At its 11th regular meeting held on Wednesday, 26 March 2014, the Supervisory Board of the joint stock company Sava dealt with and endorsed the audited annual reports of the Sava Group and Sava d.d. for 2013.
It also adopted the Report by the Supervisory Board about the annual reports of the Sava Group and Sava d.d., which includes the evaluation of business performance and assessment of the work of the Management Board of Sava d.d. in 2013. It further became acquainted with the revised business plan of the Sava Group and Sava d.d. for 2014, at which it carefully dealt with the presented current strategic activities and the preparations associated with submittal of the modified restructuring strategy as an alternative to the achievement of goals, outlined in the 2011 strategy.
The Supervisory Board confirmed the suggested Agenda and the proposed resolutions of the 20th Shareholders’ Meeting of Sava d.d. that will be held on Tuesday, 29 April 2014; the Call of the Shareholders’ Meeting will be announced on 28 March 2014.
When dealing with the annual reports, the Supervisory Board of Sava d.d. expressed its acknowledgement and full support to the work of the Management Board of Sava d.d., performed in an outstandingly adverse economic environment and influenced by the burden of the past business decisions, before the current Management Board assumed their position.
The major achievements of the restructuring strategy performed by Sava in 2013 were: maintenance of current liquidity and solvency; entering into the master restructuring agreement with the lending banks, Sava bonds holders and other financial creditors; further reorganisation and consolidation of business operations of Sava d.d. and the Tourism division; creation of conditions for the realisation of synergetic effects within the Slovene tourism sector and high efficiency in proceeding with the divestment programme ( finalised sale of the entire Rubber Manufacturing, a part of energy management business and certain other financial investments in the subsidiaries). The efficiently performed divestments as part of the restructuring strategy enabled the Sava Group to reduce indebtedness by more than €100 million and to settle the interests to the creditors regularly, which were paid in excess of €54 million. In 2013, total financial liabilities of the Sava Group reduced by slightly more than €64 million, while the financial liabilities of Sava d.d. reduced by €72 million.
Sava Group companies made sales revenues of €67.2 million. The Tourism division generated the majority or 93% of sales revenues. They amounted to €62.5 million, or 4% below the 2012 figure and the plan. The key reasons for such deviations lie in a strong decline in purchasing power, fierce price competition between tourist services providers and subsequent changes in the composition of Tourism in the course of the year (selling a part of golf business). In these outstandingly demanding market situation, the number of overnights and revenues rose in congress tourism and health care business, while the level of average realised prices of overnight stays in hotels and apartments was also preserved.
The effects of further rationalisation measures in business operations, including transfer of certain services to the external specialist service providers and the implementation of projects aimed at improving energy efficiency significantly enhanced the performance of Tourism. A relatively high negative impact on business had the unplanned introduction of extra taxes and levies, which reduced the achievements of Tourism by almost one million euro, as well as the performed impairments of real estate and receivables. Not considering the required impairments of hotel real property and operating receivables, Tourism made an operating profit of €2 million last year. In 2013, Tourism generated a net profit of €1 million, which was also due to a profitable sale of the golf course in Bled.
The generated operating result of Sava d.d. of the past year was positively affected by the generated financial revenues from the sale of Rubber Manufacturing totalling €23.5 million, profit from the sale of fixed assets totalling €5.2 million and further savings in operating expenses of the company. The profit of Sava d.d. was markedly decreased by further impairments of assets totalling €21.6 million and cancellation of deferred tax receivables totalling €9.8 million, due to which Sava d.d. made a net loss of €11.4 million in 2013. The cancellation of deferred tax receivables in connection with financial investments is mainly due to losing ownership of the investment Sava d.d. had in Abanka Vipa d.d.; another half of impairments (€9.6 million) refers to impairing the financial investment Sava d.d. had in this bank.
The loss of the Sava Group amounts to €55.6 million or slightly more than half of last year’s amount. The result was affected by the already mentioned cancellation of deferred tax receivables totalling €9.8 million, while the value of unplanned, extra impairments at the level of the Group amounted to €51.4 million. The impairments of financial investments in the associated companies, mainly in both banks, represented three quarters of total impairments at the Group level. The financial investment in Gorenjska banka d.d. was impaired in the value of €27.6 million in consolidated financial statements, and financial investment in the shares of Abanka Vipa d.d. totalling €9.6 million was ultimately impaired as based on the decision by the Bank of Slovenia, the ownership of Sava d.d. expired on 18 December 2013.
In current difficult and uncertain circumstances the two huge challenges the Management Board is facing with are to carry on the successful implementation of the restructuring strategy until 2014 and to outline a new business model for further strategic development of Sava. Parallel with that the Board will actively search for solutions to implement the strategy of investment consolidation in banking sector and to extend the master restructuring agreement at the end of this year. The goal of these activities is to strengthen the financial position and to enable an optimum financial structure for all the stakeholders of Sava d.d.: Bank Assets Management Company (BAMC), banks, other financial creditors and shareholders of the company.