Sava - Annual Report 2008

08Annual Report

Letno poroËilo 08

Annual Report 08

WE LIVE OUR VALUES.Our values affect everything we do in the Sava Group. On the

basis of these values we make decisions either as individuals,

work teams, companies or the entire Sava Group. They are the

best indicator of when we need to make a decision and choose

the right option from the possibilities offered.

We have defined the values of the Sava Group anew. We did

not replace or change them – we just made them more clear

and simple.

Excellence. Creativity . Knowledge. Integrity. Responsibility.

The five values and five foundations of the Sava Group are

represented by our associates, each one personifying one of the

values through their personalities. They form a part of our large

group and a share of its energy, creating an excellent opportunity

even during a time of aggravated financial conditions.

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Annual Report

I. Introduction

Index

I. Introduction 1. Profile of the holding company Sava d.d. .................................................................... 10

2. Organisational structure of the Sava Group ................................................................. 12 2.1 About the Sava Group ................................................................................................. 122.2. About the holding company Sava d.d. ......................................................................... 122.3 About the competence centres of knowledge .............................................................. 132.4 About the organisational structure of the Sava Group, its divisions and companies ......................................................................................... 143. Significant data and indicators .................................................................................... 164. Survey of more important events and achievements .................................................... 18 4.1. More important events and achievements in 2008 ...................................................... 184.2. More important events and achievements in 2009 – after the accounting period ......... 19 5. Report by the Chairman of the Board of Management ................................................. 20 6. Management and governing bodies ............................................................................. 266.1. Presentation of the Board of Management ................................................................... 26 6.2 Presentation of the Supervisory Board ......................................................................... 28 7. Report by the Supervisory Board ................................................................................. 31 8. The corporate governance system with the Statement on Corporate Governance ........................................................................................... 369. Risk management ........................................................................................................ 49 9.1 Goals, organisation and risk management methodology .............................................. 499.2 Management strategy and more important risks ........................................................... 519.3 Expected risks that impact Sava Group operations ....................................................... 579.4 Further development of the risk management system .................................................. 5810. Financial management ................................................................................................ 59

1. The Sava share and ownership structure ...................................................................... 66 2. Development strategy ................................................................................................. 76 3. Conditions in the changed economic environment ..................................................... 834. Business operations of the Sava Group ........................................................................ 864.1 Business performance ................................................................................................. 864.2 Assets and liabilities structure ...................................................................................... 93 5. Business operations by division ................................................................................... 96 5.1 Rubber Manufacturing division with the Foreign Trade Network ................................. 96 5.2 Tourism division .......................................................................................................... 99 5.3 Real Estate division ................................................................................................... 102 5.4 Other Operations ...................................................................................................... 104 5.5 Investment Finance division ...................................................................................... 106 6. Business operations of Sava d.d. ................................................................................ 109 6.1 Business performance ............................................................................................... 109 6.2 Assets and liabilities structure .................................................................................... 116 7. Outlook for 2009 ...................................................................................................... 1198. Marketing and managing brand names ...................................................................... 1208.1. Focusing on the customer ......................................................................................... 120 8.2. Managing brand names ............................................................................................. 1239. Strategic purchasing and suppliers ............................................................................ 124 10. Development of business processes .......................................................................... 12711. Quality systems ......................................................................................................... 128 12. EU Projects ............................................................................................................... 131 13. Development of information support ......................................................................... 133

II. BusinessAnalysis

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1. Sustainable development in the Sava Group ............................................................. 1382. Survey of more important events and achievements .................................................. 1402.1 More important events and achievements in 2008 .................................................... 1402.2 More important events and achievements in 2009 .................................................... 1463. Employee development ............................................................................................. 147 3.1 Concern for employees ............................................................................................. 147 3.2 Concern for employees outside of working hours ...................................................... 152 3.3 Concern for employee health and safety at work ....................................................... 153 4. Standards and policies regarding occupational health and safety and the environment ................................................................................................. 1575. Important acknowledgements and awards ................................................................. 159 6. Developing the social community ............................................................................. 163 6.1 Sponsorships and donations to the social community ................................................ 163 6.2 Integration of employees in the social community ..................................................... 1677. Environmental protection and fire safety ................................................................... 169 7.1 Environmental protection .......................................................................................... 1697.2 Efficient energy management ..................................................................................... 170 7.3. Fire safety .................................................................................................................. 179 7.4. Concern for the environment in the supply chain of materials and services ............... 179 7.5 Environmental safety in the future ............................................................................. 180

1. Financial statements of the Sava Group with notes in accordance with International Financial Reporting Standards as adopted by the EU ........................... 1841.1 Consolidated financial statements of the Sava Group ................................................ 184 1.2 Composition of the Sava Group ................................................................................ 191 1.3. Notes to the financial statements of the Sava Group in accordance with International Financial Reporting Standards as adopted by the EU ............................ 194 1.4 Statement by the Board of Management for the Sava Group ...................................... 244 1.5 Independent auditor’s report for the Sava Group ....................................................... 245 2. Financial statements of the company Sava d.d. with notes in accordance with Slovene Accounting Standards .................................................... 248 2.1 Financial statements of the company Sava d.d. in accordance with Slovene Accounting Standards .................................................... 248 2.2 Notes to the financial statements of the company Sava d.d. ...................................... 2602.3 Financial risk management for the company Sava d.d. .............................................. 2682.4 Breakdown and notes to the financial statements of the company Sava d.d. .............. 2702.5 Other disclosures ...................................................................................................... 2882.6 Statement by the Board of Management for the company Sava d.d. .......................... 293 2.7 Independent auditor’s report for the company Sava d.d. ............................................ 294

Global Compact principles and GRI Reporting .................................................................... 295Contact persons in the Sava Group ...................................................................................... 296

IV. FinancialReport

III. Sustainable Development Report

Annual Report 08

Annual Report 08

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I.Introduction

What if we did this differently, to

make it even better? Whoever strives for

excellence, always asks these questions

and wants to surpass their achievements. To

achieve excellence one has to set oneself

high standards. Every small detail has to be

perfect in order to achieve excellence in Sava

Hotels Bled.

We live our values.

EXCELLENCE

Alma RekiÊ,catering-tourism technician, head of confectionary in the Park Hotel, Sava Hoteli Bled d.d., Tourism division

Annual Report

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I.Introduction

1.Profile of the holding company Sava d.d.

Firm: Sava, družba za upravljanje in financiranje, d.d.Abbreviated company name: Sava, d.d.Head office: Škofjeloška c. 6, 4000 Kranj, Slovenia Tel: +386 4 206 50 00 Fax: +386 4 206 64 46 e-mail: [email protected] http://www.sava.siRegistration No: 5111358VAT ID No: SI 75105284Entry No. in court register: 10024800Classification of industries: 64.200 – holding companiesDate of entry in court register: 26 April 1996Company’s share capital as at 31/12/2008: €83,751,567.51No. of shares as at 31/12/2008: 2,006,987 ordinary personal no-par value sharesShares listed on: Ljubljana Stock Exchange d.d., stock exchangeShare name: SAVAChairman of the Board of Management: Janez BohoričMembers of the Board of Management: Vinko Perčič and Emil VizovišekChairman of the Supervisory Board: Miran KalčičDeputy Chairman of the Supervisory Board: Marko Pogačnik, MSc

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More important business areas:

• Managingandfinancingcompanies inwhich thecompanyhas amajorityorsignificant ownership stake.

• Leasingofrealestate.

• Formingandmanagingcompetencecentresofknowledge.

• Managingportfolioinvestments.

• Allothercommercialbusinessthatdirectlyorindirectlycontributestoachievingthe goals of the company and involves the purchase and sale of real estate.

• Formationofsubsidiariesandcompaniesandtake-overofownershipstakesinSlovenia and abroad.

• Joiningincommercialinterestassociationsandconcludingcommercialcontractsof all types.

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Annual Report

I. Introduction

2.1. About the Sava Group

2.2. About the holding company Sava d.d.

In the Sava Group we jointly encourage, develop and co-create our divisions, which operate according to the principles of sustainable development and fundamental values that govern the decision-making process. Besides the parent company Sava d.d., which manages the Investment Finance division and is the administrative core of the Group, the companies from four other divisions form the Group itself. We are known for the internationally renowned brand name Sava and brand names from our Tourism division. The holding company achieves synergies through a special form of network management. The active management model represents one of the key foundations of the Group’s operations and development.

The Sava Group is one of the largest and most successful business enterprises in Slovenia, combining 31 companies: besides the parent company Sava d.d., there are another 28 subsidised companies and two joint ventures. The companies operate in 5 divisions and employ over 2,700 associates.

The divisions in the Sava Group are: • RubberManufacturingwiththeForeignTradeNetwork• Tourism• RealEstate• InvestmentFinance• OtherOperations

The main tasks of the divisions and Sava Group companies are to provide operational excellence, develop special expertise in a specific sector and assure global competitiveness oriented to preserving a leading position in the domestic, regional and global markets.

In all companies we implement our common development vision and mission: surpass the expectations of our customers, employees, shareholders, partners and the environment and create attractive opportunities for employing the best personnel.

Our operations are based on the principles of sustainable development.

Sava d.d. is the administrative centre of the Sava Group and conducts Investment Finance operations. The holding company employs 60 people: the Board of Management of Sava d.d., directors of our competence centres of knowledge and certain other specialists.

Owing to the marketing and financial power of the brand name, best management systems and fundamental strategic expertise, the holding company Sava d.d. trains and manages the companies under its majority ownership.

In the management of the diverse operations in the Group the holding company gives special significance to the creation of synergies between individual parts, providing optimum financial resources and managing assets together with defining priority investments.

2. Organisational structure of the Sava Group

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2.3. About the competence centres of knowledge

We are continually strengthening and upgrading the model of active group management, which is based on the network link incorporating 14 competence centres of knowledge from fundamental strategic business areas:

• StrategicFinance• BusinessFinance• RiskManagement• StrategicAccounting,PlanningandAnalysis• StrategicControlling• InternalAudit• CostControlandOperationalExcellence• StrategicPurchasing• StrategicInformatics• HR,LawandOrganisation• EUProjects• QualitySystems• Safety• CorporateCommunications

Our management model facilitates the perception and utilisation of synergies that appear in individual parts of the Group.

Business areas are managed through rationally organised and efficient competence centres of knowledge. They incorporate competent and qualified associates from all Group companies, who combine their expertise, abilities and experiences from various business operations and companies within the Group. The basic goal of their operation is the successful implementation of the strategy as set by the Sava Group together with its divisions and companies. The model of active management of the Sava Group

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Annual Report

I. Introduction

Organisational structure and composition of the Sava Group at 25/03/2009

This network organisation of management enables the entire Sava Group not only to utilise synergies, but to improve business quality and efficiency and to accomplish excellent results more swiftly and easily. By establishing links among various forms of expertise, we determine the objectives and activities that lead to the implementation ofstrategicgoalsandthelong-termsuccessoftheSavaGroup.

Via the competence centres of knowledge the Board of Management carries out the adoptedpolicyandensuresthetransferofknow-howtoallpartsoftheGroup.

Each of the competence centres operates at three levels: – Group level:Jointlycreatesandimplementsthestrategyofindividualcompanies

and the entire Group, encourages an innovative approach and the exchange of good practice cases, and develops and disseminates knowledge, new methodologies and approaches in their respective fields.

– Division level: Organises co-operation amongGroup companies, creates thedevelopment policy and co-designs Group policy, and together with Groupcompanies plans and implements various development projects.

– Company level: Implements operative tasks for company requirements, while the competence centre management supervises their members’ work and, if required, takes appropriate measures.

2.4. About the organisational structure of the Group, its divisions and companies

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DIVISIONS AND COMPANIES OF THE SAVA GROUP

Rubber Manufacturing with the Foreign Trade Network

Marketing in this division is performed under the Sava brand. The mainstay of the development is Savatechd.o.o.,which includes the companies Sava-GTI d.o.o.,Sava-Schäferd.o.o.,SavaRold.o.o.,Savaprod.o.o.,Savarusd.o.o.,andsixforeigntrade network companies in Germany, Czech Republic, Poland, England, Croatia, Florida and two representation offices in Russia and Italy. Our Rubber Manufacturing operation is based on 88 years of tradition.

Wedevelopandmarketabroadrangeofhigh-qualityproductsandtyressuitablefor applications in the construction industry together with motorcycle, car, industrial and agricultural vehicle manufacturing, environmental protection and emergency rescue. We are maintaining our position as a key development supplier in highly demanding industrial sectors.

The Sava brand achieves high added value particularly with products for environmental protection and preservation and in certain other product groups too.

Tourism

We are the leading tourist service provider in Slovenia. The division operates under the umbrella name Sava Hotels & Resorts, which unites the offer of the company SavaHoteliBledd.d.andfivethermalspasinnorth-easternSlovenia:Terme3000d.o.o.inMoravskeToplice,TermeLendavad.o.o.,TermePtujd.o.o.andZdravili{~eRadenci d.o.o. with Terme Banovci. We market hotel, health resort and other tourist services together with golf courses and campsites of the highest category.

Real Estate

This division includes the companies Sava IP d.o.o. and its subsidiaries IP Nova d.o.o., IP Nova A d.o.o., Sava IPN d.o.o., PC AG d.o.o., Sava IMG d.o.o. and Sava Nova d.o.o.. We build for the market and lease out our own real estate. An important part of this operation involves providing project management and support services for the requirements of the Sava Group.

Investment Finance

This operation is carried out by the holding company Sava d.d. whose main task is to manage the growth of Sava Group assets and invest in profitable financial investments.

Other Operations

This includes the company Sava Medical in Storitve d.o.o., which provides employment and training of disabled workers, the company GIP Sava Kranj d.o.o., which manages real estate, and companies that are involved in energy management. The following companies operate under the wing of Ensa d.o.o.: Energetika ^rnomelj d.o.o., Ensa BIH d.o.o. and Sava Ensa dooel.

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Annual Report

I. Introduction

€ in millions

Sava Group according to International Financial Reporting Standards 2004 2005 2006 2007 2008

Index 2008/2007

Sales 235.3 244.0 169.3 188.2 231.8 123

Exports 67.0 75.8 89.7 99.1 103.1 104

Total pre-tax profit 52.2 43.7 40.6 41.6 0.3 (26.1*) 1 (63*)

Net profit 48.6 38.5 34.1 39.3 1.9 (27.7*) 5 (70*)

Net cash flow (profit+amortisation) 60.2 53.5 47.9 54.5 17.6 (43.4*) 32 (80*)

Balance sheet total 593.3 651.0 674.6 951.7 921.6 97

Non-current assets 493.9 543.6 586.2 850.3 815.4 96

Current assets 99.5 107.4 88.4 101.4 106.2 105

Equity 377.9 392.9 432.5 545.4 482.4 88

Non-current liabilities 72.2 84.1 101.7 203.3 218.6 108

Current liabilities 143.3 174.0 140.3 203.0 220.6 109

Investment in property, plant and equipment 37.1 37.6 37.1 37.5 23.3 62

INDICATORS

Net profit/operating revenues - % 19.0 15.0 20.1 19.7 0.8 (11.6*) 4 (59*)

Total income / equity - % 17.1 11.9 10.3 8.9 0.1 (5.1*) 1 (57*)

Net profit / equity - % 16.0 10.5 8.6 8.4 0.3 (5.3*) 4 (63)

Net earnings per share - € 24.9 19.1 17.0 19.6 1.2 (13.8*) 6 (70)

Independence rate (equity/balance sheet total) - % 64.0 60.0 64.0 57.0 52.0 91

Liquidity (current assets / current liabilities) - % 62.0 62.0 63.0 50.0 48.0 96

SHARE

Nominal value - € 41.7 41.7 41.7 -** -**

Book value - € 190.9 193.7 214.3 270.9 240.0 89

Market value at 31/12 - € 183.5 180.3 231.6 603.7 253.2 42

Dividend paid per a share - € 2.3 2.6 2.7 2.8 3.0 107

3. Significant data and indicators

* Since 2007 the holding company Sava d.d. has had its capital distributed to ordinary personal no-par value shares.

** Data excluding unplanned events in a total value of €25.8 million

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SAVA GROUP

2004 2005 2006 2007 2008Index

2008/2007

Environmental data

Use of energy resources in GWh 127,808 143,989 135,614 133,412 133,612 100

Use of natural resources (drinking water) - m3 in thousands 607 614 576 591 570 96

Direct and indirect greenhouse gas emissions (CO2) - metric tons in thousands 45.3 52.6 51.2 48.7 49.1 101

SAVA GROUP

2004 2005 2006 2007 2008Index

2008/2007

Social data

Employee number at 31/12 3,017 3,047 2,564 2,641 2,692 102

Added value per employee - € in thousands 25.5 26.5 28.0 29.3 30.0 102

Average salary - € 984 1,026 1,069 1,203 1,253 104

Share of employees in preventive medical check-ups - % 19.1 23.0 29.7 32.5 33.6 103

Work-related injuries with sick-leave - no. of injuries with sick-leave per 200,000 working hours 2.5 2.6 2.3 2.5 2.4 96

Sponsorships and donations - € in thousands 392 473 518 586 755 129

No. of media announcements 3,164 3,394 3,856 4,073 4,568 112

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Annual Report

I. Introduction

4. Survey of more important events and achievements

4.1 More important events and achievements in 2008

January• TheGeneralMeetingofTermeLendavad.d.adoptsaresolutiononthetransfer

of minority owners shares to Sava d.d. – the principal shareholder.• Savad.d.enters405,875newlyissuedsharesofAbankaVipad.d.tothevalueof

€24.4 million.

February• ThebusinessfacilitywithaparkinggarageKareAiscompletedandputinuse.

March• Savatechd.o.o.presentsitsnewdevelopmentachievementsinthesegmentsof

motorcycle tyres in the Velo programme, expands its scooter tyres range and introduces a new line of winter scooter tyres.

• Savad.d.purchasesbusinessstakesinthecompaniesRSGKapitald.o.o.andPrvisklad d.o.o., which operate in the domestic risk capital market.

• SavaIPd.o.o.startstobuildthefacilitySoto~jeinKranjfortheResidentialFundof the Republic of Slovenia; this facility consists of 144 flats intended for young families and will be ready for use in 2009.

April• Terme 3000 restructures from a joint stock company into a limited liability

company. • Savad.d.increasesitscapitalinSavatechd.o.o.withaninvestmentinkindtotalling

€2.2 million.

May• TermeLendavad.d.restructuresfromajointstockcompanytoalimitedliability

company. • ThestatusofSavaHoteliBledtransformsfromalimitedliabilitycompanytoa

joint stock company. • HotelSavicainBled,thefirstfamilyhotelinSlovenia,isofficiallyopened.• InTerme3000d.o.o.theAquaLoopTobogganopens–thefirstwatertoboggan

intheworldwitha360°revolutionandanadrenalinerocket-likestart.

June • Theenvironmentalprotectionprogramme(EKO)developsanewtypeandrange

of lifting bags – aircraft recovery bags; their quality is tested in the USA.• TheShareholdersMeetingofSavad.d.electsanewSupervisoryBoardandadopts

a resolution to pay a dividend of €3 per share. • ThegovernmentoftheRepublicofSloveniaterminatesalong-termleaseagreement

forVilaBledandonthebasisofapubliccallfortendersitchoosesanewlong-termtenant. The company Sava Hoteli Bled d.d., the former tenant, does not apply.

• OpeningofTermePtujd.o.o.ParkFortuna,featuringavaneofhealth.• InourtouristcapacityinBledweexceedtheplannednumberof40eventsheld

at a high level during the Slovene presidency of the EU.

July• InSrbac,BosniaandHerzegovina,weofficiallyopenthelargestfactoryforthe

manufacture of refined wooden biomass in the Balkans.

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August• Savad.d. sells its entire37.5%stake in theassociatedcompanyLimbd.o.o.,

Ptuj.

September• NFDHoldingd.d.acquiresa1.01%stakeinallissuedsharesbySavad.d.,and

thusbecomestheownerof10.50%ofalltheissuedsharesintotal.

October• TheshareofAbankaVipad.d.,animportantassociatedcompanyofSavad.d.,is

quotedinthestandardlistingoftheLjubljanaStockExchange.• Savad.d.acquires5,474,066sharesinNFD1IDd.d.,whichrepresentsa3.41%

stake in the company at a price of €7.5million,thusbecominga23.22%ownerof the company.

November• TheSupervisoryBoardofSavad.d.givesitsapprovaltotheannexonextending

terms for exercising a put/call option and agrees terms of payment in the put/call option contract with Merfin d.o.o. for shares of the joint stock company Merkur owned by Sava d.d.

• ThemanagementofVilaBledpassesovertotheselectedleaseholder.• OntheLjubljanaringroadatŽale,Sava IPcompletes theconstructionof the

Modri Kvadrat facility – a large commercial building with garage parking. The garage car park is handed over to the investor and the offices are leased out; the company moves into its own offices in the same building.

December • Savad.d.increasescapitalinSavaIPd.o.o.intheamountof€8 million. • TermeRadencid.o.o.isrenamedZdravili{~eRadencid.o.o.,therenovationof

the oldest hotel is completed and the hotel is renamed Izvir. • FromitssubsidiaryTerme3000d.d.Savad.d.purchasesa100%stake in the

companyZdravili{~eRadencid.o.o.,thepurchasetotalling€10.5 million. • Savad.d.increasesitscapitalinthecompanyTermePtujd.o.o.intheamountof

€6 million.

January• Onthebasisofatake-overbidbyToprod.o.o.andPotezaNaložbed.o.o.Sava

d.d.sells12,720sharesora7.7%stakeinthecompanyissuer,Jadrand.d.,Sežana,the purchase amounting to €0.3 million.

February• Savad.d.sells1,398,000sharesora9.9ownershipstakeofthecompanyZvon

Dva Holding d.d., Maribor; it now has no ownership stake or voting rights in this company.

• CampingBledcommencesinvestmentandmaintenanceworksatthecampsiteto enlarge capacity and improve the quality of camping pitches.

March• BorutMiklav~i~,MinisterofHealthofRS,officiallyopensHotelIzvir,markinga

newstart-upinwellnesstourisminZdravili{~eRadencid.o.o.

4.2. More important events and achievements in 2009 − after the accounting period

Annual Report

08

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I.Introduction

5.Report by the Chairman of the Board of Management

Dear shareholders,

Two years ago when we began to implement the revised development strategy for 2007-2011, it was unimaginable that the world economy would be seeking a new formula for global economic regulation in the year that followed. The introduction of interventions in countries limiting free market operation and stricter control of the financial sector were the initial steps taken to create a new economic model that aims at restoring damaged relations and fragile confidence.

In future the international economy will have to think in the long term and act in a sustainable manner – something that has always been an intrinsic part of Sava’s development concept. During the global economic crisis this model has enabled us to increase sales, improve the competitiveness of our operations and maintain liquidity and financial stability for the Sava Group.

High growth in sales, yet a lower profit due to extraordinary events

In the unfavourable circumstances for conducting business, which in 2008 includes our most important markets and lines of business, the Sava Group achieved a record 23%increaseinsalesandenhanceditssalesperformanceinalloperations.Duetoimprovements and innovations, €3.4 million was saved, which proves that we are making progress with regard to competitiveness, while bearing in mind this is a continual andnever-endingprocess.TheincreaseinGroupsales,whichamountedto€231.8 millionor6%aboveplan,demonstratedthatwewereefficientinachievinginternalgrowth,oneofthethreeleadingstrategicguidelinesfortheperiod2007-2011.

However, a leap in revenues was not entirely revealed in the success of the Group; while our operations in the first three quarters improved, the last quarter was marked first by the global financial crisis and later by the recession. Unplanned events in the amount of €25.8 million, which originate from impairments of assets in the Tourism division and financial investments in Sava d.d., decreased our performance and significantly aggravated business results. We generated a profit of €1.9 million, which is lower than in the previous year and below plan too. The balance sheet total oftheGroupwas3%lower.

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Janez BohoriË Chairman of the

Board of Management

Equity,whichrepresents52%ofGroupassetsandamountedtoslightlymorethan€482 million,lost12%invalueinthesameperiod.Attheendoftheyearreceivedloanswere one quarter higher than in the previous year. The value of investment activity was halved, both concerning infrastructure and capital. However, the favourable capitalstructureoftheSavaGroupwasmaintained.Likeallothercompanies,wehadtostrugglewiththedifficultrenewalofshort-termcreditlinesinthelastquarter,andbyrestructuringthefinancialpolicy,weincreasedthevolumeoflong-termcreditlines, which is now based on the quality and diversified structure of our investments and interest rate management.

Measures adopted to face the crisis situation

We encountered the new situation with determination not to halt our development, butenhanceourcompetitivestrengthinthecrisis.Ourpathtoshort-termmilestonesinGroupassetgrowthhasgainedsecondaryandlong-termsignificance.

Our response to new circumstances was to adopt development guidelines and measures that at the same time form the core of the revised strategy for the period 2009-2011,whosepreparationiscurrentlyunderway.Besidesimprovedmarketingefficiency, we placed the provision of liquidity and cost optimisation to the fore. Measures were already launched in the first half year of 2008 and subsequently further enhanced. In the Rubber Manufacturing division risks were managed efficiently in the area of price rises of input materials and energy sources, which skyrocketed in that year, while in the Tourism division purchasing was managed efficiently in order to alleviate the impact of high price rises of foodstuffs. Sales operations were strengthened and reoriented to new markets and restructured sales programmes to improve product quality. We proceeded with the modernisation of organisational and business processes, increased management efficiency and, through numerous activitieswithin the frameworkof the Family-FriendlyCompanyproject too,weenhanced the motivation of our employees.

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Annual Report

I. Introduction

Preserving a long-term view

At the beginning of 2009, in a situation involving the worsening global crisis, we improvedourmeasuresanddividedthemintotwogroups:short-termonestosurvivethecrisissituation,anddevelopmenttoassurelong-termcompetitiveness.

Long-termco-operationwasthebasisofourstrategyformanyyearsanditalsoactedas a guide for Sava shareholders. Therefore the present situation does not discourage us from setting goals that lead us to developing a competitive edge in the long term.

Thisshouldbehighlightedinparticularaswebelievethatdeficiencyinlong-termthinking is a key factor that led to the global crisis. Consequently, we have to return that ability as well as confidence to the international financial and economic arena.

We have observed business development over several years, as can be seen from our reporting in the past, which is why it is systematically included in this year’s business analysis – drawing attention to the achievements and confidence that we have built over a longer period of time. Risk and financial management have been specifically emphasised.

Solid composition of financial investments

Despite a lower profit, balance sheet total and equity, last year’s drop in certain indicators of the Sava Group can be defined as a relatively favourable one. In the unstable economic environment the diversity of investments, conservative policy in the field of financial investments and matrix organisational structure are proving to be advantageous.

We estimate the portfolio of financial investments of Sava d.d. to be of high quality with a value on the last day of 2008 amounting to slightly more than €542 million. The Investment Finance division, in which more than one half of all assets are engaged, continued to act as a stabiliser, despite outstanding volatility in stock exchange indices, and one of the solid pillars in our defence against risk.

Whenoptimisingtheportfoliooffinancialinvestments,wemonitorthelong-termeffects while aiming at a stable cash flow over a long period of time. This is particularly important when stock exchange indices drop heavily. In the financial investments structure,listedsecuritieshavearelativelysmallshareatonly11.6%.

As regards financial investments in the associated companies, we retained a significant strategic stake in the company Abanka Vipa d.d. by increasing its share capital with €24.4 million, and we still have significant ownership equity in Gorenjska Banka d.d.

In the long-termfinancial investments structure, investments in the share capitalof both banks represent a predominant stake or more than one half. Both banks achieve quality ratings and favourable capital suitability. As regards their comparative advantages, they complement each other so preparations for a merger will be one of our priorities in 2009.

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Impairments of financial investments due to negative stock exchange trends

Due to impairments of financial investments as a consequence of negative movements in stock exchanges, the financial performance figure of the holding company Sava d.d. was57%lowerthanplannedandonehalflowerthaninthepreviousyear.Iftheseinfluences had not been taken into account, the plan would have been exceeded by 39%.Duetoimpairmentsoffinancialinvestmentswedidnotfulfilthetotalplannedpre-taxprofitfigure,generating€2.3 million instead.

Despite the aggravated business conditions, Sava d.d. is liquid and financially sound; itpreservedafavourablestructureofliabilities,inwhichsharecapitalhasa54%stake. Owing to the accumulated profit of €29.2 million, we assure our shareholders that the adopted dividend policy will be fulfilled, thus maintaining the continual payment and growth in dividends.

Active management of the Sava Group

As a parent company of the Sava Group, Sava d.d. with its competence centres is a mainstay in the preparation of measures and risk management. The revised development solutions are established by means of a network organisational structure in the entire Group.

With the active management model, based on small yet efficient competence centres, progress has been achieved in forming strategic links and centralising business operations.Owingtoaco-ordinatedpurchasingstrategy,wedecreasedcoststoo.

In addition to the standard financial policy we have established a centralised risk management system where new improvements were introduced in the methodology of risk assessment and its early identification. Due to efficient risk management, we have ensured the liquidity and financial capability of all Group components, which will form the basis for the financial policy in 2009.

Division performance and plans

TheRubberManufacturingdivisionwithhigh-qualityindustrialrubberproductstargetedat market niches generated one half of sales in the Sava Group. This division faced a decline in demand in the most important European markets, high price fluctuations in energy resources and raw materials and the impact of negative foreign currency changes. Thanks to the introduction of unique product solutions and innovations, we managed to increase or at least preserve our market shares and a share of high addedvalueproducts.Salesincreasedby1%andamountedto€110.6 million, thus generating a modest profit. In 2009, we plan to increase both sales revenues and profit.

In theTourismdivisionwemanaged tomakesome favourablemoves:6%moreovernight stays and one tenth more guests whom we attracted with numerous innovations in our services. We consolidated our position as a leading tourist service providerinSlovenia.Revenues,whichwere7%higher, laggedbehindplan.Thedivision operations showed a negative result; again a profit was generated in the Bled destination, whereas the companies of Panonske Terme, where impairments werecarriedoutinZdravili{~eRadencid.o.o.,madealoss.ByrenovatingHotelIzvirinRadenci,weconcludedanextensive10-yearinvestmentcycleinthisdivision.

24

Annual Report

I. Introduction

Past investments in the quality of service should produce a harvest of yields now. Furthermore, we plan to introduce a new marketing strategy and organisation, merge business functions and design uniform standards for the umbrella brand name Sava Hotels & Resorts.

In the Real Estate division we retained our leading position in Slovenia. The character of this business is exposed to great fluctuations. The main company Sava IP d.o.o. thus increased profit, more than doubled sales revenues and had a significant impact on the consolidated sales in the Group.

Other Operations, where the energy management business is predominant, accounted for2%ofthesalesstructure,whichislow,butweexpectsalestoshowapermanentincrease. In 2009 we are planning investment in the manufacture of refined biomass and further increases in energy management to provide energy efficiency in Sava Group companies.

Sustainable development is our guide

Thanks to our concern for safety and health at work, we managed to keep the number of accidents at last year’s level, despite the higher volume of products sold and services. Numerous preventive campaigns to enhance safety were conducted. We received the national acknowledgement and the European Good Practice Award in occupational health and safety and improved several important environmental indicators such as consumption of energy sources, water, emissions and quantity of waste.

The company Sava Hoteli Bled d.d. was an outstanding host for numerous meetings during the time of the Slovene presidency of the EU. The commitment to sustainable development resulted in several awards: we were ranked 3rd in the TOP social responsibility campaign organised by Finance newspaper and were one of 7 finalists in the Golden Thread campaign for the best Slovene employer organised by the publisher Dnevnik. The holding company Sava d.d. was ranked among five of the mostopenjoint-stockcompaniesforthePortalAwardpresentedbytheLjubljanaStock Exchange.

Plans of the Sava Group

Theplanningofshort-termresultsinthegivencircumstancesislinkedtoguessingthefuture development of events. We have enacted various scenarios and, despite the crisis circumstances, we prepared an ambitious plan for 2009. While implementing it changes are possible, for which decisions will be made on the basis of the actual situation. Sava Group is thus planning investments of €23.5 million, mainly in production technologies,yettheirimplementationwillbere-examined,thustakingintoaccountthe situation in the domestic or foreign capital market. According to our estimates consolidatedsalesrevenueswillbe4.5%lowerthanin2008,revenuesinrealestatewill fall, while in the main divisions of Rubber Manufacturing and Tourism they will increase. Financial business will continue to have a great impact on the success of the Group. According to plans, which are based on known facts and assumptions, net profit will be €39 million, of which four fifths will be generated by Investment Finance and associates, and one fifth by the subsidiaries of Sava d.d.

25

On behalf of the Board of Management, I would like to express my gratitude to the SupervisoryBoard,appointedinJune2008,fortheirsupportinthepreparationofsolutions to tackle these uncertain conditions.

The economic crisis marked this past year as one of the most difficult in the last five decades. There is no doubt that 2009 will be even tougher. The stability of theSavaGroup,whichoriginates fromalong-standingcommitment tocontinualimprovements in business processes, will be challenged with a stern test, to which weshallrespondwithprudenceandambition.Thankstoourdevelopment-drivenbusiness policy we will further build both the reputation of the Sava brand name even in crisis circumstances and the confidence of all stakeholders. We are determined to live in accordance with our values. Owing to our excellence, creativity, knowledge, responsibility and integrity we can emerge from the crisis as winners.

JanezBohori~ Chairman of Sava d.d. Board of Management

Annual Report

08

26

6.Manage - ment and governing bodies

6.1 Presentation of the Board of Management

Janez BohoriË,Chairman of the Board of Management

Savad.d.ismanagedbyathree-memberBoardofManagementconsistingofchairmanJanez Bohorič and members Vinko Perčič and Emil Vizovišek.The Board of Management has managed the company for the third term of office in succession;itspresentmandateexpiresinJuly2011.

• Universitygraduateinchemicaltechnology,67yearsold.• EmployedatSavafor36years,firstasdevelopmenttechnologist,thendirectorof

severalSavacompanies;from1984-1990vicepresidentoftheSlovenegovernment;since 1996 chairman of the Board of Sava d.d.

• Responsible for the strategic development of operations, finance, strategiccontrolling and risk management, marketing, human resources, law, organisation and corporate communications, and the Investment Finance division.

Janez Bohorič is deputy chairman of the Awards Committee of the Republic of Slovenia for Business Excellence, member and honorary member of numerous organisations, founder of Lionism in Slovenia and development co-ordinator for Lionism inMacedonia and Central and Eastern Europe, member of the executive committee of the Managers’ Association, member of the Slovene Association of Supervisory Board Members, honorary member of the Slovene Tourist Board, member of the Economy CollegiatebodyatLjubljanaUniversity,chairmanoftheawardscommissionintheSlovene Chamber of Commerce and Industry and honorary consul of the Republic of Macedonia in Slovenia.

Membership of Supervisory Boards:• MemberoftheSupervisoryBoardofAbankaVipad.d.,Ljubljana

Photos above (from left to right) : Janez BohoriË, Chairman of the Board of Management, Vinko PerËiË and Emil Vizovišek, Members of the Board of Management

27

Vinko PerËiË,Member of the Board of Management

• Universitygraduateineconomics,65yearsold.• EmployedatSavafor45years,firstasheadofaccounts,thenasdirectorofthe

sector for planning, analysis and accounting; since 1996 a member of the Board of Management.

• Responsibleforthedevelopmentofsystemsforplanning,monitoringandauditingbusiness operations, the development of informatics and purchasing, and the Tourism and Real Estate divisions.

Vinko Perčič is member of the board of the Federation of Accountants, Financiers and Auditors of the Republic of Slovenia, chairman of the Association of Accounting and Financial Workers in Kranj, member of the Slovene Association of Supervisory Board Members, member of the Managers’ Association, and chairman of Sava Cycling Club.

Membership of Supervisory Boards:• ChairmanoftheSupervisoryBoardofGozdnoGospodarstvoBledd.d.,Bled

Membership of the Supervisory Boards of Sava Group companies:• ChairmanofthegeneralassemblyofSavaIPd.o.o.

• Universitygraduateinchemicaltechnology,64yearsold.• EmployedatSavafor33years,firstastechnologist,theninjuniormanagerialandsenior

managerial positions in the field of development. In 1988 he left Sava and took over production management in Semperit. After his return he was responsible for development, engineering and quality; since 1996 a member of the Board of Management.

• Responsible for the development of business quality systems, R&D and thecontinual improvements system, the area of safety, as well as the development and supervision of the Rubber Manufacturing division with the Foreign Trade Network, and the development of new operations.

Emil Vizovišek is member of the economy commission of the Slovene Business and Research Association with its head office in Brussels, member of the development board in the Economic Development Fund, member of the board of the National Foundation for Business Excellence, member of the board of the IRI Institute, University ofLjubljana,memberoftheSloveneAssociationofSupervisoryBoardMembers,andmember of the Managers’ Association.

Emil Vizovišek,Member of the Board of Management

28

Annual Report

I. Introduction

6.2 Presentation of the Supervisory Board

Miran KalËiËChairman of the Supervisory Board, personnel commission member

Marko PogaËnik, MScDeputy chairman of the Supervisory Board, chairman of the audit committee

Janko KastelicMember – shareholder representative

The Supervisory Board of Sava d.d. consists of 9 members, 6 of whom are shareholder representatives and 3 employee representatives.

