Kranj, 14 June 2010 -  The 16th Shareholders' Meeting of the joint stock company Sava was held today in Šmartinski Dom in Stražišče.   83.97 per cent of total company capital with a voting right was present at the Meeting. The share of voting rights of the five largest shareholders present at the Meeting amounted to  57.38 per cent of the capital present, as follows: Kapitalska Družba d.d. 22.22 per cent (375,542 shares), Slovenska Odškodninska Družba d.d. 13.14 per cent (222,029 shares), PSL Storitve d.d. 11.06 per cent (186,892 shares),  NFD1 Delniški Investicijski Sklad d.d. 5.52 per cent (93,338 shares) and ODDUS d.o.o. 5.45 per cent (92,126 shares).
The Shareholders’ Meeting decided about two counter-proposals submitted by KAD and SOD; one was accepted and the other was rejected.
The proposal by the Supervisory Board about appointing the auditor was accepted.  

At the Meeting, the shareholders elected the bodies of the Shareholders' Meeting unanimously (1,636,147 votes).  

Payment of dividends
The shareholders were made familiar with the 2009 audited annual report of Sava d.d., the 2009 audited consolidated annual report of the Sava Group and the written report from the Supervisory Board for 2009. Unanimously (1,465,749 shares) they concluded that the accumulated profit of Sava d.d. which as per the audited balance sheet at 31/12/2009 totalling  €36,646,813.29 be used  so as to distribute the share owners a dividend of €3.2 per share, which totals €6,411,833.60, i.e. from the undistributed accumulated profit of 2005 in the amount of € 2,737,735.52, and from the undistributed accumulated profit of 2006 €3,674,098. The remaining accumulated profit totalling €30,234,979.69 remains undistributed till further notice.  
The share owners who are registered in the share registry at KDD – Central Securities Clearing Corporation Inc., Ljubljana, on 11 June 2010 are entitled to a dividend. The company will start to pay dividends within 30 days after the resolution is adopted
The Shareholders’ Meeting adopted the reports and accounts and granted discharge from liabilities to the Board of Management and Supervisory Board members thereby approving the work of both bodies of the company in the business year 2009;   59.11 per cent (866,345 shares) voted for.

Janez Bohorič: We have implemented the set goals despite the aggravated situation; very successful in 2010
In the introduction to dealing with the annual report, the Chairman of the Board of Management of Sava d.d. Janez Bohorič estimated that the year 2009 was extremely tough on account of the economic crisis. In the aggravated circumstances and changed conditions for operations Sava Group companies successfully implemented the set goals. They demonstrated their high ability to manage difficult economic circumstances and bridged the impacts of the crisis with an efficient implementation of anti-crisis and development measures. One of the more important achievements was a quality preparation of the strategy for the business period 2010-2012, which will assure a high competitiveness in the future too and thus a long-term, sustainably driven growth and development of the Sava Group. With regard to the quickly changing business conditions, the Sava management team will examine the strategy on an annual basis, and complement it, if required.
The operations of the past year were affected by the slowed-down economic growth, a decline in export and private consumption, price fluctuations in raw materials, pressures on selling prices, limiting investments and aggravated providing for liquidity as a result of stricter loan terms and conditions.  The business success of Sava was marked by other events too, such as sale of a 10% ownership stake in Merkur d.d., impairments of financial investments and decreasing interest rate for granted bank loans but also cost saving in the operation of companies.
Facing a general decline in demand last year, Sava Group companies generated sales revenues of  €172.9 million; that was at the 2007 level and by a quarter less that in the record 2008 year, when the sales growth stood at even 23%. The rubber manufacturing industry was most affected by the economic crisis; the companies of this division made sales that were 21% below last year's figure, however, they restructured the range of sold products, thereby contributing to a significant improvement of coverage. The sales in Real Estate were 12% lower than last year, which is connected with a timely sale of the completed projects in the previous year. Tourism companies generated sales revenues that were 9% below last year's result, mainly due to a decrease in foreign guests in Bled.
The largest Sava's division Rubber Manufacturing had 50 per cent in the sales revenues structure, Tourism 36 per cent and Real estate 12 per cent. The remaining 2 per cent represented the sale of other operations (Sava d.d., Other Operations- companies from Energetika and SMS d.o.o.).
Operating expenses in the Sava Group totalled €173.1 million and were 29 per cent below last year's figure, which was 4 per cent above a decline in sales.  This was an important contribution to the 2009 business result. Sava Group companies achieved significant results in the area of continual improvements particularly in cost control and other fields such as restructuring a portfolio of products and services aiming at higher added value. The year 2009 was outstanding in terms of the number of innovations in the entire Sava Group; the trend of increased number of innovations continues in this year too. Last year employees made 1,600 proposals  for improvements in total or three times more than in the previous year. Owing to improvements and innovations the Sava Group saved €3.7 million in 2009. The improved efficiency of operations was demonstrated in the generated profit from operations, which totalled €4.9 million.
Sava Group companies generated a net profit of €23.4 million, while the 2008 net profit amounted to €1.9 million. The planned net profit was realised at 60 per cent, deviations from the planned values were mainly due to the impairments of assets totalling €35 million and deviations from the planned results in subsidised and associated companies. If the assets need not be impaired (mainly Abanka Vipa d.d. and other financial investments) the Sava Group would have surpassed the planned profit and made a net profit of €58.4 million. Despite the crisis situation a major part of Sava Group's profit was generated by Investment Finance, while both largest divisions – Rubber Manufacturing and Tourism – operated with profit too. Rubber Manufacturing companies generated a net profit of €1.1 million and Tourism companies €0.2 million.
The year 2009 was still denoted with uncertain share prices at the Ljubljana Stock Exchange, which affected the valuation of financial investments at Sava d.d. too. Impairments of financial investments decreased the profit of Sava d.d. by €22.7 million. Notwithstanding the impairments, the generated net profit of Sava d.d. totalling €27.4 million was six times higher than the 2008,  and 13 per cent above plan.  

