Annual report 2005 - Sava dd
Annual report 2005 - Sava dd Annual report 2005 - Sava dd
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2 |
3 |<br />
| i n t r o d u c t i o n |<br />
In <strong>2005</strong> the <strong>Sava</strong> Group surpassed the majority<br />
of its plans. These are the results that give<br />
us the impetus to move forward.
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4 |<br />
Two years before the expiration of the planned<br />
development strategy we have accomplished the<br />
majority of our goals. The return on capital<br />
surpassed that planned 10 per cent, and the equity<br />
value of the <strong>Sava</strong> Group rose to €392.4 million.<br />
We are designing bold new plans.
Robert Kranjec,<br />
ski jumper,<br />
Olympic bronze medal winner<br />
5 |<br />
| i n t r o d u c t i o n |
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6 |<br />
Index<br />
Introduction<br />
1. PROFILE OF THE HOLDING COMPANY SAVA D.D. 8<br />
2. COMPOSITION OF THE SAVA GROUP 9<br />
2.1Changes in the composition of the <strong>Sava</strong> Group 1<br />
2.2 Associated companies in the <strong>Sava</strong> Group 11<br />
2.3 Representative offices in the <strong>Sava</strong> Group 12<br />
2.4 Organisational structure of the <strong>Sava</strong> Group after the accounting period 12<br />
3. SIGNIFICANT FINANCIAL DATA AND INDICATORS 15<br />
4. A REVIEW OF HIGHLIGHTS 16<br />
4.1A review of highlights in the period January-December <strong>2005</strong> 16<br />
4.2 A review of highlights after the accounting period 19<br />
5. REPORT BY THE CHAIRMAN OF THE BOARD 20<br />
6. MANAGEMENT AND ADMINISTRATIVE BODIES 24<br />
6.1Board of Management 24<br />
6.2 Supervisory Board 26<br />
7. REPORT BY THE SUPERVISORY BOARD 29<br />
8. THE CORPORATE GOVERNANCE SYSTEM 34<br />
9. RISK MANAGEMENT 39<br />
9.1Financial risks 40<br />
9.2 Risks related to issued shares of <strong>Sava</strong> d.d. 42<br />
10. FINANCIAL MANAGEMENT 43<br />
Business Analysis<br />
11. THE SAVA SHARE AND OWNERSHIP STRUCTURE 48<br />
11.1 Movement of the <strong>Sava</strong> share 48<br />
11.2 Ownership structure of the company 50<br />
11.3 Calendar of more significant announcements 55<br />
11.4 Contact persons 56<br />
12. DEVELOPMENT STRATEGY 57<br />
13. GENERAL ECONOMIC CONDITIONS 61<br />
14. BUSINESS OPERATIONS OF THE SAVA GROUP 62<br />
14.1 Business performance of the <strong>Sava</strong> Group in <strong>2005</strong> 62<br />
14.2 Assets, equity and liabilities of the <strong>Sava</strong> Group at 31/12/<strong>2005</strong> 66<br />
15. BUSINESS OPERATIONS BY DIVISION 68<br />
15.1 Rubber Manufacturing division with the Foreign Trade Network 68<br />
15.2 Trade division 72<br />
15.3 Tourism division 76<br />
15.4 Real Estate division 82<br />
15.5 Investment Finance division 86<br />
15.6 Chemicals division 92<br />
15.7 Other companies 93<br />
16. BUSINESS OPERATIONS OF SAVA D.D. 96<br />
17. OUTLOOK FOR 2006 101<br />
18. MARKETING 102<br />
18.1 Managing brand names 102<br />
18.2 Customer policy 103
7 |<br />
| i n t r o d u c t i o n |<br />
19. STRATEGIC PURCHASING AND SUPPLIERS 104<br />
20. DEVELOPMENT ACTIVITIES 106<br />
20.1Development of business processes 106<br />
20.2 Quality of business 107<br />
20.3 Development of information support 109<br />
Sustainable Development Report<br />
21. SUSTAINABLE DEVELOPMENT 112<br />
22. IMPORTANT ACCOMPLISHMENTS 113<br />
22.1 Employees in the <strong>Sava</strong> Group 113<br />
22.2 Sponsorships for and donations to the social community 114<br />
22.3 Environmental indicators in the <strong>Sava</strong> Group 115<br />
23. THE DEVELOPMENT OF EMPLOYEES 116<br />
23.1 Concern for employees 116<br />
23.2 Concern for employees outside of working hours 122<br />
23.3 Concern for employee safety and health at work 123<br />
24. STANDARDS AND POLICIES 126<br />
25. IMPORTANT ACKNOWLEDGEMENTS AND AWARDS IN <strong>2005</strong> 127<br />
26. DEVELOPING THE SOCIAL COMMUNITY 129<br />
26.1Sponsorship for and donations to the social community 129<br />
26.2 Integration in the social community 132<br />
27. PROTECTING THE ENVIRONMENT AND FIRE SAFETY 133<br />
27.1Environmental protection 133<br />
27.2 Efficient use of energy 135<br />
27.3 Fire safety 138<br />
27.4 Environmental safety in the future 139<br />
Financial Report<br />
28. FINANCIAL STATEMENTS OF THE SAVA GROUP WITH NOTES IN ACCORDANCE<br />
WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS 142<br />
28.1Audited consolidated financial statements of the <strong>Sava</strong> Group in accordance<br />
with International Financial Reporting Standards 142<br />
28.2 Notes to the financial statements of the <strong>Sava</strong> Group in accordance<br />
with International Financial Reporting Standards 147<br />
28.3 Statement by the Board of Management 187<br />
28.4 Auditor’s <strong>report</strong> for the <strong>Sava</strong> Group 188<br />
29. FINANCIAL STATEMENTS OF THE COMPANY SAVA D.D. WITH NOTES IN<br />
ACCORDANCE WITH SLOVENE ACCOUNTING STANDARDS 189<br />
29.1Audited financial statements of the company <strong>Sava</strong> d.d. in accordance with<br />
Slovene Accounting Standards 189<br />
29.2 Notes to the financial statements of the company <strong>Sava</strong> d.d. in accordance with<br />
Slovene Accounting Standards 195<br />
29.3 Statement by the Board of Management 221<br />
29.4 Auditor’s <strong>report</strong> for the company <strong>Sava</strong> d.d. 222<br />
STATEMENT ON CONFORMITY WITH THE CORPORATE GOVERNANCE CODE FOR SLOVENIA 223<br />
CONTACT PERSONS 225
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1.<br />
8 |<br />
Profile of the Holding<br />
Company <strong>Sava</strong> d.d.<br />
Firm: <strong>Sava</strong>, druœba za upravljanje in financiranje, d.d.<br />
Abbreviated firm: <strong>Sava</strong>, d.d.<br />
Head office: Ækofjeloæka c. 6, 4000 Kranj, Slovenia<br />
Phone: +386 4 206 50 00<br />
Fax: +386 4 206 64 46<br />
e-mail: info@sava.si<br />
http://www.sava.si<br />
Registration No: 5111358<br />
VAT-ID No: SI75105284<br />
Entry No. in court register: 10024800<br />
Date of entry in court register: 26 April 1996<br />
Share capital of the company as at 31/12/<strong>2005</strong>: €83,772,596<br />
Nominal value of a share: €42<br />
No. of shares on 31/12/<strong>2005</strong>: 2,006,987 ordinary freely transferable personal shares<br />
Shares listed on: Ljubljana Stock Exchange, d.d.<br />
Share name: SAVA<br />
Chairman of the Board of Management: Janez Bohoriå<br />
Chairman of the Supervisory Board: Stanislav Valant, M.A.<br />
The nature of our business and most important<br />
activities:<br />
• Managing companies in which <strong>Sava</strong> d.d. has a<br />
majority or significant ownership share; providing<br />
financing and leasing of real estate; forming and<br />
managing competence centres of knowledge.<br />
• Managing portfolio investments.<br />
• All other commercial business that directly or<br />
indirectly contributes to achieving the goals of the<br />
company and involves the purchase and sale of real<br />
estate, formation of subsidiaries and companies and<br />
take-over of equity in Slovenia and abroad, joining<br />
businesses in an association with commercial interests<br />
and making commercial contracts of all types.
2. Composition of<br />
the <strong>Sava</strong> Group<br />
9 |<br />
At the end of <strong>2005</strong> the <strong>Sava</strong> Group consisted of 36<br />
companies, namely the parent company <strong>Sava</strong> d.d., 32<br />
subsidiaries and 3 joint ventures. The financial<br />
statements of all these companies are included in the<br />
| i n t r o d u c t i o n |<br />
consolidated financial statements of the <strong>Sava</strong> Group. In<br />
all companies the capital and voting rights are in<br />
accord.<br />
List of companies that in a<strong>dd</strong>ition to the parent company <strong>Sava</strong> d.d. are included in<br />
the <strong>Sava</strong> Group, with a comparison of ownership stakes at the end of <strong>2005</strong> and 2004.<br />
% stake % stake<br />
Change in<br />
% of stake<br />
31/12/2004 31/12/<strong>2005</strong> in <strong>2005</strong><br />
RUBBER MANUFACTURING division<br />
SAVATECH d.o.o., Kranj 100.00% 100.00% 0.00%<br />
SAVA-GTI d.o.o., Kranj 100.00% 100.00% 0.00%<br />
SAVA-ROL d.o.o., Zagreb 76.00% 76.00% 0.00%<br />
SAVA-SCHÄFER d.o.o., Kranj<br />
- FOREIGN TRADE NETWORK<br />
50.00% 50.00% 0.00%<br />
SAVA TRADE VgmbH, Munich, Germany 100.00% 100.00% 0.00%<br />
SAVA TRADE sp.z.o.o., Warsaw, Poland 100.00% 100.00% 0.00%<br />
SAVA TRADE spol.s.o.o., Prague, Czech Republic 100.00% 100.00% 0.00%<br />
SAVATRADE d.o.o., Split, Croatia 70.00% 70.00% 0.00%<br />
EUROSAVATECH S.r.l., Trieste, Italy 90.00% 0.00% -90.00%<br />
SAVATECH TRADE Ltd., London, Great Britain 100.00% 100.00% 0.00%<br />
SAVA TRADE Inc., Port Orange, Florida<br />
CHEMICALS division<br />
95.00% 95.00% 0.00%<br />
SAVA ADVANCED POLYMERS d.o.o., Kranj 51.00% 0.00% -51.00%<br />
TEOL d.d., Kranj<br />
TRADE division<br />
97.33% 98.73% 1.40%<br />
SAVA TRADE, d.d., Ljubljana 94.99% 96.40% 1.41%<br />
- MG Market d.o.o. Ljubljana (owned by <strong>Sava</strong> Trade d.d.) 74.50% 74.50% 0.00%<br />
- Chemo Zagreb d.o.o., Zagreb (owned by <strong>Sava</strong> Trade d.d.) 100.00% 100.00% 0.00%<br />
- Chemo Split d.o.o., Split (owned by <strong>Sava</strong> Trade d.d.) 100.00% 100.00% 0.00%<br />
- Tuzla Kem d.j.l., Tuzla (owned by <strong>Sava</strong> Trade d.d.) 100.00% 100.00% 0.00%<br />
- Chemo Rijeka d.o.o., Rijeka (owned by <strong>Sava</strong> Trade d.d.) 100.00% 0.00% -100.00%<br />
- Chemo Skopje d.o.o., Skopje (owned by <strong>Sava</strong> Trade d.d.) 98.00% 0.00% -98.00%<br />
- Chemo Niœ d.o.o., Niœ (owned by <strong>Sava</strong> Trade d.d.) 65.00% 65.00% 0.00%<br />
- Chemo Invest d.o.o., Ljubljana (owned by <strong>Sava</strong> Trade d.d.) 50.00% 0.00% -50.00%<br />
- Argum d.o.o., Tuzla (owned by <strong>Sava</strong> Trade d.d.) 50.00% 0.00% -50.00%
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TOURISM division<br />
1 0 |<br />
List of companies that in a<strong>dd</strong>ition to the parent company <strong>Sava</strong> d.d. are included in<br />
the <strong>Sava</strong> Group, with a comparison of ownership stakes at the end of <strong>2005</strong> and 2004.<br />
Change in<br />
% stake % stake % of stake<br />
31/12/2004 31/12/<strong>2005</strong> in <strong>2005</strong><br />
GOLF IN KAMP d.d., Bled 91.58% 91.58% 0.00%<br />
GRAND HOTEL TOPLICE BLED d.o.o., Bled 98.88% 99.36% 0.48%<br />
G&P HOTELI BLED d.o.o., Bled 87.40% 95.10% 7.70%<br />
TERME 3000 d.d., Moravske Toplice 96.65% 97.07% 0.42%<br />
- Terme Lendava d.d. (owned by Terme 3000 d.d.) 93.80% 93.02% -0.78%<br />
- Terme Ptuj d.o.o. (owned by Terme 3000 d.d.) 72.00% 72.00% 0.00%<br />
- Terme Radenci d.o.o., Radenci (owned by Terme 3000 d.d.) 100.00% 100.00% 0.00%<br />
REAL ESTATE division<br />
SAVA IP d.o.o., Ljubljana 100.00% 100.00% 0.00%<br />
- IP Nova d.o.o., Ljubljana (owned by SAVA IP d.o.o.) 100.00% 100.00% 0.00%<br />
- IP NOVA A d.o.o., Ljubljana (owned by SAVA IP d.o.o.) 100.00% 100.00% 0.00%<br />
- SAVA IPN d.o.o., Ljubljana (owned by SAVA IP d.o.o.) 100.00% 100.00% 0.00%<br />
- PC AG d.o.o., Velenje (owned by SAVA IP d.o.o.) 50.00% 50.00% 0.00%<br />
- SAVA IMG d.o.o., Pore@ (owned by SAVA IP d.o.o.) 50.00% 50.00% 0.00%<br />
SAVA NOVA d.o.o., Zagreb 100.00% 100.00% 0.00%<br />
SAVA MEDICAL IN STORITVE d.o.o., Kranj 100.00% 100.00% 0.00%<br />
OTHER COMPANIES<br />
GEA SOL International d.o.o., Kranj 100.00% 100.00% 0.00%<br />
BIOOL d.o.o., Kranj 100.00% 100.00% 0.00%<br />
ENERGETIKA SAVA d.o.o., Kranj 100.00% 100.00% 0.00%
2.1<br />
2.2<br />
1 1 |<br />
Changes in the structure<br />
of the <strong>Sava</strong> Group<br />
• Rubber Manufacturing with the<br />
foreign trade network<br />
For the company Eurosavatech S.r.l., Trieste, Italy the<br />
liquidation procedure was concluded. The company is<br />
deleted in the court register.<br />
The Rubber Manufacturing companies now operate<br />
through their representative office in Trieste.<br />
• Chemicals division<br />
For the company <strong>Sava</strong> Advanced Polymers d.o.o. the<br />
liquidation procedure was concluded. The company is<br />
deleted in the court register.<br />
The ownership stake in the company Teol d.d. was<br />
increased by 1.4 per cent due to a<strong>dd</strong>itional purchases.<br />
• Trade division<br />
Through a<strong>dd</strong>itional purchases the ownership stake in the<br />
company <strong>Sava</strong> Trade d.d., Ljubljana was increased by<br />
1.41 per cent.<br />
Associated companies<br />
in the <strong>Sava</strong> Group<br />
In accordance with the set strategy the holding company<br />
<strong>Sava</strong> d.d. continued to purchase shares in Gorenjska<br />
Banka d.d., Kranj. On 31December <strong>2005</strong> the ownership<br />
stake amounted to 41.13 per cent, which is 0.19<br />
percentage points higher than last year.<br />
| i n t r o d u c t i o n |<br />
The companies Chemo Rijeka d.o.o. and Argum d.o.o.<br />
Tuzla were deleted in the court register.<br />
For the company Chemo Skopje d.o.o. the liquidation<br />
procedure was concluded.<br />
The company Argum d.o.o., Tuzla was deleted in the<br />
court register.<br />
The company Chemo Invest d.o.o., Ljubljana was sold.<br />
• Tourism division<br />
By a<strong>dd</strong>itional purchases the stakes in the company Golf<br />
in Kamp d.d., Bled was enhanced by 0.02 per cent, in<br />
the company Grand Hotel Toplice d.o.o., Bled by 0.48<br />
per cent, in the company G&P Hoteli Bled d.o.o. by 7.7<br />
per cent, in the company Terme 3000 by 0.42 per cent.<br />
The decrease in ownership in the company Terme<br />
3000 d.d., and in the company Terme Lendava d.d. by<br />
0.78 per cent was due to the reconciliation of ownership<br />
stakes with an entry in the Clearing Depot Company.<br />
• Other companies<br />
The company <strong>Sava</strong> Dva d.o.o. was renamed Energetika<br />
<strong>Sava</strong> d.o.o.<br />
The company Gumteh & Co. d.o.o., Grosuplje<br />
discontinued to operate.<br />
The companies Terme Lendava d.d. established the<br />
company Turizem Lendava d.o.o. together with other<br />
partners.
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1 2 |<br />
Changes in the ownership of <strong>Sava</strong> d.d. associates<br />
Representative offices<br />
in the <strong>Sava</strong> Group<br />
As part of the <strong>Sava</strong> Group only the company <strong>Sava</strong>tech<br />
d.o.o., Kranj has representative offices, these being in<br />
Moscow and Trieste.<br />
(v 000 SIT)<br />
% stake % stake Change in %<br />
31/12/2004 31/12/<strong>2005</strong> of stake in <strong>2005</strong><br />
- Gorenjska Banka d.d., Kranj 40.94% 41.13% 0.19%<br />
- Limb d.o.o., Ptuj 37.50% 37.50% 0.00%<br />
TEOL d.d., Ljubljana – as the parent company<br />
- Teodora d.o.o., Ljubljana 25.00% 25.00% 0.00%<br />
SAVA TRADE d.d., Ljubljana - as the parent company<br />
- Gumitech & CO. d.o.o., Grosuplje 31.00% 0.00% -31.00%<br />
- Astra, Tehni@na Trgovina, d.o.o., Beograd 20.00% 20.00% 0.00%<br />
GOLF IN KAMP BLED d.d., Bled - as the parent company<br />
- Golf Istra d.o.o., Koper 20.00% 20.00% 0.00%<br />
TERME LENDAVA d.d. - as the parent company<br />
- Turizem Lendava d.o.o. 0.00% 33.00% 33.00%<br />
2.3<br />
2.4<br />
Organisational structure<br />
of the <strong>Sava</strong> Group after<br />
the accounting period<br />
In the beginning of 2006 we slightly restructured the<br />
organisation – the operations of the companies and their<br />
classification. There were no changes either in Rubber<br />
Manufacturing with the foreign trade network or in<br />
Tourism. At the time of preparing the <strong>Annual</strong> Report,<br />
Trade was still a part of the <strong>Sava</strong> Group, however, after<br />
selling the companies from the division – <strong>Sava</strong> Trade<br />
d.d. and MG Market d.o.o., and acquiring a stake in the<br />
Merkur Group, the management of this operation in the<br />
<strong>Sava</strong> Group will change so as to participate in the profit<br />
of the trading system Merkur, which will be strengthened<br />
through the sold company <strong>Sava</strong> Trade. The operation of<br />
Chemicals is no longer pursued independently; after<br />
selling the company Color d.d. the division, since the<br />
mi<strong>dd</strong>le of 2004, has included only the company Teol<br />
d.d., which is now being restructured. The operation of<br />
Teol d.d. will now be pursued as a part of Other<br />
Operations to which also the company for the disabled<br />
<strong>Sava</strong> Medical & Services d.o.o. was transferred from the<br />
Real Estate division. Other operations include the<br />
emerging company Energetika <strong>Sava</strong> d.o.o. established
RUBBER MANUFACTURING<br />
SAVATECH d.o.o., Kranj<br />
SAVA ROL d.o.o.,<br />
Zagreb - 76%<br />
SAVA-SCHÄFER d.o.o.,<br />
Kranj - 50%<br />
SAVA-GTI d.o.o., Ptuj<br />
FOREIGN TRADE<br />
NETWORK<br />
SAVA TRADE Gmbh, Munich<br />
SAVA TRADE Sp.z.o.o.,<br />
Warsaw<br />
SAVA TRADE s.r.o., Prague<br />
SAVATECH TRADE Ltd., London<br />
SAVA TRADE Inc.,<br />
Port Orange - 95 %<br />
1 3 |<br />
in <strong>2005</strong>. The company Biool d.o.o. has not yet started to<br />
operate, while the company Gea Sol Int. d.o.o. is<br />
inactive.<br />
The Real Estate division consists of the companies <strong>Sava</strong><br />
IP d.o.o. Ljubljana with four subsidiaries and <strong>Sava</strong> Nova<br />
| i n t r o d u c t i o n |<br />
d.o.o., Zagreb. The Investment Finance division<br />
manages investments in <strong>Sava</strong> Group companies and<br />
financial investments as those in associates and other<br />
financial investments.<br />
Organisational structure of the <strong>Sava</strong> Group (companies on 31 March 2006)<br />
TRADE<br />
SAVA TRADE d.d.<br />
Ljubljana - 96.85%*<br />
MG Market d.o.o.<br />
Ljubljana - 74.50%<br />
SAVA d.d. - HOLDING<br />
BOARD OF MANAGEMENT<br />
DIVISIONS<br />
TOURISM<br />
REAL ESTATE<br />
GOLF IN KAMP BLED d.d., SAVA IP d.o.o., Ljubljana<br />
Bled - 91.60%<br />
IP NOVA d.o.o.,<br />
GRAND HOTEL TOPLICE d.o.o., Ljubljana - 100%<br />
Bled - 99.36%<br />
IP NOVA A d.o.o.,<br />
G & P HOTELI BLED d.o.o.,<br />
Ljubljana - 100%<br />
Bled - 95.10%<br />
SAVA IPN d.o.o.,<br />
TERME 3000 d.d.,<br />
Ljubljana - 100%<br />
Moravske Toplice - 97.07%<br />
PC AG d.o.o.,<br />
TERME LENDAVA d.d., Velenje - 50%<br />
Lendava - 93.02%<br />
SAVA IMG d.o.o.,<br />
TERME PTUJ d.o.o.,<br />
Pore@ - 50%<br />
Ptuj - 72.00%<br />
TERME RADENCI d.o.o.,<br />
Radenci - 100.00%<br />
SAVA NOVA d.o.o., Zagreb<br />
In a<strong>dd</strong>ition to the parent company <strong>Sava</strong> d.d. the <strong>Sava</strong><br />
Group includes 30 companies. Our operations comprise<br />
six various divisions such as Rubber Manufacturing,<br />
Trade, Tourism, Real Estate, Other Operations and<br />
Investment Finance.<br />
We at the <strong>Sava</strong> Group continually surpass the<br />
expectations of our customers, employees, shareholders,<br />
business partners and the environment and create<br />
attractive opportunities for employing the best personnel<br />
in Slovenia.<br />
The variety of our operations is associated with the<br />
uniform principles and values that unite us in achieving<br />
common goals.<br />
OTHER OPERATIONS<br />
TEOL d.d., Ljubljana - 98.98%<br />
SAVA MEDICAL AND<br />
SERVICES d.o.o., Kranj<br />
ENERGETIKA SAVA d.o.o.,<br />
Kranj<br />
BIOOL d.o.o., Kranj<br />
GEA SOL Int. d.o.o., Kranj**<br />
Companies under 100% <strong>Sava</strong> d.d. ownership<br />
INVESTMENT FINANCE<br />
INVESTMENTS IN SAVA<br />
GROUP DIVISIONS<br />
FINANCIAL INVESTMENTS<br />
Investments in associates:<br />
- Gorenjska Banka d.d. - 41.2%<br />
- Limb d.o.o. - 37.50%<br />
Other financial investments<br />
Companies under majority <strong>Sava</strong> d.d. ownership<br />
* Due to selling the companies in division and acquiring the ownership<br />
stake in the Merkur Group in Trade division will be strategically<br />
restructured in 2006<br />
** The company is stagnant<br />
Rubber Manufacturing includes the companies<br />
<strong>Sava</strong>tech d.o.o., <strong>Sava</strong>-Schäfer d.o.o, <strong>Sava</strong>-GTI d.o.o.<br />
and <strong>Sava</strong> Rol d.o.o. as well as a network of five foreign<br />
trade companies and two representative offices.<br />
We develop innovative products of high quality for<br />
industrial applications. <strong>Sava</strong>'s industrial rubber products<br />
are sought after in the building industry, car industry<br />
(from motorcycles to cars and industrial and agricultural<br />
vehicles), the graphic and paper industry, and<br />
environmental protection.<br />
Trade includes the companies <strong>Sava</strong> Trade d.d. and MG<br />
Market d.o.o. which deal in trading technical goods and<br />
chemical products as well as DIY products.
a n n u a l r e p o r t | 2 0 0 5<br />
1 4 |<br />
<strong>Sava</strong> Trade d.d. is present in wholesale and retail sales<br />
under the AstraChemo brand. Its subsidiary, MG Market<br />
d.o.o., provides trading services in large shopping<br />
centres operating under the OBI franchise.<br />
Both trading networks, AstraChemo and OBI, are<br />
successfully expanding throughout Slovenia. The<br />
companies that operate in the Trade division will be sold<br />
in 2006.<br />
Tourism is becoming one of <strong>Sava</strong>’s strongest<br />
operations. It comprises companies that operate under<br />
the <strong>Sava</strong> Hotels&Resorts Bled and Pannonian Spas<br />
brands. The companies of <strong>Sava</strong> Hotels&Resorts Bled<br />
(Golf in Kamp Bled d.d., Grand Hotel Toplice Bled<br />
d.o.o. and G&P Hotels Bled, d.o.o.) have available more<br />
than 60 per cent of the accommodation facilities in Bled.<br />
The Pannonian Spas brand includes five spa resorts in<br />
the north-east of Slovenia: Terme 3000 d.d., Terme<br />
Radenci d.o.o., with Terme Banovci, Terme Ptuj d.o.o.<br />
and Terme Lendava d.d.<br />
Real Estate includes the companies <strong>Sava</strong> IP d.o.o., IP<br />
Nova d. o. o., IP NovaA d.o.o., <strong>Sava</strong> IPN d.o.o.,<br />
PCAG d.o.o., <strong>Sava</strong> IMG d.o.o., and <strong>Sava</strong> Nova d.o.o.<br />
We construct for the market and lease out our own<br />
properties. A significant part of our operations involves<br />
contracting and providing services to cover the<br />
requirements of the <strong>Sava</strong> Group.<br />
Other operations includes the companies Teol d.d.,<br />
<strong>Sava</strong> Medical and Services d.o.o., and Energetika <strong>Sava</strong><br />
d.o.o. Teol d.d. manufactures consumer goods,<br />
particularly cleaning agents. A new development trend<br />
is opening up with the production of green fuel –<br />
biodiesel; for this purpose the company Biool d.o.o. was<br />
established. <strong>Sava</strong> Medical and Services d.o.o. efficiently<br />
provides services that are carried out by disabled<br />
persons and meets the requirements of the <strong>Sava</strong> Group.<br />
The mission of the newly established company<br />
Energetika <strong>Sava</strong> d.o.o. is to assure efficient energy<br />
management.<br />
Investment Finance is an operation carried out by the<br />
holding company <strong>Sava</strong> d.d. Besides managing the<br />
portfolio of Group subsidiaries, the company invests in<br />
profitable financial investments.
3. Significant Financial<br />
Data and Indicators<br />
1 5 |<br />
| i n t r o d u c t i o n |<br />
THE SAVA GROUP<br />
(€ in millions)<br />
Index<br />
According to International Financial Reporting Standards 2004 <strong>2005</strong> <strong>2005</strong>/2004<br />
Sales 236.1 244.0 103<br />
Exports 67.2 75.8 113<br />
A<strong>dd</strong>ed value 73.4 80.5 110<br />
Total pre-tax profit 52.2 43.7 84*<br />
Net profit 48.6 38.5 79*<br />
Net cash flow (profit + amortisation) 60.3 53.5 89*<br />
Balance sheet total 593.5 651.2 110<br />
Non-current assets 494,0 543.8 110<br />
Current assets 99.5 107.4 108<br />
Equity 378.0 393.0 104<br />
Non-current liabilities 72.2 84.2 116<br />
Current liabilities 143.3 174.0 121<br />
Investment in property, plant and equipment 37.1 37.6 101<br />
Employees – on 31 December<br />
INDICATORS<br />
3,017 3,047 101<br />
A<strong>dd</strong>ed value / employee - € in thousands 25.5 26.3 103<br />
Total income / operating revenues (%) 21.7 17.1 79*<br />
Total income / equity (%) 17.1 11.9 70*<br />
Net profit / equity (%) 16.0 10.5 66*<br />
Net earnings per share (€) 24.9 19.1 77*<br />
Independence rate (equity / balance sheet total) (%) 64 60 94<br />
Liquidity (current assets / non-current liabilities) (%)<br />
SHARE<br />
62 62 100<br />
Nominal value - (€) 41.7 41.7 100<br />
Book value - (€) 191.0 193.8 101<br />
Market value on 31 December - (€) 183.5 180.4 98<br />
Dividend per a share - (€) 2.6 2.7 103**<br />
* Notes referring to the asterixed items:<br />
The presented <strong>2005</strong> income of the <strong>Sava</strong> Group calculated in accordance with IFRSs is lower than in 2004, the reason being a single revenue due to the purchase<br />
of the Pannonian Spas companies below their book value. The revenue due to negative goodwill contributed 30% to the created return on capital of the <strong>Sava</strong><br />
Group. Not considering this single event, the <strong>Sava</strong> Group created a net profit that was 8.8 % higher than last year.<br />
- Total income of the <strong>Sava</strong> Group achieved in <strong>2005</strong> is 14.5% above the plan.<br />
- Net profit of the <strong>Sava</strong> Group in <strong>2005</strong> is 4.3% above the plan.<br />
- Return on capital of the <strong>Sava</strong> Group in <strong>2005</strong> amounts to 10.5% and is 0.5 percentage points above the plan, thereby surpassing the target return on capital as<br />
set for the year 2007.<br />
** Proposal by the Shareholders’ Meeting.
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4. A Rewiew of Highlights<br />
4.1<br />
1 6 |<br />
A review of highlights in the period<br />
January-December <strong>2005</strong><br />
January <strong>Sava</strong> d.d. increases its stake in the companies NFD1, Delniæki Investicijski Sklad, d.d. by 4.98 per<br />
cent and in NFD Holding d.d. by 4.8 per cent. After the purchase <strong>Sava</strong> d.d. has an 18.48 per cent<br />
stake in NFD 1 d.d. and an 11.63 per cent stake in NFD Holding d.d.<br />
<strong>Sava</strong> d.d. sells its business stake in the company Geoplin d.o.o. Ljubljana.<br />
<strong>Sava</strong> IP d.o.o. and the Croatian firm IMG d.o.o. Porefl establish a company under joint ownership<br />
<strong>Sava</strong> IMG d.o.o.<br />
February The central laboratory of the Development Institute in the company <strong>Sava</strong>tech d.o.o. obtains the<br />
accreditation certificate to prove that the institute meets the requirements as set out in the<br />
SIST EN ISO/IEC 17025 standard.<br />
In the company Terme Lendava d.o.o. a new indoor swimming pool is opened next to Hotel Lipa.<br />
March <strong>Sava</strong> d.d. acquires 250,593 shares in Laæko Brewery d.d., thereby becoming the owner of a 4.76 per<br />
cent stake in this company.<br />
Camping Bled concludes a partnership with the campsite Wirthshof at Lake Boden in Germany.<br />
Terme Lendava d.d., the Municipality of Lendava and the Lendava Chamber of Trade establish the<br />
company Turizem d.o.o., which deals with tourism promotion in the district of Lendava.<br />
May In Terme 3000 d.d. the enlarged Livada golf course is opened and the construction of a 5* hotel<br />
begins.<br />
The company <strong>Sava</strong>-Schäfer d.o.o. signs an agent’s contract with the company Schäfer Composites<br />
GmbH, thus acquiring the right to produce and market polyurethane and composite roll covers for<br />
the Central and Eastern European markets.<br />
Based on the results of the national research On the Way to a Learning Company, the <strong>Sava</strong> Group<br />
wins first place for best achievements in implementing the learning company concept.
1 7 |<br />
| i n t r o d u c t i o n |<br />
June At the 10 th Shareholders’ Meeting <strong>Sava</strong>’s shareholders confirm the resolution about relieving the<br />
Board of Management and Supervisory Board and vote through a proposal for a dividend in the<br />
amount of €2.59 per a share.<br />
The company Grand Hotel Toplice d.o.o. renews and opens the Pleånik Pavilion Belvedere by Vila<br />
Bled.<br />
In Terme Ptuj a newly built amphitheatre in the thermal water park is opened.<br />
<strong>Sava</strong> IP d.o.o. acquires a strategic partner, the company Zagrebstan, to expand real estate business<br />
in Zagreb.<br />
July At the 11 th Shareholder’s Meeting <strong>Sava</strong> shareholders adopt a resolution that it is not necessary to<br />
appoint a special auditor to examine the legitimacy and suitability of legal transactions, which <strong>Sava</strong><br />
d.d. over the past five years had concluded with the companies Grand Hotel Toplice d.o.o. and Golf<br />
in Kamp Bled d.d.<br />
The company <strong>Sava</strong> Trade d.d. signs an agreement on selling its entire 50 per cent share in the<br />
company Chemo Invest d.o.o.<br />
We form a new competence centre EU Projects to support <strong>Sava</strong> Group companies in identifying<br />
project ideas and preparing final project proposals to obtain non-returnable funding from European<br />
funds for restructuring.<br />
August The new 3* Zeleni Gaj hotel opens in Terme Banovci.<br />
September A newly founded company Energetika <strong>Sava</strong> d.o.o. starts to operate. It deals with efficiency or<br />
reduction in energy consumption that results in energy savings.<br />
October The company <strong>Sava</strong>tech d.o.o. completes main investments in Rubber Manufacturing, namely the<br />
building of a new office and manufacturing plant to facilitate the development of the programme<br />
that manufactures environmental protection and rescue products.<br />
The building is officially opened by Slovene Prime Minister Janez Janæa.<br />
The management of <strong>Sava</strong> d.d. hosts Minister of the Environment and Spatial Planning Janez<br />
Podobnik and his associates; they are presented with the achievements in decreasing undesirable<br />
environmental influences and development plans regarding the efficient use of renewable sources.
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1 8 |<br />
The <strong>Sava</strong> Group sponsors the international conference Manufacturing Visions – Quo Vadis?, in<br />
which we collaborate with experts from the European Union to develop the vision and<br />
recommendations for the policy of evolving the European manufacturing sector in the decades to<br />
come.<br />
At the 52 nd catering tourism meeting our associates from Tourism win 14 gold, 28 silver and<br />
12 bronze medals and receive 9 special awards for their co-operation.<br />
November The <strong>Sava</strong> Group receives the <strong>2005</strong> award for educational management – TOP 10 awarded by GV<br />
Izobraœevanje and the Sofos Institute to companies that systematically invest in employee education<br />
and thus demonstrate a direct link between an educational and a business strategy.<br />
In a campaign by the Slovene Tourist Association My Country, Beautiful and Hospitable we obtain<br />
numerous acknowledgements: in the category of medium- and small-sized spa resorts Terme Ptuj<br />
wins first place ahead of Terme Lendava; the campsite in Bled wins first place in the category of<br />
large Slovene campsites; and the campsite in Ptuj wins second place in the category of medium- and<br />
large-sized campsites. Terme Ptuj wins second place among large Slovene swimming pools.<br />
We start to renew and modernise Hotel Park, the largest accommodation facility in Bled, which is<br />
the second largest hotel facility in Slovenia.<br />
The companies Terme 3000 d.d, Terme Lendava d.d and Terme Ptuj d.o.o. obtain the quality<br />
assurance certificates according to the ISO 9001:2000 standard, whereas the company Radenci<br />
d.o.o. is certified for conducting business according to the occupational health and safety system<br />
OHSAS 18001.<br />
December We decide to take over general sponsorship for Dr. Preæeren’s birth-place home in Vrba; in this way<br />
we provide resources for the further development of the museum located in this Slovene cultural<br />
monument.<br />
In the companies <strong>Sava</strong> Hotels & Resorts Bled we complete a plan for information system renewal<br />
and introduce an on-line booking system, which is one of the first in Slovenia.
4.2<br />
1 9 |<br />
| i n t r o d u c t i o n |<br />
A review of highlights after the accounting period<br />
January The company Gea Sol d.o.o. discontinues its business. Based on R&D work and risk assessment we<br />
discontinue planning the production of solar tiles. The vital part of its business – energy consulting<br />
– is transferred to the company Energetika <strong>Sava</strong> d.o.o.<br />
February The Supervisory Board of <strong>Sava</strong> d.d. endorses the submitted plan on restructuring <strong>Sava</strong> Trade. The<br />
plan anticipates that <strong>Sava</strong> d.d. enters the company Merkur d.d. with a significant ownership stake.<br />
<strong>Sava</strong> d.d. offers to pay in 98,000 newly issued shares as an increase in the share capital of Merkur<br />
d.d. at a price of €151.1 per a share. The restructuring plan further includes that <strong>Sava</strong> d.d. offers<br />
Merkur d.d. to purchase the entire ownership stake in <strong>Sava</strong> Trade d.d. and sell the entire ownership<br />
stake of <strong>Sava</strong> Trade in the company MG Market d.o.o. Through these transactions <strong>Sava</strong> d.d. obtains<br />
a significant stake in the company Merkur d.d., while Merkur d.d. consolidates its business through<br />
the operation of the present <strong>Sava</strong> Trade d.d.<br />
The Supervisory Board of <strong>Sava</strong> d.d. adopts a resolution that Janez Bohoriå is appointed as chairman<br />
and Vincenc Peråiå and Emil Vizoviæek as members of the <strong>Sava</strong> d.d. Board of Management for a<br />
new mandate, i.e. from 17 July 2006 until 16 July 2011.<br />
The <strong>Sava</strong> share is listed in the new South-east Europe index, Southeast Trade Index (SETX) formed<br />
by the Vienna Stock Exchange. Besides <strong>Sava</strong> d.d., another 13 companies that are listed on the<br />
Ljubljana, Bucharest, Sophia and Zagreb Stock Exchanges are included in the index.<br />
March By increasing the share capital in the company Merkur d.d., <strong>Sava</strong> d.d. implements a significant part<br />
of its restructuring plan for Trade and becomes the owner of a 19.6 per cent stake and an important<br />
shareholder in this Kranj-based company. By doing so, <strong>Sava</strong> d.d. will move from the majority-based<br />
management of a smaller company <strong>Sava</strong> Trade d.d. to the active joint management of a larger<br />
trading system with significantly better conditions for successful development and profitable<br />
operation. This is an important acquisition and opportunity for shareholders of <strong>Sava</strong> d.d.<br />
In order to acquire quality personnel, the companies of Pannonian Spas unite with professional and<br />
educational institutions in the region in the promotion of catering and tourism professions. At the<br />
same time Pannonian Spas announce 80 new vacancies in a new 5* hotel. Owing to new<br />
investments in the companies of Pannonian Spas another 80 new jobs will be available next year.<br />
<strong>Sava</strong> d.d. increases the share capital in Grand Hotel Toplice d.o.o. Bled from €1.3 million to about<br />
€2.1million; in the company <strong>Sava</strong>tech d.o.o. from the present €21.1 million to €25.1million, and<br />
in the company <strong>Sava</strong>-GTI d.o.o. from the present €0.26 million to €0.86 million.<br />
As part of closing the financial transaction of purchasing shares of Merkur d.d. <strong>Sava</strong> d.d. sold<br />
4,694,946 shares of the company NFD Holding d.d., which represents 14.17 per cent of its equity.<br />
After this sale <strong>Sava</strong> d.d. does not have any stake in the company NFD Holding d.d.
a n n u a l r e p o r t | 2 0 0 5<br />
5. Report by the Chairman<br />
of the Board<br />
2 0 |<br />
To all <strong>Sava</strong> shareholders<br />
It is my pleasure to present in the <strong>2005</strong> <strong>Annual</strong> Report the achievements of another successful business<br />
year, which have been accomplished in a keener competitive environment and founded on the efforts<br />
invested by all associates of the <strong>Sava</strong> Group in forming long-term operational excellence in all of its<br />
divisions.<br />
Once again <strong>Sava</strong> has confirmed its high flexibility and adaptability so characteristic for its entire<br />
85-year history. In particular, the ability to adapt and efficiently manage changes is the core of the<br />
accomplished results, by which we surpassed planned growth in several key areas. By that I would<br />
especially like to emphasise the importance of the competence centres of strategic knowledge for the<br />
co-ordinated operation of a diverse business group. They enable the associates in a diversified business<br />
system to rapidly identify changes and opportunities in the business environment, thereby achieving a<br />
high level of response.<br />
The results achieved by the <strong>Sava</strong> Group by the end of the year prove that the set development strategy<br />
was accomplished in full. At its fore is profitable and sustainable growth accompanied by a higher<br />
employment rate within the Group, efficient handling of natural sources and new long-term plans of<br />
co-operation with the social community.<br />
Financial results reflect the success of the Group<br />
The improved business results, which are revealed by several surpassed growth indicators in the <strong>Sava</strong><br />
Group, were accompanied by a positive effect due to a transition from Slovene to International<br />
Financial Reporting Standards.<br />
It is undoubtedly in the interest of shareholders that the value of their investment has been confirmed<br />
by international accounting criteria. It is therefore encouraging that the introduction of the<br />
international accounting methodology has been positively reflected in an increase in the equity value of<br />
the Group as well as in the book share value and net earnings per <strong>Sava</strong> share, which is why we estimate<br />
that the value of shareholders’ assets has been given a more realistic picture, while at the same time<br />
making the <strong>Sava</strong> share more attractive to foreign investors.<br />
When dealing with the planned pre-tax profit, the Group has exceeded the plan by 14 per cent and<br />
planned net profit by 4 per cent.<br />
The primary goal to be achieved by the year 2007, i.e. a 10 per cent rate on return on capital invested,<br />
has not just been approached but also fulfilled.
2 1 |<br />
Restructuring accelerates the orientation towards profitability<br />
| i n t r o d u c t i o n |<br />
In the global market only products and services that are most recognisable can break through.<br />
Discovering new market niches and shaping winners in market segments are therefore essential in<br />
achieving the profitable growth of the <strong>Sava</strong> Group. The business mainstream that directs the entire<br />
present development of the Group would therefore be defined as focusing at all levels of Group<br />
operations, both within the programmes and the Group composition. A 13 per cent increase in exports<br />
and a 10 per cent increase in the created a<strong>dd</strong>ed value prove how significantly we have progressed in<br />
that area and strengthened our competitive power globally.<br />
Such aspirations have been developed best in Rubber Manufacturing, which has strengthened internally<br />
and is focusing on international market niches where it has already become an important player. On<br />
the global scale Rubber Manufacturing is recognisable and perceptible in the markets of scooter and<br />
motorcycle tyres, conveyor belts, rubber profiles and rubber products for environmental protection. By<br />
winning significant market shares, we have secured ourselves the potential for further growth and<br />
consolidating our position.<br />
A greater role for Rubber Manufacturing in the sales structure<br />
As a whole, consolidated sales revenues from services provided and goods sold resulted in a 4 per cent<br />
increase. The result demonstrates that along with restructuring of sales programmes also sales figures<br />
have been enhanced. As forecast, we have consistently strengthened product groups, which assures<br />
innovation and the highest customer satisfaction in selected market segments according to the TOP<br />
3/2/1 principle – to win a leading position in Slovenia, be among the first two in the region and rank<br />
among the first three in Europe and worldwide.<br />
As in the previous year in <strong>2005</strong> too Trade held the leading position in the sales structure with the same<br />
volume of sales. It is followed by Rubber Manufacturing with a 14 per cent increase in net sales<br />
revenues and even a 42 per cent increase in pre-tax profits. Third place belonged to Tourism, which<br />
augmented its income by 3 per cent, accounting for a good one fifth of Group sales. Due to the dynamics<br />
of building for the market Real Estate slightly lagged behind the planned sales figures, while the<br />
company Teol d.d., which is presently being restructured, decreased its sales volume too.<br />
Rounding up the investment cycle and further enhancing the level of quality in<br />
tourist services<br />
In the <strong>Sava</strong> Group an intensive investment period is under way, during which the volume of investments<br />
in fixed assets has reached €38 million for the second time in succession. A similar investment volume is
a n n u a l r e p o r t | 2 0 0 5<br />
2 2 |<br />
envisaged for 2006 when the present investment cycle is to be completed. The major part or a good half<br />
of investment assets is earmarked for the accelerated development of tourism amenities in both<br />
destinations, Bled and Pannonian Spas. The investment cycle that began in Bled, where the renovation<br />
of the entire range of services infrastructure is currently being completed, comprised the modernisation<br />
and expansion of high-quality hotel, catering, wellness and golf facilities. Investments in the tourism<br />
infrastructure in Pannonian Spas will round off the cycle.<br />
The renovation of facilities represents the foundation, but not the only factor that is vital to increase<br />
profitability in the tourism industry. As one of the central and, according to some criteria, even the<br />
leading provider of tourist services in Slovenia we realise that a breakthrough in quality tourist services<br />
is inevitable, since Slovenia as a tourist destination has many opportunities in this area. Only after<br />
completing this task, which includes increasing the level of quality of knowledge, organisation,<br />
marketing and advertising, will it be possible to accomplish an increase in profitability as planned.<br />
Therefore future investments in tourism will be directed towards the aforementioned factors. We are<br />
also counting on assistance and collaboration from the state and establishing links with tourism<br />
organisations in Slovenia, particularly in the area of marketing, purchasing and real estate.<br />
Forecast of changes in the <strong>Sava</strong> Group<br />
Investments in Tourism place distinguished products and operations with higher a<strong>dd</strong>ed value in focus.<br />
Yet, this process should not be discussed only in terms of operations and programmes, but also at the<br />
highest level – the structure of the <strong>Sava</strong> Group. In 2004 we sold our main investment in Chemicals, in<br />
the coatings industry, to which we adapted by excluding Chemicals as an independent division.<br />
Although the year passed without any other great change in the Group’s internal structure, it was time<br />
to make a decision and conclude agreements on how to encourage the development of Trade as a<br />
strategic operation. However, as assumed in the strategy outlined for the first period of the<br />
restructuring process in the <strong>Sava</strong> Group, Trade should have utilised significant favourable effects from<br />
internal links with Chemicals. The result was an agreement with the trading enterprise Merkur<br />
concluded in February 2006. The investment in Trade will be replaced by playing an active role in<br />
managing this trading enterprise, in which we have acquired a one fifth stake. Consequently, the<br />
decision to restructure the division and sell the entire business stake in the companies <strong>Sava</strong> Trade d.d.<br />
and MG Market d.d. presents the logical continuation of selling our investment in Chemicals and the<br />
coatings industry, respectively, on which this operation was founded.<br />
The business in Real Estate is conducted in the direction outlined, the division becoming ever more<br />
present in the Croatian real estate market.<br />
Preparations for future changes<br />
In a<strong>dd</strong>ition to the agreed upon and envisaged restructuring of real investment in Trade and its exclusion<br />
from the <strong>Sava</strong> Group we are not planning any other more significant changes in the Group’s<br />
composition in 2006, being conditioned by favourable market opportunities. Yet we admit to responding<br />
to opportunities that allow the expansion of Rubber Manufacturing. In this division future development<br />
is based on investments or external growth through acquisitions in new markets, with a parallel<br />
increase in the share of Rubber Manufacturing in consolidated sales.<br />
The shift in the Group’s composition that is restructuring real investment in Trade into a financial<br />
investment will have a considerable impact on business achievements and indicators of the Group in 2006.<br />
For shareholders and the holding company <strong>Sava</strong> it is of paramount importance that capital invested in<br />
trade operations through its transfers under financial investments will win on profitability and further<br />
improve the structure and have a positive effect with investments in the Investment Finance division.<br />
The restructuring will have the strongest influence on the volume of consolidated revenues of the Group,<br />
which will be reduced by a good third.
2 3 |<br />
| i n t r o d u c t i o n |<br />
However, the volume of revenues, if a comparison is made with the same composition of the Group in<br />
the past years, would demonstrate growth. There is another important aspect concerning the<br />
restructuring of Trade: we shall enhance operating profit in the operations of our subsidiaries by 1.3<br />
percentage points. By restructuring the <strong>Sava</strong> Group we are therefore continuing to implement a<br />
profitable growth strategy.<br />
Profitability as a non-linear indicator<br />
It is worth emphasising that return on capital as an important criterion for the success of the <strong>Sava</strong><br />
Group with regard to the holding management and organisation of the Group is not an indicator that<br />
grows in linear terms, but it is fluctuating. In the past two years profitability was appreciably high,<br />
reaching 16 per cent in 2004, and 10.5 per cent in <strong>2005</strong>. The achieved profitability level is substantially<br />
affected by favourable purchases of new real investments or an increase in stakes in such investments,<br />
as we have witnessed during these years, thereby creating single operating revenues in the form of<br />
effects due to the elimination of negative goodwill. In 2006 we do not anticipate any larger sale of<br />
financial investments, therefore the profit planned for the <strong>Sava</strong> Group and the company <strong>Sava</strong> is lower.<br />
Nevertheless, it is planned to increase in the years ahead at an average annual rate of 6 per cent. The<br />
planned return on capital is lower as well. Despite the mentioned fluctuation, the present direction of<br />
the Group means progress towards stable and profitable growth of the selected operations.<br />
Success in implementing the adopted dividend policy<br />
The Investment Finance operation being performed by the holding company <strong>Sava</strong> continues to be of<br />
importance for the <strong>Sava</strong> Group. Among its long-term financial investments the holding company holds<br />
quality and profitable investments such as a stake in Gorenjska Banka d.d., in which it appears as a<br />
strategic owner. Also in future the holding company will seek ownership stakes in financial institutions,<br />
not to mention that it already has available a strong liquid and profitable portfolio of securities.<br />
In 2006 we do not plan to sell any important portfolio investments, therefore the profit of the Group is<br />
planned at a lower level and should reach €29 million. The balance of business operations, favourable<br />
financial position, rich financial investment portfolio, which provides opportunities for future gains,<br />
and an increase in operating profitability in business assures that <strong>Sava</strong> further meets the adopted<br />
development and dividend policy on a consistent basis. The policy anticipates that the dividend paid for<br />
the <strong>Sava</strong> share will undergo continual and stable growth.<br />
The confidence that investors have is due to the structure of <strong>Sava</strong>’s assets and the successful<br />
implementation of the development strategy, originating from the efficient management of its strategic<br />
investment areas. This is at the same time the reason for the market value of the <strong>Sava</strong> share being less<br />
sensitive to unfavourable movements as experienced by the SBI 20 index on the Ljubljana Stock<br />
Exchange. In the international business environment <strong>Sava</strong> is renowned as a successful company with a<br />
long-term development programme, which has been proven by the <strong>Sava</strong> share being included in a new<br />
South-east Trade Index (SETX).<br />
Preparations for profitable growth in the future development period<br />
In February the Supervisory Board gave the Board of Management of <strong>Sava</strong> d.d. another 5-year mandate<br />
until the year 2011 and entrusted it with the preparation of a development strategy for the next period.<br />
The preparation for individual operations is underway. The strategy for the entire Group, which will<br />
comprise the period from 2007 to 2011 before the end of the year, will be submitted to the Supervisory<br />
Board. By designing new steps in the strategy of <strong>Sava</strong>’s profitable growth, the <strong>Sava</strong> Group and the<br />
holding company <strong>Sava</strong> will continue to implement the adopted sustainable development vision to the<br />
satisfaction of customers, employees, shareholders and the environment.<br />
Janez Bohoriå,<br />
Chairman of the Board of Management<br />
<strong>Sava</strong> d.d.
a n n u a l r e p o r t | 2 0 0 5<br />
6. Management and<br />
Administrative Bodies<br />
6.1<br />
2 4 |<br />
Board of Management<br />
Janez Bohori@<br />
Chairman<br />
Janez Bohori@<br />
The 64-year-old Chairman of the Board of Management of <strong>Sava</strong> d.d graduated in<br />
chemical engineering and has been employed at <strong>Sava</strong> for 40 years. Since 1996 he has<br />
been Chairman of the Board and is responsible for the strategic development of<br />
operations, finance and risk management, marketing, human resources, law,<br />
organisation and corporate communications, as well as Investment Finance operations.<br />
In February 2006 the Supervisory Board extended his mandate until July 2011.<br />
During 1984 and 1990 he was vice-president of the then Slovene government responsible<br />
for the economy.<br />
Janez Bohoriå is also chairman of the Slovene Chamber of Commerce and Industry,<br />
member of the Learning Company Institute board, deputy chairman of the awards<br />
committee of the Republic of Slovenia for Business Excellence, member and honorary<br />
member of many organisations, the founder of Lionism in Slovenia and Coordinating Lion<br />
for the development of Lionism in Macedonia, member of the Regional Development<br />
Council of Gorenjsko, councillor in the Municipality of Kranj and member of the local<br />
community of Straœiæåe, member of the honorary arbitration court of the Managers’<br />
Association, honorary member of the Slovene Tourism Association and member of the<br />
Economy Collegiate Body at Ljubljana University.<br />
Membership of the Supervisory Boards:<br />
• chairman of the Supervisory Board NFD Holding d.d., Ljubljana<br />
• member of the Supervisory Board of Pokojninska Druœba A d.d., Ljubljana<br />
• member of the board of Golnik Hospital<br />
Membership of the Supervisory Boards of <strong>Sava</strong> Group companies:<br />
• chairman of the Supervisory Board of Terme 3000 d.d., Moravske Toplice<br />
• chairman of the Supervisory Board of <strong>Sava</strong> Trade d.d., Ljubljana
2 5 |<br />
Vinko Per@i@ Emil Vizoviœek<br />
Vinko Per@i@<br />
Member<br />
Emil Vizoviœek<br />
Member<br />
| i n t r o d u c t i o n |<br />
The 62-year-old university economics graduate has been employed at <strong>Sava</strong> for 42 years.<br />
He has been a member of the Board since 1996 and in February 2006 the Supervisory<br />
Board extended his mandate until July 2011. He is responsible for the development of<br />
planning systems and monitoring business operations, the development of informatics<br />
and purchasing as well operations in the Tourism and Real Estate divisions.<br />
Vinko Peråiå is also chairman of the Slovene Auditing Institute council, member of the<br />
board of the Federation of Accountants, Financiers and Auditors of the Republic of<br />
Slovenia, chairman of the Society of Accountants and Financiers in Kranj, member of the<br />
Managers’ Association and president of <strong>Sava</strong> Cycling Club.<br />
Membership of the Supervisory Boards:<br />
• chairman of the Supervisory Board of the company Domel d.d., Œelezniki<br />
Membership of the Supervisory Boards of <strong>Sava</strong> Group companies:<br />
• chairman of the Supervisory Board of Golf in Kamp Bled d.d., Bled<br />
• chairman of the Supervisory Board of Grand Hotel Toplice d.o.o., Bled<br />
• chairman of the Supervisory Board of G&P Hoteli Bled, d.o.o., Bled<br />
• member of the Supervisory Board of Terme 3000 d.d., Moravske Toplice<br />
• member of the Supervisory Board of <strong>Sava</strong> Trade d.d., Ljubljana<br />
The 61-year-old university graduate in chemical technology has been employed at <strong>Sava</strong><br />
for 30 years. He has been a member of the Board since 1996, and in February 2006 the<br />
Supervisory Board extended his mandate until July 2011. He is responsible for the<br />
development of quality management systems, research and development as well as the<br />
continual improvements system, for the development and supervision of Rubber<br />
Manufacturing operations with the foreign trade network and new development plans.<br />
Between 1988 and 1994 he managed production at Semperit, a partner of the car tyre plant<br />
<strong>Sava</strong> Semperit.<br />
Emil Vizoviæek is also a member of the board of the Association of Chemical Industries at<br />
the Slovene Chamber of Commerce and Industry, member of the board of the Technical<br />
Museum of Slovenia, member of the Managers’ Association, member of the board of the<br />
National Foundation for Business Excellence and member of the economy commission of<br />
the Slovene Business and Research Association with its head office in Brussels.<br />
Membership of the Supervisory Boards of <strong>Sava</strong> Group companies:<br />
• chairman of the Supervisory Board of Teol d.d.<br />
• chairman of the Supervisory Board of Limb d.o.o., Ptuj
a n n u a l r e p o r t | 2 0 0 5<br />
6.2<br />
2 6 |<br />
Supervisory Board<br />
Stanislav Valant, M.A.<br />
Chairman<br />
Miran Kal@i@<br />
Deputy Chairman<br />
Stanislav Valant, M.A.<br />
The 56-year-old university graduate in economics and Master of Business<br />
Administration is chairman of the Board of Management of Nacionalna<br />
Finanåna Druœba d.o.o., Ljubljana.<br />
His more important managerial experience comprises the membership of the<br />
Board of Management in Ljubljanska Banka d.d., Ljubljana, leading the project<br />
for establishing the Ljubljana Stock Exchange d.d., Ljubljana and presiding over<br />
the Slovene Banks Association.<br />
Prominent current functions:<br />
• chairman of the Association of Management Companies, Ljubljana<br />
• honorary chairman of the Supervisory Board of the Ljubljana Stock Exchange<br />
d.d., Ljubljana<br />
• chairman of the Supervisory Board of Etol d.d., Celje and Hoteli Bernardin d.d.,<br />
Portoroœ<br />
• member of the Supervisory Board of NFD Holding d.d., Ljubljana<br />
• president of the Slovene Ski Association<br />
The 58-year-old university graduate in law is director of the Institute for Work<br />
Safety d.d. Ljubljana.<br />
He was director of the specialised services sector in Hermes, Foreign Companies<br />
Representation d.o.o., Ljubljana, director of implementing insurance at the<br />
Institute of Pension and Disability Insurance of Slovenia, chairman of the<br />
Republic Committee for Work and member of the Executive Council of the<br />
Republic of Slovenia, head of the project for establishing the pensions company<br />
at SKB d.d. Ljubljana and chairman of its temporary board, deputy general<br />
director at the Institute of Pension and Disability Insurance of Slovenia.<br />
Prominent current functions:<br />
• vice-chairman of the Government of the Republic of Slovenia Board for Disabled<br />
Persons<br />
• chairman of the Committee for Closed Mutual Pension Funds for Public<br />
Employees in the Republic of Slovenia<br />
• member of the team for reforming of the pension insurance system at the Ministry<br />
of Labour, Family and Social Affairs
2 7 |<br />
Goran Bizjak<br />
Member - shareholder<br />
representative<br />
Janez Bojc<br />
Member - shareholder<br />
representative<br />
Janko Kastelic<br />
Member - shareholder<br />
representative<br />
| i n t r o d u c t i o n |<br />
The 47-year-old university graduate in economics is procurator in the company<br />
Candor d.o.o.<br />
He was assistant to the director of the Fund of the Republic of Slovenia for<br />
developing small businesses and head of the sector for preparing and managing<br />
the budget of the Republic of Slovenia.<br />
Prominent current function:<br />
• member of the Supervisory Board of Triglav Insurance d.d., Ljubljana<br />
The 44-year-old university graduate in economics is deputy director of the<br />
companies KD Group d.d. and KD Holding d.d., Ljubljana.<br />
He was director of Ljubljana Kinematografi d.d. Ljubljana, assistant to the<br />
director of Zadruœna Kmetijska Druœba d.o.o. Ljubljana, deputy director of KD<br />
Group d.d., Ljubljana, director of KD Holding d.d. Ljubljana, director of KD<br />
Investments d.d., Ljubljana and until 3 May <strong>2005</strong> member of the Supervisory<br />
Board of the company Droga d.d., Izola.<br />
Prominent current functions:<br />
• chairman of the Supervisory Board of the insurance company Adriatic<br />
Slovenica d.d., Koper<br />
• chairman of the Supervisory Board of the company Œito d.d., Ljubljana<br />
The 56-year-old university graduate in economics is director of the company<br />
Fidina d.d. Ljubljana.<br />
He was assistant to the managing director of the company Slovenijales, advisor<br />
in Triglav Insurance d.d., Ljubljana, and chairman of the fund management<br />
company DZU Triglav.<br />
Prominent current function:<br />
• member of the Supervisory Board of Terme Åateœ d.d., Åateœ ob Savi
a n n u a l r e p o r t | 2 0 0 5<br />
2 8 |<br />
Toma¡ Kuntari@, M.A.<br />
Member - shareholder<br />
representative<br />
Janez Justin<br />
Member – employee<br />
representative<br />
Jo¡ef Copek<br />
Member – employee<br />
representative<br />
Miha Resman<br />
Member – employee<br />
representative<br />
The 40-year-old university graduate in law, Master of Business Administration is<br />
assistant to the president of the Board of Management of Gorenje d.d., Velenje.<br />
He was director of the legal department in Kapitalska Druœba d.d., Ljubljana and<br />
advisor to the sector director of the Institute for Pension and Disability Insurance<br />
of Slovenia.<br />
The 60-year old mechanical technician is president of the Trade Union for<br />
Chemical, Non-metal and Rubber Manufacturing industry (KNG) <strong>Sava</strong>-<br />
Goodyear.<br />
He was president of KNG Slovenia, board member of the European Mine,<br />
Chemical and Energy Workers’ Federation (EMCEF), board member of the<br />
International Federation of Chemical, Energy, Mine and General Workers'<br />
Unions (ICEM), member of the negotiating teams for collective agreements for<br />
chemical and rubber manufacturing and non-metal industry of Slovenia, and<br />
member of the negotiating team of employees in EMCEF negotiating with the EU<br />
directorates.<br />
The 60-year-old university graduate in labour organisation is retired.<br />
He was director of the general sector in <strong>Sava</strong> d.d., Kranj and director of the<br />
company <strong>Sava</strong> Medical and Services d.o.o., Kranj in the <strong>Sava</strong> Group.<br />
The 30-year-old university graduate in economics is head of financial<br />
investments in the Strategic Finance of the company <strong>Sava</strong> d.d. Kranj.<br />
He was head of relations with investors and member of the expert team for<br />
take-overs and mergers.<br />
Prominent current functions:<br />
• member of the Supervisory Board of Limb d.o.o., Ptuj<br />
• chairman of the Workers’ Council of <strong>Sava</strong> d.d., Kranj
7. Report by the<br />
Supervisory Board<br />
2 9 |<br />
| i n t r o d u c t i o n |<br />
on the result of examining the audited <strong>2005</strong> <strong>Annual</strong> Report,<br />
<strong>2005</strong> consolidated <strong>Annual</strong> Report of the <strong>Sava</strong> Group and<br />
the proposal for using the accumulated profit <strong>2005</strong><br />
Components of the <strong>Annual</strong> Report and the Consolidated <strong>Annual</strong> Report<br />
The Supervisory Board of the joint stock company <strong>Sava</strong> has reviewed the formal aspects concerning the<br />
<strong>2005</strong> <strong>Annual</strong> Report from the Board of Management and the Consolidated <strong>Annual</strong> Report for <strong>2005</strong>.<br />
It has determined that the <strong>2005</strong> <strong>Annual</strong> Reports were produced within the legal deadline and contain all<br />
the obligatory components as prescribed by the currently valid Law on Economic Enterprises. The <strong>Annual</strong><br />
Report consists of the financial <strong>report</strong> that includes the Balance Sheet, Income Statement, enclosures with<br />
notes to all the statements, Cash Flow Statement, Statement of Changes in Equity and the business <strong>report</strong>.<br />
The Consolidated <strong>Annual</strong> Report consists of all the prescribed contents too, whereby it stands that the<br />
Business Report is common to both the <strong>Annual</strong> Report and the Consolidated <strong>Annual</strong> Report. All the<br />
essential constituents that are prescribed by legislation to produce the individual statements and <strong>report</strong>s<br />
are contained in the <strong>Annual</strong> Report. The company has correctly created legal reserves and reserves for its<br />
treasury shares. The explanations to the financial statements contain all the information prescribed by the<br />
Law on Economic Enterprises in Items 1 to 19 of Paragraph 1, Article 65. The Business Report contains<br />
all the significant business events that took place after the end of the business year, anticipated growth of<br />
the company and operations of the <strong>Sava</strong> Group in the field of research and development and data about the<br />
subsidiaries of the company. The Business Report contains an in-depth analysis on the material risks and<br />
uncertainties that the company is exposed to.<br />
The <strong>Annual</strong> Report was submitted for auditing to a selected auditor at the 10 th Shareholders' Meeting of the<br />
joint stock company. The auditors KPMG d.o.o. produced an Auditors' Report on 8 April 2006.<br />
Paragraph 3 of Article 256 of the Law on Economic Enterprises prescribes that the Board of Management<br />
must present the compiled <strong>Annual</strong> Report together with the Auditors' Report to the Supervisory Board<br />
without delay. The Board of Management of <strong>Sava</strong> d.d. did this on 13 April 2006. We therefore determine<br />
that the aforementioned legal provision was observed.<br />
Method and scope of examining the management of the company<br />
The Supervisory Board performed its supervisory function mainly at Supervisory Board meetings. It also<br />
established a review commission to prepare the written <strong>report</strong> from the Supervisory Board on the <strong>2005</strong><br />
<strong>Annual</strong> Report and other tasks in accordance with the Code of Corporate Governance for Slovenia. The<br />
commission consisted exclusively of Supervisory Board members, whereas the associates of the company,<br />
including the internal auditor, collaborated in its work.