At last year’s regular Shareholders’ Meeting a new Supervisory Board was appointed asthe4-yeartermofofficeoftheformerSupervisoryBoardexpired.Until28June2008 the Supervisory Board consisted of: Stanislav Valant MSc, chairman, Miran Kal~i~,deputychairman,andmembers:GoranBizjak,JanezBojc,JankoKastelic,TomažKuntari~MSc,JanezJustin,JožefCopekandMihaResman.

OntheabovementioneddateanewSupervisoryBoardbeganits4-year termofofficeand in its foundingmeetingon31 July2008,MiranKal~i~waselectedaschairmanandMarkoPoga~nikMSc,asdeputychairmanoftheSupervisoryBoardof Sava d.d.

At the 14thShareholders’MeetingofSavad.d.on4June2008,thefollowingmembersof the new Supervisory Board were elected as shareholder representatives:

• Bornin1948,LL.B• Since2006directoroftheInstituteforWorkSafetyd.d.,Ljubljana• MemberoftheSupervisoryBoardofSavad.d.intheperiod1996-2000anddeputy

chairmanoftheSupervisoryBoardofSavad.d.in2000-2004and2004-2008

Principal current functions and membership:• VicechairmanoftheGovernmentoftheRepublicofSloveniaBoardforDisabled

Persons• ChairmanoftheexpertcommitteeoftheEmploymentServiceofSlovenia• MemberoftheexpertcommitteeoftheSloveneAssociationofHRSocieties• MemberoftheexpertcommitteeoftheSloveneAssociationofPersonswithWork-

Related Disabilities• Member of the committee of the Closed Mutual Pension Funds for Public

Employees • MemberoftheSloveneAssociationofSupervisoryBoardMembers

• Bornin1972,MSc(OrganisationalSciences)• SinceApril2009assistanttotheBoardofManagementfortheareaofmanaging

thesubsidiariesinSavaReGroup,Ljubljana

Principal current functions and membership:• MemberoftheSloveneAssociationofSupervisoryBoardMembers

• Bornin1950,BSc(Economics)• Since2005directorofFidinad.d.,Ljubljana• MemberoftheSupervisoryBoardofSavad.d.intheperiod2000-2004and2004-

2008

Principal current functions and membership:• MemberoftheSupervisoryBoardofFinetold.d.,Celje• MemberoftheSloveneAssociationofSupervisoryBoardMembers

29

Jože ObersnelMember – shareholder representative, member of the audit committee

Tomaž ToplakMember – shareholder representative, member of the HR commission

Stanislav Valant, MScMember – shareholder representative, chairman of the HR commission

• Bornin1947,BSc(Economics)• Advisor for strategic investments in the company Zavarovalnica Triglav d.d.,

Ljubljana

Principal current functions and membership:• MemberoftheSupervisoryBoardoftheinsurancecompanyTriglavPoji◊tòvna

a.s., Brno, Czech Republic • MemberoftheadministrativeboardofZavarovalniceKopaonikd.d.,Belgrade,

Serbia

• Bornin1965,LL.B• From2005to8July2008chairmanofthemanagementboardofKapitalskaDružba

d.d.,Ljubljana

Principal current functions and membership:• ChairmanoftheSupervisoryBoardofAbankaVipad.d.,Ljubljana• DeputychairmanoftheSupervisoryBoardofIstrabenzd.d.,Koper• VicechairmanoftheEuropeaneconomicassociationSMEUNION,Brussels• MemberoftheManagers’Association,Ljubljana

• Bornin1950,MSc(Economics)• Since1994directorandsince2004chairmanoftheboardofmanagementof

NacionalnaFinan~naDružbad.o.o.,Ljubljana• ChairmanoftheSupervisoryBoardofSavad.d.,Kranjfrom2004to2008

Principal current functions and membership:• ChairmanoftheSupervisoryBoardofEtold.d.,Celje• ChairmanoftheSupervisoryBoardofHoteliBernardind.d.,Portorož• Honorarychairmanof theSupervisoryBoardof theLjubljanaStockExchange

d.d.,Ljubljana• ChairmanoftheManagementCompaniesAssociation• PresidentoftheSloveneSkiAssociation• MemberofthemanagingcommitteeoftheManagers’Association• MemberoftheSloveneAssociationofSupervisoryBoardMembers

Miran KalËiË Chairman of the

Supervisory Board

30

Annual Report

I. Introduction

Janez JustinMember-employeerepresentative, member of the HR commission

Boštjan LuznarMember – employee representative

Miha ResmanMember – employee representative, member of the audit committee

At the 2nd regular Workers’ Council meeting on 8 May 2008 employee representatives in the new Supervisory Board of Sava d.d. were elected as follows:

• Bornin1946,mechanicaltechnician• PresidentoftheTradeUnionforChemical,Non-metalandRubberManufacturing

Industries(KNG)atSava-Goodyear• Member of the Supervisory Board of Sava d.d. in the periods 1996-2000,

2000-2004and2004-2008

Principal current functions and membership:• PresidentofKNGSlovenia• Member of the board of the EuropeanMine, Chemical and EnergyWorkers’

Federation(EMCEF)• MemberoftheboardoftheInternationalFederationofChemical,Energy,Mine

andGeneralWorkers’Unions(ICEM)• Chairmanofthenegotiatingteamsforcollectiveagreementsforchemicaland

rubbermanufacturingandthenon-metalindustriesofSlovenia• Memberof thenegotiating teamofemployees inEMCEFnegotiatingwithEU

directorates

• Bornin1977,BSc(Agronomy)• Headofgolfgreen-keepingonBledgolfcourse,SavaHoteliBledd.o.o.

Principal current functions and membership:• HeadoftheexecutiveboardoftheSloveneGolfGreen-keepersAssociation• MemberofthespecialistteamMaintenanceinSavad.d.

• Bornin1975,BSc(Economics)• HeadoffinancialinvestmentsinStrategicFinanceatSavad.d.,Kranj• MemberoftheSupervisoryBoardofSavad.d.,Kranjfrom2004to2008

Principal current functions and membership:• PresidentoftheWorkers’CouncilofSavad.d.,Kranj• Memberoftheexpertteamfortake-oversandmergersatSavad.d.• MemberoftheSupervisoryBoardofNFDHoldingd.d.,Ljubljana• MemberoftheSupervisoryBoardofGorenjskaBankad.d,Kranj

31

on the results of examining the audited 2008 annual report of the company Sava d.d., the audited 2008 consolidated annual report of the Sava Groupand the proposal for using the accumulated profit for the year 2008

Components of the annual report and the consolidated annual report

The Supervisory Board of the joint stock company Sava has reviewed the formal aspects concerning the 2008 annual report from the Board of Management and the 2008 consolidated annual report of the Sava Group.

It has determined that the 2008 annual reports were produced within the legal deadline andcontainalltheobligatorycomponentsasprescribedbytheCompaniesAct-1.Theannual report consists of the financial report that includes the balance sheet, income statement, enclosures with notes to all the statements, cash flow statement, statement of changes in equity and the business report. The consolidated annual report consists of all the prescribed contents too, whereby it stands that the business report is common to both the annual report and the consolidated annual report. All the essential constituents that are prescribed by legislation to produce the individual statements and reports are contained in the annual report. The company has correctly formed legal reserves and reserves for its treasury shares. The explanations to the financial statements contain all theinformationspecifiedbytheCompaniesAct-1inItems1–22ofParagraph1,Article69. The business report contains all the significant business events that took place after the end of the business year, description of the anticipated growth of the company and activities of the Sava Group in the field of research and development and data about the representationofficesofthecompany.Thebusinessreportcontainsanin-depthanalysison the material risks and uncertainties that the company is exposed to and gives a fair view of the development and business results of the company and its financial position.

The annual report was submitted for auditing to an auditor that had been selected at the 14th Shareholders’ Meeting of the joint stock company. The auditor KPMG d.o.o. produced an auditor’s report on 6 April 2009.

Paragraph 3 of Article 272 of the Companies Act specifies that the Board of Management must present the compiled annual report together with the auditor’s report to the Supervisory Board without delay. The Board of Management of Sava d.d. did this on 9 April 2009. We therefore determine that the aforementioned legal provision was observed and so wastheprovisionsofParagraph5ofArticle57oftheCompaniesAct-1whichdefinesan8-daytermforsubmittingtheauditedannualreportandauditedconsolidatedannualreport to the competent body.

Method and scope of examining the conduct of the company The Supervisory Board performed its supervisory function mainly at Supervisory Board meetings. The Supervisory Board had seven meetings: two in the former composition and five in the new composition. The Supervisory Board meetings in 2008 took place on 20 March,24April,31July,21August,6November,18Novemberand18December.Atthesemeetings individual members of the Supervisory Board exercised their right under Paragraph 1, Article 282 of the Companies Act, which enables every member of the Supervisory Board to examine all the bases for producing the annual report. In accordance with the legal provision the Supervisory Board has the right to revoke such a right from an individual member, but the Supervisory Board did not adopt any resolution on this matter in 2008.

The Supervisory Board consists of six members who were elected by the Shareholders’ Meetingon4June2008,andthreemembersproposedbytheWorkers’Council.ThemembersoftheSupervisoryBoardare:JanezJustin,MiranKal~i~,JankoKastelic,Bo{tjanLuznar,JožeObersnel,MarkoPoga~nikMSc,MihaResman,TomažToplakandStanislavValant MSc. All members being elected by the Shareholders’ Meeting acted independently in making decisions. In making decisions concerning individual resolutions adopted in the past year, none of the members excluded themselves due to a conflict of interest. The

7. Report by the Supervisory Board

32

Annual Report

I. Introduction

Supervisory Board has set the rules as regards safeguarding business secrets and dealing with any conflicts of interest.

At its meeting on 6 November 2008, the new composition of the Supervisory Board appointed two commissions: the Audit Committee whose tasks are specified in Article 280, Companies Act 1, and a HR Commission which combines the competences of a commission for appointments and that for earnings.

TheHRCommissionconsistsof:StanislavValantMSc,ascommissionchairmanandJanezJustin,MiranKal~i~andTomažToplakascommissionmembers.TheCommissionmettwice; it dealt with a proposal for remunerating the Board of Management and Supervisory Board, and the status of the Board of Management members and its possible changes.

TheSupervisoryBoardappointedtheAuditCommitteethatconsistsof:MarkoPoga~nikMSc,ascommitteechairman,andcommitteemembersKostaBizjak(externalmember),andMihaResmanandJožeObersnel,whoareboththeSupervisoryBoardmembers.The committee met on 31 March 2009; it dealt with the annual report, appointed a candidate to audit the financial statements in 2009 and carefully studied the internal and external audit.

An external auditor, who was set questions by the commission members, collaborated in the audit committee meeting. The external auditor participated in the Supervisory Board meeting in April 2008, at which the annual report was adopted, and the Shareholders’ MeetingofthejointstockcompanyinJune2008.

The most important resolutions of the Supervisory Board

The Supervisory Board pursued and adopted resolutions on the most important matters of the company on an ongoing basis. A summary of other more important matters of individualmeetingsof theSupervisoryBoard (inchronologicalorder) isgiven in thefollowing wording:• TheSupervisoryBoardconfirmedandendorsedtheaudited2007annualreportfromthe

Board of Management, audited consolidated 2007 annual report and a written report by the Supervisory Board about the annual report from the Board of Management for 2007, consolidated annual report and the proposal for using the accumulated profit (21stmeeting).

• The Supervisory Board adopted the statement on conformity with the CorporateGovernance Code for Slovenia.

• TheSupervisoryBoardmotionedtheproposalbytheBoardofManagementaboutusing the accumulated profit, approving the discharge to the governing bodies and bonuses to the Supervisory Board members.

• TheSupervisoryBoardproposedtheShareholders’MeetingtoappointKPMGSlovenijad.o.o.,Železnacesta8a,Ljubljana,asauditorofthe2008financialstatements.

• TheSupervisoryBoardformedaproposalonelectingmembersforanewSupervisoryBoard composition.

• The Supervisory Board decided that Miran Kal~i~ be elected chairman of theSupervisoryBoard,andMarkoPoga~nikMSc,deputychairmanoftheSupervisoryBoard (1stmeeting).

• TheSupervisoryBoardconfirmsthebasisfortheworkoftheSupervisoryBoardinthefourth term of office from 2008 to 2012.

• TheSupervisoryBoardbecameacquaintedwiththereportonthebusinessoperationsoftheSavaGroupandthecompanySavad.d.intheperiodJanuarytoJune2008 (2nd meeting).

• TheSupervisoryBoardbecameacquaintedwiththereportonthebusinessoperationsoftheSavaGroupandthecompanySavad.d.intheperiodJanuarytoSeptember2008(3rdmeeting).

• TheSupervisoryBoardadoptedamendmentstoitsstandingorders.• TheSupervisoryBoardappointedanauditcommitteeconsistingofMarkoPoga~nik

MSc,ascommitteechairmanandKostaBizjak,MihaResmanandJožeObersnelascommittee members.

• TheSupervisoryBoardappointedaHRcommissionconsistingofStanislavValantMSc,ascommissionchairmanandJanezJustin,MiranKal~i~andTomažToplakascommission members.

33

• TheSupervisoryBoardgaveitsconsenttoAnnex2onestablishingaput/calloptionwithregardto262,841sharesissuedbyMerkurd.d.concludedwithMerfin,Holdin◊kadružba,d.o.o.(4thmeeting).

• TheSupervisoryBoardbecameacquaintedwiththereportonthebusinessoperationsof the SavaGroup and Sava d.d. in the period January toNovember 2008. TheSupervisory Board became acquainted with the report on financial investments and loans,andoptionsandforwardtransactionsat30/11/2008(5thmeeting).

Furthermore, the Supervisory Board pursued reporting and, if required, adopted suitable resolutions aboutlong-andshort-termfinancialinvestments,treasuryshares,sharepricesandthemovementof the shareholders’ structure. After each Supervisory Board meeting the minutes of the meeting were prepared and adopted with a resolution, in accordance with the remarks given on the minutes and, if required, also a fair copy of the minutes was made to assure traceability. Reporting by the Board of Management

In the 2008 business year reporting by the Board of Management enabled the Supervisory Board to suitably implement its supervisory role. The reports by the Board of Management were usually produced according to individual areas with a synthetic review of all business events and impacts that were considered of importance by the Supervisory Board. These involved the operations of the divisions: Rubber Manufacturing with the Foreign Trade Network, Tourism, Investment Finance, Real Estate and Other Operations, thereby enabling one to monitor the positive and negative effects of individual operations of the Sava Group.

The informationsystemMIS (Managers’ InformationSystem)enabled theSupervisoryBoard to pursue the movement of individual elements in business operations according to various business areas in detail. In this way, the Supervisory Board could decide on which elements it would like to be made acquainted with in detail in each individual meeting. Such a tool enabled the Supervisory Board to implement its legal and statutory competencies in a very efficient manner at a high level of quality.

The Supervisory Board was also allowed to make a review of individual companies or production and service programmes within separate divisions. The interest of the Supervisory Board primarily referred to the business operations of larger companies and production programmes and the consolidated statements of the entire Sava Group. The Supervisory Board devoted its special attention to the Investment Finance division area, thereby following its operation, as well as the human resources management.

In its reports the Board of Management presented and explained all the most important categories that affect the business of the joint stock company Sava and the Sava Group. These are the categories of profit, turnover, costs, added value, etc. Furthermore, comparative statements for the past year and planned statements for the comparative period were added. In this way the Supervisory Board could continuously examine the performance trend with respect to the past and planned business operations.

Business performance assessment

In dealing with the annual report the Supervisory Board analysed the movement of certain significant financial data and indicators in comparison with the previous year and the planned ones for 2008 and ascertained the following:

1. Sava Group operations in the real sector were marked by a decline in demand for products and services, and price rises of raw materials, energy resources and labour costs, whereas in the financial sector they were marked by an increase in interest rates and a drastic fall in stock exchange prices. Due to the changed economic conditions all Group companies started to perform measures to alleviate the effects of the aggravated economic environment already during the year 2008.

2. In 2008, operations were significantly deteriorated by unplanned events in the amount of €25.8 million, as a consequence of unforeseen and therefore unplanned events, whichat42%wereimpairmentsofassetsinTourismandat58%toimpairmentsoffinancial investments in Sava d.d. On the basis of additionally requested explanations and clarifications by the Board of Management and the selected auditor the Supervisory Board estimates that the mentioned impairments were carried out in accordance with

34

Annual Report

I. Introduction

recommendations of the accounting profession, and that the impairment policy was conservative and did not leave any open risks to be transferred to future periods.

3. In the Sava Group the balance sheet total amounted to €921.6millionandwas3%lowerthanattheendofthepreviousyearandalso3%lowerthanplanned.Groupequityhasa52%shareintheassetsstructure.

In Sava d.d. the balance sheet total amounted to €653.7millionandwas5%lowerthaninthepreviousyearand1%higherthanplanned.Savad.d.equityhasa54%share in the assets structure.

4. In the Sava Group sales revenues amounted to €231.8millionandwere23%higherthanlastyearand6%higherthanplanned.TheGroupcompaniesincreasedoratleast preserved their market shares in all key markets.

In Sava d.d. sales revenues amounted to €8.4 million and mainly represented revenues from rents for the use of real estate let on lease to the companies in the Group.

5. In the Sava Group the net profit amounted to €1.9 million and was lower than last year and below plan. The generated net profit excluding extraordinary events totalled €27.7millionanddeviatedfromlastyear’sprofitby30%andfromplanby14%.

In Sava d.d. the net profit totalled €4.6 million. The planned values and last year’s values were not achieved due to the unplanned impairments of financial investments in the amount of €14.9 million; excluding this extraordinary event Sava d.d. surpassed itsplannednetprofitby52%andlastyear’svalueby42%.

6. IntheSavaGroupthereturnonequityamountedto0.3%,excludingextraordinaryeventsitstoodat5.3%,or3.1percentagepointslessthanlastyearand1.2percentagepoints below plan.

InSavad.d.thereturnonequityamountedto1.2%,excludingextraordinaryeventsitstoodat4.4%,or1.1percentagepointshigherthanlastyearand1.3percentagepoints above plan.

The generated net profit of the Sava Group – as shown by the financial indicators – was significantly decreased by the unplanned and extraordinary events in a total amount of €25.8 million. These events were reflected in impairments of assets totalling €10.9 million in Tourism, while the impairments of financial investments in Sava d.d., which the company had carried out in accordance with the recommendations of and requests by the accounting profession due to a significant decrease in stock exchange prices, amounted to €14.9 million. According to the audited data the companies in the Sava Group therefore concluded the year 2008 with a net profit of €1.9 million, which was lower than in 2007 and less than planned for 2008. Considering the fact that Sava Group companies increased or at least preserved their sales and market shares, respectively, the data is of significance proving that in the case there had not been any unplanned impairments and these need not be carried out, the Sava Group would have generated a net profit of €27.7 million in 2008. With regard to the generated net business result of Sava d.d. totalling €4.6 million, it can be established that due to the described impairments of financial investments, the planned figure was not achieved, however, if impairments were excluded, the plan in 2008 would be exceeded by 52%andtheachievedresultwouldbe42%higherwithregardto2007.

On the basis of the stated facts the Supervisory Board ascertains that despite the uncertain economic situation and deepening global financial crisis, the Board of Management preserved suitable cash balancing, liquidity, solvency and favourable capital structure in Sava Group companies. The Supervisory Board estimates that given the circumstances in 2008 the Board of Management successfully implemented the set goals in the changed business conditions as it increased sales, improved the competitiveness of divisions, and preserved Group reputation. The Board of Management further maintained liquidity despite the difficulties in renewing the financial credit sources and preserved the financial stability of the Group.

Proposal for using the accumulated profit

The Supervisory Board examined the proposal for using the accumulated profit.

It ascertained that the profit was distributed in accordance with Article 230 of the Companies Act-1,whiletheproposalforusingtheaccumulatedprofit,whichat31/12/2008totalled

35

€29,168,492.43, comprised the data prescribed in Paragraph 4 of Article 293 of the aforementioned Act.

The Supervisory Board assessed whether there was a possibility for challenging such a resolution about using the accumulated profit in line with Paragraph 1 of Article 399 of the CompaniesAct-1.Itdeterminedthattherewasnosuchpossibilitysincetheproposalbythe Board of Management anticipated that the amount of €6,211,463.80 was distributed to shareholders, which is the amount exceeding 4 per cent of share capital in cumulative terms totalling €3,350,062.70.

When endorsing the annual report, the Supervisory Board supported the proposal by the Board of Management to form other reserves for one half of the net profit that remains after using the accumulated profit for the purposes from Paragraph 1 of Article 230 of theCompaniesAct-1.

BasedonParagraph3ofArticle298of theCompaniesAct-1, theSupervisoryBoardproposed that the Shareholders’ Meeting adopts a resolution on using the accumulated profit as proposed by the Board of Management.

Auditor’s report

The Supervisory Board became acquainted with the auditor’s report and determined that the auditor’s opinion is affirmative.

The auditor has also presented his views to the Supervisory Board and collaborated in the meeting of the audit committee of the Supervisory Board. He attended the Shareholders’ Meeting in 2008 and will be invited to attend this year’s Shareholders’ Meeting, which will make a decision on using the accumulated profit.

The Supervisory Board has no comments on the auditor’s report. It determines that the auditor’s reportcontainstheconstituentsprescribedinParagraph2ofArticle57oftheCompaniesAct-1.The auditor has confirmed that the financial reports have been produced in accordance with Slovene Accounting Standards, the accounting policies of the company and by employing corresponding provisions of International Financial Reporting Standards.

Comments of the Supervisory Board on the 2008 annual report and the 2008 consolidated annual report

The Supervisory Board had no comments on the 2008 annual report and the 2008 consolidated annual report that would withhold it from the adoption of a decision to endorse the annual report and the consolidated annual report.

Endorsement of the annual report for the year 2008 and the consolidated annual report

The Supervisory Board endorses the annual report of Sava d.d. for 2008 and the consolidated annual report of the Sava Group for 2008.

InaccordancewithParagraph3ofArticle282oftheCompaniesAct-1theSupervisoryBoard adopted the 2008 annual reports at its 7th meeting on 16 April 2009, thereby receiving them within an open deadline, i.e. before one month expires including the day both annual reports for 2008 were submitted to the Supervisory Board.

Kranj, 16 April 2009

MiranKal~i~ Chairman of Sava d.d. Supervisory Board

36

Annual Report

I. Introduction

Owing to business transparency and observing high standards and best governance practices, we were able to respond in due time and adapt our strategies and their methods of implementation. By consolidating corporate ownership in the Tourism division, we simplified their management. Performing the recommendations given by the Internal Audit and employing a system of internal controls have both provided a sound basis for an efficient, high quality decision-making process. The quality of reporting was verified by the awards we have repeatedly received.

The framework of the corporate governance system: Legitimacy and best practice

The corporate governance system in the Sava Group is composed of a set of relations between the management and the company supervisory board, shareholders and other interest groups of Sava d.d. as well as a set of internal and external regulatory and supervisory mechanisms that direct the business operations of the company and the Group as a whole.

Thesystemisfoundedonlegalprovisions,rulesoftheLjubljanaStockExchange,and the internal organisational regulations and rules applied in the introduction of established international and national good practices.

On the basis of a firmly outlined policy, we are continually improving the existing corporate governance system, thereby assuring its efficiency and transparency; it provides the Board of Management and the Supervisory Board of Sava d.d. with a suitable basis to achieve its goals, which are in the interest of the company and its shareholders, together with efficient supervision.

The framework of our corporate governance system is based on the implementation of general goals as set out by the internationally applied Principles of Corporate Governance by the Organisation for Economic Co-operation and Development (OECD), with an emphasis on the following: – Transparency and efficiency of markets, consistency with the principles of a legal

state and a clear distinction between the responsibilities of each body. – Protection and performance of shareholders’ rights and their impartial

treatment. – Acknowledgementofrightstostakeholdersandencouragingactiveco-operation

between a company and its stakeholders. – Assuranceoffairandethicalbusinessandresponsibledecision-making.– Strategic corporate management, efficient supervision and responsibility to a

company and its shareholders. – Timely and regular announcements of accurate data on all important issues related

to a company.

The two-tier corporate governance system in Sava Group companies

The company Sava d.d. is run by the Board of Management, whereas its operation is supervised by the Supervisory Board. Management of the subsidised companies, which are structured as joint stock companies, is carried out according to the same system. All Board of Management members participate in the general assemblies of thesubsidiaries,whichare100%ownedbySavad.d.,whileinthegeneralassembliesof other Group companies the parent company is represented by a proxy appointed by the Board of Management.

Sava d.d. has a formalised system of officiating in the general assemblies of its associated companies. Specialists for the corresponding Sava competences centres of knowledge analyse the assembly materials, examine the proposed resolutions and

8. The corporate governance system

37

draft a report for the Board of Management who takes its position to the agenda and confirms the proposed resolutions, which it will either adopt itself or put forward at the general assembly meeting by proxy.

Shareholders’ Meeting of Sava d.d. with a high level of participation

The convening of the Shareholders’ Meeting and other issues, which are of importance for its implementation, are regulated by the company’s Articles of Association, the entire wording of which is announced on the website www.sava.si. As a rule, the Shareholders’ Meeting is convened by the Board of Management of Sava d.d. once a year. It can be attended by all shareholders or their proxies or representatives who announce their participation in writing at least three days prior to the Shareholders’ Meeting.

The convening of the 14th regular annual Shareholders’ Meeting, which was held on4June2008,wasannouncedwithinthelegallyspecifiedterm–atleast30daysbefore a meeting takes place, in the Official Gazette, Finance newspaper, SEOnet – the electronicinformationsystemoftheLjubljanaStockExchange,andonthecompanyinternet pages. In line with established practice, we organised a gathering of proxies for voting at the meeting and announced information on the company website.

The shareholders of Sava d.d. voted through the proposals for resolutions given by the Board of Management concerning the appropriation of accumulated profit, relieving the Board of Management and Supervisory Board, appointing an auditor and voting through a remuneration for the Supervisory Board members with a specified majority. The proposal by the Supervisory Board concerning the election of the Supervisory Board members of Sava d.d. – the shareholder representatives – was not voted through as a group of shareholders formed their own proposal of the Supervisory Board composition and required that its proposal be voted for before the proposal givenbytheSupervisoryBoard.Thecounter-proposalbythegroupofshareholderswasadoptedwitha56%majority,onthebasisofwhichtheshareholderselectedthe new members of the Supervisory Board.

Participation in the Shareholders’ Meeting was very high; 1,679,920 of shares were present,ormorethan83%ofallshares.TheShareholders’MeetingofSavad.d.isentirely organised and carried out by our own personnel, the team of which includes more than 10 associates.

The new Supervisory Board of Sava d.d. is elected

The Supervisory Board of Sava d.d. includes nine members who are elected for a four-yeartermofofficewiththepossibilityofre-election.Sincethetermofofficeof the former Supervisory Board composition expired, the Shareholders’ Meeting in accordance with its competences elected six members to represent the interests of shareholders. The members who represented the interests of employees were elected bytheWorkers’CouncilinaccordancewiththeActonCo-operationofWorkersinManagement and its regulations.

Theformertermofofficeexpiredon28June2008.ThenewSupervisoryBoardofSavad.d.metinaconstitutivemeetinginJulyandelectedMiranKal~i~asthenewchairman,andMarkoPoga~nik,MSc,ashisdeputy.Thenamelistsoftheformerand present Supervisory Board are given in Chapter 6 – Management and Governing Bodies.

The Board of Management of Sava d.d. organised an introductory presentation for all new members of the Supervisory Board of Sava d.d., in which it presented the

38

Annual Report

I. Introduction

strategy of the Sava Group. Furthermore, it made them acquainted with the Articles of Association of the company and the Standing Orders concerning the work of the Supervisory Board, which defines the method of working, convening meetings and other issues of importance for the work of the Supervisory Board of Sava d.d. It presented the Book of Rules concerning the definition and safeguarding of business secrets and information for internal use to be used in the work of the Supervisory Board – the Corporate Governance Code. It further presented the accounting policies, practice of monitoring and reporting on operations and other key aspects of the corporate governance system in Sava d.d. and its subsidiaries.

The Supervisory Board has to meet at least once every quarter; it usually meets at leastfive timesperyear.Lastyear ithadseveral regularmeetings.Moreover, themembers of the governing bodies in the subsidiaries of the Sava Group this year are pursuing their operations conscientiously and professionally and, if required, taking appropriate measures.

The Supervisory Board acts in the interests of the company Sava d.d. and the Sava Group, thereby considering the interests of their partners. It supervises and advises the Board of Management in carrying out its tasks in the company management and defining the future development of the Group. This includes company goals as well as the corporate strategy and risks related to business operations, the structure and risk management system, internal controls system, the process of financial reporting and conformity of operations with acts and rules. After its constitution the Supervisory Board updated its Standing Orders, and in the 3rd regular meeting on 6 November 2008 it appointed an audit committee and a HR commission. Among other things, it decided to give a consensus to larger businesses, is currently pursuing the implementation of the company strategy, adopted the annual report and was made acquainted with the plan and its realisation in individual periods. Its operation is disclosed in the Supervisory Board report in detail where also the names of the audit committee and personnel commission members are given.

Owing to the successful performance and within the framework as defined by the Companies Act and the Articles of Association of Sava d.d., the Shareholders’ Meeting made a decision to pay the Supervisory Board an annual remuneration totalling €314,611.84. The amount of remuneration so far has not deviated from the amounts paid out in comparable companies in Slovenia.

Board of Management of Sava d.d.: The quality and efficiency of decision-making

Thethree-memberBoardofManagementofSavad.d.beganitspresentmandateon17July2006.TheBoardofManagementisappointedbytheSupervisoryBoard,afterthe5-yearmandateexpires.Ithasthepossibilityofbeingre-appointedinlinewith the Articles of Association. The Board of Management runs the company by conducting business for the benefit of the company, independently and on its own responsibility. The areas of work of individual members of the Board of Management are specified in the Board of Management regulations, which are summarized in Chapter 6 – Management and Governing Bodies.

In the representation of the company we make use of the principle of two signatories, thus the Board of Management is represented by two members of the Board of Management together or one member of the Board of Management together with a procurator. The company has five signatories, with two procurators in addition to the members of the Board of Management. The distribution of proxies, which is restrictive, permits current business to be concluded uninterrupted. The procurators have no

39

other limitations other than the legal one in company representation relating to the real estate business and the provision concerning joint representation.

The Board of Management reports to the Supervisory Board regarding matters of the company and Sava Group and consults with it on the most important issues in relation to the business and management of the entire Group. The Board of Management involvesabroadcircleofassociatesinthedecision-makingprocess,thusassuringitsquality and efficiency. Besides the legally specified obligations, the company Articles of Association define that the Board of Management has to obtain a consensus from the SupervisoryBoardwhencertainbusinessesexceed20%ofcompanysharecapital.

Governing and managing the subsidiaries of the Sava Group

The Board of Management of Sava d.d. ensures the efficient management and governance of the company and the entire Group. At the same time it encourages and establishesfairandethicaldecision-makinginallGroupcompanies,whichprotectsthereputation of the Group and represents one of the elements of risk management.

Managing Sava Group subsidiaries runs at several levels:– Directors’ Council of the Sava Group.– Collegiate body of directors of the competence centres of knowledge. – General assemblies of shareholders in the subsidiaries in which Sava d.d. exercises

its voting right to protect its ownership interest.– Meetings of subsidiary supervisory boards, in which representatives of the subsidiaries

of Sava d.d. management actively carry out their management role. – Occasional consultations when so required by the nature of business.

The Directors’ Council is headed by the chairman of the Board of Management of the company Sava d.d. and consists of Board of Management members and directors of the competence centres of knowledge. The members meet monthly and deal with business performance figures and other important aspects of Group operations.

The Board of Management of the parent company organises a business conference twiceayear,inJuneandDecember,inwhichbusinessforecastsforboththecurrentand the coming year are discussed. Owing to the pressing situation in the market, we dealt with our exposure to the changes brought by the global financial crisis and adapting to strategic business guidelines in the December meeting. The unpredictability of the crisis impact led to a postponement of adopting the 2009 business plan to the beginning of the mentioned year.

The collegiate body of directors of the competence centres of knowledge had the first year in office behind it. Its purpose was to identify and utilise synergies among the competence centres, implement their common tasks and increase their contribution to the success of Sava Group companies. The collegiate body members met in nine meetings and carried out two strategic workshops together with the management teams of subsidiaries, the topic being encouraging innovation. The collegiate body of directors of the competence centres of knowledge is conducted by the director of thecompetencecentreHR,LawandOrganisation.

Membership of the supervisory boards of Sava Group subsidiaries enables the members of the Board of Management of Sava d.d. to actively collaborate in the management and governance of these companies together with assessing the performance of their strategic policy and efficiency. They also give their consent to strategic decisions and the appointment of relieving the members of management bodies and their remuneration.

40

Annual Report

I. Introduction

The Board of Management of Sava d.d. places great emphasis on continual education in the field of supervisory board operation and corporate management. In addition to permanent education, the members of the Board of Management, company executives and other Sava specialists are trained within the framework of a procedure for renewing the certificate issued by Slovene Supervisory Board Members. In 2008, the following training courses were organised: consent of the supervisory board to the board of management business, appointing and relieving directors, liability for damages of the management andsupervisorybodiesandoperationofaone-tiergovernancesystem.

In order to simplify company management – the goal being that all Tourism division companies are under its full ownership – Sava d.d. as majority owner adopted several decisions in 2008. As a major shareholder, it squeezed out the remaining shareholders attheGeneralAssemblyofTermeLendavad.d.,paidthemoutinaccordancewiththelegislation, and transformed this company as well as the company Terme 3000 d.d. from a joint stock company to a limited liability company. It further restructured Sava Hoteli Bled d.d. with majority voting rights from a limited liability company to a joint stockcompany.FromthesubsidiaryTerme3000d.d.itpurchasedtheentire100%shareofZdravili{~eRadencid.o.o.,thussimplifyingthepreparationoftheconsolidatedfinancial statements of the Group.

Management of the subsidiaries: New appointments and other changes

In 2008, the following appointments and changes in the management teams of the subsidiaries were carried out: • Re-appointmentsofthepresentdirectors:

– Anton Rogina, director of the company Sava GTI d.o.o., Ptuj, until the end of January 2012; Mira Rjavec remains the workers’ director in the samecompany.

– MaksimiljanFija~ko,directorofthecompanySavaMedicalinStoritved.o.o.,Kranj, until the end of April 2012; Mira Rjavec remains the workers’ director in the same company.

– ZlatkoSmrdel,directorofthecompanySavaTradeGmbH,Munich,untiltheend of December 2011.

– Milan Vik, director of the company Sava Trade s.r.o., Prague, until the middle ofFebruary2011,andSamoJancastheprocuratorofthiscompany.

– Liljana Kosti}, director of the company Sava Trade d.o.o., Split, until thebeginningofJune2012.

– Andrej Šprajc MSc, chairman of the board of the company Sava Hoteli Bled d.d., until the end of February 2012; the board is extended by the members Fedja PobegajloandTamaraZajc(untiltheendofJune2012)withtherestructuringof the limited liability company into a joint stock company;

– GorazdRous,directorofthecompaniesSavaIPNd.o.o.,Ljubljana,andSavaIPNNOVAAd.o.o.,Ljubljana,untilthemiddleofAugust2012,andAnaFinc,who remains a procurator of both companies.

• IgorHafnarisappointedthedirectorandmemberoftheboardofthecompanySavatech d.o.o., Kranj, until the end of August 2012; Du{an Kveder as theexecutivedirectorandVesna^adežstayascompanydirectorsandMiraRjavecthe company’s workers’ director.

• JakaSlavincandTomažPer~i~areappointednewdirectorsofthecompanySavaTrade SP.z.o., Warsaw, until the middle of February 2010.

• IgorMagdi~isappointedthenewdirectorofthecompanyTermeLendavad.o.o.,Lendava,untiltheendofJune2012;AleksanderVargaisappointedtheprocuratorof the same company.

• AntonijaPircMSc,isappointedthenewdirectorofthecompanyTerme3000d.o.o., Moravske Toplice, until the middle of April 2009, after restructuring of the joint stock company into a limited liability company.

41

Changes to the personnel structure in the management teams of Sava’s subsidiaries were underway in the beginning of 2009 too: • IgorHafnarisappointedtheexecutivedirectoroftheboardofSavatechd.o.o.,

Kranj;Vesna^adežremainsthecompanydirectorandMiraRjavectheworkers’director.

• IgorHafnaranddirectorVesna adežareappointedtothenewboardofSavaprod.o.o. until the end of December 2010.

• DenisŠmigocisappointedthenewdirectorofSavarusd.o.o.until theendofDecember 2010.

• AndrejŠprajcMSc,astheexecutivedirectoranddirectorIvankaAjlectakeoverthe board of Terme 3000 d.o.o., Moravske Toplice, until the end of December 2012.

• MladenKu~i{astheexecutivedirectoranddirectorMilanKaroliareappointedtothetwo-memberboardofZdravili{~eRadencid.o.o.,Radenci,untiltheendof December 2012.