Long-term yield of the Sava share remains high
In 2009, the Sava share price moved between €190 and €260. The bid market price on the last trading day amounted to €240 and was 2 per cent higher than the book value of the Sava share.  This year the trend of decreasing the market price of the Sava share turned and after 26 May it leapt by even  a quarter.   The long-term yield of the Sava share remains attractive. With investing in the Sava share, shareholders generated a 5.4 per cent annual yield on average in the last five years, which is by 9 percentage points better than the average annual yield of the Slovene stock exchange index SBI 20.  

Successful in this year too
Sava Group companies operate successfully this jubilee year too when Sava is celebrating its 90th anniversary. The interim results for the first quarter announced at the end of May confirm this fact; in the past two months these results have even further improved. In the first five months this year, Sava Group companies enhanced their sales by 4 per cent in comparison with last year.  The sales in Tourism did not completely recovered yet, but the result of  Rubber Manufacturing,  which last year was most affected by the crisis, improved by even 18 per cent. Among the achievements of Rubber Manufacturing one should point out the intense activity in R&D field and introduction of new products for new market niches.  In a five-month period, Sava Group subsidiaries made good results, the business estimate until the end of this business year is promising too.

The investment in Merkur scrutinised by KPMG
The business with Merkur shares is one of Sava’s businesses, which the audit company KPMG, as ordered by the Supervisory Board of Sava d.d., repeatedly examined in May 2010 in view of suitability of performed procedures and economic viability. In KPMG’s opinion, all procedures in connection with making a decision were suitably carried out both in terms of formal aspect and contents, they were carried out legally and in compliance with the valid internal rules and good corporate governance practice. Moreover, the auditors did not establish any conflict of interest, neither on the part of the Board of Management or Supervisory Board members.

