An Abundance of Talent an Abundance of Talent
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ANNUAL REPORT and Consolidated ANNUAL REPORT 2004 Annual Report of the company Sava d.d. An abundance of talent An abundance of talent The result of the Sava Group have been achieved by teams that are driven by outstanding individuals. Their energy encourages and bonds us all. Their thoughts and endeavours over many years are imbued in the shift in development that was characteristic for all divisions in 2004. 2004 ANNUAL REPORT ANNUAL 1 ANNUAL REPORT and Consolidated ANNUAL REPORT 2004 Annual Report of the company Sava d.d. An abundance of talent An abundance of talent The result of the Sava Group have been achieved by teams that are driven by outstanding individuals. Their energy encourages and bonds us all. Their thoughts and endeavours over many years are imbued in the shift in development that was characteristic for all divisions in 2004. 2004 ANNUAL REPORT ANNUAL 1 INTRODUCTION 1 INDEX INTRODUCTION 5 1. KEY FINANCIAL DATA AND INDICATORS 6 2. GENERAL DATA 6 2.1. Profile of the holding company 7 2.2. Composition of the Sava Group 8 2.3. Organisational structure of the Sava Group 9 2.4. Changes in the structure of the Sava Group 9 2.5. Inclusion of companies in the Consolidated Financial Statements 10 2.6. Associated companies in the Sava Group 10 2.7. Representative offices of the Sava Group 11 3. A REVIEW OF HIGHLIGHTS AND ACHIEVEMENTS 11 3.1. Most important events and achievements in the period January-December 2004 13 3.2. Most important events in 2005 - after the accounting period 15 4. MANAGEMENT AND ADMINISTRATIVE BODIES 15 4.1. Profile of the Board of Management 18 4.2. Members of the Supervisory Board 22 5. INTERVIEW WITH THE CHAIRMAN OF THE BOARD 25 6. REPORT BY THE SUPERVISORY BOARD 29 7. CORPORATE GOVERNANCE 35 8. RISK MANAGEMENT 37 9. THE SAVA SHARE AND OWNERSHIP STRUCTURE BUSINESS ANALYSIS 44 10. DEVELOPMENT STRATEGY 47 11. GENERAL ECONOMIC CONDITIONS 48 12. BUSINESS OPERATIONS OF THE SAVA GROUP 48 12.1. Business success 50 12.2. Assets and liabilities structure 53 13. BUSINESS OPERATIONS ACCORDING TO DIVISION 53 13.1. Rubber Manufacturing division with foreign trade network 56 13.2. Chemicals division 57 13.3. Trade division 2 59 13.4. Tourism division 63 13.5. Real Estate division 64 13.6. Investment Finance division 67 14. BUSINESS OPERATIONS OF SAVA D. D. 67 14.1. Business success 70 14.2. Assets and liabilities structure 73 15. OUTLOOK FOR 2005 75 16. MARKETING AND CUSTOMERS 75 16.1. Managing brand names and marketing communications 76 16.2. Customer policy 77 17. STRATEGIC PURCHASING AND SUPPLIERS 79 18. DEVELOPMENT ACTIVITIES 79 18.1. Development of business programmes and strategic activities 80 18.2. Quality of business and development of business procedures 81 18.3. Development of information support SUSTAINABLE DEVELOPMENT REPORT 84 19. SUSTAINABLE DEVELOPMENT 85 20. A REVIEW OF HIGHLIGHTS AND ACHIEVEMENTS 85 20.1. Most important events and achievements in the period January-December 2004 87 20.2. Most important events and achievements in 2005 - after the accounting period 88 21. THE DEVELOPMENT OF HUMAN RESOURCES 88 21.1. Concern for employees 91 21.2. Concern for employees outside of working hours 92 21.3. Concern for employee safety and health at work 95 22. DEVELOPING THE SOCIAL COMMUNITY 95 22.1. Sponsorship for and donations to the social community 97 22.2. Open dialogue and integration in the social community 98 23. PROTECTING THE ENVIRONMENT AND FIRE SAFETY 98 23.1. Environmental protection 101 23.2. Fire safety FINANCIAL REPORT 104 24. SUMMARY OF PRINCIPAL ACCOUNTING POLICIES FOR THE COMPANIES OF THE SAVA GROUP 104 24.1. Basis for drawing the financial statements 104 24.2. Change in the accounting standards on 1 January 2004 105 24.3. Reporting according to section 105 24.4. Exchange rate and conversion method in domestic currency 105 24.5. Intangible fixed assets 105 24.6. Tangible fixed assets 106 24.7. Depreciation 106 24.8. Financial investments 106 24.8.1. Long-term investments 107 24.8.2. Short-term investments 107 24.9. Receivables 107 24.10. Inventories 107 24.11. Cash 108 24.12. Capital 3 108 