• FedjaPobegajlo,thepresentmemberoftheboard,wasappointedthechairmanofthemanagementboardofSavaHoteliBledd.d.untiltheendofJune2012,withTineBrodnjakastheprocuratorofthecompany,whileTamaraZajcstaysasa member of the board.

Internal audit: the majority of recommendations have been implemented

The internal audit function is carried out by the Internal Audit competence centre, which judges and evaluates the management, executive and information processes in order to ensure suitable risk management. The internal audit is responsible directly to the Board of Management of Sava d.d., to whom it has free and full access. Organisational independence enables the Internal Audit to exercise its influence in all Sava Group companies and at all business operation levels.

The projects that are subject to the internal audit are defined in the annual plan. Its basis is formed by the strategic policies of the Sava Group and risks which can affect the accomplishment of strategic goals. Based on the estimate of the possible impact of operating risks and probability of their occurrence the areas of business and issues to be dealt with are selected. The goals to be accomplished in audit inspections are defined, while taking into consideration the working hours auditors have available.

The key success and efficiency factor of the internal audit is professionalism, therefore internal auditors are continually perfecting their knowledge and upgrading auditing methodology in conformity with international standards. As consultants, they are included in project teams in various fields while maintaining their independence and avoiding any conflict of interest.

Lastyearinternalauditorsauditedtheperformanceandefficiencyofbusinessoperationsand management of certain projects. In every report they followed up the response by the executive boards of the audited companies or business areas, determined the success of implementation and reported to the board of the parent company.

In 2009, the activities of the Internal Audit will concentrate on the area of planning and monitoring the success of Sava Group companies as well as other important areas where the internal audit has not yet been conducted. It will also perform regular check-upsofmeasuresbasedontherecommendationsgiven.

42

Annual Report

I. Introduction

External audit

The financial statements of the joint stock company Sava d.d. and the majority of its subsidiaries have been audited by the audit company KPMG for several years now. Every year appointing the audit company is confirmed by the Shareholders’ Meeting of Sava d.d. The company considers the recommendations provided by the Corporate Governance Code for Slovenia on changing the responsible auditor every five years.

The business of Sava d.d. with the audit company KPMG Slovenija d.o.o. is presented in the financial section of the annual report and in the notes to the financial statements of the company and Group.

The internal controls and risk management system in connection with reporting on the financial statements

Quality reporting on the financial statements is essential for the efficient operation of the corporate governance system of Sava d.d. The Board of Management of the parent company, which carries out the risk management and internal controls system, is responsible for managing risks.

The performance of the internal controls system ensures that the strategic goals are achieved by considering the plans and supervision over the company and Group operations in accordance with the acts and rules together with reliable reporting on the financial statements, which further ensures the quality preparation of financial statements and credibility of business analyses for the needs of internal and external reporting.

The system of internal controls over reporting on the financial statements includes the policies and procedures, owing to which Sava d.d.:– undertakes to maintain records, which in reasonable detail, present a fair and

accurate view of transactions and the disposition of company assets;– has been provided with a reasonable guarantee that transactions are recorded

as necessary to permit the drafting of financial statements in accordance with generally accepted accounting principles and that revenues and expenses of the company arise within the competences which the management of companies have available; and

– has been provided with a sufficient guarantee as to the prevention or timely perception of an unauthorised acquisition, use and disposition of company assets which could have a significant effect on the financial statements.

The purpose of the internal controls system is to provide a reasonable guarantee at proper costs that the company and Group assets are secured and transactions are correctly made and recorded. In addition to the established policies and procedures the system includes, among other things, the function of the Internal Audit and the election and training of competent specialists. The Board of Management of Sava d.d. is responsible for establishing and maintaining an appropriate system of internal controls and the supervision of its efficiency. The standardised accounting policies that are applied in the Sava Group are written in the regulations of company accounts departments and define the duties and responsibilities in relation to the implementation of individual activities in the accounts departments as well as to their monitoring and supervision.

The efficiency of preparation and exchange of financial information in the Group is facilitated by the SAP central information system and other standardised information solutions. The numerical data on the balance and movement of assets, performance in

43

comparison with the past period and plan can be accessed by all Group companies in the electronic version on the fifth working day of the month for the previous month. The company executive boards analyse, comment and discuss them on a monthly basisindirectors’councilmeetings.On-goingmonitoringandanalysisformthebasisfor making business decisions and ensure that the financial reports do not contain any material errors.

Managing accounts is partly centralised and is carried out for several companies simultaneously at individual locations. Such an approach provides standard access, standardised procedures and the improved specialisation of employees, who are encouraged tocontinuallyacquireup-to-dateknowledgeintheirrespectivefields.

Several years ago the Board of Management of Sava d.d. appointed a reporting team, which includes directors and other specialists from accounting, financial, communication and other relevant areas to assist the Board in performing its responsibility in view of financial reporting. In its broadest structure, the team includes directors of all the competence centres of knowledge with their associates. In this way the Board of Management of Sava d.d. ensures the timely gathering, evaluation and disclosure of information for the preparation of quality annual and interim reports and other public announcements.

Business transparency

The Strategic Finance competence centre manages investor relations, where it works in association especially with the competence centres Strategic Accounting, Planning and Analysis and Corporate Communications. The latter provides professional assistance in the development, organisation and implementation of communication activities and manages the corporate content. In communicating with shareholders and other stakeholders, improvements are continually being introduced. The activities themselves are defined in the annual plan in accordance with the communication strategy, which forms a constituent part of the adopted business strategy.

Ourgoalistoholdadialogueandensureabove-standardinformationforshareholdersand other stakeholders. These surpass the minimum requirements of providing information asstipulatedbytheLawandtheRulesoftheLjubljanaStockExchange.Inthiswaywe jointly create a transparent and open system of corporate governance in Sava d.d..

In providing information to shareholders and the public the following principles are observed: – Equal information for all shareholders and the public. – Equal treatment of all shareholder categories.– Timely, correct, high quality information concerning the business and development

plans. – Incorporation of all business and other events in the subsidiaries, which significantly

influence their operation and, consequently, the Group’s financial statements. – Consistentandup-to-dateannouncementsandprovidingaccesstootherprice-

sensitive information.– Safeguarding the confidentiality of information until its public announcement and

avoiding a situation that could lead to an abuse of internal information.

The Internal Information Rules govern dealing with internal information, which also sets limitations in trading, while the company manages permanent or temporary lists of persons who have access to such information.

The procedures and responsibilities in external reporting are defined in the Rules on Reporting in Sava d.d. as a public joint stock company. In the preparation and

44

Annual Report

I. Introduction

announcement of information we consider high standards for announcements of accounting,financialandnon-financialdata.Inco-operationwithothercompetencecentres the holding parts of the competence centres Strategic Accounting, Planning AnalysisandCorporateCommunicationsco-ordinateandpreparebusinessinformationto be reported to the external public. The latter also gives public announcements and provides information to the investment public, the media, general public and other interested stakeholders.

Communication with shareholders: One of the most open joint stock companies

The information concerning the operations of Sava d.d. and the Sava Group is announced intheLjubljanaStockExchange’sinformationsystemSEOnet,onthewebsitewww.sava.si and, in the cases defined in the Articles of Association, in Finance newspaper. Investors and the general public are informed about all important resolutions of the Supervisory Board. Reports are announced in Slovene and English, with a translation of the entire document.

The content of announcements enables investors, analysts, the media and other interest groups to evaluate the work of the management, have an understanding of our organisation and operations, and become acquainted with corporate policies and business operations in view of environmental and ethical standards and relations with the local communities. It also highlights the plans for our future business operations, in which investors take a special interest.

In 2008, we announced 39 pieces of price sensitive information via the SEOnet system, which was at the 2007 level. The total number of media announcements in theSavaGroupincreased,andincomparisonwiththepreviousyearitroseby12%,with 4,568 announcements. This was achieved owing to our proactive approach andco-operationwithmediarepresentativesinSloveniaandabroad.Thisincreaseis mainly due to a higher number of announcements concerning the products and services of our operations and widely publicised events at our tourist destinations.

To improve the candidacy procedure for the election of Supervisory Board members, special attention was devoted to presenting the candidates of the Sava d.d. Supervisory Board prior to the Shareholders’ Meeting.

In communication in individual operations we gave priority to the presentation of new programmes and products originating from the investments in past years, especially in the Tourism division.

The most important strategic and communications project in 2009 will be the presentation of the revised development strategy of the Sava Group until 2011, which is adapted to the impact of the global financial crisis and aggravated economic environment.

Our website www.sava.si, which represents one of our key communication tools, is regularly updated. All public announcements, shareholder information, financial calendar, information on the organised gathering of proxies and other information concerning the company can be accessed via our website. We enable shareholders to receive notices by the company or answer their written queries and are available on the phone or in person for additional information and advice.

45

SAVA GROUP

ANNOUNCEMENTS OFPRICE-SENSITIVE INFORMATIONAND MEDIA COVERAGE INTHE PERIOD 2004-2008

2004 2005 2006 2007 2008

5,000

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

•

•

•

•

•

•

•

•

•

•

•

3,1643,394

3,8564,073

4,568

No. of announcements bySava d.d. in SEOnet, theelectronic system of theLjubljana Stock Exchange

No. of announcementsconcerning the Sava Groupin the media

7847 45 39 39

During all these years we have given great significance to the preparation of quality annual and interim reports, as confirmed by numerous awards. In 2008, Sava d.d. won second place in the Annual Reports 2007 competition organised by Finance newspaper; for the ninth year in succession, since this competition has been held, our annual report has been ranked among the top annual reports produced by Slovene companies.

Contact with small and large domestic and foreign investors and analysts are regularly maintained through all forms of advanced communication and also at personal meetings. Great attention is devoted to potential investors, for whom nine meetings were organised last year.

Sava d.d. was repeatedly ranked among the five best Slovene companies in the PORTALAwardcompetitionforthemostopenjointstockcompany,whichfurtherconfirmsourqualityandtheaccurateinformationprovidedtoinvestors.TheLjubljanaStock Exchange presents this award to the companies that are a role model in quality corporate communication.

Conformity with the Corporate Governance Code for Slovenia

Considerable significance is given to maintaining a high standard of corporate governance. Consequently, we support the Corporate Governance Code for Slovenia, which defines the corporate governance standards for public enterprises in Slovenia, and consider it an important tool in the further development of our corporate governance system. The commitment to the Corporate Governance Code was first adopted in 2004 when the first version of the Code was published, and subsequently we have regularly confirmed it in the following years.

The Board of Management and Supervisory Board of Sava d.d., which are responsible for the structure of the corporate governance system, estimate that the company respects the majority of binding provisions and good practice recommendations as set out by the Code. This is clear from the Statement on Conformity with the Corporate Governance Code for Slovenia for 2008, which is presented further in the annual report.

46

Annual Report

I. Introduction

Statement on Corporate Governance

The corporate governance system at Sava d.d. provides guidelines for monitoring and supervising the company and its subsidiaries. It defines the distribution of rights and responsibilities among governing bodies and sets rules and procedures for decision-makingoncorporateissues.Furthermore,itprovidesaframeworkforsetting,achieving and pursuing the implementation of business goals and exercising the values,principlesandhigheststandardsofhonestandresponsibledecision-makingand handling concerning all aspects of our operations.

Thecorporategovernancesystemisatoolforaccomplishinglong-termstrategicgoalswhereby the Board of Management and the Supervisory Board of Sava d.d. perform their responsibility towards shareholders and other stakeholders of the company. The vision and goal of Sava d.d. and its subsidised companies are to introduce the most modern principles of governance and management and the fullest conformity with all the experience set by current domestic and foreign practice.

The Corporate Governance Code for Slovenia was designed by the Stock Exchange d.d., Ljubljana, the Supervisory BoardMembers’ Association and theManagers’Association on 18 March 2004. Subsequently it was changed and amended on 14 December 2005 and 5 February 2007. The Code forms an important basis for managing and governing Sava d.d. The entire Code text is available in Slovene and EnglishonthewebsiteoftheLjubljanaStockExchange(www.ljse.si),andthewebsiteofSavad.d.(www.sava.si).

WeensureconformitywiththeCodeprovisions,exerciserulesgoverningday-to-daybusiness and pursue new principles in connection with changes in the Code. The first Statement on Conformity with the Corporate Governance Code for Slovenia wasannouncedintheSEO-netinformationsystemofthestockexchangeandonthe company website on 16 September 2004, and thereafter every year when the annual report was announced: 25 April 2005, 21 April 2006, 20 April 2007 and 25 April 2008. The Statement has formed a constituent part of our reports since the 2004 Annual Report, while the chapter on the corporate governance system has been included in our reports since 2003.

This Statement on conformity with the Corporate Governance Code for Slovenia applies to the latest amended version of the Code of 5 February 2007, and includes the periodfrom1January2008to26March2009.TheStatementisaconstituentpartofChapter 8: The Corporate Governance System, in the annual report of the Sava Group and the company Sava d.d. for 2008, and includes a comprehensive presentation of the area and main achievements concerning our corporate governance practice.

The Board of Management and the Supervisory Board of the joint stock company Sava d.d. declare that Sava d.d. respects the provisions of the Code except in cases where it deviates from it, for which the following explanation is given:

Item 1.3.18.: The Shareholders’ Meeting should vote for the Supervisory and Management Board members individually.

The Shareholders’ Meeting elected all six members who are to be elected by the Shareholders’ Meeting for the company Supervisory Board, simultaneously. This was proposed by a group of shareholders, and the proposal was motioned by a specified majority of shareholders. On the basis of a special request by a group of shareholders, the Shareholders’ Meeting voted on this proposal prior to the proposal that had been formed by the Supervisory Board.

47

Item 3.4.1.: For their work Supervisory Board members should be entitled to: – remuneration for performing their function,– remuneration for officiating on the Supervisory Board committees,– attendance fees, and– reimbursement of expenses.

Supervisory Board members should not be remunerated with share options or comparable financial instruments. It is not recommended that a major part of their remuneration be directly related to the company’s performance.

Supervisory Board members do not receive remuneration for performing the function or for officiating on Supervisory Board committees, but receive attendance fees for their work in these bodies and reimbursement of expenses as set out in the company’s Articles of Association. If the Shareholders’ Meeting decides to do so, and in 2008 it did, the Sava d.d. Supervisory Board members are entitled to a single annual remuneration. This annual remuneration was not paid to the Supervisory Board members of any of the subsidised companies of the Sava Group. Item 7.1.5.: The company should change the auditing firm or auditor partner at least every five years.

Auditing of the financial statements of Sava d.d. has been performed by KPMG Slovenija d.o.o., a select firm of auditors, for more than five years, but in this period the composition of the team of auditors and a responsible auditor or partner auditing the Sava annual report have changed.

All other obligatory provisions of the Corporate Governance Code are observed by Savad.d.tothefullestextent,aswellasthemajorityofnon-bindingprovisionswhichthe Code specifies as an example for good corporate governance. Pursuant to the new wording in the Companies Act (ZGB-1B), which exhaustively defines the minimal contents of the corporate governance statement in the amended fifth paragraph of Article 70, we hereby give the following additional explanations:

1. Description of the main characteristics of the internal audit and risk management system in the company in relation to the procedure of accounting reports.

The internal audit and risk management system in relation to the accounting reports of Sava d.d. incorporates the policies and procedures that enable timely, true and fair reporting on the financial position and assets as well as the financial result of Sava d.d. and the Sava Group. The internal audit system is presented in detail in the annual report of the Sava Group and the company Sava d.d. for 2008 in Chapter 8: The Corporate Governance System.

2. Significant direct or indirect ownership of company securities in terms of a major interestasstipulatedbytheTake-oversAct.

ThedataonachievingamajorinterestasstipulatedbytheTake-oversActisannouncedintheelectronicinformationsystemoftheLjubljanaStockExchangeandsubmittedto the Securities Market Agency on an ongoing basis. Holders of major interests in Savad.d.asstipulatedbytheTake-oversActare:KapitalskaDružbad.d.,Ljubljana(majorinterestof18.7%);SlovenskaOd{kodninskaDružbad.d.,Ljubljana(11.1%);NFDHoldingd.d.,Ljubljana(10.6%)andKlubModrihd.d.,Koper(8.3%).

48

Annual Report

I. Introduction

3. Explanations about any holders of securities with special control rights.

Individual shareholders of Sava d.d. are not in possession of special control rights on the basis of their ownership of Sava shares.

4. Explanations about all limitations in voting rights.

The shareholders of Sava d.d. have no limitations in exercising their voting rights.

5. Company regulations on appointing and replacing members of the management and supervisory bodies and changes in the Articles of Association.

Company regulations do not separately govern the appointment or replacement of members in the management and supervisory bodies and changes in the Articles of Association. The applicable legislation is applied in full.

6. Proxies of Management Board members, especially those for the issue or purchase of treasury shares.

The Board of Management is responsible for making decisions regarding the sale or purchase of treasury shares. In 2008, Sava d.d. neither purchased nor sold any treasury shares. 7. Operation of company Shareholders’ Meeting and its key responsibilities.

In 2008, the Shareholders’ Meeting met once. The responsibilities of the Shareholders’ Meeting are stipulated by law and exercised as set out in the standing orders of the Shareholders’ Meeting and by the chairperson of the Shareholders’ Meeting. The voting procedure in the Shareholders’ Meeting is minutely described in the annual report of the Sava Group and the company Sava d.d. for the year 2008 in Chapter 8: The Corporate Governance System. 8. Data on the composition and operation of management and supervisory bodies

and their commissions.

A comprehensive presentation of the management and supervisory bodies and their commissions is given in the annual report of the Sava Group and the company Sava d.d. for 2008: Chapters 6, 7 and 8: Management and Governing Bodies; Report by the Supervisory Board; The Corporate Governance System.

Kranj, 26 March 2009 Board of Management and Supervisory Board of Sava d.d.

49

9.1. Goals, organisation and risk management methodology

We systematically and comprehensively dealt with risks and, consequently, managed to avoid many surprises resulting from the financial crisis. The network organisation of the Group has proved to be our great advantage in this uncertain economic situation as risks are interconnected. Improvements that are to be developed further were introduced in the risk evaluation methodology. Future changes in the global environment are confronted through the identification of expected risks and the preparation of measures for their management.

The goal of active risk management in the Sava Group is to identify and assess risks at the earliest stage possible and, by introducing suitable measures, limit business losses, avoid risks that present a threat to our further existence and development, and utilise opportunities to the greatest possible extent. The forecasts of threats and opportunities are used as a strategic instrument in planning. Owing to such an approach, we are improving our readiness for the impact of factors from the internal and external environment that all Sava Group companies have to face.

Managing this area is centralised at the level of the Sava Group in the Risk Management competence centre. The Risk Management competence centre ensures the performance of policies in the field of risk management, develops the methodology and tools, warnsofthepotentialriskinoperationsandbusinessfunctionsandco-operatesinanalysing and taking measures to manage a particular risk.

The competence centre regularly reports to the Board of Management of Sava d.d. and Directors’ Council on all the greatest risks identified and forecasts on global risks that directly or indirectly impact company operations in the Group.

The responsibility for identifying the risks in a particular area and taking measures in this respect lies on the companies and competence centres of knowledge. The Board of Management supervises the process of risk management by employing a system of determined responsibilities.

9. Risk management

SAVA GROUP

ACTIVE RISK MANAGEMENT

Almost unlikely Unlikely Probable

Very high

High

Medium

Low

•

•

•

•

Identifiedthreat /opportunity

Increased probability of occurenceand increased influence by opportunity

Reduced probability of occurenceand reduced impact by threatIdentified opportunities

Identified threats

Impact

Probabilityof occurence

Highlyprobable

The process of active risk management, which is shown in the diagram, shows that the probability and influence of occurrence of an opportunity can be increased, and the probability and impact of occurrence of a threat can be decreased through various measures.

50

Annual Report

I. Introduction

Our active risk management process, which is shown in the diagram, was upgraded with several improvements last year.

Since 2006 we have produced risk lists according to the methodology, based on that as definedbytheinternationalstandardIRM(InternationalRiskManagementStandard).In 2008 we upgraded this methodology in individual competence centres.

To classify risks we use the criteria of description and evaluation. In terms of description, we ranked risks in four basic groups in accordance with the standardised method: strategic, financial, operating and unpredictable risks. These groups were further divided according to whether they presented an opportunity, a threat or both to the Group, and whether they affect the entire Group or only one of its divisions or companies.

For risk evaluation we improved the risk assessment system in 2008, which is presented in the table. The overall assessment represents a multiplication of three factors: impact on operations, probability of occurrence, and frequency of occurrence. The highest risk totals 100 and the lowest 1.

According to this method we compared risks in the last two years and established that the most important risks did not change, but the importance in the classification within a particular group did.

Risk management table for the Sava Group:

* When grading we intentionally left out one of the values on account of the criteria of importance.

On the basis of the data obtained, the Risk Management competence centre formed and presented the current risk assessments and provided the basis for monitoring the adopted measures. The risk assessments of more important risk groups are graphically presented in the continuation.

Impact on operation* Probability of occurence Frequency of occurence

Description Evaluation Description Evaluation Description Evaluation

Very high 5 Highly probable 4 Continually 5

High 4 Probable 3 Monthly 4

Medium 2 Unlikely 2 Quarterly, bi-annually 3

Low 1 Almost unlikely 1 Annually 2

Rarely 1

51

We most often decrease the identified strategic, financial, operating and unpredictable threats. Sometimes they are accepted, while certain threats such as high risk investments are avoided. If possible, we insure against risks with insurance companies, particularly against unpredictable risks. In order to identify opportunities, especially those with the greatest potential, we put forward proposals for projects to take efficient advantage of them.

In 2008, the management, administrative and operative business of the Sava Group was, above all, affected by two global impacts: the financial crisis and high price fluctuations in input raw material, goods and services.

STRATEGIC RISKS

When compared to last year, relations within strategic risks changed slightly. Risks connected with improving the development strategy are still the most important, while the impact due to price fluctuations in input raw materials, goods and services increased considerably.

Risks in connection with the implementation of the development strategy The financial crisis has significantly affected the implementation of the development strategy and performance of the Sava Group and the company Sava d.d. itself. On account of a higher interest rate and the demand for higher guarantees for hired loans, the conditions for contracting debts deteriorated. We therefore limited the volume of investments in the real sector. The general negative trends in the financial markets decreased the value of our investments in securities. The financial crisis has been accompanied by a recession, which resulted in lower rates of growth in demand for our products and services.

Risks are managed by examining and renewing the development strategy of the Sava Groupuntil2011and,overashort-termperiod,byimplementingmeasuresthatareadapted to aggravated conditions in the economic environment. In order to operate in the set direction, we sought new opportunities and strengthened the strategy

9.2. Management strategy and more important risks

SAVA GROUP

STRATEGIC RISKS

1 2 3

6

5

4

3

2

1

0

•

•

•

•

•

•

•

Environmentalrisk

4 5 6

Acquisitionand retainingexperts

Regulations andcompliance risk

Fluctuation inprices of input raw

materials, goodsand services Investment

risk

Implementation ofdevelopment strategy

Frequency

Probability ofoccurence

The bubble size represents the estimateof size of impact on operations (very large,large, medium, small).

52

Annual Report

I. Introduction

of seeking market niches. Through innovation and seeking new markets, we are attempting to substitute for sluggish demand in existing sales channels. At the same time we are limiting the volume of investments and cutting costs with the optimum utilisation of resources.

Investment riskAn important limitation factor in investment risk at the level of the Sava Group is diversification by increasing the variety of its operations, which reduces investment risks in relation to a particular line of business.

We are continually improving the criteria for competitive investments and optimising the structureof ouroperations andfinancial investments. The long-term successof the Sava Group is maintained through optimising the relation between real and financial investments. Our portfolio and strategic investments can, in certain cases, be transformed into portfolio ones or vice versa. Should the direction of investment development be threatened, there is always another favourable exit strategy available. Thus,in2008,weupgradedthemethodologyandproceduresforstrategicdecision-making concerning investment projects. Capital in Abanka Vipa d.d. was increased andthecapitalstrengthofcertaincompaniesintheGroup(Savatechd.o.o.,SavaIPd.o.o.andTermePtujd.o.o.)wasenhanced.

Volatility risk in prices of input raw materials, goods and services In 2008, fluctuations in the prices of input raw materials, goods and services significantly affected the business results of the Sava Group and were much stronger than in the previous year. In the global market the prices of raw materials related to oil grewinthefirsthalf-year,whileinthelastquarterwefacedadrasticfallthatgreatlyaffected the operations of the Rubber Manufacturing division. All effects due to price fluctuations along with a simultaneous decline in demand due to the recession could not be entirely transferred to product prices. Consequently, we adapted the level of stock to these price fluctuations. InTourism,thementionedriskincreasedduetoalong-termtrendofpricerisesinfoodstuffs, which, however, we managed to maintain at the average level of the previous year by introducing a standardised purchasing policy and measures. Risk in acquiring and retaining talented specialists The risks that are related to acquiring and retaining suitable experts are minimised by providing attractive working conditions, stimulating remuneration, further education and training, and other measures aimed at keeping competent and motivated personnel satisfied. In 2008, we acquired several experts who, owing to their experiences and expertise, have already proved successful both in Slovenia and abroad. We proceeded with our activities within the Sava Academy, Rubber Manufacturing and Tourism school projects.

Regulations and compliance riskThese risks are connected with changes in legal procedures and legislative measures in the field of finance and capital flows owing to a global policy that defines a higher level of standardisation in this area. While expanding our business abroad, we use information provided by our companies and representation offices, whereas for other fields in question we consult with foreign law firms and other experts. The task of every business function in the Group is to pursue changes in legislation in their respective specialist field.

53

Environmental risk For a decade we have managed such risks in the Sava Group by using system tools for their management that are governed by various international environmental and other standards and environmental protection programmes.To minimise the burden on the environment, we invest considerable effort in the implementation of a strategy to decrease the use of energy resources with the simultaneous utilisation of existing natural resources. In Tourism we seek ways to reduce our energy dependency and minimise undesired impacts on the environment. In Rubber Manufacturing, the focus is on preventive measures, thus reducing the level of emissions and energy consumption. The energy crisis at the end of 2008 radically changed the attitude of the European economytoenergy-relatedissues,creatingagreatopportunityforthedevelopmentofourenergy-relatedoperations.

FINANCIAL RISKS

The global financial crisis and recession increased all financial risks in 2008, which affected the aggravated conditions of contracting debts, increase in interest rates and solvency of Sava Group companies. These are managed centrally through the competencecentres:StrategicFinance(interestrateswapsinhedgingagainstforeigncurrencyrisk),BusinessFinance(solvency,hiringloansandpertainingterms),andRiskManagement(insuranceofreceivables).

Credit risk Owing to the financial crisis and recession, credit risk increased in 2008, and the growth tendency has continued into 2009. This risk is minimised by insuring receivables withtheinsurerSIDPrvaKreditnaZavarovalnicad.d..AfterincorporatingTourismin receivables insurance, the exposure of the Sava Group to this risk has decreased significantly.

SAVA GROUP

FINANCIAL RISKS

1 2 3

6

5

4

3

2

1

0

•

•

•

•

•

•

•

Foreigncurrency risk

4 5

Interestrate risk

Liquidity risk

Creditrisk

Frequency



54

Annual Report

I. Introduction

Solvency risk (liquidity risk)The risk in connection with solvency increased due to the financial crisis too and also due the fact that banks hold back liquid assets and credit the industry to a smaller extent. Despite the tough liquidity situation in 2008, Sava d.d. managed to acquire sufficient funds to cover the desired investments in the Group thanks to its good rating. We anticipate that the forecast measures by the Slovene government will accelerate the flow of money from banks into the industrial sector in 2009.

Interest rate riskIn 2008, interest expenses significantly rose due to rapid EURIBOR growth. At the endoftheyeartheinter-bankinterestratefell,whilesurcharges(margins)grew.Witha higher indebtedness level in the Sava Group we even reduced the average annual interest rate. The interest risk in 2009 is continuing at a high level, though it was reduced by maintaining the high level of confidence we enjoy with banks.

Foreign currency risk The exposure of the Sava Group to foreign currency risk is low as the prevailing share of company cash flow is in euros. In comparison with 2007 it rose slightly owing to the higher indebtedness in Swiss francs and financing the investments of Real Estate in Croatia in the local currency. We insured exchange rate fluctuations in both mentioned areas with banks, thus minimising risk.

More on financial risks and sensitivity to such risks is contained in the financial section of the annual report.

OPERATING RISKS

Operating risks are managed in individual companies, operations and competence centres. The success of sales operations is assured by employing analytical forecasts in the business environment, systematic planning and supervision over implementing the sales strategy. The entire operating risk management process is supported by tools such as business excellence, the 20 Keys method and ISO standards.

SAVA GROUP

OPERATING RISKS

1 2 3

6

5

4

3

2

1

0

•

•

•

•

•

•

•

Informationtechnology

4 5

HR management

Risk of environmentalchanges

Risk of product andservice competitiveness

Frequency



Supply chainrisk

55

Risk of product and service competitivenessDue to rapid changes in the prices of raw materials, goods and services and a decline in demand as a consequence of the recession, adjustments in output prices were outstanding to ensure the competitive position of our products and services in 2008. We followed our competitors in the market, developed new approaches and sought new customers and markets. Moreover, through innovation we substituted a part of our unrealised planned revenues, thus minimising risk.

Risk of human resources managementInthefirsthalfyearweexperiencedashortageofworkers(manufacturingworkersinRubberManufacturing,cateringpersonnelinTourism),whichwecompensatedfor by hiring seasonal workers. Employee loyalty is maintained thanks to a high level of concern for employees. AdditionalactivitiesareintroducedwithintheFamily-friendlyCompanyprojectaswell as additional measures to enhance health and safety at work. Through permanent education and continual improvements in working conditions, we are enhancing the quality of personnel, work performance and employee satisfaction.

Supply chain riskWe are constantly following up on activities in the supply market to decrease risk in connection with supplier reliability. Due to globalisation, price changes and more favourable foreign currency relations the European rubber manufacturing industry gained in competitive strength in the second half year. By pooling purchases in Tourism, we became a stronger partner with more negotiating power and greater supply reliability. Since 2008, risk has been minimised also on account of our demand that suppliers insure their manufacturer’s liability.

Risk of environmental changes that affect operations By adapting our organisation and improving processes and technologies, we have adapted to the environment, thus improving our competitive edge and response to occurrences in the environment. In 2009, we are planning to restructure to make marketing in the Tourism division more centralised.

Information technology risks By adopting more centralisation in managing the IT infrastructure, standardisation, a higher level of conformity, and consolidation of software, hardware and information solutions, we are able to minimise risks connected with information technology. At the same time we are enhancing the information system to make better business decisions more swiftly at all levels.

UNPREDICTABLE RISKS

Unpredictable risks appear rarely, yet their impact on operations can be remarkably high. The appearance of such risks cannot be forecast. Nevertheless, we insure against many of these risks, thereby transferring them at least partly to insurance companies and other business enterprises.

Insurable risks These are managed by employing a standardised insurance policy that is adapted to a particular operation. The Sava Group arranges the insurance of assets and liabilitieswithtwoinsurancecompanies:ZavarovalnicaTriglavd.d.andZavarovalnicaAdriatic Slovenica d.d., while receivables are insured with SID – Prva Kreditna Zavarovalnicad.d.

56

Annual Report

I. Introduction

The global trend of increasing compensation with regard to liability insurance affected the Sava Group in 2008. The accidents that occurred in this area were analysed and a set of measures for their prevention was produced, thus improving the insurance terms. Theassets(realestateandmachinery,equipmentandcars)weremainlyinsuredfortheir new value, which additionally decreases risk. We improved the manufacturer’s liability for products and services in Rubber Manufacturing and Tourism. Besides the already insured receivables in the Rubber Manufacturing division, we insured receivables in the Tourism division too, thereby decreasing Group exposure to insolvent buyers.

Amajorpartofinsurancecostsarepremiumsforassetsinsurance(38%)withahighsharetakenbyliabilityinsurancepremiums(28%).Almostonehalfoftotalinsurancecosts are due to the largest divisions, Rubber Manufacturing followed by Tourism with38%.

SAVA GROUP

INSURANCE COSTBY DIVISION

in %

Sava d.d.

Rubber Manufacturing

Tourism

Real Estate

Other Operations

10

38

2

49

1

SAVA GROUP

INSURANCE COSTBY TYPE OF INSURANCE

in %

Car insurance

Buildinginsurance

Receivablesinsurance

Assets insurance

Operationinterruptioninsurance

Liabilityinsurance

28

38

10

5

17

2

57

We operate in the global environment, so all Sava Group companies are exposed to changes in the broadest economic, financial, technology, environmental and social areas. These changes are perceived and pursued, then appropriate measures are taken. We expect that in the future the influence and probability of occurrence of certain risks, as presented in the table, will be higher.

Estimation of expected risks and future changes in impact and probability of occurrence

Due to the aggravated economic environment our effort to implement strategic plans will be further increased, especially in the area of sales. The expected risk in the implementation of the set strategy will be minimised through new marketing approaches, analyses of our competitors and organisational or process improvements.

The growing risk in connection with a dependency on energy resources, their shortage globally, continual changes in input prices and an increased share of expenses in performance figures will be managed by planning and implementing measures to enable us to face continual price changes. This is essential, even though we do not anticipate any significant price rises in energy resources in the future except in the case of greater instability in the geopolitical environment where these resources are extracted. We anticipate a price fall in raw materials for rubber manufacturing, mainly due to the general economic crisis and a decline in industrial growth in countries of the Far East.

Area Expected risk Impact Probability

Economy

Implementation of strategic plans

Dependence on energy resources

Price rises in energy resources

Change in input prices of raw materials, goods and services

Price rises in foodstuffs

Finance

Global regulation of legislation in finance

Shortage of investment capital

Technology

Impact of abuse of technology

Adapting to advances in new technology

Possible disintegration of the IT system

Environment Changes in global environmental legislation

Social

Population ageing

Workforce migration

Change with regard to 2008 Increased Unchanged Decreased New

9.3 Expected risks that impact Sava Group operations

58

Annual Report

I. Introduction

Climatechanges(globalwarming,droughtaffectingfertileland,naturaldisasters)willcertainly increase the price of foodstuffs, which will impact Tourism. Consequently, projects must be created to meet these challenges.

Two substantial changes in the field of finance are being planned. Uniform global regulation of financial legislation is forecast, aimed at standardisation and better information provided to those in the financial market concerning exposure to and vulnerability of the financial system. The consequence of the present disclosures regarding system vulnerability is a shortage of capital and decreased funding for the industrial sector. Therefore, it is of strategic importance to be able to recognise good projects that, with tough competition from capital seekers, will obtain sufficient funds for their implementation and development and increase the competitive potential of the Group.

The greatest future global risks in the area of technology are abuses of technology, rapid technological development in the areas where we operate and the possibility of a disintegration of information systems. We have therefore undertaken precautionary improvements in the security of our information system. Both of Sava’s main operations are much exposed to occurrences as regards the environment, where we expect legislation to become even stricter. In the Rubber Manufacturing division the limitations concerning emissions are increasing, thus increasing environmental risk too. In Tourism, however, stricter legislation can act as an opportunity if the quality of the natural environment where our companies operate is better than that of our competitors.

Owing to improved connections in transportation, distances are becoming shorter and the population is moving from less developed to more developed areas. In this way, the workforce competition is increasing. At the same time life expectancy is increasing. These trends impact the operation of the Sava Group companies in two respects: They prolong working life due to which ailments appear and costs are incurred, yet they present an outstanding opportunity for Tourism, which has to respond to these trends with the preparation of a suitable range of products and services.

The future development of the responsibilities of the Risk Management competence centre will include a system upgrade in the following areas:

• Development of standards for risk assessment, reporting on risks and risklimitation.

• Developmentofresponsibilitiesandauthorisationsforindividualrisks.• Upgradeofformingandadoptingtheriskmanagementpolicies.• ContinualexaminationoftheexposureoftheentireSavaGrouporanindividual

division to individual risks and determination of the suitability of risk treatment.

9.4 Further development of the risk management system

59

Owing to an efficient financial management structure we managed to ensure liquidity and solvency in all parts of the Sava Group, despite deteriorating conditions in 2008. This continues to be the guideline of our financial policy in 2009 too.

The financial function of Sava d.d. is one of its most important and requires a high level of financial reconciliation of Sava Group companies. The key operation within this function is management of the credit indebtedness portfolio of Sava Group companies and, in this regard, the liquidity and solvency of the system as a whole.

EFFICIENT REGULATION OF INDEBTEDNESS TO ENSURE LIQUIDITY AND SOLVENCY

In 2008, the parent company regulated the borrowing of money with the banking systemandotherentitiesonthebasisofco-ordinatedbusinessrequirements,therebytaking into consideration exposure limitations to the group of subsidised companies, which is determined by each individual bank – the creditor. Sava d.d. acts as a direct borrower of the required credit sources needed to meet its own liquidity and other requirements. As a rule, debtors are the subsidised companies themselves; they raise loans after obtaining preliminary approval and arranging credit terms at the level of the parent company. The methods and forms of loan insurance are also subject to a joint agreement. It is agreed that free cash surpluses are balanced internally to provide solvency of the system and ensure a suitable method for using credit lines to balance solvency.