Janez Bohorič, Chairman of the Board of Management of Sava d.d.  pointed out:” We at Sava, of course, are  following  what is currently going on in connection with signing the letter of intent between the representatives of Merkur or Merfin and Mercator, and engage ourselves actively in the arrangement with creditors of Merkur and its shareholders. We are aware of the fact that presently Merkur is facing a difficult situation. So far, Merkur has regularly settled its liabilities to banks, whereas the matured liabilities to suppliers are settled with delay. The exit from the situation will demand for a strong engagement on the part of all involved.  We find the idea about selling a part of Merkur to Mercator of interest, however, we believe that there exist alternative solutions that could preserve Merkur as a whole, since its problem is not the success of its fundamental activity, i.e. sale, but above all the financial consolidation, which would assure a potential for Merkur to fully utilise its market opportunities. As estimated by the Merkur management team, already today the sale could be enhanced by 10 to 30 per cent having a suitable financial support, which would significantly improve business results and, consequently, the security of Merkur’s shareholders and creditors.
In any case, it is the interest of Sava as the owner of Merkur shares on the one hand, and as a creditor on the other hand, whose receivables are insured with Merkur shares, that Merkur operates well, since the continuation of Merkur business is the best way of securing the value of our investment until its selling. We at Sava have begun, alone and together with other creditors and owners, to produce scenarios for exiting from this aggravated situation, and we are confident that with our common efforts and responsibility, we will assure benefits for Sava and its shareholders to a high degree.”

Miran Kalčič about the re-examination of businesses by Sava d.d. in the period 2005-2009
The Chairman of the Supervisory Board Miran Kalčič made the present in the Shareholders’ Meeting acquainted with the fact that in March and April 2010 he in his capacity of the Chairman of the Supervisory Board of Sava d.d. received the letters by two shareholders, i.e. KAD and SOD
Based on the announcements in media the quoted shareholders did, as stated in the first letter, propose to the Supervisory Board to examine in accordance with its function and with all due diligence the transactions of Sava d.d. in the last several years, and on the basis of performed procedures for the transactions examination to undertake corresponding steps and inform the shareholders of Sava d.d. thereof.
At its 12th regular meeting,  the Supervisory Board of Sava d.d. became acquainted with the contents of the letter and the request for a re-examination of Sava d.d. operations in detail. The Supervisory Board was of opinion that the requests for re-examination are unclear as to the chronology and contents, especially if the competences of the Supervisory Board (also in connection with the annual report),  the manners, methods and procedures of supervision in accordance with Articles 281 and 282 of the Companies Act are considered. The Supervisory Board, therefore, proposed to the shareholders KAD and SOD to define their request for re-examination more precise and asked both for additional explanations, above all with regard to the periods and lists of businesses, from which, as stated by the shareholders, a relatively high risks for the company  should arise as wells as doubts about their economic viability, which should further affect the valuation of the company (they ordered evaluation and the estimate of the company Sava respectively). At the same time he asked them to provide additional pieces of information if they had any available.
Based on further correspondence and explanations (letter by KAD and SOD, April 2010) with regard to the definition of the time frame and the contents of the business examination, the Supervisory Board at its 13th meeting on 22 April 20101 authorised the Chairman to impose the Board of Management to establish in liaise with the professional services how many transactions were made in the last five-year period and to produce an analysis about general, legal and economic effects of these transactions, singly and as a whole. Moreover, opinions of the internal audit, audit commission of the Supervisory Board and the auditor KPMG were to be provided, who all had to re-examine these transaction as to whether the Board of Management and Supervisory Board acted with the required level of diligence and care when  making these transactions.

All of the abovementioned had to be carried out in a short period of time until the today’s Shareholders’ Meeting so that the Supervisory Board had the following reports available:

• Strategic Finance at Sava d.d.: Survey of the situation with long-term financial investments available for sale and the effects on the operating result of Sava d.d., and survey of individual transactions in the period 2005-2009.
• Internal Audit at Sava d.d.: Business operation of Sava d.d. in the financial investments area in the period 2005-2009.  
• Audit company KPMG Slovenija, d.o.o.: Report about the actual findings based on the performed agreed procedures with regard to the selected businesses.

The external auditor KPMG separately reviewed the larger transactions, which among other things, were exposed in the letters by KAD and SOD as follows:

• Sale of Sava Trade and acquisition of the ownership stake in Merkur
• Put and call option for Merkur shares
• Purchase of shares of Gorenjska Banka
• Factoring a receivables to NFD Holding

The criteria for selecting these transaction was the size of businesses, which is mentioned in the letter by KAD and are of importance in terms of the past, the present and can be sensitive in the future, and the volume of examination , which could be carried out  during the time until the Shareholders’ Meeting.
All other transactions from the letter were examined by the internal audit.

The audit was carried out according to International Standard on Related Services ISRS 4400 , which relates to business of performing agreed procedures in connection with the accounting information. These businesses are neither the audit, nor examination  in accordance with international auditing standards or international business examination standards.  

