At the 4th regular Supervisory Board meeting of Sava d.d., held on thursday, 13 December 2012, the Supervisory Board became acquainted with the strategic policies and plans for 2013.
The Supervisory Board of Sava d.d. imposed the Management Board of Sava d.d. with a task of producing an up-dated business plan after the annual financial statements for 2012 are drawn up, since in this period the effects of certain greater business activities carried out this year are not yet known. The risk in making forecasts particularly refers to the two bigger items, i.e. estimating the volume of additional impairments of financial investment Sava d.d. holds in the associated company Abanka Vipa d.d., and fulfilment of the suspensory conditions set out in the contract on selling the Rubber Manufacturing division and the financial year of receiving the consideration in this regard.
When discussing the business plan for 2013, the Supervisory Board was made acquainted with the report from the Management Board on the already effected and the planned additional measures for rationalising Sava d.d. in terms of organisation and costs. The Supervisory Board of Sava d.d. accepted the proposal to rescind the employment contract made with Franci Strajnar, MSc, effective on 31 December 2012, and to recall him from the office of the Management Board member. As of 1 January 2013, the Management Board of Sava d.d. will consist of three members.
The Management Board of Sava d.d. presented the Business Plan of the Sava Group and Sava d.d. for 2013 to the Supervisory Board; the plan represents a continued implementation of the restructuring strategy of Sava d.d. adopted in September 2011.
Also in the second year of their term of office, the Management Board of Sava d.d. implemented the strategic commitments made. The key achievements of this financial year include: the reorganisation and consolidation of operations of Sava d.d. and Tourism division, the sale of the entire share in Rubber Manufacturing, the sale of the core operation of Real Estate and Energy Management and the sale of certain other financial investments, which will significantly decrease the financial liabilities towards the lending banks and strengthen the position of Sava d.d. and the Sava Group too.
In 2013, the implementation of the business-financial restructuring strategy of Sava will still be an extremely demanding task, particularly in the continued fierce economic circumstances, both in the capital markets, banking sector and tourism. One of the key goals of the 2013 business plan is an immediate agreement on restructuring the financial sources to provide the platform for further implementation of the strategy. Presently, the terms for implementing the restructuring of financial sources are being brought into line, a final arrangement with the lending banks will enable further consolidation of Sava d.d.’ s investment portfolio, and business optimisation of Tourism as well as Sava d.d., the parent company of the Group.
Making an agreement on reprogramming the financial liabilities adjusted to the capacity of the Group’s cash flow is the fundamental assumption of the 2013 business plan. The volume of financial expenses at the level of subsidised companies is planned with due regard to the existing contractual interest rates, while Sava d.d. is planning to reduce the bank interest rates to the level, which will facilitate its further implementation of the strategy. The fact should be taken into account that based on the already agreed disinvestments the Sava Group will repay the principals of loans in the amount of even €100 million, while it paid interests of €20 million to the banks this year.
Owing to the sale of Rubber Manufacturing and a part of Real Estate and Energy Management, the composition of the Sava Group will be significantly different in 2013. The largest operations in the Group will be represented by the operation of the parent company Sava d.d. – Investment Finance – whose major business are investments in the banking sector, and the merged and consolidated Tourism division.
In 2013, Sava d.d. with Investment Finance will continue to carry out the strategy, at which it will focus on further optimisation in the operative business, consolidation of assets and active management of investments. Due to the performed sale of a part of the real estate owned by Sava d.d. to Tourism, the generated revenues from rents will reduce, while at the same time – particularly on account of a significant decrease in the number of employees and savings in costs of services – the costs of operative business will continue to decrease. In that year, the company does not plan to generate substantial financial revenues as the business environment will still not be in favour of maximising the profits from selling the financial investments, and no dividends are expected to be paid by the banking sector. One of the key activities of the Management Board of Sava d.d. in the coming business year incorporates the endeavour for establishing a capital link between Abanka Vipa d.d. and Gorenjska Banka d.d., at which besides the positive effects on the business of the merged bank an increase in the value of investments, which Sava d.d. holds in the capital of both banks, is expected. Along with the improvement in the market situation in 2014 and in the coming years, Sava d.d. expects financial revenues from dividends again, positive effects of the planned transaction in the banking sector and a revival of activities in the capital markets, which will enable further deleverage and create conditions for a repeated growth in the assets of Sava d.d.
In 2013, Tourism plans to further improve its operations and return despite the fierce economic circumstances, particularly in the domestic and certain traditional European markets. When focusing on the quality and innovative offer by the Sava Hotels & Resorts destinations, development of new tourist products and intense marketing activities, the growth in sales will be greatly due to restructuring of the markets and further winning of foreign, growing markets as well as a flexible pricing policy. Sava Turizem d.d. will continue to optimise its business processes and carry out cost rationalisations in all business areas, particularly in purchasing and energy. Investments in the renovation of hotel capacities, development of new products and investments in energy efficiency improvements will be significantly higher than in the past years.
It is expected that in 2014 the economic situation will improve. A moderate revenues growth is anticipated, which combined with the optimisation of operations in this and in the coming years assures a constant growth in the profit and generation of cash flow by this promising business, which already in 2014 will create conditions for a dividend pay-out.
Other Operations have a minor share in the Sava Group’s business. In 2013, this segment will include the companies, which still dispose of the not yet sold assets, and the companies providing services to the Sava Group. The activities will be carried out with the aim of optimising the assets to assure liquidity and optimum structure of the business group.
In 2013, Sava d.d. will continue to carry out the activities for selling the remaining investments in the real estate sector and energy management business, yet significant risks exist in the real estate business that price expectations during that year will not yet be realised. It is more likely that any sale could be realised at more favourable terms in 2014, when the real estate markets are expected to recover.
In 2013, sales revenues of the subsidised companies of the Sava Group will be higher than in 2012. Its prevailing part refers to the generated sale of Tourism, where a further growth is anticipated. Despite an increase in revenues, the operative expenses of the Sava Group will reduce, which will result in further rise in the operating profit as well as total profit of the subsidiaries.
At this moment, it is too early to make a specific forecast of the planned net operating result of Sava d.d. and the Sava Group for 2013, which is why it will be presented upon producing the annual financial statements when the effects of transactions in progress will be known in terms of time and value, as well as the effects of other business events and activities in this financial year.
Sava d.d.
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