The basis of our financial policy in the crisis year of 2009 is to further maintain our liquidity and solvency. The decreased credit activity of domestic banks, however, still considerably limits the regular operations of Group companies. Therefore, our policyofjointco-ordinatedoperationandcashpooling,anintrinsicpartofwhichis the credit and investment policy, is amply justified.

FAVOURABLE STRUCTURE OF CREDIT INDEBTEDNESS

The financial management of the Sava Group is most evident from the structure of raised loans, structure of maturity in the volume of credit indebtedness, and interest rate structure.

The structure of credit sources by the type of creditor shows that the share of credit banksourcesslightlyincreased(by1.74percentagepoints)intheperiodofthelastfive years, while the share of crediting by the Sava Group gradually decreased; from theendof2007totheendof2008itdecreasedfrom11.78%to8.94%.Thereasonfor that lies in high investments in tourism and real estate companies, which tend to engage high credit assets for a longer period of time. In 2007 and 2008, crediting of business entities from the Group remained at the same level with slightly more than a6%shareoftotalcreditsources.

10. Financial management

60

Annual Report

I. Introduction

In a holding system such as Sava d.d. the structure of mutual crediting within the system is of great importance.

At31December2007thisstructurerevealedthat66.43%ofcreditswereapprovedby the parent company for the subsidised companies, and the rest vice versa. In 2008, thissharechangedandtheparentcompanygranted51%ofcredits.Consideringthefact that the level of cash surpluses was slightly lower, we see the reasons for that change in an increase in capital of certain companies, which was carried out through a conversion of granted credits into capital stakes. The majority owner Sava d.d. thus met the conditions of capital adequacy and ensured the financial improvement of Sava Group companies, particularly in real estate and tourism operations.

SAVA GROUP

STRUCTURE OF RAISED LOANSBY TYPE OF CREDITOR

in %

2004 2005 2006 2007 2008

100

80

60

40

20

0

•

•

•

•

•

•

0.56

Other

Sava Group

Bank

16.24

83.20

0.22

18.30

81.48

2.84

13.93

83.23

6.17

11.78

82.05

6.12

8.94

84.94

SAVA GROUP

STRUCTURE OFMUTUAL CREDITING

in %

2004 2005 2006 2007 2008

100

80

60

40

20

0

•

•

•

•

•

•

Subsidiaries

Sava

40.61 44.38 24.27 33.60 49.00

59.3955.62

75.73

66.40

51.00

61

Structure of credit indebtedness by maturity: a higher volume of long-term sources

Between2007and2008,thevolumeoflong-termcreditsourcesincreased.Attheendof2008itamounted to57.75%of totalcreditsources, thereasonbeing thechanged financial policy, which has its basis in the structure of Group investments and interest rate trends. In the financial crisis, particularly in the second half of 2008, such a policy helped to maintain liquidity and financial stability at a considerably highlevel.Itwasextremelydifficulttorenewshort-termcreditlinesespeciallyinthe last quarter of 2008 when the global financial crisis became prominent. Its direct consequence was a credit crisis that affected both the price of money and accessibility to external financing.

Interest rate structure of credits shows a suitable adaptation to the situation

SAVA GROUP

STRUCTURE OF CREDITINDEBTEDNESS BY MATURITY

in %

2004 2005 2006 2007 2008

100

80

60

40

20

0

•

•

•

•

•

•

Short-term credits

Long-term credits

52.63 53.46 51.88 45.66 42.25

47.37

57.75

46.54 48.12

54.34

SAVA GROUP

INTEREST RATE STRUCTUREOF THE CREDIT PORTFOLIO

in %

2004 2005 2006 2007 2008

100

80

60

40

20

0

•

•

•

•

•

•

LIBOR

EURIBOR

Other

34.94

64.98

80.90 82.12

73.14

0.00

65.06

0.00

26.86

6.76

28.26

8.1210.98

1.91

15.97

62

Annual Report

I. Introduction

In 2008, the greatest changes due to the financial crisis concerned the interest rate, whichcontinuedtoincreasegradually,especiallyitsvariablepart(EURIBOR)untilsummerandthecompleteoutbreakoftheAmericansub-primehousingloanscrisis.AtthattimetheEuropeanCentralBank(ECB)discontinuedraisingtheEURIBORvariableinterest rate, whereas margins and fixed surcharges to the interest rate enhanced substantially. Due to the ongoing financial crisis the bank policy concerning interest rates adapted to the conditions of the structure of sources in a particular bank. Many banks decided to launch a proportion of loans at a fixed interest rate, which, as a rule, is much higher, while certain banks maintained a variable interest rate with the EURIBOR base rate increased by a fixed surcharge. The interest rate which is formed in that way is lower than the fixed interest rate but more risky over a longer period of time on account of a possible change in economic or monetary policy.

At Sava d.d. and the entire Sava Group we have adapted well to the existing conditions in the loan market. The average interest rate for the Sava Group in 2007 was at the levelof4.82%,while in2008 it increased to5.17%. In2008, loanapprovalorrenewalexpensesroseconsiderably,whilethetermsofshort-termcreditvalidityandits renewal became shorter.

Attheendof2008,banksbegantorequiretherestructuringoflong-termcreditsandvariable credit terms, and in particular, to increase interest rate surcharges valid as of 1January2009.Especiallyinthecaseofnewcredits,irrespectiveoftheirmaturity,banks more often demand various real and other insurances, which puts companies in a difficult position due to the financial commitments already assumed in the existing credit arrangements. WE ARE MAINTAINING HIGH RELIABILITY

Underthedescribedconditionswerunouroperationssoastoremainasought-afterbusiness partner and a credit user with the highest benefits. The internal structure and concern for financial discipline together with capital sufficiency of the Group as a whole will undoubtedly make a contribution to that goal.

Annual Report 08

63

II.Business Analysis

Creativity stands for an applied

unique approach. We can all be creative, as are

our associates in manufacturing, development

and sales. So the EKO programme not only

makes products, but designs comprehensive

solutions using rubber inflatable products,

and therefore plays a leading role globally

in its market niches.

We live our values.

CREATIVITY

Primož Kurent, BSc (Mechanical Engineering), R&D Manager, EKO Programme, Savatech d.o.o, Rubber Manufacturing division

Annual Report

08

66

II.Business Analysis

1.The Sava share and ownership structure

Last year the value of the Sava share was affected by the negative atmosphere in the financial markets like other listed shares. The average price per share on the last trading day of 2008 stood at €253, which was more than one half less than in the previous year. However, this decrease in the share price was lower than the average decrease in the value of the Slovene stock exchange index according to the SBI 20 stock exchange index (-67.5%). The dividend of €3.0 per share was 7% higher than in 2007.

LONG-TERM STABILITY OF THE SAVA SHARE

In 2008, the value of the Sava share fluctuated between €220 and €625 and decreased by 58.1%. However, it kept its relatively high value in comparison with the Slovene stock exchange index SBI 20, which in this period declined by two thirds. The SBI 20 index is frequently applied in comparisons of the Sava share yield since it measures the yield of the entire Slovene stock exchange market and includes in its composition the largest and most liquid shares of the listed and unlisted market.

The Sava share kept its relatively high value also in comparison with other domestic and foreign stock exchange indices. The Slovene blue chip index SBI TOP decreased by 66% in 2008, the international blue chip index in south-eastern Europe (SETX) decreased by the same percentage. This indicates a general negative atmosphere in the domestic and foreign capital markets, which mainly originates from the global financial crisis.

67

SAVA d.d.

MOVEMENT OF THE SAVASHARE IN 2008IN COMPARISON WITH THESELECTED STOCK EXCHANGEINDICES

in

700

600

500

400

300

200

100

0

•

•

•

•

•

•

•

•

Jan

SAVA (-58%)

SBI 20 (-67%)

SBI TOP (-66%)

SETX (-66%)

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Note: To be able to compare the data, the movement of the SBI 20 index was adapted to the ratio between the Sava share price and the value of indices as it was on the last trading day of 2007.

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Annual Report

II. Business Analysis

SAVA d.d.

MOVEMENT OF THE SAVASHARE IN THE PERIOD2004-2008

in

700

600

500

400

300

200

100

0

•

•

•

•

•

•

•

•

2004

SAVA (+122%)

SBI 20 (-6%)

SBI TOP (+21%)

SETX (+18%)

2005 2006 2007 2008

Note: To be able to compare the data, the movement of the SBI 20 index was adapted to the ratio between the Sava share price and the value of indices as it was on the last trading day of 2003.

Despite a lower yield of the share in 2008, the long-term yield of the Sava share is still good. In a five-year period its average annual yield amounted to 17.9%, or 19.1 percentage points more than the average annual yield of the SBI 20 index (-1.2%).

ONE OF THE IMPORTANT STOCK EXCHANGE INDICES

At the end of the year the market capitalisation amounted to €508.2 million; its high value is reflected with the share in the structure of various stock exchange indices. The share of Sava in the calculation of the Slovene stock exchange index structure SBI 20 stood at 12% at the end of the year.

The Sava share is included in 13 various international stock exchange indices, which quote the largest companies from south-eastern Europe. This means that the international business environment has recognised the company as a successful one with solid foundations and attractive potential for long-term growth and development.

Sava share in the structure of important stock exchange indices at 31/12/2008

Index nameShare in index

structureRanked in index

structure

Total no. of companies

in index structure

Slovene stock exchange index − SBI 20 12.01 % 3rd 15

Slovene blue-chip index − SBI TOP 11.32 % 3rd 10

Dow Jones STOXX EU Enlarged TMI 1.03 % 19th 205

S&P/Citi World Index SMCAP 0.16 % 75th 260

69

SOLID OWNERSHIP STRUCTURE

On the last trading day of 2008, there were 16,833 shareholders entered in the Sava share book, which is slightly less (by 505 shareholders) than in the previous year. The company ranks among the larger Slovene joint stock companies considering the number of shareholders. The stock of domestic shareholders amounted to 98.7% and that of foreign shareholders 1.3%. In comparison with last year the stock of foreign shareholders decreased by a 0.4 percentage point. The proportion of legal entities represented 83.2% and households 16.8%.

The Republic of Slovenia owns directly (10.2%) and indirectly via Kapitalska Družba d.d. and Slovenska Od{kodninska Družba d.d. a 30% share, banks a 9.9%, and investment companies and mutual funds a 2.9% share in total company share capital.

SAVA d.d.

OWNERSHIP STRUCTUREBY CATEGORY AT 31/12/2008

in %

Legal entities

Households

16.8

83.2

1.3

98.7

Domestic shareholders

Foreign shareholders

SAVA d.d.

OWNERSHIP STRUCTUREBY CATEGORY AT 31/12/2008

in %

STRUCTURE OF LEGAL ENTITIES:

Investment companies and mutual funds

Other legal entities

Republic of Slovenia, KAD, SOD

Banks

3.5

48.7

2.4

97.6

STRUCTURE OF HOUSEHOLDS:

Domestic shareholders

Foreign shareholders

11.8

36.0

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Annual Report


10 largest shareholders at 31/12/2008

The most recent information on the ownership structure of Sava d.d. is available on the Sava homepage sava.si/Shareholder Relations.

COMPANY SECURITIES

Trading with treasury shares

At 31/12/2008 Sava d.d. had 3,289 treasury shares, the value of which amounted to €224.400, valued at the average bid price., which represented 0.16% of all shares. There was no trading with treasury shares in 2008.

Members of the Board of Management and Supervisory Board who own Sava shares

On the last trading day of 2008, the members of the Board of Management and Supervisory Board of Sava d.d. owned 2,685 Sava shares, or a 0.13% share of total company capital. In comparison with the end of 2007 the balance did not change, regardless of the fact that the new Supervisory Board of Sava d.d. began its mandate.

10 largest shareholders % ownership No. of shares

Kapitalska Družba d.d. 18.7% 375,542

Slovenska Odškodninska Družba d.d. 11.1% 222,029

NFD Holding d.d. 10.6% 211,791

Klub Modrih d.d. 8.3% 167,236

NFD d.o.o. 4.6% 92,126

FINETOL d.d. 3.5% 71,006

GBD d.d. 3.1% 61,547

Gorenjska Banka d.d. 2.6% 52,500

Hypo Bank d.d. 2.5% 49,532

Merkur d.d. 2.1% 41,500

Total 10 largest shareholders 67.0% 1,344,809

Other shareholders 33.0% 662,178

Total 100.0% 2,006,987

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Members of the Board of Management and Supervisory Board who own Sava shares

* Chairman of the Supervisory Board of Sava d.d. as of 31/07/2008; until 28/06/2008 deputy chairman of the Supervisory Board of Sava d.d.

Key data on the Sava share

Board of Management members Position

No. of shares at 31/12/2007

Stake in capital

No. of shares at 31/12/2008

Stake in capital

Janez BohoriË Chairman 706 0.035% 706 0.035%

Vinko PerËiË Member 717 0.036% 717 0.036%

Emil Vizovišek Member 1,140 0.057% 1,140 0.057%

TOTAL 2,563 0.128% 2,563 0.128%

Supervisory Board members PositionNo. of shares

at 31/12/2007Stake

in capitalNo. of shares

at 31/12/2008Stake

in capital

Miran KalËiË Chairman* 86 0.004% 86 0.004%

Janko Kastelic Member 36 0.002% 36 0.002%

TOTAL 122 0.006% 122 0.006%

TOTAL BOARD OF MANAGEMENT AND SUPERVISORY BOARD MEMBERS 2,685 0.134% 2,685 0.134%

2004 2005 2006 2007 2008

No. of shares at period end(No. of shares) 2,006,987 2,006,987 2,006,987 2,006,987 2,006,987

Market capitalisation at period end (€ in millions) 368.2 352.8 464.9 1,211.6 508.2

Share book value (€) 190.9 193.7 214.3 270.9 239.7

Share price

- highest (€) 183.5 199.4 234.3 681.1 624.1

- lowest (€) 116.0 172.2 162.8 223.4 223.0

- at period end (€) 183.5 180.3 231.6 603.7 253.2

Average daily liquidity(€ in

thousands) 170.7 21.8 42.4 201.3 101.4

Average daily trading with shares

(No. of shares) 1,170 208 222 501 259

Net earnings per share (€) 24.9 19.1 17.0 19.6 1.2

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Explanations about the methodology of the indicator calculation: • Book value of the Sava share equals the fraction product of the difference between

the equity of the Sava Group without minority interest and the weighed average number of ordinary shares excluding treasury shares.

• Net earnings per Sava share is calculated so that the net profit belonging to the company Sava d.d. (numerator) is divided by the weighed average number of ordinary Sava shares being exercised in the accounting period (denominator).

• Share of dividends in net profit equals the fraction product of dividend per share and the number of Sava shares on the ex-dividend date in the share register and net profit on the last day of the year.

• Dividend yield equals the fraction of dividend per Sava share and market price of the Sava share on the last trading day of the year.

• Capital yield equals the fraction of the market price of the Sava share in the beginning and the market price of the share at the end of the year.

• Market capitalisation equals the multiple of the number of Sava shares and the market value of shares on the last day of the year.

• The Price-Earnings ratio (P/E) is calculated as a fraction of market price of the Sava share on the last day of the year (or the highest and lowest market price in the calendar year) and earnings per share.

• The Price-to-Book ratio (P/B) is calculated as the fraction of the price of the Sava share on the last trading day of the year and book value of the share in the same period.

2004 2005 2006 2007 2008

Dividend per share (€) 2.3 2.6 2.7 2.8 3.0

Share of dividend in net profit (%) 9.4 13.6 15.7 14.3 256.4

Total amount of dividends paid

(€ in millions) 4.7 5.2 5.4 5.6 6.0

Share yield (%) 60.3 -0.3 29.6 161.1 -56.9

- dividend yield (%) 1.3 1.4 1.2 0.5 1.2

- capital yield (%) 59.0 -1.7 28.4 160.6 -58.1

Price-Earnings ratio (P/E)

- highest 7.4 10.5 13.8 34.7 533.4

- lowest 4.7 9.0 9.6 11.4 74.3

- at year end 7.4 9.5 13.7 30.8 216.4

Price-to-Book ratio (P/B) (%) 96 93 108 223 106

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Additional data on the Sava share

SHARE BOOK VALUE

The book value of the Sava share at 31 December 2008 amounted to €239.7. When calculating the book value, the number of treasury shares is deducted from the total number of shares.

Higher dividend yield

On a proposal by the Board of Management and Supervisory Board of the company Sava d.d., the 14th Shareholders’ Meeting adopted a resolution to distribute to shareholders a dividend of €3.0 per a share for the business year 2007; thus the total amount of paid dividends in 2008 amounts to €6.0 million, or 7% more than in the previous year.

Considering the proposed dividend per a share and the Sava share price on the last trading day of 2008, the dividend yield amounted to 1.2%. Ever since 1996 when Sava restructured into a joint stock company, it has increased the dividend amount per a share, thereby providing its shareholders with stable dividend yields.

Key data on dividend

Detailed information on the 14th Shareholders’ Meeting is available in Chapter 8: The Corporate Governance System of the annual report and the company homepage www.sava.si/Shareholder Relations.

Stock exchange Share name Issuer’s code

Ljubljana Stock Exchange SAVA SAV

ISIN − international security designation SI0031108457

YearDividend per

share (€)

Total amount of paid dividends

(€ in millions)Share price at the

year end (€) Dividend yield

2004 2.3 4.7 183.5 1.3%

2005 2.6 5.2 180.3 1.4%

2006 2.7 5.4 231.6 1.2%

2007 2.8 5.6 603.7 0.5%

2008 3.0 6.0 253.2 1.2%

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Annual Report


Cross-links with other companies

According to the criteria of the Corporate Governance Code, at the end of the year Sava was cross-linked on the basis of the following ownership links:• InthecompanyNFD1Delni{kiInvesticijskiSkladd.d.,ithada23.2%equity

stake,whereasNFD1hada1.4%equitystakeinSavad.d.• InGorenjskaBankad.d.ithada45.9%equitystake,whereasGorenjskaBanka

had a 2.6% equity stake in Sava d.d.• InthecompanyMerkurd.d.ithada20%equitystake,whereasMerkurhada

2.1% equity stake in Sava d.d.

Risk associated with investment in the Sava share

Such risks are due to:• factors of systematic risk-taking characteristic for all securities listed on the

Ljubljana Stock Exchange d.d. such as changed conditions in the issuer’s business, changes in tax legislation and regulations relating to the securities market and force majeure; and

• factorsofnon-systematicrisk-takingthatareconnectedwiththeoperationofeachindividual company (investment, interest, solvency and foreign currency risk).

In accordance with our strategy investment risks in connection with the Sava share are minimised by diversifying investments and adapting to changes in the capital markets.

The Sava share is ranked in the second best liquidity group of companies listed on the Ljubljana Stock Exchange d.d. The criteria for the classification into four liquidity groups are: average daily number of transactions, average daily turnover of trades, and market depth.

Approved capital and conditional increase in share capital

The Articles of Association of Sava d.d. do not include any provisions in this regard.

Relations with shareholders

We foster open and transparent relations with shareholders and other stakeholders. When providing information we surpass the legally specified minimum standards since we wish to establish trustworthy relations. Our shareholders have access to information on the internet, or they can contact us in writing or in person.

More about our communication with shareholders is available in Chapter 8: The Corporate Governance System.

75

Calendar of more significant announcements in 2009

* The stated dates are those planned and may be changed during the year. Should the planned announcement dates and events be changed, this will be notified in due course on the company’s website.

Periodical announcements and other price-sensitive information are announced on the website of the Ljubljana Stock Exchange via the e-system SEOnet (www.ljse.si). Access to information is also provided on the company website www.sava.si and in casesstipulatedbythecompanystatutealsointhenewspaperFinance.

Friday, 27 February 2009 Business report and unaudited unconsolidated financial statements of the holding company Sava d.d. for 2008

Friday, 27 March 2009 Business report and unaudited consolidated financial statements of the Sava Group for 2008

Friday, 17 April 2009 Audited annual report of the Sava Group and the holding company Sava d.d. for 2008

Friday, 17 April 2009 Statement Corporate Governance

Friday, 17 April 2009 Call for the 15th regular Shareholders’ Meeting of the company Sava d.d.

Wednesday, 20 May 2009 Business report and unaudited financial statements of the Sava Group and the holding company Sava d.d. for the period January-March 2009

Wednesday, 3 June 2009 15th regular Shareholders’ Meeting of the holding company Sava d.d.

Wednesday, 3 June 2009 or Thursday, 4 June 2009

Resolutions of the 15th regular Supervisory Board Meeting of the holding company Sava d.d.

Friday, 21 August 2009 Business report and unaudited financial statements of the Sava Group and the holding company Sava d.d. for the period January-June 2009

Friday, 6 November 2009 Business report and unaudited financial statements of the Sava Group and the holding company Sava d.d. for the period January-September 2009

Friday, 18 December 2009 Business Plan of the Sava Group and the holding company Sava d.d. for 2010

Investor RelationsMiha Resman, HeadofFinancialInvestmentse-mail: miha.resman≤sava.si,tel: +386 4 2066 068

Corporate CommunicationsLidija Bregar, Directore-mail: lidija.bregar≤sava.si,tel: +386 4 2065 819

Information on Dividend PaymentsKarmen Me`nar, Analyste-mail: karmen.meznar≤sava.si,tel: +386 4 2065 518, 2065 690

Further information for shareholders is available:• onthecompany’swebsite:

www.sava.si• e-mail:info≤sava.si

Shareholder relations

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Annual Report

II. Business Analysis 2. Development strategy

During the implementation of the goals as set in the strategic plan for 2007-2011 the Sava Group and the holding company Sava d.d. have strongly felt the impact of the global financial crisis and aggravated economic situation. When facing them and exercising the revised development solutions, we make use of the advantages that are brought by our business network structure. We implement measures to bridge the crisis and adapt our long-term development activities to meet the changed situation. This crisis is an opportunity to strengthen our competitive edge over a long-term period.

In the real sector (Rubber Manufacturing, Tourism, Real Estate) business conditions have deteriorated owing to a decline in demand even prior to the financial crisis, which acquired a global dimension in autumn 2008. In the capital market the value of financial investments fell throughout the year, while autumn was marked by holding back sources of financial credit together with an uncertain and unpredictable financial and loan policy by banks. The crisis affected the car and construction industry and caused a decrease in orders for industrial rubber products used in these industries. In the tourism sector visits by guests from foreign markets that were most affected by the crisis dropped, and demand in the real estate sector dropped dramatically too, which led to even tougher competition.

Some of the immediate measures that we opted in autumn 2008 were as follows: – The strengthening of sales activities.– Reorientation to more promising markets (market restructuring). – Restructuring of sales programmes and business processes. – Rationalisation and optimisation of all types of expenses.

ADAPTATION OF THE EXISTING DEVELOPMENT STRATEGY 2007-2011

Even before the preparation of the business plan for the year 2009 the Board of Management initiated a procedure to renew the development strategy for the period 2009-2011. Broader management teams of all Group companies and specialists at all business function levels are involved in the strategic planning process, which is still underway.

The revised values of the Sava Group

In order to reinforce internal culture, which forms the source of our identity and competitive edge of the Sava Group, we have revised and designed our common values more clearly:

Excellence: Excellence is achieved in everything we do. It is the driving force of continual improvements and permanent development.

Creativity: We develop a stimulating working environment that releases creativity and enables the further development of employee abilities.

Knowledge: Our employees are motivated to be successful and acquire and apply their knowledge, with teamwork being a priority.

Integrity: We act honestly and ethically, respecting agreements.

Responsibility: With a responsible attitude to our goals, associates and the natural and social environment we implement the principles of sustainable development.

77

STRATEGIC GOALS

The implementation of the mission and adopted development strategy of the Sava Group for the period 2007-2011 form a good foundation to adapt the strategic development plans until 2011.

The mission of the Sava Group and commitment of the Sava brand are based on constantly surpassing the expectations of all stakeholders, which continues to be our guidance under aggravated business conditions. However, in such circumstances special attention should be given to the preservation of shareholder assets and retaining the highest possible number of jobs in Sava Group companies.

Mission of the Sava Group:• Continuallysurpasstheexpectationsofourcustomers,employees,shareholders,

business partners and the environment.• Createattractiveemploymentopportunitiesforthebestpersonnel.

The mission of the holding company Sava d.d.:• Trainthemajority-ownedcompaniestoachieveanabove-averagereturnintheir

respective branches using the market and financial potential of the Sava brand together with the best management systems and key strategic expertise.

• Efficientlymanageandsupervisecompanyoperations.• Enhanceassetsthrougheffectivemanagementoftheinvestmentportfolio.

Key tasks of the holding company Sava d.d.: • Optimiseaportfolioofoperations,selectanoperationtoenterorexit,anddefine

the most suitable way to do this.• Ensureoptimumsourcesoffinanceandcashpooling.• Determinepriorityinvestmentsandtheallocationofresourcestodivisions.• Form the policy and procedures to improve the total performance of all

operations.• Perceive,createandutiliseverticalandhorizontalsynergies.

Key tasks of Sava Group divisions and companies: • Ensureoperationalexcellence.• Developspecialistsectorexpertise.• Createaportfolioofgloballycompetitiveproductsandservices(TOP3/2/1products

and services).

STRATEGIC ORIENTATION OF THE SAVA GROUP IN THE PERIOD 2009-2011

The goals of implementing the strategic guidelines in the period 2009-2011:• Survivethecrisiswithoutalossthatwouldjeopardisedevelopment.• Strengthenthelong-termcompetitiveanddevelopmentalabilitiesoftheholding

company and subsidiaries.• Preserveandenhancethevalueofshareholderassetsinthelong-termperiod.

The goals of the revised strategy beginning in the year 2009:• Preserve,ifnotexceedthealreadyachievedmarketshares.• ImprovethefinancialresultsoftheSavaGroupincomparisonwith2008.

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Annual Report


Priority tasks:– Quality changes in sales programmes.– Introduction of advanced and efficient sales strategies.– Modernisation of organisation and business processes.– Increase the efficiency of the management and competence centres of

knowledge. – Strengthen motivation among employees.

Considering the new measures, the implementation of our vision of development is still carried out in three basic directions: • Internalgrowthandimplementationofnewdevelopmentopportunities.• Growththroughinnovationandexcellence.• Employeegrowth.

Three priority measures and guidelines to complement the current three directions in strategy implementation:• Ensureliquidity.• Increasesalesefficiency.• Eliminateorcutcostswhicharenotessentialinthecrisissituation.

Three strategic measures complement and set a new framework for three paths to implement the vision of development.

ASSETSGROWTH

Gro

wth

thro

ug

hin

nova

tion

and excellence Internal growth andim

plementatio

no

fn

ewd

evelopmentopportunities

Employee growth

Ensu

reliq

uidi

ty Optim

isecosts

Increase sales efficiency

79

We respond to the aggravated economic situation with the following activities:

1. Internal growth and implementation of new development opportunities • IncreaseinternalefficiencybystrengtheningthesynergiesamongGroupdivisions

and companies. • TheholdingcompanySavad.d.formsthemainstayoftheactivemanagementof

the Sava Group at all levels. • Establish efficient management systems and spread good practice in all

divisions.• Train themajority-owned company to achieve an above-average return in its

respective branch. • RealisedevelopmentopportunitiesfortheGroupthroughtake-oversandsetting

up new companies.

2. Growth through innovation and excellence • Emphasiseevenmorethedevelopmentoftheinnovationcultureandcontinual

improvements in business processes, products and services. • Continuetoincreasethequalityofproductsandservices.• DeveloptheSavabrandandotherGroupbrandstoprovidethegreatestvaluefor

customers in all the market segments where our companies operate. • Adaptsalesgoalstothecircumstancesandincreasesalesefficiencybyswitching

to more promising markets, developing partnership relations with customers and restructuring sales programmes and business processes.

• Structurethevolumeofinvestmentstomeettheeconomicsituationsothatonlyinvestments that are urgently needed to ensure competitiveness are made.

3. Employee growth• Enhancethecreativity,knowledgeandmotivationofemployeestoachievestrategic

goals by designing a stimulating working environment. • Encouragethedevelopmentofemployeecompetencesthroughimplementingthe

philosophy of a thinking company.• Ensure the exchangeof best practices andopenup room for knowledge and

creativity. • Awardtheachievementsofouremployees.• Endeavour to increase business performance with the current number of

employees.• Implementanddeveloptheconceptofthefamily-friendly company.

The role of competence centres of knowledge in the aggravated economic situation

The present strategies, which have been focused on continual improvements in the quality of operations and flexibility, have yielded good results even in the new, aggravated economic situation, which is certainly encouraging.

Strategic alliances and centralisation of business roles in the form of the competence centres of knowledge at the Group level have proved to be particularly efficient management instruments in the new situation. Networking and the systematicmanagement of competences act as levers for achieving excellence even in a less foreseeable and unstable business environment. This has proved positive in the following areas where we are proceeding with development and implementing solutions: • Instrategicpurchasing,inwhichweachievedlowerpricesbyjointlyapproaching

suppliers. • ProvidingliquidityinindividualcompaniesandtheentireSavaGroup.• Astandardisedcompanyinformationsystem,whichprovidesacomprehensive

view of business performance and facilitates a swift response.

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Annual Report


In 2008, the effect of networked business functions was demonstrated in other business areas too. These are shown in detail in individual chapters of the business report.

The organisational culture of the Sava Group is of particular significance. An indispensable part is creativity leading to innovation and excellence as well as the thinking company culture.

The innovation of employees has for many years till now resulted in savings and the successful identification of new opportunities and solutions in the areas of sales and business efficiency.

STRATEGIC GOALS AND GUIDELINES IN SAVA GROUP DIVISIONS IN THE PERIOD 2009-2011

Rubber Manufacturing

Operational excellence, development of specialist knowledge, portfolio of competitive products:– Organic growth to strengthen market shares– Actively seeking opportunities for capital links (acquisition of new technologies

and markets)– Strengthening and modernising R&D activities– Encouraging innovation and increasing the share of innovative products– Developing high added value products in new areas (medicine, defence, energy)– Renewal of technological processes and development of environment-friendly

technologies– Making partnerships with customers– Accelerating marketing activities and market expansion– Be a mainstay of quality in market niches– Education and training with a focus on rubber manufacturing expertise– Furtheroptimisationinmanagingpurchasingsources– Optimisation in foreign trade network operations

Tourism

Increase the number of overnight stays and occupancy rate, quality and variety of services:– Separation of the basic activity from real estate management– Establishing standardised business models in key business areas – Furthercentralisationandformationofstandardisedsupportfunctionsincertain

areas (marketing, TQM, purchasing, accounting)– Renewal of marketing strategies (development of new products and selected

development of current ones, modernisation and consolidation of brand names and development of marketing channels)

– Renewal and reorganisation of marketing function– Promotion of internal marketing to stimulate consumer spending– Growth in the quality of services– Strengthening education and training and a more efficient transfer of good practice

cases– Optimisation of business processes and labour costs– Letting out on lease or eliminating non-profitable facilities– Improvement in energy efficiency

81

Real Estate

Ensure the development of sources of finance and proceed with development projects:– Restructure the portfolio by selling certain real estate which is now leased out– Developing projects which are being prepared– Strengthen sales activities in Croatia– Strategic market orientation in sustainable development from the aspects of ecology

and energy-efficient design

Other Operations

Energy managementIntroduce sustainable solutions to increase energy efficiency in the industrial sector and the Sava Group: – Increase the market share in renewable energy resources in the region– Invest effort to obtain financing from environmental funds – Strengthen marketing activities– Implementation of development projects to increase energy efficiency in the Sava

Group– Develop other selected investments in energy efficiency

The company Sava Medical in Storitve d.o.o.Proceed with growth and utilise the benefits arising from its status

Investment Finance

Maximise the long-term value of assets in the form of financial investments: – Complete a project of merging Abanka d.d. and Gorenjska Banka d.d.– Optimise a portfolio of financial investments and securities

DEEPENING RECESSION IN 2009 DEMANDS ADDITIONAL MEASURES

Due to the aggravated economic situation the Board of Management of Sava d.d. adopted this March a new, amended programme of measures for managing the crisis situation in the Sava Group under circumstances of the global crisis, as the activities envisaged in the plan for 2009 would not be sufficient to efficiently tackle any further aggravation of the crisis.

The programme of measures for managing the circumstances in the Sava Group in the global crisis adds new measures to the already introduced system measures at the Group level, introduces new activities and defines stricter criteria for their implementation.

All Group companies down to the level of every profit centre will complement the action programme on an ongoing basis and adapt it the further development of events in the business environment. A centrally managed computer-assisted information system facilitates efficient supervision over the implementation of activities and achievement of the set financial impacts.

The programme consists of two sets of measures: – Short-term measures to survive in the crisis situation– Long-term measures to ensure a long-term competitive edge

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Annual Report


1. Short-term measures to survive the crisis situation• Maintainliquidity:

– Limit investments– Strict optimisation of stock– Efficient debt recovery– Sell assets that are not essential for survival– Strengthen hedging against exchange rate risk in non-Euro regions (depreciation

of local currencies with regard to the Euro)– Provide additional external sources of finance

• Strengthenedsalesoperations.• Increasedactivitiesaimedatmeetingcustomerexpectations.• Repeatedoptimisationofpurchasepricesandpaymenttermsduetochanged

circumstances. • Consistentimplementationofthecontinualimprovementsprocessandlimiting

costs not urgently required for survival.• Shortenedworkinghours,selectivedismissalforredundancyandothermeasures

to cut labour costs.

2. Development activities to assure long-term competitiveness• Structuralchangesinsales(business)programmes:

– Discontinuation of programmes of less interest to the market – Introduction of new programmes– General enhancement of services

• Performanceofadditionalmarketingactivitiesthatareadaptedtoindividualprogrammes and a specific situation.

• Rationalisationofbusinessprocesses(manufacturingtimes,costsofmaterialsand labour, quality, etc.).

• EfficientHRmanagementandqualifyingpersonnel,introductionofefficientmotivation systems.

• Measurestoincreasemanagementefficiency:– Modernisation of management tools (organisation, management systems,

planning, information support, system of supervision) – HR recruitment

The development activities, which are part of the action programme and the already mentioned strategic goals and directions of the Group divisions, form the core of the adapted Sava development strategy for the period 2009-2011. Owing to their implementation and the short-term bridging measures, the Sava Group will not only survive the crisis, but will come out of it stronger and even more competitive than before.

83

3. Conditions in the changed economic environment

Last year the financial crisis and recession deeply marked the global economy and, consequently, the Slovene economic environment too. In 2009, the global economic climate further deteriorated and forecasts for the future are rather pessimistic. Due to a delay, Slovenia has not yet experienced the crisis and recession to the full extent, yet we believe this will happen in 2009 when a setback in conditions is anticipated, especially in the real sector.

THE WORLD IN FINANCIAL CRISIS

Before the end of the year 2008 the economic environment was deeply affected by the financial and banking crisis, which expanded to the whole world from the USA. It resulted in a lower rate of industrial growth in almost all parts of the world and nearly brought the world economy to a standstill.

The financial crisis was followed by a crisis in the real sector, which is revealed as a crisis of demand. The number of orders has decreased together with sales, while due to a shortage of liquid assets liabilities are paid later than originally agreed. The crisis is accompanied by negative movements in the labour market – an increased rate of unemployment, households decreasing their consumption, and a low level of trust in the business environment. The adopted measures at the national level have not brought any visible effects as yet.

Globally, 2008 was marked with outstanding price rises in raw materials, energy resources and other input materials. The prices of energy resources and oil were higher by as much as 40% on average, and prices of non-energy raw materials by one fifth. Oil and natural rubber, two main raw materials for the Rubber Manufacturing division, achieved a historic value. In the last months of 2008 prices subsided, and due to stabilised industrial growth and reduced demand globally they slightly decreased in the beginning of 2009 too.

Owing to the global recession, lower growth rates in the international markets, the consequences of last year’s price shocks in the international markets of raw materials and energy resources and other unfavourable trends, industrial growth in the world in 2008 and 2009 will be slightly lower.

According to the estimates of international institutions, global industrial growth stood close to 2.5%. In 2009 it should stagnate and in the OECD countries even decrease to -4%, which is the lowest rate after the Second World War. The gradual revival of industrial growth is forecast not earlier than in 2010.

RECESSION EXPANDS TO THE EU COUNTRIES

In the EU too the indicators that show confidence in the economy fell drastically in autumn. In several of the largest countries a recession was declared due to the regression in GDP in two successive quarters, while banks almost stopped long-term crediting of the real sector. The hazard of illiquidity jeopardised some of the largest and most distinguished European companies. The psychological momentum and fear of recession will lead to additional limitations in future business opportunities with consequences in the financial and real sector.

In last months of the year the EU and the Euro region, where Sava Group divisions generate the majority of their sales revenues, faced a significant decrease in economic activity. The volume of industrial production and the value of construction works achieved their lowest levels in the past decade and a half, revenues in trading decreased and the unemployment rate reached 7.5% last year.

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Annual Report


In last quarter the recession escalated further. Germany and Italy, where Rubber Manufacturinggenerates30%ofitsexports,andtheNetherlands,experiencednegativeindustrial growth for the third quarter in succession, which, given their economic power,significantlyaffectedtheentireEuroregion.Forthesecondquarterinarowsuch a decline was experienced in Great Britain, Portugal, Spain and Hungary, and forthefirsttimeinAustria,CzechRepublic,France,BelgiumandLithuania.Inthelast quarter, Slovenia experienced negative growth too: in comparison with the same period in 2007 GDP decreased by 0.8% in real terms.

