Annual report 2005 - Sava dd

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Outlook for 2006
| b u s i n e s s a n a l y s i s |
In 2006 too the Sava Group will proceed with activities in accordance with the set strategy. Important changes
will occur in the composition of the Group's operations. We have set demanding goals in relation to efficient
marketing, quality products and services and rationalising business processes. We will act so as to achieve and
surpass our planned goals.
2006 will be a year of great change in the operations of
the Sava Group. The restructuring plan of the Trade
division includes, on the one hand, selling the entire
ownership stake in the company Sava Trade d.d. and the
company MG Market d.o.o. and, on the other, entering
the company Merkur d.d. with a significant ownership
stake. The mentioned changes will considerably affect
the data and indicators relating to Sava Group operations
in 2006. We anticipate that sales revenues in the Sava
Group will decrease by 36 per cent and operating income
by 8 per cent, while operating profitability in subsidiaries
will increase due to selling the Trade division.
The plan for the Sava Group has been produced in
accordance with International Financial Reporting
Standards, as have the results for 2005. In the
comparisons presented below the same structure of the
Sava Group applies.
In 2006 the Sava Group will create consolidated net sales
revenues in the amount of €155 million, which is 4 per
cent more than net sales revenues in 2005. In the
structure of net sales revenues the Rubber Manufacturing
division with the foreign trade network is represented
with 48 per cent and has thus become the leading
division as far as volume is concerned; the Tourism
division has a 34 per cent share, Real Estate 9 per cent,
and other operations 9 per cent too. In this way the target
policy of Sava d.d. in the intensive management of three
divisions has been successfully rounded up.
An important part of the created profit of the Sava
Group has been contributed by the financial holding
company Sava d.d. which for 2006 plans to generate
financial revenues that are lower than in 2005 due to the
planned decrease in the sale of portfolio investments.
That is why for both the holding company Sava d.d. and
the Sava Group lower profit figures are planned for
2006. However, in accordance with the mid-term plan
the profit in the following years will increase by at least
6 per cent annually.
In 2006 the Sava Group plans to create a pre-tax profit
in the amount of €32.6 million and net profit of €29.2
million, which means a 7.5 per cent return on capital.
The planned profit of the Sava Group consists of the
profit in subsidiaries, profit in associates and profit in
the financial holding; each of them contributes one
third.
€38 million will be earmarked for investments that are
mainly intended for the completion of renovation and
construction of new hotel facilities in Tourism, increase
in and modernisation of manufacturing capacity in
Rubber Manufacturing, and building real estate for sale.