The goal of the re-examination was to judge the quoted businesses or made agreements from the point of view of:

• Suitability of carrying out the procedures for  decision-making in view of a formal aspect and economic viability
• Suitability of performing individual business in view of a procedure, and in case of obtaining comparable data also in view of price
• Influence of dealt with businesses on the company operation in view of the accounting and financial aspect and risk exposure aspect.

It should be pointed out that the judgment is and shall be based on the facts and circumstances upon  the occurrence of an individual business event and not on the present situation and knowledge or present market situation.

In his address Miran Kalčič, Chairman of the Supervisory Board of Sava d.d., also pointed out the general and specific findings, which arose from the report by KPMG in connection with the letters by Sava’s shareholders KAD and SOD. “Doing business was carried out at a suitable professional level. From time to time there has come to certain deficiencies and inconsistencies, however, none affected significantly the quality of doing business. The only recommendation of this type for amending the internal regulation about managing investments has already been implemented – rules and procedures in relation to the sale/purchase of an individual investment.  The audit did not find any systematic deficiencies of operation and supervision by the Supervisory Board. The examination by the external (KPMG) and internal auditors showed that  in view of formal and substantive aspect the procedures for making decisions were carried out  in compliance with the applicable legislation and valid internal rules and good corporate governance practice. Preliminary approvals by the Supervisory Board were obtained for individual transactions, or the binding legal acts incorporated clauses of suspensive condition character – individual legal act came into force only after obtaining an approval by the Supervisory Board. The examination showed that individual materials to be dealt with at the Supervisory Board meetings were rather comprehensive and from the argumentation point of view sufficiently absorbed, even though sometimes slightly delayed. The result of the sale business of Sava Trade d.o.o. was a profit of €2.6 million.  It was established that in the case of  Merkur (sale) or the option contract with Merfin, a high level of profit should be put in real terms,  as the exposure to risk of not-implementing the entire transaction due to the financial and status instability of the contract partner should be considered. As regards the decision-making about the realisation of the option entitlement to Merfin,  it was established that the Board of Management of Sava had several valuations of the equity of Merkur d.d. available, which at least achieved the price of option entitlement, which indicated a possible realisation of the entitlement. The yield from the ownership of Gorenjska Banka shares in the form of received dividends  totalling €47.1 million was realised.  When factoring a receivable that  Ljubljanska Banka had to  NFD Holding  and hiring a short-term loan at Ljubljanska Banka and a loan agreement with NFD Holding, the obtaining of a syndicated loan for refinancing the existing  financial liabilities of Sava  should be considered, as well as the pre-emption right to the pledged proprietary securities and a possibility for payment and suitableness of a direct enforceability of a loan contract in terms of complementing individual businesses of the company. In the period dealt with, Sava concluded solely six transactions with a negative investment balance, but losses were relatively small and can be reasonably explained. The total  positive effect of all transactions from Investment Finance division in the last five years surpassed €97.5 million, and €60.5 million not considering the sale of Merkur, or 10.5 per cent annually on average.

Resolutions of the Supervisory Board
At the 14th regular meeting of Supervisory Board of Sava d.d. and the 8th meeting of the audit commission of the Supervisory Board on 10 June 2010, the following resolutions were adopted:

• In the joint meeting, the Supervisory Board  and the audit commission became acquainted and dealt with the report from the Internal audit about the operations of Sava d.d. in the area of financial investments in the period 2005-2009 (Kranj, 1.6.2010, no. I 04/2010), the report from KPMG about the actual findings based on the agreed procedures carried out in connection  with the selected businesses (Ljubljana, 2 June 2010) and the survey of status of long-term financial investments available for sale with a survey of individual transactions in the period 2005-2009 (2 June 2010) prepared by the CC Strategic Finance at Sava d.d.
• In this manner both bodies made a repeated examination of all businesses in the area of financial investments in the period dealt with.
• The Supervisory Board established that the report included all business which were quoted in the KAD and SOD letter and were made in the last five years, and that the Board of Management produced a quality analysis of general, legal and economic effects of business, singly and as a whole.
• The Supervisory Board was made acquainted with the findings from the internal auditor report and KPMG report, and established that at the work of the Supervisory Board in the period dealt with legal provisions and internal regulations as well as good corporate governance practice were considered.
• The quoted reports did not expose unsuitability in the work of the Board of Management which would require adoption of additional measures by the Supervisory Board.
• The Supervisory Board was made acquainted with the available information about the operation of Merkur d.d. and Merfin d.o.o. The Supervisory Board imposed the Board of Management to produce as soon as possible  a description  of the status, assessment of risks and all possible scenarios for future events in these companies with a list of measures for securing the company and receivables of Sava in these businesses. The Supervisory Board of Sava d.d. will deal with the materials produced by the Board of Management at its next meeting.

