,616
Total cost of policyholder benefits, claims and loss 243,398,171 (11,584,697) 231,813,474

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
2006
(in EUR) Gross Reinsurance Net
Long-term insurance contracts with DPF
- death, maturity and surrender benefits - - -
- increase of liabilities - - -
Long-term insurance contracts without fixed terms (unit-linked)
- death, maturity and surrender benefits 631,192 - 631,192
- increase of liabilities 35,108,892 - 35,108,892
Net mathematical provisions-insurance contracts with DPF
- death, maturity and surrender benefits 7,787,197 (80,675) 7,706,522
- increase of liabilities 3,521,236 - 3,521,236
Non-life insurance and health insurance
- claims and loss adjustment expenses 145,734,198 (3,970,477) 141,763,721
- increase of liabilities (2,388,228) - (2,388,228)
Total cost of policyholder benefits, claims and loss 190,394,487 (4,051,152) 186,343,335
23.2 Expenses by nature (excluding insurance contracts benefits (net) and claims)
(in EUR) 2007 2006
Raw materials and consumables used 7,184,227 5,038,503
Cost of services 84,724,041 75,887,790
Employee benefit expense:
Wages and salaries 43,226,249 35,066,931
Social security costs 8,034,912 7,500,327
Other cost of employees 5,721,519 6,062,326
Other long-term and post-employment benefits 2,268,097 1,427,069
59,250,777 50,056,653
Depreciation, amortisation and impairment 8,215,555 6,917,704
Other insurance expenses 7,248,001 4,567,005
Other expenses 14,337,515 6,408,821
309
Total: 180,960,116 148,876,476
Number of employees 1,927 1,802
In 2007 many new insurance companies were established by the Group, which is why some income and
expenses in 2006 are not comparable with 2007.

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
23.3 Audit remuneration
(in EUR) 2007 2006
Expenses (VAT included):
- Audit of the financial statements 440,343 293,937
- Other audit services 178,057 776
- Tax advisory 3,000 78,509
- Other non audit services 75,000 144,838
Total: 696,400 518,060
24. Investment income
(in EUR) 2007 2006
Available-for-sale:
- dividend income 2,894,635 2,824,079
- interest income, exchange differences 5,031,917 4,549,957
7,926,552 7,374,036
Held-to-maturity
- interest income 362,506 218,373
310
Financial assets at fair value through P&L:
- dividend income 720,907 621,941
- interest income, exchange differences (209,415) 1,110,920
511,492 1,732,861
Cash and cash equivalents, loans, deposits, receivables:
- interest income 5,044,313 5,076,484
Total: 13,844,863 14,401,754
25. Net realised gains on financial assets available for sale
(in EUR) 2007 2006
Realised gains on financial assets – available for sale 26,046,744 21,694,705
Realised losses on financial assets – available for sale (1,848,818) (4,355,357)
24,197,926 17,339,348
Impairment of financial assets (2,596,286) (9,633,386)
Total: 21,601,640 7,705,962

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
26. Net fair value gains on assets at fair value through profit and loss
(in EUR) 2007 2006
Changes of fair value of financial assets
- held for trading 3,724,216 10,057,019
- initial recognition 16,196,104 5,999,232
19,920,320 16,056,251
Net fair value gains on financial assets at fair value through profit and loss:
- held for trading 7,149,735 2,425,239
- initial recognition 449,626 (55,717)
7,599,361 2,369,522
Changes of fair value of derivatives (6,279,463) -
Total: 21,240,218 18,425,773
27. Finance costs
(in EUR) 2007 2006
Interest expense:
Bank borrowings (3,040,305) (1,653,998)
Bonds (4,055,059) (3,030,041)
Other (175,146) (113,320)
Net foreign exchange differences - other 717,877 (716,441)
Total: (6,552,633) (5,513,800)
311
28. Income tax expense
(in EUR) 2007 2006
Current tax (14,097,912) (13,592,473)
Deferred tax 1,586,596 5,746,871
Total: (12,511,316) (7,845,602)