24.13. Goodwill and negative goodwill in the Consolidated Balance Sheet 108 24.14. Long-term provisions 108 24.15. Liabilities 109 24.16. Short-term accruals and deferrals 109 24.17. Recognition of revenues 109 24.17.1. Operating revenues 109 24.17.2. Financial revenues 110 24.17.3. Extraordinary revenues 110 24.18. Recognition of expenses 110 24.18.1. Operating expenses 110 24.18.2. Financial expenses 110 24.18.3. Extraordinary expenses 110 24.19. Cash Flow Statement 111 25. AUDITED FINANCIAL STATEMENTS FOR SAVA D.D. WITH NOTES 111 25.1. Auditor’s Report for Sava d.d. 112 25.2. Audited Balance Sheet of Sava d.d. 113 25.3. Audited Profit and Loss Account of Sava d.d. 114 25.4. Audited Cash Flow Statement of Sava d.d. 116 25.5. Audited Statement of Changes in Equity of Sava d.d. for the period from 31 December 2003 to 31 December 2004 118 25.6. Calculation of accumulated profit or loss 118 25.7. Proposal for the appropriation of accumulated profit 118 25.8. Breakdown and notes to the financial statements 118 25.8.1. Balance Sheet 128 25.8.2. The Profit and Loss Account 135 25.8.3. Statement by the Board 136 26. AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF THE SAVA GROUP WITH NOTES 136 26.1. Auditor's Report on the Sava Group 137 26.2. Audited Consolidated Balance Sheet as at 31 December 2004 138 26.3. Audited Consolidated Profit and Loss Account for the period January - December 2004 139 26.4. Audited Consolidated Cash Flow Statement for the period from 1 January to 31 December 2004 141 26.5. Audited Consolidated Statement of Changes in Equity for the period from 31 December 2003 to 31 December 2004 143 26.6. Calculation of accumulated profit or loss 143 26.7. Important notes to the Consolidated Financial Statements 143 26.7.1. Disclosures in connection with the Consolidated Balance Sheet 155 26.7.2. Disclosures relating to the Consolidated Profit and Loss Account 160 26.7.3. Disclosures relating to the Consolidated Profit and Loss Account 161 26.7.4. Other disclosures relating to the Sava Group 164 26.7.5. Changeover to International Accounting Standards 164 26.7.6. Statement by the Board 165 STATEMENT ON CONFORMITY WITH THE CORPORATE GOVERNANCE CODE FOR SLOVENIA 167 CONTACT PERSONS 4 1. KEY FINANCIAL DATA AND INDICATORS € in millions SAVA d. d. SAVA GROUP Index Index 2001 2002* 2003 2004 2004/2003 2001 2002* 2003 2004 2004/2003 Sales 53.2 13.9 11.9 7.6 64 109.4 211.7 231.3 236.1 102 Exports 32.9 0.0 0.0 0.0 - 59.5 72.0 81.9 67.2 82 Added value 13.9 3.9 7.0 4.2 60 50.1 51.9 62.1 73.4 118 Total profit before taxes 7.9 7.5 8.3 15.8 190 6.1 7.0 8.0 24.3 304 Net profit 7.3 7.0 7.0 12.9 184 5.3 6.4 6.4 20.7 323 Net cash flow (profit + depreciation) 12.0 11.6 11.5 15.7 137 15.8 16.6 16.8 32.9 196 Balance sheet total 307.1 291.6 308.8 363.3 118 412.4 412.4 420.0 514.9 123 Fixed assets 191.0 179.4 163.0 270.9 166 225.3 197.7 178.6 345.2 193 Current assets and deferred costs and accrued revenues 116.1 112.2 145.8 92.4 63 187.1 214.7 241.4 169.3 70 Capital 213.9 226.0 222.7 283.4 127 250.3 233.5 233.7 292.9 125 Provisions and accrued costs and deferred revenues 0.3 0.1 0.5 0.5 100 21.0 21.5 16.0 31.5 197 Long-term liabilities 4.1 7.7 11.3 6.8 60 23.9 33.2 34.3 49.0 143 Short-term liabilities 70.8 57.8 74.2 72.6 98 117.2 124.2 136.1 141.5 104 Investments in fixed assets 8.3 10.7 10.8 8.4 78 14.3 23.1 14.4 37.0 257 Employees (on 31 December) 876 49 46 47 102 2,586 2,505 2,426 3,017 124 INDICATORS Added value/employee (€ in thousands) 15.9 80.3 159.3 91.3 57 19.4 21.3 24.4 25.5 105 Total profit/ gross proceeds - % 14.2 57.2 64.5 195.9 304 3.1 3.2 3.4 10.1 297 Total profit / capital** - % 3.5 3.4 3.8 6.6 174 2.5 3.1 3.5 9.7 277 Net profit per share - € 4.3 4.1 4.1 6.6 161 Level of independence (capital/balance sheet total) - % 75 78 72 78 108 61 57 56 57 102 Liquidity (short-term receivables+cash/ short-term liabilities) - % 148 191 195 126 65 120 129 138 83 60 SHARE Nominal value - € 42 42 42 42 100 Book value - € 130 131 130 141 108 Market value on 31 December - € 75 124 118 183 155 Dividend per share - € 2.3 2.4 2.4 2.4*** 104 * On 1st January 2002 the joint stock company Sava was restructured to become a management and finance company.