Miran Kalčič pointed out that due to the economic crisis the year 2009  was extremely demanding for Sava d.d. and Sava Group companies. In these unfavourable environment Sava Group companies  bridged the effect of the crisis with an efficient implementation of anti-crisis activities and development measures.
The international economic environment along with the continuation of the global financial crisis and its transfer into real sector strongly affected the operations of Group companies. A sluggish  global economic growth, limiting investments and aggravated providing liquidity due to stricter term for loans affected the operations of Sava Group companies already in 2009 and will continue to do so in 2010.
Kalčič also mentioned that within the framework of sustainable development the Supervisory Board devoted its attention to the HR management. “Sava is one of the rare companies which did not dismiss employees for operative reasons and did not utilise bonuses according to the Act on partial refund of salary compensation and the Act on partial subsidy for full –time job.”

Miran Kalčič about the status of the Board of Management of Sava d.d.
According to Miran Kalčič the Supervisory Board estimated the work of the Board of Management of Sava d.d. in 2009 and established that the Board of Management controlled the difficult economic situation and bridged the impacts of the crisis with a timely and efficient implementation of anti-crisis activities, measures aiming at development and care for employees at introducing changes.

Miran Kalčič, Chairman of the Supervisory Board of Sava d.d., commented also the actual status of Sava’s Board of Management and explained:” At its 11th meeting in November the Supervisory Board passed the resolution  to accept a proposal by the Board of Management  to change their individual managerial work contracts so that the work contract according to the Employment Relationships Act (ERA) , which serves as the basis for work relations and performing managerial function, is transformed to a civil work contract with the elements of mandate contract according to the general rules of civil and obligation law, respectively – Articles 619 thru 648 and 766 thru 787 Code of Obligations (CO). Such a decision was in compliance with the regulations as ERA does not stipulate a condition that a person who carries out a managerial function with a company is in a work relationship as applicable for certain economic entities according to special regulations, e.g. banks, insurance companies, pension funds.”
The status of an individual and their personal circumstances, considering the prohibition of discrimination based on personal circumstances as stipulated in Article 14 of the Constitution RS, are constitutionally safeguarded personal categories. This applies to the right to a pension, which is a defined  constitutional category as set out in Article 50 of the Constitution.  According to Article 5 of ZPIZ-1 the rights from the compulsory pension insurance are inalienable, do not fall under statute of limitation, are non-transferrable, non-inheritable personal rights, which cannot be interfered with except in cases stipulated by the law; and that even in the case that it is about a so-called work upon retiring, and irrespective of whether this is about performing a managerial function in the status of the beneficiary of right which can only be obtained if  legally determined conditions are met.
Moreover, this is a personal data, to which the legal provision from the Personal Data Protection Act and the internal personal data protection regulation apply.
This type of status of a member of the board of management is not an important data for various publics, it is of importance that such a contract about managing regulates managing and governing of a company, rights, obligations and responsibilities of board of management members and their term of office. It is of significance how these are implemented in practice, which is to be supervised by the supervisory board within the framework of its competences.
Kalčič pointed out that the right to an old-age pension according to the provisions of Article 156 of ZPIZ-1 was obtained de lege with fulfilling minimum retirement conditions according to Article 36 ZPIZ, and was exercised with a request filed in by the insured in accordance  with Article 259 of ZPIZ.
The condition for obtaining/exercising the right for the purpose of its enjoyment  is a discontinuation of compulsory insurance, which in the given case is based  on changing the basis, on which the managerial function is carried out (discontinuation of work  relationship and establishing a civil relationship when the mandate is in progress).
If the insured fulfils the quoted, legally defined conditions in cumulative terms, and files in a request for exercising the right to an old-age pension, ZPIZ Slovenija issues an order in an administrative procedure, for recognising the right and begins to pay the old-age pension.