a n n u a l r e p o r t | 2 0 0 5<br />
3 0 |<br />
The Supervisory Board held seven regular meetings. At these meetings individual members of the<br />
Supervisory Board exercised their right under Paragraph 1, Article 274(a) of the Law on Economic<br />
Enterprises, which enables all members of the Supervisory Board to examine all the bases for producing<br />
the <strong>Annual</strong> Report. In accordance with the legal provision the Supervisory Board has the right to revoke<br />
such a right from an individual member, but the Supervisory Board did not adopt any resolution on this<br />
matter in <strong>2005</strong>.<br />
The Supervisory Board meetings in <strong>2005</strong> took place on 17 February, 22 April, 17 May, 7 July, 25 August,<br />
and 15 December.<br />
The most important resolutions of the Supervisory Board<br />
The Supervisory Board pursued and adopted resolutions about the most important matters on a regular<br />
basis. A summary of other more important resolutions of individual meetings of the Supervisory Board (in<br />
chronological order) is given in the following wording:<br />
• The Supervisory Board became acquainted with the <strong>2005</strong> Business Plan together with a projection for<br />
2006 and 2007 (4 th meeting).<br />
• The Supervisory Board motioned the proposal by the Board to allocate 50% of the accumulated profit<br />
2004 remaining after the use of the net profit for the purpose under Paragraph 1, Article 228 of the Law<br />
on Economic Enterprises to other revenue reserves;<br />
• The Supervisory Board confirmed and endorsed the audited 2004 <strong>Annual</strong> Report from the Board of<br />
Management, audited consolidated 2004 <strong>Annual</strong> Report and a written <strong>report</strong> by the Supervisory Board<br />
about the annual <strong>report</strong> from the Board of Management for 2004, the consolidated 2004 <strong>Annual</strong> Report<br />
and the proposal for using the accumulated profit (5 th meeting).<br />
• The Supervisory Board motioned the proposal by the Board of Management about distribution of<br />
accumulated profit;<br />
• The Supervisory Board proposed to the Shareholders’ Meeting to extend the period for the unused part<br />
of the approved capital by another 5 years;<br />
• The Supervisory Board estimated that appointing a special auditor for examining individual transactions<br />
of the company was not needed (6 th meeting).<br />
• The Supervisory Board prepared written standpoints with regard to the demand for appointing a special<br />
auditor and made the chairman of the Supervisory Board in charge of presenting the standpoints in the<br />
extraordinary meeting (7 th meeting);<br />
• The Supervisory Board became acquainted with the bi-annual <strong>report</strong> on business operations for the<br />
period January-June <strong>2005</strong> (9 th meeting).<br />
• The Supervisory Board appointed the members of the review and personnel commission (10 th meeting).<br />
In a<strong>dd</strong>ition to that the Supervisory Board pursued and, if required, adopted required resolutions about<br />
long- and short-term financial investments, treasury shares, share price and the movement of the
3 1 |<br />
| i n t r o d u c t i o n |<br />
shareholders’ structure. After each Supervisory Board meeting the minutes of the meeting were prepared<br />
and were adopted with a resolution.<br />
Reporting by the Board of Management<br />
In the <strong>2005</strong> business year <strong>report</strong>ing by the Board of Management enabled the Supervisory Board to suitably<br />
implement its supervisory role. The <strong>report</strong>s by the Board of Management were usually produced according<br />
to individual areas with a synthetic review of all business impacts. These involved the operations of the<br />
divisions: Rubber Manufacturing with the Foreign Trade Network, Trade, Tourism, Real Estate and<br />
Investment Finance, thereby enabling one to monitor the positive and negative effects of individual<br />
operations of the <strong>Sava</strong> Group.<br />
The Supervisory Board was also allowed to make a review of individual companies or production and<br />
service programmes within individual divisions. The interest of the Supervisory Board primarily referred<br />
to the business operations of larger companies and production programmes and the consolidated<br />
statements of the entire Group.<br />
In its <strong>report</strong>s the Board of Management presented all the most important categories that affect the business<br />
of the joint stock company <strong>Sava</strong>. These are the categories of profit, turnover, costs, a<strong>dd</strong>ed value, etc.<br />
Furthermore, comparative statements for the previous year and planned statements for the current and<br />
future two years were a<strong>dd</strong>ed to the statement for <strong>2005</strong>. In this way the Supervisory Board could<br />
continuously examine the trend with respect to the past and planned business performance.<br />
Business performance assessment<br />
The Supervisory Board examined the business operations of <strong>Sava</strong> d.d. and the <strong>Sava</strong> Group during the year<br />
based on the submitted <strong>2005</strong> <strong>Annual</strong> Report, which for the <strong>Sava</strong> Group was prepared in accordance with<br />
International Financial Reporting Standards for the first time. By doing so the results and assets of the <strong>Sava</strong><br />
Group were presented in a more realistic manner, since the major part of assets was shown at the fair value<br />
principle. The use of new standards had a favourable effect on the shown return on capital of the <strong>Sava</strong><br />
Group, which in <strong>2005</strong> surpassed 10 per cent as planned in the strategy for the year 2007. The equity value<br />
presented in balance sheets of the <strong>Sava</strong> Group increased to more than €392 million or €193.8 per share.<br />
Irrespective of the single effect due to the transition to new financial standards it is to be ascertained in<br />
every case that the <strong>Sava</strong> Group in <strong>2005</strong> operated successfully and all key performance indicators of the<br />
Group surpassed the planned value. The comparison of values and business indicators does not show a<br />
suitable increase with regard to the past year, the reason being the negative goodwill shown under<br />
revenues for the year 2004 on account of the purchase of companies operating under the Pannonian Spas<br />
brand (it involved a single event connected with entering into the ownership structure).
a n n u a l r e p o r t | 2 0 0 5<br />
3 2 |<br />
The Supervisory Board of <strong>Sava</strong> d.d. analysed the movement of certain significant financial data and<br />
indicators, which show business success and ascertained:<br />
• net sales revenues in the <strong>Sava</strong> Group were achieved at €244 million and 4 per cent above last year and<br />
3 per cent below the plan;<br />
• The pre-tax profit of the <strong>Sava</strong> Group totalling €43.7 million was 14.5 per cent higher than planned or 20.9<br />
per cent lower than last year’s profit;<br />
• Net profit of the <strong>Sava</strong> Group for <strong>2005</strong> was generated in the amount of €38.5 million and was 4.3 per cent<br />
above plan. In comparison with last year it was 20.9 per cent lower. Not considering the negative<br />
goodwill, the <strong>Sava</strong> Group in <strong>2005</strong> generated a net profit that was 8.8 per cent higher than last year.<br />
• Return on capital of the <strong>Sava</strong> Group, calculated as the ratio between pre-tax profit and average balance<br />
of equity, amounted to 11.9 per cent and was 5.2 percentage points lower than last year.<br />
• Return on capital of the <strong>Sava</strong> Group calculated as the ratio between net profit and average balance of<br />
equity amounted to 10.5 per cent and was 5.5 percentage points lower than last year. The achieved return<br />
on capital was 0.5 percentage points above the planned return in <strong>2005</strong>.<br />
• On 31 December <strong>2005</strong> the <strong>Sava</strong> Group employed 3,047 employees, or 1 per cent more than last year.<br />
The Supervisory Board ascertains that the Board of Management of the company was successful in <strong>2005</strong><br />
as all the key goals were implemented both in <strong>Sava</strong> d.d. and the <strong>Sava</strong> Group. Very good results of the <strong>Sava</strong><br />
Group for <strong>2005</strong> according to IFRSs were due to successful operation and the application of new standards,<br />
which show the income and value of the assets in a considerably different manner. It is not anticipated that<br />
such a single event will be repeated in the coming years.<br />
The Supervisory Board estimated that the Board accomplished a material portion of business goals from<br />
the four-year development strategy prior to the deadline, however, certain important changes appeared in<br />
the strategy implementation that demand a revision of the current strategic development goals. The key<br />
elements of these changes are:<br />
• The Board of Management revised the adopted strategy of Trade by selling the entire operation and as<br />
an important shareholder entered in the ownership structure of the largest domestic trader with technical<br />
goods – the company Merkur. The decision will have a positive effect on the success of the <strong>Sava</strong> Group<br />
and resulted from the sale of the company Color d.d. as the largest investment in Chemicals. This year<br />
the Board of Management will seek an optimum solution for the remaining company from the division,<br />
i.e. Teol d.d.;<br />
• As far as the volume of the invested capital is concerned the Tourism division has become the second most<br />
important operation of the Group following Investment Finance. In the following period the Board will<br />
focus on increasing the return on capital invested by rationalising operations, synergies from a joint<br />
appearance and suitable positioning in Slovene tourism;<br />
• Investment Finance is the operation with a key contribution to the successful operation and profitability<br />
of the entire <strong>Sava</strong> Group. The future divestitures of the investments and investment in other existing or<br />
new operations will be realised within the adopted strategy and on the basis of the economic study and<br />
the established comparative advantages of the business system as a whole.<br />
In the business year 2006 the company will have to revise the adopted strategy for the period 2004-2007<br />
with regard to the aforementioned and already performed revisions from the previous year also due to the<br />
dynamic changes in the market and the necessity for rapid adaptation. The Supervisory Board ascertained<br />
that the development strategy should be revised on an annual basis.<br />
Proposal for using accumulated profit<br />
The Supervisory Board examined the proposal for using accumulated profit.<br />
It ascertained that the profit was distributed in accordance with Article 228 of the Law on Economic
3 3 |<br />
| i n t r o d u c t i o n |<br />
Enterprises, while the proposal for using accumulated profit comprises the data prescribed in the fourth<br />
paragraph of Article 282 of the aforementioned law.<br />
The Supervisory Board assessed whether there was a possibility for challenging such a resolution about<br />
using accumulated profit in line with the first paragraph of Article 368 of the Law on Economic<br />
Enterprises. It determined that there was no such possibility, since the proposal by the Board of<br />
Management anticipated that the amount of €5,352,661 was distributed to shareholders, which is the<br />
amount exceeding 4 per cent of share capital in cumulative terms totalling €3,350,904.<br />
When endorsing the <strong>Annual</strong> Report, the Supervisory Board supported the proposal by the Board of<br />
Management to form other reserves for one half of the net profit that remains after using accumulated profit<br />
for the purposes from the first paragraph of Article 228 of the Law on Economic Enterprises.<br />
Based on the third paragraph of Article 286 of the Law on Economic Enterprises, the Supervisory Board<br />
proposed that the Shareholders’ Meeting adopt a resolution on using accumulated profit as proposed by<br />
the Board of Management.<br />
Auditor's <strong>report</strong><br />
The Supervisory Board has examined the Auditor's <strong>report</strong> and determined that the auditor's opinion is an<br />
affirmative one.<br />
The auditor has also presented his views in the <strong>report</strong> to the Supervisory Board and collaborated in the<br />
meeting of the auditing commission of the Supervisory Board.<br />
The Supervisory Board has no comments on the Auditor's Report. It determines that the Auditor’s Report<br />
contains the constituents prescribed in the second paragraph of Article 54 of the Law on Economic<br />
Enterprises. The auditor has confirmed that the financial <strong>report</strong>s have been produced in accordance with<br />
Slovene Accounting Standards, the accounting policies of the company and by employing corresponding<br />
provisions of International Accounting Standards.<br />
Comments of the Supervisory Board on the <strong>2005</strong> <strong>Annual</strong> Report and the<br />
<strong>2005</strong> Consolidated <strong>Annual</strong> Report<br />
The Supervisory Board has no comments on the <strong>2005</strong> <strong>Annual</strong> Report and the <strong>2005</strong> Consolidated <strong>Annual</strong><br />
Report that would delay the adoption of a decision to endorse the <strong>Annual</strong> Report and the Consolidated<br />
<strong>Annual</strong> Report.<br />
Endorsement of the <strong>2005</strong> <strong>Annual</strong> Report and the Consolidated <strong>Annual</strong> Report<br />
The Supervisory Board hereby endorses the <strong>2005</strong> <strong>Annual</strong> Report and the <strong>2005</strong> Consolidated <strong>Annual</strong> Report<br />
of the <strong>Sava</strong> Group.<br />
The Supervisory Board received the <strong>2005</strong> <strong>Annual</strong> Reports within an open deadline, i.e. before one month<br />
expires including the day the <strong>2005</strong> <strong>Annual</strong> Reports were submitted to the Supervisory Board.<br />
20 April 2006<br />
Stanislav Valant, M.A.<br />
Chairman of the Supervisory Board
a n n u a l r e p o r t | 2 0 0 5<br />
8. The Corporate<br />
Governance System<br />
3 4 |<br />
The corporate governance system of <strong>Sava</strong> d.d. refers to the operation of its executive bodies with the aim of<br />
contributing to the efficient implementation of business goals and communication with shareholders and other<br />
partners to the greatest extent possible. In this way their confidence in our operation is strengthened. The<br />
management of the company <strong>Sava</strong> d.d. and its subsidiaries is based on legal provisions, the regulations of the<br />
Ljubljana Stock Exchange, and internal organisational rules and regulations while employing and<br />
transferring good business practice.<br />
Two-tier corporate governance<br />
system in the companies of the<br />
<strong>Sava</strong> Group<br />
Through efficient governance and management we<br />
create a competitive edge for <strong>Sava</strong> Group companies.<br />
<strong>Sava</strong> d.d. is managed according to a two-tier system, for<br />
which it is characteristic that the company is conducted<br />
by the Board of Management, while its operation is<br />
supervised by the Supervisory Board. The Group’s<br />
subsidiaries, which are organised as joint-stock<br />
companies, are managed in the same way, as are the<br />
subsidiaries with limited liability.<br />
Shareholders’ Meeting<br />
of <strong>Sava</strong> d.d.<br />
Shareholders of the company exercise their rights in<br />
company matters through the Shareholders’ Meeting.<br />
Convening meetings and dealing with other matters of<br />
importance for their performance is determined by the<br />
company statute in accordance with current legislation.<br />
The entire wording of the statute is announced on the<br />
<strong>Sava</strong> d.d. website: http://www.sava.si/1/1d/frame3.htm.<br />
The Shareholders’ Meeting is convened by the Board of<br />
Management of <strong>Sava</strong> d.d., once per year, as a rule. It may<br />
be attended by all shareholders or persons authorised by<br />
shareholders, or agents who at least three days prior to the<br />
Shareholders’ Meeting announce their participation in<br />
writing. The Shareholders’ Meeting convocation is<br />
announced at least 30 days prior to the meeting in the<br />
Official Gazette, Finance magazine, in the electronic<br />
information system SEOnet of the Ljubljana Stock<br />
Exchange d.d., and on the company websites.<br />
At the 11 th annual Shareholders’ Meeting that took place<br />
on 1June <strong>2005</strong> shareholders of <strong>Sava</strong> d.d. made a<br />
decision about appropriating profit, relieving the Board<br />
of Management and Supervisory Board and appointing<br />
an auditor. On request from one of the largest<br />
shareholders an extraordinary Shareholders’ Meeting<br />
was convened on 13 July <strong>2005</strong>, in which shareholders<br />
decided to appoint a special auditor for examining the<br />
business of <strong>Sava</strong> d.d. with its subsidiary Grand Hotel<br />
Toplice d.o.o. and the company Golf in Kamp Bled<br />
d.o.o. over a period of the last five years. Shareholders<br />
rejected the proposal by a two-thirds majority. All<br />
business was namely already revealed and examined by<br />
the authorised auditors, who did not find any<br />
irregularities, while the compulsory settlement<br />
procedure was conducted by the competent court.<br />
Supervisory Board of <strong>Sava</strong> d.d.<br />
The Supervisory Board of the company includes nine<br />
members. Six members, shareholders’ representatives,<br />
are elected by the Shareholders’ Meeting, while<br />
members and employee representatives are elected by<br />
the Workers’ Council in accordance with the law on<br />
employee participation in management.<br />
The Supervisory Board members are elected for a<br />
mandate of four years with the possibility of being<br />
repeatedly elected. The Supervisory Board shall meet at
3 5 |<br />
least once per quarter, or obligatorily once per half year.<br />
At <strong>Sava</strong> d.d. the Supervisory Board meets at least in five<br />
regular meetings annually.<br />
It is common practice that the Supervisory Board appoints<br />
a commission for the preparation of a Supervisory Board<br />
<strong>report</strong> on the annual <strong>report</strong> and a proposal about profit<br />
appropriation as well as its own audit commission. The<br />
scope of business of this commission corresponds to the<br />
code recommendation, namely, for the Supervisory Board<br />
to form an audit commission. The audit commission team<br />
that is composed of the commission chairman Janko<br />
Kastelic and members Stanislav Valant, M.A., and Miha<br />
Resman, reviewed the annual <strong>report</strong>, discussed the matter<br />
with the auditor and prepared a proposal for the<br />
Supervisory Board <strong>report</strong>.<br />
At its last meeting in <strong>2005</strong> the Supervisory Board<br />
appointed a personnel commission, which by the first<br />
meeting in 2006 drafted a proposal to appoint a new<br />
Board of Management. The personnel commission<br />
members, Miran Kalåiå, Stanislav Valant, M.A., and<br />
Joœef Copek, extended the mandate of the present Board<br />
of Management by a new mandate period.<br />
The method of working, convocation of meetings and<br />
other matters of importance for the work of the<br />
Supervisory Board of the company <strong>Sava</strong> d.d. are set out<br />
in the statute of the company and the regulations<br />
governing its work.<br />
Board of Management<br />
of <strong>Sava</strong> d.d.<br />
The company <strong>Sava</strong> d.d. is led by a three-member Board<br />
of Management who is appointed by the Supervisory<br />
Board and whose mandate is five years with an<br />
unlimited possibility for repeated appointment. The<br />
present Board of Management begins its new mandate<br />
on 17 July 2006 and ends it on 16 July 2011.<br />
The Board of Management runs <strong>Sava</strong> d.d. by conducting<br />
business for the benefit of the company in a self-<br />
| i n t r o d u c t i o n |<br />
dependent manner and on their own responsibility. The<br />
number of Board of Management members and their<br />
scope of business and authority are determined by a<br />
Supervisory Board resolution and form a constituent<br />
part of the Board of Management regulations.<br />
The Board of Management <strong>report</strong>s to the Supervisory<br />
Board on a regular basis, in an understandable manner<br />
and on time on all significant questions in relation to the<br />
operations of the company and the <strong>Sava</strong> Group. The<br />
Board of Management and Supervisory Board reconcile<br />
their opinions as regards designing and implementing<br />
the corporate strategy. For certain decisions and<br />
transactions, respectively, the Board of Management has<br />
to acquire approval from the Supervisory Board; such<br />
transactions are purchase of ownership stakes that<br />
exceed 20 per cent of <strong>Sava</strong> d.d.’s share capital, and an<br />
increase in the share capital from approved capital.<br />
<strong>Sava</strong> d.d. has two procurators. Their mandate coincides<br />
with the mandate of the current Board of Management.<br />
They represent the company together with one member<br />
of the Board of Management. The procurators have no<br />
limitations other than legal limitations in representing<br />
the company in real estate business and the provision of<br />
joint representation.<br />
Governing and managing the<br />
subsidiaries of the <strong>Sava</strong> Group<br />
The <strong>Sava</strong> Group is composed of the controlling<br />
company <strong>Sava</strong> d.d., its subsidiaries, in which the<br />
controlling company holds, directly and indirectly, a<br />
majority stake, and joint ventures, which the parent<br />
company manages together with other joint owners.<br />
The key task of the <strong>Sava</strong> d.d. management is to assure<br />
efficient company management and governing of the<br />
entire group. Acting on the part of all employees in the<br />
<strong>Sava</strong> Group is connected to and directed by the common<br />
values and business principles that form the basis for
a n n u a l r e p o r t | 2 0 0 5<br />
3 6 |<br />
implementing the corporate strategy of <strong>Sava</strong> d.d. and its<br />
subsidiaries.<br />
Managing subsidiaries is carried out at several levels:<br />
• council of directors of the <strong>Sava</strong> Group, which consists<br />
of members of <strong>Sava</strong> d.d. Board of Management,<br />
directors of subsidiaries and the director of<br />
competence centres of knowledge;<br />
• competence centres of knowledge, which exercise the<br />
business policy at expert levels and transfer<br />
knowledge within the <strong>Sava</strong> Group;<br />
• shareholders’ meetings of subsidiaries, at which <strong>Sava</strong><br />
d.d. exercises its voting right and protects its interests;<br />
• supervisory board meetings of subsidiaries, at which<br />
the representatives of the <strong>Sava</strong> d.d. management<br />
exercise their managing role; and<br />
• occasional consultations, if so required by the nature<br />
of business.<br />
The Council of Directors is headed by the chairman of<br />
<strong>Sava</strong> d.d. Board of Management. Members meet on a<br />
monthly basis and deal with business achievements and<br />
other important aspects of the company business in the<br />
Group. Furthermore, the Board of Management of <strong>Sava</strong><br />
d.d. regularly (twice a year) convenes a business<br />
conference of the <strong>Sava</strong> Group. The June meeting is<br />
intended for forecasting the business results by the year<br />
end, whereas the December meeting deals with the<br />
business plans for the following year.<br />
Representatives of the <strong>Sava</strong> d.d. management actively<br />
engage in governing and managing the subsidiaries as<br />
members of their supervisory boards. Their tasks<br />
include regular assessments of the implementation of<br />
company strategic policies and their efficiency, giving<br />
approvals to strategic decisions and appointing or<br />
recalling members of the management bodies, as well as<br />
their remuneration.<br />
There were no changes in <strong>2005</strong> in the management<br />
teams of the subsidiaries.<br />
Managing key strategic<br />
areas through the competence<br />
centres of knowledge<br />
The continual development of operations demands<br />
improvements, which is why we have formed two new<br />
competence centres of knowledge in <strong>2005</strong> such as<br />
Internal Audit and EU Projects.<br />
The competence centres of knowledge are the<br />
organisational form established in order to manage key<br />
strategic areas at the level of the entire Group; they were<br />
formed in 2002 and represent the organisational<br />
successor of the previous network management of<br />
individual areas. One of the Board of Management<br />
members is competent for each of the centres as its<br />
administrator. The fundamental role of the competence<br />
centres that, as a rule, have their management centre in<br />
the holding company, is to take care of performing the<br />
adopted business policy in their particular area of<br />
expertise. The competence centre members in the<br />
subsidiaries exercise common principles within their<br />
companies. The operation of this organisational form of<br />
management and securing knowledge transfer within the<br />
Group is defined in the regulations book of the Board of<br />
Management.<br />
Establishing an internal audit in the form of a<br />
competence centre is substantial progress in<br />
strengthening the corporate governance system,<br />
especially with regard to controlling the business<br />
performance of its subsidiaries. The basic task of<br />
internal auditors in the <strong>Sava</strong> Group is to provide<br />
assurances, which are based on independent and<br />
impartial audits, about the suitability of procedures for<br />
dealing with risks and to advise on how to improve the<br />
efficiency and success of such procedures in all business<br />
areas.<br />
The tasks of the second newly established competence<br />
centre, EU Projects, is to work systematically and to use<br />
opportunities for funding utilising European structural<br />
funds.<br />
Within the <strong>Sava</strong> Group there are 14 competence centres<br />
of knowledge: Internal Audit, Risk Management,<br />
Strategic Finance, Finance, Strategic Accounting,<br />
Planning and Analyses, Marketing Systems, HR, Law<br />
and Organisation, Corporate Communications, Strategic<br />
Purchasing, Strategic Informatics, Quality Systems,<br />
Cost Control and Operational Excellence, Safety, and<br />
EU Projects.
COMPETENCE CENTRES OF KNOWLEDGE<br />
3 7 |<br />
Competence centres of knowledge<br />
JANEZ BOHORIČ<br />
STRATEGIC FINANCE<br />
Director: Miha Dolinar<br />
RISK MANAGEMENT<br />
Director: Vlasta Mekiš<br />
FINANCE<br />
Procurator: Iva Žagar, M.A.<br />
MARKETING SYSTEMS<br />
Director: Alojzija Murn<br />
CORPORATE COMMUNICATIONS<br />
Director: Lidija Bregar<br />
HR, LAW AND ORGANISATION<br />
Director: Tatjana Lozar<br />
SAVA d.d.<br />
BOARD OF MANAGEMENT<br />
Chairman: Janez Bohorič<br />
Members: Emil Vizovišek, Vinko Perčič<br />
VINKO PERČIČ<br />
STRATEGIC PURCHASING<br />
Director: Marko Štebe<br />
STRATEGIC ACCOUNTING,<br />
PLAN AND ANALYSES<br />
Director: Mojca Globočnik<br />
STRATEGIC INFORMATICS<br />
Director: Georg Pollak<br />
INTERNAL AUDIT<br />
Director: Duša Haložan Sedej, M.A.<br />
DIVISIONS<br />
Reporting on business<br />
operations and strengthening<br />
the confidence of shareholders<br />
and the public<br />
The basic goal that we pursue in the <strong>Sava</strong> Group is to<br />
enhance company assets by increasing the efficiency<br />
and profitability of operations. We regularly inform our<br />
shareholders and the general public about our<br />
achievements as stipulated by law and the regulations of<br />
the Ljubljana Stock Exchange as well as the Corporate<br />
Governance Code for Slovenia. We also make use of<br />
numerous other forms and tools of communicating such<br />
as a letter to shareholders, regular announcements and<br />
other written information to interested shareholders and<br />
financial analysts, providing information on the phone<br />
and similar methods.<br />
| i n t r o d u c t i o n |<br />
EMIL VIZOVIŠEK<br />
QUALITY SYSTEMS<br />
Director: Jože Vodičar<br />
COST CONTROLL AND<br />
OPERATIONAL EXCELLENCE<br />
Director: Emil Vizovišek<br />
SAFETY<br />
Manager: Janez Fabjan<br />
EU PROJECTS<br />
Director: Primož Kozina<br />
TRADE INVESTMENT FINANCE<br />
TOURISM REAL ESTATE RUBBER MANUFACTURING OTHER OPERATIONS<br />
Due to intensive business operations and our endeavours<br />
to provide a higher level of business transparency as<br />
well as increased interest shown by shareholders and the<br />
general public in our business recently, the number of<br />
announcements in the electronic information system of<br />
the Ljubljana Stock Exchange, SEOnet, as well as in the<br />
mass media has escalated. The number of<br />
announcements on the website SEOnet stabilised at 47<br />
in <strong>2005</strong>, while the number of announcements<br />
concerning the <strong>Sava</strong> Group in the media increased to<br />
3,394, surpassing the previous year by a good 200.<br />
Regular rankings of <strong>Sava</strong> d.d. among the best Slovene<br />
companies in assessing annual <strong>report</strong>s according to the<br />
criteria of Finance magazine proves that the high quality<br />
level of <strong>report</strong>ing has been maintained. Moreover, we<br />
are ranked in a narrow circle of Slovene companies in<br />
annual reviews on the quality of communication with<br />
investors for the Portal Award organised every year by<br />
the Ljubljana Stock Exchange.<br />
COMPETENCE CENTRES OF KNOWLEDGE
a n n u a l r e p o r t | 2 0 0 5<br />
3 8 |<br />
SAVA d.d.<br />
Growth in the volume of <strong>report</strong>ing<br />
No. of announcements by<br />
<strong>Sava</strong> d.d. in the Ljubljana Stock<br />
Exchange electronic information<br />
system, SEOnet<br />
No. of announcements about<br />
the <strong>Sava</strong> Group in media<br />
The manner, flow of information and responsibilities in<br />
<strong>report</strong>ing are defined by the Internal Rule Book of<br />
<strong>report</strong>ing on <strong>Sava</strong> d.d. as a public joint stock company.<br />
The corporate communication team is in charge of<br />
considering the adopted <strong>report</strong>ing system, its<br />
reconciliation with new legislation and the introduction<br />
of improvements based on the best domestic and foreign<br />
practices available. The team that operates under the<br />
Board of Management includes the director of the<br />
competence centres and some of their associates.<br />
One of the team’s tasks is to pursue changes in the<br />
Corporate Governance Code for Slovenia, ensure<br />
consistency with it and enforce rules in daily operations<br />
1,448<br />
25<br />
* The electronic system of <strong>report</strong>ing at the Ljubljana Stock Exchange was introduced in 2002.<br />
1,527<br />
29<br />
1,632<br />
78<br />
3,164<br />
47<br />
3,394<br />
I*<br />
2001 2002 2003 2004 <strong>2005</strong><br />
and company business. The commitment to the code<br />
was already adopted by the Statement on Conformity<br />
with the Corporate Governance Code for Slovenia for<br />
the code’s first version that had been designed in March<br />
2004 in collaboration with the Ljubljana Stock<br />
Exchange, Supervisory Board Members Association<br />
and Managers’ Association. In this annual <strong>report</strong> we<br />
announce the Statement on conformity with the latest<br />
version of the Corporate Governance Code for Slovenia<br />
valid since 14 December <strong>2005</strong> on page 223.<br />
Together with the entire content of the Corporate<br />
Governance Code for Slovenia this statement is available<br />
on our website: http://www.sava.si/1/1d/frame5.htm.
9. Risk Management<br />
3 9 |<br />
| i n t r o d u c t i o n |<br />
The competence centre Risk Management has been operating since the end of 2004. Its members, the<br />
representatives of <strong>Sava</strong> d.d., systematically incorporate risk management in the organisation and day-to-day<br />
business, business functions and processes in all divisions of the <strong>Sava</strong> Group. In this way the processes that<br />
prior to then were regulated on the basis of quality management certificates, safety systems and various other<br />
methods for risk management have been upgraded.<br />
Risk management has been defined as a continuous and<br />
developing process that should a<strong>dd</strong>ress risks throughout<br />
the Group’s operations methodically and systematically.<br />
The goal is to achieve a sustained benefit within each<br />
operation, perceive risks and capitalise on them.<br />
On account of the systematic risk treatment in the<br />
<strong>Sava</strong> Group we have designed competitive<br />
advantages such as:<br />
• more successful conformity to shareholder requirements;<br />
• more efficient allocation of free financial resources;<br />
• less possibility of unforeseeable events; and<br />
• less possibility of insolvency.<br />
Based on the adapted risk management standard from<br />
2002 (Risk Management Standard, issue IRM,<br />
AIRMIC, Alarm from 2002) all risks at the level of the<br />
competence centres of knowledge and individual<br />
business functions that in Group companies are covered<br />
by these centres were documented in <strong>2005</strong>. We have<br />
prepared a list of risks of importance for all companies<br />
and classified them into opportunities for benefit and<br />
threats to success. Risks have been classified in a<br />
descriptive manner and their impact on operations<br />
measured as well as the factors determined that mainly<br />
affect risk.<br />
Approximately one half of the recorded risks refers to<br />
internal factors determined by business processes, the<br />
organisation and flow of information as well as<br />
acquiring synergies within the Group. Human resources<br />
management and education has a significant effect on<br />
risk management.<br />
Strategic risks<br />
Strategic risks are dealt with together with the<br />
implementation of the vision, mission and goals of the<br />
<strong>Sava</strong> Group and its individual companies. Boards of<br />
management in the companies together with their<br />
associates deal with this kind of risk.<br />
Operational risks<br />
Individual competence centres of knowledge deal with<br />
operational risks and manage them through their regular<br />
work procedures. Each centre is responsible for<br />
perceiving and controlling opportunities for benefit and<br />
threats to success from their respective field in<br />
accordance with their competences, strategy, goals and<br />
tasks that have been brought into line at the Group level.<br />
Hazard risks<br />
The appearance of hazard risks is a rare phenomenon,<br />
yet it can have serious consequences, therefore we try to<br />
insure against such risk through insurance companies.<br />
The <strong>Sava</strong> Group has made special contracts with<br />
insurance companies to cover risks that are adapted to<br />
the Group’s operations. The insurance policy is<br />
amended and adapted to requirements at the annual<br />
level. Insurances are mainly concluded for a term of ten<br />
years. We are endeavouring to level the maturity dates<br />
in the Group and shorten the long-term nature of<br />
insurance policies.
a n n u a l r e p o r t | 2 0 0 5<br />
9.1<br />
4 0 |<br />
Tangible fixed assets are mainly insured against fire,<br />
machinery breakdown, burglary and certain other hazards.<br />
Due to increased investments in preventive action the risk<br />
exposure to insured hazards is becoming lower.<br />
In production and trading companies receivables are<br />
insured as well. Insurance against production standstills,<br />
civil and occupational liabilities and product liabilities<br />
are becoming increasingly important.<br />
Financial risks<br />
The financial policy and thereby financial risk<br />
management in the <strong>Sava</strong> Group is adopted by the<br />
financial commission of <strong>Sava</strong> d.d. and confirmed by the<br />
Board of Management of <strong>Sava</strong> d.d. The financial policy<br />
determines financial relations within the business<br />
system, as well as relations to banks and other partners<br />
in the business system.<br />
The sensitivity of the <strong>Sava</strong> Group to financial risks is<br />
described in the financial <strong>report</strong> of the annual <strong>report</strong>.<br />
Liquidity risks<br />
Owing to its good rating the <strong>Sava</strong> Group experiences no<br />
difficulties in providing means of solvency. It is<br />
therefore in a position to acquire financial funds in the<br />
banking system relatively easily and under favourable<br />
conditions. The companies of the <strong>Sava</strong> Group hire loans<br />
practically with all banks operating in Slovenia.<br />
All types of insurance are systematically reviewed<br />
annually in collaboration with the insurance company<br />
and adapted to the operations of the <strong>Sava</strong> Group with<br />
regard to the changes in the environment where we<br />
operate and experience we have gained with the<br />
insurance company.<br />
The structural relation between long- and short-term<br />
loans of the <strong>Sava</strong> Group did not change in <strong>2005</strong>.<br />
However, the relation between indebtedness in domestic<br />
and foreign currency has changed, the reason being<br />
lower interest rates for loans in foreign currency and a<br />
stable relation between the euro and the Slovene tolar.<br />
The financial function has been very efficiently<br />
managed by cash and balanced liquidity by an active<br />
allocation of cash surpluses and deficits between<br />
companies.<br />
In relation to the banking system, the <strong>Sava</strong> Group is<br />
exposed as a whole, therefore the centralised<br />
management of cash flows is essential. Due to relatively<br />
low indebtedness of the entire Group we do not have any<br />
problems with liquidity. One of the indicators for the<br />
good Group rating is also the relation between long- and<br />
short-term items in the balance sheet of the <strong>Sava</strong> Group.
4 1 |<br />
SAVA GROUP<br />
Items in the balance sheet<br />
of the <strong>Sava</strong> Group<br />
at 31/12/<strong>2005</strong><br />
Current liabilities<br />
Current assets<br />
Equity<br />
Other non-current assets<br />
Non-current tied securities<br />
Non-current liabilities<br />
In accordance with the investment policy of the <strong>Sava</strong><br />
Group 25 per cent of long-term assets is tied in<br />
securities available for sale. More than 90 per cent of<br />
these shares are listed on the stock exchange, therefore<br />
any deficits in long-term sources does not jeopardise<br />
payment ability.<br />
Credit risk<br />
(27%)<br />
Approximately one half of inflows of the <strong>Sava</strong> Group is<br />
acquired from customers, which is why insurance of<br />
receivables is of great importance. The risk exposure<br />
with receivables in production and trading companies is<br />
low, since receivables are mainly insured with SID –<br />
Prva Kreditna Zavarovalnica d.d. In the companies in<br />
SAVA GROUP<br />
Cash inflows and outflows<br />
by currency in the <strong>Sava</strong> Group<br />
in <strong>2005</strong><br />
(1%)<br />
All loans in foreign currency are loans in euros, due to<br />
which the currency risk of indebtedness in <strong>2005</strong> was<br />
| i n t r o d u c t i o n |<br />
(17%) (60%) (62%) (21%) (13%)<br />
the Tourism division we have elaborated a policy for<br />
larger customers – tourist package providers. Due to the<br />
diversification of customers in Tourism the risk<br />
exposure is not very high.<br />
Currency exposure<br />
EQUITY AND LIABILITIES<br />
ASSETS<br />
Foreign currency balance in the entire <strong>Sava</strong> Group is<br />
considerably adjusted. The allocation of foreign<br />
currency surpluses and deficits is regulated through socalled<br />
internal foreign currency exchanges, thereby<br />
assuring an internal foreign currency balance.<br />
Occasional a<strong>dd</strong>itional surpluses or deficits are balanced<br />
in collaboration with the banking system.<br />
OUTFLOWS<br />
INFLOWS<br />
(23%) (76%)<br />
considerably reduced with the transition to the euro<br />
region after 1January 2007.
a n n u a l r e p o r t | 2 0 0 5<br />
9.2<br />
4 2 |<br />
Interest rate risk<br />
Since 2004 we have been hiring the majority of new<br />
loans at a variable interest rate (see graph). We consider<br />
variable interest rates as all those based on EURIBOR,<br />
basic interest rate, SITIBOR or others, which individual<br />
banks define as the basis to which they a<strong>dd</strong> a margin.<br />
SAVA GROUP<br />
Indebtedness at fixed and<br />
variable interest rate<br />
at 31/12/<strong>2005</strong><br />
Fix interest rate<br />
Variable interest rate<br />
Risks related<br />
to issued shares<br />
of <strong>Sava</strong> d.d.<br />
In a<strong>dd</strong>ition to systematic and common market and<br />
liquidity risks, which are characteristic for all securities<br />
on the Ljubljana Stock Exchange, there are, to the best<br />
of our knowledge, no a<strong>dd</strong>itional specific market and<br />
Due to growing risk exposure with euro-nominated risks<br />
and thus exposure due to the EURIBOR-bound interest<br />
rate and its expected growth it was decided in the <strong>Sava</strong><br />
Group in <strong>2005</strong> to protect the interest rate at the company<br />
level of the entire Group.<br />
Foreign currency loans Tolar loans<br />
liquidity risks whatsoever that would substantially affect<br />
a change in the value of a share.<br />
According to the <strong>report</strong> by the Ljubljana Stock<br />
Exchange d.d. from February 2006 the <strong>Sava</strong> share was<br />
classified in the second of four liquidity groups, which<br />
are defined by the gap between offer and demand,<br />
market depth, share price changeability, trading volume<br />
and the minimum time of presence in the market.
10.Financial<br />
Management<br />
4 3 |<br />
After <strong>Sava</strong> d.d. had been restructured into a holding company for managing and financing, the role of<br />
financial management has become one of performing essential business functions. The policy is defined at the<br />
level of the parent company, and the co-ordinated presence of Group companies is the domain of the<br />
competence centre Finance.<br />
<strong>Sava</strong> d.d. does not appear as a direct lessee of required<br />
credit sources. As a rule, the companies themselves hire<br />
loans, which depends on the agreement and planned<br />
indebtedness requirements that are planned annually.<br />
Outside the Group the companies are not able to<br />
contract debts without approval from the Strategic<br />
Finance Department, which agrees upon the terms and<br />
conditions with a selected bank. The balancing of cash<br />
flows, which guarantees financial solvency and using<br />
lines of credit to do so, is agreed upon and co-ordinated<br />
in the same manner.<br />
SAVA GROUP<br />
Hired loans of the <strong>Sava</strong> Group<br />
by creditor<br />
Credit sources at 31/12/<strong>2005</strong><br />
Credit sources at 31/12/2004<br />
160<br />
140<br />
120<br />
100<br />
80<br />
60<br />
40<br />
20<br />
The structure of hired loans and credit sources,<br />
respectively, by creditor type demonstrates that in 2004<br />
the share of bank loans of the <strong>Sava</strong> Group totalled<br />
around 80 per cent. In <strong>2005</strong> it remained at<br />
approximately the same level. The share of crediting by<br />
the <strong>Sava</strong> Group was at approximately the same level in<br />
2004 and <strong>2005</strong> – around 20 per cent. A negligible source<br />
of assets is represented by other sources (legal entities).<br />
In 2004 this share amounted to 0.56 per cent, while in<br />
<strong>2005</strong> it decreased to 0.22 per cent.<br />
Banks <strong>Sava</strong> Group<br />
~ 18%<br />
(31/12/2004)<br />
~ 20%<br />
(31/12/<strong>2005</strong>)<br />
~ 0.56%<br />
(31/12/2004)<br />
~ 0.22%<br />
(31/12/<strong>2005</strong>)<br />
Other creditors
a n n u a l r e p o r t | 2 0 0 5<br />
4 4 |<br />
SAVA GROUP<br />
Structure of mutual crediting<br />
at 31/12/<strong>2005</strong><br />
Credits granted by <strong>Sava</strong> d.d. to<br />
subsidiaries of the <strong>Sava</strong> Group<br />
Credits granted by subsidiaries<br />
to the parent company <strong>Sava</strong> d.d.<br />
The brisk investment activity of Group companies in<br />
<strong>2005</strong> dictated a higher long-term indebtedness. This was<br />
utilised to redesign the credit portfolio. The structure of<br />
indebtedness with loans changed in favour of<br />
indebtedness in foreign currency, which at the year end<br />
represented more than 76 per cent of the total figure.<br />
The reason lies in prices, for contracting debts in foreign<br />
currency in Slovenia and abroad was cheaper than in<br />
SAVA GROUP<br />
Currency structure of the<br />
credit portfolio<br />
(in %)<br />
Tolar loans<br />
Foreign currency loans<br />
Due to approaching the European monetary union we<br />
began to redesign the credit portfolio in <strong>2005</strong> so as to<br />
increase the share of euro loans. At the end of <strong>2005</strong><br />
(44%) (56%)<br />
tolars. Another important issue was that Slovenia is<br />
nearing the European monetary union. With this change<br />
a large portion of indebtedness with loans became<br />
bound to the EURIBOR variable interest rate, which<br />
demands serious planning to apply one of the<br />
instruments for insurance against such an interest rate<br />
(IRS).<br />
63.25<br />
36.75<br />
23.60<br />
76.40<br />
31/12/2004 31/12/<strong>2005</strong><br />
these loans exceeded three quarters of the total credit<br />
portfolio.
4 5 |<br />
SAVA GROUP<br />
Structure of credit indebtedness<br />
by maturity<br />
(in %)<br />
Short-term loans<br />
Long-term loans<br />
With regard to credit portfolio maturity in <strong>2005</strong>, we did<br />
not find any appreciable changes in comparison with the<br />
year 2004.<br />
After a change in the credit portfolio and events in the<br />
domestic monetary market the indebtedness cost was<br />
considerably reduced in <strong>2005</strong> too. At the end of the year<br />
the average interest rate in the <strong>Sava</strong> Group amounted to<br />
3.53 per cent, which is lower than the interest rate<br />
average in the euro region. A lower inflation rate, keener<br />
competition among banks, high rating, uniform<br />
presence and the favourable negotiating position of the<br />
<strong>Sava</strong> Group contributed to a reduction in interest rates.<br />
52.63<br />
47.37<br />
| i n t r o d u c t i o n | )<br />
53.46<br />
46.54<br />
31/12/2004 31/12/<strong>2005</strong><br />
The off-balance evidence or surety-warranty activity<br />
was maintained at approximately the same level as in<br />
the previous year. <strong>Sava</strong> d.d. guarantees for hired loans or<br />
guarantees for Group companies (the Trade and Real<br />
Estate division) amount in total to €29 million.<br />
Owing to its rating the parent company <strong>Sava</strong> d.d., as a<br />
rule, contracts debts without any a<strong>dd</strong>itional pledge of its<br />
material or financial assets.<br />
We expect that the banking system will continue to treat<br />
the companies of the <strong>Sava</strong> Group as sought-after<br />
business partners and debtors with preferential<br />
treatment.
a n n u a l r e p o r t | 2 0 0 5<br />
4 6 |<br />
To reach a goal, one has to swim with the flow<br />
and overcome it. We at the <strong>Sava</strong> Group are<br />
endeavouring to grow further. We have reached<br />
operating revenues of €256.7 million and<br />
generated a net profit of €37.6 million.
Aleœ Aberœek,<br />
swimmer, national champion<br />
in the 200 m butterfly<br />
4 7 |<br />
| b u s i n e s s a n a l y s i s |
a n n u a l r e p o r t | 2 0 0 5<br />
11. The <strong>Sava</strong> Share and<br />
Ownership Structure<br />
11.1<br />
4 8 |<br />
In <strong>2005</strong> the <strong>Sava</strong> share fluctuated between €187.8 and €179.5. The unit price on the last day of trading in <strong>2005</strong><br />
reached €180.4, or 1.4 per cent less than in the beginning of the year. The decrease is mainly due to movements<br />
on the Ljubljana Stock Exchange, which also affected the rate of the SBI 20 index that in the same period<br />
decreased by 5.6 per cent. In the last five years long-term investors in the <strong>Sava</strong> share had a 12.7 per cent<br />
annual yield on average.<br />
Movement of the<br />
<strong>Sava</strong> share<br />
In the first quarter of <strong>2005</strong> the SAVA share continued its<br />
positive growth trend from the last quarter of 2004. The<br />
share price at 31 March <strong>2005</strong> amounted to €188.1. In the<br />
second quarter of <strong>2005</strong> the <strong>Sava</strong> share price lowered<br />
slightly, reaching €181.6 on 30 June <strong>2005</strong>.<br />
In the second half of <strong>2005</strong> the <strong>Sava</strong> share price<br />
fluctuated around €179.5, while on the last trading day<br />
in <strong>2005</strong> it amounted to €180.4.<br />
The SAVA share price in the period from 1 January<br />
<strong>2005</strong> to 31 December <strong>2005</strong> decreased by 1.4 per cent,<br />
yet its movement deviated upwards by 4.5 per cent on<br />
average and reached lower deviations than the SBI 20<br />
SAVA d.d.<br />
Movement of the <strong>Sava</strong> share<br />
in <strong>2005</strong><br />
(in SIT)<br />
<strong>Sava</strong> d.d.<br />
SBI 20<br />
60,000<br />
50,000<br />
40,000<br />
30,000<br />
20,000<br />
10,000<br />
2000<br />
index. In the same period last year the SBI index fell by<br />
5.6 per cent.<br />
By investing in the <strong>Sava</strong> share long-term, investors have<br />
enhanced their asset value. The investors who invested<br />
€5,066 in the <strong>Sava</strong> share in the beginning of 2000<br />
increased their asset at the end of <strong>2005</strong> to €10,375. The<br />
return on investment in the amount of 148 per cent since<br />
the beginning of 2000 until the end of <strong>2005</strong> results in an<br />
average yield of 12.7 per cent.<br />
The movement in the price of the <strong>Sava</strong> share in <strong>2005</strong><br />
was impacted also by a lower trading volume on the<br />
Ljubljana Stock Exchange, which in <strong>2005</strong> decreased by<br />
30.6 per cent or €255.9 million. Despite a decrease in<br />
the SBI index value due to a lower trading volume in the<br />
Slovene securities market, the <strong>Sava</strong> share price in <strong>2005</strong><br />
2001 2002 2003 2004 <strong>2005</strong>
4 9 |<br />
SAVA d.d.<br />
Movement of the <strong>Sava</strong> share<br />
from 2000 to <strong>2005</strong><br />
(in SIT)<br />
<strong>Sava</strong> d.d.<br />
SBI 20<br />
60,000<br />
50,000<br />
40,000<br />
30,000<br />
20,000<br />
10,000<br />
surpassed the value of the Slovene Stock Exchange<br />
index SBI 20. On average the daily <strong>Sava</strong> share price<br />
| b u s i n e s s a n a l y s i s |<br />
2000 2001 2002 2003 2004 <strong>2005</strong><br />
* Note: To be able to compare the data the SBI 20 index was adapted so as to keep the ratio between the <strong>Sava</strong> share price and the SBI 20 index during the whole<br />
period at 8.93 as it was on 1 January <strong>2005</strong>.<br />
The <strong>Sava</strong> share is included in<br />
computations of various stock<br />
exchange indices<br />
The <strong>Sava</strong> share is included in the computation of the<br />
Slovene Stock Exchange index SBI 20 as well as in the<br />
computation of other international stock exchanges<br />
indices.<br />
exceeded the SBI 20* index by 4.8 per cent.<br />
For several years now the <strong>Sava</strong> share price has<br />
participated significantly in the computation of the<br />
Slovene Stock Exchange index SBI 20. For several<br />
years the <strong>Sava</strong> share has also been included in the Dow<br />
Jones and other international indices, which include the<br />
largest companies from south-east Europe. This means<br />
that the international business environment has<br />
recognised the company <strong>Sava</strong> d.d. as a successful<br />
company with stable, long-term development.<br />
Participation of the <strong>Sava</strong> share in computing the value of important stock exchange<br />
indices as at 31/12/<strong>2005</strong><br />
(in %)<br />
Slovene Stock Exchange index – SBI 201-100 10.04<br />
Dow Jones SOX EU Enlarged 15 0.47<br />
Dow Jones SOX EU Enlarged TMI 0.39<br />
Southeast Europe Traded Index 2.28
a n n u a l r e p o r t | 2 0 0 5<br />
11.2<br />
5 0 |<br />
Ownership structure of<br />
the company<br />
On 31 December <strong>2005</strong> 17,929 shareholders were<br />
registered in the share register of the company. In the<br />
total structure domestic investors had a 98.2 per cent<br />
stake and foreign investors a 1.8 per cent stake; legal<br />
entities had a 81.4 per cent stake and natural persons an<br />
18.6 per cent stake.<br />
In comparison with the state on 31 December 2004 the<br />
ownership structure of the company <strong>Sava</strong> d.d. shows<br />
that the share of legal entities rose by 1.3 per cent,<br />
whereas the share of natural persons fell by 1.3<br />
percentage points. Compared to the state at the end of<br />
2004 the share of foreign investors in the company <strong>Sava</strong><br />
d.d. rose by 0.1 percentage points.<br />
Ownership by number of shares at 31/12/<strong>2005</strong><br />
(v 000 SIT)<br />
No. of % of<br />
Total<br />
No. of Stake in<br />
Ownership by number of shares shareholders shareholders shares capital<br />
1 - 100 17,661 98.5 % 403,699 20.1 %<br />
101 - 1000 229 1.3 % 51,486 2.6 %<br />
1.001 - 10.000 21 0.1 % 74,473 3.7 %<br />
10.001 - 100.000 13 0.1 % 319,590 15.9 %<br />
nad 100.001 5 0.0 % 1,157,739 57.7 %<br />
Total 17,929 100.0 % 2,006,987 100.0 %<br />
Ownership of shares by nationality at 31/12/<strong>2005</strong><br />
Ownership of shares by nationality<br />
Domestic shareholders 98.2 %<br />
Foreign shareholders 1.8 %<br />
Total 100.0 %<br />
(in %)
5 1 |<br />
Ownership of shares by category at 31/12/<strong>2005</strong><br />
| b u s i n e s s a n a l y s i s |<br />
(v 000 SIT)<br />
% of No. of<br />
Ownership of shares by category ownership shares<br />
State institutions 29.8 % 597,926<br />
Financial institutions and insurance companies 41.7 % 837,592<br />
Legal entities 9.9 % 198,853<br />
Natural persons 18.6 % 372,616<br />
Total 100.0 % 2,006,987<br />
Ownership structure at 31/12/<strong>2005</strong> compared to the structure at 31/12/2004<br />
No. of No. of<br />
shares at Stake shares at Stake<br />
Shareholder 31/12/<strong>2005</strong> in capital Shareholder 31/12/2004 in capital<br />
Kapitalska Dru¡ba d.d. 375,542 18.71 % Kapitalska Dru¡ba d.d. 375,286 18.70%<br />
Slovene Compensation Fund d.d. 222,029 11.06 % Slovene Compensation Fund d.d. 222,029 11.06%<br />
Legal entities 1,033,511 51.50 % Legal entities 1,008,271 50.24%<br />
NFD1 Investicijski sklad d.d. 291,703 14.53 % NFD1 Investicijski Sklad d.d. 305,581 15.23%<br />
NFD Holding d.d. 161,465 8.05 % Zvon Ena Holding d.d. 119,927 5.98%<br />
Radenska d.d. 107,000 5.33 % Radenska d.d. 107,000 5.33%<br />
Zvon Ena Holding d.d. 68,690 3.42 % Banka Celje d.d. 78,520 3.91%<br />
Etol d.d. 56,305 2.81 % NFD Holding d.d. 72,644 3.62%<br />
Gorenjska Banka d.d. 52,500 2.62 % Etol d.d. 54,805 2.73%<br />
Banka Koper d.d. 46,754 2.33 % Gorenjska Banka d.d. 52,500 2.62%<br />
NFD d.o.o. 39,120 1.95 % Merkur d.d. 41,500 2.07%<br />
Other legal entities 209,974 10.46 % Other legal entities 115,865 5.77%<br />
<strong>Sava</strong> (treasury shares) 3,289 0.16 % <strong>Sava</strong> (treasury shares) 3,289 0.16%<br />
Natural persons total 372,616 18.57 % Natural persons total 398,112 19.84%<br />
TOTAL 2,006,987 100.00 % TOTAL 2,006,987 100.00%
a n n u a l r e p o r t | 2 0 0 5<br />
Ownership by category 2001 2002 2003 2004 + <strong>2005</strong> + Average<br />
No. of shares<br />
on 31/12/<strong>2005</strong> 1,720,987 1,720,987 1,720,987 2,006,987 2,006,987 -<br />
Nominal value of shares<br />
(in thousand €) 74.74 74.74 72.71 84.02 83.77 -<br />
Book value of share<br />
(in €) n/a n/a n/a 190.85 193.76 192.30<br />
Net profit per share (in €) n/a n/a n/a 24.9 19.1 22.0<br />
Dividend per share (in €) 2.30 2.37 2.37 2.59 2.67* 2.46<br />
Share of dividend<br />
in net profit n/a n/a n/a 10.4% 14.0%* 12.2%<br />
Amount of dividends<br />
paid in the year (in million €) 3.93 4.07 4.74 5.18 5.35* 4.66<br />
Earnings per share 6.40% 74.49% -0.52% 59.57% 0.05% 28.00%<br />
- dividend yield 3.20% 2.00% 2.00% 1.41% 1.48% 2.02%<br />
- capital yield 3.20% 72.49% -2.52% 58.16% -1.43% 25.98%<br />
Market capitalisation<br />
(in million €) 123.37 212.16 206.83 368.06 352.86 251.59<br />
Average daily liquidity<br />
(in thousand €) 62.00 106.09 37.74 170.65 21.78 79.65<br />
Average daily trading<br />
with shares 1,650 1,090 344 1,170 208 892<br />
Share price<br />
- highest 78.48 130.29 122.52 183.39 199.47 -<br />
- lowest 64.00 71.66 95.54 115.95 172.29 -<br />
- at year end 71.73 123.60 116.84 183.39 180.38 135.19<br />
P / E<br />
- highest n/a n/a n/a 7.4 9.5 -<br />
- lowest n/a n/a n/a 4.7 9.0 -<br />
- at year end n/a n/a n/a 7.4 9.5 8.4<br />
P / B n/a n/a n/a 96% 93% 95%<br />
5 2 |<br />
Trading with treasury shares<br />
On the last day of <strong>2005</strong> <strong>Sava</strong> d.d. had 3,289 treasury<br />
shares available whose value, calculated according to<br />
the average purchase price, was €224,500, while the<br />
Key data on the <strong>Sava</strong> share<br />
• Proposal to the Shareholders’ Meeting<br />
+ Data for 2004 and <strong>2005</strong> is prepared according to IFRSs.<br />
n/a – due to a transition to IFRSs the data from previous years is not comparable.<br />
nominal value reached €137,700. The number of<br />
treasury shares represents 0.16 per cent of the total of<br />
shares issued.<br />
There was no trading with treasury shares between 1<br />
January and 31 December <strong>2005</strong>.
5 3 |<br />
Notes:<br />
• The book value of the <strong>Sava</strong> share is calculated as a<br />
ratio between the equity value of the <strong>Sava</strong> Group<br />
excluding minority interest and weighed average<br />
number of named shares excluding treasury shares.<br />
• Net profit per <strong>Sava</strong> share is calculated so as to divide<br />
the net profit for the year that relates to the named<br />
shares of the controlling company (numerator) with<br />
the weighed number of named shares being exercised<br />
in the accounting period (denominator).<br />
• The share of dividends in net profit equals the<br />
fraction product of dividend per share and the number<br />
of shares on the ex-dividend date in the share register<br />
and net profit on the last day of the year.<br />
• The dividend yield equals the fraction of dividend per<br />
Share book value<br />
The book value of the <strong>Sava</strong> share on the last day of the<br />
year <strong>2005</strong> was €193.8. When calculating the book value<br />
the number of treasury shares was deducted from the<br />
total number of shares.<br />
Dividend per share<br />
The Board of Management of <strong>Sava</strong> d.d. proposed the<br />
SAVA d.d.<br />
Dividend per share<br />
(In tolars)<br />
| b u s i n e s s a n a l y s i s |<br />
share in the year and market price of the <strong>Sava</strong> share on<br />
the last trading day of the year.<br />
• The capital yield equals the fraction of the market<br />
price of the <strong>Sava</strong> share in the beginning and the market<br />
price of the <strong>Sava</strong> share at the year end.<br />
• Market capitalisation equals the multiple of the<br />
number of <strong>Sava</strong> shares and the market value of shares<br />
on the last day of the year.<br />
• The P/E index is calculated as the fraction of market<br />
price of the <strong>Sava</strong> share on the last day of the year (or<br />
the highest and lowest market prices in the calendar<br />
year) and profit per share.<br />
• The P/B index is calculated as a fraction of the price<br />
of the <strong>Sava</strong> share on the last trading day of the year and<br />
book value of the share in the same period.<br />
payment of a dividend in the amount of €2.67 for a<br />
share, or a total amount €5.3 million.<br />
Taking into consideration the proposed dividend for a<br />
share and the <strong>Sava</strong> share price on the last trading day of<br />
the year, the dividend yield for <strong>2005</strong> reached 1.5 per<br />
cent. Ever since 1996 <strong>Sava</strong> d.d. has been increasing the<br />
dividend for a share, thereby guaranteeing its<br />
shareholders stable dividend yields in the long run.<br />
530 546 560<br />
620<br />
640<br />
2001 2002 2003 2004 <strong>2005</strong>
a n n u a l r e p o r t | 2 0 0 5<br />
5 4 |<br />
Company securities owned by members of the Board<br />
of Management and Supervisory Board<br />
On 31 December <strong>2005</strong> the members of the Board of<br />
Management and Supervisory Board of <strong>Sava</strong> d.d. owned<br />
Cross-links with other<br />
companies<br />
According to the criteria of the Corporate Governance<br />
Code <strong>Sava</strong> on 31 December <strong>2005</strong> was cross-linked on<br />
the basis of the following ownership connections:<br />
• <strong>Sava</strong> d.d. had an 18.5 per cent stake in the company<br />
NFD1 Investicijski Sklad d.d., and NFD had a 14.5 per<br />
cent stake in the company <strong>Sava</strong> d.d.<br />
2,685 shares in the joint stock company <strong>Sava</strong> d.d., or a<br />
0.13 per cent stake in total company capital.<br />
No. of No. of<br />
Board of Management shares on Stake shares on Stake Difference<br />
members Position 31/12/2004 in capital 31/12/<strong>2005</strong> in capital (5 – 3)<br />
Janez Bohori@ Chairman 706 0.035% 706 0.035% 0<br />
Vinko Per@i@ Member 717 0.036% 717 0.036% 0<br />
Emil Vizoviœek Member 1,140 0.057% 1,140 0.057% 0<br />
Members of Board total 2,563 0.128% 2,563 0.128% 0<br />
No. of No. of<br />
shares on Stake shares on Stake Difference<br />
Supervisory Board members Position 31/12/2004 in capital 31/12/<strong>2005</strong> in capital (5 – 3)<br />
Stane Valant, M.A. Chairman 0 0.000% 86 0.000% 0<br />
Miran Kal@i@ Vice Chairman 86 0.004% 706 0.004% 0<br />
Janez Bojc Member 163 0.008% 0 0.000% -0.008%<br />
Janko Kastelic Member 36 0.002% 36 0.002% 0<br />
Toma¡ Kuntari@, M.A. Member 0 0.000% 0 0.000% 0<br />
Goran Bizjak Member 0 0.000% 0 0.000% 0<br />
Jo¡ef Copek Member 0 0.000% 0 0.000% 0<br />
Janez Justin Member 0 0.000% 0 0.000% 0<br />
Miha Resman Member 0 0.000% 0 0.000% 0<br />
Supervisory Board<br />
members total 285 0.014% 122 0.006% -0.008%<br />
Board of Management and<br />
Supervisory Board members total 2,848 0.142% 2,685 0.134% -0.008%<br />
• <strong>Sava</strong> d.d. had an 11.0 per cent stake in the company<br />
NFD Holding d.d., and NFD Holding an 8.1 per cent<br />
stake in the company <strong>Sava</strong> d.d.<br />
• <strong>Sava</strong> d.d. had a 41.1 per cent stake in Gorenjska Banka<br />
d.d., and Gorenjska Banka d.d. a 2.6 per cent stake in<br />
the company <strong>Sava</strong> d.d.