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the
weighted average tax rate applicable to profits of the consolidated companies as follows:
(in EUR) 2007 2006
Profit before tax 47,456,900 28,722,371
Tax calculated at domestic tax rates applicable to profits in the
respective countries
(11,093,938) (7,147,220)
Income not subject to tax 4,542,968 3,356,177
Expenses not deductible for tax purposes (5,284,546) (3,499,708)
Utilisation of previously unrecognised tax losses 690,293 995,037
Tax losses for which no deferred income tax asset was recognised (1,366,093) (1,549,888)
Tax charge (12,511,316) (7,845,602)
Effective tax rate 26.36% 27.32%
The tax authorities may at any time inspect the
books and records within 5 years subsequent to the
reported tax year, and may impose additional tax
assessments and penalties. Some of the subsidiaries
have been the subject of the tax inspection in the
last years, but the parent company has not been
inspected by the tax authorities since 2001 when it
was established. The Group's management is not
aware of any circumstances which may give rise to
a potential material liability in this respect.
312
29. Earnings per share
by the weighted average number of ordinary shares
in issue during the year, excluding ordinary shares
Basic earnings per share is calculated by dividing
the profit attributable to equity holders of the Group,
adjusted for the amount of preference dividends,
purchased by the Group and held as treasury
shares. There are no potential dilutive shares.
(in EUR) 2007 2006
Basic
Profit attributable to equity holders of the Group 32,341,428 18,210,040
Weighted average number of ordinary shares in issue 2,613,439 2,620,354
Basic and diluted earnings per share (EUR per share) 12.38 6.95

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
30. Dividends per share
31. Acquisitions and disposals
According to the General Meeting’s decision
31.1 Acquisition
on accumulated profit distribution, holders of
preference shares received a dividend of EUR 3.34
per share in 2007 (2006: EUR 1.67 per preference
In 2007 the Group acquired more than 50% in
six companies:
share) and a dividend of EUR 3.2 per ordinary
share (2006: EUR 0 per ordinary share). For 2007
the Chief Executive Officer proposed a dividend to
holders of preference shares of EUR 3.34 per share
and a dividend to holders of ordinary shares of EUR
3.4 per share.
- KD Securities ead Sofija – 1. 1. 2007
- Vrtnarstvo Celje d.o.o. – 1. 1. 2007
- KD Vifin d.o.o. Bratislava – 30. 6. 2007
- VIB a.d. Banja Luka – 30. 6. 2007
- Oklev d.o.o. Ljubljana – 31. 12. 2007
- Group Gea College – 31. 12. 2007.
According to four business combinations the Group
recognised goodwill totaling EUR 403,304; in the
other two business combinations (the companies
313
Gea College and Vrtnarstvo Celje d.o.o.) the Group
recognised an excess of EUR 768,664.
Details of net assets acquired and excess on the acquisition are as follows:
(in EUR) 2007 2006
Purchase consideration:
– cash paid 1,847,987 424,762
– direct costs relating to the acquisition - 9,314
Total purchase consideration 1,847,987 434,076
Fair value of net assets acquired 2,213,347 554,611
Goodwill (Note 9) 403,304 -
Excess (Note 22.2) (768,664) (120,535)

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
The assets and liabilities arising from the acquisition are as follows:
(in EUR) Fair value Carrying value
Cash and cash equivalents 986,672 718,257
Property, plant and equipment 1,442,568 18,344
Investment property 4,536,423 -
Available-for-sale financial assets 223,649 427,954
Loans and receivables 1,812,768 1,823,556
Other assets 1,306,403 69,271
Financial liabilities (2,734,719) -
Payables (1,217,667) (59,735)
Net assets 6,356,097 2,997,647
Minority interest 2,402,190 1,237,310
Net assets acquired:
- in the previous years 1,740,560 1,205,909
- in a current year 2,213,347 554,611
Cash and cash equivalents in subsidiary acquired
- in the previous years 768,602 669,459
- in a current year 1,847,987 434,076
Cash and cash equivalents in subsidiary acquired (986,672) (718,257)
Cash outflow on acquisition 1,629,917 385,278
314
31.2 Disposal
In December 2007 the Group disposed of 100% of the
share capital of Globtour d.o.o. and 100% of the share
capital of company KD Investments b.v., Netherlands.
The gain on the disposal amounted to EUR 2,795,586.
(in EUR)
Carrying value
Cash and cash equivalents 293,958
Property, plant and equipment 546,638
Loans and receivables 4,407,932
Other assets 90,938
Financial liabilities (1,297,935)
Payables (5,162,211)
Net assets (1,120,680)
Goodwill 25,092
Minority interest -
Cash and cash equivalents for disposal of net assets 1,700,000
Cash and cash equivalents in diposed companies (293,958)
Cash from company disposal 1,406,042