Inflation in the EU and in the Euro region was much higher than in previous periods and in July it exceeded 4%. In autumn it began to decrease along with lower demand and falling prices of raw materials. At the end of the year it reached 2.2% in the EU countries and 1.6% in the Euro region. Inflation is now expected to be lower in 2009, i.e. below 1%.

In the EU countries or the Euro region industrial growth decreased, which according to forecasts should continue in 2009 too. Industrial growth was estimated at 0.7% last year, or 1.9 percentage points less than in the previous year. In 2009, it may even be negative from -2% to -4%.

SLOVENIA AFFECTED BY THE GLOBALLY TOUGH ECONOMIC SITUATION

Sava Group companies increased their share of sales from 47% to 56%, but in 2008 the impact of the deteriorated conditions were revealed in the most important trading partners of the Slovene industrial sector.

After two years of extremely high growth, with a favourable global industrial boom cycle, especially in countries which present significant European export markets for Slovenia, industrial growth subsided. Over a half-year period the current economic trends were still favourable with 5.5% growth in GDP with the exception of industrial production where activities have already slowed.

In autumn economic activity slowed down considerably, being affected by the following factors: • Decreased level of growth in exports of goods, especially in EU markets: In

NovemberandDecemberexportswerelowerby14or15%,andattheannuallevel they were 0.9% higher than in 2007, but in 2009 the declining trend will continue.

• Decrease in industrial production: At the annual level industrial production was 1.9% lower than in the previous year; the fall was bigger than in the EU and Euro region where it amounted to 1.6%.

• Decrease in the rate of growth in completed construction works: In the past two months construction activity slowed down, as demonstrated by the decreased value of construction works; the annual value of 15.1% was among the highest in the EU, but construction activity will continue to decrease in 2009.

• Growth reduced in trade: In 2008 it was still high; for 2009 a decrease in growth is forecast.

• Decreased growth of investment activity: In the past three months the volume of investments was more than 5% lower than in the same period last year; it was especiallyaffectedbyastandstillinOctoberandNovember,byliquidityissuesand a high level of caution when making new investments. With regard to the pastyear,investmentsincreasedby6.2%attheannuallevelinrealterms.For2009, a 10% decrease in investments is forecast.

85

In 2008, inflation increased from 3.6% in 2007 to 5.7%, but it should be reduced in 2009 along with alleviation of world prices for energy sources and foodstuffs and, above all, due to less industrial activity, it should again settle in 2009 and be 1% on average. After a 3-month period of deflation the inflation rate last December was 2.1% in the interim period.

Owing to an increase in the American dollar, exchange rate risks increased too. After a period of a strong euro position in relation to the American dollar in the first half-year period of 2008, when the euro achieved a record value of 1.5777 against the US dollar, the dollar currency gradually increased in the second half year. In December, the euro was worth 1.345 dollars. The forecast is that the American currency will get stronger this year too and, relative to the euro, it should stand at about 1.3 dollars or even lower.

The performance indicators in the performance of Slovene banks worsened. The average return on equity was the category that decreased most, i.e. falling from 16.3% in 2007 to 9%.

Interest rates became more dependent on changes in the EURIBOR and LIBOR interest rates as well as the interest margins of commercial banks. Due to a decrease in the interest rate by the European Central Bank, EURIBOR decreases and so does the interest rate for companies, but banks increase their interest margins at the same time. The average interest rate for new loans approved to companies rose in October to about 7% and then fell to about 6%; generally, the interest rate is one percentage point higher than in the euro region, however, given the higher inflation rate in Slovenia it retains a lower level in real terms.

Due to aggravation of the conditions in the international inter-bank markets credit activity in domestic banks was almost entirely suspended at the end of the year. The net indebtedness of companies with domestic banks was almost one quarter higher than at the end of the previous year and totalled €18.6 billion. The value of the Slovene SBI stock exchange index decreased throughout the year.

The conditions in the labour market deteriorated too. After several years of falling, unemployment has been rising again since September 2008; according to the forecast this situation will continue. Salaries per employee are estimated to increase by 2.5% in real terms, which is much greater than productivity; the forecast for 2009 stands at 2.2% on average, whereas in the private sector a zero growth in salaries is forecast.

In 2009, Slovene companies will have to face not only problems concerning current liquidity, but also obstacles in the acquisition of new orders and ensuring competitive power, forcing them to reduce production. In the case of liquidity problems, working hours are shortened and in urgent cases companies will have to dismiss employees. As a rule, employment will mainly decrease with rare exceptions and there will be fewer investments. The services industry is the most optimistic. In 2009, the tax on paid salaries is abolished, thus significantly enhancing the competitiveness of Slovene companies. This is an urgent measure in light of the aggravated economic conditions.

In the financial and banking sector the impact of the crisis is highly perceptible, and in the real sector the crisis is only deepening. According to estimates, industrial growth in Slovenia achieved 3.5% last year and for 2009 analysts are forecasting even negative growth from -2% to -4%.

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Annual Report

II. Business Analysis 4. Business operations of the Sava Group

4.1. Business performance

Sava Group operations in the real sector were marked by a decline in demand for products and services, and price rises of raw materials, energy resources and labour costs, whereas in the financial sector they were marked by an increase in interest rates and a fall in stock exchange prices. In this aggravated business year we achieved a record 23% growth in revenues. Despite the implementation of drastic measures aimed at strengthening business efficiency, net profit was lower than planned due to extraordinary events (impairments of assets in the Tourism division and impairments of financial investments in Sava d.d. in accordance with recommendations of the accounting profession), and also due to deviations from the planned values in our subsidised and associated companies. The impact of these stated extraordinary events has been demonstrated in other performance categories too, so it is dealt with separately.

SALES REVENUES

They totalled €231.8 million, or 23% more than in the previous year and 6% above plan. All Group companies enhanced their sales.

The Real Estate division had a major impact on the growth in sales, as it more than doubled the sales figure from the previous year. The Tourism division increased its sales by 7%, while Other Operations, in which most sales are created by the energy management operation, increased its sales by 16%. After three years with 18% growth on average, sales in the largest Sava division, Rubber Manufacturing, settled and, with regard to 2007, increased by slightly more than 1%.

Intherevenuesstructurebydivision,RubberManufacturingwiththeForeignTradeNetworkhada49%,Tourism29%,RealEstate20%andOtherOperationsa2%share.

44% of consolidated sales revenues were made in foreign markets.

The average of generated annual sales revenues in the last five years totalled €213.7 million.

SAVA GROUP

SALES REVENUESFROM 2004 TO 2008

in millions

2004 2005 2006* 2007 2008

300.0

250.0

200.0

150.0

100.0

50.0

0.0

•

•

•

•

•

•

•

235.3244.0

169.3188.2

231.8

* In 2006, the Trade division and the rest of the Chemicals division were sold due to which the sales volume of the Group decreased.

87

OPERATING EXPENSES including extraordinary events

They totalled €243.7 million. Costs of goods, materials and services had a 64% share in the expenses structure, labour costs a 23%, depreciation a 6%, write-offs a 5% and other operating expenses a 2% share.Due to the fact that the performance of the company Zdravili{~e Radenci, d.o.o. was worse than expected, real estate and equipment were assessed. On the basis of this assessment the company impaired fixed assets in the amount of €10.2 million. In connection with the termination of the lease contract for Vila Bled the company Sava Hoteli Bled d.d. wrote-off the unamortised part of investments totalling €0.7 million.

OPERATING EXPENSES excluding extraordinary events

They totalled €232.8 million and were 22% higher than last year. Costs of goods, materials and services had a 67%, labour costs 25%, depreciation 7% and other operating expenses a 2% share in the operating expenses structure.

The amount of operating expenses was affected by high price rises in input raw materials and energy sources. Labour costs were higher than last year due to domestic inflation and a shortage of trained personnel in Tourism. Due to a significant increase in sales revenues in Real Estate the costs of sold product – buildings were higher too.

OPERATING PROFIT/LOSS (EBIT) including extraordinary events

Due to impairments of assets in Tourism totalling €10.9 million an operating loss was generated in the amount of €5.9 million.

SAVA GROUP

SALES REVENUES STRUCTUREBY DIVISION

in %

Rubber Manufacturingwith the Foreign TradeNetwork

Tourism

Real Estate

Other Operations

29

49

20

2

88

Annual Report


OPERATING PROFIT (EBIT) excluding extraordinary events

Operating profit in the amount of €5.0 million was generated, which was 45% less than generated and planned in the previous year.

The aggravated economic situation in the last quarter of 2008 decreased business performance in the subsidiaries. A continual and intensive effort to manage cost growth and assure rational use of business assets stabilised the decrease in operating profit.

FINANCIAL REVENUES • Financialrevenuesintheamountof€20.5 million were 55% higher than in the

previous year and surpassed the business plan by 53%. The majority of revenues was generated by the holding company Sava d.d.

FINANCIAL EXPENSES including extraordinary events

Financialexpensestotalling€38.9 million were more than twice as high as in the previous year. In their structure interest for received loans had a 57% share and impairments of financial investments a 36% share.Considering the unfavourable stock exchange movements and in following the demands and recommendations of the accounting profession, Sava d.d. impaired financial investments available for sale in a total amount of €14.9 million.

FINANCIAL EXPENSES excluding extraordinary events

Financialexpensesintheamountof€24.0 million were 63% higher than last year. Interest expenses for received loans had an 89% share in their structure.

The increase in financial expenses was due to the higher indebtedness of Sava Group companies, deteriorated conditions for obtaining external financing sources and unfavourable exchange rate relations.

NET FINANCING EXPENSES including extraordinary events

At €18.3 million they were higher than planned and achieved in the previous year. The financing result was aggravated due to impairments of financial investments available for sale in a total amount of €14.9 million.

NET FINANCING EXPENSES excluding extraordinary events

The financial result of the Sava Group was negative and totalled €3.4 million.

The financial result was influenced by higher interest expenses and exchange rate losses.

SHARE IN THE PROFIT OF ASSOCIATES

• TheserevenuesrefertoGorenjskaBankad.d.,AbankaVipad.d.andJobd.o.o.,and totalled €24.5 million, which was 28% less than in the previous year. The global financial crisis also aggravated operations in the banking sector, therefore revenues from the share in the profit of associates lag behind the planned ones by 19%.

89

• €15.5 million was paid as dividends, or 63% of revenues. They were 46% higher than in the previous year and above plan.

• Thedifferenceintheamountof€9 million (estimate), or 37% was the remaining attributable profit of associates using the equity method of investment evaluation in associated companies. The attributed profit was 62% lower than last year and 46% below plan.

TOTAL PRE-TAX PROFIT including extraordinary events

The generated profit amounted to €0.3 million and was lower than last year and below plan. The unplanned events significantly aggravated operations and amounted to €25.8 million, out of which 42% were due to impairments of assets in Tourism, and 58% referred to impairments of financial investments in the holding company Sava d.d. The average annual total pre-tax profit in the last five years amounted to €35.7 million.

TOTAL PRE-TAX PROFIT excluding extraordinary events

The generated profit amounted to €26.1 million and was 37% lower than last year, deviating from that planned by 26%. The average annual total pre-tax profit in the last five years amounted to €40.8 million.

The deviations from the business plan were due to the changed economic environment and appeared in the companies of Rubber Manufacturing and Tourism as well as in associated companies

Pre-tax profit structure

TAX

• Taxliabilityofcompaniesamountedto€0.5 million and was lower than in the previous year. The holding company Sava d.d. did not account for tax on revenues as the prevailing part of realised revenues was untaxed or partly taxable pursuant to legislation.

• Deferredtaxreceivableswerechargedintheamountof€2.1 million, and mainly refer to impairments of financial investments.

€ in millions

2004 2005 2006 2007 2008

Operating profit without negative goodwill 5.1 7.0 2.8 7.9 5.0

Newly arisen negative goodwill 14.5 1.3 1.4 1.0 0.0

Impairments of assets 0.0 0.0 0.0 0.0 -25.8

Financial result 16.4 15.8 15.5 -1.5 -3.4

Share in the profit of associates 16.2 19.6 20.9 34.2 24.5

PRE-TAX PROFIT 52.2 43.7 40.6 41.6 0.3

90

Annual Report


NET PROFIT including extraordinary events

The profit was generated in the amount of €1.9 million, which was less than last year and below plan. The unplanned events significantly aggravated operations in the amount of €25.8 million, out of which 42% were due to impairments of assets in Tourism and 58% were impairments of financial investments in the company Sava d.d. The average annual net profit in the last five years amounted to €32.5 million.

NET PROFIT excluding extraordinary events

The generated profit amounted to €27.7 million and was lower than in the previous year due to the strategic decision to decrease the sales volume of financial investments by 30%. It deviates from plan by 14%. The average annual net profit in the last five years amounted to €37.6 million.

In all Sava Group companies intensive measures were introduced to alleviate the effects of the aggravated economic environment: price rises in raw materials and energy resources, labour costs, increased interest rates, negative exchange rate fluctuations and a decline in demand due to the recession.

SAVA GROUP

NET PROFIT BY YEARINCLUDING EXTRAORDINARYEVENTS

in millions

2004 2005 2006 2007 2008

60.0

50.0

40.0

30.0

20.0

10.0

0.0

•

•

•

•

•

•

•

48.6

38.534.1

39.3

1.9

5-year average

32.5

91

RETURN ON EQUITY including extraordinary events

When calculating the ratio between net profit and average balance of equity the return on equity amounted to 0.3%.

RETURN ON EQUITY excluding extraordinary events

When calculating the ratio between net profit and average balance of equity the return on equity amounted to 5.3%. The achieved return on equity was 1.2 percentage points lower than in the previous year.

A contribution to the return on equity of the Sava Group by type of profit

pp = percentage point

SAVA GROUP

NET PROFIT BY YEAREXCLUDING EXTRAORDINARYEVENTS

in millions

2004 2005 2006 2007 2008

60.0

50.0

40.0

30.0

20.0

10.0

0.0

•

•

•

•

•

•

•

48.6

38.534.1

39.3

27.7

5-year average

37.6

2004 2005 2006 2007 2008

Operating profit without negative goodwill 1.7 pp 1.9 pp 0.7 pp 1.6 pp 1.0 pp

Newly arisen negative goodwill 4.8 pp 0.4 pp 0.3 pp 0.2 pp -

Impairments of assets - - - - -5.0 pp

Financial result 5.4 pp 4.3 pp 3.9 pp -0.2 pp -0.7 pp

Share in the profit of associates 5.3 pp 5.3 pp 5.3 pp 7.3 pp 4.7 pp

Tax -1.2 pp -1.4 pp -1.6 pp -0.5 pp 0.3 pp

Return (NET PROFIT/EQUITY) 16.0 % 10.5 % 8.6 % 8.4 % 0.3 %

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Annual Report


Income statement of the Sava Group by quarter in 2008

In the first three quarters operations gradually improved. The divisions increased their sales revenues and profit and surpassed the business plans. In last quarter operations were already significantly affected by the global financial crisis and recession. Sales revenues in the last quarter were substantially higher due to Real Estate, while in other divisions a fall in sales was marked. In this period we impaired assets in a total amount of €25.8 million.

Income statement of the Sava Group by quarter in 2008

The holding company Sava d.d. made a significant contribution to the business results of the Group. The dynamics of generating the result of Sava d.d. by quarter mostly depends on the time of selling financial investments and receiving dividends. Certain divisions depend on seasonal movements, therefore it is not reasonable to compare the results with quarterly results of the previous year.

€ in thousands

JAN - MAR 2008

APR - JUN 2008

JUL - SEP 2008

OCT - DEC 2008

JAN - DEC 2008

Sales revenues from goods and services sold 43,567 53,515 55,859 78,813 231,754

Change in inventories 6,758 12,748 11,186 -27,774 2,918

Other operating revenues 717 1,307 854 275 3,153

Operating revenues 51,042 67,570 67,899 51,314 237,825

Costs of goods, materials and services -32,631 -46,243 -43,993 -33,810 -156,677

Labour costs -13,648 -14,352 -14,332 -14,896 -57,228

Depreciation and amortisation -3,876 -4,044 -3,896 -3,912 -15,728

Write-offs -160 -229 -380 -10,882 -11,591

Other operating expenses -315 -609 -615 -933 -2,472

Operating expenses -50,630 -65,477 -63,216 -64,373 -243,696

Operating income 412 2,093 4,683 -13,059 -5,871

Financial income 754 15,619 2,093 2,077 20,543

Financial expenses -5,836 -4,490 -6,423 -22,155 -38,904

Net financing income -5,082 11,129 -4,330 -20,078 -18,361

Share in the income of associates 7,570 7,915 5,820 3,231 24,536

Pre-tax profit 2,900 21,137 6,173 -29,906 304

Tax -279 -239 4 2,130 1,616

Net profit for the year 2,621 20,898 6,177 -27,776 1,920

93

4.2. Assets and liabilities structure

BALANCE SHEET TOTAL On the last trading day of 2008 it totalled €921.6 million, which was 3% less than at the end of the previous year. The average balance sheet total in the last five years amounted to €758.4 million.

ASSETS

• Property,plantandequipmentandinvestmentpropertyhada33%shareintheassets structure, investments in associated companies a 35%, non-current securities available for sale a 20%, and current and other assets a 12% share.

• Moreimportantchangesininvestmentsinassociatesamountedto€318.1 million and with regard to last year they were 12% higher:– Increase in capital of Abanka Vipa d.d. in the amount of €24.4 million. – By using the equity method for evaluation of associates in the consolidated financial

statements the profit of associates totalling €9 million was attributed. • IntheassetsbydivisionInvestmentFinancehada65%,Tourism19%andother

divisions a 16% share, of which the majority was due to Rubber Manufacturing withtheForeignTradeNetwork.

CAPITAL AND LIABILITIES

On the last trading day of 2008 capital totalled €482.4 million, which represented 52% in the liabilities structure. In comparison with the previous it was 12% lower. The average balance of capital in the last five years amounted to €446.2 million.

SAVA GROUP

ASSETS STRUCTURE AT 31/12

in millions

Property, plant and equipmentand invesment property

1,000.0

900.0

800.0

700.0

600.0

500.0

400.0

300.0

200.0

100.0

0.0

•

•

•

•

•

•

•

•

•

•

•

2004

2005

2006

2007

2008

249.

4

Investmentsin associates

Non-currentsecurities

Otherassets

Totalassets

270.

527

1.8

287.

1

301.

6

107.

112

1.2

176.

328

4.7

318.

1

134.

113

9.5

128.

626

9.5

186.

8

102.

711

9.8

97.9

110.

4

115.

1

593.

365

1.0

674.

695

1.7

921.

6

94

Annual Report


• Moreimportantchangesincapitalitemswereasfollows:– The net profit belonging to Sava d.d. amounted to €2.3 million. – The minority interest decreased by €0.4 million, mainly due to current losses

referring to them.– One half of net profit in the holding company Sava d.d. in the amount of

€2.3 million was allocated to other revenue reserves.– A sum of €6 million was earmarked for payment of dividends for the year

2007. – The net surplus from revaluation in connection with the evaluation of non-

current securities at fair value decreased by €58.9 million. In the negative surplus from the revaluation the Sava Group showed only a decrease of €2.1 million in the value of non-current securities under their cost value. The remaining decreases in fair value were transferred to the income statement for the year 2008.

• Thereceivedloanstotalling€377.6 million were the greatest item in total liabilities; they were 26% higher than last year mainly due to investments in the capital market, in Tourism and the increased volume of operation in Real Estate.

INVESTMENTS:

Sava Group companies earmarked €23.3 million for investments in infrastructure, which was almost one half less than in the previous year. The most important investments were the renovation of the hotel Izvir in Radenci, adaptation of apartments in the family hotel Savica in Bled and investments in the restructuring of the manufacture of conveyor belts and tyres as well as required ecology-related improvements in the production of offset rubber blankets for the printing industry. In the last five years the companies earmarked €172.6 million in total for such investments.

The holding company Sava d.d. allocated €69 million to investments in the capital market, which was one half less than in the previous year.

SAVA GROUP

LIABILITIES STRUCTUREAT 31/12

in millions

1,000.0

900.0

800.0

700.0

600.0

500.0

400.0

300.0

200.0

100.0

0.0

•

•

•

•

•

•

•

•

•

•

•

2004

2005

2006

2007

2008Capital

377.

939

2.9

432.

654

5.4

482.

4

Non-currentliabilities

72.2

84.1

101.

7 203.

3

218.

6

Currentliabilities

143.

317

4.0

140.

3 203.

0

220.

6

Total capitaland liabilities

593.

365

1.0

674.

695

1.7

921.

6

95

NUMBER OF EMPLOYEES IN THE SAVA GROUP

On the last day of the year Sava Group employed 2,692 people, which was 51 more than at the end of the previous year.

When due to the seasonal nature of work there was a necessity for employing additional manufacturing and service provider workers, we employed new associates for a fixed period of time in Rubber Manufacturing and Tourism.

SAVA GROUP

STRUCTURE OF INVESTMENTSIN THE INFRASTRUCTUREBY DIVISION

in %

Sava d.d.

Other operations

Rubber Manufacturingwith the Foreign TradeNetwork

Tourism

7

53

12

28

96

Annual Report


5.1. Rubber Manufacturing division with the Foreign Trade Network

STRATEGIC DEVELOPMENT AND GOALS

MissionCreate comprehensive solutions for various fields where industrial rubber and related products and tyres are applied. Vision • Becomethedevelopmentpartnerofkeycustomers.• Bethemostadaptablemanufacturerinmarketniches.• Make the quality of our products comparable to those producedby our best

competitors. • Growintoacommunityofprofessional,creativeandmotivatedassociateswho

build their future by increasing their competitive advantages. • TurntheRubberManufacturingdivisionintooneofthemostfinanciallysound

divisions in the Sava Group through environment-friendly technology and its incorporation in international economic streams and contacts.

ECONOMIC ENVIRONMENT

Rubber manufacturing as a branch of business is strongly associated with the car andconstructionindustry.Negativecyclicalchangesinthesetwoindustrieshavethus been transferred to Sava’s division too. In the last quarter, negative trends were reported by all global producers in this sector. Slightly more optimistic were only those who had taken into account on time the coming trends in the area of energy supply, transport with regard to safety and comfort, and environmental protection, and managed to achieve higher added value. The market niches strategy continues to be our guide, therefore the Rubber Manufacturing division is flexible in adapting to these trends.

The key characteristics of the economic environment that had and will have an impact on Rubber Manufacturing with the Foreign Trade Network are as follows:• Inthemarketofrubbertechnicalproductsandtyresthecompetitionbecamemore

intense together with associated price pressures. • InwesternEuropeancountriesthemarketgrewslower,whereasthesituationwas

better in eastern Europe, Russia and other fast developing countries. • Thedevelopedmarketstillhasthegreatestshareofglobalconsumptionofindustrial

rubber products.• ThetrendofrelocatingthemanufactureoflesscomplexproductstoeasternEurope

and Asia.• Repeatedpriceincreasesinstrategicrubbermanufacturingmaterials,energyand

packaging, which could not be entirely transferred to end prices, significantly affected the competitive position of the branch, particularly in dollar markets.

• ThecompetitivenessofEuropeanmanufacturersdecreasedonaccountofappreciationof the euro compared to other world currencies.

• Manufacturers began to forecast redundancies and shut down unprofitableplants.

• Focusing on optimisation of purchasing and internal processes in uncertaincircumstances became one of the key factors to strengthen efficiency.

• Complying with environmental standards has remained an important part ofoperations in the rubber manufacturing industry.

• Thegrowingcrisisindemandledtoadeclineinorderswhichdemonstratedtheuncertainty of the market.

• Thepresentdemandforrubberproductshaschangedwhilenewonesareopeningup and new markets and niches are emerging.

• Theneedforafter-salesservicesisincreasing.

5. Business operations by division

97

DIVISION OPERATION

After several years of outstandingly high growth in sales, the growth in sales revenues of companies in this, the largest Sava division, subsided. Under the tough conditions faced by the entire industry of industrial rubber products and tyres, sales were even slightly enhanced thanks to our high flexibility and swift response to the rapidly changing business environment, thereby preserving or increasing our market share in the majority of key markets.

Unfavourable economic conditions were more distinctive in the entire branch as had been anticipated while formulating the business plans for 2008. A decline in the sales market resulted in a decline in demand in Europe, being our principal sales market. The behaviour of customers was more rational, demanding longer payment terms and requesting us to store stock as a supplier. The prices of basic input raw materials and energy rose substantially. Unfavourable movements in the financial markets produced higher financing costs. Owing to tough competition, producers could not transfer all these charges in retail prices, which along with higher labour costs in the division decreased margins and profit.

Due to the enumerated reasons the business figures of the division were worse than last year and also worse than planned.

In the structure of consolidated sales of the Sava Group, Rubber Manufacturing with the Foreign Trade Network had a 49% share.

Sales reached €110.6 million, which was 1% more than in the previous year and 7% less than planned. The growth in sales decreased considerably in the last quarter. In the past five years the companies in Rubber Manufacturing achieved an 11% growth in revenues on average, and in the last 3 years even 18% growth.

The company Savatech d.o.o. accounted for the largest share in the division’s sales structure at 88%. The division created slightly more than one fifth of sales revenues through its foreign trade network, the majority being through its company in Germany, Sava Trade Munich.

We managed to preserve a relative market share in most key markets, or even increase it in places. Moreover, we retained our position as a key development supplier in tough industrial sectors and acquired new development partners. The high number of new products, which are noted for their original solutions and innovative designs, contributed to our sales performance.

The companies of the division generated 73% of sales revenues in 90 foreign markets. These include new markets that helped to stabilise the lower rate of growth than planned for the traditional markets of the EU. Despite a recession in Germany – our main export market – and other EU markets, where the division generated 55% of exports, the sales structure by market remained almost the same. This means that with a decline in growth in the branch in developed EU markets, Sava’s Rubber Manufacturing division increased its market share.

The total profit generated was slightly positive, but below last year’s figures and below plan. Besides the lower growth in sales as planned, business performance was also affected by price rises in raw materials, materials, services, higher labour costs and additional employment in this division, higher interest expenses for hired loans and, in particular, a perceptibly negative impact due to changes in the exchange rate between the euro and other currencies in which sales are realised.

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Annual Report


All division companies were positive except for Savarus d.o.o. from Russia. Besides initial problems at start-up in the manufacture of profiles, the operation was further aggravated due to problems in sales and the unfavourable exchange rate between the rouble and the euro.

The companies in the division earmarked €6.6 million for investments, which was almost double than in the previous year. The investment assets were mainly allocated to the following: • Increaseintheproductionofproductgroupsofconveyorbeltswithhigheradded

value. • AdditionalproductioncapacityintheVeloprogramme.• Thepurchaseofenvironment-friendlyandenergy-efficienttechnologyandreducing

a bottleneck in the production of semi-finished products in offset rubber blankets manufacturing for the printing industry.

• Thepurchaseofnewequipmenttoimprovethequalityandreliabilityofelastomercompounds in the Mixing Plant programme.

• Theautomationoftwoinjectionpresseswitharobotarmintheproductionofmoulded products in the company Sava-GTI, d.o.o..

• Otherminorinvestmentsaimedatimprovingqualityandproductivity,saferwork,alleviation of environmental impacts and the rational use of energy.

AssetsofthecompaniesfromtheRubberManufacturingdivisionwiththeForeignTradeNetworkamountedto€71.8 million, 53% of which was financed with capital and 47% with foreign sources.

Key data for Rubber Manufacturing with the Foreign Trade Network

* Sales revenues for Rubber Manufacturing with the Foreign Trade Network are consolidated

€ in millions

2004 2005 2006 2007 2008Index

2008/2007

Sales revenues* 70.6 80.1 96.2 109.3 110.6 101

Pre-tax profit 1.2 1.7 3.7 4.6 0.0 -

Net profit 1.0 1.4 2.9 3.5 0.0 -

Assets 39.0 47.0 57.9 65.3 71.8 110

Equity 20.2 21.3 28.8 32.4 37.9 117

Liabilities 18.8 25.7 29.1 32.9 33.9 103

Investments in property, plant and equipment 2.5 4.6 4.2 3.4 6.6 194

Number of employees 860 941 1,001 1,040 1,078 104

99

5.2. Tourism division

2009 BUSINESS PLAN

Uncertain circumstances are still continuing. Trends in the markets of raw materials and the most recent forecasts show a decrease in prices of both input and raw materials. Due to a surplus in manufacturing capacity and new, price-aggressive competitors, mature products will continue to be under the pressure of further price decreases.

Our key measures and policy concerning the Rubber Manufacturing division in the circumstances described are as follows: – Besides more intensive operations aimed at acquiring new customers, the priority

is more intensive development of new products and strengthening after-sales services.

– An extremely selective investment policy focused exclusively on the areas that are most essential for the further development of the division, whereby the volume of investments will be increased in comparison with 2008.

– A selection of the production and sales programme will be carried out together with a new marketing positioning, especially in the most promising markets.

– Managing all types of costs will be adapted to changes in sales.

In2009,theRubberManufacturingdivisionwiththeForeignTradeNetworkplanstoachieve target sales revenues of €119.3 million, a total pre-tax profit of €3.1 million and investments in the further modernisation of manufacturing capacity totalling €7.8 million.


MissionProvide a diversity of experiences.

Vision • RemainthelargesttouristserviceproviderinSlovenia.• Consolidateourmarketpositionasafirst-ratetouristserviceproviderbyfocusing

on excellence and uniform business standards. • Thetourismmanagementcompanywillcreatesynergiesinoperationsandenable

an expansion to foreign markets. • Increasethenumberofkeymarketsandmarketsegmentsfromwhichourguests

arrive. • Createanefficientcustomerrelationsmanagementmodel(CRMmodel)supported

by strong and recognisable brand names such as Sava Hotels & Resorts. • Providehighlyqualifiedpersonnelanddevotespecialattentiontotheacquisition

of knowledge in Slovenia and abroad. • Developthedivisioninasustainablemannerandgiveprioritytothelinkbetween

the narrower and broader environment.


Last year the tourism sector was highly exposed to the negative impact of the global financial crisis, which was revealed in a decreased number of arrivals and overnight stays by foreign guests in the second half-year period. The world tourism organisation has confirmed this trend. At the international level, the average number of tourist visits was 2% higher than in the previous year due to positive trends in the first half-year period, while in the second half-year period a decrease in the number of guests was noted.

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Annual Report


Last year, Slovenia was visited by 2.8 million tourists, or 2.8% more than in the previous year. The total number of overnight stays in tourist facilities was 1.6% higher than in the previous year. In particular the number of domestic guests increased, accounting for 5% more overnight stays, while visits by foreign guests remained at last year’s level. The greatest increase, 4%, was noted in health resorts.

The dynamics of tourist streams experienced significant changes. There were fewer guests from Germany and Austria, whereas the number of guests from Belgium, the Netherlands, Scandinavian countries and eastern Europe, especially the RussianFederation,increased.GuestsfromItalystillrepresentthelargestgroup,theirnumberof visits remaining at the same level. At the same time revenues from foreign guests increased as a 12% growth in inflows was noted at the national level.

Key characteristics of the changed economic environment that has impacted the tourism industry, especially in the second half-year period: • Luxurytourismwheredemandisnotsosensitiveisontherise,ontheonehand,

and budget price tourism, on the other. • Experiences and active holidays are becoming more important than

destinations.• Theinterestoftouriststotakeaholidayintheirowncountryisincreasing,andless

distant destinations with lower transportation costs are becoming more popular. • Reservationsarebookedlatewhilethedemandforspecialandlastminuteoffers

is increasing as uncertainty leads people to make decisions at the last moment.• Conference and business tourism is in decline owing to company

rationalisation.

DIVISION OPERATIONS IN 2008

Owing to our sales achievements, we have further consolidated our position as a leading tourist service provider in Slovenia, despite the exacting circumstances.

The revenues of the division increased while the impact from the recession is observable in higher energy, labour and financing costs. This recession is also revealed in decreased demand, especially in fewer guests from our traditional markets: Austria, Germany, Great Britain and America. We have therefore introduced an active approach to new markets.

Last year our accommodation facilities hosted close to 312,000 guests, or slightly above 11% more than last year’s figure. The level of overnight stays increased by 6%. The share of domestic guests increased from 40.0 in 2007 to 43.5 percentage points in 2008, while the number of overnight stays by foreign guests was at last year’s level, or slightly less than 1% lower.

The occupancy rate in Sava’s new tourist facilities increased, yet the profitability threshold was not reached in certain places. This holds true especially for the hotels Livada and Primus. The highest was an increase in energy costs. Owing to high domestic inflation and a shortage of suitably qualified staff, the pressures to increase labour costs were high too. Unfavourable movements in the financial markets further increased financing expenses.

In 2008, the operations of companies in the Tourism division were marked by unplanned events in the amount of €18.1 million, which deteriorated business performance.

101

Extraordinary events were as follows: • Due to lower than expected operating efficiency of the companyZdravili{~e

Radenci d.o.o., an authorised appraiser assessed the value of property, plant and equipment, based on which the company impaired fixed assets with a total amount of €10.2 million.

• TheownershipofZdravili{~eRadencid.o.o.wastransferredfromTerme3000d.o.o.to the holding company Sava d.d.; the contracting price included the elements of asset impairments in Radenci, with Terme 3000 d.o.o. making a consequential loss of €7.2 million.

• ThecontractbetweenSavaHoteliBledd.o.o.andtheRepublicofSloveniaonleasing Vila Bled was terminated, and the non-amortised part of investments in this facility totalling €0.7 million was written off.

Tourism had a 29% share in the consolidated sales of the Sava Group.

Sales revenues of the companies in Tourism in the amount of €69 million surpassed revenues in the previous year by 7%, and lagged 4% behind the plan. In the past five years the companies of the division achieved an average annual growth rate of 6% in revenues.

Considering the entire Group, the planned business result was not achieved; the performance negatively deviated from last year’s results too. The companies performed differently. Sava Hoteli Bled d.d. created a profit in the amount of €1.4 million, which was at last year’s level. The companies in north-eastern Slovenia turned a loss of €2.4 million into the total result of the division – a €1 million loss.

€12.4 million was earmarked for investments in property, plant and equipment, which was 53% of all investments in the Sava Group. The most important investments were the renovation of Hotel Izvir in Radenci and adapting apartments into a family-friendly Hotel Savica in Bled.

The assets of the companies in Tourism, in the amount of €191.7 million, were 53% financed with capital and 47% with foreign sources.

Key data for Tourism

* Data in brackets represent the value excluding extraordinary events.

€ in millions

2004 2005 2006 2007 2008Index

2008/2007

Sales revenues 52.9 54.4 57.8 64.6 69.0 107

Pre-tax profit* 2.9 0.6 2.1 0.2 -19.1 (-1.0) -

Net profit* 2.9 0.5 1.9 -0.1 -19.3 (-1.2) -

Assets 169.8 181.3 198.1 212.5 191.7 90

Equity 106.7 106.3 108.9 115.8 102.4 88

Liabilities 63.1 75.0 89.1 96.7 89.3 92


Number of employees 1,341 1,328 1,397 1,428 1,430 100

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Annual Report


5.3. Real Estate division

2009 BUSINESS PLAN

Operations in the Tourism division have been planned in the following directions:• Afocusonthesuccessfulmarketpositioningofcapacity,whichwasacquired

owing to large investments in the renovation of existing and building of new capacity in the past investment cycle.

• IntroductionofmoreactivemarketinginSloveneandforeignmarkets,especiallyin neighbouring ones.

• IncreaseinthenumberoftargetmarketswithafocusoneasternEurope.• Increaseinmanagementefficiencybymergingthekeymanagementfunctionsin

one place under the patronage of a tourism management company.

Sales revenues of €72.3 million are planned together with a total pre-tax profit of €3.9 million and investments of €6.7 million, whose necessity will be repeatedly examined in light of the economic situation.


MissionUtilise our expertise and financial strength to construct buildings for the market where buyers or tenants can live in a healthy, safe and pleasant environment. We ensure company owners gain reliable returns in the long run and our employees benefit from professional and personal growth with an appropriate salary level.

Vision:• RemaintheleadingcompanyforrealestatedevelopmentinSlovenia.• ExpandbusinessvolumeinCroatia.• Thegoalswillbeachievedbyofferingsuitableremunerationforemployeesthrough

the variable part of their salaries.


Last year the growth level in the construction industry in Slovenia was still high, especially in the first half-year period. The annual growth in the value of construction works completed amounted to 15.1%, despite the fact that in the second half-year period it decreased below the level of the previous year, especially in non-residential buildings.

The real estate business largely depends on available sources of finance, therefore the global financial crisis and, consequently, less credit offered by Slovene banks limited its business potential. The conditions to obtain credit deteriorated, interest rates increased, and due to uncertainties credit terms were shortened. The real estate business decreased last year, while the double digit growth figure regarding the prices of real estate, which we had witnessed over a longer period of time, was interrupted.

In the beginning of 2009, there was a falling demand for real estate. According to estimates the construction business will decrease by a further 12%.