11.3 Calendar of more significant<br />
announcements<br />
5 5 |<br />
| b u s i n e s s a n a l y s i s |<br />
(Anticipated) date of<br />
Type of announcement or event announcement or event*<br />
Business <strong>report</strong> and unaudited unconsolidated financial statements Tuesday, 28 February 2006<br />
of the holding company <strong>Sava</strong> d.d. for <strong>2005</strong><br />
Business <strong>report</strong> and unaudited consolidated financial statements Friday, 31 March 2006<br />
of the <strong>Sava</strong> Group for <strong>2005</strong><br />
Summary of the audited annual <strong>report</strong> of the <strong>Sava</strong> Group and the Friday, 21 April 2006<br />
holding company <strong>Sava</strong> d.d. for <strong>2005</strong><br />
Audited annual <strong>report</strong> of the <strong>Sava</strong> Group and the holding Friday, 21 April 2006<br />
company <strong>Sava</strong> d.d. for <strong>2005</strong><br />
Statement on Conformity with the Corporate Governance Code for Slovenia Friday, 21 April 2006<br />
Report by the Supervisory Board Friday, 21 April 2006<br />
Call for the 12 th regular Shareholders’ Meeting of the company <strong>Sava</strong> d.d. Friday, 28 April 2006<br />
Business <strong>report</strong> and unaudited financial statements of the <strong>Sava</strong> Group Monday, 29 May 2006<br />
and the holding company <strong>Sava</strong> d.d. for the period January-March 2006<br />
12 th regular Shareholders’ Meeting of the holding company <strong>Sava</strong> d.d. Wednesday, 31 May 2006<br />
Note: only those shareholders who are registered as holders of shares<br />
in KDD two working days after the Shareholders’ Meeting will be entitled<br />
to dividends.<br />
Resolutions of the 12 th regular Supervisory Board Meeting of the holding Wednesday, 31 May 2006 or<br />
company <strong>Sava</strong> d.d. Thursday, 1 June 2006<br />
Summary of the business <strong>report</strong> and unaudited financial statements Monday, 25 August 2006<br />
of the <strong>Sava</strong> Group and the holding company <strong>Sava</strong> d.d. for the<br />
period January-June 2006<br />
Business <strong>report</strong> and unaudited financial statements of the <strong>Sava</strong> Group Monday, 25 August 2006<br />
and the holding company <strong>Sava</strong> d.d. for the period January-June 2006<br />
Business <strong>report</strong> and unaudited financial statements of the <strong>Sava</strong> Group Wednesday,<br />
and the holding company <strong>Sava</strong> d.d. for the period January-September 2006<br />
* The stated dates are those planned and may be changed during the year.<br />
29 November 2006<br />
Periodical announcements and other price-sensitive information are announced on the website of the Ljubljana Stock<br />
Exchange via the e-system SEOnet (www.ljse.si). Access to information is also provided on the company website<br />
www.sava.si and in cases stipulated by the company statute also in the Official Gazette and the newspaper Finance.<br />
Should the planned announcement dates and events change, this will be notified in due course on the company’s<br />
website.
a n n u a l r e p o r t | 2 0 0 5<br />
11.4 Contact persons:<br />
5 6 |<br />
Investor relations:<br />
Miha Resman, Head of Financial Investments in<br />
Strategic Finance<br />
e-mail: miha.resman@sava.si,<br />
Tel: +386 4 2066 068<br />
Information on dividend payments<br />
Karmen Meœnar, Credit Analyst<br />
e-mail: karmen.meznar@sava.si,<br />
Tel: +386 4 2065 518, 2065 690<br />
Corporate Communications<br />
Lidija Bregar, Director<br />
e-mail: lidija.bregar@sava.si,<br />
Tel: +386 4 2065 819, 2065 903<br />
Further information for shareholders,<br />
the media and the general public is<br />
available on:<br />
the company's website: www.sava.si
12.<br />
5 7 |<br />
Development<br />
Strategy<br />
| b u s i n e s s a n a l y s i s |<br />
We at <strong>Sava</strong> are intensively implementing the development strategy that was set in 1997 when we expanded our<br />
operations from rubber manufacturing to new branches of business. The period of eight years after the change<br />
in development was divided into two strategic phases. In the first phase that comprised five years (1997-2002)<br />
we strongly accelerated our growth through acquisitions and the establishment of new companies, thus<br />
achieving the position of one of the largest business systems in Slovenia. In the second phase (2003-2007) we<br />
have been focusing on the development of competitive core programmes and services and an increase in<br />
business profitability. The achieved results at the end of <strong>2005</strong> repeatedly confirm that the strategic goals have<br />
been implemented in accordance with planned dynamics and in certain areas even surpassed. In 2006 we are<br />
concentrating on a thorough examination and upgrading of the set strategic priorities, as well as designing<br />
ambitious goals for the next five-year period of our growth and development.<br />
Restructuring operations,<br />
design and growth of the<br />
<strong>Sava</strong> Group<br />
As the leading car tyre manufacturer in the markets of<br />
the former Yugoslavia and with a 3 per cent share in the<br />
European car tyre market <strong>Sava</strong> is facing the pressures of<br />
globalisation. <strong>Sava</strong> did not have available its own<br />
technology for radial tyre production. Confronted with<br />
unfavourable conditions for renewing the contract<br />
offered by the then partner Continental, we decided to<br />
link with the American corporation Goodyear. We sold<br />
a majority stake in the car tyre programmes to Goodyear<br />
and established two companies under joint ownership.<br />
In 1998, <strong>Sava</strong> d.d., with its operations volume<br />
amounting to scarcely one quarter of the previous<br />
volume, started to implement a new development<br />
strategy that was directed to achieving its primary goal<br />
until 2007: to increase the volume of operations from<br />
the then €38 million to €310 million.<br />
In the period from 1997 to 2002 we surpassed the<br />
volume of operations prior to linking with the Goodyear<br />
corporation by:<br />
• restructuring the industrial rubber programmes that<br />
remained fully owned by <strong>Sava</strong> d.d.;<br />
.• expanding to related operations (technical trade and<br />
chemicals) that complement rubber manufacturing as<br />
the basic operation;<br />
• diversifying operations (utilising opportunities in the<br />
promising tourism industry and entering the real estate<br />
business, particularly but not exclusively due to a large<br />
volume of investment projects and similar<br />
requirements within the Group); and<br />
• strengthening the investment finance role and<br />
combining strategic investments in real sector and<br />
profitable financial investments.<br />
In 2002, before the expiration of this development<br />
phase, <strong>Sava</strong> d.d. was restructured to a holding company<br />
for management and finance and formed six key<br />
business areas and divisions of the <strong>Sava</strong> Group,<br />
respectively.<br />
Enhancing all aspects of<br />
profitability in operations<br />
In the second strategic period, from 2003 to 2007, the<br />
internal growth of the companies and their expansion<br />
continue to be a development priority, thereby shifting<br />
the focus on implementing the development strategy<br />
from operations volume growth to an increase in<br />
operations profitability that until 2007 should reach 10<br />
per cent or three times as much as in 2002.<br />
We have formed separate but complementary missions<br />
and visions of the holding company and the Group.<br />
The mission of the holding company <strong>Sava</strong> d.d. is to<br />
increase the value of company assets, which is being
a n n u a l r e p o r t | 2 0 0 5<br />
5 8 |<br />
implemented by establishing competences in both key<br />
areas of our operations: managing the majority-owned<br />
companies and managing the investment portfolio.<br />
Managing the companies: subsidiaries are trained to<br />
achieve returns on capital invested that are above<br />
average with regard to the relevant branch.<br />
Managing the companies is based on five strategic<br />
guidelines:<br />
• to ensure the most modern management systems;<br />
• to establish efficient competence centres of knowledge<br />
in all key strategic business areas;<br />
• to provide conditions for employment, development<br />
and motivation of all employees, particularly top<br />
specialists;<br />
• to focus on developing and augmenting the portfolio<br />
of globally competitive products and services in the<br />
long run; and<br />
• to ensure operational excellence and cost efficiency.<br />
Managing the portfolio: we identify, select, acquire<br />
and integrate the right portfolio of businesses that<br />
improve the profitability of investments in the divisions<br />
of the <strong>Sava</strong> Group.<br />
Managing the portfolio – either acquisitions or<br />
divestitures – is an essential component in managing<br />
such a diverse system like <strong>Sava</strong>, therefore exacting<br />
criteria that support expertise in this field are being<br />
developed.<br />
The mission of the <strong>Sava</strong> Group: we are oriented to<br />
continually surpassing the expectations of customers,<br />
employees, shareholders, partners and the environment at<br />
the level of the entire Group, as well as creating attractive<br />
opportunities to employ the best personnel in Slovenia.<br />
The renewed vision of the holding company <strong>Sava</strong><br />
seeks to become the most successful and sought-after<br />
capital manager in Slovenia and a respected and<br />
responsible partner in the sustainable development of<br />
the natural and social environment.<br />
The vision of the <strong>Sava</strong> Group is to offer the greatest<br />
value to the customer and most appealing opportunity<br />
for employing the best personnel in Slovenia.<br />
We have adopted common business principles that in<br />
a<strong>dd</strong>ition to values represent the basis of our operations.<br />
The common principles that direct the operations of all<br />
<strong>Sava</strong> Group companies are:<br />
• profitable growth;<br />
• competent and motivated employees;<br />
• excellent knowledge of customers;<br />
• innovative products and services;<br />
• reliability and operational excellence; and<br />
• a fair and ethical business.<br />
The values of the <strong>Sava</strong> Group direct the organisational<br />
culture of our business system and place great emphasis<br />
on responsibility and the focus on achieving outstanding<br />
results and excellence in conducting business. We are<br />
led by the following values:<br />
• excellence in everything we do;<br />
• reliability and efficiency;<br />
• knowledge, creativity and self-initiative;<br />
• co-operation based on mutual respect and an open<br />
dialogue; and<br />
• responsibility towards the natural and social<br />
environment.<br />
<strong>2005</strong> – the primary goal for<br />
2007 surpassed<br />
In recent years <strong>Sava</strong> has experienced a radical<br />
reorganisation and increased its business success by<br />
restructuring its operations, strengthening its brand<br />
names, making huge investments, increasing the<br />
efficiency of its processes and combined involvement of<br />
its employees.<br />
The plans as set for 2007 have been achieved faster than<br />
originally expected. Already in <strong>2005</strong> the return on<br />
equity surpassed the 10 per cent figure specified in the<br />
strategy, which should be reached only in 2007. The<br />
equity value of the <strong>Sava</strong> Group rose to €388 million,<br />
and the share book value exceeded the figure of €192<br />
per share. Moreover, in <strong>2005</strong> we invested highly in<br />
further development, especially in the technology and<br />
renewal of our facilities, which will be continued in<br />
2006 and beyond. With new investments the <strong>Sava</strong><br />
Group has created and will create new jobs, especially<br />
in Pomurje.<br />
These accomplishments – combined with the achieved<br />
portfolio strength of our operations and companies –<br />
have created a solid foundation for the future and<br />
provided the strength to further exceed our expectations.
5 9 |<br />
Future steps in implementing<br />
the strategy<br />
2006 can be characterised as a year of consolidation for<br />
<strong>Sava</strong> Group operations, intensive investments and a<br />
further increase in the operating profitability of<br />
subsidiaries. Owing to the already exceeded target<br />
profitability that in line with the set strategy should have<br />
been achieved only in 2007, as well as new development<br />
opportunities and the implementation of planned<br />
changes in the Groups’ composition, this will also be the<br />
year in which strategic goals in all operations and Group<br />
companies are thoroughly reviewed and revised, thereby<br />
determining further detailed steps on the way to<br />
profitable growth of the <strong>Sava</strong> Group in the next 5-year<br />
development period.<br />
One of the key changes that will make a comparison of<br />
the <strong>Sava</strong> Group in 2006 and <strong>2005</strong> more difficult will be<br />
restructuring of the Trade division. Till now this has<br />
accounted for more than two thirds of total Group sales<br />
revenues.<br />
Trade in the <strong>Sava</strong> Group was formed as an operation<br />
that will be strongly strategically linked to Chemicals<br />
operations. The original strategic plans of this operation<br />
anticipated linking the Slovene coatings industry within<br />
the <strong>Sava</strong> Group. The Chemicals and Trade divisions<br />
would join purchasing and sales channels, resulting in<br />
an increase in the business performance of both<br />
operations. However, neither the merging of the<br />
chemical industry within the <strong>Sava</strong> Group has been<br />
implemented, nor the planned synergetic effects in the<br />
Trade division. Based on the concentration and difficult<br />
market conditions in this branch, the development and<br />
investment criteria in the <strong>Sava</strong> Group, and trends<br />
regarding the business and strategic position of both<br />
companies in this division, we have decided to<br />
restructure Trade and thus accelerate its further<br />
development.<br />
In the mi<strong>dd</strong>le of March 2006 <strong>Sava</strong> d.d. already<br />
implemented an important part of the strategic<br />
restructuring plan for the Trade division. Due to<br />
collaboration in the increase in share capital and<br />
a<strong>dd</strong>itional purchases of shares it has already become a<br />
significant 20 per cent owner of shares in the successful<br />
Slovene trading system, the Merkur Group. Future steps<br />
in restructuring Trade include selling the entire<br />
ownership stake that <strong>Sava</strong> Trade d.d. has in MG Market<br />
d.o.o., and selling the company <strong>Sava</strong> Trade d.d. to the<br />
| b u s i n e s s a n a l y s i s |<br />
company Merkur d.d. In this way <strong>Sava</strong> d.d. will<br />
substitute the majority management of a smaller trading<br />
company <strong>Sava</strong> Trade d.d. with active co-management of<br />
a larger trading system whose prospects for successful<br />
development and profitable business are substantially<br />
better – an accomplishment and opportunity of vital<br />
importance for <strong>Sava</strong> shareholders.<br />
In this year we plan to adopt strategic decisions<br />
concerning the company Teol d.d. Presently the<br />
programme of this company is being restructured.<br />
Establishing and starting-up the production of green fuel<br />
– biodiesel – on these premises, either independently or<br />
in association with one of the interested strategic<br />
partners, has been identified as one of the promising<br />
courses of development of this operation.<br />
The key generators of our further growth and<br />
development continue to be Rubber Manufacturing,<br />
Tourism, Real Estate and Investment Finance.<br />
In Rubber Manufacturing, our traditional business, it<br />
is planned to double the volume of operations in a<br />
5-year period. This will be achieved by focusing on<br />
innovative, high-quality industrial rubber products and<br />
services and by winning the position of the most<br />
progressive and adaptable niche producer of elastomer<br />
products in Europe and worldwide.<br />
Globally, Tourism is the branch with the highest<br />
growth rates and one of the key branches in the<br />
development of the Slovene economy. The development<br />
vision of <strong>Sava</strong>’s division Tourism is to strengthen the<br />
role of the leading tourist service provider in Slovenia,<br />
expand its operations to neighbouring markets and<br />
ensure top-class hotel, catering, golf and other tourist<br />
services. Besides the planned comprehensive<br />
investment operations and intensive employment, more<br />
important development tasks in 2006 include more<br />
active collaboration with other tourism companies in<br />
Slovenia and carrying out preparations for the<br />
introduction of the separate management of real estate<br />
and operational business of tourism companies.<br />
In Real Estate we perceive a chance to strengthen our<br />
leading market position in the Slovene market and<br />
further expand operations in the neighbouring Croatian<br />
market where we wish to reach the position of a leading<br />
service provider.
a n n u a l r e p o r t | 2 0 0 5<br />
6 0 |<br />
In 2006 and beyond Investment Finance will<br />
repeatedly contribute a material share to the success of<br />
<strong>Sava</strong> Group performance. By investing in profitable<br />
financial investments, providing funds for the<br />
development of the Group’s operations, efficient<br />
acquisition of assets and a uniform presence in the<br />
capital market, this division will generate above-average<br />
returns for our shareholders and implement the vision of<br />
becoming the most profitable financial pillar in<br />
Slovenia.<br />
Strategic foundations of future<br />
development<br />
Our financial compass continues to be the return on<br />
capital invested and devoting attention to creating a cash<br />
flow and maintaining a solid asset balance.<br />
The long-term profitable growth of individual<br />
companies and the Group as a whole will be supported<br />
by balanced investment that considers the increase in<br />
a<strong>dd</strong>ed value in the long run, particularly by employing<br />
an innovative approach; this includes both products and<br />
services with potential as well as technology and<br />
processes.<br />
When making decisions regarding investments at the<br />
Group level, we will focus on business areas that<br />
demonstrate the highest success potential.<br />
Continuing modernisation of management systems<br />
and strengthening the efficient operation of<br />
competence centres of knowledge will further remain<br />
in the forefront of our efforts, which up till now has been<br />
proven to be an outstandingly efficient way to manage<br />
key strategic areas, transfer knowledge, and direct and<br />
motivate employees to achieve goals at the level of the<br />
Group and individual companies.<br />
Our employees in particular are of prime importance<br />
for success in all of our operations. Therefore their<br />
qualifications, motivation and corporate disposition, as<br />
well as seeking and developing the best talents, will<br />
remain one of the key strategic development priorities of<br />
the <strong>Sava</strong> Group in the future. We wish to further<br />
strengthen the volume and quality of various forms of<br />
education including encouraging opportunities for selftraining.<br />
The remuneration system will be linked to the<br />
achievements of an individual and performance of<br />
individual Group companies to an even greater extent.<br />
To win a leading position in Slovenia, be at least<br />
second in the region and rank among three providers<br />
in our own market segment in Europe and<br />
worldwide, respectively, is and remains the basic<br />
requirement and condition for all members of the <strong>Sava</strong><br />
Group. We will strengthen the global competitiveness of<br />
our products and services portfolio at the company or<br />
division level by proceeding to identify new market<br />
opportunities, develop new products and services and<br />
design innovative business models that bring<br />
comparative advantages.<br />
Seeking important development opportunities at the<br />
level of the entire Group, particularly in Tourism, is just<br />
one of the activities to ensure operational excellence<br />
and cost efficiency. Another is energy savings, either in<br />
the form of reducing energy consumption or having an<br />
even more efficient supply, which can significantly<br />
contribute to a reduction in costs, thereby increasing the<br />
business performance of Group companies.<br />
The development of <strong>Sava</strong> will also in the future be<br />
founded on a sustainable basis that we comprehend as<br />
combining long-term economic success with<br />
environmental protection and social responsibility, both<br />
being our contribution towards a better future for<br />
present and future generations.
13.<br />
6 1 |<br />
General Economic<br />
Conditions<br />
Since economic conditions had different effects we<br />
present below the characteristics for each of the<br />
divisions.<br />
Rubber Manufacturing:<br />
• competitiveness grows ever keener, thereby putting<br />
pressure on sale prices;<br />
• saturated in market Western European countries;<br />
• a high price increase in strategic rubber raw materials;<br />
• intensive horizontal and vertical concentration in the<br />
branch;<br />
• relocation of production of technologically less<br />
complex products to Eastern Europe and Asia; and<br />
• stricter environmental standards.<br />
Chemicals:<br />
• further pooling of distribution channels in the Slovene<br />
market;<br />
• entry of new competitors in the target markets; and<br />
• a decline in economic conditions in certain target<br />
markets.<br />
| b u s i n e s s a n a l y s i s |<br />
Economic movements in Slovenia in <strong>2005</strong> were characterised by a growth in domestic product, industrial<br />
production, exports as well as an increase in raw materials prices, which had a particularly negative impact<br />
on the operations of <strong>Sava</strong> Group companies.<br />
Trade:<br />
• Slovene trade as a whole successfully conducted<br />
business;<br />
• intensive presence of foreign producers and traders;<br />
and<br />
• pooling domestic companies increases price competitiveness.<br />
Tourism:<br />
• a 4 per cent increase in arrivals and 1 per cent more<br />
overnight stays by foreign tourists at the level of<br />
tourism operations in Slovenia;<br />
• a 1 per cent decrease in arrivals and a 2 per cent<br />
decrease in overnight stays by Slovene tourists at the<br />
level of tourism operations in Slovenia;<br />
• change in tourist streams in countries;<br />
• more links within the tourism economy; and<br />
• high dependence on the weather.<br />
Real Estate:<br />
• favourable trends in the building industry;<br />
• increase in construction services; and<br />
• an increase in the share of building houses, decrease in<br />
the share of building other facilities.
a n n u a l r e p o r t | 2 0 0 5<br />
14. Business Operations<br />
of the <strong>Sava</strong> Group<br />
14.1<br />
6 2 |<br />
The consolidated financial statements of the <strong>Sava</strong> Group have been compiled according to International<br />
Financial Reporting Standards for the first time. The introduction of International Financial Reporting<br />
Standards has provided a more realistic presentation of the results and assets of the <strong>Sava</strong> Group. The items in<br />
the financial statements are valued at fair values as required by the new standards. The introduction of new<br />
standards has a positive effect on the presented return on capital employed of the <strong>Sava</strong> Group, which in <strong>2005</strong><br />
exceeded 10 per cent, as set in the strategy until 2007. The equity of the <strong>Sava</strong> Group as presented in the balance<br />
sheet increased too and amounted to more than €393 million or €193.8 per a share. Regardless of the applied<br />
standards, the <strong>Sava</strong> Group operated successfully and all key performance indicators surpassed the planned<br />
values. The <strong>Sava</strong> Group created a pre-tax profit of €43.8 million, which is 14.5 per cent higher than planned.<br />
In <strong>2005</strong> the companies in the <strong>Sava</strong> Group generated a net profit of €38.5 million, which was 4.3 per cent more<br />
than set in the business plan.<br />
Business performance of the <strong>Sava</strong> Group<br />
in <strong>2005</strong><br />
Survey of important data based on the consolidated income statement<br />
of the <strong>Sava</strong> Group<br />
(€ in millions)<br />
<strong>Sava</strong> Group Index<br />
in accordance with International Financial Reporting Standards 2004 <strong>2005</strong> <strong>2005</strong>/2004<br />
Net sales revenues 236.1 244.0 103<br />
Other revenues 20.1 12.5 62<br />
TOTAL OPERATING REVENUE 256.3 256.5 100<br />
Earnings before interest, taxes, depreciation and amortisation (EBITDA) 37.7 24.9 66<br />
Earnings before interest and taxes (EBIT) 19.6 8.3 43<br />
Net financing income 16.4 15.8 96<br />
Share in income of associates 16.3 19.6 120<br />
Pre-tax profit 52.2 43.7 84<br />
Tax -3.6 -5.2 145<br />
Net profit of the <strong>Sava</strong> Group 48.6 38.5 80<br />
- Net profit/operating revenue – in % 19.0% 15.0% 79<br />
Net profit of the <strong>Sava</strong> Group attributable to <strong>Sava</strong> d.d. 48.3 38.2 79
6 3 |<br />
Operating revenues<br />
In <strong>2005</strong> the <strong>Sava</strong> Group generated operating revenues in<br />
the amount of €256.5 million, which was at last year’s<br />
level.<br />
In operating revenues in 2004 negative goodwill<br />
totalling €14.5 million, which referred to the purchase<br />
of companies operating under the Pannonian Spas<br />
brand, was recognised. In operating revenues in <strong>2005</strong><br />
negative goodwill totalling €1.29 million, which was<br />
due to the a<strong>dd</strong>itional purchase of stakes from minority<br />
stakeholders, was recognised.<br />
SAVA GROUP<br />
| b u s i n e s s a n a l y s i s |<br />
Net sales revenues of the <strong>Sava</strong> Group in the amount of<br />
€244 million were 4 per cent higher than last year and 3<br />
per cent below plan.<br />
In the sales structure by division Trade had a 38.3 per<br />
cent, Rubber Manufacturing with the Foreign Trade<br />
network a 31.6 per cent, Tourism a 21.5 per cent and<br />
Real Estate a 5.9 per cent share. The remaining 2 per<br />
cent were operating revenues by other operations.<br />
Net sales revenues of the Group in foreign markets<br />
represented 31.1 per cent in consolidated sales revenues.<br />
109.4<br />
211.7<br />
231.3 236.1 244.0<br />
2001 2002 2003 2004 <strong>2005</strong><br />
Note: a comparison of net sales revenues from products and services by year corresponds, despite the transition to IFRSs.<br />
SAVA GROUP<br />
Net sales revenues structure<br />
in <strong>2005</strong> by division<br />
OTHER COMPANIES<br />
CHEMICALS<br />
REAL ESTATE<br />
TRADE<br />
RUBBER MANUFACTURING<br />
TOURISM<br />
(31.6%) (38.3%) (5.9%) (2.1%) (0.6%) (21.5%)
a n n u a l r e p o r t | 2 0 0 5<br />
6 4 |<br />
Operating expenses<br />
The <strong>Sava</strong> Group operated with operating expenses in the<br />
amount of €206.4 million, which was 8.7 per cent more<br />
than in the previous year. In the operating expenses<br />
structure costs of goods, materials and services had a<br />
70.1 per cent, labour costs a 22.3 per cent, depreciation<br />
a 6.1 per cent, and write-offs and other expenses a 1.5<br />
per cent share.<br />
Earnings before interest and taxes<br />
(EBIT)<br />
EBIT in the amount of €8.3 million included the<br />
recognised revenues due to the elimination of negative<br />
goodwill in the amount of €1.29 million, which in the<br />
previous year were much higher and totalled €14.5<br />
million.<br />
EBIT, without considering the revenues originating<br />
from the elimination of negative goodwill totalling €7.0<br />
million, was 38.2 per cent higher than last year. The<br />
growth in sales, strict supervision over the cost increase<br />
and optimum use of operating assets resulted in an<br />
improvement of the operating performance of the<br />
Group, which for the second year in a row was reflected<br />
in enhanced EBIT.<br />
Net financing income<br />
In <strong>2005</strong> the <strong>Sava</strong> Group created financing income in the<br />
amount of € 24.4 million, or 16.2 per cent less than last<br />
year. In the financing income structure the profit in sale<br />
of financial investments had a 77.7 per cent share and<br />
received dividends an 8 per cent, received interest a 5.6<br />
per cent and other financing income an 8.7 per cent<br />
share. Financing income was mainly generated by the<br />
company <strong>Sava</strong> d.d. and is described in the part of the<br />
annual <strong>report</strong> that refers to <strong>Sava</strong> d.d.<br />
In <strong>2005</strong> the <strong>Sava</strong> Group created financing expenses in<br />
the amount of €8.6 million, or 32.3 per cent less than in<br />
the previous year. In the expense structure the major<br />
part, or 70.7 per cent, had expenses for interest for hired<br />
loans, 18.8 per cent were due to impairments in financial<br />
investments, and the remaining 10.5 per cent were other<br />
financing expenses.<br />
The achieved financing income totalling €15.8 million<br />
was 3.8 per cent lower than last year and was generated<br />
by <strong>Sava</strong> d.d. in total.<br />
Share in income of associates<br />
Revenues from share in income of associates referred to<br />
Gorenjska Banka d.d., Kranj and were created in the<br />
amount of €19.6 million, which was 20.5 per cent more<br />
than last year. €5.7 million or 29 per cent was paid as<br />
dividends, the remaining sum of €13.9 million or 79.5<br />
per cent being the rest of the attributable profit of<br />
Gorenjska Banka d.d. for <strong>2005</strong> considering the equity<br />
method.<br />
(€ in millions)<br />
<strong>2005</strong> 2004<br />
Operating income without elimination of negative goodwill 7.0 5.1<br />
Income 15.8 16.4<br />
Elimination of negative goodwill 1.3 14.5<br />
Share in income of associates 19.6 16.2<br />
PRE-TAX PROFIT 43.7 52.2
6 5 |<br />
Pre-tax profit<br />
The pre-tax profit of the <strong>Sava</strong> Group totalling €43.7<br />
million was 14.5 per cent higher than planned or 20.9<br />
per cent lower than last year’s profit. The pre-tax profit<br />
included:<br />
Tax<br />
For <strong>2005</strong> tax liability in the amount of €3.3 million and<br />
an ascertained receivable from recently found temporary<br />
differences totalling €0.25 million were computed. In<br />
the income statement an income tax of €5.2 million was<br />
presented, which was 45.5 per cent higher than last year.<br />
The effective tax rate for <strong>2005</strong> amounted to 12.0 per<br />
cent and was 5.1 percentage points higher than last year.<br />
The changed tax legislation already affected the tax<br />
liability amount in <strong>2005</strong>. A decrease in possible relief in<br />
connection with investments, which in the <strong>Sava</strong> Group<br />
are high, will cause an even higher tax liability in the<br />
future.<br />
Net profit for the year<br />
Net profit of the <strong>Sava</strong> Group for <strong>2005</strong> was generated in<br />
the amount of €38.5 million and was 4.3 per cent above<br />
plan. In comparison with last year it was 20.9 per cent<br />
lower, the reason being the negative goodwill due to the<br />
purchase of companies operating under the Pannonian<br />
Spas brand, which in 2004 was shown under revenues.<br />
| b u s i n e s s a n a l y s i s |<br />
Irrespective of this event, the <strong>Sava</strong> Group in <strong>2005</strong><br />
generated a net profit that was 8.8 per cent higher than<br />
last year.<br />
In <strong>2005</strong> all divisions operated with a positive result with<br />
the exception of the Chemicals division, which is being<br />
strategically reorganised, and other operations including<br />
companies and projects that have just begun.<br />
Return on capital<br />
Return on capital of the <strong>Sava</strong> Group, calculated as the<br />
ratio between pre-tax profit and average balance of<br />
equity, amounted to 11.9 per cent and was 5.2<br />
percentage points lower than last year.<br />
Return on capital of the <strong>Sava</strong> Group calculated as the<br />
ratio between net profit and average balance of equity<br />
amounted to 10.5 per cent and was 5.5 percentage points<br />
lower than last year. The achieved return on capital was<br />
0.5 percentage points above the planned return in <strong>2005</strong>.<br />
Both the lower profit in absolute terms and lower return<br />
on capital of the <strong>Sava</strong> Group were mainly due to a single<br />
financial income in 2004 in the form of eliminating the<br />
negative goodwill that was realised with the purchase of<br />
companies operating under the Pannonian Spas brand.<br />
Contribution to return on capital by income type in <strong>2005</strong> and 2004<br />
(EUR in millions)<br />
<strong>2005</strong> 2004<br />
Operating income 1.9% 1.7%<br />
Income without elimination of negative goodwill 4.3% 5.4%<br />
Elimination of negative goodwill 0.4% 4.8%<br />
Share in income of associates 5.3% 5.3%<br />
Tax -1.4% -1.2%<br />
NET PROFIT FOR THE YEAR 10.5% 16.0%
a n n u a l r e p o r t | 2 0 0 5<br />
14.2<br />
6 6 |<br />
Assets, equity and<br />
liabilities of the <strong>Sava</strong><br />
Group at 31/12/<strong>2005</strong><br />
The balance sheet sum of the <strong>Sava</strong> Group at 31/12/<strong>2005</strong><br />
amounted to €651 million and was 9.7 per cent higher<br />
than in the same period last year. Important changes<br />
appeared in tangible fixed assets, especially in Tourism.<br />
Investments in associates, mainly in Gorenjska Banka<br />
d.d., increased by 13.2 per cent due to the application of<br />
the equity method.<br />
SAVA GROUP<br />
31/12/<strong>2005</strong> / 2004<br />
240<br />
257<br />
04/05<br />
Equity and liabilities<br />
In the liabilities structure equity had a 60.3 per cent<br />
share, which was 3.4 percentage points less than last<br />
year. Non-current liabilities had a 12.9 per cent share in<br />
the liabilities structure, which was 16.5 per cent more<br />
than last year and current liabilities a 26.8 per cent<br />
share, which was 21.4 per cent more than last year.<br />
107<br />
121<br />
Assets<br />
In the assets structure of the <strong>Sava</strong> Group tangible fixed<br />
assets, intangible fixed assets and investment property<br />
represented 41.7 per cent, investments in associates 18.6<br />
per cent, non-current securities available for sale 21.4<br />
per cent and current assets and other assets 18.3 per<br />
cent.<br />
In the assets structure by division <strong>Sava</strong> d.d. has a 59.2<br />
per cent share, Tourism a 21.5 and Other Operations an<br />
19.3 per cent share.<br />
134<br />
140<br />
13<br />
26<br />
44<br />
44<br />
48<br />
50<br />
7<br />
13<br />
594<br />
651<br />
04/05 04/05 04/05 04/05 04/05 04/05 04/05<br />
In total liabilities the hired non-current and current loans<br />
in the amount of €188.3 million were the greatest item,<br />
exceeding last year’s figure by 29.5 per cent. In the<br />
liabilities structure they had a 28.9 per cent share. A<br />
higher indebtedness rate was due to large investments in<br />
<strong>Sava</strong> Group companies.
6 7 |<br />
SAVA GROUP<br />
Equity and liabilities at<br />
31/12/<strong>2005</strong> / 2004<br />
(€ in millions)<br />
Equity<br />
Non-current liabilities<br />
Curent liabilities<br />
Total equity and liabilities<br />
Investments<br />
In <strong>2005</strong> the companies of the <strong>Sava</strong> Group earmarked €<br />
37.6 million or 1.4 per cent more than last year for<br />
investments. A good half of all investments was<br />
implemented in Tourism for the modernisation of<br />
existing and construction of new hotel facilities. An<br />
a<strong>dd</strong>itional one third of investments in <strong>Sava</strong> d.d. was<br />
mainly earmarked for construction of buildings for the<br />
market.<br />
SAVA GROUP<br />
Investments in fixed assets in<br />
the <strong>Sava</strong> Group<br />
(€ in millions)<br />
| b u s i n e s s a n a l y s i s |<br />
378<br />
393<br />
72<br />
84<br />
143<br />
174<br />
594<br />
651<br />
04/05 04/05 04/05 04/05<br />
Data about the share book value on the<br />
basis of the equity value of the <strong>Sava</strong><br />
Group at 31/12/<strong>2005</strong><br />
The share book value of <strong>Sava</strong> d.d. calculated as the ratio<br />
between the equity value of the <strong>Sava</strong> Group without<br />
minority interest and weighed average number of<br />
ordinary shares without treasury shares at 31/12/<strong>2005</strong><br />
amounted to €193.8, which was one per cent more than<br />
last year.<br />
The market value of the <strong>Sava</strong> share at 31/12/<strong>2005</strong><br />
amounted to €180.4 and reached 93.1 per cent of the<br />
book value.<br />
14.3<br />
23.1<br />
14.4<br />
37.0<br />
37.6<br />
2001 2002 2003 2004 <strong>2005</strong>
a n n u a l r e p o r t | 2 0 0 5<br />
15. Business Operations by Division*<br />
15.1<br />
6 8 |<br />
Rubber Manufacturing division<br />
with the Foreign Trade Network<br />
V i s i o n<br />
To focus on innovative quality industrial rubber<br />
products and services and double business volume<br />
in a 5-year period as well as win the position<br />
of the most advanced and niche market-adaptable<br />
manufacturer of elastomer products<br />
in Europe and throughout the world.
6 9 |<br />
| b u s i n e s s a n a l y s i s |<br />
* Key data was prepared in accordance with<br />
International Financial Reporting Standards
a n n u a l r e p o r t | 2 0 0 5<br />
7 0 |<br />
The companies of Rubber Manufacturing achieved sales in the amount of € 95.1 million, which was 14per cent<br />
higher than last year. In the total consolidated sale of the <strong>Sava</strong> Group Rubber Manufacturing with the Foreign<br />
Trade Network had a 31.6 per cent share. Total pre-tax profit was 42 per cent higher than last year, and net<br />
profit totalling €1.4million was 38 per cent higher than generated in the same period last year. Rubber<br />
Manufacturing earmarked € 4.6 million for investments.<br />
For 2006 it is planned to achieve sales revenues of € 98.5 million with a pre-tax profit of € 2.9 million, while<br />
€ 4.5 million will be invested in an a<strong>dd</strong>itional upgrade of production facilities.<br />
Key data for Rubber Manufacturing with the Foreign Trade Network<br />
2004 <strong>2005</strong><br />
(€ in millions)<br />
Index<br />
<strong>2005</strong>/2004<br />
Net sales revenues 83.2 95.1 114<br />
Pre-tax profit 1.2 1.7 142<br />
Net profit 1.0 1.4 138<br />
Assets 39.0 47.0 120<br />
Equity 20.2 21.3 105<br />
Liabilities 18.8 25.7 136<br />
Investments in fixed assets 2.5 4.6 180
7 1 |<br />
The company <strong>Sava</strong>tech d.o.o., the largest in the Rubber<br />
Manufacturing division, increased its net sales revenues<br />
by 16 per cent with regard to last year. 74 per cent of<br />
products were sold in foreign markets, the most<br />
important partner being Germany. Despite unfavourable<br />
trends, <strong>Sava</strong>tech d.o.o. operated very successfully in the<br />
raw materials market and contributed 70 per cent to the<br />
total profit of Rubber Manufacturing.<br />
The company <strong>Sava</strong>-GTI d.o.o. is a smaller, but rapidly<br />
developing company that re-oriented to the car market<br />
with a range of high quality and high value-a<strong>dd</strong>ed<br />
products. Net sales revenues were 32 per cent higher<br />
than last year, the profit generated being twice as high as<br />
last year. <strong>Sava</strong>-GTI d.o.o. contributed 23 per cent to the<br />
total profit of Rubber Manufacturing.<br />
The company <strong>Sava</strong>-Schäfer d.o.o. is a joint venture<br />
with the German strategic partner Schäfer AG.<br />
Therefore the key data for Rubber Manufacturing show<br />
| b u s i n e s s a n a l y s i s |<br />
only one half of the sales revenues, profit, assets and<br />
liabilities of this company. In <strong>2005</strong> the company<br />
generated sales revenues that were 15 per cent higher<br />
and profit that was 45 per cent higher than last year.<br />
The company <strong>Sava</strong> Rol d.o.o. from Zagreb confronted<br />
tough business conditions in Croatia in <strong>2005</strong> too, with<br />
keen competition in particular. In the structure of the<br />
Rubber Manufacturing division the company does not<br />
represent a significant share.<br />
Foreign Trade Network<br />
The Foreign Trade Network mainly sells products from<br />
the Rubber Manufacturing programmes; 22 per cent of<br />
products are sold through its network. It includes five<br />
companies in Germany, UK, USA, Czech Republic and<br />
Poland and two representative offices, these being in<br />
Moscow and Trieste.
a n n u a l r e p o r t | 2 0 0 5<br />
15.2<br />
7 2 |<br />
Trade division<br />
V i s i o n<br />
To make use of benefits that result<br />
from operational restructuring in 2006,<br />
which includes the sale of the entire ownership<br />
stake in the company <strong>Sava</strong> Trade d.d. and<br />
MG Market d.o.o. and entering <strong>Sava</strong> d.d.<br />
in the company Merkur d.d. with<br />
a significant shareholding.
7 3 |<br />
| b u s i n e s s a n a l y s i s |
a n n u a l r e p o r t | 2 0 0 5<br />
7 4 |<br />
The Trade division created net sales revenues in the amount of € 97.8 million, which was at last year’s level.<br />
In the total consolidated sales structure of the <strong>Sava</strong> Group Trade had a 38.3 per cent share. Total pre-tax<br />
profit amounting to €3 million was 70 per cent higher than last year, as well as net profit of €2.2 million. Trade<br />
earmarked €0.4million for investments.<br />
For 2006 it is planned to strategically restructure the Trade division, which includes, on the one hand, selling<br />
the entire stake in the companies <strong>Sava</strong> Trade d.d. and MG Market d.o.o. and, on the other, entering <strong>Sava</strong> d.d.<br />
in the company Merkur d.d. with a significant ownership stake. That is why the business plan for the <strong>Sava</strong><br />
Group for 2006 has been prepared by taking into account the mentioned changes.<br />
Key data for Trade<br />
(€ in millions)<br />
Index<br />
2004 <strong>2005</strong> <strong>2005</strong>/2004<br />
Net sales revenues 97.5 97.8 100<br />
Pre-tax profit 1.7 3.0 170<br />
Net profit 1.4 2.2 154<br />
Assets 63.1 61.1 97<br />
Equity 24.7 26.9 109<br />
Liabilities 38.4 34.2 89<br />
Investments in fixed assets 0.4 0.4 119
7 5 |<br />
In <strong>2005</strong> the company <strong>Sava</strong> Trade d.d. created net sales<br />
revenues in the amount of €54 million, which was 4 per<br />
cent less than last year. The generated profit totalling<br />
€2.2 million was 33 per cent above last year’s figure and<br />
mainly produced by selling real estate.<br />
Incorporating the company in the Merkur Group with a<br />
similar sales programme will facilitate an improvement<br />
in the strategic market position, an increase in the<br />
common market share and exploiting synergistic<br />
benefits due to both economy of scale and pooling and<br />
utilising the best knowledge and business models that<br />
companies with a long-standing tradition have available.<br />
| b u s i n e s s a n a l y s i s |<br />
The company MG Market d.o.o. did not substantially<br />
improve its business performance. Net sales revenues<br />
totalling €43.8 million were in fact 6 per cent higher<br />
than last year. However, this was not sufficient for a<br />
positive result. Too great dependence on the franchise<br />
partner, long-term rental contracts for OBI centres and<br />
keen competition by new centres with similar sales<br />
programmes were the reason for a loss totalling €0.03<br />
million, which, however, is much lower than last year.<br />
The strategic restructuring plan of the Trade division<br />
includes selling a stake in the company MG Market<br />
d.o.o. too.
a n n u a l r e p o r t | 2 0 0 5<br />
15.3<br />
7 6 |<br />
Tourism division<br />
V i s i o n<br />
To strengthen its position as the leading<br />
tourist service provider in Slovenia,<br />
expand its operations to neighbouring<br />
markets and provide an integrated range<br />
of top-class hotel,catering,golf and<br />
other tourist services.
7 7 |<br />
| b u s i n e s s a n a l y s i s |
a n n u a l r e p o r t | 2 0 0 5<br />
7 8 |<br />
With regard to the conditions where factors such as especially large investments and disturbingly unfavourable<br />
weather were prominent, the companies of the Tourism division successfully concluded the year <strong>2005</strong>.<br />
The generated net sales revenues in the amount of €54.4 million were 3 per cent higher than last year. In the total<br />
consolidated sales structure of the <strong>Sava</strong> Group Tourism had a 21.5 per cent share. Pre-tax profit totalling €0.6 million<br />
and net profit totalling €0.5 million were lower than last year. The deviation was partly due to the implementation<br />
of planned investments and partly to a revaluation of buildings in the company Terme Radenci d.o.o.<br />
For investments in fixed assets Tourism earmarked €20.5 million, or almost 54.4 per cent of all investments in<br />
the Group. Important investments in Pannonian Spas were the construction of a new 5* hotel in Terme 3000,<br />
renovation of the hotel Radin in Radenci, renovation of the hotel Zeleni Gaj in Banovci and the refurbishment<br />
of an outdoor swimming pool with an amphitheatre in Ptuj. In <strong>Sava</strong> Hotels&Resorts Bled the renovation of<br />
Park Hotel commenced and the information system was completely renewed.<br />
In 2006 Tourism plans to generate sales revenues of €58.2 million, total pre-tax profit of €4.4 million and invest<br />
€20.0 million.<br />
Key data for Tourism<br />
(€ in millions)<br />
Index<br />
2004 <strong>2005</strong> <strong>2005</strong>/2004<br />
Net sales revenues 52.9 54.4 103<br />
Pre-tax profit 2.92 0.62 21<br />
Net profit 2.87 0.45 16<br />
Assets 169.8 181.3 107<br />
Equity 106.6 106.3 100<br />
Liabilities 63.1 75.0 119<br />
Investments in fixed assets 24.8 20.5 82
7 9 |<br />
<strong>Sava</strong> Hotels&Resorts Bled<br />
The company Golf in Kamp Bled d.d. made net sales<br />
revenues of €2.9 million, or 6 per cent more than last<br />
year, and created a net profit of €0.13 million, which<br />
was significant progress in comparison with last year.<br />
The company continued to win new markets and<br />
provide quality services oriented to meeting top-class<br />
standards as set for the tourism industry in Europe. In<br />
order to implement this goal, it has drafted<br />
documentation for the renovation of King’s golf course,<br />
and a project to extend it with another nine holes is<br />
underway.<br />
The company Grand Hotel Toplice d.o.o. generated<br />
sales revenues of €6.0 million, or 4 per cent more than<br />
last year, and concluded the year with a loss of €0.2<br />
million.<br />
All business goals of the company were not<br />
implemented in full, since tourist movements for the<br />
company, which offers top-quality hotel services in the<br />
region, were unfavourable. The already implemented<br />
restructuring programme and projects in progress will<br />
improve future results.<br />
| b u s i n e s s a n a l y s i s |<br />
The company G&P Hoteli Bled d.o.o. created net sales<br />
revenues of €10.1 million, or 10 per cent more than last<br />
year. It generated a net profit of €0.8 million, or 11 per<br />
cent more than in the same period last year.<br />
Good business results are due to the renovation of hotel<br />
capacity, introduction of new products and acquisition<br />
of congress facilities. Brisk investment operations will<br />
continue in 2006, assuring further business growth.<br />
Pannonian Spas<br />
The company Terme 3000 d.d. created net sales<br />
revenues of €15.6 million, which is one per cent less<br />
than last year and generated a net profit of €1.2 million,<br />
or 19 per cent less than in the same period last year.<br />
The planned disruptions in operations due to extensive<br />
investment and, consequently, a decrease in overnight<br />
stays slightly deteriorated company business in<br />
comparison with last year. For 2006 a significant<br />
increase in all business indicators is planned.<br />
The company Terme Radenci d.o.o. created net sales<br />
revenues of €12.5 million, or 3 per cent less than last<br />
year and operated with a loss of €2.2 million, the reason<br />
being a revaluation of buildings.
a n n u a l r e p o r t | 2 0 0 5<br />
8 0 |<br />
The renovation of Hotel Miral and a restrictive policy<br />
led by the Healthcare Insurance Service caused a deficit<br />
in sales in the healthcare area. Projects are under way<br />
that will have a positive effect due to energy-efficient<br />
buildings. A<strong>dd</strong>itional investments will be required in the<br />
tourist infrastructure that will only meet the<br />
requirements of high-category guests.<br />
The company Terme Ptuj d.o.o. created net sales<br />
revenues of €4.0 million, or 9 per cent more than last<br />
year. The generated net profit totalling €0.28 million<br />
was 6 per cent above last year’s figure.<br />
The first part of the investment programme, during<br />
which water facilities were arranged, was completed.<br />
The accommodation facility will be improved through<br />
building a 4* hotel and new apartments in 2007.<br />
SAVA GROUP<br />
Comparison of overnight stays by<br />
domestic and foreign guests<br />
in the Tourism division<br />
No. of overnight stays<br />
of guests from abroad<br />
No. of overnight stays<br />
of domestic guests<br />
The company Terme Lendava d.d. created net sales<br />
revenues of € 3.3 million, or 13 per cent more than last<br />
year, and generated a net profit of € 0.41 million, which<br />
was almost four times more than last year.<br />
Investments in the renovation of hotel and swimming<br />
pool facilities, larger capacity and the introduction of<br />
new products facilitated an improvement in quality,<br />
therefore the price achieved for providing services<br />
exceeded last year’s price.<br />
Overnight stays structure in the<br />
Tourism division<br />
Tourism made 1,062,270 overnight stays, or 3 per cent<br />
less than last year. In <strong>Sava</strong> Hotels&Resorts there were<br />
311,856 overnight stays, or 10 per cent less than last<br />
year, while Pannonian Spas reached 750,414 overnight<br />
stays, or 3 per cent less than last year.<br />
(61%)<br />
(39%)
8 1 |<br />
SAVA GROUP<br />
Comparison of overnight stays by<br />
domestic and foreign guests<br />
in <strong>Sava</strong> Hotels&Resorts Bled<br />
No. of overnight stays<br />
of guests from abroad<br />
No. of overnight stays<br />
of domestic guests<br />
SAVA GROUP<br />
Comparison of overnight stays by<br />
domestic and foreign guests<br />
in Pannonian Spas<br />
No. of overnight stays<br />
of guests from abroad<br />
No. of overnight stays<br />
of domestic guests<br />
| b u s i n e s s a n a l y s i s |<br />
(5%)<br />
(47%)<br />
(95%)<br />
(53%)
a n n u a l r e p o r t | 2 0 0 5<br />
15.4<br />
8 2 |<br />
Real Estate division<br />
V i s i o n<br />
To act as a key co-ordinator of real estate business<br />
within the <strong>Sava</strong> Group,strengthen its leading<br />
position in the Slovene market and further<br />
expand its business in the neighbouring<br />
Croatian market with the aim of being<br />
ranked among the leading<br />
real estate managers.
8 3 |<br />
| b u s i n e s s a n a l y s i s |
a n n u a l r e p o r t | 2 0 0 5<br />
8 4 |<br />
The Real Estate division achieved net sales revenues of €14.8 million, or 8 per cent less than last year. The<br />
revenues in this division depend entirely on the stage of completion of construction projects, therefore<br />
deviations in years are common. In the consolidated sales structure of the <strong>Sava</strong> Group Real Estate had a 5.9<br />
per cent share. Pre-tax profit totalled €1.04million and was 6 per cent above last year’s profit, while net profit<br />
in the amount of €0.73 million was 12 per cent lower than last year.<br />
For 2006 Real Estate plans to create revenues of €15.9 million and a pre-tax profit of €1.1 million.<br />
Key data for Real Estate<br />
(€ in millions)<br />
Index<br />
2004 <strong>2005</strong> <strong>2005</strong>/2004<br />
Net sales revenues 15.9 14.8 93<br />
Pre-tax profit 0.98 1.04 106<br />
Net profit 0.82 0.73 88<br />
Assets 45.7 50.9 111<br />
Equity 10.3 11.1 107<br />
Liabilities 35.4 39.8 112<br />
Investments in fixed assets 0.83 0.66 80
8 5 |<br />
The company <strong>Sava</strong> IP d.o.o. is the supporting company<br />
in the division and accounted for 81 per cent of total<br />
sales. In <strong>2005</strong> the company created net sales revenues in<br />
the amount of €12.0 million, which was 12 per cent less<br />
than last year. It also generated a net profit of €0.6<br />
million, or 16 per cent less than last year.<br />
In <strong>2005</strong> the company <strong>Sava</strong> IP d.o.o. concentrated its<br />
business in Ljubljana and on the Slovene coast. Due to<br />
the expansion to the Croatian market it collaborated<br />
with companies already established by <strong>Sava</strong> IP d.o.o. or<br />
<strong>Sava</strong> d.d., or acted as a strategic partner in companies<br />
such as IP Nova d.o.o., IP Nova A d.o.o., <strong>Sava</strong> IPN<br />
d.o.o. and <strong>Sava</strong> Nova d.o.o. Zagreb. The companies PC<br />
| b u s i n e s s a n a l y s i s |<br />
AG d.o.o. from Velenje and <strong>Sava</strong> IMG d.o.o. Poreå are<br />
joint ventures with a strategic partner. The mentioned<br />
companies are not significant in the common indicators<br />
for <strong>2005</strong>, yet their business will strengthen in the<br />
following year.<br />
The company <strong>Sava</strong> Medical in Storitve d.o.o. has the<br />
status of a disability company and in <strong>2005</strong> generated net<br />
sales revenues of €2.2 million, which is at last year’s<br />
level. Its net profit totalling €0.05 million was lower<br />
than last year.<br />
In 2006 the company will be dealt with under Other<br />
Operations.
a n n u a l r e p o r t | 2 0 0 5<br />
15.5<br />
8 6 |<br />
Investment Finance division<br />
V i s i o n<br />
To generate an above-average return<br />
for shareholders by investing in profitable<br />
financial investments and ensuring funds for the<br />
development of the Group’s divisions,efficient<br />
acquisition of funds and a uniform presence<br />
in the capital market,thus making us the most<br />
profitable financial pillar in Slovenia.
8 7 |<br />
| b u s i n e s s a n a l y s i s |
a n n u a l r e p o r t | 2 0 0 5<br />
8 8 |<br />
The Investment Finance division is represented by the company <strong>Sava</strong> d.d. The data in the continuation was<br />
prepared in accordance with International Financial Reporting Standards, whereas the business analysis and<br />
the financial statements of <strong>Sava</strong> d.d. were prepared in accordance with Slovene Accounting Standards. There<br />
are significant differences mainly in assessing non-current securities available for sale that are consistent with<br />
IFRS, according to which the asset and equity value of the company <strong>Sava</strong> d.d. is increased.<br />
Key data for Investment Finance<br />
(€ in millions)<br />
Index<br />
2004 <strong>2005</strong> <strong>2005</strong>/2004<br />
Net sales revenues 7.7 8.0 103<br />
Pre-tax profit 17.0 22.5 133<br />
Net profit 14.0 18.8 134<br />
Assets 442.8 498.8 113<br />
Equity 348.2 366.5 105<br />
Liabilities 94.6 132.3 140<br />
Investments in fixed assets 8.4 11.5 136
8 9 |<br />
| b u s i n e s s a n a l y s i s |<br />
In <strong>2005</strong> too Investment Finance continued to successfully manage financial investments and thus substantially<br />
contribute to the income of both <strong>Sava</strong> d.d. and the <strong>Sava</strong> Group.<br />
Investing in profitable financial investments ensures the potential for further development of other operations<br />
in the <strong>Sava</strong> Group and brings our shareholders suitable yields and long-term security for the invested assets.<br />
<strong>Sava</strong> d.d. earmarked over € 37.6 million for investments in long- and short-term financial investments. The<br />
majority of financial investments was implemented in the domestic market, while in line with the stated<br />
development strategy for tourism we increased the ownership stake in the Croatian tourist holding.<br />
In the domestic capital market we increased our stakes in the companies NFD1, Delniæki Investicijski Sklad,<br />
d.d., NFD Holding d.d., Laæko d.d. Brewery, Mercator d.d. and KD Group d.d. In the foreign capital market<br />
we increased our stake in the tourist holding Dom Holding d.d. and acquired a stake in Slavonski Investicijski<br />
Sklad d.d.<br />
A major part of funds for investment in long- and short-term domestic investments was acquired through<br />
divesting certain existing financial investments. The rest of the funds was acquired from other financing sources.<br />
SAVA d.d.<br />
Survey of financial investments<br />
by maturity at the end of <strong>2005</strong><br />
Short-term financial investments<br />
Long-term financial investments<br />
(36%)<br />
(64%)
a n n u a l r e p o r t | 2 0 0 5<br />
9 0 |<br />
SAVA d.d.<br />
Geographical survey of financial<br />
investments at the end of <strong>2005</strong><br />
Foreign financial investments<br />
Domestic financial investments<br />
Domestic financial investments<br />
in <strong>2005</strong><br />
To assure suitable yields and long-term security for the<br />
invested assets of our shareholders we increased<br />
investments in <strong>2005</strong> in the companies NFD 1, Delniæki<br />
(6%)<br />
(94%)<br />
Investicijski Sklad d.d., NFD Holding, Laæko d.d.<br />
Brewery, Mercator d.d. and KD Group d.d.<br />
(v 000 SIT)<br />
No. of<br />
Investments shares % stake<br />
NFD 1 d. d. 8,000,000 4.98%<br />
NFD Holding d. d. 1,450,000 4.80%<br />
Brewery Laœko d. d. 250,983 2.87%<br />
Mercator d. d. 25,026 0.78%<br />
KD Group d. d. 7,972 4.28%
9 1 |<br />
Foreign financial investments in<br />
<strong>2005</strong><br />
In line with the development strategy of further<br />
investing outside of Slovenia we continued with<br />
investment operations in Croatia. In <strong>2005</strong> we increased<br />
the ownership stake in one of the largest Croatian tourist<br />
Decrease in financial<br />
investments in <strong>2005</strong><br />
Consistent with the adopted strategic policy we sold<br />
certain long and short-term investments in domestic and<br />
| b u s i n e s s a n a l y s i s |<br />
holding companies Dom Holding d.d., in which <strong>Sava</strong><br />
d.d. owned more than 16 per cent of the company at the<br />
end of <strong>2005</strong>. In <strong>2005</strong> we also acquired a 4.27 per cent<br />
share in Slavonski Investicijski Sklad d.d.<br />
(v 000 SIT)<br />
No. of<br />
Investments shares % stake<br />
Dom Holding, d. d. 122,000 1.50%<br />
Slavonski Zaprti Investicijski Sklad, d.d. 143,000 4.27%<br />
foreign companies.<br />
(v 000 SIT)<br />
No. of<br />
Investments shares % stake<br />
Geoplin, d. o. o. business stake 5.94%<br />
SN Holding, d. d. 196,603 5.85%
a n n u a l r e p o r t | 2 0 0 5<br />
15.6<br />
9 2 |<br />
Chemicals division<br />
The company Teol d.d. created sales revenues of € 5.4million, or 13 per cent less than last year. In this year<br />
too it made a loss of € 0.27 million.<br />
In line with the business plan 2006 Teol d.d. will create sales revenues in the amount of €6.2 million, whereas<br />
a loss in the amount of € 0.2 million will still be made. Seeking new sales channels, which poses a major<br />
problem for the company, did not bring results, therefore in 2006 a decision will be made to restructure it<br />
according to one of several possible scenarios.<br />
The Chemicals division in the <strong>Sava</strong> Group will be discontinued in 2006, while the operation of the company<br />
Teol d.d. will be transferred to Other Operations.<br />
Key data for Chemicals<br />
(€ in millions)<br />
Index<br />
2004 <strong>2005</strong> <strong>2005</strong>/2004<br />
Net sales revenues 6.2 5.4 87<br />
Pre-tax profit -0.81 -0.26 32<br />
Net profit -0.81 -0.27 33<br />
Assets 4.0 2.7 66<br />
Equity 1.4 1.1 80<br />
Liabilities 2.7 1.6 59<br />
Investments in fixed assets 0.09 0.04 41
15.7<br />
9 3 |<br />
Other Companies<br />
| b u s i n e s s a n a l y s i s |<br />
Other Companies represent Gea Sol Int. d.o.o., Biool d.o.o. and Energetika <strong>Sava</strong> d.o.o. As for their details,<br />
these companies represent development projects in the <strong>Sava</strong> Group. However, the volume of their operations<br />
in <strong>2005</strong> was not large.<br />
The 2006 business plan does not envisage any significant changes for Other Operations with regard to <strong>2005</strong>,<br />
and the business result will still be negative. In 2007 the company Energetika <strong>Sava</strong> d.d. will implement its first<br />
development plans.<br />
Key data for Other Companies<br />
(€ in millions)<br />
Index<br />
2004 <strong>2005</strong> <strong>2005</strong>/2004<br />
Net sales revenues 0.02 0.23 1,376<br />
Pre-tax profit -0.19 -0.63 330<br />
Net profit -0.19 -0.63 326<br />
Assets 0.36 0.28 77<br />
Equity 0.23 -0.28 -<br />
Liabilities 0.13 0.56 419<br />
Investments in fixed assets 0 0 -
a n n u a l r e p o r t | 2 0 0 5<br />
9 4 |<br />
The results have been accomplished by intensive<br />
management of the operations of the <strong>Sava</strong> Group.<br />
Our outlook for 2006 is ambitious.<br />
We will restructure the Trade division and<br />
consolidate our position in Rubber Manufacturing,<br />
Tourism, Investment Finance and Real Estate.
Valter Bon@a,<br />
cyclist, Tour de Slovénie winner<br />
9 5 |<br />
| b u s i n e s s a n a l y s i s |
a n n u a l r e p o r t | 2 0 0 5<br />
16.<br />
16.1<br />
9 6 |<br />
Business Operations of <strong>Sava</strong> d.d.<br />
The holding company <strong>Sava</strong> d.d. is the parent company of the <strong>Sava</strong> Group. Last year its business was successful<br />
and the results surpassed those planned. It created net sales revenues of €8.0 million, which was 5 per cent<br />
better than in the previous year. Financial income in the amount of €28.0 million is at last year’s level, while<br />
the planned pre-tax profit is exceeded by 40 per cent. Last year pre-tax profit totalled €21.5 million. The net<br />
profit of <strong>Sava</strong> d.d. in the amount of €17.9 million considerably surpasses that planned too; it is 39 per cent<br />
higher than last year and 26 per cent above plan, respectively.<br />
Business performance<br />
(€ in millions)<br />
Index<br />
2001* 2002 2003 2004 <strong>2005</strong> <strong>2005</strong>/2004<br />
Net sales revenues 53.2 13.2 11.9 7.6 8.0 105<br />
Other revenues 7.7 0.2 0.6 0.5 1.7 373<br />
Operating expenses -65.9 -20.0 -17.5 -11.9 -9.8 83<br />
FINANCING INCOME 11.0 14.1 13.3 19.5 21.8 112<br />
TOTAL PRE-TAX PROFIT 7.9 7.5 8.3 15.8 21.7 137<br />
NET PROFIT 7.3 7.0 7.0 12.9 17.9 139<br />
* In 2002 <strong>Sava</strong> d.d. restructured into a holding company.<br />
Net sales revenues<br />
Since restructuring into a holding company the net sales<br />
revenues of <strong>Sava</strong> d.d. mainly represent sales within the<br />
<strong>Sava</strong> Group, while in the total Group structure they have<br />
arounda3percentshareofcumulative sales.<br />
In <strong>2005</strong> the joint stock company <strong>Sava</strong> created net sales<br />
revenues of €8.0 million, or 5 per cent more than last<br />
year. In the net sales revenues structure office rentals<br />
had a 45 per cent share and equipment rentals a 19 per<br />
cent share. The remaining 36 per cent was mainly due to<br />
the contribution of subsidiaries for using the trademark<br />
and sales of services by the competence centres of<br />
knowledge.<br />
Other revenues in the amount of €1.7 million were three<br />
times higher than last year, 78 per cent of this sum being<br />
due to revenues from selling real estate.