The resolution by the Supervisory Board, which is obliged to act for the benefit of the company with due care and diligence, and safeguard trade secrets of the company was based not only on the regulations (ERA, CO) but also on the fact that in the crisis period costs should be decreased in all areas of Sava Group companies.
One of the possibilities was to decrease salaries of Sava d.d. Board of Management and more than 170 managerial associates at Sava, who already in 2008 renounced their variable pay. As legal and implementable option, the Board of Management members proposed a change in the basis of their contract so as to replace the concluded individual work contract, which is based on ERA, with a managerial contract, which has a civil legal basis.
Kalčič mentioned that abroad such contracts are common, also in the German law, which served as a basis for the applicable ERA. It is even recommendable in the contractual regulation of managerial function performance to avoid employment regulations and work relationship. Civil legal contractual regulation of performing managerial function and practice is common to many regulations in other EU countries and worldwide.
Civil legal regulations do not define minimum rights as defined by ERA for directors in work relationship. The only prohibition is the prohibition of regulating these relationships in contrast to the Constitution, forced regulations and moral principles. Therefore the security of a director in such a relationship differs from the security of a worker in a work relationship   and that to an extent as defined by a civil legal contract. Rights, obligations and responsibilities according to the principle of autonomy of a client’s will can be freely arranged, which means that they can freely determine the contents.
The valid managerial contracts that Board of Management members have concluded incorporate the same obligations and responsibilities and fewer rights as they are cleared from work provisions, mainly because of decreasing costs in connection with holiday allowance, breaks, holidays, voluntary pension scheme and accident insurance premiums.
Kalčič pointed out that with concluding managerial contracts the mandate of the Board of Management, which lasts until 17 July 2011, had not been terminated. This is also the reason that the public was not explicitly informed about the work status of Sava’s Board of Management as the Board of Management members continue to perform their function.
When adopting a resolution about the change of the legal basis for contractual arrangement of managerial function performance the Supervisory Board was aware of the fact that with the change of the legal basis the Board of Management members were facilitated to file in a request for exercising the already obtained right to an old-age pension.
The question of performing a managerial function by a person who receives payment on the basis of a civil contract and who during a mandate exercises and enjoys the right to an old-age pension (a retired person status) was examined prior to making a decision by the HR commission and the Supervisory Board. Such a decision was also examined with suitable government institutions which gave their positive opinion.
“This provides a basis for a grounded standpoint that despite a high standard of the corporate communications at Sava, personal circumstances in connection with obtaining and exercising the right to an old-age pension, which does not affect the obligations and responsibilities at performing the managerial function and the term of office according to the managerial contract, does not represent the so-called internal information according to Financial Instruments Market Act that would have impact on the price of such or any other financial instruments,” said Kalčič.

Other resolutions
The Shareholders' Meeting confirmed the proposal to appoint KPMG Slovenija d.o.o., Železna cesta 8a, Ljubljana the auditor of the financial statements of Sava d.d. and the Sava Group for 2010. The resolution was passed unanimously (1,681,808 shares).
The Shareholders’ Meeting accepted the resolution by the Board of Management and Supervisory Board to pay a variable part of payment to the debit of operating costs in total gross amount of €50,880, which is to be paid  so that every member of the Supervisory Board receives a fivefold of their gross monthly reward  arising from the membership in the company’s Supervisory Board. 990,170 votes or 58.86 per cent voted for the proposal.
With regard to the counter-proposal by KAD and SOD, to which the Board of Management of Sava did not object, the Shareholders' Meeting passed the resolution to determine attendance fee for the participation in the Supervisory Board meeting for the Chairman of the Supervisory Board in the amount of €429.0 gross and for its members €330.0 gross.  55 per cent or 925,187 votes voted against the proposal.
The Shareholders’ Meeting agreed with the second counter-proposal by KAD and SOD, which referred to the corresponding changes and amendments  to the company’s Articles of Association. 1,468,205 votes or 87.28 per cent voted for the proposal.
 
There were no challenging actions announced at the Shareholders' Meeting.  

Sava d.d.
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