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
Globtour d.o.o. realised EUR 21,963,462 in income
in 2007, the major part being for travel arrangements.
Operating profit in 2007 was EUR 57,961, net loss for
2007 was EUR 36,215.
32. Related-party transactions
The Group is controlled by KD Group d.d., Ljubljana
(incorporated in Slovenia), which owns 60.39% of
the Group’s shares. The remaining 39.61% of the
shares are widely held.
The following transactions were carried out with related parties:
(in EUR) 2007 2006
Sales of goods and services
- Associates 2,562,461 1,946,315
- KD Group d.d. 1,942 26,160
- Other KD Group d.d. related parties - 35,624
Total: 2,564,403 2,008,100
Goods and services are sold on the basis of the price lists in force for both related and unrelated parties.
(in EUR) 2007 2006
Purchases of goods and services
- Associates 1,618,907 915,753
- KD Group d.d. 2,945 871,833
- Other KD Group d.d. related parties 86,411 81,163
315
Total: 1,708,263 1,868,749
(in EUR) 2007 2006
Year-end balances arising from sales/purchases of goods/services
Receivables from related parties:
- Associates 237,221 346,720
- KD Group d.d. 2,921 1,527
- Other KD Group d.d. related parties - 35,628
240,142 383,876
Payables to related parties:
- Associates 167,257 130,746
- KD Group d.d. 19,180 844,129
- Other KD Group d.d. related parties 2,166 3,171
188,603 978,046

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
(in EUR) 2007 2006
Key management personnel compensation
Salaries 2,592,343 2,067,839
Total: 2,592,343 2,067,839
(in EUR) 2007 2006
Loans to associates
Beginning of the year 1,008,805 511,650
Loans advanced during the year 1,545,904 1,273,176
Loan repayments received (2,463,949) (777,099)
Interest charged 56,788 24,566
Interest received (58,496) (23,489)
End of the year 89,052 1,008,805
316
(in EUR) 2007 2006
Loans to KD Group d.d.
Beginning of the year 17,406,689 19,489,079
Loans advanced during the year 16,596,200 23,083,404
Loan repayments received (23,043,790) (25,236,050)
Interest charged 681,938 635,562
Interest received (912,926) (565,306)
End of the year 10,728,111 17,406,689
No provision was required in 2007 and 2006 for loans to associates and KD Group d.d.
(in EUR) 2007 2006
Borrowings from associates
Beginning of the year - 1,173,106
Borrowings received during the year - -
Borrowings repayments - (1,168,419)
Interest charged - 300
Interest paid - (4,987)
End of the year - -

KD Holding Group
Notes to Consolidated Financial Statements as at and for the year ended 31 December 2007
(in EUR) 2007 2006
Contribution to and from mutual funds
Investments in mutual funds – associates 14,953,733 16,569,846
Investments in mutual funds – recognised at fair value through profit / loss 93,718,387 46,144,997
Share of profit of associates (Note 10) 2,107,111 2,654,565
Share of profit – recognised at fair value through profit / loss 15,282,347 6,630,850
33. Events after the balance sheet date
made on 16 January 2008 for shares of KD Življenje
(SZZR) and on 17 January 2008 for shares of Adriatic
In January 2008 KD Holding d.d. took the decision
of the Central Securities Clearing Corporation (KDD)
to transfer shares because of the exclusion of minority
shareholders of KD Življenje insurance company d.d.
Slovenica d.d. (ADZR). By entry of the transfer of
shares in the Central Corporation KD Holding became
the sole shareholder of the companies Adriatic
Slovenica d.d. and KD Živjenje d.d.
and Adriatic Slovenica d.d. The transfer of shares
from minority shareholders to main shareholder was
Since the beginning of 2008 many activities in
the Group which may cause disposal of Adriatic
Slovenica d.d. have taken place.
317

KD Holding Group
Consolidated Financial Statements as at and for the year ended 31 December 2007
318
Annual Report 2007
KD Holding Group
Publisher:
KD Holding, finančna družba, d. d., Celovška 206, 1000 Ljubljana
Editing and production:
KD Holding d. d.
Concept and creative texts:
Stojan Pelko, PhD., Korpus d. o. o.
Creative concept and design:
Katarina Klemen Kovačič, MSc. (KD Holding d. d.)
Original photography:
Arne Hodalič
The photographs of the Group management were taken in the City Museum of Ljubljana, with which KD Holding collaborated, as a
sponsor, on the installation of a permanent commemorative collection dedicated to Oton Župančič at the Oton Župančič Library in Ljubljana.
Redaction:
KD Holding d. d. and Korpus d. o. o.
Translation:
Amidas d. o. o. and Erica Johnson Debeljak
Technical support:
Prajs d. o. o. and Fotoformat
Printed by:
Collegium Graphicum d. o. o.
Impression:
400
July 2007
The Annual Report of the KD Holding Group for 2007 is available at: www.kd-group.com.
The Annual Report 2007 in English language is the translation of the Slovene version of the KD Holding Group Annual Report 2007, which is the legal version,
approved by the supervisory board of KD Holding d. d. and published on the information system of the Ljubljana Stock Exchange (SEOnet).

KD Holding Group
Consolidated Financial Statements as at and for the year ended 31 December 2007
Rimski kovanci - arheološko najdbišče reka Ljubljanica
319

320
KD Holding Group
Consolidated Financial Statements as at and for the year ended 31 December 2007