9 7 |<br />
Operating expenses<br />
Operating expenses totalled €9.8 million, or 17 per cent<br />
less than in the same period last year.<br />
In the expenses structure cost of goods, materials and<br />
services had a 35 per cent share, labour costs a 34 per<br />
cent, write-offs a 30 per cent share and other costs one<br />
per cent share.<br />
A significant part of operating expenses was due to<br />
managing financial investments, therefore a surplus in<br />
the financial results was partly earmarked to cover these<br />
expenses.<br />
Financing income<br />
In <strong>2005</strong> the joint stock company <strong>Sava</strong> created financial<br />
revenues in the amount of €28.1 million, which is at last<br />
year’s level, and financial expenses totalling €6.2<br />
million, or 28 per cent less than last year. The surplus in<br />
| b u s i n e s s a n a l y s i s |<br />
The financial statements of <strong>Sava</strong> d.d.<br />
were prepared in accordance with<br />
Slovene Accounting Standards.<br />
Financing income by activity type - € in millions<br />
financial revenues over financial expenses totalling<br />
€21.8 million exceeds last year’s figure by 12 per cent.<br />
The predominant 73 per cent share of dividend totalling<br />
€7.7 million represents dividends obtained from<br />
Gorenjska Banka d.d. Kranj, which compared to last<br />
year were more than twice as high. Furthermore,<br />
dividends in other companies where <strong>Sava</strong> d.d. had<br />
financial investments are considerably higher than last<br />
year and will present a significant source of company<br />
profit in the future too.<br />
66 per cent of financial revenues from the sale of securities<br />
totalling €18.8 million were realised by selling a stake in<br />
Geoplin d.o.o., 17 per cent by selling securities in certain<br />
Croatian fonds and 17 per cent by selling other portfolio<br />
investments. Financial expenses in connection with<br />
securities totalling €2.0 million were mainly due to<br />
impairment in the value of securities with regard to the<br />
Stock Exchange price on the day of the accounting period.<br />
(v mio SIT)<br />
Financial Financial Financial Financial Financial Financial<br />
revenues expenses income revenues expenses income<br />
Year <strong>2005</strong> Year 2004<br />
Dividends 7.7 0 7.7 2.8 0 2.8<br />
Securities 18.8 2.0 16.8 9.6 4.6 5.0<br />
Sale of a 20% stake<br />
in <strong>Sava</strong> Tires JVH d.o.o. 0 0 0 14.0 0 14.0<br />
Interests 1.0 3.2 -2.2 0.9 3.0 -2.0<br />
Associates 0 0.9 -0.9 0 0.7 -0.7<br />
Others 0.4 0.1 0.4 0.8 0.3 0.5<br />
TOTAL 28.1 6.2 21.8 28.1 8.6 19.5
a n n u a l r e p o r t | 2 0 0 5<br />
9 8 |<br />
Interest revenues relate to loans granted to subsidiaries.<br />
Interest expenses were due to the indebtedness of the<br />
company with banks, which was higher than last year on<br />
account of large investments in the entire <strong>Sava</strong> Group.<br />
Financial expenses in connection with subsidiaries<br />
totalling €0.9 million included losses in these<br />
companies in the amount of €0.59 million and<br />
revaluation adjustments of granted loans to these<br />
companies in the amount of €0.33 million.<br />
Other financial revenues totalling €0.4 million were<br />
mainly due to the charged guarantees, while other<br />
financial expenses in the amount of €0.06 million were<br />
due to the negative exchange rate differences and other<br />
financial expenses.<br />
Total pre-tax profit<br />
In <strong>2005</strong> the total pre-tax profit of <strong>Sava</strong> d.d. amounted to<br />
€21.7 million, which was 37 per cent higher than last<br />
year and 40 per cent higher than planned.<br />
SAVA d.d.<br />
Net profit by year<br />
(€ in millions)<br />
Accumulated profit and<br />
dividend<br />
Accumulated profit of the joint stock company <strong>Sava</strong> on<br />
31/12/<strong>2005</strong> totalled €29.8 million. The Board of<br />
Tax on profit<br />
Based on the generated total profit and considering the<br />
provisions on the Law on Income of Legal Entities the<br />
tax liability of <strong>Sava</strong> d.d. for <strong>2005</strong> totalled €3.80 million;<br />
taking into account deferred taxes the figure was €3.78<br />
million. In comparison with last year the tax liability<br />
was 28 per cent higher and also exceeded that planned,<br />
primarily on account of a delay in certain investments<br />
and related tax relief.<br />
Net profit<br />
The generated net profit of <strong>Sava</strong> d.d. in the amount of<br />
€17.9 million was 39 per cent higher than last year and<br />
26 per cent higher than planned.<br />
7.3 7.0 7.0<br />
12.9<br />
17.9<br />
2001 2002 2003 2004 <strong>2005</strong><br />
Management of <strong>Sava</strong> d.d. will propose to the<br />
Shareholders’ Meeting a payment of dividends for <strong>2005</strong><br />
in the amount of €2.67 per share. € 5.4 million will be<br />
allocated to the payment of dividends.
9 9 |<br />
Return on capital<br />
Return on capital of <strong>Sava</strong> d.d. calculated as the ratio<br />
between the total profit of the accounting period before<br />
tax and the balance of equity for <strong>2005</strong> amounts to 7.9<br />
per cent, or 1.3 percentage points more than last year.<br />
The return on capital of <strong>Sava</strong> d.d. calculated as the ratio<br />
between the net profit for the financial year and the<br />
balance of equity, for <strong>2005</strong> amounts to 6.5 per cent or<br />
1.2 percentage points more than last year.<br />
Balance sheet total<br />
The balance sheet total of <strong>Sava</strong> d.d. amounts to € 440.8<br />
million and is 21 per cent higher compared to last year.<br />
| b u s i n e s s a n a l y s i s |<br />
Accumulated profit at 31/12/<strong>2005</strong><br />
(€ in millions)<br />
Net profit for the year <strong>2005</strong> 17.9<br />
Retained profit from previous years 20.8<br />
Allocation of the <strong>2005</strong> profit to revenue reserves -8.9<br />
Accumulated profit at 31/12/<strong>2005</strong>* 29.8<br />
*50% of the net profit for <strong>2005</strong> was allocated to other revenue reserves.<br />
SAVA d.d.<br />
Assets structure at 31/12/<strong>2005</strong> / 2004<br />
(€ in millions)<br />
Tangible fixed assets<br />
Long-term financial investments<br />
Short-term financial investments<br />
Other assets<br />
Total assets<br />
Assets structure<br />
In the assets structure long-term financial investments<br />
has the largest share, i.e. 51 per cent, while short-term<br />
financial investments has a 31 per cent share and<br />
tangible fixed assets a 17 per cent share.<br />
Long-term financial investments total €224.6 million.<br />
There are no significant changes when compared to last<br />
year. The shares in the subsidiaries of the <strong>Sava</strong> Group<br />
and the shares in the associates (Gorenjska Banka, d.d.),<br />
were increased due to employing the equity method,<br />
which involves a<strong>dd</strong>ing the attributable profit in<br />
investment and an increase in specific equity revaluation<br />
adjustment.<br />
Short-term financial investments in the amount of<br />
€136.7 million is 57 per cent higher than last year, this<br />
being due to an increase in the ownership stakes in<br />
Mercator d.d., NFD 1 Investment Fund, NFD Holding,<br />
Laæko Brewery, KD Group and certain Croatian funds.<br />
69<br />
76<br />
202<br />
225<br />
87<br />
137<br />
6<br />
4<br />
363<br />
441<br />
04/05 04/05 04/05 04/05 04/05
a n n u a l r e p o r t | 2 0 0 5<br />
1 0 0 |<br />
Liabilities structure<br />
The capital of the joint stock company <strong>Sava</strong> in the<br />
amount of €318.3 million is 12 per cent higher than last<br />
year. In the liabilities structure it has a 72 per cent share.<br />
The significant changes in capital are as follows:<br />
• in <strong>2005</strong> a net profit of €17.9 million was realised, half<br />
of it being allocated to other revenues reserves;<br />
• €5.2 million was allocated for a dividend payment;<br />
• the specific equity revaluation adjustment was<br />
enhanced by €22 million: due to profit sharing in the<br />
associate Gorenjska Banka, d.d. in the amount of<br />
€19.6 million and in subsidiaries in the amount of<br />
SAVA d.d.<br />
Liabilities structure at<br />
31/12/<strong>2005</strong> / 2004<br />
(€ in millions)<br />
Equity<br />
Long-term liabilities<br />
Short-term liabilities<br />
Other liabilities<br />
Total liabilities<br />
Investments in fixed assets<br />
In <strong>2005</strong> <strong>Sava</strong> d.d. invested €11.5 million in tangible<br />
fixed assets, mainly for the purchase of strategic land<br />
and real estate and partly for finishing the EKO<br />
building, in which the production of environmental<br />
protection and rescue products is already under way.<br />
€5.2 million, while a decrease in specific equity<br />
revaluation adjustment in the amount of €2.9 million<br />
represents paid dividends of Gorenjska Banka, d.d. in<br />
<strong>2005</strong>.<br />
Financial and operating liabilities totalling €122.2<br />
million has a 28 per cent share in the liabilities structure<br />
and compared to last year the figure is higher by 54 per<br />
cent. The increase in indebtedness of the joint stock<br />
company <strong>Sava</strong> with banks is mainly due to intensive<br />
investment activity in the entire <strong>Sava</strong> Group.<br />
283<br />
318<br />
7<br />
8<br />
73<br />
114<br />
0<br />
0<br />
363<br />
441<br />
04/05 04/05 04/05 04/05 04/05<br />
Financial position of the<br />
company<br />
The joint stock company <strong>Sava</strong> is highly liquid and<br />
solvent and shows a favourable capital structure. We<br />
estimate that in doing business with the joint stock<br />
company <strong>Sava</strong> there are no risks related to solvency, and<br />
the company has sufficient capital available as regards<br />
the volume and type of business it performs.
17.<br />
1 0 1 |<br />
Outlook for 2006<br />
| b u s i n e s s a n a l y s i s |<br />
In 2006 too the <strong>Sava</strong> Group will proceed with activities in accordance with the set strategy. Important changes<br />
will occur in the composition of the Group's operations. We have set demanding goals in relation to efficient<br />
marketing, quality products and services and rationalising business processes. We will act so as to achieve and<br />
surpass our planned goals.<br />
2006 will be a year of great change in the operations of<br />
the <strong>Sava</strong> Group. The restructuring plan of the Trade<br />
division includes, on the one hand, selling the entire<br />
ownership stake in the company <strong>Sava</strong> Trade d.d. and the<br />
company MG Market d.o.o. and, on the other, entering<br />
the company Merkur d.d. with a significant ownership<br />
stake. The mentioned changes will considerably affect<br />
the data and indicators relating to <strong>Sava</strong> Group operations<br />
in 2006. We anticipate that sales revenues in the <strong>Sava</strong><br />
Group will decrease by 36 per cent and operating income<br />
by 8 per cent, while operating profitability in subsidiaries<br />
will increase due to selling the Trade division.<br />
The plan for the <strong>Sava</strong> Group has been produced in<br />
accordance with International Financial Reporting<br />
Standards, as have the results for <strong>2005</strong>. In the<br />
comparisons presented below the same structure of the<br />
<strong>Sava</strong> Group applies.<br />
In 2006 the <strong>Sava</strong> Group will create consolidated net sales<br />
revenues in the amount of €155 million, which is 4 per<br />
cent more than net sales revenues in <strong>2005</strong>. In the<br />
structure of net sales revenues the Rubber Manufacturing<br />
division with the foreign trade network is represented<br />
with 48 per cent and has thus become the leading<br />
division as far as volume is concerned; the Tourism<br />
division has a 34 per cent share, Real Estate 9 per cent,<br />
and other operations 9 per cent too. In this way the target<br />
policy of <strong>Sava</strong> d.d. in the intensive management of three<br />
divisions has been successfully rounded up.<br />
An important part of the created profit of the <strong>Sava</strong><br />
Group has been contributed by the financial holding<br />
company <strong>Sava</strong> d.d. which for 2006 plans to generate<br />
financial revenues that are lower than in <strong>2005</strong> due to the<br />
planned decrease in the sale of portfolio investments.<br />
That is why for both the holding company <strong>Sava</strong> d.d. and<br />
the <strong>Sava</strong> Group lower profit figures are planned for<br />
2006. However, in accordance with the mid-term plan<br />
the profit in the following years will increase by at least<br />
6 per cent annually.<br />
In 2006 the <strong>Sava</strong> Group plans to create a pre-tax profit<br />
in the amount of €32.6 million and net profit of €29.2<br />
million, which means a 7.5 per cent return on capital.<br />
The planned profit of the <strong>Sava</strong> Group consists of the<br />
profit in subsidiaries, profit in associates and profit in<br />
the financial holding; each of them contributes one<br />
third.<br />
€38 million will be earmarked for investments that are<br />
mainly intended for the completion of renovation and<br />
construction of new hotel facilities in Tourism, increase<br />
in and modernisation of manufacturing capacity in<br />
Rubber Manufacturing, and building real estate for sale.
a n n u a l r e p o r t | 2 0 0 5<br />
18. Marketing<br />
18.1 Managing brand names<br />
1 0 2 |<br />
We at the <strong>Sava</strong> Group are endeavouring to develop our own brand names, therefore we are continually<br />
improving the communication strategy to promote our recognition. By successfully managing brand names,<br />
we enhance the sale of products and services of the Group, strengthen a positive image in the public eye and<br />
augment company assets.<br />
The strategy as set for the Tourism division governed<br />
the design of the brand names of two tourist destinations<br />
that link the services of various companies in Bled and<br />
the Pannonian region. For Bled we have designed the<br />
<strong>Sava</strong> Hotels&Resorts Bled brand and in the north-east<br />
of Slovenia the Pannonian Spas brand. Both brands are<br />
protected and registered in foreign markets too.<br />
In September the Trade division presented its new<br />
communication strategy for the OBI brand and its<br />
advantages. The focus is on the concept: OBI is more.<br />
The concept meets the high standards that OBI has set<br />
and includes the integrated effect of various<br />
communication tools – from media communications to<br />
the exterior appearance of OBI stores.<br />
We promote brand name recognition on the website too.<br />
We redesigned the home page www.hotelibled.com. Its<br />
main purpose is to inform visitors and sell services<br />
offered by <strong>Sava</strong> Hotels Bled. By launching a new<br />
booking system, we made room reservations more userfriendly;<br />
in 2006 the system will be upgraded through a<br />
bonus card.<br />
A new home page www.panonske-terme.si has been<br />
created which, in a<strong>dd</strong>ition to a comprehensive range of<br />
Pannonian Spas, provides up-to-date offers in individual<br />
destinations and links between them.
18.2<br />
1 0 3 |<br />
Customer policy<br />
<strong>Sava</strong>’s focus on customers means having good<br />
knowledge of their business, comprehending and<br />
anticipating their requirements and, above all, their main<br />
questions, being familiar with their experience and<br />
adapting products and services to support their<br />
performance.<br />
In order to rank customers more easily, the Group has<br />
defined criteria for rating customers. We have also<br />
defined what position and competitive power individual<br />
companies have with their customers. In the balanced<br />
indicators system we pursue them on the basis of<br />
various financial and non-financial measurements that<br />
have been harmonised with the strategic goals of<br />
individual Group companies.<br />
The companies of the <strong>Sava</strong> Group systematically rank<br />
their customers according to their strategic importance.<br />
Vital for long-term success and stable business are key<br />
customers with whom we have established partnership<br />
relations and mutual business on a long-term basis. The<br />
systematically gathered information about customers<br />
and their position in the marketplace is accessible to<br />
everyone in the company who deals with customer<br />
communication. In this way the companies are able to<br />
forecast their own success with that achieved by their<br />
key customers.<br />
| b u s i n e s s a n a l y s i s |<br />
The long-term success of the <strong>Sava</strong> Group is a result of focusing on customers; this forms the basis for designing<br />
the strategic goals and strategies for all the companies in the Group. The opportunities and risks associated<br />
with customers are managed in an efficient manner and supported by systematic data gathering on a longterm<br />
basis.<br />
We continually measure customer satisfaction and<br />
consider their proposals to improve their position in the<br />
marketplace as well as ours.<br />
Regular customer satisfaction surveys are carried out in<br />
all divisions: on the one hand, they are adapted to the<br />
characteristics of individual companies, on the other,<br />
they assure relative comparability also within a<br />
particular company or division.<br />
Satisfaction is also measured with all key customers.<br />
From their point of view we also estimate the most<br />
important satisfaction factors, general satisfaction and<br />
how ready customers are to make recommendations to<br />
others. We are open to all of their suggestions. The<br />
result measurements – also at the level of an individual<br />
customer – form the guidelines we include in the<br />
continual improvements system.<br />
In order to compare selected competitors we have<br />
chosen particular areas in individual divisions to be able<br />
to successfully manage competitive strength. The results<br />
obtained refer further to the introduction of<br />
improvements.
a n n u a l r e p o r t | 2 0 0 5<br />
19.<br />
1 0 4 |<br />
Strategic Purchasing<br />
and Suppliers<br />
For the fifth year in succession the central management, joint purchasing policy, goals and strategies, through<br />
efficient decentralised performance based on common purchase agreements and contracts, have resulted in<br />
decreased purchase prices for several groups of goods, the exception being raw materials and energy. In this<br />
way costs were significantly reduced, thereby strengthening the profitability of the companies in the <strong>Sava</strong><br />
Group.<br />
In <strong>2005</strong> a joint and co-ordinated presence in the<br />
purchasing market and consequent performance of<br />
purchasing strategies considerably reduced the<br />
unfavourable effects of oil price growth and the demand<br />
for industrial raw materials from Asian markets.<br />
Agreements with strategic suppliers have contributed to<br />
further strengthening partnership relations and reducing<br />
exposure to prevailing stock exchange fluctuations. On<br />
account of joint operations of the competence centre<br />
Strategic Purchasing we have a<strong>dd</strong>itionally improved the<br />
SAVA GROUP<br />
Fluctuations in materials and goods<br />
prices in the <strong>Sava</strong> Group<br />
(annual deviations in %)<br />
<strong>Sava</strong> Group<br />
ECB, Statistics Pocket Book:<br />
Industrial products prices<br />
10<br />
8<br />
6<br />
4<br />
2<br />
0<br />
-2<br />
planned business performance of the companies in the<br />
<strong>Sava</strong> Group. We managed to moderate the anticipated<br />
growth in purchasing prices and reduce it by 3.6<br />
percentage points. Spreading common purchase<br />
contracts to the fields of energy sources, logistical<br />
services, standard equipment and services as well as raw<br />
materials along with utilising synergies and a joint<br />
presence in the purchase market have resulted in further<br />
savings for the <strong>Sava</strong> Group in the amount of more than<br />
one half million euros.<br />
7.7<br />
3.6<br />
1.3<br />
1.9<br />
-0.1<br />
0.0<br />
-0.9 -1.0<br />
2002 2003 2004 <strong>2005</strong>
1 0 5 |<br />
Raw materials and goods represent nearly a 60 per cent<br />
share in the total purchase value of the <strong>Sava</strong> Group.<br />
Most of the quantity was purchased in foreign markets<br />
for the Rubber Manufacturing, Chemicals and Trade<br />
divisions. In comparison with the price growth of<br />
European industrial products we have improved the<br />
conditions for purchasing in the last three years by more<br />
than 5 percentage points.<br />
The Tourism division purchases primarily in the<br />
Slovene market. A share of raw materials and goods<br />
represents about 20 per cent of the purchase value in the<br />
entire Tourism division. In the last three years the prices<br />
that we had achieved lagged behind the prices of<br />
consumer goods by more than 17 percentage points.<br />
In <strong>2005</strong> the price increases of raw materials and energy<br />
in the world market surpassed all expectations.<br />
Nevertheless, thanks to solid partnerships with key<br />
SAVA GROUP<br />
Fluctuations in materials and goods<br />
prices in Tourism<br />
(annual deviations in %)<br />
Tourism<br />
ECB, Statistics Pocket Book:<br />
Consumer goods prices<br />
10<br />
5<br />
0<br />
-5<br />
-10<br />
-15<br />
| b u s i n e s s a n a l y s i s |<br />
suppliers we have moderated risks that result from rising<br />
prices also on account of our greater demand and<br />
intensive mutual co-operation.<br />
In Rubber Manufacturing, long-term contracts with<br />
suppliers, especially with important global suppliers, are<br />
of vital importance for the stability and success of<br />
business. One of our important partners in the supply of<br />
raw materials is the Goodyear corporation. Long-term<br />
contracts with this concern bring a<strong>dd</strong>itional positive<br />
business effects, strengthen our purchasing power and<br />
reduce costs in stock exchange markets. The price<br />
competitiveness of rubber products has a favourable<br />
impact on the increase in deliveries from low-priced<br />
workforce markets.<br />
Strategic purchasing will continue to perform its<br />
planned activities in 2006 too. We expect the greatest<br />
opportunities to attain our goals in the Tourism division.<br />
-0.1<br />
0.0<br />
2.0<br />
-0.9<br />
4.1<br />
6.2<br />
-7.5<br />
2002 2003 2004<br />
-11.1<br />
<strong>2005</strong>
a n n u a l r e p o r t | 2 0 0 5<br />
20.<br />
1 0 6 |<br />
Development Activities<br />
20.1 Development of business processes<br />
Special emphasis is given to cost efficiency, adaptability, responsiveness and an innovative approach in all<br />
business processes.<br />
The concept of total quality includes excellence in<br />
controlling and adapting all factors that affect growth in<br />
business achievements. In the business excellence<br />
model (EQA) we therefore perform self-assessment and<br />
external assessments to determine shortcomings in<br />
factors and company results. Shortcomings or<br />
deviations from the planned results are a<strong>dd</strong>ressed as<br />
challenges for introducing a systematic change.<br />
We are continually reviewing improvements in the<br />
process efficiency and conformity of accomplishments<br />
with the long-term strategy of the <strong>Sava</strong> Group and<br />
individual companies by applying the system of key<br />
business indicators and the balance scorecard method<br />
(BSC).<br />
The performance indicators system for business<br />
processes assures a systematic improvement of<br />
individual processes and the system as a whole. In this<br />
way we provide a better link between the development<br />
policy, business policy and process efficiency, as well as<br />
improved system transparency. Last year we focused in<br />
particular on rationalising business and optimising<br />
business processes.<br />
Special attention is devoted to the incorporation of all<br />
associates in process improvements; they are organised<br />
in teams with set goals and measurable goals to support<br />
improvements in companies and throughout the<br />
business group.<br />
We are aware that the transfer of knowledge and<br />
experience among associates plays an important role in<br />
the balanced and more rapid progress of the entire<br />
group. Therefore we established 14 competence centres<br />
that cover the <strong>Sava</strong> Group’s individual areas of<br />
business. These centres include the most competent<br />
associates from all companies, their purpose being total<br />
quality management and the improvement of processes.<br />
The continual improvement of processes in the <strong>Sava</strong><br />
Group has been underway for the fourth year in a row<br />
and results in annual savings of € 4.2 million.<br />
In order to continually improve business performance<br />
we are also encouraging an innovative attitude of<br />
employees and promoting the culture of careful<br />
management, controlling and efficient cost decrease.
20.2 Quality of business<br />
1 0 7 |<br />
On account of stronger international competition and an<br />
increase in pressure on expenses, new forms of<br />
organisation (just-in-time), higher expectations related<br />
to services and products, and especially due to more<br />
stringent manufacturer liability for products we apply<br />
numerous quality assurance tools such as:<br />
• quality standards SIST EN ISO 9001, or processes<br />
related to the car industry VDA 6.1 and more recently<br />
ISO/TS 16949;<br />
• standards covering the safe production of foodstuffs<br />
HACCP (DS 3027 or ISO 22000);<br />
• requirements for regulating processes with regard to<br />
the EQA model (business excellence) or the 20 Keys<br />
method; and<br />
• numerous statistical methods, recently employing the<br />
6 Sigma method.<br />
The mentioned approaches have in the past been<br />
systematically and successfully introduced at the Group<br />
level. The accomplishments are evident from an<br />
increase in sales of our products and services, and in the<br />
successfully performed audits and indicators achieved,<br />
with which we directly pursue achievements at the<br />
quality level.<br />
In Rubber Manufacturing we introduced the numerical<br />
determination of process stability in <strong>2005</strong>.<br />
| b u s i n e s s a n a l y s i s |<br />
One part of the <strong>Sava</strong> Group’s business involves endeavouring to have better quality of business programmes<br />
and processes. Requirements for highly efficient quality management systems encourage us to use numerous<br />
management tools and systematically improve processes. Continual improvements in all processes enable us<br />
to increase the competitive edge of our products and services, as has been proven by the numerous certificates<br />
obtained.<br />
The quality of products in <strong>2005</strong> reached 99 per cent,<br />
despite a great number of new products in the Velo,<br />
Profile and EKO programmes. Owing to the share of<br />
new products and frequent change of raw materials in<br />
product formulations as a consequence of price<br />
movements for raw materials in the market, the amount<br />
of total waste has increased slightly.<br />
The integrated management system in Trade or the<br />
company <strong>Sava</strong> Trade d.d. meets the requirements of the<br />
international standards SIST EN ISO 9001, ISO 14001<br />
and OHSAS 18001 and includes the systems of quality<br />
management, efficient handling with the environment<br />
and assuring health and safety at work. In <strong>Sava</strong><br />
Trade d.d. we strive to link all management tools into a<br />
uniform, efficient management system that will include<br />
the quality management system, environment<br />
management systems and the occupational health and<br />
safety system. In <strong>2005</strong> the Introducing Continual<br />
Improvements System project, which was financed by<br />
the Ministry of the Economy of the Republic of<br />
Slovenia, was completed. As part of the project the 20<br />
Keys method is being introduced, which provides an<br />
integral, organised system for finding internal resources,<br />
better utilisation of own resources, and increasing<br />
competitiveness, performance, a<strong>dd</strong>ed value per<br />
employee and employee motivation. We carried out a<br />
breakdown of processes in retail sales and a method of
a n n u a l r e p o r t | 2 0 0 5<br />
1 0 8 |<br />
momentary observations. We have invested<br />
considerable time and knowledge in the a<strong>dd</strong>itional<br />
training of work team leaders in retail sales.<br />
Within the integrated management system the company<br />
<strong>Sava</strong> Trade d.d. in <strong>2005</strong> carried out:<br />
• internal and external audits of the management system;<br />
• completion of training for quality system managers;<br />
• analysis of processes in logistics and retail sales and<br />
introduced measures based on results; and<br />
• applications in the Environment-Friendly Company<br />
campaign.<br />
In the company Teol d.d., which operates as part of the<br />
Chemicals division, we reduced inventories in products<br />
and raw materials, thereby saving €48,000. We also<br />
made savings in the release of raw materials (number of<br />
analyses, rating suppliers, auditing), while the goals set<br />
for the claims area have not been achieved in full. We<br />
experienced difficulties especially due to the<br />
discontinuation of etoxilate production and seeking<br />
other suppliers in the market. However, the surveillance<br />
audit of the process with regard to the requirements set<br />
by the SIST EN ISO 9001 standard for renewing the<br />
certificate was successful.<br />
In Tourism we mainly focused on transferring best<br />
practices among individual companies. In a<strong>dd</strong>ition to<br />
the quality team we included professional teams in<br />
Tourism, which consist of specialists from individual<br />
companies that provide tourist catering in all <strong>Sava</strong><br />
Group companies. We are preparing the standards for<br />
companies that operate under the <strong>Sava</strong> Hotels & Resort<br />
brand to produce a recognisable <strong>Sava</strong> tourism service in<br />
various tourist segments.<br />
In May we successfully passed the certification audit of<br />
companies operating under the Pannonian Spa brand.<br />
Terme 3000 d.d., Moravske Toplice, Terme Lendava<br />
d.d. and Terme Ptuj d.o.o. have available a successfully<br />
introduced quality management system that conforms to<br />
the standard SIST EN ISO 9001. Terme Radenci d.o.o.<br />
and the companies of G&P Hoteli Bled d.o.o., Grand<br />
Hotel Toplice d.o.o. and Golf in Kamp Bled d.d. passed<br />
a follow-up audit in accordance with this standard and<br />
proved that the quality management system was being<br />
improved and upgraded. The kitchen of Grand Hotel<br />
Toplice passed the regular audit of the HACCP system<br />
for assuring the production of safe foodstuffs in<br />
accordance with DS3027. The audit also included the<br />
requirements as defined by the ISO 22000 standard.<br />
Three companies from the Tourism division participated<br />
in the campaign organised by the Republic of Slovenia<br />
for business excellence for <strong>2005</strong>. In May an application<br />
with a self-assessment <strong>report</strong> was submitted by the<br />
companies Terme Radenci d.o.o., Grand Hotel Toplice<br />
d.o.o. and G&P Hoteli Bled d.o.o. Terme Radenci d.o.o.<br />
received a silver diploma in this campaign.<br />
The company <strong>Sava</strong> IP d.o.o., which belongs to the Real<br />
Estate division, passed with outstanding results the<br />
surveillance audit on the conformity of the quality<br />
management system with the SIST EN ISO 9001<br />
standard, thus proving the continual improvement and<br />
upgrading of the introduced system.
20.3 Development of information support<br />
1 0 9 |<br />
Information technology in the <strong>Sava</strong> Group is understood<br />
as a strategic function that accompanies the<br />
development of a business system. We are aware of the<br />
fact that providing suitable information support<br />
contributes to the implementation of set goals. The<br />
efficient performance of informatics at <strong>Sava</strong> is therefore<br />
understood as a tool for creating a<strong>dd</strong>ed value and the<br />
simultaneous management of risks that occur.<br />
In the future we will upgrade the present system through<br />
the introduction of tested models for management<br />
(COBIT, ITIL). The suitable management of<br />
informatics and coordination of its development with<br />
the business strategy of the company are the<br />
prerequisites for information technology to be able to<br />
contribute to the return on assets invested and gain an<br />
advantage over our competitors.<br />
The central focus in the area of information technology<br />
was on providing efficient information support for the<br />
decision-making process at all management levels in the<br />
<strong>Sava</strong> Group, as well as secure operation of the<br />
| b u s i n e s s a n a l y s i s |<br />
The strategic information platform of integral information support in the <strong>Sava</strong> Group was established by the<br />
successful introduction of an integrated computer programme SAP R/3 in Rubber Manufacturing and<br />
Tourism in Bled. Last year we began to introduce the SAP system and the ROS hotel catering system in the<br />
group of hotels operating under the Pannonian Spa brand.<br />
information system itself. In all companies of the <strong>Sava</strong><br />
Group the Manager Information System (MIS) was<br />
introduced, which facilitates the pursuit of the most<br />
important business indicators and enables comparisons<br />
with the planned values and results from previous years.<br />
MIS was a<strong>dd</strong>itionally upgraded with the function of<br />
enabling the monitoring of profitability of individual<br />
products and customers.<br />
An important milestone in the introduction of<br />
informatics was that of a treasury SAP module at the<br />
Group level to manage assets in a more efficient way.<br />
We have successfully completed the project of renewing<br />
informatics in the companies operating under the <strong>Sava</strong><br />
Hotels&Resorts Bled brand and establishing a<br />
functional link between the hotel catering system ROS<br />
and SAP modules for finance and controlling.<br />
In the safety area we outlined the basis and measures for<br />
providing safety of information system operation in the<br />
<strong>Sava</strong> Group and standardised the virus protection<br />
system throughout the Group. We will further centralise<br />
the management of our information system.
a n n u a l r e p o r t | 2 0 0 5<br />
1 1 0 |<br />
It would be difficult to succeed without<br />
co-operation with the local and broader community.<br />
In return we sponsor various projects and make<br />
donations to the social community.<br />
In <strong>2005</strong> we earmarked funds that exceeded<br />
last year’s figure by one fifth.
Iztok #op and Luka Œpik,<br />
oarsmen, world record holders,<br />
world and Olympic champions<br />
1 1 1 |<br />
| s u s t a i n a b l e d e v e l o p m e n t r e p o r t |
a n n u a l r e p o r t | 2 0 0 5<br />
21.<br />
1 1 2 |<br />
Sustainable Development<br />
Reporting on the environmental and social component of sustainable development is a constituent<br />
part of <strong>Sava</strong>'s <strong>Annual</strong> Report. The Sustainable Development Report includes a survey of key matters,<br />
activities and a <strong>report</strong> on implemented goals.<br />
Our commitment to business success is combined with safety and social responsibility. We therefore<br />
act in a responsible and ethical manner. This is the key to the implementation of our vision: to become<br />
a successful and sought-after manager of capital in Slovenia and a responsible partner in the<br />
sustainable development of the natural and social environment.<br />
Our basic guidelines are:<br />
• care for the satisfaction and safety of employees and the creation of a stimulating working environment;<br />
• prudent management of energy by incorporating environment-friendly technologies;<br />
• care for the natural environment;<br />
• quality of business in line with our policy; and<br />
• integration in the social environment as its support, which is the key to our success.
22.<br />
22.1<br />
1 1 3 |<br />
| s u s t a i n a b l e d e v e l o p m e n t r e p o r t |<br />
Important Events and<br />
Accomplishments in the<br />
Area of Social Responsibility<br />
Employees in the <strong>Sava</strong> Group<br />
• Number of employees<br />
increased from 3,014 in 2004 to 3,062.<br />
SAVA GROUP<br />
The structure of employees<br />
by division<br />
SAVA d.d.<br />
CHEMICALS<br />
REAL ESTATE<br />
TRADE<br />
RUBBER MANUFACTURING<br />
TOURISM<br />
• The average salary increased by 4.1 per cent.<br />
(30%)<br />
(19%) (3%) (2%) (2%) (44%)<br />
(v 000 SIT)<br />
2004 <strong>2005</strong><br />
Average salary (€) 983.9 1,026.5<br />
• Education<br />
The average number of hours per employee reached 70.5 and the average cost of education amounted to € 147.2.<br />
(v 000 SIT)<br />
2004 <strong>2005</strong><br />
Average no. of education hours per employee 71 70.5<br />
Average cost of education per employee (€) 145.4 147.1
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1 1 4 |<br />
• Owing to a flexible work organisation and a larger<br />
number of internal education courses we saved about<br />
€0.32 million. A<strong>dd</strong>itional savings were created on<br />
account of obtaining funds from European projects.<br />
• Employee healthcare:<br />
28 per cent of employees received preliminary, periodic<br />
and specific health examinations in <strong>2005</strong>.<br />
22.2 Sponsorships for and<br />
donations to the social<br />
community<br />
In <strong>2005</strong> the <strong>Sava</strong> Group allocated €4,734,000 for<br />
sponsorships and donations, or 20 per cent more than in<br />
2004.<br />
• Sport:<br />
We further strengthened the long-standing partnerships<br />
with <strong>Sava</strong> Cycling club and Triglav Skiing club.<br />
• Culture:<br />
With the Museum of Gorenjsko we concluded a fouryear<br />
general sponsorship agreement on the birth-place<br />
home of the great Slovene poet Dr. France Preæeren in<br />
Vrba.<br />
• Safety at work:<br />
One of the novelties was collaborating in the Stop the<br />
Noise campaign.<br />
• Number of work-related injuries decreased by 0.3<br />
per cent.<br />
• Training courses for safe work were attended by 57<br />
per cent of employees.<br />
• Professional development:<br />
In <strong>2005</strong> we sponsored the final conference of the<br />
international interdisciplinary research project<br />
Manufacturing Visions – Quo Vadis?<br />
• Charity:<br />
The fee proceeds and a contribution by the company<br />
Golf in Kamp Bled d.d. were donated to the<br />
development centre of the kindergarten in Bled for preschool<br />
children with special needs.<br />
• Integration in the social community:<br />
We actively engaged in numerous international,<br />
national, professional and voluntary associations. We<br />
are also a co-founder of the Development Forum of<br />
Gorenjsko.
22.3<br />
1 1 5 |<br />
Environmental<br />
indicators in the<br />
<strong>Sava</strong> Group<br />
| s u s t a i n a b l e d e v e l o p m e n t r e p o r t |<br />
• Significant achievements in decreasing the<br />
• consumption of energy resources<br />
In Tourism we decreased the consumption of natural<br />
gas, electricity, propane-butane gas and heating oil to a<br />
great extent.<br />
• Drinking and river water consumption<br />
On the Labore premises in Kranj we decreased drinking<br />
water consumption by 11.6 and specific river water<br />
consumption by 21 per cent.<br />
• Dust particle emissions were almost completely<br />
eliminated so that the quantities (0.01-0.12 mg/m 3 ) are<br />
considerably below the permissible limit (50 mg/m 3 ).<br />
• All waste is safely and professionally disposed of.<br />
• Decreasing the use of hazardous substances<br />
– Owing to the discontinuation of etoxilate production<br />
in the company Teol d.d. ethylene-oxide is no longer<br />
used.<br />
– The specific use of nitrite- and nitrate-based LCM<br />
salts was decreased.<br />
• Noise<br />
Owing to the introduction of technical measurements we<br />
reduced noise so that night and day levels do not exceed<br />
the permissible limits.<br />
• Fire safety<br />
Numerous drills demonstrated the high level of<br />
readiness of the intervention team and employees.
a n n u a l r e p o r t | 2 0 0 5<br />
23.<br />
1 1 6 |<br />
The Development of Employees<br />
We wish to provide a safe working environment for our employees that encourages continual learning,<br />
co-operation and creativity. We motivate employees with awards and by making them aware that each<br />
individual is an important part of the team. We have established a long-term system of training for all<br />
employees that we named Akademija <strong>Sava</strong>. We are aware that the readiness of our employees for lifelong<br />
learning, personal development, entrepreneurial spirit and adapting to changes are decisive for making<br />
progress and preserving a competitive edge in all of our operations.<br />
23.1 Concern for employees<br />
Creating a working environment in which employees<br />
are able to realise their potential and ambitions in<br />
accordance with <strong>Sava</strong> corporate values are one of our<br />
priority goals.<br />
The average number and<br />
structure of employees<br />
In <strong>2005</strong> the average number of employees in the <strong>Sava</strong><br />
Group increased from 3,014 in 2004 to 3,062 in <strong>2005</strong>.<br />
There were no greater changes in the Group’s<br />
composition, therefore the employee structure in<br />
individual divisions remains similar to the year before.<br />
Tourism has the largest share of employees with 44 per<br />
cent, and is followed by Rubber Manufacturing with 30<br />
and Trade with 19 per cent.<br />
368 associates were newly employed in the companies<br />
of the <strong>Sava</strong> Group, of whom 301 were employed for a<br />
fixed period of time and 52 got a permanent position.<br />
Due to the seasonal nature of work most employees<br />
(166) were newly employed in Tourism. Tourism is<br />
followed by Rubber Manufacturing where the<br />
companies <strong>Sava</strong>tech d.o.o. and <strong>Sava</strong> GTI d.o.o.<br />
employed 126 new associates on account of an increase<br />
in production capacity and sales.<br />
Last year 324 associates left the companies of the <strong>Sava</strong><br />
Group, which did not significantly exceed the figure<br />
from the previous year. The fluctuation is greatest in<br />
Tourism with 54.6 per cent, mainly due to terminating<br />
contracts concluded for a fixed period of time.<br />
27.5 per cent of the a.m. fluctuation is due to an agreed<br />
termination of contract, 12.6 per cent to retirement, 23.5<br />
per cent termination according to the law, and 36.4 per<br />
cent due to resigning for business reasons.<br />
In <strong>2005</strong> the total fluctuation in the <strong>Sava</strong> Group<br />
amounted to 10.5 per cent, or only 0.2 per cent more<br />
than in the year before. The seasonal character of<br />
tourism business demands high employment flexibility,<br />
and with regard to the number of employees that<br />
Tourism has in the <strong>Sava</strong> Group, the percentage of the<br />
total fluctuation is relatively low and reveals the high<br />
level of employee loyalty and satisfaction.
1 1 7 |<br />
Number of employees<br />
| s u s t a i n a b l e d e v e l o p m e n t r e p o r t |<br />
(v 000 SIT)<br />
Average<br />
No. of No. of Index no. of<br />
employees employees 2/1 employees<br />
01/01/<strong>2005</strong> (1) 31/12/<strong>2005</strong> (2) <strong>2005</strong> Jan-Dec <strong>2005</strong><br />
<strong>Sava</strong> d.d., Kranj 47 53 113 49<br />
RUBBER MANUFACTURING 860 941 109 904<br />
<strong>Sava</strong>tech d.o.o., Kranj 685 754 110 718<br />
<strong>Sava</strong>-GTI d.o.o., Kranj 73 84 115 83<br />
<strong>Sava</strong>-Schäfer d.o.o., Kranj 42 43 102 43<br />
<strong>Sava</strong> ROL d.o.o., Zagreb 10 10 100 10<br />
Foreign trade network 50 50 100 50<br />
CHEMICALS 78 61 78 69<br />
Teol d.d., Ljubljana 78 61 78 69<br />
TRADE 597 573 96 585<br />
<strong>Sava</strong> Trade d.d., Ljubljana 337 311 92 325<br />
MG Market d.o.o., Ljubljana 260 262 101 260<br />
TOURISM 1,341 1,328 99 1,362<br />
Grand Hotel Toplice Bled d.o.o., Bled 148 149 101 154<br />
Golf in Kamp Bled d.d., Bled 50 51 102 54<br />
G&P Hoteli Bled d.o.o., Bled 223 217 97 233<br />
Terme 3000 d.d., Moravske Toplice 375 374 100 374<br />
Terme Lendava d.d., Lendava 122 124 102 119<br />
Terme Ptuj d.o.o., Ptuj 75 78 104 80<br />
Terme Radenci d.o.o., Radenci 348 335 96 348<br />
REAL ESTATE 92 88 96 90<br />
<strong>Sava</strong> Medical in Storitve d.o.o., Kranj 73 69 95 71<br />
<strong>Sava</strong> IP d.o.o., Ljubljana 19 19 100 19<br />
OTHER COMPANIES 0 3 3<br />
Energetika <strong>Sava</strong> d.o.o., Kranj 0 3 3<br />
TOTAL SAVA GROUP 3,015 3,047 101 3,062
a n n u a l r e p o r t | 2 0 0 5<br />
1 1 8 |<br />
Educational structure<br />
of employees<br />
The educational structure of employees did not<br />
substantially change. However, the differences achieved<br />
SAVA GROUP<br />
Educational structure<br />
at 31 December <strong>2005</strong><br />
1st level - incomplete primary school<br />
2nd level - primary school<br />
3rd level - up to 2 years of vocational school<br />
4th level - at least 3 years of vocational school<br />
5th level - secondary school<br />
6th level - technical college<br />
7th level - higher and university education<br />
8th & 9th level - Master’s and Doctor’s degree<br />
Age structure of employees<br />
(32%)<br />
In the <strong>Sava</strong> Group 46 per cent of employees are older<br />
than 41 years, 21 per cent younger than 30 years, and 33<br />
per cent of employees are between 31 and 40 years.<br />
SAVA GROUP<br />
Age structure of employees<br />
at 31 December <strong>2005</strong><br />
(in %)<br />
0.9<br />
reflect changes in the structure of the <strong>Sava</strong> Group. There<br />
are fewer employees with up to 3rd level education and<br />
those with 7th level education. In the future the level of<br />
education will grow, since 3.7 per cent of all employees<br />
study part-time.<br />
(3%) (19%) (4%) (1%) (9%) (5%) (27%)<br />
7.2<br />
Voluntary supplementary<br />
pension insurance<br />
66 per cent of employees were included in the voluntary<br />
supplementary pension insurance scheme of Kapitalska<br />
Druœba and A Pokojninska Druœba. The average<br />
premium paid by an individual and a company totalled<br />
€33.7.<br />
12.6<br />
16.8 16.0<br />
15.8 16.4<br />
10.2<br />
4.2<br />
18-20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56+years
1 1 9 |<br />
Sick leave<br />
| s u s t a i n a b l e d e v e l o p m e n t r e p o r t |<br />
The percentage of sick leave decreased in comparison<br />
with the year before. In 2004 total sick leave amounted<br />
SAVA GROUP<br />
Sick leave<br />
(in %)<br />
more than 30 days<br />
up to 30 days<br />
total<br />
Remunerating and motivating<br />
employees<br />
In <strong>2005</strong> too the basis for remunerating and promoting<br />
employees was employee performance. Employees are<br />
promoted on the basis of selective criteria such as<br />
promotion due to a more demanding job, a<strong>dd</strong>itional tasks<br />
and duties, market adjustments, or after successfully<br />
completing a training course. 324 employees were<br />
promoted due to their good performance. Senior and<br />
managerial staff as well as key specialists received<br />
a<strong>dd</strong>itional annual bonuses for achieving and surpassing<br />
the planned results. The average percentage of the<br />
variable part of salaries grew considerably in comparison<br />
with 2004 from 2.9 to 4.12 per cent. By introducing a<br />
new system of remuneration we plan to increase the<br />
variable part by up to 10 per cent.<br />
The average salary in the <strong>Sava</strong> Group totalled €1,026.5<br />
or 4.1 per cent more than last year. In all companies<br />
employees received a holiday allowance, while the<br />
Christmas bonus was paid in companies that proved<br />
particularly successful. 1,670 employees with no sick<br />
leave during the year received cash awards. Various<br />
to 4.9 per cent and in <strong>2005</strong> it totalled 4.2 per cent. Sick<br />
leave of up to 30 days totalled 2.3 per cent, whereas sick<br />
leave exceeding 30 days totalled 1.9 per cent.<br />
4.83<br />
2.28<br />
2.55<br />
4.86<br />
2.59<br />
2.27<br />
4.20<br />
1.93<br />
2.27<br />
2003 2004 <strong>2005</strong><br />
prizes are distributed according to the Rules on<br />
Remuneration and Awards, which regulates cash<br />
incentives in the form of awards for Model Worker (105<br />
employees), Company Worker (10 employees) and <strong>Sava</strong><br />
Worker (8 employees).<br />
With the 20 Keys project we encourage employees to<br />
put forward useful suggestions and improvements. We<br />
pursue trends by monitoring the indicator Number of<br />
Useful Proposals per Employee within a personnel<br />
balanced indicator system.<br />
On <strong>Sava</strong> Day we awarded and presented prizes to best<br />
and most successful employees. At pre-New Year’s<br />
meeting 239 employees were awarded for a 10-, 20- or<br />
30-year work jubilee, while 10 employees received the<br />
Company Worker award for their outstanding<br />
achievements, innovation and commitment to work.<br />
Education<br />
On-the-job training is of key importance for achieving<br />
the professional and personal growth of an individual.<br />
We therefore attempt to organise it to the maximum<br />
volume possible. In the development of employees we<br />
pursue our strategy and the development of operations.
a n n u a l r e p o r t | 2 0 0 5<br />
1 2 0 |<br />
We create an environment that is stimulating for lifelong<br />
learning, innovative thinking, fostering an entrepreneurial<br />
spirit and efficient team work. We involve promising<br />
associates in strategic training and enterprising project<br />
teams and direct them to more comprehensive<br />
educational processes. The most promising associates<br />
from these training programmes are then challenged with<br />
a more demanding job.<br />
The long-term educational model is continually adapted<br />
with regard to the required expertise and variety of<br />
target groups in the Group companies. We have named<br />
the model Akademija <strong>Sava</strong>. 6,802 training hours were<br />
achieved in <strong>2005</strong> which included over 320 associates.<br />
After the programme was completed, 31 promising<br />
young associates received diplomas for the successful<br />
completion of the Promising Associates programme.<br />
On average each employee received 70.5 hours of<br />
education, whereas the average cost of education<br />
amounted to €147.1 per employee. These costs also<br />
include vocational training courses, part-time study and<br />
trainee salaries.<br />
Cost efficiency was mainly achieved by organising<br />
internal training courses and appointing knowledge<br />
administrators – employees who as specialists in their<br />
respective area transfer their knowledge to associates<br />
from other companies.<br />
Diversity of operations, the local distance of certain<br />
companies, sophisticated methods and cost efficiency<br />
lead us to conduct training courses by utilising state-ofthe-art<br />
tools provided by information and telecommunications<br />
technology. By implementing the electronic<br />
learning project we obtained funds from the European<br />
Social Fund and Ministry of Labour, Family and Social<br />
Affairs.<br />
Over 1,000 associates were included in the project who<br />
are now efficiently using their acquired competence<br />
anew. Through the mentioned organisations we<br />
obtained funds for Akademija <strong>Sava</strong> too as well as for<br />
financing education provided by outside institutions.<br />
The greatest focus in <strong>2005</strong> was given to the<br />
implementation of various workshops to further develop<br />
managers at all hierarchical levels. Internally we<br />
provided specialised training courses. Since in Slovenia<br />
it is not possible to achieve a formal level of education<br />
in rubber manufacturing, we have prepared individual<br />
sets of expertise to be implemented in monthly<br />
workshops conducted by in-house lecturers. It is<br />
planned to develop these workshops into an internal<br />
rubber manufacturing school, in which associates learn<br />
management and communication skills as well as how<br />
to conduct employees. We organised workshops on the<br />
strategic preparation for the next development period for<br />
senior management. In Tourism training is provided by<br />
transferring good practice within the companies from<br />
this area and by presenting role models from abroad. We<br />
arranged workshops for groups of employees who have<br />
daily contact with guests to be able to establish and<br />
strengthen their good relations with them.<br />
Various awards prove that our education model is the<br />
right one. In <strong>2005</strong> we received the Learning Company<br />
Institute Award for outstanding achievements in<br />
implementing the learning company concept. We<br />
received the education management <strong>2005</strong> TOP 10 award<br />
presented by GV Izobraœevanje and the Sofos Institute<br />
to companies which systematically invest in the<br />
education of their employees and establish direct links<br />
between the education and business strategy.<br />
<strong>Sava</strong> Dialogue annual interview<br />
<strong>Sava</strong> Dialogue is an annual interview and one of the<br />
established management tools in the <strong>Sava</strong> Group. It is an<br />
in-depth, systematically conducted interview of a<br />
superior with every employee separately. The interview<br />
helps the employee to understand the long-term goals of<br />
the company more clearly as well as identify her/his role<br />
in daily work. At the same time it provides a breakdown<br />
of strategic goals and activities to the level of work<br />
teams. Through this procedure we try to design and<br />
develop a clear future vision attainable by all<br />
employees.<br />
During the annual interview the superior and employee<br />
discuss the estimates and possible development of 12<br />
competencies that in the <strong>Sava</strong> Group have been selected<br />
as a guideline and specialisation in personal<br />
development. Associates are free to express their career<br />
ambitions. The interview results are sent to the HR
1 2 1 |<br />
| s u s t a i n a b l e d e v e l o p m e n t r e p o r t |<br />
department for further analysis and supervision of the<br />
agreed measures and proposals.<br />
In <strong>2005</strong> the <strong>Sava</strong> Dialogue was conducted with 399<br />
employees – 13 per cent of all employees in the <strong>Sava</strong><br />
Group.<br />
Communicating with<br />
employees<br />
Internal communication is one of the more important<br />
tasks and ensures that good relations are maintained<br />
with and among employees, which is of key importance<br />
in meeting customer requirements and securing lasting<br />
competitive power and business success. However, it<br />
also forms the basis for building the good reputation of<br />
the company within the community and successful cooperation<br />
with it.<br />
Internally different communication tools are used such<br />
as the <strong>Sava</strong> newspaper, monthly Informator bulletin,<br />
information boards, notice boards, intranet, internet and<br />
e-mail along with a number of personal forms of<br />
communication such as interviews with employees,<br />
meetings, internal training courses and employee<br />
assemblies organised at least twice a year. The<br />
Competence Centre HR, Law and Organisation as well<br />
as management teams of all the companies collaborate<br />
in implementing the latter. At employee assemblies the<br />
Board presents the strategic policy of the <strong>Sava</strong> Group,<br />
current projects and <strong>report</strong>s from the HR area. Several<br />
times a year we participate in meetings with workers’<br />
representatives from all companies of the <strong>Sava</strong> Group.<br />
Once a year workers’ representatives meet the Board of<br />
Management of <strong>Sava</strong> d.d. Associates attend the<br />
meetings and Open Days held by the directors of<br />
individual companies as well as regular meetings with<br />
the management and the 20 Keys team meetings.<br />
We have successfully collaborated with workers’<br />
representatives and received numerous proposals from<br />
them. The Trade Union and Workers’ Council were<br />
notified of all procedures relating to a change in<br />
employee activity where employment was terminated<br />
due to business reasons, business results and a work<br />
calendar proposal, change in job descriptions and<br />
similar matters.<br />
Organisational climate<br />
measurement<br />
After measuring the organisational climate in 2004 steps<br />
were taken to improve and adapt it to meet the<br />
requirements of individual companies. We focused on<br />
improving internal communication, the personnel<br />
development system and remuneration, which has<br />
already been demonstrated by certain improvements.<br />
Since changing the organisational climate is a long-term<br />
process, we shall continue with the activities that have<br />
already begun.<br />
Rationalisation programme<br />
of the HR function<br />
The Competence Centre HR, Law and Organisation is<br />
included in the continual improvement of business<br />
processes. In <strong>2005</strong> we were repeatedly successful and<br />
implemented savings of approximately €0.21 million.<br />
Savings were mainly implemented through a selective<br />
approach to overtime work by substituting it with a socalled<br />
flexible work time organisation. Efficient<br />
relocation of employees reduced the number of overtime<br />
hours and work through student employment agencies.<br />
Furthermore, we organised numerous internal training<br />
courses for a larger number of employees.<br />
For employing difficult-to-employ associates we<br />
received financial support and a government subsidy,<br />
which we present as savings too. We saved expenses<br />
due to the announcement of vacant positions on the<br />
electronic portal http://www.zaposlitev.net.<br />
Disability issues<br />
Persons with 2 nd and 3 rd category disabilities represent<br />
6.4 per cent of all employees in the <strong>Sava</strong> Group. For<br />
every disabled employee we sought a suitable job<br />
adapted to her/his abilities and qualifications. With<br />
regard to the condition evident from risk assessment, we<br />
have prepared corrective measures to improve working<br />
conditions for all employees. The number of disability<br />
procedures decreases every year, which confirms the<br />
efficiency of measures to improve working conditions.
a n n u a l r e p o r t | 2 0 0 5<br />
1 2 2 |<br />
Development of human<br />
resources management<br />
We are aware of the fact that readiness and employee<br />
motivation for lifelong learning, personal development,<br />
enterprise initiative, innovation and flexibility are<br />
decisive for the further development and preservation of<br />
a competitive edge in all of our operations.<br />
In the Competence Centre HR, Law and Organisation<br />
we have set a demanding goal for 2006. We will build a<br />
new salary model linked to renewed job descriptions<br />
and a uniformed remuneration system within individual<br />
divisions of the <strong>Sava</strong> Group that will correspond to the<br />
salary model as proposed by the government.<br />
Our new leaders and those who will be promoted to such<br />
positions shortly will be systematically trained in the<br />
internal leadership school to made them familiar with<br />
the basic management, communication and associate<br />
23.2 Concern for employees<br />
outside of working<br />
hours<br />
Our commitment to sustainable development and care<br />
for employees obligates us to provide them with the<br />
opportunity to actively spend their spare time. Therefore<br />
we will launch a Life Cycle project in 2006, which is<br />
based on organising activities run by the company and<br />
involves as many employees as possible. The project is<br />
an upgrade of already established forms of activity. We<br />
offer employees holidays in our tourist facilities under<br />
favourable conditions.<br />
Individual companies – within legal regulations –<br />
organise for their employees and close family members<br />
various sports activities such as swimming, fitness and<br />
others.<br />
management skills. The personnel development system<br />
is being introduced in all <strong>Sava</strong> Group companies<br />
through annual interviews, incorporation in various<br />
training schemes and development interviews with key<br />
and promising associates. All companies will have a<br />
standard personnel information and personnel manager<br />
information system, which represents an important basis<br />
for efficiently managing personnel processes. In the<br />
rubber manufacturing area we intensively co-operate in<br />
the support and performance of internal communication<br />
processes and plan to further strengthen our activities in<br />
this field. In the competence centre HR, law and<br />
organisation we co-finance the project using European<br />
social funds. We repeatedly obtained funds from the<br />
European Social Fund and the Ministry of Labour,<br />
Family and Social Affairs to carry out the training of our<br />
employees. We will concentrate even more on employee<br />
training in the Tourism division: by a transfer of good<br />
practices among companies in the Tourism division and<br />
presentations of good role models from abroad.<br />
We foster cultural activities within the <strong>Sava</strong> Cultural<br />
society, which has been active for more than 30 years. It<br />
includes four groups that establish contacts with similar<br />
societies both in Slovenia and abroad. The <strong>Sava</strong> folklore<br />
group enjoys a good reputation with experts too.<br />
Dancers, musicians, tamburizza players and singers held<br />
many concerts and organised education courses. The<br />
singers who appear under the name Deåve released their<br />
CD. The art group held an exhibition at Extempore in<br />
Piran and with neighbouring Austrian Carinthia the<br />
group appeared in the joint project of the European<br />
Union entitled Spread Together, in which a literary<br />
group also took part. We established links with the<br />
Macedonian society in Kranj and prepared a joint<br />
literary meeting entitled The Preæeren’s Oro, continued<br />
collaboration in the project launched by the Ækofja Loka<br />
museum society and the Ivan Tavåar library called<br />
Colourful Loka. The photography section members<br />
attended a photo safari in the companies of Pannonian<br />
Spas and showed the photos they took in two issues of<br />
the <strong>Sava</strong> newspaper.
23.3<br />
1 2 3 |<br />
| s u s t a i n a b l e d e v e l o p m e n t r e p o r t |<br />
Concern for employee<br />
safety and health at<br />
work<br />
Employee healthcare<br />
Employee healthcare in the <strong>Sava</strong> Group concentrates on<br />
the prevention of illness both due to the working<br />
environment and in connection with their work. We<br />
strive to employ people in jobs that are adapted to their<br />
psychological and physical abilities. 28 per cent of<br />
employees received preliminary, periodic and specific<br />
health examinations in <strong>2005</strong>.<br />
Health and safety at work<br />
Achieving goals in health and safety at work was based<br />
on a preventive approach that includes all employees. Our<br />
final goal is to anticipate and successfully manage risk.<br />
A great deal of attention is devoted to the frequency of<br />
work-related injuries, precautionary measures, prevention<br />
Many <strong>Sava</strong> employees respected the slogan Travel to Work in a<br />
Different Way, and on 22 September rode their bikes to work<br />
of social-related factors (especially stress and a<strong>dd</strong>iction to<br />
psychoactive substances) and analysing new types of risk.<br />
We encourage employees to live healthily and act on<br />
time, also by being involved in initiatives such as the<br />
pan-European campaign European Mobility Week. By<br />
employing an integral approach, preparing special<br />
folders and motivating employees we persuaded more<br />
than one quarter of employees in our Kranj-based<br />
facility not to drive by car to work on European Car<br />
Free Day.<br />
We are also involved in the pan-European campaign<br />
launched by the European Occupational Safety and<br />
Health Board called Stop the Noise. By making<br />
employees aware of how important it is to protect<br />
themselves and others against harmful noise, we<br />
measured noise source levels at certain work places and<br />
specified a list of noise sources. Employee children<br />
made drawings to contribute to the pan-Slovenia<br />
competition concerning occupational health and safety<br />
invited by the Avgust Kuhar Foundation.<br />
Award winners of the art competition (left to right): Blaœ Bevc,<br />
Gaæper Trojar Kuhar, Marina Trojar Kuhar, Rok Bevc,<br />
Andrej Logonder, Jakob Svetina, Vesna Logonder, Klara Svetina.
a n n u a l r e p o r t | 2 0 0 5<br />
1 2 4 |<br />
Decrease in the number<br />
of work-related injuries<br />
The frequency and seriousness of occupational injuries<br />
decreased owing to a systematic approach in the<br />
improvement of working conditions.<br />
An orientation to safety at work is incorporated in our<br />
business policy.<br />
SAVA GROUP<br />
No. of occupational injuries in the<br />
companies of the <strong>Sava</strong> Group<br />
from 2003 to <strong>2005</strong><br />
SAVA GROUP<br />
Frequency of occupational injuries<br />
with sick leave in the companies<br />
of the <strong>Sava</strong> Group<br />
from 2003 to <strong>2005</strong><br />
(per 200,000 working hours)<br />
A commitment to and concern for safety are encouraged<br />
by special preventive measures such as March – Safety<br />
Month and October – Fire Safety Month.<br />
Occupational safety forms a part of our business<br />
programme that is intended for customers. During<br />
European Occupational Safety and Health Week the<br />
company <strong>Sava</strong> Trade d.d. exhibited its sales programme<br />
aimed at personal protection in the International<br />
Symposium for Occupational Safety and Health.<br />
85<br />
73<br />
71<br />
2003 2004 <strong>2005</strong><br />
3.2<br />
2.9<br />
2.6<br />
2003 2004 <strong>2005</strong>
1 2 5 |<br />
| s u s t a i n a b l e d e v e l o p m e n t r e p o r t |<br />
Identifying stress through<br />
education<br />
Employee responsibility for one’s own safety is<br />
encouraged by educating and training which comprises<br />
training for safe work, strengthening an awareness of<br />
how important safety at work is and anticipating new<br />
types of risk. 57 per cent of employees participated in<br />
training courses for safe work in <strong>2005</strong>.<br />
The principal aim of education is to provide new<br />
information in relation to occupational safety and<br />
health. In a<strong>dd</strong>ition to legally prescribed forms of<br />
theoretical and practical training courses for safe work,<br />
periodic training courses and qualification examinations<br />
we also encourage associate awareness by:<br />
• providing weekly notices and advice on safety at work<br />
on special notice boards;<br />
• writing a column entitled Sreåko warns and gives<br />
advice in a monthly bulletin Informator; and<br />
• printing notices in the <strong>Sava</strong> newspaper.<br />
Employees can give their suggestions to improve safety<br />
directly to the respective specialised service.<br />
Occupational health and safety,<br />
OHSAS 18001 standard<br />
Increasingly strict regulations, which are incorporated in<br />
the operation of individual companies by applying<br />
internationally valid system tools, are implemented to<br />
enhance occupational health and safety. These<br />
regulations are a successful risk management tool.<br />
Most companies that seek to systematically reduce the<br />
risk of injury or health disorders affecting their<br />
employees apply the OHSAS 18001 standard<br />
(Occupational Health and Safety Assessment Series)<br />
whose basic principle is a continual improvement<br />
process.<br />
In 2002 and 2003 system tools for occupational health<br />
and safety were applied in the rubber manufacturing<br />
companies of the <strong>Sava</strong> Group. In 2004 the companies<br />
<strong>Sava</strong>tech d.o.o., <strong>Sava</strong>-Schäfer d.o.o. and <strong>Sava</strong> Trade d.d.<br />
obtained certificates which prove their operations are<br />
conducted in line with the OHSAS 18001 standard. In<br />
<strong>2005</strong> the certificate for a successfully introduced<br />
occupational health and safety system was also obtained<br />
by the company Radenci d.o.o. as the first spa resort,<br />
hotel and catering company to do so.<br />
OHSAS 18001 certificate for Terme Radenci
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24.<br />
1 2 6 |<br />
Standards and Policies<br />
Concerning Occupational Safety<br />
and Health that we Respect and<br />
Perform in the <strong>Sava</strong> Group<br />
Our work concerning occupational health and safety at<br />
the level of the <strong>Sava</strong> Group has since 2000 been directed<br />
by the environmental policy at the Group level. The area<br />
is managed by the competence centre Technical, Fire<br />
and Environmental Safety (TPEV). The work of this<br />
centre and setting goals is linked with conforming to<br />
internationally valid general standards in the field of<br />
safety as well as specialised standards, which represent<br />
the best models in the branches where we operate:<br />
• OHSAS 18001 standard (Occupational Health and<br />
Safety Assessment Series) for system management of<br />
occupational health and safety<br />
- In 2004 the certificate was obtained by the companies<br />
<strong>Sava</strong>tech d.o.o., <strong>Sava</strong>-Schäfer d.o.o. and <strong>Sava</strong> Trade<br />
d.d.<br />
- In <strong>2005</strong> the certificate was obtained by Terme<br />
Radenci d.o.o.<br />
• The environmental certificate SIST EN ISO 14001<br />
for environmental protection<br />
- In 2000 the certificate was obtained by all Kranjbased<br />
rubber manufacturing companies.<br />
- In 2001 Ptuj-based rubber manufacturing companies<br />
obtained the certificate.<br />
- In 2004 the company from the Tourism division,<br />
Terme Radenci d.o.o., and <strong>Sava</strong> Trade d.d. from the<br />
Trade division obtained it.<br />
• In <strong>2005</strong> the company Terme Radenci d.o.o. brought<br />
its operations in line with the new environmental<br />
standard ISO 14001:2004.<br />
• Committed to Green programme<br />
- In 2003 the company Golf in Kamp Bled d.d. joined<br />
in the implementation of the programme of the<br />
European Golf Association Committed to Green.<br />
• A permit for using the logotype Responsible Care for<br />
2004 and <strong>2005</strong> was obtained by the companies<br />
<strong>Sava</strong>tech d.o.o., <strong>Sava</strong>-Schäfer d.o.o. and <strong>Sava</strong>-GTI<br />
d.o.o.<br />
• In <strong>2005</strong> the <strong>Sava</strong> Group obtained the certificate Blue<br />
Energy from the holding company Slovenske<br />
Elektrarne and its business partners for the<br />
economical use of energy and a contribution to the<br />
Blue Fund.