103

DIVISION OPERATION

Sales revenues more than doubled and net profit increased by 9%. At the same time, the first more visible effects of the crisis were felt, which according to forecasts will be even more damaging in the future.

We will therefore concentrate on providing suitable building plots in the next two years to permit reliable growth in the years thereafter.

Real Estate had a 20% share in the total consolidated sales structure of the Sava Group in 2008.

In Real Estate sales revenues reached a figure of €46.8 million, which was 128% more than last year. Such high growth was due to the completion of the project Modri Kvadrat. High fluctuations in revenues generated in various years in this business are common as they depend on the level of completion of buildings.

Pre-tax profit totalling €1.6 million was 7% higher than last year, and net profit in the amount of €1.2 million was 9% higher.

The assets of the companies in Real Estate totalling €83.2 million were 22% funded with capital and 78% with foreign sources which had been hired to perform specific construction works.

Key data for Real Estate

2009 BUSINESS PLAN

The possible disinclination of the banking sector to provide finance for real estate projects sets a considerable limitation on companies in the division. Consequently, future operations will mainly concentrate on obtaining suitable building plots in order to ensure long-term stable growth after 2011.

We plan to generate revenues of €24.2 million and a total pre-tax profit of €1.4 million in Real Estate.

€ in millions

2004 2005 2006 2007 2008Index

2008/2007

Sales revenues 13.7 12.1 19.7 20.5 46.8 228

Pre-tax profit 0.8 1.0 1.1 1.5 1.6 107

Net profit 0.6 0.7 0.8 1.1 1.2 109

Assets 40.1 45.3 42.9 64.9 83.2 128

Equity 6.9 7.6 8.5 9.6 18.7 195

Liabilities 33.3 37.7 34.5 55.3 64.5 117

Investments in property, plant and equipment 0.8 0.7 0.0 0.0 1.9 -

Number of employees 19 19 19 19 19 100

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Annual Report


5.4. Other Operations STRATEGIC DEVELOPMENT AND GOALS

The company Energetika Sava d.o.o. and other energy management companies

Mission To decrease the costs of energy supply by introducing integrated solutions.

Vision • Tobecomeanimportantmanufacturerintheareaofalternativeenergysources.• Toenablecustomerstogainsavingsinprimaryenergyandimplementthenotion

of sustainable energy supply by surpassing environmental standards. • Toensureprofitablegrowththroughefficientutilisationofmarketopportunities

and brisk investment activity with a low risk and high cash flow.• Toencouragethedevelopmentofasynchronised,efficientanddedicatedteam

to not only face challenges, but risks and responsibility too.

The company Sava Medical in Storitve d.o.o. MissionProvide business services at a competitive price, mainly for internal users in the Sava Group, and employ less able individuals with limited working abilities, thus contributing to the success of the Sava Group.

Vision• Becomeanevenmoreefficientandpricecompetitiveproviderofcertainbusiness

services for the needs of the Sava Group.• Provideworkfordifficult-to-employpeoplefromcompaniesintheSavaGroup

so as to bring tax relief and legal advantages to benefit the entire Group. ECONOMIC ENVIRONMENT

Last year we had to face price rises in oil, gas and other energy resources, therefore the rational use of energy is one of the key factors in successful business operations. Owing to a higher awareness relating to environmental issues, the interest in renewable energy resources is growing. However, suitable financial incentives for such projects are insufficient.

105

DIVISION OPERATION

We will enhance operations in the area of efficient use and renewable energy resources, which in a period of increased energy prices, is gaining in economic importance. Our success was confirmed by revenues that exceeded those planned by 8.7%.

The following companies from the areas of energy management operate within the framework of Other Operations: Energetika Sava d.o.o., Energetika ^rnomelj d.o.o., Ensa BH d.o.o., Srbac BIH and Sava Ensa d.o.o.e.l., Skopje, Macedonia, as well as a disability company Sava Medical in Storitve d.o.o. and the company Gip Sava Kranj d.o.o., Ruma.

The mainstay of the energy management business is Energetika Sava d.o.o., which specialises in providing services concerning the rational use of energy and renewable energy sources. It provides services for Sava Group companies and the market and makes its own investments in projects.

Last year an important part of the company’s operations was directed to the start-up and optimisation of a refined biomass plant in Bosnia. In the next phase we will set up our own raw materials stock to supply our own plants for the combined use of heat and electricity. This strategic context also includes the construction and start-up of a plant to manufacture briquettes in Macedonia.

Owing to decreases in energy consumption, the operation of Energetika Sava d.o.o. is contributing to an increase in business efficiency of other Sava Group companies. Last year it assisted in energy-related improvements in the main office building, and in 2009 it will finish energy-related improvements in Zdravili{~e Radenci d.o.o., which will make a significant contribution to the success of this company.

Sava Medical in Storitve d.o.o. is a disability company established for difficult-to-employ persons and people with limited working abilities.

Last year the company took over the management of an entire building on the Kare A premises in Kranj, including a multi-storey garage. In line with the plan it discontinued providing security services and transferred this business to a contractor. Investments were earmarked for the renewal of a rent-a-car fleet, for the needs of technical, production and environmental safety and the renewal and modernisation of holiday facilities, which are also marketed outside of the Group.

Other Operations had a 2.2% share in the total consolidated sales of the Sava Group.

The volume of business in the Group structure remains low, but it is growing every year as planned. In 2008, sales revenues were 16% higher than in the previous year.

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Annual Report


Key data for the companies of Other Operations

2009 BUSINESS PLAN

Sales revenues of €5.0 million are planned with a total pre-tax profit of €0.1 million and investments of €3.8 million in the entire division. Due to difficult business conditions we are repeatedly examining the eligibility of investments before their implementation.


MissionOptimise the value of individual investments, provide assistance with financing our operations and manage the growth of Sava Group assets.

Vision Be the most profitable investor in Slovenia.


The global financial crisis that marked the past year has caused falls in the majority of exchange rates in the domestic and foreign institutional capital markets. Global indices – measured with the MSCI World index – decreased by 42.1% on average while in Europe (MSCI Europe) they decreased by 45.2% on average. The fall in the domestic market was even greater and amounted to €67.5% measured with the domestic stock exchange index SBI 20. The forecasts for 2009 are very uncertain.

€ in millions

2004 2005 2006 2007 2008Index

2008/2007

Sales revenues 2.2 2.4 3.3 4.3 5.0 116

Pre-tax profit 0.0 -0.6 0.2 -0.2 -0.1 50

Net profit 0.0 -0.6 0.2 -0.2 -0.1 50

Assets 6.0 5.9 8.2 18.3 12.0 66

Equity 3.7 3.2 3.6 8.6 5.0 58

Liabilities 2.3 2.7 4.6 9.7 7.0 72


Number of employees 73 72 91 95 101 106

5.5. Investment Finance division

107

DIVISION OPERATION

Owing to the fall in stock exchange indices, we choose the most efficient ways for asset management to optimise its value for shareholders. Despite a decrease in last year’s value, the book value of the Sava share, which reflects asset growth, increased by 37%.

TheInvestmentFinancedivisionisincorporatedintheoperationoftheholdingcompanySava d.d.. By managing financial investments, it contributes to the business success of the Sava Group. The placements in financial investments open up possibilities for the further development of existing divisions in the Sava Group and, at the same time, contribute to an increase in the assets of our shareholders.

With successful management and a diversified portfolio of financial investments we act so as to restrain the negative impact originating from a market imbalance, thus optimising the value of our shareholders’ assets. The Sava share book value, one of the key factors for investor demand for Sava shares, lost 14.5% of its value in 2008, yet its value increased by 37% in the past five years. This means that the value of the Sava share rose by 6.5% on an annual basis, which is 7.7 percentage points higher than the average annual growth of the Slovene stock exchange index SBI 20 in the same period.

Movement in the Sava share book value from the beginning of 2004 to 2008

To optimise the value and ensure the long-term growth of financial assets, in January we entered 405,875 shares of Abanka Vipa d.d. to increase capital. The payment totalled €24.4 million, whereby the ownership stake of Sava d.d. in the equity capital of Abanka Vipa d.d. did not change. In October, we acquired 5,474,066 shares of thecompanyNFD1IDd.d.andincreasedourequityinthiscompanyto23.22%;the purchase totalled €7.5 million.

Annual growth in the Sava share price Annual growth in the SBI 20 index

2008 -14.5% -67.5%

2007 26.8% 78.1%

2006 3.2% 37.9%

2005 12.2% -5.7%

2004 9.2% 24.9%

Average annual growth 6.5% -1.2%

Total growth 37.1% -6.0%

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Annual Report


Survey of the largest financial investments made by Sava and percentage of shareholders’ equity

2009 BUSINESS PLAN

In 2009, the company Sava d.d. is planning to achieve the following figures: • Sales revenues of €8.1 million, which will be mainly generated within the

Group. • Financialrevenuesof€47.3 million, out of which revenues from the planned sale

of financial investment in the shares of the company Merkur d.d. will have a 68% stake.

• Inthelightofthefuturesituation,wewillexaminethepossibilityoflinkingourfinancial investments in the banking sector to optimise the value of financial assets.

• €5.6 million will be allocated to investments in property, plant and equipment and investment property, the necessity for investments will be re-examined before actual project completion.

• Operationsconcerningfinancialinvestmentswilldependonboththemarketandliquidity situation.

• Inaccordancewiththeplanthetotalprofitwillbe€24.3 million.

We plan to generate financial revenues of €47.3 million and a total profit of €24.3 million.

Sava’s largest financial investments No. of shares % ownership

Abanka Vipa d.d., Ljubljana 1,715,841 23.8

Merkur d.d., Naklo 262,841 20.0

Gorenjska Banka d.d., Kranj 152,110 45.9

NFD 1 ID d.d., Ljubljana 31,372,541 23.2

Dom Holding d.d., Zagreb 668,213 8.2

109

6.1. Business performance

The operation of the holding company in the deepening financial crisis was marked by a market imbalance and decrease in share prices. The results achieved deviated from the planned ones due to impairments of financial investments, which were carried out in accordance with the requirements and recommendations of the accounting profession.

Besidesmanagingthesubsidiaries,InvestmentFinancerepresentsanextensivepartof the operations of Sava d.d. Any events in the domestic and foreign capital market therefore significantly influences business achievements.

BALANCE SHEET TOTAL

It amounted to €653.7 million, or 5% less than in the previous year. The average balance sheet total in the last five years amounted to €521.3 million.

CAPITAL

It totalled €355.9 million, or 14% less than in the previous year, and had a 54% share in the liabilities structure. The average balance of capital in the last five years amounted to €340.4 million.

TOTAL PRE-TAX PROFIT

Considering last year’s impairments of financial investments totalling €14.9 million it amounted to €2.3 million and was below plan. When the effects of impairments were excluded, the total profit amounted to €17.2 million, which was 37% better than in the previous year and 52% above plan. The average of the last five years amounted to €16.3 million.

NET PROFIT/LOSS Due to impairments of financial investments last year it totalled €4.6 million and did not meet the plan. Excluding an extraordinary impairment event it amounted to €17.2 million, thereby surpassing the business plan by 52% and in comparison to last year increased net profit by 42%. Considering the impairment of financial investments in the amount of €14.9 million and deferred taxes in the amount of €2.2 million, it equalled the total pre-tax profit. The average annual net profit in the last five years amounted to €14.2 million.

ACCUMULATED PROFIT

The accumulated profit totalled €29.2 million, thereby assuring the performance of the adopted dividend policy.

6. Business operations of Sava d.d.

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Annual Report


Survey of more important data concerning the business performance of Sava d.d.

* Data excluding impairments of financial investments

€ in millions

2004 2005 2006 2007 2008Index

2008/2007

Net sales revenues 7.6 8.0 7.4 9.0 8.4 93

Other revenues 0.5 1.7 0.9 2.3 0.7 30

Operating expenses -11.9 -9.8 -9.8 -12.8 -13.4 105

FINANCING INCOME 19.4 21.8 30.5 14.2 6.6 (21.5)* 46 (151)*

TOTAL PRE-TAX PROFIT 15.8 21.7 29.1 12.6 2.3 (17.2)* 18 (137)*

NET PROFIT 12.8 17.9 23.8 12.1 4.6 (17.2)* 38 (142)*

SAVA d.d.

NET PROFIT IN THEPERIOD 2004-2008

in millions

2004 2005 2006 2007 2008

30.0

25.0

20.0

15.0

10.0

5.0

0.0

•

•

•

•

•

•

•

12.8

17.9

23.8

12.1

17.2

5-year average

16.8

12.6

4.6

2.6

14.2including impairments offinancial investments

excluding impairments offinancial investments

**

*

**

*

**

*

Movement of accumulated profit of Sava d.d. in 2008

€ in millions

Net profit 2008 4.6

Retained profit from 2007 32.9

Payment of dividends in 2008 -6.0

Allocation of 2008 profit to other revenue reserves -2.3

Accumulated profit at 31/12/2008 29.2

111

Operations indicators for Sava d.d.

SAVA d.d.

SURVEY OF ACCUMULATEDPROFIT IN THE PERIOD2004 - 2008

in millions

2004 2005 2006 2007 2008

35.0

30.0

25.0

20.0

15.0

10.0

5.0

0.0

•

•

•

•

•

•

•

•

32.8

25.9

32.5 32.9

29.2

5-year average

30.7

31/12/2004 31/12/2005 31/12/2006 31/12/2007 31/12/2008

Participation rate of equity - in %equity / liabilities 78.0 72.0 71.9 60.2 54.4

Participation rate of long-term financing - in %total equity + long-term liabilities (incl. provisions and deferred taxes) + long-term accruals and deferrals / liabilities 80.0 74.0 78.5 79.5 74.6

Operating fixed assets rate - in %Fixed assets + investment property / assets 19.0 17.0 17.4 9.3 9.4

Long-term investment rate - in %Total fixed assets + accruals and deferrals + investment property + long-term financial investments + long-term operating receivables / assets 75.0 68.0 90.3 92.2 92.8

Equity of fixed operating assets ratioEquity/ fixed assets + investment property 4.1 4.2 4.1 6.5 5.8

Acid test ratioLiquid assets / short-term liabilities 0.0 0.0 0.0 0.0 0.0

Quick ratioTotal liquid assets + short-term receivables and short-term financial investments / short-term liabilities 1.3 1.2 0.5 0.4 0.3

Current ratioShort-term assets / short-term liabilities 1.3 1.2 0.5 0.4 0.3

Operating efficiency ratioOperating revenues / operating expenses 0.7 1.0 2.9 1.5 1.0

Net return on equity ratioNet profit for financial year / average equity less net operating results for the year 5.0 6.0 7.9 3.3 1.2

Dividends to share capital ratioTotal dividends paid in financial year / average share capital 6.0 6.0 6.4 6.7 7.2

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Annual Report


PARTICIPATION RATE OF EQUITY

Owing to a 54% participation rate of equity, we assure a sufficient level of financial security as more than one half of company assets are financed by equity.

OPERATIONS OF SAVA D.D. BY QUARTER IN 2008

It is unreasonable to compare the achieved results with the quarterly data of the past year as the dynamics of the achieving business results of Sava d.d. strongly depend on the time of selling financial investments and receiving dividends.

€ in thousands

JAN- MAR 2008

APR-JUN 2008

JUL-SEPT 2008

OCT-DEC 2008

JAN-DEC 2008

1. NET SALES REVENUES 2,047 2,076 2,184 2,125 8,432

a) Revenues in domestic market 2,046 2,075 2,184 2,124 8,429

To companies in the Group 1,642 1,667 1,770 1,715 6,794

To associates 30 30 -60 0 0

To others 374 378 474 409 1,635

b) Revenues in foreign market 1 1 0 1 3

To companies in the Group 1 1 0 1 3

To associates 0 0 0 0 0

To others 0 0 0 0 0

2. CHANGE IN THE VALUE OF INVENTORIES OF PRODUCTS AND WORK IN PROGRESS 0 0 0 0 0

3. CAPITALISED OWN PRODUCTS AND SERVICES 0 0 0 0 0

4. OTHER OPERATING REVENUES (with operating revenues from revaluation adjustment) 279 3 353 2 637

5. COSTS OF MERCHANDISE, MATERIALS AND SERVICES -1,013 -2,297 -1,345 -2,138 -6,793

a) Costs of merchandise and materials sold and cost of material used -136 -92 -97 -143 -468

b) Costs of services -877 -2,205 -1,248 -1,995 -6,325

6. LABOUR COSTS -774 -767 -822 -1,590 -3,953

a) Salaries and wages -606 -594 -648 -1,272 -3,120

b) Social security costs (pension insurance cost shown separately) -113 -110 -120 -228 -571

- Social security costs -46 -44 -49 -97 -236

- Pension insurance costs -67 -66 -71 -131 -335

c) Other labour costs -55 -63 -54 -90 -262

113

€ in thousands

JAN- MAR 2008

APR-JUN 2008

JUL-SEPT 2008

OCT-DEC 2008

JAN-DEC 2008

7. AMORTISATION AND DEPRECIATION EXPENSES, WRITE-OFFS -489 -555 -600 -665 -2,309

a) Amortisation -478 -480 -556 -505 -2,019

b) Operating expenses from revaluation of intangible and tangible fixed assets -10 -2 -8 -126 -146

c) Operating expenses from revaluation of current assets -1 -73 -36 -34 -144

8. OTHER OPERATING EXPENSES -23 -67 -46 -198 -334

9. FINANCIAL REVENUES FROM SHARES 3,370 26,964 1,925 2,387 34,646

a) Financial revenues from shares in Group companies 0 10 723 0 733

b) Financial revenues from shares in associates 3,042 12,396 0 0 15,438

c) Financial revenues from shares in other companies 328 14,558 1,202 2,387 18,475

d) Financial revenues from other investments 0 0 0 0 0

10. FINANCIAL REVENUES FROM GRANTED LOANS 638 1.239 881 2,178 4,936

a) Financial revenues from loans granted to Group companies 493 516 514 527 2,050

b) Financial revenues from loans granted to other entities 145 723 367 1,651 2,886

11. FINANCIAL REVENUES FROM OPERATING RECEIVABLES 2 4 3 2 11

a) Financial revenues from operating receivables due from Group companies 0 1 0 0 1

b) Financial revenues from operating receivables due from other entities 2 3 3 2 10

12. FINANCIAL EXPENSES FROM IMPAIRMENT AND WRITE-OFFS IN FINANCIAL INVESTMENTS 0 0 -668 -15,113 -15,781

13. FINANCIAL EXPENSES FROM FINANCIAL LIABILITIES -3,942 -3,472 -4,084 -5,688 -17,186

a) Financial expenses from borrowings obtained from Group companies -72 -39 -57 -119 -287

b) Financial expenses from borrowings obtained from banks -3,803 -3,433 -4,027 -5,569 -16,832

c) Financial expenses from issued bonds 0 0 0 0 0

d) Financial expenses from other financial liabilities -67 0 0 0 -67

14. FINANCIAL EXPENSES FROM OPERATING LIABILITIES -6 -2 0 -2 -10

a) Financial expenses from operating liabilities due to Group companies 0 -3 3 0 0

b) Financial expenses from trade payables and bill payables -1 1 -3 -1 -4

c) Financial expenses from other operating liabilities -5 0 0 -1 -6

15. OTHER REVENUES 45 1 0 57 103

16. OTHER EXPENSES -17 -4 0 -32 -53

17. TAX ON PROFIT 0 0 0 0 0

18. DEFERRED TAXES 0 0 0 2,227 2,227

19. NET PROFIT FOR THE FINANCIAL YEAR 117 23,123 -2,219 -16,448 4,573

114

Annual Report


NET SALES REVENUES

• Savad.d.generatedsalesrevenuesof€8.4 million, or 6% less than last year and 7% above plan.

• NetsalesrevenuesdidnotsignificantlyinfluencetheleveloftotalsalesoftheSava Group; they had only a 2% share of cumulative sales and mainly represented sales of services by Sava d.d. to Group companies.

• Theirstructure:60%wasrevenuesfromrentforbusinesspremises,40%wasacontribution by subsidiaries for using the brand name and revenues from services provided by the competence centres of knowledge.

OTHER REVENUES

• Theseamountedto€0.6 million and were lower than in 2007 but higher than planned.

• Theyincludedrevenuesfromsellingrealestate.

OPERATING EXPENSES

• Theseamountedto€13.4 million and were 4% higher than last year and 11% above plan.

• Deviationswereduetocostsformaintenanceandrenovationofthemainofficebuilding.

• Intheirstructurecostsofgoods,materialsandserviceshada51%share,labourcosts 30%, write-offs 17%, and other expenses a 2% share.

• A considerable amount of these expenses was due to managing financialinvestments, therefore the surplus of the financial result was partly intended to cover expenses.

FINANCING INCOME

• Financing income in the holding company Sava d.d. totalled €6.6. million. The deviations with regard to the business plan and last year’s achievements resulted from impairments of financial investments due to unfavourable stock exchange movements. Impairments of financial investments were not planned. In the past five-year period Sava d.d. achieved a positive annual financing income of €18.6 million on average.

• Financial revenues of €39.6 million were 59% higher than in 2007 and 23% above plan.

• Financial expenses totalling €33.0 million were three times as high as last year and twice as high as planned. The level of financial expenses was significantly influenced by impairments of financial investments in the amount of €14.9 million and interest in the amount of €17.2 million, the increase of which was due to a higher indebtedness of the company in comparison with previous years.

• Thesurplus in financial revenues over financial expenses totalling €6.6 million was one half lower than in 2007 and 57% lower than planned. If impairments of financial investments were not considered, Sava d.d. would surpass the plan for financing income by 39%, with results being 51% better than last year.

115

Financing income by type of activity

• Dividends which totalled €33.2 million were significantly higher than last year; they represented received dividends from Gorenjska Banka d.d., Kranj, and Abanka Vipad.d.(ourassociatedcompanies),NacionalnaFinan~naDružbaandothercompanies.

• Financial revenues from the sale of securities in the amount of €1.5 million were low due to a strategically planned decrease in the volume of selling financial investments. Financial expenses in connection with securities were due toimpairments of financial investments in 94% and a loss in the sale of certain financial investments in 6%.

• Interest revenues in the amount of €4.9 million referred to approved loans and deposits; interest expenses in the amount of €17.2 million originated from company indebtedness with banks, which in comparison with previous years significantly rose on account of extensive investment activity. The average interest rate for hired loans was a 0.35 percentage point higher than in the previous year.

TOTAL PRE-TAX PROFIT

• Totalpre-taxprofitofSavad.d.amountedto€2.3 million in 2008 and did not achieve the planned value.

• If the effects of impairments in financial investments totalling €14.9 million were not considered, Sava d.d. would have generated a total pre-tax profit of 17.2 million, which was 37% above last year’s results and surpassed the planned value by 52%.

INCOME TAX

• In2008,Savad.d.hadnoincometaxchargedastheprevailingpartofthegeneratedrevenues were of a type which in accordance with legislation is not taxable or partly taxable.

• Deferredtaxreceivableswerechargedintheamountof€2.2 million and mainly referred to the impairments of financial investments.

€ in millions

Financing income

Financing income

Financing income

Financing income

Financial revenues

Financial expenses

Financial result

Financial result

2004 2005 2006 2007 20085-year

average

Dividends 2.8 7.7 11.4 13.3 33.2 0.0 33.2 13.7

Securities 5.0 16.8 21.6 8.5 1.5 -15.8 -14.3 7.3

Interests -2.0 -3.1 -3.3 -6.2 4.9 -17.2 -12.3 -5.2

Others 13.6 0.4 0.8 -1.4 0.0 0,0 0.0 2.8

Total 19.4 21.8 30.5 14.2 39.6 -33.0 6.6 18.6

116

Annual Report


NET PROFIT

• DuetoimpairmentsinfinancialinvestmentsthegeneratednetprofitofSavad.d.in the amount of €4.6 million did not achieve the planned value.

• Ifthisextraordinaryeventisnottakenintoaccount,Savad.d.surpassesits2008business plan by 52% and last year’s result by 42%.

ACCUMULATED PROFIT

• Ittotalled€29.2 million on the last day of the year. • TheBoardofManagementofthecompanywillproposethepaymentofdividends

for 2008 in accordance with the adopted dividend policy, which foresees a stable 3% annual growth in paid dividends.

RETURN ON EQUITY

• Theratiobetweenthetotalpre-taxprofitforthefinancialyearandtheaveragebalance of equity: return amounted to 0.6%. Excluding the effects of impairments of financial investments, the return on equity amounts to 4.4% and is 1.3 percentage points above plan.

• Theratiobetweenthenetprofitforthefinancialyearandtheaveragebalanceof

equity: return amounted to 1.2%. Excluding the effects of impairments of financial investments, the return on equity amounts to 4.4% too and is 1.3 percentage points above plan.

NUMBER OF EMPLOYEES

At the end of 2008, Sava d.d. employed 64 associates, or five more than in the previous year.

BALANCE SHEET TOTAL

It amounted to €653.7 million, which was 5% less than last year.

ASSETS STRUCTURE

• Long-termfinancialinvestmentshadthelargest(83%)share;tangiblefixedassetsand investment properties had a 9% share, and other assets an 8% share.

• Inthestructureoflong-term financial investments totalling €542.1 million the following significant changes appeared with regard to the previous year:– Increase in capital of subsidiaries in the amount of €16.2 million and a transfer

of the ownership of the company Zdravili{~e Radenci d.o.o. to Sava d.d. (the transaction amounted to €10.5 million). In this way all important subsidiaries are under direct Sava d.d. ownership.

– Increase in capital in the company Abanka Vipa d.d. in the amount of €24.4 million.

– Netincreasesinthebalanceofinvestmentsinothersharesandstakestotalled€16.5 million.

– The value of financial investments decreased by €99.0 million due to revaluation to fair value.

6.2. Assets and liabilities structure

117

– In accordance with the agreement about the put and call option and the appertaining annexes for shares of the company Merkur d.d., the financial investment in Merkur d.d. in 2008 rose by €5.2 million and at 31/12/2008 it totalled €111.7 million.

• Undershort-term assets shown in the amount of €47.2 million, approved deposits to banks, which represented a part of the liquidity reserve of Sava d.d., had a 40% share.

LIABILITIES STRUCTURE

The capital of the joint stock company Sava totalled €355.9 million and was 14% lower than last year; in the liabilities structure it had a 54% share, which was 4 percentage points less than in the previous year. The changes in capital were as follows:• One half of net profit totalling €4.6 million was allocated to other revenue

reserves.• €6.0 million was earmarked for the payment of dividends.• Thesurplusfromrevaluationinconnectionwithevaluationoflong-termfinancial

investments at fair value decreased by €58.9 million.

Long- and short-term liabilities of the company in the amount of €295.8 million were 8% higher than last year; additional loans were hired for the increase in capital of Abanka Vipa d.d.

SAVA d.d.

ASSETS STRUCTUREAT 31/12/2008

in millions

Fixed assets andinvestments properties

700

600

500

400

300

200

100

0

•

•

•

•

•

•

•

•

61.3

542.1

41.98.4

653.7

31/12/2007

31/12/2008

64.3

572.5

36.418.4

691.6

Long-term financialinvestments

Short-term financialinvestments

Otherassets

Totalassets

118

Annual Report


INVESTMENTS

Sava d.d. earmarked €1.6 million for investments in tangible fixed assets and investment property, particularly in the purchase of strategic real estate, and €69 million for investments in the capital market outside of the Group.

FINANCIAL POSITION OF THE COMPANY

Despite the uncertain economic situation and deepening global financial crisis, the joint stock company Sava is both liquid and solvent and still has a favourable capital structure. We estimate that as far as solvency is concerned, there are no risks involved in conducting business with company Sava d.d. as the company has sufficient capital available with regard to the volume and type of business it conducts; its share in the liabilities structure amounts to 54%.

SAVA d.d.

LIABILITIES STRUCTUREAT 31/12/2008

in millions

Capital

700

600

500

400

300

200

100

0

•

•

•

•

•

•

•

•2.1

653.7

31/12/2007

31/12/20082.5

691.6

Long-termliabilities

Short-termliabilities

Otherliabilities

Totalliabilities

355.9

416.2

132.6 130.2 140.3165.5

119

We have produced an ambitious business plan for 2009, which is the result of our search for marketing opportunities, exit strategies and solutions to be applied to the complexity of the current economic situation and definition of our current activities. However, it is likely that during the year we will have to adapt the business plan to a further aggravation of conditions in the business environment.

The deepened global financial crisis has deteriorated the conditions in the global economic environment and transferred their impact to the real sector. Due to a decline in demand and harsh financing conditions the Slovene industrial sector is feeling the increasing strength of these changes. The global rate of economic growth slowed down as did the rate of growth in exports, consumption and raw materials price rises, while selling prices are under pressure, credit terms aggravated and investments limited. All of these factors have already affected the operation of the Sava Group and will have the same impact in the future.

2009 will be of critical importance for the future development of Sava Group companies. Therefore we are continually adapting our business to the new situation and drastically changing our planning for the future and way of thinking at the same time.

The plans are founded on the following basis and guidelines: • InvestmentsinSavaGroupcompaniesweresubstantialinthepastandprovide

suitable support to the performance of our basic operations. • Salesrevenuesareplannedwithgreatresponsibility.• Aftercheckingthesuitabilityofbusinessprocesses,wehavealreadyimplemented

certain rationalisation measures concerning expenses.• Onlythemosturgentinvestmentsaremade.

According to the 2009 business plan, the Sava Group should accomplish the following goals: • Weplantogeneratesalesrevenuesof€221.2 million, whereas €218.9 million was

plannedfor2008.IntheRubberManufacturingdivisionwiththeForeignTradeNetworksalesrevenueswillbehigherby8.5%andTourismby4.8%,whileinReal Estate they will be lower by one half when compared to last year when they doubled due to completed larger projects.

• IntheoperatingrevenuesstructureRubberManufacturingwiththeForeignTradeNetworkshouldhavea52%shareandTourism32%,RealEstate11%andOtherOperations a 5% share.

• AccordingtoplanSavaGroupcompaniesshouldcreateatotalpre-taxprofitof€40.6 million and a net profit of €39 million, which would result in an 8.4% return on capital and a 4.3% return on assets.

• TheprofitfromthefinancialoperationsoftheholdingcompanySavad.d.anditsassociated companies should account for 81% of the planned profit of the Sava Group. In line with the business plan the associated companies should contribute 19% to the total profit.

• ThebalancesheettotalofSavaGroupcompaniesshouldamountto€901.3 million at the end of the year; equity should have a 54% share in its structure.

• Thedividendpolicywillbecarriedoutasadoptedandassurespaymentofandstable growth in dividends.

• Investmentsinthebusinessplanstandat€23.5 million, but prior to their realisation we will repeatedly take a critical look at them to examine their urgency.

• Inlinewiththeplanthenumberofemployeeswillnumber2,651attheendofthe year and will be adapted to the changed market situation during the year.

The business plan for 2009 has been complemented with the programme of measures for managing the situation in the Sava Group under circumstances of the global crisis. The programme was adopted this March, and provides support to the performance of the plan and its pursuance. However, it is reasonable to expect that during the year the plans will have to be adapted to the changed economic situation, thereby assuring corresponding responses to the uncertain situation on an ongoing basis.

7. Outlook for 2009

120

Annual Report

II. Business Analysis 8. Marketing and managing brand names

8.1. Focusing on the customer

In all divisions the focus is on seeking new market opportunities as well as new markets themselves and on the consolidation of sales activities. Owing to an innovative approach, we managed to improve sales in Rubber Manufacturing. In Tourism, marketing activities were promoted under a uniform brand Sava Hotels & Resorts, which will be renewed in 2009.

We concentrate on products and services that give us a leading position in the chosen market segment and on having an integrated approach with customers. We are continually identifying market opportunities, while striving for innovation and an increase in added value. On the basis of the TOP 3/2/1 strategy we develop products with the goal of being the first in the country, at least among the two best in the region and among the three best in the world.

We develop and reinforce customer relationship management by: – complementing the Customer Relationship Management model;– continually upgrading the criteria for assessing the management process; – conducting regular customer/guest satisfaction surveys and considering their

proposals and improvements; – consolidating partnership relations with key customers and guests; and – providing support and pursuing all the mentioned activities via the SAP information

system.

In the global financial crisis we place a special strategic significance on the search for new opportunities and markets with higher potential and on the consolidation of sales activities. Owing to market research and studies on the characteristics of each individual market separately, we facilitated a break-through in new markets last year and made a contribution to greater market shares in individual segments of all key operations. We particularly encourage internal marketing, thus enhancing the selling approach of every employee and sales of additional services to hotel guests.

RUBBER MANUFACTURING – improved results owing to original solutions and innovative products

In the first half-year the positive growth trend, which we have experienced for several years, has still continued. Besides the factors that are characteristic for individual programmes, the sales results were already affected by the unfavourable economic situation globally at the year end. The programmes Profiles, Print, Elastomers and the company Sava-GTI d.o.o., which generates the majority of revenues in the car industry, were the most affected by the new situation.

It is encouraging to see individual programmes achieving better results than in the previous year, which held true for the programmes of the company Savatech d.o.o.: Conveyor Belts and Environmental Protection Products – EKO and Velo. This was mainly due to a large share of products that excel in unique solutions and innovative designs. Despite unfavourable trends, the offset rubber blankets programme for the printing industry managed to maintain a relatively good market share in most key markets and a predominant market share in Slovenia, also thanks to the introduction of new niche products.

In the sales structure of industrial rubber products conveyor belts had the predominant share with almost one quarter of sales revenues. Our share in special application belts was increased and new products were launched. We maintained our position of a key development supplier in complex industrial areas, where we strengthened our relationships with key partners. Rubber compounds had a 21% share in sales; in this segment we strengthened relations with key customers. In Slovenia, we had

121

a 50% market share, yet we perceived the potential for further growth. The sale of compounds was expanded to other EU countries and to those of the former Yugoslavia. With tyres the relative share was enhanced by 3 percentage points, achieving 17%. We maintained or increased our market share in individual western European markets and successfully penetrated the market as a supplier for new two-wheel vehicle manufacturers. Business relationships with car manufacturers were upgraded, thus achieving the position of a development partner.

When the first signs of crisis appeared, which were revealed in a decline in the number of orders, increase in stocks at manufacturers and high price rises in raw materials during the year, we enhanced activities in all companies and programmes to find new customers. These activities include: • Increasedparticipationintradeshowsandorganisationofnewbusinessconferences

and meetings with customers. • Moreactiveco-operationwithkeycustomersthatincorporateourcompaniesas

development suppliers. • ConsolidationofstrategicR&Dprojectsorientedtothedevelopmentofnewproducts,

introduction of advanced technologies, automation of production processes and introduction of modern approaches to research work and development.

The number of countries where we sell our products was increased to 90. In foreign markets we generated 73% of total net sales revenues, mainly in EU countries where the majority of complex products are sold. In the market of Eastern Europe we continued to increase our sales figures, which will probably be slightly lower in the future, despite the fact that this market is where the highest growth is expected.

TOURISM: winning new markets

In accordance with the strategic policy the entire division strongly intensified its activities in new markets, thereby creating new sales opportunities. Individual hotels and spa resorts together with wellness and golf services were presented in the new markets of Scandinavia, Eastern Europe and Russia, Great Britain and the former Yugoslav countries. At the same time we are endeavouring to maintain our market position in existing markets, in particular in Slovenia, Austria, Germany, Italy and Croatia. By opening a new highway section from Maribor to Lendava, access to the spa resorts of Radenci, Terme 3000 and Terme Lendava improved considerably and so did the market potential of these destinations.

We are involved in various projects that enhance the market appeal of hotel and other accommodation capacity such as a Cycling Hotel badge and the Conference FacilitiesHotel certificate, which were received by our hotels and accommodation facilities in Bled and north-eastern Slovenia.

In Sava Hoteli Bled we upgraded and developed an interesting service package. In the Slovene market we emphasised the positioning of a new product, the family Hotel Savica, where we utilised website marketing tools to a large extent. In the promotion of this destination we worked closely with the Slovene Tourist Board and the Local Bled Tourist Organisation. We participated in the tourism trade show CBR in Munich and a ten-day presentation of Slovenia in Luxembourg, promoting short stays and golf and active holidays. We collaborated with the Congress Office and the SPOT Consortium, in the framework of which we supported the opening of new air routes. Together with agents and tour operators we prepared special offers for the low season and promoted them jointly in certain markets.

122

Annual Report


Terme 3000 in Moravske Toplice celebrated its 45th anniversary in the tourism industry, which nowadays is built on natural properties of therapeutic black thermal mineral waters, a rich tradition and a variety of destination stories. We designed a new marketing communication strategy for improved market penetration; in advertising we concentrated on individual guests and increased marketing communication activities in the 5* hotel Livada Prestige. The planned reorganisation of the marketing department was carried out by introducing key market management. Sales promotion was performed mainly in the domestic market with a focus on so-called event marketing. An attractive accomplishment was the Aqua loop toboggan, an attraction that complemented swimming pool facilities. In creating new products, we intend to strengthen co-operation with providers of various amenities in the surrounding areas.

