The Group KD Group and KD Group dd

The KD Group Annual Report 2009
2. BUSINESS REPORT
REPORT OF THE CHIEF EXECUTIVE OFFICER OF KD GROUP D. D.
Global financial crisis provided an incentive for reorganisation of the Group KD Group and implementation of measures for
business rationalisation. These activities began in 2009 and will continue 2010. The loss of EUR 44 million incurred by the
Group KD Group in 2009 is to a large extent the consequence of poor performances of companies operating abroad and
also a result of global financial crisis. The Group KD Group has already adopted strategic decisions concerning companies
operating abroad in terms of which markets should be pursued further and from which to withdraw. The relevant measures
have already been implemented. The poorest results were recorded by companies operating in South-eastern Europe
(Romania, Bulgaria, Ukraine, and Serbia), the region where the financial crisis impact on financial institutions was worst and
where the consequences were the largest. The major share of the loss incurred by the Group KD Group is due to the
Group's withdrawal from the South-eastern European markets in which the Group did not have the controlling interest and
where no profits were expected in the long-term. The proceeds will be used to realise the adopted strategy. Companies
operating in Slovenia are performing well and in 2009 exceeded the planned results.
The KD Group's performance in 2009 was better than in 2008, resulting in a loss of EUR 44 million. Operating revenue in
2009 reached EUR 368 million, a decrease of 6 percent compared with 2008. Decrease in the revenue is due to the disposal
of enterprises in the cinematographic division in 2008. Revenue from insurance premiums, which account for the majority of
revenue, rose by 3 percent compared with 2008. At the end of the year, total assets amounted to EUR 848 million, an
increase of 7 percent compared to 2008, whereas total capital was reduced by EUR 41 million or 21 percent compared with
2008. At the end of 2009, the Group KD Group reported EUR 152 million of capital and EUR 182 million of financial liabilities.
The majority (almost EUR 100 million) represents long-term financial liabilities maturing in 2015. I wish to stress that the
Group KD Group regularly meets its obligations concerning interest and principal repayments. We have established good
relationships with all commercial banks. In 2010, the Group KD Group is expected to generate profit of EUR 4 million, rising
to as much as EUR 11 million in 2011. The results of the first few months of 2010 confirm these trends.
The Group KD Group believes that the adopted strategic decisions provide solid basis for continued development of the
Company and the entire Group KD Group. Majority of the KD Group's revenue comes from the third largest insurance in
Slovenia, Adriatic Slovenica, the largest investment management company in Slovenia - KD Skladi, fast growing life
insurance companyKD Življenje, and KD Banka, a private bank, rounding up a comprehensive palette of financial services
provided by the Group.
Insurance
Insurance companies within the Group KD Group were in 2009 involved in intense expansion and improvement of their range
of products and services as well as development of new, specialised insurance products aimed at individual target groups.
Market share of 12.56 percent recorded in 2009, makes Adriatic Slovenica the third largest insurance company in Slovenia.
In terms of property insurance, the insurance company held a 17.01 percent share in 2009, 23.9 percent share in health
insurance places the company in the second place on the health insurance market, while the company holds the leading
position on the market of above-standard health insurance. Due to its consolidated market network and modern insurance
products supplemented by first-class assistance services, the insurance company has set even more ambitious goals for the
next financial year.
Life insurance company KD Življenje is the second largest life insurance providers in Slovenia and in spite of unstable
economic conditions at the end of 2009 it increased its market share to 14.1 percent. Slovenian life insurance market was in
2009 marked primarily by the financial crisis reflected in an average 3.8 percent decline which was preceded by several
years of continuous growth of the life insurance sectors.
The goals for 2010 include life insurance premiums of over EUR 84 million, over 256 million premiums for property insurance
(including health insurance premiums) which translates into 3.6 percent increase in property insurance premiums and 5
percent growth in the health insurance market.
In accordance with the adopted strategic decisions, the Group KD Group will withdraw from those markets where the results
are below the expectations and will instead, concentrate on the Slovenian market.
8