25.<br />
1 2 7 |<br />
<strong>Sava</strong> d.d.<br />
| s u s t a i n a b l e d e v e l o p m e n t r e p o r t |<br />
Important Acknowledgements<br />
and Awards in <strong>2005</strong><br />
Company Achievement Acknowledgement/Award Institution<br />
<strong>Sava</strong> d.d. Joint Best result and joint USP Institute and<br />
acknowledgement acknowledgement in developing Slovene Chamber of<br />
the learning Company concept Commerce and Industry<br />
<strong>Sava</strong> Group TOP 10 An acknowledgement to a GV Izobraœevanje and<br />
acknowledgement company which invests most in<br />
employee education and training<br />
the Sofos Institute<br />
<strong>Sava</strong> Hotels&Resorts Bled<br />
Company Achievement Acknowledgement/Award Institution<br />
Wellness Œiva, Golden Plaque Achievement of the year in Slovene Chamber of<br />
G&P Hoteli Bled d.o.o. developing tourist services Commerce and Industry<br />
Camping Bled, 1st place My Country – Beautiful and Slovene Tourist Board<br />
Golf in Kamp Bled d.d. Hospitable campaign, the<br />
large-sized campsite category<br />
Hotel Park Acknowledgement for Special acknowledgement for Slovene Fire-fighting<br />
(G&P Hoteli Bled d.o.o.) co-operation co-operation in the international<br />
fire-fighting drill<br />
Association<br />
G&P Hoteli Bled d.o.o., 20 medals and 52nd Catering Tourist Meeting Slovene Chamber of<br />
Grand Hotel Toplice d.o.o. acknowledgements Commerce and Industry<br />
Camping Bled, The Recommended The Dutch<br />
Golf in Kamp Bled d.d. Campsite sign Association ANWB
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Pannonian Spas<br />
Company Achievement Acknowledgement/Award Institution<br />
Terme 3000 d.d., Golden Sower Golden acknowledgement for Slovene Tourist Board<br />
and Bike centre innovation<br />
Hotel Ajda, Q Quality Sign Acknowledgement for quality Adminstrative Unit<br />
Terme 3000 d.d. work in the area of Murska Sobota and<br />
accommodation facilities national assessment<br />
commission<br />
Terme Radenci d.o.o. Silver diploma For the application according to Ministry of Higher<br />
the Business Excellence Award Education, Science and<br />
of RS Technology, Institute<br />
for Metrology<br />
Terme Ptuj d.o.o. 1 st place My Country – Beautiful and Slovene Tourist Board<br />
Hospitable campaign, in the<br />
medium- and small-sized<br />
campsite category<br />
Terme Ptuj d.o.o. 2 nd place My Country – Beautiful and Slovene Tourist Board<br />
Hospitable campaign, in the<br />
medium-sized campsite category<br />
Terme Lendava d.d. 2 nd place My Country – Beautiful and Slovene Tourist Board<br />
Hospitable campaign, in the<br />
small-sized campsite category<br />
Terme 3000 d.d. 2 nd place My Country – Beautiful and Slovene Tourist Board<br />
Hospitable campaign, in the<br />
large-sized campsite category<br />
Terme 3000 d.d. Best arranged Slovene Best Swimming Pool Good Morning,<br />
swimming pool <strong>2005</strong> campaign a TV Slovenia show<br />
facilities<br />
Terme Ptuj d.o.o. 2 nd place in the large Slovene Best Swimming Pool Good Morning,<br />
thermal swimming <strong>2005</strong> campaign a TV Slovenia show<br />
pools category<br />
Terme 3000 d.d. Golden pin 52 nd Catering and Slovene Chamber of<br />
Tourist meeting Commerce and Industry<br />
Terme 3000 d.d., 44 medals and 52 nd Catering Slovene Chamber of<br />
Terme Radenci d.o.o., acknowledgements Tourist meeting Commerce and Industry<br />
Terme Lendava d.d.,<br />
Terme Ptuj d.o.o.,<br />
Terme Banovci<br />
Milan Karoli, Acknowledgement Acknowledgement and golden Slovene Chamber of<br />
hotel director, and golden plaque plaque for a contribution to the Commerce and Industry<br />
Terme 3000 d.d. for quality and quality of spa resort tourism<br />
success at GTZ in Pomurje<br />
Daniel Kozar, 2 silver medals Award in menu cooking and International Culinary<br />
member of the Slovene exhibition of cold culinary Arts Competition,<br />
national Olympic team, delights Basel, Switzerland<br />
Terme 3000 d.d.<br />
Daniel Kozar Silver medal Award for a self-prepared dish at Trade Exihibition for the<br />
member of the Slovene the European Culinary Arts Hotel Industry and<br />
national Olympic team, Competition Gastronomy, Salzburg,<br />
Terme 3000 d.d. Austria<br />
Stanko Jerebic, Special Slovene Chamber of<br />
Terme Radenci d.o.o. acknowledgement Commerce and Industry<br />
for achievements
26.<br />
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Sport<br />
| s u s t a i n a b l e d e v e l o p m e n t r e p o r t |<br />
Developing the<br />
Social Community<br />
Our investments in sport, culture, humanitarian campaigns, professional development of the company and<br />
environmental issues help the broader and narrower social community to develop. Our priority is to<br />
collaborate in long-term projects that can contribute to the development of a larger number of people<br />
especially children. In a<strong>dd</strong>ition to financial support we provide our long-term partners with organisational<br />
support and the active involvement of employees in individual projects.<br />
26.1 Sponsorship for and<br />
donations to the social<br />
community<br />
We build our relations on respect, understanding and an<br />
open dialogue.<br />
Through sponsorships and donations the companies of<br />
the <strong>Sava</strong> Group are integrated in individual local<br />
SAVA GROUP<br />
Sponsorship and donations<br />
Sport<br />
Culture<br />
Professions/Education<br />
Social/humanitarian campaigns<br />
Ecology<br />
(62%)<br />
For many years a substantial share of sponsorship funds<br />
has been earmarked for the <strong>Sava</strong> Cycling Club, one of<br />
the largest and most successful clubs in Slovenia in the<br />
past 35 years. Valter Bonåa was a particularly successful<br />
communities. When it comes to larger national and<br />
international projects, they are united under the auspices<br />
of the holding company <strong>Sava</strong> d.d., and thus represent the<br />
<strong>Sava</strong> Group. We especially assist non-profit societies,<br />
organisations and institutions and concentrate on<br />
providing assistance to children and their development.<br />
In <strong>2005</strong> the <strong>Sava</strong> Group earmarked more than<br />
€4,734,000 for sponsorships and donations, which is 20<br />
per cent more than in 2004.<br />
(14%) (10%) (8%) (6%)<br />
athlete of the club. In the Krka Grand Prix our cyclists<br />
won an historic triple victory and were successful in<br />
many other competitions at the local, national and<br />
international level. A team of the youngest athletes won<br />
all categories in the Orangina Cup, which further proves<br />
successful co-operation.
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We are continuing to sponsor Triglav Ski Club. On a<br />
modern ski jump – Bauhenk under Æmarjetna Gora –<br />
training conditions are excellent and it can host<br />
competitions at the highest level. In the beginning of<br />
2006 the Nordic Junior World Championships were<br />
held, with <strong>Sava</strong> d.d. participating in the organisation. In<br />
summer the Grand Prix will take place on an artificial<br />
ski jump with the world’s best jumpers participating.<br />
We sponsor team sports as well. <strong>Sava</strong> Handball Club<br />
joined with the Planina team to enable the youngest<br />
girls’ selection to become familiar with handball, while<br />
the seniors are faced with new challenges. The OBI<br />
store sponsored the junior team of Kranj Football Club,<br />
while <strong>Sava</strong>tech d.o.o. sponsored Olimpija Volleybal<br />
Club, and <strong>Sava</strong> Trade d.d. Jeœica Baseball Club.<br />
This year too we sponsored the traditional Ljubelj <strong>2005</strong><br />
Oldtimers’ Race for the Hrast Memorial, which had<br />
more than 3,000 visitors. Terme Lendava provides funds<br />
for the advancement of the sport of speedway.<br />
The companies in Tourism earmarked considerable<br />
funds for donations and sponsorships in sport. The<br />
company Terme 3000 d.d. sponsored numerous<br />
societies – Union Olimpija Basketball Club, the football<br />
players of Mura 05 and Åarda, female football players of<br />
Pomurje Len, the table-tennis club Moravske Toplice,<br />
the grass hockey team NTK Moravske Toplice, and also<br />
the young golfer, Vanja Bransberger. The companies<br />
Terme Lendava d.d. and Terme Ptuj d.o.o. sponsor<br />
football players and ballooning. <strong>Sava</strong> Hotels Bled<br />
sponsored golf advancement and enabled three primary<br />
schools to purchase and assemble golf equipment. They<br />
also sponsored Bled Rowing Club, Partizan Œirovnica<br />
Gymnastic Society and Œirovnica Mountaineering<br />
Society.<br />
Culture<br />
We further remain active in spreading culture and<br />
preserving cultural heritage and have therefore<br />
established several long-term partnerships. We<br />
sponsored the year-round project Synergy of the Art and<br />
Business World, launched by the world renowned<br />
virtuoso violin player Miha Pogaånik, in which he<br />
discovered the paths to new ideas in the economy and<br />
decision-making process of managerial teams through<br />
classical music.<br />
With the Museum of Gorenjsko we concluded a fouryear<br />
general sponsorship agreement on the birth-place<br />
home of the great Slovene poet Dr. France Preæeren in<br />
Vrba and collaborated in the exhibition to celebrate the<br />
100 th anniversary of the Slovene film industry. We<br />
enrich the cultural life of the local community through<br />
faithful collaboration with the Preæeren Theatre in<br />
Kranj.<br />
For several years we have been partners in the world’s<br />
unique cultural Growing Book project. The idea about<br />
Slovenia being proud of its literature is spreading<br />
because every year we sponsor The Franc Rozman-<br />
Stane Institution and the Just One Flower event. We<br />
supported numerous book issues published by the<br />
League of Combatants in the Second World War and<br />
contributed to the Walk along Partisan Trails of<br />
Jelovica event and the erection of the pan-Slovenian<br />
monument to the T.I.G.R. combatants and people who<br />
defended the Slovene homeland in Veliko Cerje above<br />
Nova Gorica.<br />
The company <strong>Sava</strong> Hotels&Resorts Bled is the general<br />
sponsor of the Dana Renåelj international ballet school<br />
of Bled as well as the Bled Festival, the international
1 3 1 |<br />
| s u s t a i n a b l e d e v e l o p m e n t r e p o r t |<br />
summer contest for musicians. We aided the<br />
Macedonian cultural society Sv. Ciril and Metod Kranj<br />
in arranging premises for their work. Jointly with the<br />
company <strong>Sava</strong> Trade d.d. we contributed to the<br />
implementation of certain events during Kranj Youth<br />
Week. The company <strong>Sava</strong>tech d.o.o. collaborated with<br />
the Academy of Fine Arts of Ljubljana University in<br />
designing a new tread pattern for a scooter tyre.<br />
Tourist operations correspond to public and cultural<br />
events. The company Terme 3000 d.d. was involved in<br />
the events of the Days of Sobota and Koæiå, andthe<br />
Beltinci Festival and also assisted in the renovation of<br />
churches. The companies Terme Lendava d.d. and<br />
Terme Ptuj d.d. helped in the preservation of folk art by<br />
making a contribution to ethnographic groups, choirs<br />
and a musical society.<br />
Professional development<br />
<strong>Sava</strong> d.d. is a co-founder of organisations of broader<br />
social importance such as the Joœef Ætefan International<br />
Post-graduate School, Institute for the Development of a<br />
Learning Company and the Development Forum of<br />
Gorenjsko.<br />
Professional achievements are companions of economic<br />
progress. In <strong>2005</strong> we sponsored the final conference of<br />
the international interdisciplinary research project<br />
Manufacturing Visions – Quo Vadis? On the basis of a<br />
research project, which included almost 3,000 experts,<br />
22 countries and 31 European institutions, the<br />
conference should determine the guidelines for future<br />
industrial development in Europe with the aim of<br />
becoming the best competitive economy by 2010.<br />
<strong>Sava</strong>tech d.o.o. took part in the research.<br />
We took over sponsoring the conference Manageress<br />
Excellence, organised by the Section of Manageresses at<br />
the Managers’ Association of Slovenia in collaboration<br />
with the international business school IEDC Bled. We<br />
also established contact with the Metrology Institute RS<br />
and sponsored the awards ceremony of the Business<br />
Excellence Awards of the Republic of Slovenia and<br />
provided professional and financial assistance in<br />
publishing the book Learning Company – Create a<br />
Company of Know-how. Assistance was given to the<br />
Association of Safety Engineer Societies to organise the<br />
8 th symposium on safety and health at work where the<br />
Avgust Kuhar Foundation awards were presented.<br />
Our aspirations for a balanced social development led us<br />
to form a partnership with the IFIMES Institute, the<br />
International Institute for Mi<strong>dd</strong>le-East and Balkan<br />
Studies, which has its head office in Ljubljana. The<br />
Institute is involved in crisis areas, rescue and<br />
preliminary conflict prevention.<br />
The companies in Tourism helped in implementing<br />
projects of the Slovene Tourist Board, which celebrated<br />
its 100 th anniversary, as well as the Tourist Association<br />
of Pomurje. Pannonian Spas sponsored the Diamant<br />
chef team. The Slovene Olympic chef team found a<br />
long-term partner in <strong>Sava</strong> Hotels Bled that will sponsor<br />
it in the following four year period. Preparations prior to<br />
departure for the world chef competition in Basel were<br />
held in Grand Hotel Toplice d.o.o.<br />
The company <strong>Sava</strong>tech d.o.o. is also loyal to the Faculty<br />
of Chemistry and Chemical Technology in Maribor. It<br />
also sponsored the issue of a new presentation CD of the<br />
Kranj Technical School Centre, thereby joining<br />
endeavours to popularise technical professions.<br />
All companies of the <strong>Sava</strong> Group are involved in the<br />
development of education and training institutions in<br />
their local environments. They supported their<br />
educational programmes, donated computer equipment<br />
and awarded pupils for their success in various<br />
competitions and research projects.<br />
Aid in distress<br />
One part of our social role is understanding the needs of<br />
the social environment.<br />
We contributed funds and actively participated in the<br />
Mayor’s Race through the streets of Kranj, which is<br />
organised to collect funds to help a<strong>dd</strong>icts. Through the
a n n u a l r e p o r t | 2 0 0 5<br />
26.2<br />
1 3 2 |<br />
Good Thought campaign sponsored by Kapitalska<br />
Druœba we donated funds to purchase new equipment<br />
for the Oncology Institute in Ljubljana.<br />
In collaboration with the Youth Friends’ Society in<br />
Kranj we enabled children from deprived families to<br />
enjoy free holidays at the seaside. Repeatedly we were<br />
partners in the Young Mums campaign, in which we<br />
gave New Year gifts to children from student families.<br />
On Bled golf course the Friendship Tournament for the<br />
President’s Cup was held; the fee proceeds and a<br />
Integration in the social<br />
community<br />
The <strong>Sava</strong> Group is represented in public by its<br />
employees who in their spare time are involved in<br />
various professional associations, organisations and<br />
voluntary activities.<br />
contribution by the company Golf in Kamp Bled d.d.<br />
were donated to the development centre of the<br />
kindergarten in Bled for pre-school children with special<br />
needs.Through the Slovene Karitas charity organisation<br />
the company <strong>Sava</strong> Trade d.d. sent material for building<br />
emergency shelters in Sri Lanka, which had been<br />
devastated by natural disaster.<br />
Through minor donations we helped numerous societies<br />
and organisations that are endeavouring to bring a ray of<br />
light to deprived people.<br />
They collaborate in the local community and municipal<br />
bodies, various professional and business associations,<br />
branch organisations, specialised associations for<br />
quality development, as well as in expert consultations,<br />
seminars, congresses and other professional meetings.<br />
They welcome the representatives of governmental and<br />
non-governmental organisations, economic delegations<br />
and other interested public groups and act in various<br />
non-profit organisations.
1 3 3 |<br />
| s u s t a i n a b l e d e v e l o p m e n t r e p o r t |<br />
27. Protecting the Environment<br />
and Fire Safety<br />
Consistent with the law we manage our operations to attain a continual decrease in negative environmental<br />
influences and the prevention of pollution.<br />
Therefore we have committed ourselves to:<br />
• assess the impact on the environment with every new operation;<br />
• develop new products and services that are safe in production and use as well as their environment-friendly<br />
disposal;<br />
• discontinue using hazardous substances;<br />
• plan, design and operate tools and procedures with the maximum economical use of energy and raw<br />
materials and reduce the environmental burden;<br />
• consider prescribed pollution limit values when selecting new equipment and technology;<br />
• monitor environmental influences and take steps in case of irregularities;<br />
• educate, train and make all employees aware of working responsibly;<br />
• co-operate with interested parties in an open and cultural dialogue and, consequently, contribute to the<br />
success of joint efforts invested by the company to improve environmental protection;<br />
• encourage suppliers and contractors to use new environment management systems and respect<br />
environmental legislation; and<br />
• announce our success to the public.<br />
27.1 Environmental protection<br />
Our priority goals are:<br />
• the economic use of energy, raw materials and natural<br />
resources;<br />
• separate collection and recycling of waste to decrease<br />
the quantity of waste for disposal;<br />
• the prevention of environmental pollution;<br />
• substitution of hazardous substances with less<br />
hazardous ones; and<br />
• the training of employees on environmental issues.<br />
Operations of all rubber manufacturing companies are<br />
certified according to the SIST EN ISO 14001<br />
certificate. In the Ptuj-based company <strong>Sava</strong>-GTI d.o.o.<br />
we began conducting business in compliance with the<br />
environment management certificate back in 2002. This<br />
year the operation was re-assessed, and in line with the<br />
mentioned standard, we obtained the second environment<br />
management certificate.<br />
In the company Terme Radenci d.o.o. environmental<br />
management is performed in accordance with the<br />
international standard SIS EN ISO 14001. In <strong>2005</strong> this<br />
operation was adapted to the new environment<br />
management standard ISO 14001:2004. In the company<br />
Golf in Kamp Bled d.d. we continued to adapt this<br />
operation to conform to the Committed to Green<br />
programme. In the company Teol d.d. we introduced an<br />
integrated system to balance the environment<br />
management and occupational health and safety system<br />
with the already introduced quality system according to<br />
the ISO 9001/2000 standard.<br />
By promoting environmental awareness among<br />
employees we collaborate in campaigns in the narrower<br />
and broader social community. Together with more than<br />
400 participants from various societies and Kranj<br />
citizens and residents from Straœiæåe we participated in<br />
the fourth Let’s Clean Kranj campaign organised by the<br />
Kranj Scouts Association, the Municipality of Kranj and<br />
the <strong>Sava</strong> Group.
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1 3 4 |<br />
Grand Hotel Toplice d.o.o. Bled and Bled High School<br />
for Catering and Tourism raised funds by selling tickets<br />
and donated the proceeds to Bled Tourism Society for<br />
the protection of swans. <strong>Sava</strong> Hotels Bled and Bled<br />
Tourism Society honoured the Day of Earth and the<br />
100 th anniversary of the Slovene Tourist Association in<br />
the park of Vila Hotel Bled by planting the symbol of<br />
Slovenia – a lime tree.<br />
Environmental indicators<br />
We regularly monitor environmental indicators and<br />
introduce measures to decrease the impact of our<br />
operations on the environment in individual companies<br />
and at the level of the entire <strong>Sava</strong> Group.<br />
The following environmental indicators are measured<br />
on a monthly basis:<br />
Environment management certificate ISO 14001: 2004 for Terme<br />
Radenci<br />
• energy consumption;<br />
• drinking water consumption;<br />
• water pollution;<br />
• air pollution;<br />
• space occupied by stored waste;<br />
• use of hazardous substances; and<br />
• noise.<br />
Responsible handling<br />
The Responsible Handling Programme is the Slovene<br />
name for the international initiative from the chemical<br />
industry called Responsible Care. The Chemical<br />
Industry Association at the Slovene Chamber of<br />
Commerce and Industry granted the right to use the<br />
Responsible Care logo to 18 companies. The companies<br />
of the <strong>Sava</strong> Group <strong>Sava</strong>tech d.o.o. and <strong>Sava</strong>-Schäfer<br />
d.o.o. have been granted this right repeatedly.<br />
Responsible Care logotype
27.2<br />
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| s u s t a i n a b l e d e v e l o p m e n t r e p o r t |<br />
Efficient use of energy<br />
Energy sources<br />
The companies of the <strong>Sava</strong> Group use various energy<br />
sources. In the consumption structure electricity has the<br />
largest share with 36 per cent and is followed by steam,<br />
natural gas, heating oil and propane/butane gas. In <strong>2005</strong><br />
energy consumption totalled 142,678,613 kWh.<br />
We received an award for economical energy<br />
consumption. The holding company Slovenske Elektrarne<br />
SAVA GROUP<br />
Share of individual energy source<br />
Electricity<br />
Steam<br />
Natural gas<br />
Heating oil<br />
Propane/butane<br />
Energy-related check-ups<br />
In <strong>2005</strong> eight buildings in various companies of the<br />
<strong>Sava</strong> Group were inspected in relation to energy<br />
consumption. All inspections demonstrated a possible<br />
decrease in energy consumption and, consequently,<br />
costs. Based on the anticipated short- and long-term<br />
technical and other measures for efficient energy<br />
consumption, we plan to not only reduce specific energy<br />
consumption but energy costs too, or at least maintain<br />
them at this level, despite the rise in prices and<br />
expansion of production and tourism facilities.<br />
Significant achievements in<br />
decreasing the consumption<br />
of energy sources<br />
Natural gas<br />
In comparison with last year the rubber manufacturing<br />
companies <strong>Sava</strong>tech d.o.o. and <strong>Sava</strong>-Schäfer d.o.o.<br />
(28%)<br />
and its business partners presented us with a certificate<br />
which proves that 10 per cent of the electricity we<br />
consume is generated from renewable sources and thus<br />
contributes to the Blue Fund, which is intended for the<br />
development of renewable energy sources in Slovenia.<br />
By integrating in the National Plan of the Republic of<br />
Slovenia on distribution rights for greenhouse gas<br />
emissions in the period <strong>2005</strong>-2007 the company Radenci<br />
d.o.o. committed itself to collaborating in the first period<br />
of reducing emissions within the European Union and<br />
will reduce greenhouse gas emissions by 10.6 per cent.<br />
(27%) (8%) (0.7%) (36%)<br />
reduced the specific natural gas consumption used for<br />
steam production by 19.8 per cent, in Terme<br />
Radenci d.o.o. by 9 per cent and in Terme Ptuj d.o.o. by<br />
6.1 per cent.<br />
Electricity<br />
Specific electricity consumption decreased in<br />
comparison with last year. In Terme Lendava it was<br />
decreased by 19.6 per cent, in Golf in Kamp Bled d.d.<br />
by 6 per cent, in Grand Hotel Toplice d.o.o. by 1.9 per<br />
cent, in the rubber manufacturing companies <strong>Sava</strong>tech<br />
d.o.o. and <strong>Sava</strong>-Schäfer by 1.3 per cent, and in Terme<br />
Radenci d.o.o. by 1 per cent.<br />
Heating oil<br />
Consumption was decreased in Terme Radenci d.o.o.,<br />
Hotel Jeruzalem by 35 per cent, Golf in Kamp Bled d.d.<br />
by 9 per cent, and in G&P Hoteli Bled d.o.o. by 4.8 per<br />
cent.
a n n u a l r e p o r t | 2 0 0 5<br />
1 3 6 |<br />
Propane-butane gas<br />
The consumption of propane-butane gas was 4.5 per<br />
cent lower than last year.<br />
Decrease in drinking water<br />
consumption<br />
We regularly monitor the pollution level of industrial<br />
water effluents from our manufacturing facilities. The<br />
results demonstrate that pollution is below the<br />
prescribed limits.<br />
We continued the project of drinking water consumption<br />
by:<br />
• employing methodical detection of drinking water<br />
leakage in water pipelines and eliminating faults at the<br />
same time;<br />
Specific drinking water<br />
consumption on the<br />
Labore premises<br />
(in m3 SAVA GROUP<br />
water/metric tons of product)<br />
SAVA GROUP<br />
Specific river water consumption<br />
on the Labore premises<br />
(in m 3 water/metric tons of product)<br />
21.7<br />
33.3<br />
• regularly monitoring water consumption; and<br />
• ensuring the efficient use of water.<br />
In one year the Kranj-based companies reduced drinking<br />
water consumption by 11.6 per cent. This is the most<br />
important achievement resulting from our systematic<br />
approach in environmental protection. Specific river<br />
water consumption was reduced by 21 per cent in the<br />
Kranj-based companies.<br />
The consumption of tap water was reduced in Teol d.d.<br />
by 10 per cent, Terme Lendava d.d. by 27 per cent,<br />
Grand Hotel Toplice Bled d.o.o. by 7.5 per cent, G&P<br />
Hoteli Bled d.o.o. by 6.4 per cent, and in Terme Ptuj<br />
d.o.o. by 3.6 per cent.<br />
19.9<br />
30.9<br />
16.4<br />
Average<br />
2000 2001 2002<br />
32.0<br />
Average 2000 2001 2002<br />
7.4<br />
4.3<br />
2003 2004 <strong>2005</strong><br />
30.1 29.7<br />
3.8<br />
23.7<br />
2003 2004 <strong>2005</strong>
1 3 7 |<br />
| s u s t a i n a b l e d e v e l o p m e n t r e p o r t |<br />
Lower dust particles and<br />
organic solvent emissions<br />
Due to the installation of filtering apparatus in key<br />
processes in recent years emissions of dust particles<br />
were almost completely eliminated. The measurement<br />
results are considerably below the permissible limits.<br />
<strong>Annual</strong> dust emissions were reduced by 20 per cent.<br />
A high reduction in the emissions of organic solvents in<br />
the Print programme is due to the regular operation of<br />
the thermal incineration plant. In Teol d.d. organic<br />
solvent emissions per metric ton of products was<br />
reduced by 12 per cent. Ammonia emissions in Etopon<br />
in the production of the same company amount to 62<br />
kilos per year, which is within legal requirements.<br />
Filters; Filters; Filters;<br />
Permissible limits sandblasting in grinding offset rubber in use of powder chemicals<br />
for dust particles the Roll Service programme the Print programme in the Elastomers programme<br />
mg/m 3 mg/m 3 mg/m 3 mg/m 3<br />
50 0.06 –0.12 0.01- 0.03 0.01 -0.05<br />
Less waste and hazardous<br />
substances<br />
In the companies of Rubber Manufacturing we ensure<br />
safe and professional waste disposal. Years ago <strong>Sava</strong>tech<br />
d.o.o. introduced separate waste collection according to<br />
type and property. Rubber waste and non-hazardous<br />
industrial waste are disposed of in landfills. Wooden,<br />
metal, paper and plastic waste is recycled, while<br />
hazardous substances and their packaging are incinerated<br />
or recycled.<br />
SAVA GROUP<br />
Specific quantity of all landfilled<br />
waste in Rubber Manufacturing<br />
(kg/metric tons of product)<br />
139<br />
Due to the changed products structure the specific<br />
amount of waste increased by 2.8 per cent.<br />
In accordance with our plans, which specify the<br />
handling of waste, and based on the basic principles of<br />
the strategic policy for handling waste in the Republic of<br />
Slovenia, the companies of the <strong>Sava</strong> Group are<br />
committed to gradually reduce the quantity of waste.<br />
We will collect waste fractions as pure as possible and<br />
increase the utilisation of their substances and energy<br />
value.<br />
119<br />
98<br />
Average<br />
2000 2001 2002<br />
82,2<br />
68<br />
70<br />
2003 2004 <strong>2005</strong>
a n n u a l r e p o r t | 2 0 0 5<br />
27.3<br />
1 3 8 |<br />
Mixed sewage waste generated in the hotel, catering and<br />
spa resort operations is collected separately, too.<br />
In <strong>2005</strong> the quantity of sewage waste was reduced in<br />
Terme Radenci d.o.o. by 24 per cent, G&P Hoteli Bled<br />
d.o.o. by 11.6 per cent and in Golf in Kamp Bled d.d. by<br />
4.2 per cent.<br />
We are systematically decreasing the use of hazardous<br />
substances. In the company Teol d.d. ethylene-oxide is<br />
no longer used in the production of etoxilate. The<br />
greatest progress in decreasing the specific use of<br />
hazardous substances was achieved with the<br />
introduction of certain improvements in the technology<br />
of rubber profiles production in Rubber Manufacturing<br />
where the specific use of nitrite- and nitrate-based LCM<br />
salts was substantially reduced.<br />
Noise<br />
The noise level in the Kranj-based rubber manufacturing<br />
companies during the day and at night was considerably<br />
decreased through the following technical measures:<br />
•a noise barrier in front of the solvent pumping station<br />
next to the Print programme building of the company<br />
<strong>Sava</strong>tech d.o.o.;<br />
•a noise barrier by the cooling tower adjacent to the<br />
Elastomer programme building of the company<br />
<strong>Sava</strong>tech d.o.o.;<br />
Fire safety<br />
Systematic safety operations (environmental protection,<br />
safety and health at work and fire safety) demonstrate<br />
positive effects also in the field of fire safety. The number<br />
of fires has considerably decreased over recent years.<br />
Despite continual improvements in preventive actions<br />
with respect to fire safety, employee training to implement<br />
fire safety measures and the resulting performance of these<br />
planned measures, the risk still exists.<br />
As part of the preventive campaign related to fire safety<br />
individual companies of the <strong>Sava</strong> Group organised<br />
theoretical and practical training in October.<br />
•a noise barrier in front of the apparatus for filtering air<br />
polluted with grinds from the <strong>Sava</strong>-Schäfer d.o.o.<br />
plant; and<br />
•a silencer on the ventilation system outlet in the Velo<br />
programme of the company <strong>Sava</strong>tech d.o.o.<br />
The results of monitoring show that noise levels during<br />
the day and at night do not exceed the prescribed limits.<br />
MEETING THE NEIGHBOURS<br />
In the companies that operate on the <strong>Sava</strong> premises we<br />
have regularly held meetings with neighbours ever since<br />
1998. 43 residents accepted an invitation for a<br />
traditional meeting that was held on 24 November <strong>2005</strong>.<br />
Representatives of the company <strong>Sava</strong>tech d.o.o.,<br />
Goodyear – EP and <strong>Sava</strong> Tires d.o.o. acquainted<br />
participants with the achievements in decreasing the<br />
impact on the environment, innovations and<br />
improvements in environmental protection and safety<br />
and health at work. We presented our plans concerning<br />
environmental protection for the following year.<br />
Residents also viewed a new business and production<br />
facility of the EKO programme for environmental<br />
protection and rescue products, which forms a part of the<br />
company <strong>Sava</strong>tech d.o.o.<br />
Several times a year the rubber manufacturing<br />
companies carry out unannounced simulation drills. In<br />
September an unannounced fire drill Fire on Line KS<br />
2000 in the Conveyor Belt programme, part of the<br />
company <strong>Sava</strong>tech d.o.o., was carried out. In October a<br />
simulated fire-fighting drill was carried out in the Print<br />
programme in the company <strong>Sava</strong>tech d.o.o. The purpose<br />
of both drills was to check the abilities of employees to<br />
intervene in case of fire at their work places and the<br />
competence of the intervention team of the <strong>Sava</strong> firefighting<br />
unit. Both drills proved that employees and the<br />
team alike are sufficiently qualified to intervene in case<br />
of fire.
27.4<br />
1 3 9 |<br />
| s u s t a i n a b l e d e v e l o p m e n t r e p o r t |<br />
Training employees on how to react in case of a fire hazard or<br />
intervening in case fire breaks out in the companies Teol d.d. and<br />
<strong>Sava</strong>-GTI d.o.o.<br />
On an initiative of the organisers of the 16 th<br />
International Fire-fighters Meeting we were involved in<br />
the national fire-fighting drill Fire <strong>2005</strong> that took place<br />
on 28 May in the Hotel Park building in Bled. The<br />
tactical fire-fighting drill was based on the assumption<br />
that fire had broken out in one of the hotel rooms. The<br />
Environmental safety<br />
in the future<br />
Responsibility towards the environment will be<br />
demonstrated further by meeting legal requirements and<br />
upgraded by the introduction of state-of-the-art methods<br />
and standards governing improvements in environmental<br />
protection.<br />
In the company <strong>Sava</strong>tech d.o.o. activities will be<br />
oriented to obtain an integral environmental permit. In<br />
Tourism’s golf course we will focus on preserving the<br />
diversity of animal species. We will endeavour to build<br />
Checking qualifications of intervention teams in the Fire on Line<br />
KS 2000 drill<br />
drill proved that procedures for intervention under<br />
extraordinary circumstances were suitable and so was<br />
handling by employees and hotel guests. Co-ordination<br />
of the protection and rescue part of the drill was good<br />
and qualifications highly professional.<br />
a bypass road to relieve the hotel surroundings and Bled<br />
lake of exhaust fumes. The international HACCP<br />
standard that ensures the production of safe food is due<br />
to be adopted. It is based on analysing risk and finding<br />
critical issues.<br />
We will strengthen the culture of preventing risk and<br />
encourage co-operation among all those involved in<br />
health and safety at work.<br />
In planning and monitoring our future operations we<br />
will respect the principle that preserved nature is the<br />
best heritage for future generations.
a n n u a l r e p o r t | 2 0 0 5<br />
1 4 0 |<br />
The path upwards requires investment.<br />
Therefore the <strong>Sava</strong> Group makes major investments,<br />
the total investment value in <strong>2005</strong> exceeding<br />
€37.6 million. The same amount will be invested<br />
in 2006 when our comprehensive investment cycle<br />
is due for completion.
Vanja Bransberger,<br />
golf player,<br />
national junior champion<br />
1 4 1 |<br />
| f i n a n c i a l r e p o r t |
a n n u a l r e p o r t | 2 0 0 5<br />
28.<br />
28.1<br />
1 4 2 |<br />
Financial Statements of the<br />
<strong>Sava</strong> Group with Notes in<br />
accordance with International<br />
Financial Reporting Standards<br />
Audited consolidated financial statements of<br />
the <strong>Sava</strong> Group in accordance with International<br />
Financial Reporting Standards<br />
Consolidated Income Statement for the year <strong>2005</strong><br />
(SIT in thousands)<br />
Note <strong>2005</strong> 2004<br />
Net sales revenues from goods sold and services rendered 58,461,843 56,385,784<br />
Change in inventories of products and work in progress 967,030 188,980<br />
Other operating revenue 5 2,016,853 4,638,016<br />
Operating revenue 61,445,726 61,212,780<br />
Cost of goods, materials and services -41,678,587 -39,176,844<br />
Labour cost 6 -13,280,230 -12,378,454<br />
Depreciation and amortisation -3,597,950 -2,880,373<br />
Other write-offs 7 -376,338 -1,455,963<br />
Other operating expense 8 -521,204 -636,663<br />
Operating expenses -59,454,309 -56,528,297<br />
Operating income 1,991,417 4,684,483<br />
Financial income 5,854,543 6,989,972<br />
Financial expense -2,070,087 -3,057,454<br />
Net financing income 9 3,784,456 3,932,518<br />
Share in income of associates 10 4,692,039 3,895,152<br />
Pre-tax profit 10,467,912 12,512,153<br />
Tax 11 -1,252,339 -860,704<br />
Net profit for the year 9,215,573 11,651,449<br />
Net profit for the year attributable to:<br />
Equity holders of the parent 9,162,673 11,580,064<br />
Minority interest 52,900 71,385<br />
Net profit for the period 9,215,573 11,651,449<br />
Basic earnings per share (SIT) 4,572.88 5,970.81
| consolidated financial statements in accordance with IFRS |<br />
ASSETS<br />
1 4 3 |<br />
Consolidated Balance Sheet as at 31 December <strong>2005</strong><br />
(SIT in thousands)<br />
Note 31/12/<strong>2005</strong> 31/12/2004<br />
Property, plant and equipment 12 61,501,098 57,420,827<br />
Intangible assets 13 284,010 350,216<br />
Investment property 14 3,322,896 2,337,783<br />
Investments in associates 15 29,033,709 25,657,063<br />
Non-current equity securities 16 33,430,277 32,141,290<br />
Non-current receivables 17 2,704,451 442,475<br />
Non-current assets 130,276,441 118,349,654<br />
Inventories 18 10,543,373 10,614,956<br />
Trade and other receivables 19 12,024,773 11,460,158<br />
Current tax receivable 18,623 8,517<br />
Current loans 20 574,234 1,042,284<br />
Cash and cash equivalent 21 2,568,857 713,168<br />
Current assets 25,729,860 23,839,083<br />
Totals assets 156,006,301 142,188,737<br />
EQUITY AND LIABILITIES<br />
Issued capital 20,069,870 20,069,870<br />
Share premium 30,100,770 30,100,770<br />
Reserves 8,382,996 6,238,856<br />
Fair value reserve 6,560,951 10,206,362<br />
Treasury shares -53,787 -53,787<br />
Retained earnings 27,952,373 22,176,134<br />
Total equity attributable to equity holders of the parent 93,013,173 88,738,205<br />
Minority interest 1,143,753 1,815,107<br />
Total equity 22 94,156,926 90,553,312<br />
Non-current provisions 23 1,824,309 1,747,087<br />
Deferred government grants 24 2,054,562 753,292<br />
Non-current interest-bearing borrowings 26 14,480,373 11,698,555<br />
Non-current operating liabilities 17,418 47,329<br />
Deferred tax liabilities 25 1,784,701 3,058,867<br />
Non-current liabilities 20,161,363 17,305,130<br />
Current interest-bearing borrowings 26 30,642,855 23,137,273<br />
Current operating liabilities 27 10,707,024 10,787,794<br />
Accrued expenses 28 338,133 405,228<br />
Current operating liabilities 41,688,012 34,330,295<br />
Total liabilities 61,849,375 51,635,425<br />
Total equity and liabilities 156,006,301 142,188,737
a n n u a l r e p o r t | 2 0 0 5<br />
CASH FLOWS FROM OPERATING ACTIVITIES<br />
1 4 4 |<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Profit before taxation 9,215,573 11,651,449<br />
Adjustments for:<br />
Consolidated Statement of Cash Flows for the year <strong>2005</strong><br />
Depreciation of property, plant and equipment 3,402,112 2,702,560<br />
Depreciation of intangible assets 99,459 79,727<br />
Depreciation of investment property 96,372 98,086<br />
Impairment in property, plant and equipment 42,382 964,842<br />
Impairment of intangible assets 51,431 21,999<br />
Impairment in investment property 7,171 0<br />
Impairment of financial investments 476,294 1,163,814<br />
Revenues from elimination of negative goodwill -309,743 -3,467,619<br />
Proceeds from sale of plant, property and equipment -1,050,978 -572,367<br />
Loss at disposal of property, plant and equipment 21,156 93,563<br />
Profit in sale of current financial investments 0 -3,335,892<br />
Profit in sale of non-current securities -4,792,718 -2,786,801<br />
Loss in sale of securities 56,847 69,305<br />
Share in income of associates -4,692,039 -3,895,152<br />
Other dividends received -492,590 -97,613<br />
Interest expense 1,463,187 1,460,343<br />
Interest revenue -344,370 -286,250<br />
Income tax liability 1,252,339 860,704<br />
Income from operations prior to change in operating equity and provisions 4,501,885 5,147,289<br />
Change in non-current receivables -2,261,976 328,884<br />
Change in current receivables -544,786 1,784,305<br />
Change in inventories 29,670 1,201,502<br />
Change in current operating liabilities and accrued costs -112,062 -7,175,720<br />
Change in non-current operating liabilities -88,940 -147,424<br />
Change in provisions 77,221 76,002<br />
Change in government grants 1,301,270 275,954<br />
Acquired cash in operations 2,902,282 1,490,792<br />
Paid income tax -1,312,192 -507,931<br />
Net cash flow from operations 1,590,090 982,861
| consolidated financial statements in accordance with IFRS |<br />
CASH FLOWS IN INVESTING ACTIVITIES<br />
1 4 5 |<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Purchase of property, plant and equipment equipment -9,018,105 -8,890,167<br />
Proceeds from sale of property, plant and equipment equipment 2,523,162 2,218,157<br />
Purchase of intangible assets -85,400 -126,878<br />
Proceeds from sale of intangible assets 17,538 0<br />
Purchase of investment properties -1,491,865 -110,449<br />
Proceeds from sale of investment properties 403,209 381,280<br />
Purchase of subsidiaries -293,685 -11,970,898<br />
Proceeds from sale of subsidiaries 0 3,729,463<br />
Purchase of associates -133,920 -3,526,367<br />
Proceeds from sale of current financial investments 0 10,072,804<br />
Proceeds from repaid loans 468,050 0<br />
Expenses for granted loans 0 -149,498<br />
Purchase of equity securities available for sale -11,858,738 -12,307,750<br />
Proceeds from sale of non-current securities 10,056,744 6,438,586<br />
Received dividends of associates 1,361,350 552,960<br />
Other dividends received 492,590 97,613<br />
Received interests 339,526 262,396<br />
Net cash flow from investment activities -7,219,544 -13,328,748<br />
CASH FLOWS IN FINANCING ACTIVITIES<br />
Increase in share capital 0 8,008,000<br />
Other increase in equity -97,013 0<br />
Proceeds from granted non-current loans 7,117,350 4,856,420<br />
Expenditures for granted non-current loans -1,686,722 -1,065,506<br />
Proceeds from granted current loans 16,425,408 12,071,922<br />
Expenses for granted current loans -11,568,636 -11,065,350<br />
Expenses for dividends of Group's shareholders -1,242,294 -1,160,348<br />
Paid interests -1,462,950 -1,554,648<br />
Net cash flow from financing activities 7,485,143 10,090,490<br />
Net increase or decrease in cash and cash equivalents 1,855,689 -2,255,397<br />
Cash and cash equivalents at year begin 713,168 2,968,565<br />
Cash and cash equivalents at year end 2,568,857 713,168
a n n u a l r e p o r t | 2 0 0 5<br />
1 4 6 |<br />
Consolidated Statement of Changes in Equity for the year <strong>2005</strong><br />
(SIT in thousands)<br />
Issued Share<br />
Fair<br />
value Treasury Retained Majority Minority<br />
capital premium Reserves reserve shares earnings interest interest TOTAL<br />
Balance 01/01/2004 17,209,870 24,952,770 4,700,980 5,305,941 -54,195 13,294,702 65,410,068 1,679,729 67,089,797<br />
Entry of<br />
called-up capital 2,860,000 5,148,000 0 0 0 0 8,008,000 0 8,008,000<br />
Profit 2004 0 0 0 0 0 11,580,064 11,580,064 71,385 11,651,449<br />
Profit allocation<br />
to reserves 0 0 1,538,284 0 0 -1,538,284 0 0 0<br />
Dividend and<br />
bonus payout 0 0 0 0 0 -1,160,348 -1,160,348 0 -1,160,348<br />
Revaluation of<br />
securities available<br />
for sale to<br />
fair value 0 0 0 5,559,173 0 0 5,559,173 0 5,559,173<br />
Decrease due<br />
to sale of<br />
securities 0 0 0 -658,752 0 0 -658,752 0 -658,752<br />
Selling company<br />
with minority<br />
interest 0 0 0 0 0 0 0 -656,871 -656,871<br />
Acquired by<br />
purchase of<br />
new companies 0 0 0 0 0 0 0 1,004,739 1,004,739<br />
Decrease in<br />
minority interest<br />
due to purchase<br />
of stakes 0 0 0 0 0 0 0 -283,875 -283,875<br />
Others 0 0 -408 0 408 0 0 0 0<br />
Balance 31/12/2004 20,069,870 30,100,770 6,238,856 10,206,362 -53,787 22,176,134 88,738,205 1,815,107 90,553,312<br />
Profit <strong>2005</strong> 0 0 0 0 0 9,162,673 9,162,673 52,900 9,215,573<br />
Dividend payout 0 0 0 0 0 -1,242,294 -1,242,294 -1,242,294<br />
Profit allocation<br />
to reserves 0 0 2,144,140 0 0 -2,144,140 0 0 0<br />
Revaluation of<br />
securities available<br />
for sale to fair value 0 0 0 -2,128,424 0 0 -2,128,424 0 -2,128,424<br />
Decrease<br />
due to sale of<br />
securities 0 0 0 -1,516,987 0 0 -1,516,987 0 -1,516,987<br />
Decrease in<br />
minority interest<br />
due to purchase<br />
of stakes 0 0 0 0 0 0 0 -627,241 -627,241<br />
Decrease in minority<br />
interest due to<br />
transition under joint<br />
management 0 0 0 0 0 0 0 -97,013 -97,013<br />
Balance 31/12/<strong>2005</strong> 20,069,870 30,100,770 8,382,996 6,560,951 -53,787 27,952,373 93,013,173 1,143,753 94,156,926
| notes to the consolidated financial statements in accordance with IFRS |<br />
28.2 Notes to the financial statements of the <strong>Sava</strong><br />
Group in accordance with International Financial<br />
Reporting Standards<br />
1 4 7 |<br />
SIGNIFICANT ACCOUNTING POLICIES FOR THE SAVA GROUP<br />
1. Significant accounting policies<br />
<strong>Sava</strong> d.d. is a company domiciled in the Republic of<br />
Slovenia. The consolidated financial statements of the<br />
<strong>Sava</strong> Group for the year ended 31 December <strong>2005</strong><br />
comprise the <strong>Sava</strong> Group that include the parent<br />
company <strong>Sava</strong> d.d. and its subsidiaries (together<br />
referred to as the <strong>Sava</strong> Group) and the Group's interest<br />
in jointly controlled entities.<br />
The financial statements were authorised for issue by<br />
the Board of Management on 28 March 2006.<br />
a) Statement of compliance<br />
The consolidated financial statements have been<br />
prepared in accordance with International Financial<br />
Reporting Standards (IFRSs) and its interpretations<br />
adopted by the International Accounting Standards<br />
Board (IASB). These are the Group’s first consolidated<br />
financial statements and IFRS 1 has been applied.<br />
An explanation of how the transition to IFRSs has<br />
affected the <strong>report</strong>ed financial position, financial<br />
performance and cash flows of the Group is provided<br />
under item 34 of the notes.<br />
The following new Standards are not yet effective and<br />
have not been applied in preparing these financial<br />
statements of the <strong>Sava</strong> Group for the year <strong>2005</strong>:<br />
• IFRS 6 Exploration for and Evaluation of Mineral<br />
Resources (effective from 1 January 2006 - The Group<br />
does not have any operations that would be affected by<br />
the new Standard.<br />
• IFRS 7 Financial Instruments: Disclosures (effective<br />
from 1 January 2007) – The Standard will require<br />
increased disclosure in respect of the Group's financial<br />
instruments. The Group considers that the significant<br />
a<strong>dd</strong>itional disclosures required will relate to its<br />
financial risk management objectives, policies and<br />
processes.<br />
• Amendment to IFRS 1 First-time Adoption of<br />
International Financial Reporting Standards and IFRS<br />
6 Exploration for and Evaluation of Mineral<br />
Resources (effective from January 2006) - The Group<br />
does not have any operations that would be affected by<br />
the new amendment.<br />
• Amendment to IAS 1 Presentation of Financial<br />
Statements – Capital Disclosures (effective from 1<br />
January 2007) – This amendment will require<br />
significantly more disclosures regarding the capital<br />
structure.<br />
• Amendment to IAS 19 Employee Benefits – Actuarial<br />
Gains ald Losses (effective from 1 January 2006) – The<br />
amendment includes an option for actuarial gains and<br />
losses to be recognised in full as they arise, outside of the<br />
income statement in a statement of recognised income<br />
and expense. Presently the <strong>Sava</strong> Group recognises<br />
actuarial gains and losses in full in the income statement<br />
and intends to do the same in the future.<br />
• Amendment to IAS 39 Financial Instruments:<br />
Recognition and Measurement – Cash Flow Hedge<br />
Accounting of Forecast Intragroup Transactions<br />
(effective from 1 January 2006) – The amendment<br />
allows the foreign currency risk of a highly probable<br />
forecast intragroup transaction to qualify as hedged<br />
item if certain criteria are met. In the <strong>Sava</strong> Group only<br />
the consolidated financial statements have been<br />
prepared according to IFRSs.
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• Amendment to IAS 39 Financial Instruments:<br />
Recognition and Measurements – The Fair Value<br />
Option (effective from 1 January 2006) – The<br />
amendment restricts the designation of financial<br />
instruments as »at fair value through profit or loss«.<br />
The <strong>Sava</strong> Group does not have any financial<br />
instruments that would be classified as financial<br />
instruments at fair value.<br />
• Amendment to IAS 39 Financial Instruments:<br />
Recognition and measurement and IFRS 4 Insurance<br />
Contracts – Financial Guarantee Contracts (effective<br />
from 1 January 2006): The amendment requires<br />
guarantees that are not insurance contracts to be<br />
measured at fair value upon initial recognition. The<br />
company considers insurances and guarantees hired by<br />
companies in the Group as insurance contracts and<br />
accounts for them as contingent liabilities. Guarantees<br />
for loans are issued by the parent company for loans<br />
hired by subsidiaries. Therefore from the aspect of the<br />
<strong>Sava</strong> Group there are no contingent liabilities, since all<br />
liabilities of subsidiaries are presented in the<br />
consolidated financial statements.<br />
• Amendment to IAS 21 The Effects of Changes in<br />
Foreign Exchange Rates – Net Investment in a Foreign<br />
Operation (effective from 1 January 2006) – The<br />
Group currently has no items comprising net<br />
investments in foreign operations that will be affected<br />
by the amendment.<br />
• IFRIC 4 Determining whether an Arrangement<br />
contains a Lease (effective from 1 January 2006) –<br />
The interpretation requires certain arrangements to be<br />
accounted for as a lease in accordance with IAS 17<br />
Leases even if they are not in legal form of a lease. The<br />
Group has no such agreements made that would<br />
require dealing with according to this interpretation.<br />
• IFRIC 5 Rights to Interests arising from Decommissioning,<br />
Restoration and Environmental Rehabilitation<br />
Funds (effective from 1 January 2006) - The<br />
interpretation deals with funds created for the purpose of<br />
settling decommissioning and similar expenses. IFRIC 5<br />
is not relevant to the Group's operations.<br />
• IFRIC 6 Liabilities arising from Participating in a<br />
Specific Market – Waste Electrical and Electronic<br />
Equipment (effective from 1 December <strong>2005</strong>) – The<br />
interpretation deals with obligations arising from the<br />
European Union Directive regulating the collection,<br />
treatment, recovery and environmentally sound<br />
disposal of waste equipment. IFRIC 6 is not relevant<br />
to the Group's operations.<br />
• IFRIC 7 Applying the Restatement Approach under<br />
IAS 29 Financial Reporting in Hyperinflationary<br />
Economies (effective from 1 March 2006) – The<br />
interpretation contains guidance on how an entity<br />
would restate its financial statements pursuant to IAS<br />
29 in the first year it identifies the existence of<br />
hyperinflation in the economy of its functional<br />
currency. IFRIC 7 is not relevant to the Group's<br />
operations, since they do not operate in hyperinflation.<br />
• IFRIC 8 Scope of IFRS 2 (effective from 1 May 2006)<br />
– The interpretation clarifies that the accounting<br />
standard IFRS 2 Shareholders Payment applies to<br />
arrangements where an entity makes share-based<br />
payments for apparently nil or inadequate<br />
consideration. IFRIC 8 is not relevant to the Group's<br />
operations, since there are no such payments.<br />
• IFRIC 9 Reassessment of Embe<strong>dd</strong>ed Derivatives<br />
(effective from 1 June 2006) – The interpretation<br />
clarifies that the treatment of an embe<strong>dd</strong>ed derivative<br />
is assessed by the entity when the entity first becomes<br />
a party to the contract, and that reassessement is<br />
prohibited unless there is a change in the terms of the<br />
contract that significantly modifies the cash flows that<br />
otherwise would be required under the contract. IFRIC<br />
9 is not relevant to the Group's operations since it does<br />
not have any embe<strong>dd</strong>ed derivatives.<br />
* Explanation to the applied abbreviations:<br />
IAS – International Accounting Standard<br />
IFRS – International Financial Reporting Standards<br />
IFRIC - International Financial Reporting<br />
Interpretations Committee
| notes to the consolidated financial statements in accordance with IFRS |<br />
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b) Basis of preparation<br />
The financial statements are presented in Slovene tolars,<br />
rounded to the nearest thousand.<br />
They are prepared on the historical cost basis except<br />
property, plant and equipment that are stated at their<br />
carrying amount on the date of transition to IFRS and<br />
financial instruments classified as available for sale that<br />
are stated at their fair value.<br />
Cost of property, plant and equipment on the day of<br />
transition to IFRS is considered the fair value of these<br />
assets. In past the carrying amount of property, plant and<br />
equipment was stated at cost which until 2001 had been<br />
enhanced by annual price indices and impaired on the<br />
basis of individual value assessments according to IAS 36.<br />
The preparation of financial statements in conformity<br />
with IFRSs requires management to make judgements,<br />
estimates and assumptions that affect the application of<br />
policies and <strong>report</strong>ed amounts of assets and liabilities,<br />
income and expenses. The estimates and associated<br />
assumptions are based on historical experience and<br />
various other factors that are believed to be reasonable<br />
under the circumstances, the results of which form the<br />
basis of making the judgements about carrying values of<br />
assets and liabilities that are not readily apparent from<br />
other sources. Actual results may differ from these<br />
estimates.<br />
The estimates and underlying assumptions are reviewed<br />
on an ongoing basis. Revisions to accounting estimates<br />
are recognised in the period in which the estimate is<br />
revised if the revision affects only that period, or in the<br />
period of the revision and future periods if the revision<br />
affects both current and future periods.<br />
The accounting policies set out below have been applied<br />
consistently to all periods presented in these<br />
consolidated financial statements and in preparing an<br />
opening IFRS balance sheet at 1 January 2004 for the<br />
purposes of the transition to IFRSs.<br />
The accounting policies have been applied consistently<br />
by <strong>Sava</strong> Group entities.<br />
c) Basis of consolidation<br />
The <strong>Sava</strong> Group includes the parent company <strong>Sava</strong> d.d.,<br />
32 subsidiaries, 3 jointly controlled entities. The<br />
consolidated financial statements of the Group include<br />
the financial statements of all these entities. A detailed<br />
survey of the Group and changes is presented in the<br />
<strong>Annual</strong> Report under chapter 2 Composition of the <strong>Sava</strong><br />
Group.<br />
Subsidiaries<br />
Subsidiaries are entities controlled by <strong>Sava</strong> d.d. Control<br />
exists when the parent company has the power to govern<br />
the financial and operating policies of an entity so as to<br />
obtain benefits from its activities. In all subsidiaries the<br />
capital and voting rights are in accord.<br />
The financial statements of subsidiaries are included in<br />
the consolidated financial statements from the date that<br />
control commences until the date that control ceases.<br />
Joint ventures<br />
Joint ventures are those entities over whose activities the<br />
Group has joint control, established by contractual<br />
agreement between the Group and the contractual<br />
partner. The consolidated financial statements include<br />
the Group’s proportionate share of the entities’ assets,<br />
liabilities, revenue and expenses with items of a similar<br />
nature on a line by line basis, from the date that joint<br />
control commences until the date that joint control<br />
ceases.<br />
Associates<br />
Associates are those entities in which the <strong>Sava</strong> Group<br />
has significant influence, but not control, over the<br />
financial and operating policies. The consolidated<br />
financial statements include the <strong>Sava</strong> Group’s share of<br />
the total recognised gains and losses of associates on an<br />
equity accounted basis, from the date that significant<br />
influence commences until the date that significant<br />
influence ceases. When the Group’s share of losses<br />
exceeds its interest in an associate, the Group’s carrying<br />
amount is reduced to nil and recognition of further<br />
losses is discontinued except to the extent that the Group<br />
has incurred legal or constructive obligations or made<br />
payments on behalf of an associate.
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The capital and voting rights in associates are in accord<br />
except with Gorenjska Banka where the <strong>Sava</strong> Group on<br />
31/12/<strong>2005</strong> had voting rights in the amount of 41.1%,<br />
whereas the statute limits the voting right of a<br />
stakeholder to a maximum of 33%.<br />
Transaction eliminated on consolidation<br />
Intragroup balances and any unrealised gains and losses<br />
or income and expenses arising from intragroup<br />
transactions, are eliminated in preparing the<br />
consolidated financial statements.<br />
Unrealised gains arising from transactions with<br />
associates are eliminated to the extent of the Group’s<br />
interest in the entity. Unrealised losses are eliminated in<br />
the same way as unrealised gains, but only to the extent<br />
that there is no evidence of impairment.<br />
d) Foreign currency<br />
Foreign currency transactions<br />
Transactions in foreign currencies are translated at the<br />
mean exchange rate of the Bank of Slovenia ruling at the<br />
date of the transaction.<br />
Monetary assets and liabilities denominated in foreign<br />
currencies at the balance sheet date are translated to<br />
Slovene tolar at the mean exchange rate of the Bank of<br />
Slovenia ruling at that date. Foreign exchange<br />
differences arising on translation are recognised in the<br />
income statement.<br />
Non-monetary assets and liabilities denominated in<br />
foreign currencies that are stated at fair value are<br />
translated to Slovene tolar at the mean exchange rate of<br />
the Bank of Slovenia ruling at the date the fair value was<br />
determined. Non-monetary assets and liabilities<br />
denominated in foreign currencies that are stated at fair<br />
value are translated to Slovene tolar at the mean<br />
exchange rate of the Bank of Slovenia ruling at the date<br />
the fair value was determined.<br />
Financial statements of foreign operations<br />
The assets and liabilities of foreign operations are<br />
translated to Slovene tolar at the mean exchange rate of<br />
the Bank of Slovenia ruling at the balance sheet date.<br />
The revenues and expenses of foreign operations are<br />
translated to tolar at rates ruling at the dates of the<br />
transactions. Foreign exchange differences arising on<br />
retranslation are recognised directly in a separate<br />
component of equity.<br />
e) Derivative financial instruments<br />
The Group does not use derivative financial instruments<br />
to hedge its exposure to foreign exchange and interest<br />
rate risks arising from operational, financing and<br />
investment activities. Moreover, the Group does not<br />
hold or issue derivative financial instruments for trading<br />
purposes.<br />
f) Property, plant and equipment<br />
Owned assets<br />
Items of property, plant and equipment are stated at cost<br />
as deemed cost less accumulated depreciation (see<br />
below) and impairment losses (see accounting policy<br />
under Impairment of Assets – note l). The cost of selfconstructed<br />
assets includes the cost of materials, direct<br />
labour and indirect production overheads.<br />
Certain items of property, plant and equipment that had<br />
been revalued to fair value on 1 January 2004, or prior<br />
to the date of transition to IFRSs, are measured on the<br />
basis of deemed cost, being the revalued amount at the<br />
date of that revaluation.<br />
The useful lives are as follows:<br />
Manufacturing buildings 25 – 80 years<br />
Hotel, trading buildings, warehouses 20 – 71 years<br />
Office buildings 25 – 40 years<br />
Manufacturing equipment in rubber manufacturing 4 – 20 years<br />
Hotel furnishings 5 – 20 years<br />
Equipment in stores 4 – 10 years<br />
Computer equipment 2 – 5 years<br />
Other equipment 6 – 20 years
| notes to the consolidated financial statements in accordance with IFRS |<br />
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Property that is being constructed or developed for<br />
future use as investment property is classified as<br />
property, and stated at cost until construction or<br />
development is complete, at which time it is reclassified<br />
as investment property.<br />
Where parts of an item of property, plant and equipment<br />
have different useful lives, they are accounted for as<br />
separate items of property, plant and equipment.<br />
Subsequent costs<br />
The <strong>Sava</strong> Group recognises in the carrying amount of an<br />
item of property, plant and equipment the cost of<br />
replacing part of such an item when that cost is incurred<br />
if it is probable that the future economic benefits<br />
embodied with the item will flow to the <strong>Sava</strong> Group and<br />
the cost of the item can be measured reliably. All other<br />
costs are recognised in the income statement as an<br />
expense as incurred.<br />
Depreciation<br />
Depreciation is charged to the income statement on a<br />
straight-line basis over the estimated useful lives of each<br />
part of an item of property, plant and equipment. Land<br />
is not depreciated.<br />
g) Intangible assets<br />
Goodwill<br />
All business combinations are accounted for by<br />
applying the purchase method. In respect of associates,<br />
the carrying amount of goodwill is included in the<br />
carrying amount of the investment in the associate.<br />
Negative goodwill arising on an acquisition is<br />
recognised directly in profit or loss.<br />
Other intangible assets<br />
Other intangible assets that are acquired by the <strong>Sava</strong><br />
Group are stated at cost less accumulated amortisation<br />
and impairment losses (see accounting policy<br />
Impairment of Assets – note l).<br />
Expenditure on internally generated goodwill and<br />
brands is recognised in the income statement as an<br />
expense as incurred.<br />
Subsequent expenditure<br />
Subsequent expenditure on capitalised intangible assets<br />
is capitalised only when it increases the future economic<br />
benefits embodied in the specific asset to which it<br />
relates. All other expenditure is expensed as incurred.<br />
Amortisation<br />
Amortisation is charged to the income statement on a<br />
straight-line basis over the estimated useful lives of<br />
intangible assets unless such lives are indefinite.<br />
Intangible assets are amortised from the date they are<br />
available for use. The estimated useful lives for software<br />
and other patents and licence are five years.<br />
h) Investments<br />
Investments in debt and equity securities<br />
As regards the intent of its acquisition investments in<br />
debt and equity securities are classified as available for<br />
sale. These financial instruments are recognised or<br />
derecognised by the Group on the date it commits to<br />
purchase / sell the investments. The securities available<br />
for sale are equity securities of companies that either are<br />
or are not listed at the Stock Exchange.<br />
The investments in shares are stated at fair value. Profit<br />
or loss are recognised directly in equity. When these<br />
investments are derecognised, the cumulative gain or<br />
loss previously recognised directly in equity is<br />
recognised in profit or loss for the period.<br />
The fair value of financial instruments classified as<br />
available for sale is their quoted bid price at the balance<br />
sheet date. The fair value of shares and interests of a<br />
company that is not listed is estimated on the basis of<br />
recently known transactions. The fair value of availablefor-sale<br />
securities is ascertained every three months.<br />
Investment property<br />
Investment properties are properties which are held<br />
either to earn rental income or for capital appreciation or<br />
for both. For evaluating investment properties the cost<br />
model is applied.<br />
Depreciation is charged to the income statement on a<br />
straight-line basis over the estimated useful lives of each<br />
part of an item of property, plant and equipment. Land<br />
is not depreciated. The estimated useful lives for<br />
investment property are 20 – 30 years.