In the health resort of Radenci we adapted services to meet the requirements of target guests and visitor groups. The Spa was renamed the Radenci Health Resort to emphasise the tradition of effective treatments for cardiovascular diseases and health services in the Medico Corrium wellness centre. At the end of December a trial operation was carried out in the renovated hotel complex Izvir – a significant milestone in the development and marketing of this health resort. By expanding the wellness range of services in Terme Banovci, we focused on new guest segments: active and local residents.

Owing to the fact that active holidays associated with sports and recreational activities are in demand, Terme Lendava developed programmes for cycling and trekking, Nordicwalkingandpreparationtrainingforsportsteam.

In Terme Ptuj the services provided by the 4* star Grand Hotel Primus were enhanced by additional activities in the Gemina XIII club and Valens Augusta wellness centre, the only one in the region of Spodnje Podravje. With its rich Roman history and tradition of local habits and customs, Ptuj provides rich inspiration for organising events that complement tourist services. Last year we organised a Roman wedding in Grand Hotel Primus for the first time, which formed a part of the Roman spectacles in Terme Ptuj (Roman wedding, Roman games and Saturnalia). In the Kurent Consortium, whose co-founder is the company Terme Ptuj, we assisted in the organisation of this oldest masseventinCentralEurope–theKurentFestival.

REAL ESTATE

One of the achievements which made us most proud last year was the Modri Kvadrat office complex in Ljubljana. The architect received a Golden Pencil for this project, a prestigious acknowledgement by the Chamber of Architecture and Land Development as the best business facility in 2008. We made our contribution to the reduction of global warming by constructing energy-saving buildings with lower heating costs and reduced greenhouse gas emissions. The planning of such buildings is adapted to meet customer requirements, so market research is conducted with questionnaires and interviews with present and potential customers either in-the-field or in focus groups.

OTHER OPERATIONS

Marketing activities in the company Energetika Sava d.o.o. concentrated mostly on buyers of fuels made from wooden biomass. In existing remote-controlled systems we focused on adjusting price ratios between energy sources and sold heat energy. With the opening of a new factory for the production of refined wooden biomass in the Republic of Serbia, we launched the strategy of introducing local alternative sources of energy supply in the region. A similar project on a smaller scale was started in Macedonia.

123

We conduct the policy of having a standard Sava brand, which at the same time appears as the corporate brand name and brand name of all Sava Group divisions with the exception of Tourism. The Sava brand name is in line with positive trends that reflect its identity, which are: quality and tradition; power, reliability and stability; well-designed and modern; development potential and a clear vision of the future.

Owing to the efficient management of brand names, we are consolidating our positive image among the public and enhancing its value. In Rubber Manufacturing the image of the brand name was verified by easier penetration into new markets. The Sava brand is well established in Energetika, and in Real Estate it is being strengthened through operation in the Croatian market. Its consolidation is also due to the quality of the construction projects completed in Slovenia and abroad which regularly exceed customer expectations and therefore are our best acknowledgement. With a clear communication strategy we are enhancing brand recognition in all divisions.

Within the framework of the new strategy for the Tourism division and the strategic project of marketing renewal, we shall introduce in 2009 a standard brand name Sava Hotels & Resorts for both destinations, Bled and north-eastern Slovenia. This decision conforms with the goal of consolidating our position as a leading service provider in Slovenia and facilitates the expansion of operations. The new architecture of the brand name places the marketing of particular key tourist products and their own identity at the fore. In marketing we shall concentrate on select target groups, and we will mostly built on stories and creating adventures.

The recognisability of Sava’s tourist brand name and the strength of one of the largest wellness and health service providers is maintained and enhanced also by investing in accommodation facilities. Last year we finished the renewal of the old Terapija hotel in Radenci and renamed it Izvir – the source of health.

We produce annual communication plans to support the marketing of our brand names. The companies are presented via their web pages and other advanced marketing communication tools. As part of the introduction of a uniform brand name for Tourism we plan to revamp the Tourism division’s web site in 2009.

8.2. Managing brand names

124

Annual Report

II. Business Analysis 9. Strategic purchasing and suppliers

Owing to a centrally managed supply system, we were able to efficiently control purchase prices and expenses both for services and indirect materials, despite price rises in 2008. The purchasing policy is implemented through a strategy of related purchases, whereas its rigorous implementation will facilitate control over supply costs in the future too.

By levelling supply we alleviated price rises in 2008 and, owing to the combined action of Group companies, we enhanced the volume of savings. Our purchasing strategies and developed partnerships with suppliers significantly contributed to managing the considerable price increases in the energy and rubber raw materials market. During the crisis we are focusing in particular on the strategic guideline which sets out to utilise all opportunities in the supply market and ensure a lag of purchase prices behind market movements.

EFFICIENT MANAGEMENT OF PRICE RISES

2008 was marked by accelerated growth in the prices of raw materials and energy sources. Particularly in Rubber Manufacturing we could feel the impact of price rises in strategic raw materials and energy sources, which both have an important share in the cost structure of rubber products. Even a decrease in oil prices in the second half of the year could not mitigate the consequences of outstanding price rises in raw materialsinthefirsthalfoftheyear.Forthisreason,thecostshareforalltypesofenergy sources increased from 4.9% of total income to 5.78% in the Sava Group.

In 2008, Tourism operations were highly affected by price increases, a trend that already began in the last quarter of 2007. The highest price rise was noted with foodstuffs and beverages.

Owing to a delay in the increase of prices for industrial products and the rigorous implementation of the adopted purchasing policy, we have managed to ensure that our purchase prices lag behind market movements, thereby enhancing the difference between the growth of comparable prices in the market and our prices by 1.4 percentage points.

SAVA GROUP

PRICE FLUCTUATIONS OFPURCHASED PRODUCTIONMATERIALS AND GOODS(annual deviations in Group in %)

in %

2004 2005 2006 2007 2008

28

23

18

13

8

3

-2

-7

•

•

•

•

•

•

•

•

-0.1

20032002

0.0

1.3

-2.7-1.6

3.6

-0.5

7.7

0.6

12.8

1.3

15.6

5.2

21.9

Price fluctuations in theSava Group

Price fluctuations ofindustrial products in theEU (Source: ECB, StatisticsPocket Book)

125

When selecting suppliers, we place the joint planning of all supply parameters together with high quality at the best price as a priority. Social responsibility and employing a sustainable approach have become our central strategic values and a component part of our services and products. When assessing suppliers, we consider not only the criteria such as the supplier’s references, price, quality, reliability of delivery and geographic proximity, but also their attitude to the natural and social environment. Raw materials for Rubber Manufacturing are purchased globally, but mainly in the European Union. In the Tourism division, we place an emphasis on food articles of local origin and the diverse range of quality Slovene wines.

SAVA GROUP

STRUCTURE OF PURCHASINGBY MARKET

in %

Slovenia

European Union

Imports

17

32 51

SAVA GROUP

PRICE FLUCTUATIONS OFPURCHASED PRODUCTIONMATERIALS AND GOODSIN TOURISM(annual deviations in Group in %)

in %

2004 2005 2006 2007 2008

20

15

10

5

0

-5

-10

-15

•

•

•

•

•

•

•

•

-0.1

20032002

0.0

2.0

-6.2 -6.9

5.4

-9.5

7.4

-11.1

9.5

-10.4

12.3

-10.6

17.4

Price fluctuations inTourism

Price fluctuations ofconsumer goods (processedfood) in the EU (Source:ECB, Statistics Pocket Book)

126

Annual Report


2009 – EVEN CLOSER LINKS TO ENSURE SUCCESS

In order to be able to manage circumstances during the economic crisis, we place even more emphasis on establishing connections and links regarding the volume of demand and a joint appearance in the market. Of course, reduced expenses, higher added value (coverage), and the formation of permanent and project teams in the network of internal customers, specialists, buyers and suppliers remain as importantasever.Furthermore, linkinganddevelopingstrategic relationships forkey purchasing groups, which is underway outside of the Sava Group, is becoming increasinglyimportanttoo.Followingthispolicy,onthepremisesatLaboreinKranjwe are consolidating our strategic relationship with the companies we work with in the area of raw materials, energy sources and facility management.

We expect the price rises in energy sources and basic foodstuffs in 2009 to continue, which is why the efficient implementation of our strategic purchasing policy is of the utmost importance.

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10. Development of business processes

The competitive position and business success of the Sava Group are based on its orientation to pursuing changes, an ability we are further strengthening in the current crisis situation. By doing so, we are ensuring new advantages over our competitors. Owing to the introduction of improvements and innovations, we saved some €3.4 million in 2008.

The systematic management of changes in business processes is a significant source of success of the entire Group and is founded on the continual improvements strategy. This requires not only our associates who are able to comprehensively direct and develop business processes, but also those who are motivated and well-organised and are able to perceive deviations and utilise them as an opportunity for introducing improvements. Moreover, by conducting improvements collectively and eliminating deviations, we pursue excellence in everything we do.

Using the system of total quality management and the business excellence model, we examined our progress in 2008 and introduced a number of improvements. By employing the balanced score card (BSC) method, we monitored progress. This is not revealed in the short-term results, but it is decisive for the sustainable performance of the Sava Group.

Such a method of operation takes effect especially in aggravated economic conditions. The continual consolidation and management of activities by the competence centres, which carry out operative, tactical and strategic projects, is gaining further in importance. This type of organisation permits the introduction of complex approaches, which would incur much higher expenses in a conventional form of organisation.

We encourage and implement innovative changes through the following activities and results: – We permanently examine innovative ideas provided by the development and

technology units that operate in certain companies; with the support of the R&D Institute and laboratories we manage the risks that arise with the introduction of new products and technologies.

– Our companies are involved in technology platforms and the expertise network in Slovenia and the EU.

– Within the framework of joint projects we establish links with companies and academic and educational organisations in Slovenia, the EU and other countries.

– In the process of a systematic search for improvement opportunities, the 20 Keys system, which involves all employees by type of process, is employed.

– We saved €3.4 million by implementing the proposals submitted in the continual improvements programme.

– Special attention is given to a variety of small proposals, which we named drops, in which employees put forward innovative ideas to improve specific details. In Rubber Manufacturing alone we received more than 500 such drops in 2008.

Out of all the proposals received the share of those which are adopted is growing each year; last year the share stood close to 73%.

Owing to the aforementioned activities, we are able to promote the development of the culture of innovation, thereby ensuring the future development of business processes and strengthening our competitive edge.

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We carried out a number of activities to improve all aspects of quality that are vital for future enhancement of the competitive edge of our products and services. Several companies in Tourism received safety certificates for food and quality and we prepared uniform standards for Sava Hotels & Resorts. The key strategic goal in the field of quality is to develop and establish the method of process management, which is co-ordinated and compatible with advanced European and global systems.

In 2008 we carried out the following activities in this connection: • Introductionofnewstandardsandmaintainingcurrentonesthatregulatebusiness

processes and are result-oriented in accordance with the principles of business excellence(SISTENISO9001,SISTISO/TS16949,SISTENISO17025,AQAP2131Certificate of Conformity, ISO 22000, CE mark for products, etc.).

• Reductionofcoststhatarisefrompoorqualitywithregardtotheresultsachievedin 2007 (costs that are directly measurable: quality achieved, total waste, claims, repairs, system maintenance costs).

• Measurementofperformanceindicators(e.g.inTourism:guestsatisfaction).• Introductionofmathematicalmodels,measurementofprocessstabilityaccordingto

the 6 Sigma method (6 Sigma as a methodology, 6 Sigma as a system of management and philosophy), preparation of standards in Sava Hotels & Resorts.

• Introductionof theexcellencemodel inbusinessprocesses (referencemodel:EFQM),activitieslinkedtotheimplementationofthe20 Keys systems, 6 Sigma philosophy, etc.

• ActivitiesinTourismsuchascyclingandtrekkingfacilities.

In 2008, we successfully finished the majority of the aforementioned activities. Audits by customers (second part: the programmes Velo and Profiles from the company Savatech d.o.o., Sava-GTI d.o.o.) and audits by the certification company (third part: certification of processes according to standards ISO/TS 16949 for Sava-GTI d.o.o. and theMixingPlantprogrammeofthecompanySavatechd.o.o.,SISTENISO17025forthe field of testing in the central laboratory, AQAP in the EKO programme and SIST ENISO9001inallotherprogrammesorcompaniesoftheRubberManufacturingandTourismdivisions,SavaIPd.o.o.andSavad.d.,andSISTENISO22000inTourism)were passed successfully. As planned, all audits by suppliers were carried out with an emphasis on the suppliers of metal parts.

RUBBER MANUFACTURING

The planned savings in relation to the quality of products were not achieved last year. The costs due to poor quality represented 4.74% with regard to output (4.1% in 2007). This is mainly due to worse results concerning waste and a surplus in the expected number of claims. Product quality achieved 99.28%.

To improve our performance in 2009, we plan to: • improvetheinformationsystem(determinationoffaults,responsibilityfordisplaying

data in various places in the process, etc.); • placemoreemphasisontheeducationofemployeesinaspecificprocess;• controlhowactivitiesareperformed(daily,weeklyandmonthlymeetingswith

employees involved in the process); • produceaQualityAssuranceManual;• actconsistentlyinintroducingtheFMEAmethodintheareaofriskmanagement

(description of possible faults in individual parts of a process, determination of possible reason for faults and how to prevent them occurring); and

• QFD(benchmarkingofaproductinviewofquality).

11. Quality systems

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Savatech d.o.o.

Despite numerous new products, a level of quality of 99.34% was achieved. Total waste amounted to 4.3%, which was more than in 2007 and, to a great extent, it originated from a transfer of a part of production to other premises in the Profiles programme. The number of claims was higher than in the previous year for similar reasons as in the case of waste.

The stability of processes in individual areas (conveyor belts, compound preparation, Velo, a part of the process in the Profiles programme) was in line with expectations and we are drawing nearer to the strategic goal of 2011, which is to achieve a value of cpk >1.33. The results are especially favourable in Conveyor Belts where savings in materials exceed the figure of €200,000.

Sava-GTI d.o.o.

Product quality achieved 99.28%, which was at last year’s level. Owing to the applied technology, total waste is lower than in 2007. An increase was observable in the number of claims whose share remained low enough not to affect the competitive position of products in the market.

The processes were upgraded through special requirements that new customers had in thecarprogramme(VolkswagenAG–FormelQ,Duraautomotive–GlobalSupplierQuality Assurance Manual and Gorenje, household appliances manufacturer). All internal audits and the audit in compliance with the ISO/TS 16949 standard as well as all audits by customers (second part) proved successful.

Sava-Schäfer d.o.o.

The quality of products at the level of the entire company was slightly lower than expected. Due to increased waste and a higher number of claims in comparison with 2007, a saving on account of cutting down the number of poor quality products was not achieved. The company will continue to implement the required measures in ordertoimprovethesituationin2009.TheauditaccordingtotheSISTENISO9001standard was successfully carried out.

TOURISM

The greatest emphasis was given to transferring best practice among individual companies. Expert teams formed a core to prepare standards for Sava Hotels & Resorts. Owing to its introduction, Sava’s specific tourist services in various segments of tourism will become recognisable.

We ran an extensive training course for new internal auditors and additionally qualified theexistinginternalauditorsinconformitywiththeSISTENISO9001andSISTENISO 22000 systems. Thanks to a higher number of internal auditors (171 persons) we managed to enhance considerably the satisfaction of audited enterprises with the performance of internal audits.

In June, the certification company Bureau Veritas conducted a joint certification auditofthequalitymanagementsystemsaccordingtotheSISTENISO9001:2000standard,andfoodsafetymanagementaccordingtotheSISTENISO22000:2005standard in Terme 3000 d.o.o., Zdravili{~e Radenci d.o.o, Terme Ptuj d.o.o. and in Terme Lendava d.o.o.; all companies received the certificate according to the named standards.

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The audit was carried out in Sava Hoteli Bled d.d. too, thus verifying the conformity ofitsoperationwiththeSISTENISO9001standard.Atthesametimesuccessfulfollow-up audits were conducted according to the ISO 22000:2005 standard.

In all companies of the Tourism division we carried out self-assessments in line with thebusinessexcellencemethod(EFQM)andaccordingtothe20Keysmethod.Theresult of the first self-assessment was 62 projects for improvements whose performance efficiency is regularly examined. In the second self-assessment introduction efficiency is regularly monitored, and we noted a positive trend.

In order to be able to transfer best practices among similar hotels and other facilities throughout Europe, we organised numerous excursions for key personnel and management teams of hotels, golf courses and the campsite as well as managers of individual processes.

As far as the possibility of marketing a cycling product is concerned, we entered the campaign by the Slovene Tourist Board called Cycling Marketing Standards with Hotel Lipa, Hotel Primus, Hotel Radin Standard, Hotel Park and Camping Bled. A commission, which rated hotels, established that all the criteria, as defined by the mentioned standard in individual elements from the evaluation list up to the third level, had been met in full.

The congress-tourism office also rated conference facilities and certified the hotels Radin in the health resort of Radenci, Vila Bled, Grand Hotel Toplice, and the hotels Golf and Park in Bled as conference facilities hotels.

The quality of operations in 2008 was verified also with the assistance of highly qualified undercover guests who put forward some very useful proposals for improvements.

In 2009 too we shall use every opportunity to improve all aspects of quality in Tourism.

REAL ESTATE

The company SAVA IP d.o.o. passed a follow-up audit of the quality management systeminconformitywithSISTENISO9001standardswithanexcellentassessmentand proved that continual improvements are being introduced and the currently running quality management system is being continually upgraded.

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12. EU projects

The effects of the systematic gathering of expertise on applying for EU funding as well as supervision from one place were evident in 2008 too. We enabled funds to be drawn totalling €3.14 million and already assured a further €1.4 million in 2009. The focused method of our business operations continues to be to our advantage even under these aggravated economic conditions.

We encourage Group companies to apply for EU funding and seek opportunities for day-to-day activities, for which we provide assistance. Our guideline Each Project – an EU Project means that each project in the Sava Group will be co-financed by EU funds. The assets are acquired in the field of environmental protection, ecology, new product development, energy sources, social responsibility, working with employees and investments.

To achieve our goals, we carry out the following key activities: • Identifyanddeterminethecontentofprojectideas,continuallypursuecallsfor

invitations and apply for funding with at least 20 projects annually. • NegotiateandconcludeanagreementwiththeEuropeanCommissionandMinistry,

respectively. • Co-ordinate,realiseandsupervisetheapprovedprojectuntilitscompletion.• Performa studyof European strategicdocumentationandpertaining strategic

documentation of the Republic of Slovenia.• DraftinstructionsandguidelinestocomplementthebusinessstrategiesofGroup

companies. • ContinuallyseeknewpartnerstoliaiseinEuropeanprojectsandestablishlinks

with partners. • IntroducenewassociatesinthefieldofEUfundsacquisitionsandmanagement

of European projects. • Participate in external seminars andworkshops andorganise internal training

courses on the acquisition of EU funds and management of European projects.

SUCCESSFUL IN ALL PHASES UNTIL THE OBTAINED FUNDS ARE DRAWN

Last year we devoted particular attention to the development of mid-term projects and ensuring all the required factors to draw on EU funds. The following results were achieved: – The required documentation was drafted for investments totalling €2.2 million

for funds utilised at the end of 2007. – Fundsweredrawnintheamountof€970,000. – The required basis was formulated for current investments and drawing on €1.4

million in 2009. – We applied for funds with 27 projects totalling €5.7 million, thereby meeting the

annual plan.

We established a system to monitor results, which were of key importance for reporting to the European authorities for the purpose of supervising the use of funds.

In accordance with our plans we expanded our expertise on how to obtain funding from the EU among co-workers. In the framework of the Sava Academy we were involved in training courses on the preparation of business plans and ran a seminar and workshop on the actual projects. Possible co-financing sources were identified and incorporated in the business plans. We considered the fact that the timing of the European projects is adapted to the development of business projects and these are mainly realised in the period of three years starting from concept to final implementation.

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The political environment too is of importance for the successful use of European funding. It usually takes one year from a project draft to the actual beginning of the project.Forentrepreneurs,whotakeintoconsiderationsuchadelayintherealisationof an excellent business opportunity in view of opportunity costs, one year is a very long period of time. Additional challenges appear at the administrative level, yet by utilising the acquired expertise and experiences, we are successful in managing them.

2008: ACTIVE PROJECT IMPLEMENTATION

Activities in the implementation of projects were underway at the following levels:• Werenovatedthefirstfamilyhotelandbegantherenovationofanotherhotel

utilising European funding. • UndertheLeonardodaVincipilotprojectsprogramme,wefinishedaninnovative

project addressing the development of education in Rubber Manufacturing, which in co-operation with eight partners from three states has been underway since 2006.

• UndertheLeonardodaVinciMobilityProjectsprogramme,lastDecemberwefinished a project of one-week personnel exchanges in the European states, which were attended by 46 employees.

• Intheenvironmentalfieldwecreatedprojectstopromotebioticdiversityongolfcourses and a reduction in CO2 emissions under the Life++ programme.

In a three-year period 2006-2008 we managed to obtain non-returnable EU funds of €5.4 million, out of which we drew on €3.6 million, while this year the sum of €1.5 million will be utilised. In the middle of 2009 we expect to receive a response to our application in the field of culture and an environmental project on the golf course in the amount of €750,000.

NEW LINKS WITH DOMESTIC PARTNERS

The Sava Group is known for its collaboration with local and regional organisations in the development and incorporation of partners in its business process. Last year we strengthened our collaboration with several Slovene organisations in developing common projects too and obtaining European funds, particularly in the field of environmental protection, culture and developing tourism, in which we liaised with SMEs. We shall proceed in this direction as during the period of turmoil the joint provision of funding sources can be a great advantage.

The set goals for 2009: • Identifyandprepareatleast20projectstocompeteincallsforapplications.• Obtainnon-returnablefundsofatleast€3.5 million.• BecomefamiliarwithEuropeanstrategicdocumentationonanongoingbasisand

pertaining strategic documentation of the Republic of Slovenia used as the source and, furthermore, acquaint the management teams of Sava Group companies with it.

• Acquireaminimumof40projectideas.• Seeksuitablepartnerstojoinusincallsforapplications.

Our goal by the year 2011 is to acquire at least 60 project ideas, provide over €10 million of approved funds and achieve a 40% success rate in calls for applications.

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13. Development of information support

The pursuit, development and introduction of new information techniques, solutions and improvements have resulted in more efficient work in all Sava Group companies. We were particularly active in the Tourism division where we began to establish a standardised hotel information system.

Sava Group companies have available a standardised, centrally managed and interconnected information system that provides a good basis for the optimisation of business processes within a particular division. This is in accordance with the strategic policy as set out for IT, thus enabling IT users to perform their primary activities uninterrupted.

We have concentrated on the following activities:• Developamanagementinformationsystembyaddingnewareassuchasmonitoring

main performance indicators for sales in Tourism and purchasing efficiency in Rubber Manufacturing.

• FinishtheinitialintroductionandplanningphasefortheIntranetportal(Savanet)of the Sava Group and accomplish the goal of improved access to information and internal communication.

• Transfergoodpracticecasesinthesupervisionofinputinvoicesinthee-versionfrom Rubber Manufacturing to Tourism and introduce a standardised documentation system to serve as a basis for the modernisation of office work to permit electronic operation.

• Establishastandardisedhelpdeskservicetoimprovesupportforinformationsystemusers and systematically pursue and obtain information in relation to problems in operating the information infrastructure.

• Forthefirsttimeweexaminedthesuitabilityofinformationinfrastructureoperationby visiting all locations of the Rubber Manufacturing and Tourism divisions.

• On the basis of our findings and submitted proposals for improvements weeliminated some imperfections in terms of security, and in co-operation with the provider of the ROS hotel information system we made a number of improvements in its operation.

• AprojectwasstartedtointroducetheROSstandardisedhotelinformationsystemin Tourism, which will complement the SAP system introduced last year and facilitate further optimisation of important business functions such as purchasing, customer management, etc.

In 2009, we will proceed with the already started activities, and special attention will be devoted to the following issues:• Improvetheeffectofinformationtoolswhicharealreadyavailable.• Improve the efficiencyof IT operation in termsofwork organisation, flowof

expertise and ideas. • Proceedwith the introduction of good practice cases in ITmanagement and

continually improve the information security system. • Proceedwiththeimplementationofastandardiseddocumentationsystemforthe

Sava Group (contracts, legal office support) in order to establish a uniform basis for document process management.

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• ProvideinformationsupportforthestandardisationofpurchasinginTourismandintroduce a loyalty card.

• RestructuretheexistingbusinessITprocessesandoptimisethem.• ProceedwithupgradingandaddingnewfunctionstotheIntranetportalofthe

Sava Group.

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III.Sustainable Development Report

Modern expertise is of an

interdisciplinary nature, standing for

co-operation and connecting various expert

fields in practice. Each architectural task is a

world on its own and knowledge represents

never-ending growth. When we are seeking

new solutions, we sometimes first have to face

a hopeless position and be against the wall

to realise we can build a new door to move

ahead. Knowledge is the driving force that

opens up that door.

We live our values.

KNOWLEDGE

Artur Olaj, BSc (Architecture), project manager in Sales Dept., Sava IP d.o.o., Real Estate division

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III.Sustainable Development Report

1.Sustainable development in the Sava Group

The Sava Group was ranked among the top three companies in Slovenia which act at the highest level of social responsibility, thus proving we are on the right path in our endeavours to maintain sustainable development. This has been achieved by the implementation of our values – excellence, creativity, integrity, knowledge and responsibility – without which one cannot imagine sustainable development. The 2008 sustainable development report presents our efforts in key areas such as concern for employees and the broader social and natural environment. With indicators that enable one to follow changes, we reveal the trends and achievement of set goals over the years. Certain data given for areas that have closely approached our strategic goals in the past are compared with the year 2007, as only slight improvements could be perceived in these specific areas.

As a responsible corporate citizen the Sava Group ensures the satisfaction of all stakeholders and, as a result, the implementation of the corporate business strategy. We are aware that the responsibility for excellence comes first: to be a good employer for all personnel and a good partner to all investors, customers, suppliers and other partners. In all areas of sustainable development we are seeking new potential and innovative ways of resolving environmental and social issues, in which we are assisted by our realistic and fair view of the performance results that always provide a new impetus for introducing further improvements. We encourage our employees to acquire knowledge. Responsibility towards the environment is transferred from the internal public to our suppliers, the local community and other stakeholders. Holding a dialogue with stakeholder groups provides the basis for exploring new dimensions in order to better understand how our business goals can contribute to the implementation of broader social goals to an even greater extent.

In the implementation of the sustainable development strategy of the Sava Group we pursue the following goals: – Strengthen the role of a responsible partner in sustainable development of the

environment where our employees realise their abilities and ambitions.– Contribute to the universal quality of life and act responsibly to the greatest extent

possible, i.e. not only improve safety and health at work and environmental safety, but spread this awareness among employees, customers and shareholders.

– Responsibly invest and develop product and services.

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– Establish a partnership liaison with the social community aimed at common development and achieving common goals.

– Decrease the undesired impact of our operations on the environment and use energy responsibly.

– Maintain business excellence in accordance with set policy.

These goals have been set on the basis of: – EU directives on the principles regarding equality in dealing with co-workers,

meaning that: • Wedonottolerateanydiscrimination.• Werigorouslyobservetheprovisionsonthepreventionofforcedandcompulsory

labour as labour agreements should reflect the free will of partners involved. • ThereisnochildlabourintheSavaGroupasweemployonlyadults.

– Fundamental human rights as defined by the United Nations Universal Declaration of Human Rights.

– Basic labour standards as determined by the International Labour Organisation.– GRI reporting (Global Reporting Initiative). – Ten principles of sustainable development as defined by Global Compact (our

company is one of the founders of the Slovene Society of the UN Global Compact for Sustainable Development whose aim is to promote the socially responsible action of companies).

Our endeavour was recognised by Finance newspaper too, which ranked our company 3rd among 30 participating socially responsible Slovene companies.

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EVENT AREA

Signing of a new sponsorship agreement between Sava d.d. and Sava Kranj Cycling Club.

SPONSORSHIP AND DONATIONS TO THE SOCIAL COMMUNITY

As the first Slovene hotel, the new Grand Hotel Primus certifies that its operations are run in accordance with environmental directives; in April, the family hotel Savica in Bled becomes the second such hotel.

ENVIRONMENTAL STANDARDS

In Hotel Golf, Bled, the 6th Slovene Voluntarism Congress is organised by the Slovene Philanthropy Association, dealing with the topic Voluntarism and Responsibility. The Slovene President Dr. Danilo Türk addresses more than 200 participants.

SPECIAL EVENTS HOSTED IN OUR COMPANIES

2.1. More important events and achievements in 2008

JANUARY

2. Survey of more important events and achievements

FEBRUARY

EVENT AREA

As a member of the Kurent Consortium (with the Municipality of Ptuj and Perutnina Ptuj), Terme Ptuj d.o.o. organises the Kurent Festival in Ptuj with a traditional international carnival procession for the second time. More than 80,000 visitors from Slovenia and abroad attend the event.

The main cultural event celebrating the Slovene national holiday Prešeren Day, which is sponsored by us, takes place in the birth-place home of Dr. Prešeren in Vrba.


In the final event of the pan-European campaign Lighten the Load in Bilbao, Spain, the company Savatech d.o.o. together with the Safety competence centre receives the prestigious European award for good occupational health and safety practice for 2008, as the first Slovene company to do so.

SAFETY AND HEALTH PROTECTION AT WORK

In the international culinary competition during the Intergastra trade show, Danilo Kozar, a chef at Terme 3000 d.o.o., receives two gold medals for his first-rate culinary masterpieces.

MORE IMPORTANT AWARDS AND ACKNOWLEDGEMENTS IN 2008

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MARCH

EVENT AREA

The Safety competence centre organises the following: • In the Group companies the annual preventive campaign

March - A Month of Occupational Health and Safety is held, this time being incorporated in the preventive campaign by the European Occupational Health and Safety Agency entitled A Healthy Working Environment. Good for You, Good for Business.

• 6th Safety conference entitled A Good Safety Culture Minimizes Risk.


Beginning of the project Let’s Improve Employee Well-Being, aimed at decreasing absenteeism in Terme 3000 d.o.o., the health resort Radenci d.o.o. and Terme Lendava d.o.o.

ABSENTEEISM

In Planica, where Sava d.d. sponsors ski jumps, we host domestic and foreign partners of the Rubber Manufacturing division.

For the seventh time in succession we organise the campaign Let’s Clean Kranj with scouts from Kranj and the Municipality of Kranj. 29 organisations and more than 1,400 participants take part including our employees.

The sponsors of the 38th Week of Slovene Drama, Sava d.d. being one of them, enable free admission to all performances.


The radio broadcast listeners of Good Morning, Slovenia choose the Živa wellness centre in the Bled-based Golf hotel as the best Slovene hotel relaxation centre.

MORE IMPORTANT AWARDS AND ACKNOWLEDGEMENTS

Sava’s hotels Radin in ZdravilišËe Radenci d.o.o. and Grand Hotel Toplice, together with hotels Golf and Park in Bled obtain the certificate Conference Facility Hotel, which is granted by the Slovene Congress and Tourism Agency in nine categories for the first time.

CERTIFICATES AND STANDARDS

APRIL

EVENT AREA

In Brussels, a Slovene Evening is held which, with the assistance of Sava, is prepared by the Slovene committee of the European Economic Social Council.

Bled ambulance station renovates its parking lot with assistance provided by Sava Hoteli Bled d.d.


As part of a visit to industrial and financial organisations in Gorenjska, the chairman of the National Council, Blaž KavËiË, MSc, visits Sava d.d. as one of the most important companies in the region.


On the occasion of the 40th anniversary of tourism development Terme Banovci receives a plaque from the community of Veržej.


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MAY

EVENT AREA

Lifting bags manufactured by the rubber manufacturing programme EKO are used in rescues after the catastrophic earthquake in the Chinese province of Sichuan.

After a much publicised opening of the new family hotel Savica an Open Day is held for the residents of Bled and its surroundings.

The Sava Kranj Cycling Club organises the 41st Kranj Grand Prix and the 15th Filip Majcen memorial.


JUNE

EVENT AREA

A cultural and charity event organised by the Franc Rozman Stane Institute entitled Just One Flower… is held − one that has been sponsored by Sava d.d. for several years in succession.

In Bled’s Grand Hotel Toplice the 7th international conference Manageress Excellence 2008 is organised by the Manageress Section of the Managers Association, which is co-financed by its gold sponsor Sava d.d.


Within the framework of the educational programme Preparation of Business Plans for Strategic Projects run by the Sava Academy, the fifth generation of associates from the Sava Group successfully completes its training.

In the European conference on the 2008 quality in mobility programme, Lifelong Learning in Cankarjev Dom, we present our success story under the Leonardo da Vinci VETPRO mobility project called Sava-Train.

EMPLOYEE EDUCATION, TRAINING AND DEVELOPMENT

JULY

EVENT AREA

The organisation Jan from Kranj is assisted by Sava in planning the programme for active leisure time for children entitled Let’s Get Summer Going by providing various workshops.

The companies Terme Ptuj d.o.o. and Terme Lendava d.o.o. together with their numerous supporters perform the second charitable cycling campaign Cyclers for SonËek Ptuj and raise funds to support programmes run by the Ptuj-Ormož Association for Cerebral Paralysis.


More than 500 visitors, family members and retired people of the company attend the first Sava Open Day as part of the Family-Friendly Company project in Terme 3000 d.o.o.

FAMILY-FRIENDLY COMPANY CERTIFICATE

At Bled Golf Course we host the European Youth Golf Championships for boys, which is attended by 120 young golf players from 20 European countries.


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AUGUST

EVENT AREA

For the second year in succession Sava Kranj Cycling Club and Sava d.d. organise a cycling trip called A Challenge of Three Summits, which unites numerous managers and supporters of the Kranj-based cycling club.


Sava Hoteli Bled d.d. hosts the international Bled Strategic Forum organised by the Republic of Slovenia Ministry of Foreign Affairs and Centre for European Perspective; the event is supported by Sava d.d. too.

INCORPORATING EMPLOYEES IN THE SOCIAL COMMUNITY

In the Cycling Across Slovenia project, the Slovene Tourism Organisation confers the Cycling Hotel Badge to hotels managed by Sava’s Tourism division: Grand Hotel Primus in Terme Ptuj, hotel Radin in the Radenci health resort, hotel Lipa in Terme Lendava and hotel Park in Bled. Camping Bled obtains the title of Cycling Campsite. Hotel Termal in Terme 3000 d.o.o. has had this title ever since 2007.


Hotel Livada Prestige in Terme 3000 d.o.o. hosts the famous English football club Chelsea.

In co-operation with Terme Ptuj, Terme Ptuj d.o.o. Swimming Club organises the 3rd national championships in toboggan racing. For the first time the competition is organised for representatives of the Slovene media and utilizes electronic time measurement.


The Sava folk dance group receives a prestigious award for the most original show in the 45th International Folk Dance Festival in Poland.

CONCERN FOR EMPLOYEES OUTSIDE OF WORKING HOURS

Terme Lendava d.o.o. organises an Open Day for employee family members and retired employees within the Family-Friendly Company project.


SEPTEMBER

EVENT AREA

Beginning of the Health - Three Hearts project in the health resort of Radenci d.o.o. to promote a healthy way of living among employees.


Sava d.d. and the Slovene Employers’ Association organise a conference in Bled called Sick Leave in Slovenia and Challenges for the Future.

ABSENTEEISM

At Bled Golf Course the 10th Friendship Golf Tournament for the President’s Cup is held; on this occasion Sava Group companies, business partners and friends raise funds for the opening of a new Safe House in Gorenjska.

Employees from the Kranj-based companies participate in the Mayor’s charity marathon, raising funds to help drug addicts and their family members.


On World Tourism Day, the Slovene Tourism Organisation distributes the Best Manager award in the Slovene tourism industry; this award is received by Andrej ©prajc, MSc, director of the Tourism division in the Sava Group.


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EVENT AREA

In the Sava Group companies in Kranj, Ptuj and Banovci Open Days are held, attracting more than 1,200 employees together with their family members and retired employees.


Due to a thunderstorm in the region of Spodnje Podravje our employees in Ptuj suffered considerable material damage; to provide assistance we therefore allocate financial support to our associates whose houses were damaged.


On World Tourism Day, the company Terme 3000 d.o.o. organises a jubilee golf tournament to celebrate the 10th anniversary of Livada golf course, which is noted for the longest hole in Slovenia.


OCTOBER

EVENT AREA

In the European week of occupational health and safety the Safety competence centre carries out promotional activities under the slogan A Healthy Working Environment.


At the 55th catering and tourism meeting in Terme 3000 d.o.o. Sava’s employees receive 34 gold, 29 silver and 13 bronze medals, as well as 7 acknowledgements. To mark the 100th anniversary of organised catering and tourism business in Slovenia, the Tourism Catering Chamber imparts a special acknowledgement to Janez BohoriË, chairman of the Sava d.d. Board of Management, for his contribution to the development and quality of Slovene tourism services. The company ZdravilišËe Radenci d.o.o. and the Safety competence centre jointly receive the national award Good Occupational Health and Safety Practice, imparted by the Republic of Slovenia Ministry of Labour. In the Best Slovene Swimming Pool campaign, listeners of the Slovene radio broadcast Good Morning, Slovenia choose Ptuj Thermal Park Ptuj as best in the large thermal swimming pools category.


