A response to an article in the weekly magazine *Demokracija*

On 30 April 2015, the newspaper *Demokracija* published an article by the journalist Gašper Blažič, entitled *The Demagogic Seller of the Family Silver*. Below, we provide a correction to the inaccurately reported information, whilst also adding a clarification regarding the management of investments in the companies of the KD Group.

The article in question contains incorrect and unprofessional information, as the author states that Matjaž Gantar (KD Group) ‘pocketed’ the proceeds from the sale of Žito. We would like to emphasise that KD Group d. d. did not own any shares in Žito; the shares in Žito were held as part of the investments of mutual funds managed by KD Skladi, the insurance company Adriatic Slovenica (AS) and KD Kapital, all three of which are part of the KD Group. Thus, the combined share of all companies within the KD Group in the sales consortium amounted to 42 per cent.

We would also like to explain to both the journalist and the readers of Demokracija the importance of sound investment management.

KD Skladi will receive a purchase price of EUR 7.9 million on behalf of the sub-funds of the KD Umbrella Fund. The purchase price represents significant holdings in the KD Galileo fund, a mixed flexible fund (2.6 per cent), KD Rastko, a European equity fund (3.7 per cent), and KD Dividendni, an equity fund (6.2 per cent), and will be allocated to new investment opportunities in accordance with the investment policy of each sub-fund.

Following the conclusion of the negotiations, KD Skladi considers that the negotiations were conducted professionally. Cooperation with the state, in this case a significant shareholder in Žito, was fair in every respect and was based on a commitment to transparency, efficiency and responsible ownership. In managing investors’ assets, KD Skladi strives to achieve its objective: to provide the highest-quality investment solutions for investors, delivering consistent long-term returns on investment. Investors are always at the heart of our decision-making. The buyer of Žito was selected through a competitive process and in line with the set objectives. The bid selected represents the fulfilment of the set objectives for investors.

In the case of the insurance company Adriatic Slovenica, all its investments, as was the case with the investment in Žito, for which the total purchase price amounted to EUR 0.4 million, are channelled into AS’s reserve funds, which provide additional safeguards for Adriatic Slovenica’s policyholders. Thus, in the event of major claims, funds from the reserve funds are allocated to the settlement of these claims. The condition for the reserve funds to remain stable and to provide the means for settling claims for policyholders is the profitable management of investments in these funds; whilst profitable investment management is also an obligation of the insurance company, as prescribed by the Insurance Act.

This notice will also be published on the company’s website www.kd-group.com under ‘Public Announcements’ from 14 May 2015 for a period of at least five years.

KD Group d.d.