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For the need of disclosing the fair value of investment<br />
property is established. The fair value is based on<br />
market values, being the estimated amount for which a<br />
property could be exchanged on the date of valuation<br />
between a willing buyer and a willing seller in an arm’s<br />
length transaction after proper marketing wherein the<br />
parties had each acted knowledgeably, prudently and<br />
without compulsion. As a rule, the portfolio is being<br />
appraised by an independent and certified valuator.<br />
When an investment property becomes owner-occupied,<br />
it is reclassified as property, fixtures and fittings.<br />
Lease payments are accounted for as described in<br />
accounting policy "Revenue" and "Expenses" under q)<br />
and r).<br />
i) Trade and other receivables<br />
Construction work in progress<br />
Construction work in progress is stated at cost plus<br />
profit recognised to date (see accounting policy<br />
Revenue under q) less a provision for foreseeable losses<br />
and less progress billings. Cost includes all expenditure<br />
related directly to specific projects and an allocation of<br />
fixed and variable overheads incurred in the Group’s<br />
contract activities based on normal operating capacity.<br />
Other trade and other receivables<br />
Trade and other receivables are stated at their cost less<br />
impairment losses (see accounting policy Impairment of<br />
Assets under l).<br />
j) Inventories<br />
Inventories are stated at the lower of cost and net<br />
realisable value. Net realisable value is the estimated<br />
selling price in the ordinary course of business, less the<br />
estimated costs of completion and selling expenses.<br />
The cost of other inventories includes expenditure<br />
incurred in acquiring the inventories and bringing them<br />
to their existing location and condition. In the case of<br />
manufactured inventories and work in progress, cost<br />
includes an appropriate share of overheads based on<br />
normal operating capacity. The use of inventories is<br />
stated at weighted average prices.<br />
k) Cash and cash equivalents<br />
Cash and cash equivalents comprise cash balances and<br />
call deposits or deposits at up to three months’ notice.<br />
l) Impairment of assets<br />
The carrying amounts of the Group’s assets, other than<br />
current and deferred tax assets (see accounting policy<br />
w), are reviewed at each balance sheet date to determine<br />
whether there is any indication of impairment. If any<br />
such indication exists, the asset’s recoverable amount is<br />
estimated.<br />
An impairment loss of an asset is recognised whenever<br />
the carrying amount of an asset or its cash-generating<br />
unit exceeds its recoverable amount. Impairment losses<br />
are recognised in the income statement.<br />
When a decline in the fair value of an available-for-sale<br />
financial asset has been recognised directly in equity<br />
and there is objective evidence that the asset is impaired,<br />
the cumulative loss that had been recognised directly in<br />
equity is recognised in profit or loss even though the<br />
financial asset has not been derecognised. The amount<br />
of the cumulative loss that is recognised in profit or loss<br />
is the difference between the acquisition cost and<br />
current fair value, less any impairment loss on that<br />
financial asset previously recognised in profit or loss.<br />
Calculation of recoverable amount<br />
The recoverable amount of the Group’s investments in<br />
receivables carried at amortised cost is calculated as the<br />
present value of estimated future cash flows, discounted<br />
at the original effective interest rate (i.e., the effective<br />
interest rate computed at initial recognition of these<br />
financial assets). Receivables with a short duration are<br />
not discounted.<br />
The recoverable amount of other assets is the greater of<br />
their net selling price and value in use. In assessing<br />
value in use, the estimated future cash flows are<br />
discounted to their present value using a pre-tax<br />
discount rate that reflects current market assessments of<br />
the time value of money and the risks specific to the<br />
asset. For an asset that does not generate largely<br />
independent cash inflows, the recoverable amount is<br />
determined for the cash-generating unit to which the<br />
asset belongs.
| notes to the consolidated financial statements in accordance with IFRS |<br />
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Reversals of impairment<br />
An impairment loss in respect of an investment in an<br />
equity instrument classified as available for sale is not<br />
reversed through profit or loss. If the fair value of a debt<br />
instrument classified as available for sale increases and<br />
the increase can be objectively related to an event<br />
occurring after the impairment loss was recognised in<br />
profit or loss, the impairment loss shall be reversed, with<br />
the amount of the reversal recognised in profit or loss.<br />
In respect of other assets, an impairment loss is reversed<br />
if there has been a change in the estimates used to<br />
determine the recoverable amount.<br />
An impairment loss is reversed only to the extent that<br />
the asset’s carrying amount does not exceed the carrying<br />
amount that would have been determined, net of<br />
depreciation or amortisation, if no impairment loss had<br />
been recognised.<br />
m) Share capital<br />
Repurchase of share capital<br />
When share capital recognised as equity is repurchased,<br />
the amount of the consideration paid, including directly<br />
attributable costs, is recognised as a change in equity.<br />
Repurchased shares are classified as treasury shares and<br />
presented as a deduction from total equity.<br />
Dividends<br />
Dividends are recognised as a liability in the period in<br />
which they are declared.<br />
n) Interest-bearing borrowings<br />
Interest-bearing borrowings are recognised initially at<br />
fair value less attributable transaction costs. Subsequent<br />
to initial recognition, interest-bearing borrowings are<br />
stated at amortised cost with any difference between<br />
cost and redemption value being recognised in the<br />
income statement over the period of the borrowings on<br />
an effective interest basis.<br />
o) Provisions<br />
A provision is recognised in the balance sheet when the<br />
Group has a present legal or constructive obligation as a<br />
result of a past event, and it is probable that an outflow<br />
of economic benefits will be required to settle the<br />
obligation. If the effect is material, provisions are<br />
determined by discounting the expected future cash<br />
flows at a pre-tax rate that reflects current market<br />
assessments of the time value of money and, where<br />
appropriate, the risks specific to the liability.<br />
Provisions for severance and employee jubilee benefits<br />
The company pays contributions for health insurance,<br />
pension and social insurance fund from gross salaries<br />
during the year at statutory defined rates. Contributions<br />
are recognised as an expense in the income statement as<br />
incurred.<br />
As stipulated by the legislation, collective agreement<br />
and internal regulations the Group is committed to pay<br />
employee jubilee benefits and severance upon their<br />
retirement, for which long-term provisions are formed.<br />
No other liabilities due to pension exist.<br />
Provisions are formed in the amount of benefit that<br />
employees have earned in return for their service in the<br />
current and prior periods, discounted at the balance<br />
sheet date. The calculation for every employee<br />
considers expense for severance upon retirement and all<br />
expected jubilee benefits until their retirement. The<br />
chosen discount interest rate is 2.75% annually and<br />
represents the real interest rate. The calculation is<br />
performed by a qualified actuary using the projected<br />
unit method.<br />
Warranties<br />
A provision for warranties is recognised when the<br />
underlying products or services are sold. The provision<br />
is based on historical warranty data and a weighting of<br />
all possible outcomes against their associated<br />
probabilities.<br />
Restructuring<br />
A provision for restructuring is recognised when the<br />
Group has approved a detailed and formal restructuring<br />
plan, and the restructuring has either commenced or has<br />
been announced publicly. Future operating costs are not<br />
provided for.<br />
p) Trade and other payables<br />
Trade and other payables are stated at cost.
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q) Revenue<br />
Goods sold and services rendered<br />
Revenue from the sale of goods is recognised in the<br />
income statement when the significant risks and rewards<br />
of ownership have been transferred to the buyer.<br />
Revenue from services rendered is recognised in the<br />
income statement as services are rendered.<br />
No revenue is recognised if there are significant<br />
uncertainties regarding recovery of the consideration<br />
due, associated costs or the possible return of goods also<br />
continuing management involvement with the goods.<br />
Construction contracts<br />
As soon as the outcome of a construction contract can be<br />
estimated reliably, contract revenue and expenses are<br />
recognised in the income statement in proportion to the<br />
stage of completion of the contract. The stage of<br />
completion is assessed by reference to surveys of work<br />
performed. An expected loss on a contract is recognised<br />
immediately as incurred.<br />
Rental income<br />
Rental income from investment property is recognised<br />
in the income statement on a straight-line basis over the<br />
term of the lease.<br />
Government grants<br />
Government grant is recognised in the balance sheet<br />
initially as deferred income when there is reasonable<br />
assurance that it will be received and that the Group will<br />
comply with the conditions attaching to it.<br />
Grants that compensate the Group for expenses incurred<br />
are recognised as revenue in the income statement on a<br />
systematic basis in the same periods in which the<br />
expenses are incurred. Grants that compensate the<br />
Group for the cost of an asset are recognised in the<br />
income statement as other operating income on a<br />
systematic basis over the useful life of the asset.<br />
r) Expenses<br />
Operating lease payments<br />
Payments made under operating leases are recognised in<br />
the income statement on a straight-line basis over the<br />
term of the lease.<br />
Net financing costs<br />
Net financing costs comprise interest payable on<br />
borrowings calculated using the effective interest rate<br />
method, interest receivable on funds invested, dividend<br />
income, foreign exchange gains and losses, and gains<br />
and losses from sale of securities.<br />
Interest income is recognised in the income statement as<br />
it accrues, using the effective interest rate method.<br />
Dividend income is recognised in the income statement<br />
on the date the entity’s right to receive payments is<br />
established.<br />
The interest expense component of finance lease<br />
payments is recognised in the income statement using<br />
the effective interest rate method.<br />
s) Income tax<br />
Income tax on the profit or loss for the year comprises<br />
current and deferred tax. Income tax is recognised in the<br />
income statement except to the extent that it relates to<br />
items recognised directly in equity, in which case it is<br />
recognised in equity.<br />
Current tax is the expected tax payable on the taxable<br />
income for the year, using tax rates enacted or<br />
substantially enacted at the balance sheet date, and any<br />
adjustment to tax payable in respect of previous years.<br />
Deferred tax is provided using the balance sheet liability<br />
method, providing for temporary differences between<br />
the carrying amounts of assets and liabilities for<br />
financial <strong>report</strong>ing purposes and the amounts used for<br />
taxation purposes. The amount of deferred tax provided<br />
is based on the expected manner of realisation or<br />
settlement of the carrying amount of assets and<br />
liabilities, using tax rates enacted or substantively<br />
enacted at the balance sheet date.<br />
A deferred tax asset is recognised only to the extent that<br />
it is probable that future taxable profits will be available<br />
against which the asset can be utilised. Deferred tax<br />
assets are reduced to the extent that it is no longer<br />
probable that the related tax benefit will be realised.<br />
t) Segment <strong>report</strong>ing<br />
A segment is a distinguishable component of the Group<br />
that is engaged either in providing products or services
| notes to the consolidated financial statements in accordance with IFRS |<br />
1 5 5 |<br />
(business segment), or in providing products or services<br />
within a particular economic environment (geographical<br />
segment), which is subject to risks and rewards that are<br />
different from those of other segments.<br />
The <strong>Sava</strong> Group’s operations are divided in six divisions<br />
and the operation Other companies which are defined as<br />
business segments such as Rubber Manufacturing with<br />
the foreign trade network, Chemicals, Trade, Tourism,<br />
Real Estate, and Investment Finance.<br />
The <strong>Sava</strong> Group’s sales is pursued in three geographical<br />
segments: Slovenia, export to other EU countries, other<br />
exports.<br />
2. Segment Information<br />
Segment information is presented in respect of the<br />
Group's business segments that are included in the <strong>Sava</strong><br />
Group's divisions.<br />
The operation by a particular division is presented in<br />
chapter15 of the <strong>Annual</strong> Report.<br />
Information by business segment for the year <strong>2005</strong><br />
(SIT in thousands<br />
Rubber<br />
Manufacturing Excluding<br />
with foreign Other Investment operations<br />
trade network Chemicals Trade Tourism Real Estate Companies Finance in the Group TOTAL<br />
Net sales revenues<br />
from goods sold<br />
Net sales revenues from<br />
20,412,014 1,289,750 0 0 3,315,939 0 0 -4,782,659 20,235,044<br />
services rendered<br />
Net revenues<br />
787,265 0 0 12,990,102 0 54,462 1,905,903 -2,808,863 12,928,869<br />
from rents<br />
Net sales revenues<br />
from merchandise<br />
0 0 4,234 52,978 221,652 0 0 0 278,864<br />
sold<br />
Change in<br />
1,582,187 0 23,436,879 0 0 0 0 0 25,019,066<br />
inventories<br />
Other operating<br />
281,916 -51,153 0 0 736,267 0 0 0 967,030<br />
revenues<br />
Total<br />
76,092 94,228 527,969 289,004 169,270 1,338 414,567 444,385 2,016,853<br />
operating revenues 23,139,474 1,332,825 23,969,082 13,332,084 4,443,128 55,800 2,320,470 -7,147,137 61,445,726<br />
Net profit for<br />
the year 342,828 -63,895 532,116 107,912 174,329 -150,358 4,497,567 3,775,074 9,215,573<br />
Assets 11,254,902 645,161 14,639,445 43,441,505 12,203,081 66,328 119,500,693 -45,744,814 156,006,301<br />
Liabilities 6,148,370 382,038 8,202,423 17,974,619 9,544,872 134,116 31,686,614 -12,223,677 61,849,375<br />
Purchase of property,<br />
plant and equipment 1,096,538 9,343 101,101 4,904,831 158,599 479 2,747,213 0 9,018,105<br />
Depreciation 541,731 27,311 283,539 1,892,918 177,086 14,714 660,651 0 3,597,950
a n n u a l r e p o r t | 2 0 0 5<br />
1 5 6 |<br />
By the acquisition of companies operating under the<br />
Pannonian Spas brand in 2004 negative goodwill in the<br />
amount of 3,467,619,000 tolars was produced, which<br />
consistent with International Financial Reporting<br />
Standards was included in the income of the Group for<br />
the year 2004. Thus the profit of the Group in 2004 was<br />
affected by negative goodwill at 29.8 per cent.<br />
Information by business segment for the year 2004<br />
(SIT in thousands)<br />
Rubber<br />
Manufacturing Excluding<br />
with foreign Other Investment operations<br />
trade network Chemicals Trade Tourism Real Estate Companies Finance in the Group TOTAL<br />
Net sales revenues<br />
from goods sold 17,539,776 1,474,761 0 0 3,611,792 0 0 -3,372,770 19,253,559<br />
Net sales revenues from<br />
services rendered 1,104,615 0 0 12,616,313 0 3,661 1,857,083 -3,383,599 12,198,073<br />
Net revenues<br />
from rents 0 0 2,142 56,791 198,322 0 0 0 257,255<br />
Net sales revenues<br />
from merchandise<br />
sold 1,304,328 0 23,372,569 0 0 0 0 0 24,676,897<br />
Change in<br />
inventories 73,520 34,330 0 0 81,576 0 0 -446 188,980<br />
Other operating<br />
revenues 75,339 128,835 224,664 186,005 94,883 0 222,040 3,706,250 4,638,016<br />
Total operating revenues 20,097,578 1,637,926 23,599,375 12,859,109 3,986,573 3,661 2,079,123 -3,050,565 61,212,780<br />
Net profit for<br />
the year 248,125 -194,756 345,194 687,279 196,885 -46,098 3,358,316 7,056,504 11,651,449<br />
Assets 9,348,197 969,579 15,135,658 40,697,445 10,961,368 85,787 106,159,519 -41,168,816 142,188,737<br />
Liabilities 4,506,325 642,562 9,216,579 15,132,864 8,484,738 31,886 22,687,515 -9,067,043 51,635,425<br />
Purchase of property,<br />
plant and equipment 609,160 22,320 85,440 5,951,320 199,960 0 2,021,967 0 8,890,167<br />
Depreciation 520,409 46,120 172,291 1,301,197 173,739 5,980 660,637 0 2,880,373
| notes to the consolidated financial statements in accordance with IFRS |<br />
1 5 7 |<br />
Acquisitions in 2004 and <strong>2005</strong><br />
(SIT in thousands)<br />
Company Payment<br />
equity on for<br />
Acquisition acquisition Acquired Purchased acquired Negative<br />
Company date date stake equity stake goodwill<br />
YEAR 2004:<br />
Terme 3000 d.d. - consolidated 01/01/2004 9,677,020 96.65% 9,352,840 7,643,939 -1,708,901<br />
Terme Radenci d.o.o. 01/01/2004 6,220,557 96.65% 6,012,168 4,250,000 -1,762,168<br />
Other A<strong>dd</strong>itional purchases 73,509 76,959 3,450<br />
Total -3,467,619<br />
YEAR <strong>2005</strong>:<br />
Information by geographical segment<br />
Consolidated net sales revenues by geographical segment<br />
Slovenia EU Other<br />
(SIT in thousands)<br />
Total<br />
<strong>2005</strong> 40,504,253 9,949,221 8,008,369 58,461,843<br />
2004 40,335,413 8,911,915 7,138,456 56,385,784<br />
The assets are not segmented due to the fact that the<br />
carrying amount of the assets relating to the companies<br />
3. Acquisition and sale of stakes<br />
in subsidiaries<br />
In <strong>2005</strong> only purchases of ownership stakes were carried<br />
out, while in 2004 stakes in companies operating under<br />
in Slovenia represents 99.1 per cent of the total assets of<br />
the Group (in 2004: 98.9%).<br />
the Pannonian Spas brand were bought and a stake in the<br />
company Color d.d. was sold.<br />
GOLF IN KAMP d.d. Bled A<strong>dd</strong>itional purchases 1,413,963 0.02% 283 79 -204<br />
Grand Hotel Toplice Bled d.o.o., Bled A<strong>dd</strong>itional purchases 200,201 0.48% 961 1,834 873<br />
G&P Hoteli Bled d.o.o., Bled A<strong>dd</strong>itional purchases 6,052,451 7.70% 466,039 219,723 -246,316<br />
TERME 3000 d.d., Moravske Toplice A<strong>dd</strong>itional purchases 10,122,084 0.42% 42,513 28,651 -13,862<br />
Teol d.d. A<strong>dd</strong>itional purchases 287,032 1.40% 4,018 0 -4,018<br />
<strong>Sava</strong> Trade d.d. A<strong>dd</strong>itional purchases 7,162,809 1.41% 100,996 43,398 -57,598<br />
Other A<strong>dd</strong>itional purchases -11,381 0 11,381<br />
Total -309,743
a n n u a l r e p o r t | 2 0 0 5<br />
YEAR 2004:<br />
YEAR 2004:<br />
1 5 8 |<br />
Sale of stakes in companies<br />
(SIT in thousands)<br />
Company equity Sold part Purchase money<br />
Date of sale on date of sale Sold stake of equity for a sold stake Difference<br />
Color d.d. 01/01/2004 4,351,677 84.70% 3,685,870 3,729,463 43,593<br />
YEAR 2004:<br />
Disclosures of assets and liabilities in acquired companies<br />
(SIT in thousands)<br />
Property, plant Intangible Other<br />
and equipment aseets assets Liabilities<br />
Terme 3000 d.d. - consolidated 14,407,702 92,748 603,224 4,999,416<br />
Terme Radenci d.o.o. 7,708,223 4,068 339,076 1,830,810<br />
Disclosures of assets and liabilities in sold companies<br />
(SIT in thousands)<br />
Property, plant Intangible Other<br />
and equipment assets assets Equity Liabilities<br />
Color d.d. 3,694,934 307,982 5,550,776 4,351,677 5,202,015<br />
Income statement<br />
4. Joint ventures<br />
3companies are included in the <strong>Sava</strong> Group, in which<br />
the parent company has a 50 per cent stake: <strong>Sava</strong><br />
Schäfer, d.o.o., Kranj, PC AG, d.o.o. Velenje and <strong>Sava</strong><br />
IMG, d.o.o., Poreå. In consolidating we have applied the<br />
proportionate consolidation method and we present<br />
below the appropriate portion of assets, liabilities,<br />
revenues and expenses.<br />
(<strong>2005</strong> - SIT in thousands)<br />
Net sales revenues from goods sold and services rendered 408,996<br />
Other operating revenues -1,076<br />
Cost of goods materials and services -236,240<br />
Labour costs -110,370<br />
Other operating expenses -14,325<br />
Tax -10,085<br />
Net profit for the year 36,900
| notes to the consolidated financial statements in accordance with IFRS |<br />
Balance sheet<br />
1 5 9 |<br />
(<strong>2005</strong> - SIT in thousands)<br />
Property, plant and equipment 88,692<br />
Non-current receivables 742<br />
Inventories 21,875<br />
Operating and other receivables 70,554<br />
Interest-bearing borrowings -36,615<br />
Cash and cash equivalents 1,393<br />
Assets 146,641<br />
Minority interest 133,914<br />
Interest-bearing borrowings 11,021<br />
Non-current operating liabilities 862<br />
Current loans 5,806<br />
Current operating liabilities -4,962<br />
Equity and liabilities 146,641<br />
5. Other operating revenues<br />
(SIT in thousands)<br />
OTHER OPERATING REVENUES <strong>2005</strong> 2004<br />
Reversal of provisions not used 186,701 126,623<br />
Revenues from government incentives 59,521 110,840<br />
Net proceeds from sale of property, plant and equipment 1,050,978 572,367<br />
Realised negative goodwill in purchase of subsidiaries 309,743 3,467,619<br />
Other 409,910 360,567<br />
Total 2,016,853 4,638,016<br />
Other items mainly comprise the collection of written-off receivables and reversal of other non-current provisions.
a n n u a l r e p o r t | 2 0 0 5<br />
1 6 0 |<br />
6. Labour costs<br />
(SIT in thousands)<br />
LABOUR COSTS <strong>2005</strong> 2004<br />
Wages and salaries 9,379,542 8,635,424<br />
Social security expense 1,673,150 1,579,994<br />
Other labour cost 2,227,538 2,163,036<br />
Total 13,280,230 12,378,454<br />
Other labour cost includes paid employee holiday<br />
allowance, other compensations in accordance with the<br />
collective agreement (meals and commuting to and from<br />
work) and provisions for severance pay and employee<br />
7. Impairment losses and write-offs<br />
IMPAIRMENT LOSSES AND WRITE-OFFS <strong>2005</strong><br />
(SIT in thousands)<br />
2004<br />
Impairment of property, plant and equipment 0 728,883<br />
Write-offs of property, plant and equipment 42,382 235,959<br />
Write-offs of investment property 7,171 0<br />
Write-offs of intangible assets 51,431 21,999<br />
Inventories 98,282 144,194<br />
Receivables 177,072 324,928<br />
Total 376,338 1,455,963<br />
8. Other operating expenses<br />
(SIT in thousands)<br />
OTHER OPERATING EXPENSES <strong>2005</strong> 2004<br />
Other operating expenses 521,204 636,663<br />
Other operating expenses mainly consist of contributions<br />
for a building plot and formation of non-current<br />
jubilee benefits accounted on the basis of actuary<br />
calculation.<br />
3,062 employees were employed in <strong>2005</strong>, while in 2004<br />
the employee number totalled 3,014.<br />
provisions. They do not represent a significant share in<br />
the operating expenses structure.<br />
(SIT in thousands)<br />
OTHER INFORMATION ABOUT EXPENSES <strong>2005</strong> 2004<br />
Research and development costs 1,921 4,989<br />
Restructuring costs 4,252 2,126<br />
Direct operating expenses for investment property 131,922 131,459<br />
Rent-generating 106,966 102,724<br />
Revenue non-generating 24,956 28,735
| notes to the consolidated financial statements in accordance with IFRS |<br />
9. Net financing income<br />
NET FINANCING INCOME <strong>2005</strong><br />
(SIT in thousands)<br />
2004<br />
Net gain on disposal of equity securities 4,792,718 6,122,693<br />
Dividends and shares in income 492,590 97,613<br />
Interest income 344,370 286,250<br />
Net exchange gains 110,780 105,063<br />
Others 114,085 378,353<br />
Total financing income 5,854,543 6,989,972<br />
Interest expenses -1,463,187 -1,460,343<br />
Impairment of equity securities -476,294 -1,163,814<br />
Exchange losses -41,842 -252,925<br />
Net loss on disposal of investments -56,847 -69,305<br />
Others -31,917 -111,067<br />
Total financing expenses -2,070,087 -3,057,454<br />
Net financing income 3,784,456 3,932.518<br />
Income tax expense recognised in the income statement:<br />
INCOME TAX EXPENSES <strong>2005</strong><br />
(SIT in thousands)<br />
2004<br />
Income tax expenses recognised in the income statement:<br />
Assessed tax in the current year<br />
- for the current year -1,312,485 -865,737<br />
- adjustment for previous years 0 0<br />
Total -1,312,485 -865,737<br />
DEFERRED TAX<br />
- recently arisen and withdrawn temporary differences 60,146 5,033<br />
- effect by applied tax losses 0 0<br />
Total 60,146 5,033<br />
Tax to the credit/debit of the income statement -1,252,339 -860,704<br />
1 6 1 |<br />
10. Share of profit in associates<br />
Income from share of profit in associates refers to<br />
Gorenjska Banka d.d. Kranj and was realised in the<br />
amount of 4,692,039,000 tolars, which is 20.5 per cent<br />
more than last year. The amount of 1,361,350,000 tolars<br />
11. Income tax expenses<br />
was paid as dividends, the remaining 3,330,689,000<br />
tolars, or 79.5 per cent, are due to the rest of the<br />
attributable profit of Gorenjska Banka d.d. for <strong>2005</strong><br />
considering the equity method.
a n n u a l r e p o r t | 2 0 0 5<br />
1 6 2 |<br />
Comparison between the actual and calculated tax rate<br />
Deferred tax, recognised directly in equity<br />
A deferred tax liability due to the revaluation of<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
rate value rate value<br />
Pre-tax profit in accordance with IFRSs 10,467,912 12,512,153<br />
Income tax by applying the official rate 25.0% 2,616,978 25.0% 3,128,038<br />
Tax rate effect in foreign operations 0.2% 24,470 0.0% -219<br />
Tax non-deductible expenses 3.1% 322,774 2.0% 250,920<br />
Tax free revenues -11.4% -1,198,204 -14.5% -1,819,123<br />
Tax benefits not recognised in the income statement -4.5% -476,466 -4.7% -591,085<br />
Effect by companies operating with a loss 2.0% 204,579 0.4% 54,939<br />
Consolidation bookings -2.3% -241,792 -1.3% -162,766<br />
Effective tax rate 12.0% 1,252,339 6.9% 860,704<br />
available-for-sale securities to a fair value decreased a<br />
fair value reserve.<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Revaluation of available-for-sale securities -1,215,137 1,633,474
| notes to the consolidated financial statements in accordance with IFRS |<br />
COST<br />
1 6 3 |<br />
12. Property, plant and equipment<br />
Movement of property, plant and equipment in the <strong>Sava</strong> Group in <strong>2005</strong><br />
(SIT in thousands)<br />
Plant and Other PPE under<br />
Land Buildings machinery equipment construction Total<br />
Balance at 31/12/2004 8,873,501 63,734,711 13,776,487 9,627,815 2,499,172 98,511,686<br />
Purchase 1,079,266 0 0 0 7,938,839 9,018,105<br />
Capitalisation 299,902 2,159,674 2,149,575 237,898 -4,847,049 0<br />
Transfers 0 0 19,277 -19,277 0 0<br />
Disposals -402,366 -1,532,914 -78,324 -1,584,974 0 -3,598,578<br />
Write-offs 0 -905 -10,127 -45,024 0 -56,056<br />
Balance at 31/12/<strong>2005</strong> 9,850,303 64,360,566 15,856,888 8,216,438 5,590,962 103,875,157<br />
ACCUMULATED DEPRECIATION<br />
Balance at 31/12/2004 - 27,111,886 7,971,568 6,007,405 0 41,090,859<br />
Disposals - -563,459 -731,068 -810,711 0 -2,105,238<br />
Write-offs - -2,591 -4,177 -6,906 0 -13,674<br />
Depreciation - 1,583,006 1,248,549 570,557 0 3,402,112<br />
Balance at 31/12/<strong>2005</strong> - 28,128,842 8,484,872 5,760,345 0 42,374,059<br />
CARRYING AMOUNT<br />
Balance at 31/12/2004 8,873,501 36,622,825 5,804,919 3,620,410 2,499,172 57,420,827<br />
Balance at 31/12/<strong>2005</strong> 9,850,303 36,231,724 7,372,016 2,456,093 5,590,962 61,501,098
a n n u a l r e p o r t | 2 0 0 5<br />
COST<br />
1 6 4 |<br />
Movement of property, plant and equipment in the <strong>Sava</strong> Group in 2004<br />
Plant and Other<br />
(SIT in thousands)<br />
PPE under<br />
Land Buildings machinery equipment construction Total<br />
Balance at 01/01/2004 7,271,312 37,818,653 25,994,948 6,120,842 907,767 78,113,522<br />
Purchase 263,127 4,290,889 211,355 911,818 3,212,978 8,890,167<br />
Capitalisation 0 0 1,810,819 0 -1,810,819 0<br />
A<strong>dd</strong>itions (increases) by acquisitions 2,715,014 29,187,988 0 5,689,106 201,420 37,793,528<br />
Disposals -497,790 -2,661,288 -7,550,874 -2,092,100 0 -12,802,052<br />
Decreases due to company disposals -623,166 -4,363,116 -4,077,688 -966,493 -12,174 -10,042,637<br />
Write-offs 0 0 -2,595,549 0 0 -2,595,549<br />
Impairment -254,996 -538,415 -16,524 -35,358 0 -845,293<br />
Balance at 31/12/2004 8,873,501 63,734,711 13,776,487 9,627,815 2,499,172 98,511,686<br />
ACCUMULATED DEPRECIATION<br />
Balance at 31/12/2004 - 18,083,597 20,236,032 4,041,509 0 42,361,138<br />
A<strong>dd</strong>itions (increases) by acquisitions - 11,995,289 0 3,682,314 0 15,677,603<br />
Disposals - -1,994,288 -7,096,258 -1,736,193 0 -10,826,739<br />
Decreases due to company disposals - -1,951,034 -3,763,643 -633,026 0 -6,347,703<br />
Write-offs - 0 -2,359,590 0 0 -2,359,590<br />
Impairment - -118,307 -6,070 7,967 0 -116,410<br />
Depreciation - 1,096,629 961,097 644,834 0 2,702,560<br />
Balance at 31/12/2004 - 27,111,886 7,971,568 6,007,405 0 41,090,859<br />
CARRYING AMOUNT<br />
Balance at 01/01/2004 7,271,312 19,735,056 5,758,916 2,079,333 907,767 35,752,384<br />
Balance at 31/12/2004 8,873,501 36,622,825 5,804,919 3,620,410 2,499,172 57,420,827
| notes to the consolidated financial statements in accordance with IFRS |<br />
Survey of mortgage values<br />
Book value of assets under<br />
(SIT in thousands)<br />
Value of mortgages<br />
SURVEY OF MORTGAGE VALUES mortgage at 31/12/<strong>2005</strong> on real estate<br />
<strong>Sava</strong> d.d. 965,354 670,812<br />
<strong>Sava</strong> Trade d.d. 2,194,589 213,296<br />
<strong>Sava</strong> IP d.o.o. 485,970 777,150<br />
<strong>Sava</strong> IP Nova d.o.o. 1,479,792 1,153,762<br />
Terme 3000 d.d. 8,876,901 2,565,479<br />
Terme Radenci d.o.o. 7,048,050 2,740,335<br />
Terme Ptuj d.o.o. 1,216,876 1,066,816<br />
Terme Lendava d.d. 1,880,498 240,157<br />
Golf in Kamp Bled d.d. 17,144 28,013<br />
24,165,174 9,455,820<br />
1 6 5 |<br />
In the company G&P Hoteli Bled d.o.o. a mortgage is<br />
entered in the amount of 944,322,000 tolars, but the<br />
procedure for cancelling the mortgage is underway,<br />
13. Intangible assets<br />
Intangible assets totalling 284.010,000 tolars mainly include computer software.<br />
since the loans were repaid; the total amount of<br />
mortgages for the <strong>Sava</strong> Group does not include the<br />
mentioned mortgage.<br />
Movement of intangible assets in the <strong>Sava</strong> Group in <strong>2005</strong> and 2004<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
COST VALUE<br />
At year begin 740,378 1,031,879<br />
A<strong>dd</strong>itions 114,029 143,421<br />
Acquisitions 0 173,760<br />
Decreases -115,458 -27,738<br />
Company disposals 0 -558,946<br />
Write-offs -71,764 -21,999<br />
At year end<br />
ACCUMULATED AMORTISATION<br />
667,188 740,378<br />
At year beginn -390,162 -495,651<br />
A<strong>dd</strong>itions 0 -3,699<br />
Acquisitions 0 -76,944<br />
Decreases 86,113 14,895<br />
Company disposals 0 250,964<br />
Write-offs 20,333 0<br />
Amortisation -99,459 -79,727<br />
At year end -383,175 -390,162<br />
CARRYING AMOUNT 284,010 350,216<br />
In the income statement the amortisation of intangible assets is included in the item depreciation and amortisation.
a n n u a l r e p o r t | 2 0 0 5<br />
(SIT in thousands)<br />
Land - Buildings -<br />
investment investment<br />
property property Total<br />
COST VALUE<br />
Balance at 01/01/<strong>2005</strong> 209,257 2,566,714 2,775,971<br />
A<strong>dd</strong>itions 0 1,491,865 1,491,865<br />
Disposals -60,500 -405,239 -465,739<br />
Balance at 31/12/<strong>2005</strong> 148,757 3,653,340 3,802,097<br />
ACCUMULATED DEPRECIATION<br />
Balance at 01/01/<strong>2005</strong> 0 438,188 438,188<br />
Disposals 0 -55,359 -55,359<br />
Depreciation 0 96,372 96,372<br />
Balance at 31/12/<strong>2005</strong> 0 479,201 479,201<br />
CARRYING AMOUNT<br />
Balance at 01/01/<strong>2005</strong> 209,257 2,128,526 2,337,783<br />
Balance at 31/12/<strong>2005</strong> 148,757 3,174,139 3,322,896<br />
1 6 6 |<br />
14. Investment property<br />
Investment property is mainly real estate under operating lease.<br />
Movement of investment property in the <strong>Sava</strong> Group in <strong>2005</strong><br />
Movement of investment property in the <strong>Sava</strong> Group in 2004<br />
(SIT in thousands)<br />
Land - Buildings -<br />
investment investment<br />
property property Total<br />
COST VALUE<br />
Balance at 01/01/2004 387,646 2,659,156 3,046,802<br />
A<strong>dd</strong>itions 94,423 16,026 110,449<br />
Disposals -272,812 -108,468 -381,280<br />
Balance at 31/12/2004 209,257 2,566,714 2,775,971<br />
ACCUMULATED DEPRECIATION<br />
Balance at 01/01/2004 0 340,102 340,102<br />
Depreciation 0 98,086 98,086<br />
Balance at 31/12/2004 0 438,188 438,188<br />
CARRYING AMOUNT<br />
Balance at 01/01/2004 387,646 2,319,054 2,706,700<br />
Balance at 31/12/2004 209,257 2,128,526 2,337,783<br />
The fair value of investment property does not differ<br />
considerably from the book value as the major part of<br />
real estate under operating lease was constructed in<br />
2003and there have not been any significant changes in<br />
the real estate market since then.
| notes to the consolidated financial statements in accordance with IFRS |<br />
1 6 7 |<br />
15. Investments in associates<br />
The <strong>Sava</strong> Group's companies have their stakes in the following associates:<br />
(SIT in thousands)<br />
Stake in % Stake in %<br />
<strong>2005</strong> 2004 <strong>2005</strong> 2004<br />
Gorenjska Banka d. d., Kranj 41.13 40.94 29,021,099 25,557,191<br />
Limb d.o.o., Ptuj 37.50 37.50 0 71,100<br />
Golf Istra d.o.o., Koper 20.00 20.00 11,338 28,200<br />
Teodora d.o.o., Ljubljana 25.00 25.00 572 572<br />
Gumtech & Co. d.o.o., Grosuplje 0 31.00 0 0<br />
Astra, tehni@ka trgovina d.o.o., Belgrade 20.00 20.00 0 0<br />
Turizem Lendava d.o.o. 33.00 0 700 0<br />
Total 29,033,709 25,657,063<br />
Movement of investments in associates:<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Initial balance 25,657,063 18,788,504<br />
Acquisitions 133,920 3,427,067<br />
Attributable profits 4,692,039 3,895,152<br />
Paid dividends -1,361,350 -552,960<br />
Impairment -87,963 0<br />
Year end balance 29,033,709 25,657,063<br />
Important financial data about the biggest associate – Gorenjska Banka d.d., Kranj:<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Assets 320,155,994 279,687,949<br />
Liabilities and provisions 256,954,135 220,715,717<br />
Equity 63,201,859 58,972,232<br />
Revenues 32,676,917 25,462,522<br />
Profit 11,407,826 9,500,370
a n n u a l r e p o r t | 2 0 0 5<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Balance at 01/01 32,141,290 17,880,283<br />
Purchase 11,858,738 12,307,705<br />
Revaluation to fair value -4,860,547 7,074,588<br />
Disposals -5,348,832 -4,392,639<br />
Impairment -360,372 -728,647<br />
Balance at 31/12 33,430,277 32,141,290<br />
1 6 8 |<br />
16. Non-current securities<br />
In the <strong>Sava</strong> Group non-current securities are all<br />
classified as available for sale. They represent a<br />
financial potential that in the future will be invested in<br />
accordance with the Group's business strategy. The<br />
major part of equity securities are shares of the<br />
companies that are listed on the Ljubljana or other stock<br />
exchanges.<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Shares of listed companies 30,801,240 25,449,885<br />
Shares and stakes of non-listed companies 2,629,037 6,691,405<br />
Total 33,430,277 32,141,290<br />
Movement of equity securities available for sale:<br />
17. Non-current receivables<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Receivables due to financial leasing 2,172,467 0<br />
Granted non-current loans 297,890 0<br />
Other non-current financial receivables 30,940 177,649<br />
Other non-current operating receivables 203,154 264,826<br />
Total 2,704,451 442,475<br />
The contract about the financial leasing of unfurnished<br />
offices for the needs of the government bodies was<br />
concluded for a period of 15 years. The contract interest<br />
rate amounts to 4.296 per cent and is subject to annual<br />
adjustment.<br />
In <strong>2005</strong> financial revenues arising from financial leasing<br />
in the amount of 38,428,000 tolars were realised. Nonearned<br />
financial revenues arising from financial leasing<br />
calculated at an effective interest rate totals 607,877,000<br />
tolars.
| notes to the consolidated financial statements in accordance with IFRS |<br />
Analysis of maturity in non-current receivables:<br />
(SIT in thousands)<br />
Financial<br />
leasing Other Total<br />
- from one to 5 years 695,116 531,984 1,227,100<br />
- more than 5 years 1,477,351 0 1,477,351<br />
Total 2,172,467 531,984 2,704,451<br />
1 6 9 |<br />
Movement of non-current receivables:<br />
19. Trade and other receivables<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Balance at 01/01 442,475 771,359<br />
Recently formed receivables 2,431,082 0<br />
Repayments -169,106 -328,884<br />
Balance at 31/12 2,704,451 442,475<br />
18. Inventories<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Material 1,155,531 1,054,923<br />
Work and projects in progress 3,769,533 3,998,201<br />
Finished goods and merchandise 5,603,405 5,505,015<br />
Advances for inventories 14,904 56,817<br />
Total 10,543,373 10,614,956<br />
In <strong>2005</strong> the companies of the <strong>Sava</strong> Group formed a provision in inventories in the amount of 98,282,000 tolars, while<br />
in 2004 it totals 144,194,000 tolars.<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Trade receivables 6,960,772 6,823,412<br />
Accrued receivables 216,774 1,663,134<br />
Receivables due from associates 10,082 393,589<br />
Advances paid 2,118,334 758,153<br />
Receivables for VAT and other taxes 708,874 665,673<br />
Other receivables 2,009,937 1,156,197<br />
Total 12,024,773 11,460,158<br />
In <strong>2005</strong> the companies of the <strong>Sava</strong> Group formed a provision in trade receivables totalling 177,072,000 tolars. In<br />
2004 the provision in trade receivables amounted to 324,928,000 tolars.
a n n u a l r e p o r t | 2 0 0 5<br />
1 7 0 |<br />
20. Current loans<br />
22. Equity and reserves<br />
Issued capital<br />
The approved share capital that was totally paid in<br />
amounts to 20,069,870,000.00 tolars. It is divided into<br />
2,006,987 shares with a nominal value of 10,000 tolars<br />
each. The holders of shares are entitled to a dividend in<br />
accordance with the resolution as adopted by the<br />
Shareholders' Meeting. The ownership structure and its<br />
changes are described in chapter 11 of the <strong>Annual</strong><br />
Report The <strong>Sava</strong> share and ownership structure.<br />
The balance and movement of equity is clear from the<br />
statement of changes in equity.<br />
Share premium<br />
The share premium amounts to 30,100,770,000 tolars. It<br />
originates from:<br />
• equity reserves that were formed on the basis of<br />
privatisation regulations in the amount of<br />
12,178,885,000 tolars;<br />
• revaluating issued capital by price indices, which<br />
according to Slovene Accounting Standards was<br />
carried out until the end of 2001, in the amount of<br />
12,773,885,000 tolars; and<br />
• in 2004 the a<strong>dd</strong>itionally paid in capital that amounted<br />
to 5,148,000,000 tolars.<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Originated loans 313,236 979,880<br />
Current portion of non-current loans 260,998 62,404<br />
Total 574,234 1,042,284<br />
21. Cash and cash equivalents<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Cash in hand and on accounts 742,577 540,444<br />
Current deposits 1,826,280 172,724<br />
Total 2,568,857 713,168<br />
Reserves<br />
Reserves amounted to 8,382,996,000 tolars and include:<br />
• legal reserves totalling 1,720,987,000 tolars; and<br />
• other reserves totalling 6,662,009,000 tolars, which<br />
were formed according to the resolution by the Board<br />
of Management. The Board of Management pursuant<br />
to Slovene legislation has a legitimate option to<br />
allocate one half of the profit for the current year as<br />
determined according to Slovene Accounting<br />
Standards into other reserves. In <strong>2005</strong> the Board of<br />
Management allocated 2,144,140,000 tolars (2004:<br />
1,538,284,000 tolars) to other revenue reserves.<br />
Reserves for treasury shares<br />
On 31 December <strong>2005</strong> the company had 3,289 treasury<br />
shares, which represents 0.16 per cent of the total<br />
number of issued shares. The cost of shares amounted to<br />
53,787,000 tolars. This amount reduces the total equity.<br />
In <strong>2005</strong> no changes occurred.<br />
Fair value reserve<br />
Fair value reserve amounts to 6,560,951,000 tolars and<br />
includes revaluation effects of securities available for<br />
sale to a fair value less deferred tax liability in relation<br />
to these effects.
| notes to the consolidated financial statements in accordance with IFRS |<br />
(number of shares)<br />
<strong>2005</strong> 2004<br />
No. of shares on 1 Jan. 2,006,987 1,720,987<br />
Less treasury shares -3,289 -3,289<br />
Increase in capital on 23/03/2004 - 286,000<br />
Weighted average no. of ordinary shares 2,003,698 1,939,446<br />
1 7 1 |<br />
Retained earnings<br />
Retained earnings amount to 27,952,373,000 tolars and<br />
Dividends<br />
include retained earnings from the previous year and net<br />
profit for the year.<br />
<strong>2005</strong> 2004<br />
Dividend per ordinary share in the year (in SIT) 620 560<br />
Total dividends to the debit of retained earnings (SIT in thousands) 1,242,294 1,122,057<br />
Earnings per share<br />
Share capital is divided into 2,006,987 ordinary shares<br />
that all have voting rights and are freely transferable.<br />
Weighted number of ordinary shares:<br />
Net earnings attributable to ordinary shares amounts to:<br />
The company has no bonds available to be converted<br />
into shares.<br />
<strong>2005</strong> 2004<br />
Net profit for the year (SIT in thousands) 9,162,673 11,580,064<br />
Weighted average no. of ordinary shares 2,003,698 1,939,446<br />
Basic net earnings per share (in SIT) 4,572.88 5,970.81<br />
The appropriation of profit is only possible within the<br />
amount determined in accordance with Slovene<br />
legislation. The legislation regulates that a parent<br />
company may distribute profit as determined in<br />
individual financial statements compiled in accordance<br />
with Slovene Accounting Standards. On 31 December<br />
<strong>2005</strong> the profit amounted to 7,131,916,000 tolars.<br />
<strong>2005</strong> 2004<br />
Retained earnings of the <strong>Sava</strong> Group according to IFRSs 27,952,373 22,176,134<br />
Retained earnings of the company <strong>Sava</strong> d.d. according to SAS 7,131,916 6,230,070<br />
Difference not distributable 20,820,457 15,946,064
a n n u a l r e p o r t | 2 0 0 5<br />
1 7 2 |<br />
Reserves that are determined in accordance with IFRSs<br />
are not available for distribution. The exception is other<br />
revenue reserves as presented in accordance with<br />
Slovene Accounting Standards, which may be allocated<br />
to a distribution subject with the approval of the Board<br />
of Management. On 31 December <strong>2005</strong> this reserve<br />
amounted to 6,662,009,000 tolars.<br />
Minority interest<br />
In <strong>2005</strong> minority interest decreased by 627,240,000<br />
tolars due to the a<strong>dd</strong>itional purchase of stakes in<br />
subsidiaries, and by 97,013,000 tolars due to a transition<br />
to a joint controlling and, as a consequence,<br />
proportionate consolidating. The increase in minority<br />
interest of 52,900,000 tolars is represented by profits<br />
attributable to minority interest.<br />
Minority interest relates to the following companies:<br />
Minority<br />
(SIT in thousands)<br />
Profits attributable<br />
Minority interest interest capital to minority interest<br />
<strong>2005</strong> 2004 <strong>2005</strong> 2004 <strong>2005</strong> 2004<br />
<strong>Sava</strong> ROL d.o.o., Zagreb 24.0% 24.0% 9,469 9,243 591 697<br />
<strong>Sava</strong>-Schäfer d.o.o., Kranj 50.0% 50.0% 0 93,532 0 29,166<br />
Teol d.d., Ljubljana 1.3% 2.7% 2,920 8,731 -811 -3,358<br />
<strong>Sava</strong> Trade d.d., Ljubljana 3.6% 5.0% 298,854 391,493 18,837 20,803<br />
MG Market d.o.o., Ljubljana 28.2% 29.2% -545,367 -557,729 -16 -26,422<br />
<strong>Sava</strong>trade Inc., Port Orange, Florida 5.0% 5.0% 979 624 249 597<br />
Golf in Kamp d.d., Bled 8.4% 8.4% 117,759 115,314 2,676 -9,356<br />
Grand Hotel Toplice Bled d.o.o., Bled 0.6% 1.1% 698 2,065 -241 224<br />
G&P Hoteli Bled d.o.o., Bled 4.9% 12.6% 291,894 733,421 9,125 23,964<br />
Terme 3000 d.d., Moravske Toplice 2.9% 3.3% 292,565 332,366 8,792 12,543<br />
Terme Lendava d.d. 9.7% 9.3% 109,370 96,217 9,301 2,006<br />
Terme Ptuj d.o.o. 30.1% 30.4% 405,146 389,353 19,741 17,385<br />
Terme Radenci d.o.o., Radenci 2.9% 3.3% 159,465 200,478 -15,344 3,136<br />
Total 1,143,753 1,815,107 52,900 71,385<br />
The company <strong>Sava</strong>-Schäfer d.o.o,. Kranj was dealt with as a subsidiary throughout 2004, since it was not under joint<br />
management the entire year.
| notes to the consolidated financial statements in accordance with IFRS |<br />
1 7 3 |<br />
23. Provisions<br />
Provisions due to relief in payment of social security<br />
contributions are formed in accordance with the Law on<br />
Employment Rehabilitation and Disabled Persons<br />
Employment. They are used for covering various<br />
expenses as set out in the quoted law, particularly to<br />
cover depreciation in plant, property and equipment in<br />
the disablement company.<br />
(SIT in thousands)<br />
2004 Increases Decreases <strong>2005</strong><br />
Provisions for liabilities to employees 1,460,500 96,563 -10,667 1,546,396<br />
Provisions for law suits and other claims 216,401 31,583 -44,371 203,613<br />
Warranties 56,981 0 -3,144 53,837<br />
Others 13,205 8,650 -1,392 20,463<br />
Total 1,747,087 136,796 -59,575 1,824,309<br />
Provisions for liabilities to employees include liabilities<br />
for retirement pay and employee jubilee benefits in the<br />
amount as determined by the actuary calculation.<br />
24. Government grants<br />
Provisions for law suits are formed after consulting<br />
lawyers who estimated the outcome of law suits filed<br />
and other claims that relate to the denationalisation<br />
procedure.<br />
(SIT in thousands)<br />
2004 Increases Decreases <strong>2005</strong><br />
Provisions due to relief in social security payment 441,659 87,075 -77,632 451,102<br />
Funds by EU and other funds 311,633 1,358,664 -66,837 1,603,460<br />
Total 753,292 1,445,739 -144,469 2,054,562<br />
25. Deferred tax liability<br />
Deferred tax liability relates to the following items:<br />
Funds obtained in the Pannonian Spas companies from<br />
the structural funds were utilised for renovation of<br />
tourist facilities such as the construction of a 5* hotel in<br />
Moravske Toplice, renovation of Hotel Radin in<br />
Radenci, construction of apartments in Lendava and a<br />
swimming pool complex in Ptuj.<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Liabilities of foreign subsidiaries 18,880 17,763<br />
Deferred tax assets according to Slovene Accounting Standards -39,275 0<br />
Revaluation of securities to fair value 2,186,984 3,402,121<br />
Forming non-current provisions for retirement pay and employee jubilee benefits -381,888 -361,017<br />
Total 1,784,701 3,058,867
a n n u a l r e p o r t | 2 0 0 5<br />
1 7 4 |<br />
Movement of deferred tax liability:<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Initial balance 3,058,867 1,420,237<br />
Increase in liability in foreign subsidiaries 1,117 10,189<br />
Increase of deferred tax assets according to Slovene Accounting Standards -39,275 0<br />
Change in liability due to revaluation of securities to fair value -1,215,137 1,633,474<br />
Decrease in receivables for provisions for retirement pay 2,667 7,142<br />
Increase in receivables for forming provisions for retirement pay -23,538 -12,175<br />
Total 1,784,701 3,058,867<br />
26. Interest-bearing borrowings<br />
The explanation below provides information as to the<br />
terms and conditions for granted loans. More<br />
NON-CURRRENT BORROWINGS<br />
information about the company's exposure to interest<br />
and exchange rate risk is contained in item 9 of the<br />
<strong>Annual</strong> Report.<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Borrowings with domestic banks 12,757,339 8,726,011<br />
Borrowings with foreign banks 1,242,740 2,376,157<br />
Borrowings with others 480,294 596,387<br />
Total non-current borrowings 14,480,373 11,698,555<br />
CURRENT BORROWINGS<br />
Current portion in non-current borrowings with banks 3,759,652 7,526,127<br />
Current borrowings with domestic banks 26,763,103 15,491,611<br />
Current borrowings with others 120,100 119,535<br />
Total current borrowings 30,642,855 23,137,273<br />
Total borrowings 45,123,228 34,835,828
| notes to the consolidated financial statements in accordance with IFRS |<br />
Interest rate Maturity of last Type of<br />
in % instalment insurance<br />
NON-CURRENT BORROWINGS<br />
- borrowings by associates from 3mEURIBOR+0.75 2007-2012 Bills of exchange,<br />
to 6mEURIBOR+0.7<br />
to TOM+2.9<br />
mortgages, letter of comfort<br />
- borrowings by domestic banks 1mEURIBOR+1.25 2010-2025 Bills of exchange,<br />
do 1.5; 3-6mEURIBOR + mortgages, guarantees,<br />
0.65 to 4.47; TOM+0.5 to<br />
2.60; from 1 to 6.50 in SIT<br />
cession<br />
- borrowings by foreign banks from 3mEURIBOR+ 0.5 to 2007-2015 Guarantees, bills of<br />
1.6; from 3-3.225 in SIT exchange, mortgage<br />
- others 3m EURIBOR+0.75; 2009-2012 Bank guarantees,<br />
CURRENT BORROWINGS<br />
TOM+2.1 - 4 bills of exchange<br />
- borrowings by associates 3.9-5.40 in SIT; 2006 Bills of exchange,<br />
6mEURIBOR+0.65-0.67 letter of comfort<br />
- current borrowings by domestic banks 3.48-5.5 in SIT; 2006 Bills of exchange,<br />
3mEURIBOR + 0.5 to 1.6; letter of comfort<br />
1mEURIBOR+0.6-1.5; guarantees, options,<br />
6mEURIBOR+0.6 receivables, mortgage<br />
- others 3.2-4.0 in SIT 2006 Not insured<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Trade payables 7,150,394 7,604,365<br />
Liabilities for received advances 547,443 443,542<br />
VAT and other taxes 1,218,190 1,110,231<br />
Employee payables 969,433 895,929<br />
Other operating liabilities 821,564 733,727<br />
Total 10,707,024 10,787,794<br />
1 7 5 |<br />
Terms and conditions for hiring borrowings:<br />
Maturity of non-current borrowings:<br />
27. Current liabilities<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Between 1 and 2 years 6,277,481 3,951,548<br />
Between 2 and 5 years 6,144,984 5,896,047<br />
More than 5 years 2,057,908 1,850,960<br />
Total 14,480,373 11,698,555
a n n u a l r e p o r t | 2 0 0 5<br />
1 7 6 |<br />
28. Accrued expenses<br />
29. Financial instruments<br />
Managing financial risks<br />
The <strong>Sava</strong> Group has a very good rating, therefore it has<br />
no difficulty in balancing liquidity and cash flows.<br />
However, due to contracting debts in euro currency a<br />
higher foreign currency risk exists. Due to a stable<br />
exchange rate and expected euro introduction the risk is<br />
low. Simultaneously with contracting debts in foreign<br />
currency the EURIBOR rate risk increases, which<br />
mainly serves as the basis for interest rates for debts<br />
contracted anew. According to forecasts this basis<br />
should rise in the future, therefore we are preparing an<br />
interest rate protection which will include all companies<br />
indebted at the EURIBOR-based interest rate. Managing<br />
financial risk is explained in chapter 9 Risk<br />
Management in detail.<br />
Sensitivity analysis of financial risks<br />
In financial risk we are highly exposed to a change in<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Accrued expenses 338,138 405,228<br />
Fair value of financial instruments<br />
the interest rate and since almost three-quarters of<br />
indebtedness is based on the inter-bank interest rate<br />
EURIBOR, its influence is the greatest. Taking into<br />
consideration the average indebtedness last year and the<br />
current structure at 31/12/<strong>2005</strong> each tenth of a change in<br />
the average annual interest rate would increase interest<br />
by almost 25 million tolars for the entire Group.<br />
If indebtedness in the Group changed by 1 billion tolars,<br />
the operating income would change by 35.3 million<br />
tolars with the average December interest rate being<br />
3.53 per cent at the Group level.<br />
With regard to the expectations and forecasts, the<br />
change in the euro rate has a considerably lower effect<br />
on operations; ever since Slovenia accessed the<br />
European Union the exchange rate has fluctuated only<br />
slightly around the centrally agreed parity exchange rate<br />
and it amounts to 239.640 tolars for one euro.<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Book Fair Book Fair<br />
value value value value<br />
Securities available for sale 33,430,277 33,430,277 32,141,290 32,141,290<br />
Non-current receivables 2,704,451 2,704,451 442,475 442,475<br />
Current receivables 12,075,122 12,075,122 11,525,492 11,525,492<br />
Granted loans 574,234 574,234 1,042,284 1,042,284<br />
Cash and cash equivalents 2,568,857 2,568,857 703,168 703,168<br />
Non-current loans 14,480,373 14,480,373 11,698,555 11,698,555<br />
Non-current operating liabilities 17,418 17,418 47,329 47,329<br />
Current loans 30,642,855 30,642,855 23,137,273 23,137,273<br />
Current operating liabilities 10,707,024 10,707,024 10,787,794 10,787,794
| notes to the consolidated financial statements in accordance with IFRS |<br />
<strong>2005</strong> 2004<br />
No. of <strong>Sava</strong> d.d. shares owned by Gorenjska Banka 52,500 52,500<br />
Stake of Gorenjska Banka d.d. in <strong>Sava</strong> d.d. 2.62% 2.62%<br />
1 7 7 |<br />
Estimating fair values<br />
Securities available for sale<br />
The fair value of a available-for-sale securities that are<br />
listed equals the quoted market price on the balance<br />
sheet date. The fair value of shares and stakes of unlisted<br />
companies is estimated on the basis of last known<br />
transactions.<br />
Interest-bearing loans and borrowings<br />
The fair value is estimated as a discounted value of<br />
expected cash flows from the principal and interests,<br />
whereby the effective interest rate equals the contracting<br />
interest rate, which fluctuates and mainly changes every<br />
three months (3-month Euribor).<br />
Current receivables and liabilities<br />
For receivables and liabilities with a remaining life of<br />
less than one year, the notional amount is deemed to<br />
reflect the fair value.<br />
30. Contingencies<br />
At 31 December <strong>2005</strong> the <strong>Sava</strong> Group presents no<br />
contingencies. All known liabilities are included in the<br />
consolidated financial statements.<br />
31. Related parties<br />
Related parties include subsidiaries and associates,<br />
members of supervisory boards, board of management<br />
of the parent company and subsidiaries in the Group and<br />
their close family members.<br />
Relations with subsidiaries<br />
Business relations among the companies of the <strong>Sava</strong><br />
Group relate to the purchase and sale of raw materials,<br />
finished products and merchandise. Services provided<br />
within the <strong>Sava</strong> Group companies are mainly rents for<br />
real estate and equipment, the use of the trade mark and<br />
services by competence centres.<br />
Transactions among related parties are performed on an<br />
arm's length basis.<br />
For loans which associates borrowed from banks and are<br />
presented in the consolidated financial statements under<br />
liabilities to banks guarantees were issued by the parent<br />
company. The guarantees at 31/12/<strong>2005</strong> totalled<br />
10,353,612,000 tolars. Issued guarantees are considered<br />
insurance contracts according to IFRS 4.<br />
Relations with associates<br />
Gorenjska Banka d.d., Kranj is the most important<br />
associate of <strong>Sava</strong> d.d.:<br />
The companies in the <strong>Sava</strong> Group raise loans with and make deposits in Gorenjska Banka. Terms and conditions for<br />
these transactions equal those effective for other companies with a similar rating.<br />
Survey of transactions with Gorenjska Banka d.d.<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Balance of raised borrowings at 01/01 5,043,095 3,402,002<br />
Hiring new borrowings 3,672,250 5,765,880<br />
Repayment of borrowings -3,657,905 -4,124,787<br />
Balance of raised borrowings at 31/12 5,057,440 5,043,095<br />
Balance of paid deposits at 31/12 100,313 0
a n n u a l r e p o r t | 2 0 0 5<br />
1 7 8 |<br />
Borrowings hired with Gorenjska Banka d.d. bear<br />
interest at various interest rates: 3month<br />
EURIBOR+0.65%, 6 month EURIBOR+0.65-0.70%,<br />
TOM+2.9%.<br />
Foreign currency deposits with Gorenjska Banka d.d.<br />
were paid in this year in total, the interest rate being 1.05<br />
per cent.<br />
In <strong>2005</strong> value adjustments were formed due to a loan<br />
granted to the company LIMB, d.o.o. in the amount of<br />
71,100,000 tolars.<br />
Relations to natural persons<br />
Related natural persons (chairman and board members<br />
of the parent company and the supervisory board and<br />
their close family members) own 4,190 shares in the<br />
parent company <strong>Sava</strong> d.d., which represents 0.209 per<br />
cent of ownership.<br />
No. of shares Stake in capital<br />
Board of Management of <strong>Sava</strong> d.d. members 2,563 0.128 %<br />
Closer family members of <strong>Sava</strong> d.d. Board members 137 0.007 %<br />
<strong>Sava</strong> d.d. Supervisory Board members 122 0.006 %<br />
Managers in subsidiaries 817 0.041 %<br />
Supervisory Board members in subsidiaries 551 0.027 %<br />
Total 4,190 0.209 %<br />
Gross income in <strong>2005</strong>:<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Board members 697,606 598,036<br />
Other employees with managerial contracts 1,433,443 1,223,144<br />
Supervisory Board members 89,376 41,917<br />
Gross income includes salaries, bonuses and other proceeds.<br />
Company receivables due from related natural persons:<br />
(SIT in thousands)<br />
<strong>2005</strong> 2004<br />
Board members 2,972 4,287<br />
Other employees with managerial contracts 16,149 25,422<br />
Supervisory Board members 0 0<br />
Receivables relate to granted housing loans to<br />
employees. Loans were granted at the effective market<br />
interest rate on the day of loan approval.<br />
There are no liabilities of companies to related natural<br />
persons.
| notes to the consolidated financial statements in accordance with IFRS |<br />
1 7 9 |<br />
32. Events after the balance sheet date<br />
The events that occurred after the balance sheet date and<br />
are important for the company are described in chapter<br />
4.2 in detail and are as follows:<br />
• The Supervisory Board adopted a resolution to<br />
restructure the Trade division by selling the existing<br />
companies <strong>Sava</strong> Trade d.d. and MG Market d.o.o. and<br />
acquire a significant stake in the company Merkur.<br />
The information about Trade is disclosed in item<br />
28.2.2 that contains information by segment and<br />
demonstrates the influence of excluding the Trade<br />
division from the <strong>Sava</strong> Group.<br />
• By an increase in the share capital in the company<br />
Merkur and a<strong>dd</strong>itional purchases of shares <strong>Sava</strong> d.d.<br />
has implemented an important part of the planned<br />
strategic restructuring of its Trade division.<br />
Among those events there were none which would<br />
require any revisions in the consolidated financial<br />
statements.<br />
33. Key sources of estimation<br />
uncertainty<br />
Non-current provisions are formed for retirement pay<br />
and employee jubilee benefits in accordance with the<br />
law, collective agreement and internal regulations. The<br />
amount was establised on the basis of an actuary<br />
calculation which used a discounted rate of 2.75 per cent<br />
annually. In the case of a change in the law or interest<br />
rate the amount of required provisions for this purpose<br />
could change.<br />
The fair value of investment property cannot be<br />
ascertained on the basis of future cash flows as the<br />
contracts about the financial lease have been concluded<br />
for the period of one year maximum. As a fair value the<br />
book value of investment property is used. The Board<br />
estimates that there is no significant difference between<br />
the fair and book value, which mainly originates from<br />
cost value of real estate that were built in 2003anew.<br />
34. Explanation of transition to IFRSs<br />
The accounting principles as explained in chapter 28.2.<br />
have been applied in the preparation of both the<br />
consolidated financial statements at 31 December <strong>2005</strong><br />
and the comparative figures for the year 2004, as well as<br />
the opening balance sheet compiled in accordance with<br />
IFRSs at 1 January 2004.<br />
In preparing the opening balance sheet according to<br />
IFRSs the financial statements that in previous years had<br />
been prepared according to Slovene Accounting<br />
Standards were adjusted so as to consider IFRSs. The<br />
tables below show the adjustment effects on the<br />
financial position, financial performance and cash flows<br />
of the <strong>Sava</strong> Group.
