DARS_porocilo 2007 ANG.indd

Economic Environment
Owing to favourable international economic trends in 2007, the country’s high economic growth increased
to 6.1%, representing the highest growth recorded after its attainment of independence. The key factors
influencing growth were the export of goods and services (13 percent growth in real terms) and intensive
domestic investment activities (17.2 percent growth, in real terms, of investments in property, plant and
equipment). Investment activities in 2007 were the most intensive in recent years, and were stimulated by
the construction of infrastructure. Other construction investments also intensified. Favourable business
expectations continued to stimulate the growth of investments in equipment and machinery, as well as the
expansion of production facilities. Among individual activities, processing and the construction industry
contributed the largest shares to economic growth. The growth of state and private consumption stabilised
in comparison with 2006. Intensive economic activity also had a positive effect on the labour market,
where the employment rate increased by 2.7%. The highest increase in employment was recorded in the
construction industry. Salaries increased at a stable rate, but fell behind the growth of work productivity,
attaining a 5.9 % nominal growth and a 2.2 % growth in real terms.
The inflation pressures that began to be felt in Slovenia in the past year were additionally stimulated by
movements in the prices of oil, basic raw materials and food on world markets. The average inflation at
year end was 3.6 %, while year-on-year inflation was 5.6 %. Despite the positive effects of high economic
growth on the economy and due to substantial investments in machines and equipment, as well as
increased imports of intermediate goods aimed at accelerating the growth of production in processing
activities, the import of goods surpassed exports, which indirectly increased the balance of payments
deficit to 4.8% of GDP for 2007.
Financial Operations and Financial Risk Management
In its operations, the Company pursued the goal of minimising operating and financial risks. On the
expense side, operating risks were hedged by security instruments requested from suppliers (primarily
first-class guarantees and contractual penalties imposed in cases of delayed completion of works), and
on the revenue side by closely following traffic flow forecasts and toll collections, as the demand for
motorway utilisation services has a low elasticity and the responses of users are foreseeable along with
the still acceptable risk of incorrect estimates.
The Company carried out its financial operations in cooperation with several international and foreign
commercial banks, and with practically all Slovene banks. Such diversification of operations effectively
reduces the risk of overdependence on individual institutions and increases operating competitiveness.
The Company reduced its financial risks by means of several instruments, including both natural protection
and the use of derivative financial instruments. In 2007 the Company concluded three deals aimed at
securing interest rate risks. Currency risks were secured primarily through natural protection, i.e. cash
flow management. Such protection is possible because the Company operates in only a limited number of
currencies and carries out the majority of its transactions in the EUR currency.
Liquidity risks were reduced by effective liquidity management and the formation of a highly liquid
investment portfolio.
As part of its agency activities under the Agreement on the Performance of Contracts, the Company
signed a loan agreement for new borrowings with Nova Ljubljanska banka, d.d..
In line with the Motorway Company in the Republic of Slovenia Act, the Company’s investment policy in
2007 was focused on debt instruments issued by the State and commercial banks. Within the scope of
liquidity management, the Company optimised cash flows through the so-called construction account and
the account of DARS d.d..
21 ANNUAL REPORT DARS d.d. 2007 BUSINESS REPORT