Annual report 2005 - Sava dd

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The Supervisory Board of Sava d.d. analysed the movement of certain significant financial data and
indicators, which show business success and ascertained:
• net sales revenues in the Sava Group were achieved at €244 million and 4 per cent above last year and
3 per cent below the plan;
• The pre-tax profit of the Sava Group totalling €43.7 million was 14.5 per cent higher than planned or 20.9
per cent lower than last year’s profit;
• Net profit of the Sava Group for 2005 was generated in the amount of €38.5 million and was 4.3 per cent
above plan. In comparison with last year it was 20.9 per cent lower. Not considering the negative
goodwill, the Sava Group in 2005 generated a net profit that was 8.8 per cent higher than last year.
• Return on capital of the Sava Group, calculated as the ratio between pre-tax profit and average balance
of equity, amounted to 11.9 per cent and was 5.2 percentage points lower than last year.
• Return on capital of the Sava Group calculated as the ratio between net profit and average balance of
equity amounted to 10.5 per cent and was 5.5 percentage points lower than last year. The achieved return
on capital was 0.5 percentage points above the planned return in 2005.
• On 31 December 2005 the Sava Group employed 3,047 employees, or 1 per cent more than last year.
The Supervisory Board ascertains that the Board of Management of the company was successful in 2005
as all the key goals were implemented both in Sava d.d. and the Sava Group. Very good results of the Sava
Group for 2005 according to IFRSs were due to successful operation and the application of new standards,
which show the income and value of the assets in a considerably different manner. It is not anticipated that
such a single event will be repeated in the coming years.
The Supervisory Board estimated that the Board accomplished a material portion of business goals from
the four-year development strategy prior to the deadline, however, certain important changes appeared in
the strategy implementation that demand a revision of the current strategic development goals. The key
elements of these changes are:
• The Board of Management revised the adopted strategy of Trade by selling the entire operation and as
an important shareholder entered in the ownership structure of the largest domestic trader with technical
goods – the company Merkur. The decision will have a positive effect on the success of the Sava Group
and resulted from the sale of the company Color d.d. as the largest investment in Chemicals. This year
the Board of Management will seek an optimum solution for the remaining company from the division,
i.e. Teol d.d.;
• As far as the volume of the invested capital is concerned the Tourism division has become the second most
important operation of the Group following Investment Finance. In the following period the Board will
focus on increasing the return on capital invested by rationalising operations, synergies from a joint
appearance and suitable positioning in Slovene tourism;
• Investment Finance is the operation with a key contribution to the successful operation and profitability
of the entire Sava Group. The future divestitures of the investments and investment in other existing or
new operations will be realised within the adopted strategy and on the basis of the economic study and
the established comparative advantages of the business system as a whole.
In the business year 2006 the company will have to revise the adopted strategy for the period 2004-2007
with regard to the aforementioned and already performed revisions from the previous year also due to the
dynamic changes in the market and the necessity for rapid adaptation. The Supervisory Board ascertained
that the development strategy should be revised on an annual basis.
Proposal for using accumulated profit
The Supervisory Board examined the proposal for using accumulated profit.
It ascertained that the profit was distributed in accordance with Article 228 of the Law on Economic