a n n u a l r e p o r t | 2 0 0 5<br />
ASSETS<br />
1 8 0 |<br />
Changes in the consolidated Balance Sheet<br />
(SIT in thousands)<br />
Adjustments Adjustments<br />
affecting Previous affecting<br />
31/12/2003 Transfers equity 01/01/2004 31/12/2004 Transfers adjustments equity 31/12/2004<br />
SAS IFRS SAS IFRS<br />
Property, plant<br />
and equipment 37,768,396 -2,016,012 0 35,752,384 58,968,946 -1,548,119 0 0 57,420,827<br />
Intangible<br />
assets 2,040,344 -694,086 -810,030 536,228 1,470,529 -417,004 -810,030 106,721 350,216<br />
Investment property 0 2,706,700 0 2,706,700 0 2,337,783 0 0 2,337,783<br />
Investments in<br />
associates 12,336,305 572 6,451,627 18,788,504 0 19,752,696 6,451,627 -547,260 25,657,063<br />
Equity securities<br />
available for sale 2,464,131 8,341,565 7,074,588 17,880,284 22,324,507 -3,791,699 7,074,588 6,533,894 32,141,290<br />
Non-current<br />
receivables 538,922 232,437 0 771,359 327,230 115,245 0 0 442,475<br />
Total<br />
non-current assets 55,148,098 8,571,176 12,716,185 76,435,459 83,091,212 16,448,902 12,716,185 6,093,355 118,349,654<br />
Inventories 11,914,759 -155,118 0 11,759,641 10,614,956 0 0 0 10,614,956<br />
Trade and<br />
other receivables 11,671,517 672,126 0 12,343,643 10,755,820 704,338 0 0 11,460,158<br />
Income tax<br />
receivable 0 0 0 0 0 8,517 0 0 8,517<br />
Current financial<br />
investments 18,911,260 -12,174,348 0 6,736,912 18,441,351 -18,441,351 0 0 0<br />
Current loans 1,197,053 0 0 1,197,053 0 1,042,284 0 0 1,042,284<br />
Cash and cash<br />
equivalents 576,871 2,391,694 0 2,968,565 529,645 183,523 0 0 713,168<br />
Total current<br />
assets 44,271,460 -9,265,646 0 35,005,814 40,341,772 -16,502,689 0 0 23,839,083<br />
Total assets 99,419,558 -694,470 12,716,185 111,441,273 123,432,984 -53,787 12,716,185 6,093,355 142,188,737
| notes to the consolidated financial statements in accordance with IFRS |<br />
EQUITY AND LIABILITIES<br />
1 8 1 |<br />
(SIT in thousands)<br />
Adjustments Adjustments<br />
affecting Previous affecting<br />
31/12/2003 Transfers the result 01/01/2004 31/12/2004 Transfers adjustments the result 31/12/2004<br />
SAS IFRS SAS IFRS<br />
Issued capital 17,209,870 0 0 17,209,870 20,069,870 0 0 0 20,069,870<br />
Share premium 24,952,770 0 0 24,952,770 30,100,770 0 0 0 30,100,770<br />
Reserves 4,700,980 0 0 4,700,980 6,238,856 0 0 0 6,238,856<br />
Fair value reserves 0 0 5,305,941 5,305,941 3,889,452 0 5,305,941 1,010,969 10,206,362<br />
Treasury shares 0 -54,195 0 -54,195 0 -53,787 0 0 -53,787<br />
Retained earnings 5,612,228 0 7,682,474 13,294,702 7,856,753 0 7,682,474 6,636,907 22,176,134<br />
Minority interest 2,834,857 -640,275 -514,853 1,679,729 2,056,705 0 -514,853 273,255 1,815,107<br />
Total equity 55,310,705 -694,470 12,473,562 67,089,797 70,212,406 -53,787 12,473,562 7,921,131 90,553,312<br />
Non-current<br />
provisions 2,841,126 0 -1,170,040 1,671,086 6,373,344 0 -1,170,040 -3,456,217 1,747,087<br />
Deferred<br />
government grants 477,338 0 0 477,338 753,292 0 0 0 753,292<br />
Interest-bearing<br />
borrowings 7,907,641 0 0 7,907,641 11,698,555 0 0 0 11,698,555<br />
Non-current<br />
operating liabilities 199,909 0 0 199,909 47,329 0 0 0 47,329<br />
Deferred tax liabilities 7,574 0 1,412,663 1,420,237 17,763 0 1,412,663 1,628,441 3,058,867<br />
Total non-current<br />
liabilities 11,433,588 0 242,623 11,676,211 18,890,283 0 242,623 -1,827,776 17,305,130<br />
Current<br />
interest-bearing<br />
borrowings 22,130,701 0 0 22,130,701 23,137,273 0 0 0 23,137,273<br />
Current liabilities 10,081,976 0 0 10,081,976 10,787,794 0 0 0 10,787,794<br />
Accrued expenses 462,588 0 0 462,588 405,228 0 0 0 405,228<br />
Total current liabilities 32,675,265 0 0 32,675,265 34,330,295 0 0 0 34,330,295<br />
Total liabilities 44,108,853 0 242,623 44,351,476 53,220,578 0 242,623 -1,827,776 51,635,425<br />
Total equity<br />
and liabilities 99,419,558 -694,470 12,716,185 111,441,273 123,432,984 -53,787 12,716,185 6,093,355 142,188,737
a n n u a l r e p o r t | 2 0 0 5<br />
1 8 2 |<br />
Explanation of the adjustments in the consolidated<br />
balance sheet<br />
Property plant and equipment is reduced by investment<br />
property that according to Slovene Accounting<br />
Standards was classified as fixed assets.<br />
At 31 December 2003 the capitalised cost of<br />
organisation incurred by the enterprises in the <strong>Sava</strong><br />
Group were recognised as intangible assets in the<br />
amount of 810,030,000 tolars. These were in major part<br />
(98%) due to the opening of new OBI stores. The<br />
amount cannot be recognised according to IFRS, so it<br />
was derecognised, and thus reducing retained earnings.<br />
For the same reason, in 2004 capitalised cost of<br />
organisation incurred by the enterprises was not<br />
recognised in the amount of 15,626,000 tolars, which<br />
reduces the income according to IFRSs. Due to<br />
derecognition of these costs the amortisation totalling<br />
122,347,000 tolars referring to these costs could not be<br />
recognised. The total adjustment amount increases the<br />
income for 2004 by 106,721,000 tolars.<br />
Intangible assets were reduced due to derecognition of<br />
goodwill in the amount of 640,275,000 tolars, a transfer<br />
of leasehold improvements to property, plant and<br />
equipment (30,195,000 tolars at 1 January 2004,<br />
365,136,000 tolars at 31 December 2004), and a transfer<br />
of advance payments for intangible assets to receivables<br />
(23,616,000 tolars at 1 January 2004, 976,000 tolars at<br />
31 December 2004).<br />
According to Slovene Accounting Standards the <strong>Sava</strong><br />
Group companies did not present separately any<br />
investment property. In certain companies investment<br />
property was included in fixed assets, whereas in other<br />
companies in non-current financial investments. At 1<br />
January 2004 investment property was transferred from<br />
assets and non-current financial investments. Their<br />
value at 1 January 2004 totalled 2,706,700,000 tolars,<br />
whereas at 31 December 2004 they totalled<br />
2,337,783,000 tolars.<br />
In accordance with Slovene Accounting Standards<br />
treasury shares were presented under non-current<br />
financial investments. Consistent with IFRSs they were<br />
transferred directly to equity at 1 January 2004.<br />
According to Slovene Accounting Standards investments<br />
in associates were measured at cost until 2003, while the<br />
profit was recognised as it was paid out. In 2004 the<br />
accounting policy was changed and the investment was<br />
increased by the total attributable profits for 2004, which<br />
was recognised in the equity. Adjustments at 1 January<br />
2004 amounting to 6,451,627,000 tolars represent the<br />
attributable profits from previous years less received<br />
dividends as of the year the company became an<br />
associate until the year 2003. These profits were a<strong>dd</strong>ed to<br />
the retained earnings. Adjustments in 2004 amounting to<br />
547,260,000 tolars represent the received dividends in<br />
2004, since the investment according to SAS was<br />
increased by the total attributable profit.<br />
Consistent with Slovene Accounting Standards the<br />
majority of securities was presented as current financial<br />
investments irrespective of their actual purpose.<br />
Consistent with IFRSs and in accordance with the<br />
company policy they are all classified as available for<br />
sale and presented among non-current assets.<br />
Non-current securities are investments in equity<br />
securities of companies that are listed on the Stock<br />
Exchange as well as other companies. These shares are<br />
the financial potential of the parent company that in the<br />
future will be invested in accordance with the Group's<br />
business strategy. Therefore they are classified as<br />
available for sale. Consistent with Slovene Accounting<br />
Standards investments in shares of listed companies<br />
were valued at cost which could not exceed the Stock<br />
Exchange price on the balance sheet date. In accordance<br />
with IFRSs their value was adjusted to the quoted<br />
market price on the balance sheet date. The adjustment<br />
effect increases the fair value reserve (as the part of the<br />
equity) at 1 January 2004 by 5,601,095,000 tolars, and<br />
at 31 December 2004 by an a<strong>dd</strong>itional 4,927,790,000<br />
tolars. The fair value adjustment of listed shares<br />
amounts to 10,528,885,000 tolars at 31 December 2004.<br />
The fair value reserve is reduced by deferred tax<br />
liabilities amounting to 2,632,221,000 tolars. Shares and<br />
interests in companies that are not listed on the Stock
| notes to the consolidated financial statements in accordance with IFRS |<br />
1 8 3 |<br />
Exchange were measured at cost according to Slovene<br />
Accounting Standards, while the company had to<br />
estimate annually the need for an impairment, thereby<br />
considering the information about company operations.<br />
Consistent with IFRSs these investments were revalued<br />
to fair value that was ascertained in consideration of the<br />
last known transaction in the previous year. The<br />
The stated effects are shown below:<br />
Cash comprises call deposits and deposits at up to three<br />
months' notice that were transferred from current<br />
financial investments (at 1 January 2004 deposits<br />
amounted to 2,387,057,000 tolars, and 172,724,000<br />
tolars at 31 December 2004).<br />
A major part of non-current provisions includes the<br />
negative goodwill being recognised in the consolidated<br />
financial statements. A part in the amount of<br />
2,558,977,000 tolars that originates from previous years<br />
increased retained earnings, whereas a part that arose in<br />
2004 amounting to 3,467,619,000 tolars increased the<br />
income of the year. Other unrecognised provisions<br />
applied to provisions for future advertising, of which<br />
35,000,000 tolars were eliminated in the opening<br />
balance, and 8,727,000 tolars in the year 2004.<br />
revaluation effect increased the fair value reserve at<br />
1 January 2004 by 1,473,493,000 tolars, and at<br />
31 December 2004 by an a<strong>dd</strong>itional 1,606,104,000<br />
tolars. Fair value reserve of the unlisted shares at 31<br />
December 2004 amounts to 3,079,597,000 tolars. The<br />
fair value reserve is reduced by deferred tax liabilities<br />
amounting to 769,899,000 tolars.<br />
(SIT in thousands)<br />
At For the Total at<br />
01/01/2004 year 2004 31/12/2004<br />
Effect of revaluation to fair value of listed securities 5,601,095 4,927,790 10,528,885<br />
Effect of revaluation to fair value of unlisted securities 1,473,493 1,606,104 3,079,597<br />
Total 7,074,588 6,533,894 13,608,482<br />
Deferred tax liability due to revaluation to fair value of listed securities -1,400,274 -1,231,947 -2,632,221<br />
Deferred tax liability due to revaluation to fair value of unlisted securities -368,373 -401,526 -769,899<br />
Deferred tax liability total -1,768,647 -1,633,473 -3,402,120<br />
Effect recognised in equity 5,305,941 4,900,421 10,206.362<br />
Slovene Accounting Standards did not require forming<br />
any non-current provisions for certain employee<br />
benefits. On the basis of the actuary calculation<br />
liabilities for employee jubilee benefits and severance<br />
payment upon retirement were calculated at 1 January<br />
2004 in the amount of 1,423,937,000 tolars and<br />
a<strong>dd</strong>itionally for 2004 in the amount of 20,130,000<br />
tolars. The initial balance reduces retained earnings,<br />
whereas the difference reduces the income for the year<br />
2004. Deferred tax assets referring to these obligations<br />
were accounted amounting to 361,017,000 tolars, which<br />
decrease the deferred tax liability.
a n n u a l r e p o r t | 2 0 0 5<br />
1 8 4 |<br />
Certain of the mentioned changes affected the<br />
classification of individual items, whereas others the<br />
According to Slovene Accounting Standards and tax<br />
legislation in previous years deferred taxes were not<br />
accounted for. Therefore they were calculated and<br />
retained earnings or other equity items. Due to the<br />
transition to IFRSs the changes in equity were as follows:<br />
(SIT in thousands)<br />
Issued Share Fair value Treasury<br />
Translation<br />
equity Retained Minority<br />
capital premium Reserves reserve shares adjustment earnings interest TOTAL<br />
Balance acc. to SAS<br />
at 31/12/2003 17,209,870 24,952,770 4,700,980 0 0 -37,751 5,649,979 2,834,857 55,310,705<br />
ADJUSTMENTS<br />
TO IFRSs<br />
Transfer of treasury<br />
shares 0 0 0 0 -54,195 0 0 0 -54,195<br />
Revaluation of<br />
securities available<br />
for sale to fair value 0 0 0 5,305,941 0 0 0 0 5,305,941<br />
Revaluation of<br />
investments in<br />
associates on an equity<br />
accounted basis 0 0 0 0 0 0 6,451,627 0 6,451,627<br />
Unrecognised<br />
non-current<br />
accrued expenses 0 0 0 0 0 0 -577,955 -232,075 -810,030<br />
Unrecognised<br />
non-current provisions 0 0 0 0 0 0 30,590 4,410 35,000<br />
Provisions for<br />
severance cost<br />
and employee<br />
jubilee benefits 0 0 0 0 0 0 -1,023,061 -44,892 -1,067,953<br />
Adjustments to<br />
consolidation on<br />
equity method<br />
Balance according to<br />
0 0 0 0 0 37,751 2,763,522 -882,571 1,918,702<br />
IFRSs at 01/01/2004 17,209,870 24,952,770 4,700,980 5,305,941 -54,195 0 13,294,702 1,679,729 67,089,797<br />
presented in these financial statements for the first time.<br />
Receivables and liabilities for deferred tax arose from<br />
the following items:<br />
(SIT in thousands)<br />
01/01/2004 31/12/2004<br />
The existing liability of foreign associates 7,574 17,763<br />
Revaluation of securities to fair value 1,768,647 3,402,121<br />
Forming non-current provisions for severance cost and employee jubilee benefits -355,984 -361,017<br />
Total 1,420,237 3,058,867
| notes to the consolidated financial statements in accordance with IFRS |<br />
1 8 5 |<br />
Changes in the consolidated income statement<br />
(SIT in thousands)<br />
SAS 2004 Transfers<br />
Adjustments<br />
affecting net<br />
income IFRSs 2004<br />
Net revenue from goods sold and services rendered 56,385,784 0 0 56,385,784<br />
Changes in inventories 188,980 0 0 188,980<br />
Capitalised own products and services 113,555 -113,555 0 0<br />
Other operating revenues 945,267 392,380 3,300,369 4,638,016<br />
Cost of goods, material, services -39,274,773 113,555 -15,626 -39,176,844<br />
Labour costs -12,329,755 0 -48,699 -12,378,454<br />
Depreciation and amortisation -2,908,914 0 122,347 -2,786,567<br />
Other write-offs -1,455,963 0 0 -1,455,963<br />
Other operating expense -673,500 -56,969 0 -730,469<br />
Operating income 990,681 335,411 3,358,391 4,684,483<br />
Financial income 7,542,932 -552,960 0 6,989,972<br />
Financial expenses -3,057,454 0 0 -3,057,454<br />
Net financing income 4,485,478 -552,960 0 3,932,518<br />
Share in income of associates 0 552,960 3,342,192 3,895,152<br />
Pre-tax income 5,476,159 335,411 6,700,583 12,512,153<br />
Extraordinary revenues 392,380 -392,380 0 0<br />
Extraordinary expenses -56,969 56,969 0 0<br />
Tax -865,737 0 5,033 -860,704<br />
Net income for the financial year 4,945,833 0 6,705,616 11,651,449<br />
Net income for the financial year attributable to:<br />
Equity holders of the parent 4,905,407 0 6,674,657 11,580,064<br />
Minority interest 40,426 0 30,959 71,385<br />
Net income for the financial year 4,945,833 0 6,705,616 11,651,449
a n n u a l r e p o r t | 2 0 0 5<br />
1 8 6 |<br />
Explanation of the adjustments in the consolidated<br />
income statement<br />
Extraordinary revenues in the income statement were<br />
transferred under other operating revenues, and<br />
extraordinary expenses under other operating expenses.<br />
Other items were correspondingly broken down to meet<br />
the requirements of IFRSs for a separate disclosure.<br />
The substance of adjustments in the income statement<br />
affecting its amount is explained above in connection<br />
with individual balance sheet items. Below they are<br />
shown by the individual item of the income statement.<br />
Other operating revenues were increased by<br />
derecognition of negative goodwill amounting to<br />
3,467,619,000 tolars that arose in 2004, by a reduction<br />
in provisions for severance cost and employee benefits<br />
(28,569,000 tolars) and unrecognised provisions for<br />
advertising (8,727,000 tolars) and decreased for<br />
negative goodwill in the amount of 204,546,000 tolars<br />
utilised in previous years.<br />
Cost of goods, materials and services were increased by<br />
15,626,000 tolars for the cost of organisation incurred<br />
by the enterprise that were capitalised in 2004 according<br />
to SAS, and consistent with IFRSs they cannot be<br />
recognised. At 1 January 2004 unrecognised noncurrent<br />
capitalised expenses amounted to 810,030,000<br />
tolars. In 2004 their amortisation amounted to<br />
122,347,000 tolars. This amount increased the income<br />
for the year 2004. Labour costs in 2004 were increased<br />
by a<strong>dd</strong>itional provisions for severance costs and<br />
employee benefits on the basis of an actuary calculation<br />
in the amount of 48,699,000 tolars. For the difference<br />
between the reduction of provisions and formed<br />
a<strong>dd</strong>itional provisions for severance costs the deferred<br />
tax receivable amounting to 5,033,000 tolars was<br />
calculated.<br />
The share in profit of associates is the attributable profit<br />
that consistent with SAS in 2004 was not recognised in<br />
the income statement.<br />
All adjustments in the net income attributable to the<br />
Group increased the income by 6,705,616,000 tolars.<br />
Adjustments did not significantly influence the net<br />
income attributable to minority owners, which increased<br />
by 30,959,000 tolars especially due to amortisation of<br />
unrecognised capitalised cost of organisation incurred<br />
by the enterprise.<br />
Explanation of changes in the consolidated cash flow<br />
statement<br />
The form of the cash flow statement according to<br />
Slovene Accounting Standards differs considerably<br />
from the cash flow statement according to IFRSs.<br />
Therefore certain differences are not explainable. As far<br />
as substance is concerned, the difference lies only in<br />
classifying current call deposits and deposits at up to<br />
three months’ notice in cash and cash equivalents,<br />
whereas their movement according to SAS was<br />
classified in current financial investments.
| statement by the board of management for the <strong>Sava</strong> Group |<br />
28.3<br />
1 8 7 |<br />
Statement by the Board<br />
of Management for the<br />
<strong>Sava</strong> Group<br />
The Board of Management confirms the consolidated<br />
financial statements of the <strong>Sava</strong> Group for the year<br />
ended 31 December <strong>2005</strong>. These are the Group's first<br />
financial statements that have been prepared according<br />
to International Financial Reporting Standards.<br />
The Board of Management confirms that appropriate<br />
accounting policies have been applied on a consistent<br />
28 March 2006<br />
Vinko Peråiå<br />
Member of the Board<br />
Emil Vizoviæek<br />
Member of the Board<br />
basis and the consolidated <strong>report</strong> presents a true and fair<br />
view of the financial position of the <strong>Sava</strong> Group and the<br />
results of its operations for the year <strong>2005</strong>.<br />
The Board of Management is responsible for the proper<br />
managing of accounting policies, adopting suitable<br />
measures for securing the assets and other funds, and<br />
confirms herewith that the financial statements and the<br />
notes have been produced based on the assumption that<br />
the company will proceed with its operation in<br />
accordance with current legislations and International<br />
Financial Reporting Standards.<br />
Janez Bohoriå<br />
Chairman of the Board
auditor’s <strong>report</strong> for the sava group | <strong>2005</strong><br />
28.4<br />
1 8 8 |<br />
Auditor’s <strong>report</strong> for the <strong>Sava</strong> Group
| financial statements of the company <strong>Sava</strong> d.d. in accordance with SAS |<br />
29.<br />
29.1 Audited financial statements of the company <strong>Sava</strong> d.d.<br />
in accordance with Slovene Accounting Standards<br />
Audited Balance Sheet of the company <strong>Sava</strong> d.d.<br />
Individual Balance Sheet items are explained in the breakdown and notes to the financial statements<br />
(SIT in thousands)<br />
INDEX<br />
31/12/<strong>2005</strong> 31/12/2004 <strong>2005</strong>/2004<br />
ASSETS<br />
A. FIXED ASSETS 72,032,979 64,945,505 111<br />
I. INTANGIBLE FIXED ASSETS 73,507 97,412 75<br />
II. TANGIBLE FIXED ASSETS 18,162,294 16,533,547 110<br />
III. LONG-TERM INVESTMENTS 53,797,178 48,314,546 111<br />
B. CURRENT ASSETS 33,575,766 22,148,730 152<br />
I. INVENTORIES 0 0<br />
II, OPERATING RECEIVABLES 818,455 1,317,592 62<br />
A) Long-term operating receivables 225,063 287,467 78<br />
B) Short-term operating receivables 593,392 1,030,125 58<br />
III. SHORT-TERM INVESTMENTS 32,754,766 20,827,216 157<br />
IV. CASH IN BANKS, CHEQUES AND CASH IN HAND 2,545 3,922 65<br />
C. DEFERRED COSTS AND ACCRUED REVENUES 838 211 397<br />
TOTAL ASSETS 105,609,583 87,094,446 121<br />
OFF-BALANCE ASSETS<br />
LIABILITIES<br />
7,885,590 8,781,079 90<br />
A: CAPITAL 76,263,873 67,955,085 112<br />
I. Called-up capital 20,069,870 20,069,870 100<br />
II. Capital reserves 17,326,885 17,326,885 100<br />
III. Revenues reserves 8,382,996 6,238,856 134<br />
IV. Retained net profit or loss from previous periods 4,987,776 4,691,785 106<br />
V. Net profit or loss for the financial year 2,144,140 1,538,285 139<br />
VI. Equity revaluation adjustments 23,352,206 18,089,404 129<br />
B: PROVISIONS 58,149 93,316 62<br />
C: FINANCIAL AND OPERATING LIABILITIES 29,287,399 19,021,490 154<br />
A) Long-term financial and operating liabilities 1,956,006 1,625,456 120<br />
B) Short-term financial and operating liabilities 27,331,393 17,396,034 157<br />
D: ACCRUED COSTS AND DEFERRED REVENUES 162 24,555 1<br />
LIABILITIES TOTAL 105,609,583 87,094,446 121<br />
OFF-BALANCE LIABILITIES 7,885,590 8,781,079 90<br />
1 8 9 |<br />
Financial Statements of the<br />
company <strong>Sava</strong> d.d. with Notes<br />
in Accordance with Slovene<br />
Accounting Standards
a n n u a l r e p o r t | 2 0 0 5<br />
(SIT in thousands)<br />
JAN - DEC JAN - DEC INDEX<br />
<strong>2005</strong> 2004 <strong>2005</strong>/2004<br />
01. NET SALES REVENUES 1,905,903 1,820,972 105<br />
02. CHANGE IN THE VALUE OF INVENTORIES OF PRODUCTS AND WORK IN PROCESS 0 0 -<br />
03. CAPITALISED OWN PRODUCTS AND SERVICES 0 0 -<br />
04. OTHER OPERATING REVENUES (WITH OPERATING REVENUES FROM<br />
REVALUATION ADJUSTMENT) 414,495 110,874 374<br />
05. COSTS OF GOODS, MATERIAL AND SERVICES 811,269 826,780 98<br />
06. LABOUR COSTS 793,854 792,713 100<br />
07. AMORTISATION AND DEPRECIATION EXPENSE 701,948 1,194,365 59<br />
08. OTHER OPERATING EXPENSES 42,477 27,214 156<br />
OPERATING PROFIT OR LOSS (1+2+3+4-5-6-7-8) -29,150 -909,226 -<br />
09. FINANCIAL REVENUES FROM SHARES 6,374,304 6,335,144 101<br />
10. FINANCIAL REVENUES FROM LONG-TERM RECEIVABLES 8,321 16,983 49<br />
11. FINANCIAL REVENUES FROM SHORT-TERM RECEIVABLES 338,408 370,969 91<br />
12. FINANCIAL EXPENSES FROM LONG- AND SHORT-TERM INVESTMENTS WRITE-OFFS 708,842 973,602 73<br />
13. INTEREST EXPENSES AND FINANCIAL EXPENSES FROM OTHER LIABILITIES 787,153 1,092,552 72<br />
14. TAX ON PROFIT OR LOSS FROM ORDINARY ACTIVITIES 0 0 -<br />
15. NET PROFIT OR LOSS FROM ORDINARY ACTIVITIES 5,195,888 3,747,716 139<br />
(1+-2+3+4-5-6-7-8+9+10+11-12-13-14)<br />
16. EXTRAORDINARY REVENUES 72 37,234 -<br />
17. EXTRAORDINARY EXPENSES 1,329 90 -<br />
18. PROFIT OR LOSS FROM EXTRAORDINARY ACTIVITIES (16-17) -1,257 37,144 -<br />
19. TAX ON PROFIT OR LOSS 909,698 708,291 128<br />
20. DEFERRED TAXES -3,347 0 -<br />
21. NET PROFIT OR LOSS FOR THE FINANCIAL YEAR 4,288,280 3,076,569 139<br />
(15+16-17-19-20)<br />
1 9 0 |<br />
Audited Income Statement of the company <strong>Sava</strong> d.d.<br />
Individual Income Statement items are explained in the breakdown and notes to the financial statements.
| financial statements of the company <strong>Sava</strong> d.d. in accordance with SAS |<br />
A. CASH FLOWS FROM OPERATING ACTIVITIES<br />
1 9 1 |<br />
Audited Cash Flow Statement of the company <strong>Sava</strong> d.d.<br />
(SIT in thousands)<br />
JAN-DEC <strong>2005</strong> JAN-DEC <strong>2005</strong> JAN-DEC 2004 JAN-DEC 2004<br />
INFLOWS OUTFLOWS INFLOWS OUTFLOWS<br />
a) Inflows from operating activities 2,484,993 2,253,740<br />
Operating revenues 2,011,123 1,976,570<br />
Extraordinary revenues arising from operating<br />
activities 22 37,234<br />
Opening minus closing operating receivables<br />
Opening minus closing deferred costs<br />
474,475 239,977<br />
and accrued revenues -627 -41<br />
b) Outflows from operating activities<br />
Operating expenses exclusive of depreciation<br />
1,843,322 3,087,603<br />
expenses and long-term provisions<br />
Extraordinary expenses arising from operating<br />
1,652,769 1,655,247<br />
activities 1,329 90<br />
Income tax and other taxes not included in<br />
operating expenses 906,351 708,291<br />
Closing minus opening inventories 0 -201<br />
Opening minus closing operating liabilities<br />
Opening minus closing accrued costs and<br />
-741,520 722,204<br />
deferred revenues 24,393 1,972<br />
c) Net cash from operating activities (a minus b), or 641,671 0<br />
Net cash from operating activities (b minus a) 0 833,863<br />
B. CASH FLOWS FROM INVESTING ACTIVITIES<br />
a) Inflows from investing activities 7,103,728 19,191,462<br />
Financial revenues from investing activities 6,709,055 6,356,379<br />
Extraordinary revenues from investing activities 0 0<br />
Offset decrease in intangible fixed assets 0 0<br />
Offset decrease in tangible fixed assets 0 738,421<br />
Offset decrease in long-term investments 394,673 0<br />
Offset decrease in short-term investments 0 12,096,662<br />
b) Outflows from investing activities 12,721,712 23,939,160<br />
Financial expenses from investing activities 277,181 797,808<br />
Extraordinary expenses from investing activities 0 0<br />
Offset increase in intangible fixed assets 999 0<br />
Offset increase in tangible fixed assets 1,958,899 0<br />
Offset increase in long-term investments 0 23,141,352<br />
Offset increase in short-term investments 10,484,633 0
a n n u a l r e p o r t | 2 0 0 5<br />
1 9 2 |<br />
JAN-DEC <strong>2005</strong> JAN-DEC <strong>2005</strong> JAN-DEC 2004<br />
(SIT in thousands)<br />
JAN-DEC 2004<br />
INFLOWS OUTFLOWS INFLOWS OUTFLOWS<br />
c) Net cash used in investing activities (a minus b), or 0 0<br />
Net cash used in investing activities (b minus a) 5,617,984 4,747,698<br />
C. CASH FLOWS FROM FINANCING ACTIVITIES<br />
a) Inflows from financing activities 8,156,322 7,722,385<br />
Financial revenues from financing activities 0 321,993<br />
Extraordinary revenues from financing activities 50 0<br />
Increase in capital 0 6,847,244<br />
Offset increase in long-term provisions 0 0<br />
Offset increase in long-term financial liabilities 330,551 0<br />
Offset increase in short-term financial liabilities 7,825,721 553,148<br />
b) Outflows from financing activities 3,181,386 2,137,768<br />
Financial expenses from financing activities 1,224,787 1,084,156<br />
Extraordinary expenses from financing activities 0 0<br />
Decrease in capital 1,926,426 0<br />
Offset decrease in long-term provisions 35,167 9,649<br />
Offset decrease in long-term financial liabilities 0 1,054,192<br />
Offset decrease in short-term financial liabilities 0 0<br />
Decrease in dividends payable -4,994 -10,229<br />
c) Net cash used in financing operations (a minus B), or 4,974,936 5,584,617<br />
Net cash used in financing operations (b minus a) 0 0<br />
D. Cash and cash equivalent at end of period 2,545 3,922<br />
Net increase in cash and cash equivalents<br />
(sum net cash used Ac, Bc and Cc) -1,377 3,056<br />
Cash and cash equivalents at beginning of period 3,922 866<br />
In the <strong>2005</strong> cash flow statement the following items<br />
were excluded as non-cash ones:<br />
• depreciation in intangible fixed assets in the amount of<br />
24,904,000 tolars;<br />
• depreciation in tangible fixed assets in the amount of<br />
651,405,000 tolars;<br />
• revaluation adjustment in receivables in the amount of<br />
24,662,000 tolars;<br />
• financial expenses from shares in losses of subsidiaries<br />
in the amount of 140,729,000 tolars;<br />
• financial expenses due to impairments in loans of<br />
associates in the amount of 150,894,000 tolars;<br />
• receivables and liabilities for buyback of securities in<br />
the amount of 1,363,123,000 tolars;<br />
• specific equity revaluation adjustments in the amount<br />
of 5,946,934,000 tolars.
| financial statements of the company <strong>Sava</strong> d.d. in accordance with SAS |<br />
Change in Equity<br />
1 9 3 |<br />
Audited Statement of Changes in Equity of the company <strong>Sava</strong> d.d. for the period<br />
from 31 December 2004 to 31 December <strong>2005</strong><br />
Individual items of the Statement of Changes in Equity are explained in the breakdown and notes to the financial<br />
statements.<br />
(SIT in thousands)<br />
Retained net Net profit<br />
profit or loss or loss for<br />
Called up Capital from previous the financial Equity revaluation<br />
capital reserves Revenue reserves periods year adjustments<br />
I II III IV V VI<br />
Retained net Net profit General Specific<br />
Reserves profit from for the equity equity<br />
Share Capital Legal for own Statutory Other previous financial revaluation revaluation Capital<br />
capital reserves reserves shares reserves reserves period year adjustments adjustments total<br />
I/1 II III/1 III/2 III/3 III/4 IV/1 V/1 VI/1 VI/2<br />
A. BALANCE AT 31/12/2004 20,069,870 17,326,885 1,720,987 53,787 0 4,464,082 4,691,785 1,538,285 12,773,885 5,315,519 67,955,085<br />
B. Transfer to equity 0 0 0 0 0 0 0 4,288,280 0 5,946,934 10,235,214<br />
- Entry of called-up capital 0 0 0 0 0 0 0 0 0 0 0<br />
- Entry of net profit or loss for<br />
the financial year 0 0 0 0 0 0 0 4,288,280 0 0 4,288,280<br />
- Entry of general equity<br />
revaluation adjustments 0 0 0 0 0 0 0 0 0 0 0<br />
- Entry of specific equity<br />
revaluation adjustments 0 0 0 0 0 0 0 0 0 5,946,934 5,946,934<br />
- Other increases in capital 0 0 0 0 0 0 0 0 0 0<br />
C. Transfer within equity 0 0 0 0 0 2,144,140 1,538,285 -3,682,425 0 0 0<br />
- Allocation of net profit for the<br />
financial year according to the board<br />
of management and supervisory<br />
board resolution 0 0 0 0 0 2,144,140 0 -2,144,140 0 0 0<br />
- Allocation of net profit to<br />
a<strong>dd</strong>itional reserves according to<br />
the resolution adopted by the<br />
shareholders’ meeting 0 0 0 0 0 0 0 0 0 0 0<br />
- Dissolution of reserves for own<br />
shares and allocation to other<br />
capital elements 0 0 0 0 0 0 0 0 0 0 0<br />
- Other allocations within capital<br />
elements 0 0 0 0 0 0 1,538,285 -1,538,285 0 0 0<br />
D. Transfer from equity 0 0 0 0 0 0 -1,242,294 0 0 -684,132 -1,926,426<br />
- Dividends and bonuses paid 0 0 0 0 0 0 -1,242,294 0 0 -1,242,294<br />
- Other transfers from equity 0 0 0 0 0 0 0 0 0 -684,132 -684,132<br />
E. BALANCE AT 31/12/ <strong>2005</strong> 20,069,870 17,326,885 1,720,987 53,787 0 6,608,222 4,987,776 2,144,140 12,773,885 10,578,321 76,263,873
a n n u a l r e p o r t | 2 0 0 5<br />
Change in Equity<br />
1 9 4 |<br />
Audited Statement of Changes in Equity of the company <strong>Sava</strong> d.d. for the period<br />
from 31 January 2003 to 31 December 2004<br />
(SIT in thousands)<br />
Retained net Net profit<br />
profit or loss or loss for<br />
Called up Capital from previous the financial Equity revaluation<br />
capital reserves Revenue reserves periods year adjustments<br />
I II III IV V VI<br />
Retained net Net profit General Specific<br />
Reserves profit from for the equity equity<br />
Share Capital Legal for own Statutory Other previous financial revaluation revaluation Capital<br />
capital reserves reserves shares reserves reserves period year adjustments adjustments total<br />
I/1 II III/1 III/2 III/3 III/4 IV/1 V/1 VI/1 VI/2<br />
A. BALANCE AT 31/12/2003 17,209,870 12,178,885 1,720,987 54,195 0 2,925,798 5,033,887 818,246 12,773,885 0 52,715,753<br />
B. Transfer to equity 2,860,000 5,148,000 0 -408 0 0 0 3,076,569 0 5,315,519 16,399,680<br />
- Entry of called-up capital 2,860,000 5,148,000 0 0 0 0 0 0 0 0 8,008,000<br />
- Entry of net profit or loss for<br />
the financial year 0 0 0 0 0 0 0 3,076,569 0 0 3,076,569<br />
- Entry of general equity<br />
revaluation adjustments 0 0 0 0 0 0 0 0 0 0 0<br />
- Entry of specific equity<br />
revaluation adjustments 0 0 0 0 0 0 0 0 0 5,315,519 5,315,519<br />
- Other increases in capital 0 0 0 -408 0 0 0 0 0 0 -408<br />
C. Transfer within equity 0 0 0 0 0 1,538,284 818,246 -2,356,530 0 0 0<br />
- Allocation of net profit for the<br />
financial year according to the board<br />
of management and supervisory<br />
board resolution 0 0 0 0 0 1,538,284 0 -1,538,284 0 0 0<br />
- Allocation of net profit to<br />
a<strong>dd</strong>itional reserves according to<br />
the resolution adopted by the<br />
shareholders’ meeting 0 0 0 0 0 0 0 0 0 0 0<br />
- Dissolution of reserves for own<br />
shares and allocation to other<br />
capital elements 0 0 0 0 0 0 0 0 0 0 0<br />
- Other allocations within capital<br />
elements 0 0 0 0 0 0 818,246 -818,246 0 0 0<br />
D. Transfer from equity 0 0 0 0 0 0 -1,160,348 0 0 0 -1,160,348<br />
- Dividends and bonuses paid 0 0 0 0 0 0 -1,160,348 0 0 0 -1,160,348<br />
E. BALANCE AT 31/12/ 2004 20,069,870 17,326,885 1,720,987 53,787 0 4,464,082 4,691,785 1,538,285 12,773,885 5,315,519 67,955,085
| notes to the financial statements of the company <strong>Sava</strong> d.d. in accordance with SAS |<br />
1 9 5 |<br />
Calculation of accumulated profit or loss<br />
Proposal for the appropriation<br />
of accumulated profit<br />
In <strong>2005</strong> the joint stock company <strong>Sava</strong> created a net<br />
profit in the amount of 4,288,280,000 tolars; in<br />
compliance with the resolution by the Board of<br />
Management and in accordance with the Supervisory<br />
Board 50 per cent of this sum was allocated to other<br />
revenue reserves.<br />
As at 31 December <strong>2005</strong> the joint stock company <strong>Sava</strong><br />
showed in its accounting books accumulated profit in<br />
the amount of 7,131,916,000 tolars.<br />
(SIT in thousands)<br />
CALCULATION OF ACCUMULATED PROFIT OR LOSS 31/12/<strong>2005</strong> 31/12/2004<br />
21. NET PROFIT OR LOSS FOR THE FINANCIAL YEAR 4,288,280 3,076,569<br />
22. Retained profit (loss) 4,987,776 4,691,785<br />
23. Decrease (reversal) of capital reserves 0 0<br />
24. Decrease (reversal) of revenue reserves 0 0<br />
25. Increase (a<strong>dd</strong>itional allocation) for revenue reserves -2,144,140 -1,538,284<br />
26. ACCUMULATED PROFIT (ACCUMULATED LOSS) 7,131,916 6,230,070<br />
(21+22+23+24-25)<br />
29.2<br />
The Board of Management of the joint stock company<br />
<strong>Sava</strong> will propose to the Shareholders’ Meeting that<br />
dividends be paid for the year <strong>2005</strong> in the amount of 640<br />
tolars per share. 1,282,367,000 tolars will be allocated<br />
for the distribution to shareholders and we shall propose<br />
to the Shareholders’ Meeting that they utilise the<br />
accumulated profit from the year 1999 as a distribution<br />
source. In accordance with the proposal by the Board of<br />
Management of <strong>Sava</strong> d.d. the remainder of the<br />
accumulated profit in the amount of 5,849,549,000<br />
tolars will remain undistributed.<br />
Notes to the financial statements of the<br />
company <strong>Sava</strong> d.d. in accordance with Slovene<br />
Accounting Standards<br />
ACCOUNTING POLICY OF THE COMPANY SAVA D.D.<br />
Basis for drawing the financial<br />
statements<br />
The financial statements of the joint stock company<br />
<strong>Sava</strong> were drawn in conformity with Slovene<br />
Accounting Standards 2001, which had been issued by<br />
the Slovene Institute of Auditors.<br />
Due to better clarity the Balance Sheet and the Income<br />
Statements of the joint stock company <strong>Sava</strong> are<br />
presented in an abridged form; a<strong>dd</strong>itional explanations<br />
are contained in the disclosures.<br />
The financial statements are drawn in Slovene tolars<br />
rounded to one thousand units.<br />
In 2006 too, the joint stock company <strong>Sava</strong> as a parent<br />
company of the <strong>Sava</strong> Group will draw individual<br />
financial statements in accordance with Slovene<br />
Accounting Standards.
a n n u a l r e p o r t | 2 0 0 5<br />
1 9 6 |<br />
Segment <strong>report</strong>ing<br />
<strong>Sava</strong> d.d. has not defined either business or geographical<br />
segments.<br />
Exchange rate and conversion method<br />
in domestic currency<br />
All of the items shown in the accounts books and<br />
expressed in foreign currency are converted to the tolar<br />
value at the medium exchange rate of the Bank of<br />
Slovenia as valid on the last day of the accounting<br />
period.<br />
Intangible long-term fixed assets<br />
Intangible long-term fixed assets include investments in<br />
the acquired long-term rights on industrial property.<br />
An intangible long-term fixed asset is initially<br />
recognised at cost. Cost includes also the import and<br />
non-refundable purchasing taxes. Cost does not include<br />
the interests accrued by the appearance of an intangible<br />
long-term asset.<br />
Due to its increase in value the intangible long-term<br />
fixed assets are not revalued. The mentioned method<br />
applies also to intangible fixed assets that are purchased<br />
abroad.<br />
If the book value exceeds the substitutable value, the<br />
value in intangible fixed assets will impair. The<br />
substitutable value is determined on the basis of revenue<br />
and expenses estimation, which arise from further use of<br />
the assets considering thereby a suitable discount rate in<br />
future cash flows.<br />
Tangible fixed assets<br />
At initial recognition a tangible fixed assets is valued at<br />
cost. The cost includes its purchase expense, import and<br />
non-refundable purchasing taxes and expenses which<br />
can be attributed directly to its putting in service for the<br />
intended use, especially expenses for its transport and<br />
installation.<br />
Costs do not increase the interests on loans for acquiring<br />
a tangible fixed asset until it is put in service for the use.<br />
The cost of a tangible fixed asset, which is constructed<br />
or manufactured in the company, comprises expenses<br />
that are caused by its construction or manufacturing and<br />
indirect expenses for its construction or manufacturing<br />
that can be attributed to it.<br />
Due to the increase in value the tangible fixed assets are<br />
not revalued; the effects of the impairment are shown in<br />
operating expenses from revaluation.<br />
The difference between the net sales value and the book<br />
value of a disposed fixed asset is transferred under the<br />
operating revenues from revaluation, if the former is<br />
higher than the latter and under the operating expenses<br />
from revaluation, if the latter is higher than the former,<br />
respectively.<br />
Expenses that arise later in relation to a tangible fixed<br />
asset, increase its cost value, if they increase its future<br />
benefits in comparison with the ones originally<br />
estimated. The expenses that assure the prolongation of<br />
serviceability period of the tangible fixed asset first<br />
decrease the depreciation adjustment of its value<br />
calculated by then.<br />
Repairs of or maintaining the tangible fixed assets are<br />
intended for renewing or preserving the future economic<br />
benefits expected on the basis of the originally estimated<br />
level of asset efficiency. They are recognised as<br />
expenses upon their appearance.<br />
Depreciation<br />
The value of a tangible fixed asset and intangible fixed<br />
asset that is not written off is decreased through<br />
depreciation.<br />
The tangible fixed asset starts to be depreciated on the<br />
first day of the next month after beginning of use and<br />
performing the activity, for which it is intended,<br />
respectively.<br />
The intangible fixed asset starts to be depreciated when<br />
it is available for use.<br />
The decrease in value of depreciable assets due to an<br />
impairment are not depreciation costs but operating<br />
expense from revaluation of depreciable assets, except if<br />
at its precedent increase in value the equity revaluation<br />
adjustment was enhanced. In such a case it should be<br />
used before it increases the operating expenses from<br />
revaluation of these assets.
| notes to the financial statements of the company <strong>Sava</strong> d.d. in accordance with SAS |<br />
1 9 7 |<br />
The depreciation rates are based on the service life of the assets and amount to:<br />
Financial investments<br />
Long-term investments<br />
A long-term investment in capital, proprietary securities<br />
of other companies or debtor’s securities of other<br />
companies or the state are initially recognised at the cost<br />
of purchase, which equals either the paid sum of money<br />
or its equivalents, or the fair value of other substitutions<br />
for a purchase invested by the investor on the exchange<br />
day increased by costs that can be attributed directly to<br />
the investment.<br />
Long-term financial investments in capital of<br />
subsidiaries and associates are valued so as to be<br />
annually increased by that share of the net profit of<br />
subsidiaries or associates, which belongs to the holding<br />
company. Recording shares in profit of associates and<br />
subsidiaries increase the equity revaluation adjustment<br />
in connection with long-term financial investments.<br />
The subsequently received shares in profit decrease the<br />
originally shown increase in financial investment on the<br />
basis of a share in profit.<br />
Long-term investments in companies that are not<br />
investments in subsidiaries or associates are valued in<br />
the financial statements according to the investment<br />
method and are annually not increased by a share of the<br />
net profit that belongs to them. The allocated stakes in<br />
the profit are dealt with outside the investments and<br />
increase the financial revenues.<br />
Long-term investments, which are relocated under<br />
short-term investments, are transferred individually at<br />
their book value.<br />
Short-term investments<br />
Short-term investments in the proprietary securities<br />
of other companies and debtor’s securities of<br />
year <strong>2005</strong> - in % year 2004 - in %<br />
Intangible long-term fixed assets 20.0 20.0<br />
Buildings from 2.5 to 4.0 from 2.5 to 4.0<br />
Plant and machinery from 5.0 do 33.3 from 5.0 to 33.3<br />
Other equipment from 10.0 do 25.0 from 10.0 to 25.0<br />
companies or the state are initially valued at their<br />
purchase value.<br />
At the end of the year the value of those securities,<br />
which are listed on the Stock Exchange, is compared<br />
with the market price on the last day of the accounting<br />
period. In case that the market price is higher than the<br />
average purchase price the increase in value of the<br />
investment is not carried out. If the market price is lower<br />
than the average purchase price, then a revaluation<br />
adjustment is formed for the investment.<br />
For short-term securities, which are not listed on the<br />
Stock Exchange, the actual value is determined on the<br />
basis of last known transactions.<br />
Receivables<br />
At their initial recognition the receivables of all types are<br />
shown in the amounts that arise from the corresponding<br />
documents on condition that they will be paid. The<br />
original receivables can later be increased, or irrespective<br />
of payment or any other settlement, decreased by every<br />
amount, which is proven by an agreement.<br />
The advances in the balance sheet are shown in relation<br />
with things they are refer to.<br />
Receivables, which are assumed not be settled within<br />
the due term and in total amount respectively, are<br />
considered doubtful and, if a court procedure has<br />
already began, disputable.<br />
The revaluation adjustments in receivables are formed<br />
as follows:<br />
• a 100 per cent adjustment in all sued receivables and<br />
receivables filed in a bankruptcy proceeding, as well<br />
as current receivables, if the responsible service makes
a n n u a l r e p o r t | 2 0 0 5<br />
1 9 8 |<br />
a competent decision that reasonable grounds exist;<br />
• an 80 per cent adjustment in receivables filed in an<br />
obligatory enforcement proceeding.<br />
Cash<br />
Cash consists of book money. Book money is money on<br />
accounts at a bank or any other financial institution and<br />
can be applied for payment. It consists of immediately<br />
available cash. The book value of cash equals its initial<br />
nominal value until the need for a revaluation appears.<br />
Cash in foreign currency is translated to a domestic<br />
currency at the exchange rate on the day of receipt.<br />
The revaluation adjustment of cash in foreign currency<br />
is carried out on the day of <strong>report</strong>ing. It appears only in<br />
case of cash expressed in a foreign currency. On<br />
conversion the mi<strong>dd</strong>le exchange rate of the Bank of<br />
Slovenia is used. The revaluation adjustment of cash is<br />
shown as financial revenue and expenses, respectively.<br />
Capital<br />
The total capital comprises called-up capital, capital<br />
reserves, revenue reserves, retained net profit or loss<br />
from previous periods, equity revaluation adjustments<br />
and temporary also undistributed net profit.<br />
Share capital is managed in the domestic currency.<br />
Long-term provisions<br />
Long-term provisions are formed from long-term<br />
accrued costs or expenses and are earmarked for<br />
covering contingent liabilities arising from lawsuits.<br />
Liabilities<br />
Liabilities are either financial or operating, short-term or<br />
long-term.<br />
All liabilities are initially recognised with the amounts<br />
arising from the corresponding documents about their<br />
appearance, which prove the receipt of cash or redemption<br />
of any operating liability, in the case of long-term<br />
operating liabilities the receipt of tangible fixed assets, in<br />
the case of short-term operating liabilities the receipt of a<br />
product or a service or performed work and charged costs,<br />
expenses or a share in the net profit respectively.<br />
Long-term liabilities are further increased by imputed<br />
interests or decreased by repaid amounts and any other<br />
settlements, agreed upon with a creditor. The book value<br />
of long-term liabilities equals their original value<br />
decreased by repayment of the principal and transfers<br />
under short-term liabilities until the need for a<br />
revaluation adjustment of long-term debts appears.<br />
The book value of short-term liabilities equals their<br />
original value adjusted by their increases or decreases as<br />
agreed upon with the creditors until the need for their<br />
revaluation adjustment appears.<br />
Short-term and long-term liabilities of all kinds are<br />
initially shown with the amounts, which arise from the<br />
corresponding documents on condition that the creditors<br />
request their repayment. The liabilities are later<br />
increased with imputed yields (interests, other<br />
compensations), about which an agreement is made with<br />
the creditor. Liabilities are decreased by repaid amounts<br />
and any other settlements in agreement with the<br />
creditor. Long-term liabilities are decreased for the part<br />
that should be paid in less than a year, which is shown<br />
under short-term liabilities.<br />
Short-term accruals and deferrals<br />
Deferred costs and accrued revenues include short-term<br />
deferred costs.<br />
Short-term accrued costs and deferred revenues include<br />
deferred input tax on a<strong>dd</strong>ed value due from effected<br />
advances.<br />
The basis for short-term accruals and deferrals are the<br />
facts determined owing to certain knowledge and put<br />
down as a resolution about the formation of short-term<br />
accruals and deferrals and book-keeping documents<br />
acquired from the external business partners.<br />
Recognition of revenues<br />
Revenues are recognised if the enhancement of<br />
economic benefits in the accounting period is connected<br />
with an increase in an asset or decrease in a liability and<br />
such an increase could be reliably measured.<br />
Revenues are recognised when it is legitimate to expect<br />
they will result in earnings if these were not already<br />
implemented at their appearance.
| notes to the financial statements of the company <strong>Sava</strong> d.d. in accordance with SAS |<br />
1 9 9 |<br />
Operating revenues<br />
Revenues from provided services with the exception of<br />
provided services that result in financial revenues are<br />
measured at the selling prices of finished services or at<br />
the selling prices of services in progress with respect to<br />
the level of their completion.<br />
Revenues from received subsidies or endowments are<br />
measured in amounts that are approved for this purpose.<br />
Operating revenues from revaluation arise upon the<br />
disposal of tangible fixed assets and intangible fixed<br />
assets considering the equity revaluation adjustment<br />
from the precedent increase in the value of assets.<br />
Financial revenues<br />
Financial revenues are revenues from investment<br />
activities. They arise in relation to long-term and shortterm<br />
financial investments and also receivables.<br />
Financial revenues are recognised upon accounting<br />
irrespective of the proceeds if their size, maturity and<br />
redemption are not doubted.<br />
Interests are charged in proportion to the period expired<br />
and with regard to the not yet redeemed share of the<br />
principal and the valid interest rate.<br />
Dividends and shares in profit achieved in subsidiaries<br />
and associates are taken into account when they are<br />
paid.<br />
Financial revenues from revaluation arise upon the<br />
disposal of long-term and short-term financial<br />
investments considering the equity revaluation<br />
adjustment from the precedent increase in the value of<br />
financial investments.<br />
Extraordinary revenues<br />
Extraordinary revenues consist of extraordinary items.<br />
They appear in actually incurred amounts.<br />
Recognition of expenses<br />
Expenses are recognised if a decrease in economic<br />
benefits in the accounting period is connected with a<br />
decrease in assets or an increase in liabilities and this<br />
decrease could be reliably measured.<br />
Operating expenses<br />
Operating expenses are recognised when the material is<br />
used and service provided, respectively.<br />
Operating expenses are recognised in the period, to<br />
which they relate.<br />
Operating expenses from revaluation are recognised<br />
when a corresponding revaluation adjustment is carried<br />
out irrespective of their influence on the operating profit<br />
or loss.<br />
Operating expenses from revaluation arise in connection<br />
with tangible fixed assets, intangible fixed assets and<br />
current assets due to their impairment.<br />
Financial expenses<br />
Financial expenses are expenses for financing and<br />
investing activities.<br />
Financial expenses are recognised after balancing<br />
irrespective of payments that are in relation with them.<br />
Financial expenses from revaluation arise in connection<br />
with long-term and short-term financial investments due<br />
to their impairment and in connection with the increase<br />
in the value of long-term and short-term liabilities.<br />
Extraordinary expenses<br />
Extraordinary expenses include extraordinary items that<br />
are shown in actually arisen amounts.<br />
Cash Flow Statement<br />
Cash Flow Statement is drawn according to the indirect<br />
method based on data from the Balance Sheet at 31<br />
December <strong>2005</strong> and the Balance Sheet at 31 December<br />
2004 and the data from the Income Statement for the<br />
year <strong>2005</strong> and a<strong>dd</strong>itional data, which is required for<br />
adapting the inflows and outflows and a corresponding<br />
breakdown of important items.
a n n u a l r e p o r t | 2 0 0 5<br />
2 0 0 |<br />
BREAKDOWN AND NOTES TO THE FINANCIAL STATEMENTS OF<br />
SAVA D.D<br />
Balance Sheet<br />
Intangible fixed assets<br />
Intangible fixed assets totalling 73,507,000 tolars<br />
include the purchase licences for the MySAP.com and<br />
Survey of intangible fixed assets<br />
Movement of intangible fixed assets<br />
ORACLE software applications. The value of newly<br />
purchased licences in <strong>2005</strong> totalled 999,000 tolars. In<br />
<strong>2005</strong> the depreciation in the amount of 24,904,000 tolars<br />
was charged.<br />
(SIT in thousands)<br />
INDEX<br />
31/12/<strong>2005</strong> 31/12/2004 <strong>2005</strong>/2004<br />
I. INTANGIBLE FIXED ASSETS 73,507 97,412 75<br />
1. Long-term deferred operating costs 0 0 -<br />
2. Long-term deferred development costs 0 0 -<br />
3. Long-term industrial property rights 73,507 97,412 75<br />
4. Goodwill 0 0 -<br />
5. Advances for intangible fixed assets 0 0 -<br />
(SIT in thousands)<br />
COST VALUE<br />
Long-term industrial<br />
property rights TOTAL<br />
Balance at 01/01/<strong>2005</strong> 124,356 124,356<br />
Purchase, capitalisation 999 999<br />
Disposals, write-offs 0 0<br />
Revaluation adjustments 0 0<br />
Balance at 31/12/<strong>2005</strong> 125,355 125,355<br />
VALUE ADJUSTMENT<br />
Balance at 01/01/<strong>2005</strong> 26,944 26,944<br />
Purchase 0 0<br />
Disposals, write-offs 0 0<br />
Revaluation adjustments 0 0<br />
Depreciation 24,904 24,904<br />
Balance at 31/12/<strong>2005</strong> 51,848 51,848<br />
CARRYING AMOUNT<br />
Balance at 01/01/<strong>2005</strong> 97,412 97,412<br />
Balance at 31/12/<strong>2005</strong> 73,507 73,507
| notes to the financial statements of the company <strong>Sava</strong> d.d. in accordance with SAS |<br />
2 0 1 |<br />
Tangible fixed assets<br />
Tangible fixed assets totalling 18,162,294,000 tolars<br />
present 17.4 per cent of the balance sheet total and are<br />
10 per cent higher than last year. In accordance with the<br />
business policy of the company certain investments in<br />
subsidiaries were financed by the joint stock company<br />
<strong>Sava</strong> and included in the assets of the company too. A<br />
mortgage is placed on tangible fixed assets, precisely on<br />
the Grand Hotel Toplice building, with Bank Austria<br />
Creditanstalt due to the hired long-term loan for the<br />
hotel renovation. As at 31 December <strong>2005</strong> the loan not<br />
paid totals 670,812,000 tolars.<br />
Survey of tangible fixed assets<br />
The following significant changes in tangible fixed<br />
assets appeared in <strong>2005</strong>:<br />
• 2,746,378,000 tolars were allocated to investments, of<br />
which 2,661,474, 000 tolars were earmarked for the<br />
purchase of strategic building plots, real estate and<br />
equipment, 42,865,000 tolars for technology<br />
improvements in manufacturing equipment in<br />
<strong>Sava</strong>tech d.o.o., and 42,039,000 tolars for computer<br />
and other equipment;<br />
• in <strong>2005</strong> the depreciation of tangible fixed assets was<br />
charged in the amount of 635,747,000 tolars;<br />
• in <strong>2005</strong> impairments in fixed assets were not required.<br />
(SIT in thousands)<br />
INDEX<br />
31/12/<strong>2005</strong> 31/12/2004 <strong>2005</strong>/2004<br />
II. TANGIBLE FIXED ASSETS 18,162,294 16,533,547 110<br />
1. Land and buildings 14,280,196 12,933,473 110<br />
a) Land 4,490,714 3,547,899 127<br />
b) Buildings 9,789,482 9,385,574 104<br />
2. Plant and machinery 2,440,043 2,307,146 106<br />
3. Other equipment 129,551 166,391 78<br />
4. Tangible fixed assets under construction 1,312,504 1,126,537 117<br />
a) Advances for tangible fixed assets 0 0 -<br />
b) Tangible fixed assets under construction and manufacture 1,312,504 1,126,537 117
a n n u a l r e p o r t | 2 0 0 5<br />
(SIT in thousands)<br />
Advances Tangible<br />
for fixed assets<br />
tangible under con-<br />
Plant and Other fixed struction and<br />
COST VALUE Land Buildings machinery equipment assets manufacture TOTAL<br />
Balance at 01/01/<strong>2005</strong> 3,547,899 16,497,335 8,021,807 450,533 0 1,126,537 29,644,111<br />
Purchase, capitalisation 1,003,370 1,081,811 473,444 1,786 2,362 1,725,886 4,288,659<br />
Disposals, write-offs -60,555 -679,239 -305,335 -70,161 -2,362 -1,539,919 -2,657,571<br />
Revaluation adjustments 0 0 0 0 0 0 0<br />
Balance at 31/12/<strong>2005</strong> 4,490,714 16,899,907 8,189,916 382,158 0 1,312,504 31,275,199<br />
VALUE ADJUSTMENT<br />
Balance at 01/01/<strong>2005</strong> 0 7,111,761 5,714,661 284,142 0 0 13,110,564<br />
Purchase 0 0 0 0 0 0 0<br />
Disposals, write-offs 0 -273,595 -296,509 -63,302 0 0 -633,406<br />
Revaluation adjustments 0 0 0 0 0 0 0<br />
Depreciation 0 272,259 331,721 31,767 0 0 635,747<br />
Balance at 31/12/<strong>2005</strong> 0 7,110,425 5,749,873 252,607 0 0 13,112,905<br />
CARRYING AMOUNT<br />
2 0 2 |<br />
Movement of tangible fixed assets<br />
Balance at 01/01/<strong>2005</strong> 3,547,899 9,385,574 2,307,146 166,391 0 1,126,537 16,533,547<br />
Balance at 31/12/<strong>2005</strong> 4,490,714 9,789,482 2,440,043 129,551 0 1,312,504 18,162,294<br />
Long-term financial investments<br />
Long-term investments totalling 53,797,178,000 tolars<br />
Survey of long-term financial investments<br />
present 50.9 per cent of the balance sheet total and are<br />
11 per cent higher than last year.<br />
(SIT in thousands)<br />
INDEX<br />
31/12/<strong>2005</strong> 31/12/2004 <strong>2005</strong>/2004<br />
III. LONG-TERM FINANCIAL INVESTMENTS 53,797,178 48,314,546 111<br />
1. Shares in companies in the Group 27,558,437 26,123,735 105<br />
2. Long-term loan receivables due from group enterprises 1,480,381 568,472 260<br />
3. Shares in associates 23,794,413 19,652,824 121<br />
4. Long-term loan receivables due from associates 0 0 -<br />
5. Other long-term shares 907,312 1,911,488 47<br />
6. Other long-term loan receivables 2,848 4,240 67<br />
7. Own shares 53,787 53,787 100
| notes to the financial statements of the company <strong>Sava</strong> d.d. in accordance with SAS |<br />
2 0 3 |<br />
Shares in the <strong>Sava</strong> Group companies totalling<br />
27,558,437,000 tolars were 5 per cent higher when<br />
compared to last year. Significant changes in shares of<br />
companies in the <strong>Sava</strong> Group were as follows:<br />
• shares in the following companies increased: G&P<br />
Hoteli Bled d.o.o. by 7.7 per cent, <strong>Sava</strong> Trade d.d.,<br />
Ljubljana by 1.41 per cent, Terme 3000 d.d.,<br />
Moravske Toplice by 0.42 per cent, Grand Hotel<br />
Toplice Bled d.o.o. by 0.48 per cent, Golf in Kamp<br />
Bled d.d. by 0.02 per cent;<br />
• the share capital in the company ENSA d.o.o., Kranj<br />
was increased by 17,900,000 tolars;<br />
• In <strong>2005</strong> long-term financial investments in the<br />
companies of the <strong>Sava</strong> Group were increased by<br />
1,254,895,000 tolars with regard to the attributable<br />
part of the net profit, and decreased by 140,729,000<br />
tolars with regard to the attributable part of the loss in<br />
the companies of the <strong>Sava</strong> Group.<br />
Long-term loan receivables due from companies in the<br />
Group in the amount of 1,480,381,000 tolars were<br />
higher than last year, which is due to an approved long-<br />
term loan to the company <strong>Sava</strong> Nova d.o.o. Zagreb in<br />
the amount of 1,110,128,000 tolars.<br />
Shares in associates in the amount of 23,794,413,000<br />
tolars present a 41.13per cent share in Gorenjska<br />
Banka d.d., Kranj.<br />
Other long-term shares in the amount of 907,312,000<br />
tolars were decreased by 53per cent when compared to<br />
last year, which was mainly due to selling a stake in the<br />
company Geoplin d.o.o.<br />
Other long-term loan receivables in the amount of<br />
2,848,000 tolars were long-term loans to third business<br />
partners.<br />
Own shares in the amount of 53,787,000 tolars were the<br />
same as last year. The number of treasury shares at<br />
31/12/<strong>2005</strong> was 3,289; the nominal value of treasury<br />
shares amounted to 32,890,000 tolars, while the number<br />
of treasury shares represents 0.16 per cent of all shares<br />
issued.
a n n u a l r e p o r t | 2 0 0 5<br />
GROSS VALUE<br />
2 0 4 |<br />
Movement of long-term financial investments<br />
(SIT in thousands)<br />
Long-term Shares<br />
Shares and loan and Long-term<br />
stakes of receivables stakes and loan Other<br />
companies due long-term receivables Other long-term<br />
in from group receivables due from long-term loan Own<br />
the Group enterprises in associates associates shares receivables stake TOTAL<br />
Balance at 01/01/<strong>2005</strong> 26,278,779 568,472 19,652,824 0 2,020,175 4,240 53,787 48,578,277<br />
Increase 1,576,585 1,151,395 4,825,259 0 201,404 20 0 7,754,663<br />
Decrease 141,421 202,461 0 0 1,137,160 98 0 1,481,140<br />
Decrease due to received<br />
shareholding and dividends 462 0 683,670 0 0 0 0 684,132<br />
Transfers 0 -37,025 71,100 0 -71,100 -1,314 0 -38,339<br />
Revaluation adjustments 0 0 0 0 0 0 0 0<br />
Balance at 31/12/<strong>2005</strong> 27,713,481 1,480,381 23,865,513 0 1,013,319 2,848 53,787 54,129,329<br />
VALUE ADJUSTMENT<br />
Balance at 01/01/<strong>2005</strong> 155,044 0 0 0 108,687 0 0 263,731<br />
Increase 0 0 71,100 0 8,279 0 0 79,379<br />
Decrease 0 0 0 0 10,959 0 0 10,959<br />
Transfers 0 0 0 0 0 0 0 0<br />
Balance at 31/12/<strong>2005</strong> 155,044 0 71,100 0 106,007 0 0 332,151<br />
NET VALUE<br />
Balance at 01/01/<strong>2005</strong> 26,123,735 568,472 19,652,824 0 1,911,488 4,240 53,787 48,314,546<br />
Balance at 31/12/<strong>2005</strong> 27,558,437 1,480,381 23,794,413 0 907,312 2,848 53,787 53,797,178<br />
Long-term operating receivables<br />
Long-term operating receivables totalling 225,063,000<br />
tolars decreased by 22 per cent when compared to last<br />
year. 97 per cent of long-term operating receivables<br />
refer to long-term loans to employees for the purchase<br />
of flats. These loans were insured by a creditor’s<br />
mortgage on flats.<br />
The remaining 3per cent are receivables from<br />
scholarships and tuition fees and receivables for<br />
deferred taxes. Receivables for deferred taxes due from<br />
the state were formed in the amount of 3,347,000 tolars.<br />
None of the long-term operating receivables have been<br />
matured as yet.
| notes to the financial statements of the company <strong>Sava</strong> d.d. in accordance with SAS |<br />
II. OPERATING RECEIVABLES<br />
2 0 5 |<br />
Survey of long-term operating receivables<br />
(SIT in thousands)<br />
INDEX<br />
31/12/<strong>2005</strong> 31/12/2004 <strong>2005</strong>/2004<br />
A) Long-term operating receivables 225,063 287,467 78<br />
1. Long-term trade receivables 0 0 -<br />
2. Long-term receivables due from companies in the Group 0 0 -<br />
3. Long-term receivables due from associates 0 0 -<br />
4. Long-term receivables due from other entities 225,063 287,467 78<br />
5. Long-term called-up capital unpaid 0 0 -<br />
Short-term operating receivables<br />
Short-term operating receivables totalling 593,392,000<br />
tolars decreased by 42 per cent when compared to last<br />
year, which is primarily due to a decrease in trade<br />
receivables due from buyers of securities.<br />
Short-term trade receivables are due to charged rentals<br />
and other services outside the <strong>Sava</strong> Group; short-term<br />
receivables due from companies in the Group are also<br />
due to charged rentals and other services; short-term<br />
II. OPERATING RECEIVABLES<br />
Survey of short-term operating receivables<br />
receivables due from other entities are mainly<br />
receivables from buyers of securities and receivables<br />
arising from VAT, which are due from the state.<br />
In <strong>2005</strong> the value adjustment balance in trade<br />
receivables decreased by 101,917,000 tolars and<br />
increased by 10,490,000 tolars. On 31 December <strong>2005</strong><br />
the value of adjustment balance in trade receivables<br />
totalled 144,865,000 tolars.<br />
Short-term operating receivables are not insured.<br />
(SIT in thousands)<br />
INDEX<br />
31/12/<strong>2005</strong> 31/12/2004 <strong>2005</strong>/2004<br />
B) Short-term operating receivables 593,392 1,030,125 58<br />
1. Short-term trade receivables 14,404 44,703 32<br />
2. Short-term receivables due from companies in the Group 192,726 202,001 95<br />
3. Short-term receivables due from associates 7,975 0 -<br />
4. Short-term receivables due from other entities 378,287 783,421 48
a n n u a l r e p o r t | 2 0 0 5<br />
2 0 6 |<br />
Survey of short-term operating receivables by maturity<br />
Short-term financial investments<br />
Short-term financial investments totalling 32,754,766,000<br />
tolars represent 31.4 per cent of the balance sheet total.<br />
Survey of short-term financial investments<br />
(SIT in thousands)<br />
TOTAL Due Not due<br />
II. OPERATING RECEIVABLES<br />
B) Short-term operating receivables 593,392 8,395 584,997<br />
1. Short-term trade receivables 14,404 792 13,612<br />
2. Short-term receivables due from companies in the Group 192,726 5,130 187,596<br />
3. Short-term receivables due from associates 7,975 2,473 5,502<br />
4. Short-term receivables due from other entities 378,287 0 378,287<br />
Shares in companies in the Group totalling<br />
3,863,351,000 tolars represent short-term loans to the<br />
companies in the <strong>Sava</strong> Group.<br />
(SIT in thousands)<br />
INDEX<br />
31/12/<strong>2005</strong> 31/12/2004 <strong>2005</strong>/2004<br />
III. SHORT-TERM FINANCIAL INVESTMENTS 32,754,766 20,827,216 157<br />
1. Shares in companies in the Group 3,863,351 3,661,878 106<br />
2. Shares in associates 119,000 0 -<br />
3. Own shares 0 0 -<br />
4. Other short-term investments 28,772,415 17,165,338 168<br />
Shares in associates totalling 119,000,000 tolars include<br />
a short-term loan to the company Limb d.o.o. Ptuj.<br />
Other short-term investments totalling 28,772,415<br />
tolars consist of the following items:<br />
• shares available for sale in the amount of<br />
24,433,184,000 tolars;<br />
• advances for purchase of securities in the amount of<br />
2,008,978,000 tolars;<br />
• short-term deposits with banks in the amount of<br />
1,723,493,000 tolars;<br />
• receivables for buyback of securities in the amount of<br />
1,363,123,000 tolars;<br />
• short-term loans to other companies in Slovenia in the<br />
amount of 4,334,000 tolars;<br />
• value adjustment of short-term financial investments<br />
in the amount of 760,697,000 tolars.<br />
80 per cent of shares purchased for sale include the<br />
shares of Dom Holding d.d., Maksima Holding d.d.,<br />
Mercator d.d., NFD 1 d.d. and NFD 2 d.d., Laæko<br />
Brewery d.d. and KD Group d.d.
| notes to the financial statements of the company <strong>Sava</strong> d.d. in accordance with SAS |<br />
2 0 7 |<br />
On 31 December 2004 revaluation adjustments totalled<br />
788,218,000 tolars. In <strong>2005</strong> an a<strong>dd</strong>itional revaluation<br />
adjustment in other short-term financial investments<br />
was formed in the amount of 352,093,000 tolars and the<br />
adjustment in the amount of 379,614,000 tolars was<br />
eliminated. The revaluation adjustments balance at 31<br />
December <strong>2005</strong> totalled 760,697,000 tolars, which<br />
reflects the value adjusting to the stock exchange price.<br />
Capital<br />
The capital in the amount of 76,263,873,000 tolars is 12<br />
per cent higher than last year.<br />
In the structure of liabilities the capital has a 72.2 per<br />
cent share.<br />
In <strong>2005</strong> the following changes that influenced capital<br />
were carried out:<br />
• Net profit for the financial year of 4,288,280,000<br />
tolars was created.<br />
• Other revenue reserves were increased in accordance<br />
with the proposal by the Board of Management and the<br />
proposal by the Supervisory Board by 50 per cent of<br />
the net profit in the amount of 2,144,140,000 tolars.<br />
• According to the resolution of the Shareholders’<br />
Meeting the sum of 1,242,294,000 tolars was<br />
earmarked for dividends.<br />
Already in 2004 the accounting principles in <strong>Sava</strong> d.d.<br />
changed as regards using the equity method for treating<br />
profits in subsidiaries. Interests in the profit of<br />
subsidiaries are included under the specific equity<br />
revaluation adjustments for long-term financial<br />
investments and not under financial revenues. The total<br />
specific equity revaluation adjustments for long-term<br />
financial investments in the amount of 10,578,321,000<br />
tolars include the following items:<br />
• investments in subsidiaries in the amount of<br />
2,680,500,000 tolars;<br />
• investment in Gorenjska Banka in the amount of<br />
7,897,821,000 tolars.
a n n u a l r e p o r t | 2 0 0 5<br />
2 0 8 |<br />
Survey of individual capital items<br />
(SIT in thousands)<br />
INDEX<br />
31/12/<strong>2005</strong> 31/12/2004 <strong>2005</strong>/2004<br />
A: CAPITAL 76,263,873 67,955,085 112<br />
I. Called-up capital 20,069,870 20,069,870 100<br />
a) Share capital 20,069,870 20,069,870 100<br />
b) Uncalled capital 0 0 -<br />
II. Capital reserves 17,326,885 17,326,885 100<br />
III. Revenue reserves 8,382,996 6,238,856 134<br />
1. Legal reserves 1,720,987 1,720,987 100<br />
2. Reserves for own shares 53,787 53,787 100<br />
3. Statutory reserves 0 0 -<br />
4. Other reserves 6,608,222 4,464,082 148<br />
IV. Retained net profit or loss from previous periods 4,987,776 4,691,785 106<br />
V. Net profit or loss for the financial year 2,144,140 1,538,285 139<br />
VI. Equity revaluation adjustments 23,352,206 18,089,404 129<br />
1. General equity revaluation adjustments 12,773,885 12,773,885 100<br />
a) Revaluation adjustment in share capital 12,773,885 12,773,885 100<br />
b) Revaluation adjustment in paid-in capital surplus 0 0 -<br />
c) Revaluation adjustment in reserves 0 0 -<br />
d) Revaluation adjustment in retained net profit<br />
or loss from previous periods 0 0 -<br />
2. Specific equity revaluation adjustments 10,578,321 5,315,519 199<br />
a) Revaluation adjustment for tangible fixed assets 0 0 -<br />
b) Revaluation adjustment in long-term financial investments 10,578,321 5,315,519 199<br />
c) Revaluation adjustment in short-term financial investments 0 0 -<br />
d) Revaluation adjustment in long-term financial liabilities 0 0 -<br />
e) Revaluation adjustment in short-term financial liabilities 0 0 -<br />
Provisions<br />
At the end of 2004 long-term provisions totalled<br />
93,316,000 tolars, which were earmarked for covering<br />
potential liabilities due to lawsuits. In <strong>2005</strong> certain<br />
lawsuits ended with favourable result due to which the<br />
provisions were eliminated in the amount of 44,000,000<br />
tolars. For covering potential liabilities due to lawsuits<br />
new long-term provisions were formed in the amount of<br />
8,833,000 tolars. On 31 December <strong>2005</strong> the company<br />
showed 58,149,000 tolars in long-term provisions.
| notes to the financial statements of the company <strong>Sava</strong> d.d. in accordance with SAS |<br />
2 0 9 |<br />
Survey of long-term provisions<br />
(SIT in thousands)<br />
INDEX<br />
31/12/<strong>2005</strong> 31/12/2004 <strong>2005</strong>/2004<br />
B: PROVISIONS 58,149 93,316 62<br />
1. Provisions for pensions and similar 0 0 -<br />
2. Provisions for tax liabilities 0 0 -<br />
3. Other provisions 58,149 93,316 62<br />
Long-term financial and operating liabilities<br />
On 31 December <strong>2005</strong> the company showed long-term<br />
financial liabilities to banks in the amount of<br />
1,956,006,000 tolars, or 20 per cent more than in 2004.<br />
Their share in the structure of finance sources is 1.9 per<br />
cent.<br />
Long-term loans are obtained from banks LHB, Bank<br />
Austria Creditanstalt and NLB. All loans obtained are<br />
nominated in euros. Interest rates for long-term foreign<br />
currency loans are 3month-Euribor + 1%, 1-month-<br />
Euribor + 1.25% and 3-month-Euribor + 0.70% to<br />
0.85%. Loans obtained from Bank Austria Creditanstalt<br />
Survey of long-term financial and operating liabilities<br />
C: FINANCIAL AND OPERATING LIABILITIES<br />
are insured with a mortgage on the building of Hotel<br />
Toplice Bled and blank bills of exchange. Also the loan<br />
obtained from Nova Ljubljanska Banka is insured with<br />
blank bills of exchange, while other loans are not<br />
insured.<br />
The total amount of secured long-term loans amounts to<br />
1,746,377,000 tolars.<br />
The Maturity date of long-term financial liabilities is as<br />
follows:<br />
• in 2007 936,679,000 tolars<br />
• in 2008 439,559,000 tolars<br />
• in 2009 439,559,000 tolars<br />
• in 2010 140,209,000 tolars<br />
(SIT in thousands)<br />
INDEX<br />
31/12/<strong>2005</strong> 31/12/2004 <strong>2005</strong>/2004<br />
A) Long-term financial and operating liabilities 1,956,006 1,625,456 120<br />
1. Long-term financial liabilities arising from bonds 0 0 -<br />
2. Long-term financial liabilities to banks 1,956,006 1,625,456 120<br />
3. Long-term operating liabilities arising from advances 0 0 -<br />
4. Long-term trade payables 0 0 -<br />
5. Long-term bills payable 0 0 -<br />
6. Long-term financial and operating liabilities to companies in the Group 0 0 -<br />
7. Long-term financial and operating liabilities to associates 0 0 -<br />
8. Long-term financial and operating liabilities to other entities 0 0 -
a n n u a l r e p o r t | 2 0 0 5<br />
Balance of loans at 01/01/<strong>2005</strong> 1,625,456<br />
New loans obtained in <strong>2005</strong> 1,994,002<br />
Repayments in <strong>2005</strong> -298,822<br />
Transfer to short-term part -1,364,630<br />
Balance of loans at 31/12/<strong>2005</strong> 1,956,006<br />
2 1 0 |<br />
Movement of long-term financial liabilities in <strong>2005</strong>:<br />
Short-term financial and operating liabilities<br />
Short-term financial and operating liabilities totalling<br />
27,331,393,000 tolars are 57 per cent higher than last<br />
year. Their share in the liabilities structure amounts to<br />
26.2 per cent.<br />
Short-term financial liabilities to banks total<br />
18,924,504,000 tolars and are 67 per cent higher than<br />
last year. The increase is the result of a higher<br />
indebtedness with banks due to intensive investment<br />
activity and new formed liabilities for the buyback of<br />
securities in the amount of 1,363,123,000 tolars. All<br />
short-term loans are obtained from banks in Slovenia,<br />
interest rates being 1-month Euribor + 0.60% to<br />
Survey of short-term financial and operating liabilities<br />
C: FINANCIAL AND OPERATING LIABILITIES<br />
(SIT in thousands)<br />
+0.75%, and 3-month Euribor +0.55% to +0.58%,<br />
nominal interest rates being from 3.2 to 3.9 per cent.<br />
Only the short-term part of long-term financial liabilities<br />
is nominated in foreign currency. None of the short-term<br />
financial liabilities to banks have fallen due as yet and<br />
are all insured with bills of exchange.<br />
Short-term trade payables totalling 140,525,000 tolars<br />
have not become due.<br />
Short-term financial and operating liabilities to<br />
companies in the Group total 4,337,492,000 tolars and<br />
are 199 per cent higher than last year. Financial liabilities<br />
to companies in the Group represent 82 per cent of the<br />
quoted sum, the remaining part being operating<br />
(SIT in thousands)<br />
INDEX<br />
31/12/<strong>2005</strong> 31/12/2004 <strong>2005</strong>/2004<br />
B) Short-term financial and operating liabilities 27,331,393 17,396,034 157<br />
1. Short-term financial liabilities arising from bonds 0 0 -<br />
2. Short-term financial liabilities to banks 18,924,504 11,352,805 167<br />
3. Short-term operating liabilities arising from advances 0 22,671 0<br />
4. Short-term trade payables 140,525 121,175 116<br />
5. Short-term bills payable 0 0 -<br />
6. Short-term financial and operating liabilities to companies in the Group 4,337,492 1,450,302 299<br />
7. Short-term financial and operating liabilities to associates 2,990,819 3,492,847 86<br />
8. Short-term financial and operating liabilities to other entities 938,053 956,234 98
| notes to the financial statements of the company <strong>Sava</strong> d.d. in accordance with SAS |<br />
2 1 1 |<br />
liabilities. The financial liabilities result from managing<br />
the financial sources of the companies in the <strong>Sava</strong> Group.<br />
Short-term financial liabilities to companies in the<br />
Group are shown to the following companies:<br />
• <strong>Sava</strong> Trade d.d. in the amount of 1,371,120,000 tolars;<br />
• <strong>Sava</strong> IP d.o.o. in the amount of 539,197,000 tolars;<br />
• <strong>Sava</strong> Medical and Services d.o.o. in the amount of<br />
403,398,000 tolars;<br />
• G&P Hoteli Bled d.o.o. in the amount of 310,648,000<br />
tolars;<br />
• Terme Lendava d.d. in the amount of 233,869,000<br />
tolars;<br />
• Terme Radenci d.o.o. in the amount of 160,368,000<br />
tolars;<br />
• <strong>Sava</strong>tech d.o.o. in the amount of 230,121,000 tolars;<br />
and<br />
• to other subsidiaries in the <strong>Sava</strong> Group in the amount<br />
of 288,378,000 tolars.<br />
All quoted short-term financial liabilities are debts to the<br />
companies in the <strong>Sava</strong> Group in Slovenia and have not<br />
yet fallen due and are not insured. Interest rates for<br />
obtained short-term loans from the companies in the<br />
<strong>Sava</strong> Group range are from 3.2 per cent to 3.76 per cent.<br />
Short-term financial and operating liabilities to<br />
associates totalling 2,990,819,000 tolars are 14 per cent<br />
lower than last year. The amount includes the principal<br />
of received loans and liabilities for interests from<br />
Survery of off-balance assets / liabilities<br />
Gorenjska Banka d.d. The liabilities have not yet fallen<br />
due and are insured with the bills of exchange. Interest<br />
rates are from 3.9 per cent to 6-month Euribor + 0.60%.<br />
Short-term financial and operating liabilities to other<br />
entities totalling 938,053,000 tolars are 2 per cent lower<br />
than last year. Liabilities from obtained loans from legal<br />
entities outside the Group represent an 11 per cent share<br />
and liabilities to the state a 45 per cent share, the rest<br />
being liabilities to brokers of securities, liabilities for<br />
salaries, unpaid dividends and other liabilities.<br />
Accrued costs and deferred revenues<br />
Accrued costs and deferred revenues totalling 162,000<br />
tolars mainly refer to deferred input tax on VAT from<br />
received advances.<br />
Off-balance assets / liabilities<br />
Issued guarantees mainly refer to the loans received by<br />
subsidiaries. Under item mortgages the amount of the<br />
loan from Bank Austria Creditanstalt is shown.<br />
Other contingencies<br />
As at 31 December <strong>2005</strong> the joint stock company <strong>Sava</strong><br />
did not have any other contingencies. All known<br />
liabilities are included in the financial statements.<br />
(SIT in thousands)<br />
Structure Structure INDEX<br />
31/12/<strong>2005</strong> <strong>2005</strong> 31/12/2004 2004 <strong>2005</strong>/2004<br />
Excluded farmland after<br />
opening balance 42,098 0.5% 42,098 0.5% 100<br />
Assets excluded according to order due<br />
to nationalisation 82,333 1.0% 82,333 0.9% 100<br />
Issued guarantees 7,090,347 89.9% 7,601,779 86.6% 93<br />
Mortgages on the Grand Hotel Toplice building 670,812 8.5% 1,054,869 12.0% 64<br />
TOTAL 7,885,590 100.0% 8,781,079 100.0% 90
a n n u a l r e p o r t | 2 0 0 5<br />
2 1 2 |<br />
Income Statement<br />
Net sales revenues<br />
Since 2002 the net sales revenues of <strong>Sava</strong> d.d. mainly<br />
present inter-company sales within the <strong>Sava</strong> Group. In<br />
<strong>2005</strong> the joint stock company <strong>Sava</strong> realised net sales<br />
revenue in the amount of 1,905,903,000 tolars, which is<br />
5 per cent more than in the same period last year.<br />
Sales revenues are created from leasing out fixed assets<br />
and equipment and providing other services mainly for<br />
subsidiaries in the <strong>Sava</strong> Group, and to a lesser extent to<br />
companies outside of the Group.<br />
Survey of net sales revenues<br />
Survey of costs of goods, materials and services<br />
(SIT in thousands)<br />
JAN - DEC JAN - DEC INDEX<br />
<strong>2005</strong> 2004 <strong>2005</strong>/2004<br />
01. NET SALES REVENUES 1,905,903 1,820,972 105<br />
a) Revenues in domestic market 1,905,158 1,802,956 106<br />
To companies in the Group 1,729,094 1,591,683 109<br />
To other subsidiaries 16,921 0 -<br />
To other entities 159,143 211,273 75<br />
b) Revenues in foreign market 745 18,016 4<br />
To companies in the Group 745 2,987 25<br />
To other subsidiaries 0 0 -<br />
To other entities 0 15,029 0<br />
Costs of goods, materials and services<br />
Other operating revenues (with operating revenues<br />
from revaluation)<br />
Other operating revenues with operating revenues from<br />
revaluation totalling 414,495,000 tolars mainly arise – in<br />
78 per cent - from the sale of assets in Ptuj and Maribor,<br />
and partly from the sale of miscellaneous equipment that<br />
<strong>Sava</strong> due to a discontinuation of programmes no longer<br />
requires. 22 per cent of other operating revenues include<br />
revenues due from eliminating long-term provisions and<br />
accrued costs and deferred revenues for disposing of<br />
hazardous waste and revenues due to settling receivables<br />
that were already written off.<br />
Cost of goods, materials and services in the amount of 811,269,000 tolars are 2 per cent lower than in the same period<br />
last year.<br />
(SIT in thousands)<br />
JAN - DEC JAN - DEC INDEX<br />
<strong>2005</strong> 2004 <strong>2005</strong>/2004<br />
05. COSTS OF GOODS, MATERIALS AND SERVICES 811,269 826,780 98<br />
a) Cost of merchandise and materials sold and cost<br />
of raw materials and consumables used 54,241 64,787 84<br />
b) Cost of services 757,028 761,993 99
| notes to the financial statements of the company <strong>Sava</strong> d.d. in accordance with SAS |<br />
2 1 3 |<br />
The table below shows costs of goods, materials and services by type of cost:<br />
Survey of labour costs<br />
(SIT in thousands)<br />
31/12/<strong>2005</strong> 31/12/2004<br />
Cost of materials 54,240 64,787<br />
Cost of postal charges and transportation services 16,673 15,102<br />
Cost of maintenance services 101,503 86,604<br />
Cost of rentals 36,675 31,542<br />
Cost refunds to employees 4,923 7,045<br />
Cost of payment transactions, bank services and insurance premiums 25,012 24,103<br />
Cost of intellectual and personal services 232,413 201,121<br />
Cost of fairs, advertising and office allowances 98,514 72,946<br />
Cost of other services 241,316 323,530<br />
TOTAL 811,269 826,780<br />
Labour costs<br />
Labour costs totalling 793,854,000 tolars include<br />
provisions for a<strong>dd</strong>itional payments in <strong>2005</strong> in<br />
accordance with managerial contracts.<br />
The company shows the premiums charged for<br />
a<strong>dd</strong>itional pension insurance in the amount of 8,226,000<br />
tolars under labour costs.<br />
(SIT in thousands)<br />
JAN - DEC JAN - DEC INDEX<br />
<strong>2005</strong> 2004 <strong>2005</strong>/2004<br />
06. LABOUR COSTS 793,854 792,713 100<br />
a) Wages and salaries 589,630 567,324 104<br />
b) Social security costs 105,564 104,666 101<br />
c) Other labour costs 98,660 120,723 82<br />
Amortisation and depreciation expenses, write-offs<br />
Amortisation and depreciation expenses, write-offs total<br />
701,948,000 tolars and are 41 per cent lower than last<br />
year. In <strong>2005</strong> these costs are lower on account of<br />
extraordinary impairments in fixed assets carried out in<br />
2004.
a n n u a l r e p o r t | 2 0 0 5<br />
2 1 4 |<br />
Survey of amortisation and depreciation expenses, write-offs<br />
(SIT in thousands)<br />
JAN - DEC JAN - DEC INDEX<br />
<strong>2005</strong> 2004 <strong>2005</strong>/2004<br />
07. AMORTISATION AND DEPRECIATION EXPENSES, WRITE-OFFS 701,948 1,194,365 59<br />
a) Amortisation of intangible fixed assets, depreciation of<br />
tangible fixed assets, and operating expenses from<br />
revaluation of tangible and intangible fixed assets 676,309 1,178,315 57<br />
b) Operating expenses from revaluation of operating current assets 25,639 16,050 160<br />
Amortisation and operating expenses from revaluation<br />
include the following items:<br />
• amortisation of intangible fixed assets in the amount of<br />
24,904,000 tolars;<br />
• amortisation of tangible fixed assets in the amount of<br />
635,747,000 tolars; and<br />
• operating expenses from revaluation due to<br />
elimination of fixed assets from use in the amount of<br />
15,658,000 tolars.<br />
Operating expenses from revaluation of operating current<br />
assets totalling 25,638,000 tolars refer to value<br />
adjustments of trade receivables and value adjustments<br />
due from tuition fees and scholarships.<br />
Survey of financial revenues from shares<br />
Other operating expenses<br />
Other operating expenses totalling 42,477,000 tolars<br />
mainly represent paid contributions for urban real estate<br />
as well as the housing and compensation fund and a<br />
provision for lawsuits that might be lost.<br />
Financial revenues from shares<br />
Financial revenues from shares totalling 6,374,304,000<br />
tolars are 1 per cent higher than in the same period last<br />
year.<br />
(SIT in thousands)<br />
JAN - DEC JAN - DEC INDEX<br />
<strong>2005</strong> 2004 <strong>2005</strong>/2004<br />
09. FINANCIAL REVENUES FROM SHARES 6,374,304 6,335,144 101<br />
a) Financial revenues from shares in Group companies 10,568 26,820 39<br />
b) Financial revenues from shares in associates 1,361,350 1,537,276 89<br />
c) Other financial revenues from shares<br />
(incl. financial revenues from revaluation) 5,002,386 4,771,048 105<br />
Financial revenues from shares in Group companies –<br />
with the exception of associates in the amount of<br />
10,568,000 tolars – mainly include exchange differences<br />
of subsidiaries abroad.<br />
Financial revenues from shares in associates in the<br />
amount of 1,361,350,000 tolars include received<br />
dividends from Gorenjska Banka d.d.<br />
Other financial revenues from shares with financial<br />
revenues from revaluation in the amount of<br />
5,002,386,000 tolars are in 60 per cent due to proceeds<br />
from the sale of the financial investment Geoplin d.o.o.<br />
Ljubljana, whereas the remaining 40 per cent are due to<br />
the sale of securities in tourist operations in Croatia,<br />
other securities and other received dividends.
| notes to the financial statements of the company <strong>Sava</strong> d.d. in accordance with SAS |<br />
2 1 5 |<br />
Financial revenues from long-term receivables<br />
When compared to last year financial revenues from<br />
long-term receivables totalling 8,321,000 tolars are 51<br />
Survey of long-term receivables<br />
(SIT in thousands)<br />
JAN - DEC JAN - DEC INDEX<br />
<strong>2005</strong> 2004 <strong>2005</strong>/2004<br />
10. FINANCIAL REVENUES FROM LONG-TERM RECEIVABLES 8,321 16,983 49<br />
a) Financial revenues from long-term receivables due<br />
from Group companies 0 56 0<br />
b) Financial revenues from long-term receivables due from associates 0 0 -<br />
c) Other financial revenues from long-term receivables<br />
(incl. financial revenues from revaluation) 8,321 16,927 49<br />
Financial revenues from short-term receivables<br />
Financial revenues from short-term receivables in the<br />
amount of 338,408,000 tolars are 9 per cent lower than<br />
in the same period last year.<br />
Interest revenues and revenues from short-term<br />
receivables due from companies in the <strong>Sava</strong> Group –<br />
except in associates dash in the amount of 296,545,000<br />
tolars are charged interests from short-term loans,<br />
operating interests and charged guarantees to companies<br />
in the <strong>Sava</strong> Group.<br />
per cent lower and are mainly due to revaluation of<br />
long-term loans.<br />
Interest revenues and revenues from short-term<br />
receivables due from associates in the amount of<br />
7,821,000 tolars are charged interests and guarantees to<br />
the associate Limb d.o.o. from Ptuj.<br />
Other interest revenues and revenues from short-term<br />
receivables (including financial revenues from<br />
revaluation) in the amount of 34,042,000 tolars include<br />
interests from loans to others, positive exchange rate<br />
differences and revenues from guarantees charged<br />
outside the <strong>Sava</strong> Group.<br />
Survey of financial revenues from short-term receivables<br />
(SIT in thousands)<br />
JAN - DEC JAN - DEC INDEX<br />
<strong>2005</strong> 2004 <strong>2005</strong>/2004<br />
11. FINANCIAL REVENUES FROM SHORT-TERM RECEIVABLES 338,408 370,969 91<br />
a) Interest revenues and revenues from short-term receivables<br />
due from Group companies 296,545 240,631 123<br />
b) Interest revenues and revenues from short-term receivables<br />
due from associates 7,821 191
a n n u a l r e p o r t | 2 0 0 5<br />
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Financial expenses for long- and short-term<br />
investment write-offs<br />
Financial expenses for long- and short-term write-offs<br />
totalling 708,842,000 tolars are 27 per cent lower than<br />
last year.<br />
Financial expenses from revaluation of investments in<br />
companies in the Group totalling 220,523,000 tolars<br />
mainly include financial expenses from revaluation for<br />
participating in the loss of subsidaries (Teol d.d., Gea Sol<br />
International d.o.o., Ensa d.o.o., Kranj) and forming value<br />
adjustments in approved loans (Geasol International<br />
d.o.o. and Ensa d.o.o.)<br />
Survey of financial expenses for long- and short-term write-offs<br />
(SIT in thousands)<br />
JAN - DEC JAN - DEC INDEX<br />
<strong>2005</strong> 2004 <strong>2005</strong>/2004<br />
12. FINANCIAL EXPENSES FOR LONG- AND SHORT-TERM WRITE-OFFS 708,842 973,602 73<br />
a) Financial expenses from revaluation of investments in companies<br />
in the Group 220,523 175,650 126<br />
b) Financial expenses from revaluation of investments in associates 71,100 0 -<br />
c) Other financial expenses from revaluation 417,219 797,952 52<br />
Interest expenses and expenses incurred in<br />
connection with other liabilities<br />
Interest expenses and expenses incurred in connection<br />
with other liabilities totalling 787,153,000 tolars are 28<br />
per cent lower than in the same period last year.<br />
Financial expenses from revaluation of investments in<br />
associates in the amount of 71,100,000 tolars is due to<br />
an impairment in financial investment in the associate<br />
Limb d.o.o., Ptuj.<br />
Other financial expenses from revaluation amounts to<br />
417,219,000 tolars, of which 86 per cent is due to an<br />
impairment in short-term securities with regard to the<br />
Stock Exchange market price, while the remaining 14<br />
per cent are realised expenses from the sale of shortterm<br />
securities.<br />
Interest expenses and expenses incurred in connection<br />
with other liabilities to companies in the Group totalling<br />
74,076,000 tolars include mainly interest expenses for<br />
bank loans.<br />
Survey of interest expenses and expenses incurred in connection with other liabilities<br />
(SIT in thousands)<br />
JAN - DEC JAN - DEC INDEX<br />
<strong>2005</strong> 2004 <strong>2005</strong>/2004<br />
13. INTEREST EXPENSES AND EXPENSES INCURRED IN CONNECTION WITH<br />
OTHER LIABILITIES 787,153 1,092,552 72<br />
a) Interest expenses and expenses incurred in connection with other<br />
liabilities to Group companies 74,076 57,860 128<br />
b) Interest expenses and expenses incurred in connection with other<br />
liabilities to associates 125,977 191,444 66<br />
c) Other interest expenses and expenses incurred in connection with<br />
other liabilities 587,100 843,248 70
| notes to the financial statements of the company <strong>Sava</strong> d.d. in accordance with SAS |<br />
2 1 7 |<br />
Interest expenses and expenses incurred in connection<br />
with other liabilities to associates totalling 125,977,000<br />
tolars are charged interests for loans from Gorenjska<br />
Banka d.d.<br />
Other interest expenses and expenses incurred in<br />
connection with other liabilities totalling 587,100,000<br />
tolars include interest expenses for other bank loans,<br />
negative exchange rate differences and other financial<br />
expenses.<br />
Survey of extraordinary revenues and extraordinary expenses<br />
(SIT in thousands)<br />
JAN - DEC JAN - DEC INDEX<br />
<strong>2005</strong> 2004 <strong>2005</strong>/2004<br />
16. EXTRAORDINARY REVENUES 72 37,234 0<br />
17. EXTRAORDINARY EXPENSES 1,329 90 1,477<br />
a) Extraordinary expenses less expenses from equity revaluation adjustments 1,329 90 1,477<br />
b) Extraordinary expenses from equity revaluation adjustments 0 0 -<br />
Tax on profit<br />
In <strong>2005</strong> the tax liability of the joint stock company <strong>Sava</strong><br />
totalled 909,698,000 tolars or 28 per cent more than in<br />
Survey of tax on profit<br />
Extraordinary revenues and extraordinary expenses<br />
Extraordinary revenues totalling 72,000 tolars represent<br />
revenues from settled lawsuits. Extraordinary expenses<br />
in the amount of 1,329,000 tolars represent paid<br />
compensation in a court procedure.<br />
the same period last year and represents an effective tax<br />
rate of 17.5 per cent.<br />
The deferred tax totalling 3,347,000 tolars was formed<br />
from adjustments in receivables and long-term provisions.<br />
(SIT in thousands)<br />
TAX ON INCOME OF LEGAL ENTTITIES INDEX<br />
RECOGNISED IN THE INCOME STATEMENT <strong>2005</strong> 2004 <strong>2005</strong>/2004<br />
Tax assessed for the current year 909,698 708,291 128<br />
- for the current year 909,698 708,291 128<br />
- adjustments for previous years 0 0 -<br />
Deferred tax -3,347 0 -<br />
- from newly arisen and withdrawn temporary differences -3,347 0 -<br />
- from the effect of applied past tax losses 0 0 -<br />
TAX IN THE INCOME STATEMENT 906,351 708,291 128
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2 1 8 |<br />
Survey of tax on profit calculation<br />
(SIT in thousands)<br />
COMPARISON BETWEEN THE ACTUAL YEAR <strong>2005</strong> YEAR 2004<br />
AND THE CALCULATED TAX RATE Rate Amount Tax Rate Amount Tax<br />
Pre-tax profit 5,194,631 3,784,860<br />
Tax on profit applying the official rate 25.0% 1,298,658 25.0% 946,215<br />
Effect by tax rates in other countries 0.0% 0 0 0.0% 0 0<br />
Expenses not tax-deductible 2.1% 426,804 106,701 3.6% 542,960 135,740<br />
Effect of increase in tax rate on special profits 0.0% 0 0 0.0% 0 0<br />
Non-taxed revenues -6.6% -1,380,712 -345,178 -3.7% -553,097 -138,274<br />
Tax reliefs<br />
- applied, having effect on tax liability decrease -2.9% -601,930 -150,483 -6.2% -941,558 -235,390<br />
- remaining, to be utilised in the following years 0 0 0 0.0% 0 0<br />
Tax loss<br />
- applied, having effect on tax liability decrease 0.0% 0 0 0.0% 0 0<br />
- remaining, to be utilised in the following years 0.0% 0 0 0.0% 0 0<br />
Adjustments for previous years 0 0 0 0.0% 0 0<br />
TAX ASSESSED FOR THE CURRENT YEAR -7.5% -388,960 -6.3% -237,924<br />
Temporary difference for calculating deferred tax -0.1% -13,388 -3,347 0.0% 0 0<br />
TAX IN THE INCOME STATEMENT 17.4% 906,351 18.7% 708,291<br />
Under revenues that are not tax-deductible revaluation<br />
of assets and debts, newly formed long-term provisions<br />
and other not recognised expenses in accordance with<br />
the Law on Legal Entities Income Tax are included.<br />
Received dividends by Gorenjska Banka d.d., in which<br />
we have a 41.13per cent shareholding, are shown under<br />
Survey of receivables and liabilities for deferred taxes<br />
non-taxed revenues and elimination of the already taxed<br />
long-term provisions.<br />
Tax reliefs utilised in <strong>2005</strong> relate to investments in<br />
intangible and tangible fixed assets, employed disabled<br />
persons, the pension scheme and donations.<br />
(SIT in thousands)<br />
RECEIVABLES LIABILITIES NET<br />
Deferred taxes due from: <strong>2005</strong> 2004 <strong>2005</strong> 2004 <strong>2005</strong> 2004<br />
Operating receivables 1,139 0 0 0 1,139 0<br />
Provisions 2,208 0 0 0 2,208 0<br />
TOTAL 3,347 0 0 0 3,347 0
| notes to the financial statements of the company <strong>Sava</strong> d.d. in accordance with SAS |<br />
2 1 9 |<br />
Net profit or loss<br />
The net profit for the financial year totalled<br />
4,288,280,000 tolars in <strong>2005</strong> and is therefore 39 per cent<br />
higher than in the same period last year or 26 per cent<br />
higher than planned.<br />
Based on a resolution by the Board of Management and<br />
approval from the Supervisory Board 50 per cent of the<br />
net profit for the financial year in the amount of<br />
2,144,140,000 tolars is allocated to other revenue<br />
reserves.<br />
Net profit after converting capital into euros and cost of living<br />
(SIT in thousands)<br />
Calculated Decrease<br />
Capital % growth effect in profit<br />
CAPITAL\calculation in euros 66,028,659 0.00% 0 4,288,280<br />
CAPITAL\calculation from cost of living growth* 66,028,659 2.30% 1,518,659 2,769,621<br />
*cost of living<br />
Shares in profit<br />
The Shareholders’ Meeting has not approved any shares<br />
in the profit to those who are not owners.<br />
Data about group of persons<br />
In <strong>2005</strong> the total gross income of the members of the<br />
Board of Management amounted to 227,133,000 tolars.<br />
This sum consists of gross salaries, gross bonuses and<br />
other income.<br />
In <strong>2005</strong> the total net income of the Board members<br />
amounted to 96,182,000 tolars, which is 42 per cent of<br />
gross income.<br />
24 employees with managerial contracts received<br />
gross income totalling 268,949,000 tolars in <strong>2005</strong>. This<br />
income includes gross salaries, gross bonuses and other<br />
revenues.<br />
<strong>Sava</strong> d.d. showed receivables to employees with<br />
managerial contract in the amount of 1,860,000 tolars.<br />
In <strong>2005</strong> the Supervisory Board members received<br />
gross income totalling 83,486,000 tolars, of which paid<br />
bonuses have a 94 per cent share, the remaining sum is<br />
attendance fee. In <strong>2005</strong> also the liability to the member<br />
of the Supervisory Board from the previous mandate<br />
was settled in the amount of 6,843,000 tolars.<br />
Survey of income for the Board of Management<br />
(SIT in thousands)<br />
Total Total<br />
Gross income income<br />
Gross Gross other in gross in net<br />
NAME AND SURNAME salary bonuses income amount amount<br />
Janez Bohori@, Chairman of the Board 48,207 28,366 3,380 79,953 33,697<br />
Emil Vizoviœek, Member of the Board 44,626 26,280 3,043 73,949 31,405<br />
Vinko Per@i@, Member of the Board 44,487 26,280 2,464 73,231 31,080<br />
TOTAL 137,320 80,926 8,887 227,133 96,182<br />
Other income includes holiday allowance, other work-related earnings and bonuses.
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2 2 0 |<br />
Basic Business Indicators<br />
(SIT in thousands)<br />
INDICATORS 31/12/<strong>2005</strong> 31/12/2004<br />
1. BASIC FINANCING INDICATOR<br />
a) rate of ownership of financing 0.72 0.78<br />
capital/liabilities<br />
b) rate of long-term nature of financing<br />
sum of capital, long-term debts and provisions/liabilities<br />
2. BASIC INVESTMENT INDICATOR<br />
0.74 0.80<br />
a) basic investment rate 0.17 0.19<br />
fixed assets (according to net book value)/assets<br />
b) rate of long-term nature of investing<br />
(sum of fixed assets,long-term financial investments and long-term operating receivables/assets)<br />
3. BASIC INDICATORS OF PARALLEL FINANCIAL STRUCTURE<br />
0.68 0.75<br />
a) capital coverage of fixed assets coefficient 4.20 4.11<br />
capital/fixed assets (according to net book value)<br />
b) direct coverage of short-term liabilities coefficient (fast coefficient) 0.00 0.00<br />
cash/short-term liabilities<br />
c) accelerated coverage of short-term liabilities coefficient (accelerated coefficient) 1.22 1.26<br />
sum of cash and short-term receivables/short-term liabilities<br />
d) short-term coverage of short-term liabilities coefficient (short-term coefficient) 1.23 1.27<br />
short-term assets/short-term liabilities<br />
4. BASIC ECONOMIC INDICATORS<br />
a) economy of operations coefficient<br />
operating revenues/operating expenses<br />
5. BASIC PROFITABILITY INDICATORS<br />
0.99 0.68<br />
a) net profitability of capital coefficient 0.06 0.05<br />
net profit in business year/average capital (without net profit for the year)<br />
b) coefficient of dividend of share capital 0.06 0.06<br />
sum of dividends for the business year/average share capital<br />
Return on capital<br />
The return on capital of <strong>Sava</strong> d.d., calculated as the ratio<br />
between pre-tax profit for the financial year and the<br />
average balance of equity, totalled 7.9 per cent in <strong>2005</strong>,<br />
which is 1.3percentage points more than last year.<br />
The return on capital of <strong>Sava</strong> d.d., calculated as the ratio<br />
between net profit for the financial year and the average<br />
balance of equity, totalled 6.5 per cent in <strong>2005</strong>, which is<br />
1.2 percentage points more than last year.<br />
The average balance of equity for <strong>2005</strong> is being<br />
calculated without taking into account net profit for the<br />
current year and specific equity revaluation adjustments<br />
formed at the end of the current year.
| statement by the board of management for the company <strong>Sava</strong> d.d. |<br />
29.3<br />
2 2 1 |<br />
Statement by the Board<br />
of Management for the<br />
company <strong>Sava</strong> d.d.<br />
The Board agrees with the financial statements of the<br />
company <strong>Sava</strong> d.d. for the year that ended on 31<br />
December <strong>2005</strong>.<br />
The Board confirms that when drawing up the financial<br />
statements it consistently applied the corresponding<br />
accounting guidelines and the accounting estimates<br />
28 March 2006<br />
Vinko Peråiå<br />
Member of the Board<br />
Emil Vizoviæek<br />
Member of the Board<br />
were elaborated according to the principle of prudence<br />
and cost efficiency, and that the annual <strong>report</strong> gives a<br />
true and fair view of the company’s assets and its<br />
business performance in the year <strong>2005</strong>.<br />
The Board is responsible for the proper managing of its<br />
accounting procedures, adopting suitable measures for<br />
securing assets and other funds, and confirms herewith<br />
that the financial statements and notes have been<br />
produced based on the assumption that the company will<br />
proceed with its operations in accordance with the<br />
current legislation and Slovene accounting standards.<br />
Janez Bohoriå<br />
Chairman of the Board
a u d i t o r ’ s r e p o r t f o r t h e c o m p a n y S a v a d . d . |<br />
29.4<br />
2 2 2 |<br />
Auditor’s <strong>report</strong> for the company <strong>Sava</strong> d.d.
| statement on conformity with the corporate governance code for slovenia |<br />
2 2 3 |<br />
Statement on conformity with<br />
the Corporate Governance<br />
Code for Slovenia<br />
<strong>Sava</strong> d.d. has developed a system of corporate<br />
governance that ensures transparency in managing<br />
companies and the <strong>Sava</strong> Group, achieves and exceeds<br />
the expectations of shareholders and other stakeholder<br />
groups and protects their interests. The final goal of<br />
<strong>Sava</strong> d.d. and each of its each of its subsidiaries is the<br />
growth and development on sustainable basis, thus<br />
strengthening long-term economic success.<br />
The Board of Management of <strong>Sava</strong> d.d. has established<br />
and maintained a strong ethical climate with the aim of<br />
conducting its business in accordance with the highest<br />
standards of personal and corporate behaviour. The<br />
Board of Management of <strong>Sava</strong> d.d. has likewise<br />
designed an efficient system of internal supervision that<br />
maintains a suitable level of protection both with regard<br />
to honesty and the accuracy of information concerning<br />
its business. By appointing the <strong>report</strong>ing team, the<br />
Board of Management of <strong>Sava</strong> d.d. has established an<br />
a<strong>dd</strong>itional mechanism for introducing best practice and<br />
supervision over <strong>report</strong>ing to ensure that it is on time,<br />
comprehensive, relevant and accurate while respecting<br />
the principle of equality in informing all shareholders.<br />
Information on the key development achievements of the<br />
past year and the level of conformity with the best practice<br />
in the area of corporate governance are detailed in Chapter<br />
8. Corporate Governance System; the <strong>2005</strong> <strong>Annual</strong> Report<br />
of the <strong>Sava</strong> Group and the company <strong>Sava</strong> d.d.<br />
The policy and practice of corporate governance at <strong>Sava</strong><br />
d.d. observes the Corporate Governance Code for<br />
Slovenia (hereinafter referred to as the Code), which as<br />
of the year 2004 has been designed, developed and<br />
established by the Ljubljana Stock Exchange d.d.,<br />
Ljubljana, Association of Supervisory Board Members,<br />
and the Manager’s Association with the aim of<br />
specifying more precisely the standards of corporate<br />
governance for public commercial enterprises in<br />
Slovenia and to contribute to the rise of the corporate<br />
governance culture in Slovenia.<br />
The Board of Management of the joint stock company<br />
<strong>Sava</strong> issued the former Corporate Governance Code for<br />
Slovenia on 31 March <strong>2005</strong> and published it on 25 April<br />
<strong>2005</strong>. Hence it follows from the announcement of this<br />
statement, which is available also on the <strong>Sava</strong> d.d. web<br />
site (www.sava.si) that the company observed the then<br />
valid Code of 18 March 2004 in full with the exception<br />
of some cases. The announced deviations and<br />
explanations have remained to be decisive for <strong>2005</strong> until<br />
the issue of the new code subsidiaries, which became<br />
effective on 14 December <strong>2005</strong>.<br />
Herewith the Board of Management and the Supervisory<br />
Board of the joint stock company <strong>Sava</strong> d.d. declare that<br />
the joint stock company <strong>Sava</strong> d.d. respects the<br />
provisions of the changed and amended code of 14<br />
December <strong>2005</strong> in full except in cases where it deviates<br />
from it, for which the following explanations are given:<br />
Item 1.1.1.: The basic goals of the joint stock company<br />
which performs lucrative activity is to maximise the<br />
value of the company. This and other goals, which the<br />
company pursues in performance of its activity shall be<br />
written down in the company statute.<br />
In its statute <strong>Sava</strong> d.d. has not separately laid down the<br />
company goals except those defined by the Law on<br />
Commercial Enterprises. The goal "to maximise the<br />
value of company assets" is a constituent part of the<br />
wording that represents the mission of <strong>Sava</strong> d.d. and is,<br />
as well as other strategic company goals, contained in<br />
public releases and <strong>report</strong>s, which are available for all<br />
shareholders and the public.<br />
Item 2.3.2: The method of determining the level of pay,<br />
remuneration and other benefits for members of the<br />
Board of Management must first be prescribed and<br />
respect the criteria as they are presented especially:<br />
• the range of tasks of an individual member of the<br />
Board;<br />
• the performance of an individual member of the<br />
Board;<br />
• the size of the company and its financial position;<br />
• complexity of company management with regard to its<br />
business and organisational structure;
a n n u a l r e p o r t | 2 0 0 5<br />
2 2 4 |<br />
• general economic circumstances in which the<br />
company operates;<br />
• the success of the company's business performance;<br />
• meeting the strategic and annual plans;<br />
• awards to members of the Board in subsidiaries; and<br />
• recommendations for awarding endorsed by<br />
professional organisations.<br />
However, we believe that <strong>Sava</strong> d.d. does observe the<br />
provisions, but the wording of the items is inaccurate as<br />
it indicates that the company should adopt special<br />
regulations in connection with the method of<br />
determining pay levels, remunerations and other<br />
benefits for members of the Board of Management. We<br />
believe that a separate deed that would define the<br />
criteria in advance is not required and we also believe<br />
that in this way the required adaptability in decisionmaking<br />
would be reduced. Therefore we further<br />
maintain that the present arrangement according to<br />
which the issue is regulated with criteria specified in<br />
advance in individual contracts between the company<br />
and individual members of the Board of Management,<br />
while the decision about awarding the Board of<br />
Management are adopted upon endorsing the annual<br />
financial statements.<br />
Item 6.1.5: The company must change the auditing<br />
company or the auditor partner at least once every five<br />
years.<br />
Auditing of the financial statements of <strong>Sava</strong> d.d. has<br />
been performed by KPMG Slovenija d.o.o., a select firm<br />
of auditors, for more than five years, but in this period<br />
the composition of the team of auditors has changed.<br />
All other obligatory provisions of the Corporate<br />
Governance Code of 14 December <strong>2005</strong>, which were<br />
published in full on the website of the Ljubljana Stock<br />
Exchange (www.ljse.si), are fully observed by <strong>Sava</strong> d.d.<br />
The vision of <strong>Sava</strong> d.d. in the field of corporate<br />
governance is the conformity of the corporate<br />
governance system with all good practices, which are<br />
determined by the most progressive Slovene and<br />
international practice.<br />
The statement on observing the Corporate Governance<br />
Code refers to the period from the implementation of the<br />
Corporate Governance Code in the amended and<br />
changed version of 14 December <strong>2005</strong> to the day of<br />
publication of this Statement on 31 March 2006. The<br />
Board of Management and the Supervisory Board of<br />
<strong>Sava</strong> d.d. discussed and adopted the Statement on the<br />
Corporate Governance Code for Slovenia on 21 April<br />
2006. In accordance with the rules we shall regularly<br />
publish a statement on conformity with the Corporate<br />
Governance Code or its future variants in future annual<br />
<strong>report</strong>s.<br />
31 March 2006 Board of Management<br />
and Supervisory Board of <strong>Sava</strong> d.d.
2 2 5 |<br />
The <strong>Sava</strong> Group<br />
<strong>Sava</strong>, d.d. - Holding<br />
BOARD OF MANAGEMENT<br />
Janez Bohoriå, Chairman<br />
tel: +386 4 206 52 15, fax: +386 4 206 64 46<br />
janez.bohoric@sava.si<br />
Emil Vizoviæek, Member<br />
tel: +386 4 206 52 10, fax: +386 4 206 64 46<br />
emil.vizovisek@sava.si<br />
Vinko Peråiå, Member<br />
tel: +386 4 206 53 25, fax: +386 4 206 64 46<br />
vinko.percic@sava.si<br />
Competence centres<br />
CORPORATE COMMUNICATIONS<br />
Lidija Bregar, Director<br />
tel: +386 4 206 58 19, fax: +386 4 206 64 01<br />
lidija.bregar@sava.si<br />
STRATEGIC FINANCE<br />
Miha Dolinar, Director<br />
tel: +386 4 206 59 88, fax: +386 4 206 64 46<br />
miha.dolinar@sava.si<br />
FINANCE<br />
Iva Œagar, M.A., Procurator<br />
tel: +386 4 206 63 46, fax: +386 4 206 64 46<br />
iva.zagar@sava.si<br />
STRATEGIC ACCOUNTING,<br />
PLANNING & ANALYSES<br />
Mojca Globoånik, Director<br />
tel: +386 4 206 56 01, fax: +386 4 206 64 46<br />
mojca.globocnik@sava.si<br />
RISK MANAGEMENT<br />
Vlasta Mekiæ, Director<br />
tel: +386 4 206 51 36, fax: +386 4 206 64 46<br />
vlasta.mekis@sava.si<br />
| c o n t a c t p e r s o n s |<br />
PROCURATORS<br />
Iva Œagar, M.A.<br />
tel: +386 4 206 63 46, fax: +386 4 206 64 46<br />
iva.zagar@sava.si<br />
Miran Hude<br />
tel: +386 4 206 59 46, fax: +386 4 206 64 06<br />
miran.hude@sava.si<br />
INTERNAL AUDIT<br />
Duæa Haloœan Sedej, M.A., Internal Auditor<br />
tel: +386 4 206 53 26, fax: +386 4 206 64 46<br />
dusa.sedej@sava.si<br />
COST CONTROL AND OPERATIONAL<br />
EXCELLENCE<br />
Emil Vizoviæek, Board Member<br />
tel: +386 4 206 52 10, fax: +386 4 206 64 46<br />
emil.vizovisek@sava.si<br />
STRATEGIC PURCHASING<br />
Marko Ætebe, Director<br />
tel: +386 4 206 63 73, fax: +386 4 206 64 22<br />
marko.stebe@sava.si<br />
MARKETING SYSTEMS<br />
Alojzija Murn, Manager<br />
tel: +386 1 280 03 90, fax: +386 1 280 03 20<br />
alojzija.murn@sava-trade.si<br />
HR, LAW & ORGANISATION<br />
Tatjana Lozar, Director<br />
tel: +386 4 206 56 16, fax: +386 4 206 64 60<br />
tatjana.lozar@sava.si
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2 2 6 |<br />
STRATEGIC INFORMATICS<br />
Georg Pollak, Director<br />
tel: +386 4 206 53 07, fax: +386 4 206 64 46<br />
georg.pollak@sava.si<br />
QUALITY SYSTEMS<br />
Joœe Vodiåar, Manager<br />
tel: +386 4 206 52 85, fax: +386 4 206 64 36<br />
joze.vodicar@sava.si<br />
Divisions<br />
Rubber Manufacturing<br />
SAVATECH d. o. o., Kranj<br />
Duæan Kveder, Director<br />
tel: +386 4 206 52 74, fax: +386 4 206 64 60<br />
dusan.kveder@sava.si<br />
Vesna Åadeœ, Director<br />
tel: +386 4 206 51 79, fax: +386 4 206 64 60<br />
vesna.cadez@sava.si<br />
SAVA - GTI d.o.o., Ptuj<br />
Anton Rogina, Director<br />
tel: +386 2 787 93 30, fax: +386 2 787 93 40<br />
anton.rogina@sava.si<br />
SAVA - SCHÄFER d.o.o., Kranj<br />
IztokDolenc, Director<br />
tel: +386 4 206 53 63, fax: +386 4 206 64 05<br />
iztok.dolenc@sava.si<br />
SAVA ROL d.o.o., Zagreb<br />
Darko Vodanovifl, Director<br />
tel. and fax: +385 1 366 74 89<br />
sava-rol@zg.hinet.hr<br />
SAFETY<br />
Janez Fabijan, Manager<br />
tel: +386 4 206 53 78, fax: +386 4 206 64 42<br />
janez.fabijan@sava.si<br />
EU PROJECTS<br />
Primoœ Kozina, Director<br />
tel: +386 4 206 52 91, fax: +386 4 206 64 04<br />
primoz.kozina@sava.si<br />
FOREIGN TRADE NETWORK<br />
SAVA TRADE G.m.b.H., Munich, Germany<br />
Zlatko Smrdel, Director<br />
tel: +49 89 544 14 30, fax: +49 89 532 89 51<br />
zlatko.smrdel@sava-trade.de<br />
SAVA TRADE s.r.o., Prague, Czech Republic<br />
Roman Drapela, Director<br />
tel: +420 22 494 19 66, +420 22 494 25 67<br />
fax: +420 22 494 25 59<br />
roman.drapela@savatrade.cz<br />
SAVA TRADE Sp. zo.o., Warsaw, Poland<br />
Ryszard Zawadzki, Director<br />
tel: +48 22 721 1361, fax: +48 22 721 1362<br />
ryszard.zawadzki @savatrade.com.pl<br />
SAVATECH TRADE Ltd., London<br />
Great Britain<br />
Boætjan Podjed, Director<br />
tel: +44 020 8288 35 08, fax: +44 020 8688 00 55<br />
bostjan.podjed@savatech.f9.co.uk<br />
SAVA TRADE Inc., Port Orange, Florida<br />
Tony Æimunac, Director<br />
tel: +1 386 760 07 06, fax: +1 386 760 87 54<br />
savatrade@bellsouth.net
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Trieste Representative Office, Italy<br />
Niko Golemac, Manager<br />
tel: +39 040 2528 140, fax: +39 040 252 90 63<br />
niko.golemac@sava.si<br />
paolo.leghissa@sava.si<br />
Trade<br />
SAVA TRADE d. d., Ljubljana<br />
Antonija Pirc, M.A., Director<br />
tel: +386 1 280 02 04, fax: +386 1 280 03 20<br />
antonija.pirc@sava-trade.si<br />
Tourism<br />
Andrej Æprajc, Director Tourism<br />
tel: +386 4 537 77 12, fax: +386 4 537 77 22<br />
andrej.sprajc@hotelibled.com<br />
GOLF IN KAMP Bled d. d., Bled<br />
Andrej Æprajc, Director<br />
tel: +386 4 537 77 12, fax: +386 4 537 77 22<br />
andrej.sprajc@hotelibled.com<br />
Camping Bled<br />
Marjeta Vizoviæek, Manager<br />
tel: +386 4 575 20 01, fax: +386 4 575 20 02<br />
marjeta.vizovisek@camping.bled.si<br />
GRAND HOTEL TOPLICE d. o. o., Bled<br />
Zvone Æpec, Director<br />
tel: +386 4 579 11 70, fax: +386 4 574 18 41<br />
info@hotel-toplice.com<br />
Hotel Vila Bled<br />
Emil Æink, Manager Hotel Vila Bled<br />
tel: +386 4 579 15 00, fax: +386 4 574 13 20<br />
emil.sink@vila-bled.com<br />
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Moscow Representative Office, Russia<br />
Branimir AnŸelifl, Manager<br />
tel: +7 095 775 38 46, fax: +7 095 981 63 03<br />
branimir.andjelic@savatech.ru<br />
MG MARKET d.o.o., Ljubljana<br />
Duæan Papeœ, Director<br />
tel: +386 1 420 10 42, fax: +386 1 420 10 52<br />
dusan.papez@mg-market.si<br />
G&P HOTELI BLED d.o.o., Bled<br />
Lidija Dokl, Director<br />
tel: +386 4 575 10 00, fax: +386 4 575 10 49<br />
lidija.dokl@gp-hoteli-bled.si<br />
Hotel Golf, Bled<br />
Fedja Pobegajlo, Director<br />
tel: +386 4 579 20 00, fax: +386 4 574 17 68<br />
fedjap@gp-hoteli-bled.si<br />
Hotel Park, Bled<br />
Ema Pogaåar, Director<br />
tel: +386 4 579 30 00, fax: +386 4 574 15 05<br />
ema.pogacar@gp-hoteli-bled.si<br />
TERME 3000 d.d., Moravske Toplice<br />
Duæan Bencik, General Manager<br />
tel: +386 2 512 23 00, fax: +386 2 548 16 07<br />
dusan.bencik@terme3000.si<br />
Terme Lendava d.d., Lendava<br />
Franc Huber, Director<br />
tel: +386 2 577 44 40, fax: +386 2 577 44 18<br />
franc.huber@terme-lendava.si<br />
Terme Ptuj d.o.o., Ptuj<br />
Andrej Klasinc, Director<br />
tel: +386 2 749 45 10, fax: +386 2 749 45 20<br />
andrej.klasinc@terme-ptuj.si
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Terme Radenci, d.o.o., Radenci<br />
Milan Hojnik, Director<br />
tel: +386 2 520 27 00, fax: +386 2 520 27 472<br />
milan.hojnik@terme-radenci.si<br />
Terme Banovci, Verœej<br />
Lea Hofman, Manager<br />
tel: +386 2 513 14 00, fax: +386 2 587 17 03<br />
lea.hofman@terme-banovci.si<br />
Real Estate<br />
SAVA IP d.o.o., Ljubljana<br />
Joœe Kavåiå, Director<br />
tel: +386 1 430 41 50, fax: +386 1 231 31 70<br />
joze@sava-ip.si<br />
IP NOVA d. o. o., Ljubljana<br />
Gorazd Rous, Director<br />
Tel: +386 1 430 41 50, fax: +386 1 231 31 70<br />
gorazd@sava-ip.si<br />
Other Operations<br />
TEOL d. d., Ljubljana<br />
Danijel Æumej, General Manager<br />
tel: +386 1 520 41 30, fax: +386 1 520 41 09<br />
danijel.sumej@teol.si<br />
SAVA MEDICAL IN STORITVE d.o.o., Kranj<br />
Maksimiljan Fijaåko, Director<br />
tel: +386 4 206 53 97, fax: +386 4 206 64 42<br />
maksimiljan.fijacko@sava.si<br />
Investment Finance<br />
INVESTMENTS IN INNOVATIVE PROJECTS:<br />
LIMB d.o.o., Ptuj<br />
Natalija Potoånik, Director<br />
tel: +386 2 787 93 19, fax: +386 2 787 93 27<br />
natalija.potocnik@siol.net<br />
Hotel Jeruzalem, Ljutomer<br />
Branko Smodiæ, Manager<br />
tel: +386 2 581 12 11 , fax: +386 2 581 11 48<br />
hotel.jeruzalem-ljutomer@radenska.si<br />
SAVA NOVA d.o.o., Zagreb<br />
Joœe Kavåiå, Director<br />
tel: +385 1 666 10 05, fax: +385 1 668 10 13<br />
joze@sava-ip.si<br />
ENSA d.o.o., Kranj<br />
Stanko Cvenkel, Director<br />
tel: +386 4 206 57 77, fax: +386 4 206 64 04<br />
stanko.cvenkel@sava.si<br />
Joœef Pæeniånik, Technical Director<br />
tel: +386 2 787 93 21, fax: +386 2 787 9327<br />
joze.psenicnik@limb.si
2 2 9 |<br />
| c o n t a c t p e r s o n s |
a n n u a l r e p o r t | 2 0 0 5<br />
<strong>Sava</strong>, d.d.<br />
<strong>Annual</strong> Report <strong>2005</strong><br />
Published by<br />
<strong>Sava</strong>, d.d.<br />
Concept<br />
<strong>Sava</strong>, d.d.<br />
Edited by<br />
<strong>Sava</strong>, d.d.<br />
Vesna Muravec<br />
Written by<br />
<strong>Sava</strong>, d.d.<br />
Studio Kernel<br />
English translators<br />
Lea Terlikar<br />
Mark Alexander Valentine<br />
AD & Design<br />
Kreattiva Advertising, d.o.o.<br />
Printed by<br />
ÅukGraf<br />
Photography<br />
Dragan Arrigler<br />
Ivan Draækiå<br />
Mitja Smrdel<br />
Gorazd Kavåiå<br />
May 2006<br />
www.sava.si