At the 55th catering and tourism meeting the companies of Sava’s Tourism division actively engage in the first national labour exchange, dealing with employment opportunities in the tourism and catering sector. The Tourism division of the Sava Group joins the SETCOM project (involving the use of sustainable energy in mainly tourist destinations), which is run by the International Tourism Institute with partners. The project programmes also encourage companies from the tourism sector to use renewable energy sources.


On Sava Day, held in Kranj’s Prešeren Theatre, we award our most deserving associates for their outstanding achievements. The Manager of the Year award is received by Antonija Pirc, MSc, director of the Strategic Controlling competence centre at Sava d.d.


Sava Hoteli Bled prepares an Open Day, which attracts numerous employees, their family members and retired employees.


SEPTEMBER

145

NOVEMBER

EVENT AREA

In a competition organised by Finance newspaper Sava d.d. wins second prize for its 2007 Annual Report, meaning that its report has been ranked among the best reports of Slovene companies for the ninth time in succession.

The publisher of international guides to luxury hotels, Condé Nast Johansens, gives the Golf hotel in Bled a prestigious award for excellence in the Best Marketing partner category.

In the My Country - Beautiful and Hospitable campaign organised by the Slovene Tourism Organisation and sponsored by the Slovene president Dr Danilo Türk, awards are received by Terme 3000 d.o.o., Terme Ptuj d.o.o. and Terme Lendava d.o.o.


DECEMBER

EVENT AREA

A much publicised conference within the framework of the rubber manufacturing school, the European project entitled Rubber Knowledge, is successfully concluded.

We present the participants of the international Erasmus and Leonardo da Vinci contact seminar entitled Lifelong Training − an International Bridge between Educational Institutions and the World of Work the Sava Group as a developer of good practice cases in the field of lifelong learning.

In Kranj’s Prešeren Theatre we organise a traditional meeting of employees celebrating their working jubilees, with retired employees and workers of Kranj-based Sava companies also participating.


Sava d.d. is ranked among the five best open joint stock companies in the PORTAL competition for providing correct, quality information, organised by the Ljubljana Stock Exchange.


The singers of the Sava Folk Dance Group, DeËve, celebrate their jubilee 10th anniversary.

A New Year’s event with presents for the children of Sava Group employees is organised.


Andrej Klasinc, director of the company Terme Ptuj d.o.o., is appointed the new president of the Assembly of the Slovene Natural Health Resorts Association


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Annual Report


2.2.More important events and achievements in 2009

JANUARY EVENT AREA

In the Livada Prestige hotel in Moravske Toplice, Gregor GolobiË, Minister of Higher Education, Science and Technology, attends the conference Using Knowledge to Introduce Changes in the Economy, a part of the consultation with economists in Murska Sobota.


At the head office of Sava d.d. in Kranj, the Prime Minister of the Republic of Macedonia, Nikola Gruevski, formally opens a consulate of the Republic of Macedonia in the Republic of Slovenia, managed by the honorary consul Janez BohoriË, as part of his first official visit to Slovenia.


FEBRUARYEVENT AREA

Employees from the Sava Group donate blood for their associate Denis Medja, the chef in Hotel Golf who suffered severe injuries in a road accident.


Various events take place in Terme Ptuj on the occasion of the Kurent Festival, which is held under the sponsorship of the Kurent Consortium (the Municipality of Ptuj, Perutnina Ptuj and Terme Ptuj) for the third time in succession.


In the traditional Herring Feast in Ljubljana’s Grand Hotel Union, Simon Bertoncelj, the chef of Grand Hotel Toplice Bled, receives a gold medal for his creations; the chef from Hotel Ajda in Terme Ptuj, ©tefan Sraka, receives a silver medal; and the head of confectionary in Hotel Park Bled, Alma RekiÊ, receives a bronze medal.


MARCHEVENT AREA

The company Sava d.d. is one of seven finalists in the category of medium-sized companies in Slovenia in the Golden Thread campaign 2008/2009, in which the best employer is chosen; the campaign is organised by the newspaper publisher Dnevnik. The award is presented by Dr Ivan Svetlik, Minister of Labour, Family and Social Affairs.


A meeting of liberal democratic parties from the western Balkans, the European commissioner responsible for enlargement, Olli Rehn, and members of the European parliament from ALDE (Group of the Alliance of Liberals and Democrats for Europe) takes place in Grad Hotel Toplice in Bled. The meeting deals with the enlargement of the EU to the western Balkans and is hosted by Member of the European Parliament, Jelko Kacin.


At the Slovene Chamber of Commerce and Industry the representative of the European chemical industry association CEFIC, Bernhard Their, imparts the Responsible Care certificate for the year 2009 to the companies Savatech d.o.o. and Sava-Schäfer d.o.o. The Responsible Care programme is the commitment of the international chemical industry to continual improvements in occupational health and safety, minimising environmental impacts and openness to reporting about these activities. 15 Slovene companies have voluntarily accessed the programme.

CERTIFICATES AND STANDARDS

147

3.1. Concern for employees

Employee content and business success are two inseparable notions. We therefore provide a healthy and safe working environment, which has been proven with both the number of awards and a decrease in the number of work-related injuries. Various projects have been introduced to minimise absenteeism. We received an award as one of the leading companies in adult education. Employees are motivated with special awards for putting forward useful proposals and within the framework of the Family-friendly Company project we manage their leisure time.

We have laid down in our business strategy the desire to become the most attractive opportunity for employing the best personnel. We employ associates who are ready to be involved in lifelong learning and team co-operation, and who are goal-oriented and ready to face the challenges and responsibilities of a dynamic working environment.The most important asset of the Sava Group is our employees who develop and attend to the growth of our divisions and continual improvements in our operation. In a period of great business challenges we see our associates as a driving force for progress and the key to success.

AVERAGE NUMBER AND STRUCTURE OF EMPLOYEES

In 2008, Sava Group companies employed 2,739 employees, or 108 more than in the previous year. In the share of employment by company there were no great changes – yet the majority or almost 54% are employed in the companies of the Tourism division, and 39% in Rubber Manufacturing, while other companies employed 7% of the total employee number.

Number of employees in the Sava Group:

3. Employee development

1. No. of employees31/12/2007

2. No. of employees31/12/2008

3. Index 2/1 2008/2007

4. Average no. of employeesJan-Dec 2008

Sava d.d. 59 64 108 61

RUBBER MANUFACTURING 1,041 1,078 103 1,093

Savatech d.o.o. 846 850 100 867

Sava-GTI d.o.o. 83 91 110 91

Sava-Schäfer d.o.o. 44 46 105 45

Sava ROL d.o.o. 11 11 100 11

Savarus d.o.o. - 25 - 19

Savapro d.o.o. 1 1 100 1

Foreign Trade Network 56 54 96 59

TOURISM 1,428 1,430 100 1,467

Sava Hoteli Bled d.d. 429 407 95 443

Terme 3000 d.o.o. 439 445 101 447

Terme Lendava d.o.o. 126 125 99 126

Terme Ptuj d.o.o. 139 162 117 153

ZdraviliπËe Radenci d.o.o. 295 291 99 298

REAL ESTATE 19 19 100 19

Sava IP d.o.o. 19 19 100 19

OTHER OPERATIONS 94 101 107 99

Ensa d.o.o. 3 3 100 3

Sava Medical in Storitve d.o.o. 91 98 108 96

TOTAL SAVA GROUP 2,641 2,692 102 2,739

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Annual Report


In 2008, the Sava Group employed 433 new associates, while 403 employees left. The total fluctuation in the Group thus amounted to 14.7% in 2008 and was slightly higher than in 2007 (12.8%). The increased fluctuation is due to seasonal deviations in the Tourism and Rubber Manufacturing divisions.

EDUCATIONAL STRUCTURE OF EMPLOYEES

In comparison with 2007 the educational structure barely changed. Still the greatest share (53%) of employees had a 4th or 5th level of education. This was followed by a 3rd level or less (29%) and 7th level or more (13%), while the lowest number of employees (5%) had a 6th level of education.

SAVA GROUP

EDUCATIONAL STRUCTUREOF EMPLOYEES

in %

1st level — incompleteprimary school

2nd level — primary level

3rd level — up to 2 yearsat vocational school

4th level — at least 3 yearsat vocational school

5th level —secondary school

6th level —technical college

7th level — higherand university education

8th and 9th level —Master´s and Doctor´sdegree

24

28

5

15

21

4

12

SAVA GROUP

TOP MANAGEMENTSTRUCTURE BY GENDERAT 31/12/2008

in %

Male

Female

70

30

149

AGE STRUCTURE OF EMPLOYEES

There were no significant changes in the age structure of employees in the Sava Group in 2008: more than one half of employees are older than 40, one fifth younger than 30 and one third are aged from 30 to 40.

UTILISATION OF WORKING HOURS AND SICK LEAVE

In 2008, the utilisation of working hours in the Sava Group amounted to 79.1%, which was by a 0.6 percentage point less than in 2007. The total number of overtime hours amounted to 32,841 – 0.6% of total working hours or a decrease of one percentage point in comparison with the previous year.

In 2008, sick leave was a 0.6 percentage point higher than in 2007; total sick leave in 2008 amounted to 5.2% (sick leave of up to 30 days accounting for 2.9%, and sick leave exceeding 30 days 2.3%). In order to decrease absenteeism, the Safety competence centre began the project Let’s Improve Our Employees’ Well-Being in 2008 in Terme 3000 d.o.o., Zdravili{~e Radenci d.o.o. and Terme Lendava d.o.o. With the assistance of the Slovene Employers Association Sava d.d. held a consultation on Sick Leave in Slovenia and Challenges for the Future in Bled.

DISABILITY ISSUES

178 persons with disability status are employed by the Sava Group, representing 6.6% of all employees. Pursuant to the Act on Employment Rehabilitation and Employing Disabled Persons, the companies of the Sava Group have to employ 122 disabled persons; in our companies this legally determined number is exceeded by 56 persons.

SAVA GROUP

AGE STRUCTUREOF EMPLOYEES

in %

18-20 21-25 26-30 31-35 36-40

18.0

16.0

14.0

12.0

10.0

8.0

6.0

4.0

2.0

0.0

•

•

•

•

•

•

•

•

•

•

0.8

8.3

15.2

16.8

6.2

41-45 46-50 51-55 56+ YEARS

10.9

12.6

14.214.9

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Annual Report


REWARDING AND ENCOURAGING EMPLOYEES On the basis of achieving the criteria for selective advancement, employees can be promoted to a more demanding job after successfully completing a training course to assume additional tasks and duties or market adjustments. In 2008, 585 associateswere either »horizontally« or »vertically« promoted. The average share of flexible salaries in the salary structure in 2008 amounted to 7.3%, which was approximately the same as in 2007.

The average salary in the Sava Group in 2008 amounted to €1,253, or 4% more than in the previous year. Employees received a holiday allowance of up to €986 gross and a Christmas bonus of up to €450 gross. The most successful employees received various additional monetary awards such as 568 Model Worker and 5 Company Worker awards. In the Sava Day event 7 associates received the Sava Worker and one received the Manager of the Year award. 581 awards were bestowed, or 344 awards more than in the previous year. Employees in the Tourism division are rewarded for the first three places they won in various competitions. In this way they are also encouraged to participate in specialist competitions. In the entire Sava Group we stimulate associates to utilise their working hours more efficiently.

In 2008, all Sava Group companies were included in the voluntary additional pension insurance scheme for the first time. 60.2% of employees were contributing to the scheme; individuals and companies paid in a premium of €42 on average.

However, motivation is not always only a financial one, so we also encourage our employees to attend seminars and training courses. We incorporate them in demanding projects and are continually improving their qualifications, encouraging them to provide informal commendations, feedback and proposals. In 2008, 396 proposals were given, of which 75% were realised; their economic benefit was estimated at €750,000.


As a learning organisation we encourage the education of employees and, furthermore, carefully plan and direct it. For several years now, such a standardised educational model has been the Sava Academy. Within its framework we organised the following in 2008: – Workshops for management teams of the Sava Group with an emphasis on becoming

acquainted with the legislation that affects their activities and business.– Workshops aimed at a strategy renewal and increase in innovation; directors of

companies and competence centres together with key associates searched for ideas to enhance added value in individual companies and competence centres of knowledge.

– Training courses abroad to which we sent a certain number of employees in management positions.

– Workshops for the development of leadership competences for our managers; a workshop called Basic School of Leadership conducted for the fourth year in succession.

– A programme to produce business plans for strategic projects in the Sava Group was held for the fifth time in succession.

– Foreign language courses (both in classical and electronic forms, as well as a combination of both).

– Workshops for the development of soft skills, minimising sick leave and developing interpersonal relations.

151

– Training programme to recognise and manage stress for some key personnel. – Numerous specialist training courses in various fields.

In order to enable the transfer of expertise among employees, we established a Rubber Manufacturing School in the Rubber Manufacturing division and a Tourism School in the Tourism division. Managers of knowledge who transfer their expertise to their co-workers receive training in special workshops.

In 2008, a widely publicised conference successfully completed the European Rubber Knowledge project, which includes the Rubber Manufacturing School. The result of the project is a compilation of specialised knowledge on rubber manufacturing, which we published as a manual and in electronic form; in future training programmes they will both be used as study materials.

In 2008, we finished the VETPRO Mobility Train-2-Sava project within the European Leonardo da Vinci programme; this project enabled 51 participants to take part in one-week exchanges in six European countries outside of Slovenia. In this way, 16 mentors – developers of engineering technology, project and business expertise, and know-how concerning the development of tourist destinations – participated in training courses in Germany, France, Great Britain and Belgium. 35 participants from longer educational courses (preparing business plans and managing knowledge in Rubber Manufacturing) advanced their knowledge in Sweden and Denmark. All the participants presented their experiences of good practice cases from abroad, which could be applied in our business, to their respective working environment and the management teams in the Tourism and Rubber Manufacturing divisions.

The average number of training hours per employee in the Sava Group in 2008 stood at 72, and the cost of conducting the programme was €150 per employee. In 2008, we co-financed the part-time study of 86 associates in total.

Success in the area of employee education is revealed by the rating given by Finance newspaper, which ranks the Sava Group among the Slovene companies with the best personnel. This classification is based on a questionnaire addressing the basic human resources indicators and data on educational courses in companies. According to their data, the Sava Group is in the leading position in terms of the average number of days of training per employee. According to Manager magazine we are ranked 14th among Slovene companies in terms of the number of employees whose companies refund the expenses of a part-time course of study.

Within the framework concerning the preparation of strategies for individual divisions we commenced several strategic projects, which included associates from individual specialist fields. Owing to their experience and outstanding motivation, they can make a significant contribution to the accomplishment of project goals. To develop our key personnel, we involve them as leaders and members of important projects within the company and make them face current business challenges. This contributes to the development of their business and managerial skills.

A regular annual interview called Sava Dialogue forms the core of developing personnel in the Sava Group. It involves a structured and in-depth interview of a manager with each individual associate separately. In this way we can assure a balance between company goals and an individual’s tasks. From the development part of the interview we gather data to develop the required competences and draft a plan for further employee development.

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Annual Report


COMMUNICATING WITH EMPLOYEES In communicating with employees we mainly encourage frank, two-way communication. Our role is not only to provide our employees with information, but also to encourage feedback and proposals, thereby motivating, educating and building enthusiasm among our associates. By doing so, we influence the atmosphere in a positive manner, enhance employee loyalty, strengthen trust in the management and consolidate the organisational climate.

Communication between management and employees is carried out directly (traditionally established forms of communication) and indirectly (introducing new forms of communication): – Direct communication between management and employees takes place once a

month on Open Days (company directors and also the Chairman of the Board of Management talk personally to an individual employee).

– Indirect communication is carried out through workers’ representatives and trade unions as well as the Workers’ Council of individual companies who are regularly informed in accordance with legislation.

We regularly inform employees via notice boards, a printed monthly Informator, the Sava newspaper and the Internet, the Intranet, meetings between executive boards and workers’ representatives, workers’ meetings and the occasional bulletin Sav~ek (a bulletin produced as part of the Family-friendly Company programme). Thanks to the Intranet we have created a basis for successful electronic communication with all parts of the internal public as well as a system that can be applied in business processes.

THE FAMILY-FRIENDLY COMPANY CERTIFICATE

In the Sava Group we are well aware how important it is to co-ordinate both professional and private life, which is why we applied for and received the basic Family-Friendly Company certificate. Within the Family-Friendly Company we have already introduced in our business 13 out of 14 selected measures that contribute to both an improvement in the conditions for developing the family life project and easier co-ordination of parenting with professional duties.

Some of these measures are: an additional day of paid leave for parents of first-formers, organising and co-funding active holidays, sports recreation for employees and their family members in sports’ associations, Open Days for families of our employees and retired people, housing loans under favourable conditions, price discounts for stays in Sava Group tourist facilities and discounts for products offered by our suppliers.

Sava employees can also rent the holiday facilities owned by the Sava Group.

In the Sava Group we have established systems that enable our employees to actively spend their free time. By accessing the Family-Friendly Company project, we established the sports, recreation, arts and culture association Sav~an and sports society Sava Hoteli Bled. Leisure opportunities are also provided for our employees in Terme 3000 d.o.o., Terme Lendava d.o.o., Zdravili{~e Radenci d.o.o. and Terme Ptuj d.o.o. 19 associates are engaged in the organisation and management of these societies and their sections or sports activities. Both societies have 625 members in total and offer an increasingly varied programme.

3.2.Concern for employees out-side of working hours

153

Other members of the Sava Cultural Society are active too. The folk dance group staged numerous shows and took part in international festivals. In the 45th week of the Baskied culture festival in Poland the folk dance group received a prominent award for the most original show. In a special event singers from the De~va group marked their 10th anniversary with a special performance and dancers from the Sava folk dance group presented a new dance choreography Sitars Dancing. The folk dance group members teach young people about preserving their cultural heritage and organise various folk dance workshops in primary schools and kindergartens.

Artists from the Fine Arts Group exhibited their works in numerous galleries in Gorenjska, organised the fourth consecutive two-day painting ex-tempore in Mala Poljana below Storži~ and devoted all their free weekends to artist gatherings collectively called Breakfast on the Ljubljanica.

Members of the Literary Group expand their activities beyond the borders of Slovenia. At the beginning of 2008, Zaim Dželilovi} published his second collection of poems entitled My Memories – A Day After, Agata Trojar being his mentor and editor. As the concept leader the Literary Group took part in the project Lifelong Learning programme (Leonardo da Vinci VETPRO Mobility 2007) entitled The Art Sower. The purpose of this project is to train mentors of cultural, artistic and traditional knowledge and builders of an intercultural dialogue.

PRESERVING HEALTH AND SAFETY AT WORK

An important indicator of the quality, reliability and business performance of a company is, undoubtedly, the level of health and safety at work. Therefore the goals of our occupational health and safety policy concentrate on: • identifying,analysingandminimisingrisksintheareaofoccupationalhealthand

safety; • preventinganddecreasingwork-relatedaccidents,injuriesandwork-relatedhealth

disorders; • preventingsocialriskswithanemphasisonstressandrisksduetoaddictionof

psychoactive substances; and • ensuringtheoptimumworkingcapacityofemployeesduringtheirentireworking

life. Investments in occupational health and safety are not dealt with as an expense but rather a useful investment. Preventive, planned and responsible action in this area is evident also from our operations in accordance with the international standard OHSAS 18001.

EMPLOYEE HEALTHCARE

Following the goals of our occupational health and safety policy, an important task in all of our companies is to monitor the state of health of our employees together with concern for a healthy environment and preserving their health at work. A healthy working environment not only means a higher degree of employee satisfaction and work quality, but owing to reduced absenteeism, it does not interfere with business processes or incur any additional costs. In 2008, 33.6% of employees from all Sava Group companies underwent preliminary, periodic and specific health examinations.

3.3.Concern for employee health and safety at work

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Annual Report


WORK-RELATED ACCIDENTS WITH WORK-RELATED INJURIES

Minimising the number of work-related injuries is the result of introducing a standardised approach to the detection of possible hazardous occurrences, which in altered conditions could lead to work-related accidents with or without an injury. Success is revealed in minimising both the frequency and seriousness of injury.

In 2008, 57 employees suffered from injuries, which was at last year’s level. We noted a 4% decrease in the frequency of work-related injuries with sick leave. The reasons for work-related accidents are mainly of a subjective nature.

SAVA GROUP

NUMBER OF WORK-RELATEDACCIDENTS WITH INJURIESIN THE PERIOD 2004-2008

2004 2005 2006 2007 2008

80

70

60

50

40

30

20

10

0

•

•

•

•

•

•

•

•

•

71

5451

57 57

SAVA GROUP

FREQUENCY OF WORK-RELATEDINJURIES WITH SICK LEAVEPER 200,000 WORKING HOURSIN THE PERIOD 2004-2008

2004 2005 2006 2007 2008

2.6

2.5

2.4

2.3

2.2

2.1

•

•

•

•

•

•

2.5

2.6

2.3

2.5

2.4

155

IMPROVED IDENTIFICATION OF RISK

Co-operation with employees in risk prevention An important part of the occupational health and safety policy is risk prevention, which includes the anticipation and supervision of risks. Working together with employees plays an important role here too. Properly and correctly informed employees know how to act in conformity with occupational health and safety standards and identify any possible hazards.

We provide our employees with the possibility of participating in various training courses in the field of occupational health and safety. The basis involves the legally stipulated forms of theoretical and practical training courses for safe working practice when concluding an employment contract, in case of a change of work-place that could affect health and safety at work, and periodic training courses along with checking up qualifications for safe work. In 2008, 65.8% of Sava Group employees attended theoretical courses on safe work and 51% attended practical courses.

Besides basic training we enable our employees to: – become actively involved in dealing with issues concerning occupational health

and safety, either personally or through representatives;– involve workers’ representatives in risk assessments for occupational health and

safety and consult with them on all measures that affect the mentioned area; – collaborate with occupational health and safety teams; – suggest improvements to working conditions in the bulletin Sre~ko Advises and

Warns or in preventive campaigns; – be informed about new details in weekly announcements and instructions on

special notice boards and in the Sava Group newspaper; and– encourage detection of hazardous incidents and report such events to their

supervisors.

Preventive campaigns concerning occupational health and safety The Safety competence centre is responsible for occupational health and safety in the Sava Group, which in 2008 conducted the following preventive campaigns: – Annual campaign March – A Month of Safety, which this time was included

in the preventive campaign by the European Occupational Health and Safety Agency with the topic A Healthy Working Environment – Good for You, Good for Business and was intended for the promotion of an integrated approach to risk assessment.

– A painting competition entitled Dangers are Everywhere. – The regular annual campaign October – A Month of Fire Safety.– Implementation of the project Health – Three Hearts and publishing a manual

called Physical Exercises for Better Health in Zdravili{~e Radenci d.o.o. to promote a healthy lifestyle among employees, and various activities within the project A Healthy, Content and Motivated Associate – a Company’s Most Important Asset.

Presentation of good practice cases in occupational health and safety The Safety competence centre organised various training courses such as the following: – In March it organised the 6th Safety Conference entitled Good Safety Culture

Minimises Risks. – It presented good practice cases and experiences at the following expert

meetings: • inFebruary,inBilbao,SpaininthefinaleventofthecampaignLighten the

Load, which started with a conference on musculoskeletal disorders;• inOctoberinhealthresortRadenciinameetingbytheSloveneTradeUnion

on the topic The Role of Workers’ Representatives in Risk Assessments;

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Annual Report


• inOctoberintheinternationalexpertssymposiumaboutoccupationalhealthand safety A Healthy Working Environment in Bled dealing with the topic A Healthy, Content and Motivated Associate – a Company’s Most Important Asset.

• inNovemberinhealthresortRadenci,inaspecialistmeetingorganisedbythe University Clinic of Ljubljana and the Clinical Institute for Occupational, Traffic and Sports Medicine from Ljubljana entitled Risk Assessment Focusing on Older Workers.

Achievements in occupational health and safety For its engagement in the area of occupational health and safety, the Safety competence centre received two special acknowledgements: – European Good Practice Award in occupational health and safety for 2007,

together with the company Savatech d.o.o. for minimising risks to musculoskeletal disorders under the Lighten the Load campaign.

– National acknowledgement for Good Occupational Health and Safety 2008 together with the companies Zdravili{~e Radenci d.o.o. and Sava Medical in Storitve d.o.o., in the competition sponsored by the Ministry of Labour, Family and Social Affairs and the National Network for Co-operation with the European Occupational Health and Safety Agency. The competition was called A Healthy Working Environment 2008. At the same time they were nominated for the European award.

157

STANDARD/CERTIFICATEStandard/certificate description Year of introduction

Companies which operate in conformity with the standard/certificate

OHSAS 18001 (Occupational health and safety systems)

Standard for systematic occupational health and safety management

2002 Savatech d.o.o. Sava-Schäfer d.o.o. ZdraviliπËe Radenci d.o.o.

SIST EN ISO 14001 Standard for systematic environmental management

2000 Manufacturing companies: Savatech d.o.o. Sava-Schäfer d.o.o. Sava-GTI d.o.o.ZdravilišËe Radenci d.o.o.

SIST EN ISO 22000:2005

Standard for food safety management

2008 Sava Hoteli Bled d.d. Terme 3000 d.o.o. ZdravilišËe Radenci d.o.o. Terme Ptuj d.o.o. Terme Lendava d.o.o.

Committed to Green Campaign run by the European Golf Association

2003 Sava Hoteli Bled d.o.o.

Responsible Care International voluntary initiative from the chemical industry

2000 Rubber Manufacturing companies Savatech d.o.o. and Sava-Schäfer d.o.o.

Eco Label Standard for the ecological adaptation of hotels

Begun in 2007, adjustments in progress

All companies in the Tourism division

4. Standards, policies and acknowledgements regarding occupational health and safety and the environment

At Sava d.d. we have used system tools to provide more efficient management of occupational health and safety ever since 1994, when we adopted the Policy on Occupational Health and Safety and Environmental Protection, while for the entire Sava Group such a policy was adopted in 2000.

The Safety competence centre manages this area, directing its operations and set goals in accordance with internationally known standards and with the assistance of unbiased institutions.

Standards and certificates applied in the Sava Group and its companies

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Annual Report


Special events in the areas of policies, standards and certificates in 2008 Terme 3000 d.o.o., Zdravili{~e Radenci d.o.o., Terme Ptuj d.o.o. and Terme Lendava d.o.o. obtained the food safety management certificate SIST EN ISO 22000:2005. The Chemical Industry Association at the Slovene Chamber of Commerce bestowed the right to use the Responsible Care logotype for 2008 to the companies Savatech d.o.o. and Sava-Schäfer d.o.o.

In 2008, various external audits were held to maintain the certificates and standards: – In the companies in Labore, Kranj, an external audit of the environmental

management system (SIST EN ISO 14001) and occupational health and safety management system (OHSAS 18001).

– In the companies of Sava Hoteli Bled d.d., Terme 3000 d.o.o., Zdravili{~e Radenci d.o.o., Terme Ptuj d.o.o. and Terme Lendava d.o.o., a joint external certification audit of the quality management system according to the SIST EN ISO 9001:2000 standard, and food safety management according to the SIST EN ISO 22000:2005 standard.

– In Zdravili{~e Radenci d.o.o., a regular external audit of the environmental management system ISO 14001:2004 and audit with a transfer to a new standard according to occupational health and safety management OHSAS 18001:2007.

In April, we drafted a report on responsible handling for Rubber Manufacturing, and before the end of the year we released the contents of the safety system for the mentioned area on the Intranet. In November, we submitted an application to issue an integral environmental permit to the Agency for the Environment.

159

5. Important acknowledgements and awards

SAVA D.D.

Company Achievement Acknowledgement/Award Institution

Sava d.d. 3rd place in the Leonardo da VinciVETPRO mobility category

National 2008 Apple of Quality award for the quality of lifelong learning programmes Leonardo da VinciVETPRO mobility

CMEPIUS (Centre of RSfor Mobility and European Educational and Training Programmes)

Sava d.d. Ranking among the 3 best Slovene Leonardo da Vinci Mobility projects

European 2008 Quality in Mobility awardfor the lifelong learning programme Leonardo da VinciVETPRO Mobility

European Commission

Sava d.d. Ranking among the first 5 Slovene companies for the PORTAL award − quality and correct information provided by companies

Award for the most open joint stock company

Ljubljana Stock Exchange d.d.

Janez BohoriË, Chairman, Sava d.d. Board of Management

Acknowledgement at the 55th Catering and Tourism Meeting

Special acknowledgement for a contribution to quality of tourism services

Slovene Chamber of Commerce

SAVATECH d.o.o. and SAVA-GTI d.o.o.


Savatech d.o.o. Acknowledgement for minimising risks for musculoskeletal disorders in the Lighten the Load campaign

European award for good occupational health and safety practice for 2007

European Agency for Occupational Health and Safety, European Commission and the Republic of Slovenia

Savatech d.o.o. Among the 50 best rated Slovene companies obtaining the status of a safe and desired business partner

Rating of the Year award Rating house I d.o.o. in cooperation with Dun & Bradstreet

Sava-GTI d.o.o. Supplier of the Year award in the area of rubber and plastic materials

2008 Supplier of the Year Knorr-Bremse AG, Germany (world’s leading manufacturer of braking systems)

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Annual Report


SAVA HOTELI BLED d.d.


Sava Hoteli Bled d.d. Medal winners at the 55th Catering and Tourism Meeting

16 medals and acknowledgements


Sava Hoteli Bled d.d., Hotel Golf

Nomination for the excellence award in the best media partner category

nomination Condé Nast Johansens publisher (international guides to luxury hotels)

Sava Hoteli Bled d.d., Hotel Golf − Wellness Živa

1st place in the hotel wellness centres category

1st place in the Best Wellness competition

Radio broadcast Good Morning, Slovenia, Alpe Adria Media Marketing d.o.o.

Sava Hoteli Bled d.d., Golf course Bled

2nd place and a special acknowledgement in all categories: for services, professionalism, novelties and changes, politeness and friendliness, condition of the golf course, cleanliness and fixtures

2nd place and a special acknowledgement in the Best Golf campaign

Economic Interest Association of Slovene Golf Courses

Sava Hoteli Bled d.d., Hotel Park

Cycling hotel − 3rd category Badge Slovene Tourist Board

Sava Hoteli Bled d.d., Camping Bled

Cyclist-friendly campsite Badge Slovene Tourist Board

Sava Hoteli Bled d.d., Camping Bled

2nd place in the medium-sized campsite category

2nd place My Country − Beautiful and Hospitable project, Gorenjska Tourism Association

Employees Achievement Acknowledgement/Award Institution

Andrej ©prajc, MSc, director of Tourism in the Sava Group

Acknowledgement to workers in tourism sector on World Tourism Day

Best Manager in Tourism 2008 Award

Directorate for Tourism, Ministry of the Economy RS and Slovene Tourist Board

Igor Jagodic, Slovene national chef team member, Grand Hotel Toplice

2 silver and 2 bronze medals

Silver medals of the Slovene national chef team for:• Menu with 3 courses and• Cold hors d’oeuvres and

refreshments plate • Bronze medals of the

Slovene national chef team for vegetarian plate and exhibited confectionary art

22nd Culinary Olympics IKA, Erfurt, Germany


Silver medal Silver medal for exhibited culinary products and main course cooking

25th international Intergastra 2008 trade show, Stuttgart, Germany


Gold medal Gold medal in A category (exhibition plate for 8 persons)

83rd Herring Feast, Grand Hotel Union

Simon Bertoncelj, Grand Hotel Toplice

Gold medal Gold medal in A category (exhibition plate for 8 persons)

83rd Herring Feast, Grand Hotel Union

161

THE TOURISM DIVISION COMPANIES IN NORTH-EASTERN SLOVENIA


ZdravilišËe Radenci d.o.o. together with Sava Medical in Storitve d.o.o.

Acknowledgement for an outstanding and innovative contribution to integrated dealing with risk assessment

National award for a good practice case A healthy, Content and Motivated Associate − the Most Important Company Asset for good occupational health and safety practice in 2008

6th national competition for Good Occupational Health and Safety Practice, Ministry of Labour, Family and Social Affairs RS

ZdravilišËe Radenci d.o.o. and Hotel Jeruzalem

Acknowledgement for a contribution to the development of tourism in the region of Pomurje

Acknowledgement Pomurje Tourist Association

Terme Ptuj d.o.o.Grand Hotel Primus


ZdravilišËe Radenci d.o.o.Hotel Radin


Terme Lendava d.o.o.Hotel Lipa


Terme 3000 d.o.o. 2nd place for the best arranged and most hospitable health resorts

2nd place in the large spas and health resorts category

My Country − Beautiful and Hospitable campaign, Slovene Tourist Board

Terme 3000 d.o.o. 3rd place 3rd place in the large spa category

Best Slovene Swimming Pool 2008 campaign, organised by the Good Morning, Slovenia radio broadcast, Radio Slovenia

Terme 3000 d.o.o. Plaque for successful and zealous work and merits in the development of IPA

Plaque Regional club IPA (International Police Association) for Pomurje

Terme Ptuj d.o.o. 2nd place for the best arranged and hospitable health resort

2nd place in the small-sized spas and health resorts category


Terme Lendava d.o.o. 3rd place for the best arranged and hospitable health resort

3rd place in the small-sized spas and health resorts category


Terme Ptuj d.o.o. 1st place 1st place in the large spas category


Terme Ptuj d.o.o. Special acknowledgement for the National Championships in Toboggan Racing

Special award for an innovative tourist product


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Annual Report



Terme 3000 d.o.o., Terme Radenci d.o.o., Terme Lendava d.o.o., Terme Ptuj d.o.o., Terme Banovci

Medal and acknowledgement winners at the 55th Catering and Tourism Meeting

67 medals and acknowledgements


Terme Banovci Acknowledgement for quality and success at the 55th Catering and Tourism Meeting

Acknowledgement for quality and success on the 40th anniversary of the development of tourism


Terme Banovci Plaque on the 40th anniversary of the development of tourism

Plaque by Community Veržej on the 40th anniversary of the development of tourism

Community Veržej

Employees Achievement Acknowledgement/Award Institution

Daniel Kozar, Slovene national chef team member, Terme 3000 d.o.o

2 silver and 2 bronze medals Silver medals of the Slovene national chef team for:• menu with 3 courses and• cold hors d’oeuvres and

refreshments plate Bronze medals of the Slovene national chef team for:• vegetarian plate• exhibited confectionary

art


Daniel Kozar, Slovene national chef team member, Terme 3000 d.o.o.

2 gold medals Gold medal for:• vegetarian plate and

menu with 3 courses, and• culinary artistic creation

from salt dough

25th international Intergastra 2008 trade show, Stuttgart, Germany

Danilo »urman, Terme 3000 d.o.o.

The highest acknowledgement for a contribution to the quality of gastronomic services at the 55th Catering and Tourism Meeting

Acknowledgement for quality and success


Aleksander KovaË, Terme 3000 d.o.o.

The highest acknowledgement for long-standing work and a contribution to the quality of gastronomic offer at the 55th Catering and Tourism Meeting

Acknowledgement for quality and success


©tefan Sraka, Slovene national junior chef team member Terme 3000 d.o.o.

Bronze medal Bronze medal of the Slovene national chef team for culinary exhibitions of place settings


Peter Žižek, Terme Lendava d.o.o.

Silver acknowledgement for preparing and cooking the BograË dish

Silver acknowledgement BograË festival

Peter Žižek, Terme Lendava d.o.o.

Gold acknowledgement for preparing and cooking the BograË dish

Gold acknowledgement 12th BograË festival organised by the catering tourism company RPS 04, Murska Sobota

163

6. Developing the social community

6.1. Sponsorships and donations to the social community

In 2008 too, the Sava Group continued to enhance funds for sponsorships and donations, which are allocated to a broad sphere of beneficiaries. The greatest share of funds is earmarked for sport, then culture, professional development, help in distress and support to the people who help in preserving the natural environment through various activities. Our employees integrate into the social community by transferring their expertise, experiences and abilities.

In the Sava Group we link our progress with that of the broader community. Our development strategy is therefore based on the principles of sustainable development and for many years we have supported the development of local communities. When choosing to whom we allocate funds, priority is given to long-term relationships with the people we sponsor, to projects aimed at larger groups of people and the youngest members of society. Our employees often participate in these activities.

In 2008, Sava Group companies earmarked €755,000 in total for sponsorships and donations in various areas. We proceed with the policy of enhancing our support: in 2008 the funds for sponsorships and donations were 28% higher than in 2007.

SAVA GROUP

FUNDS EARMARKED FORSPONSORSHIPS ANDDONATIONS

in thousands

2004 2005 2006 2007 2008

1,000

900

800

700

600

500

400

300

200

100

0

•

•

•

•

•

•

•

•

•

•

•

392

473518

586

755

164

Annual Report


Numerous representatives of management teams and employees in the Sava Group actively engage in various sports, cultural, humanitarian, professional and other associations and invest many hours of their spare time to this end.

SPORT

Most of the funds – up to 73% – were allocated to sport; we support sports youth activities as well as first-rate sports teams who achieve excellent results internationally. The companies thus sponsored the following projects and organisations: – Terme Ptuj d.o.o.: Ptuj Swimming Club and the Slovene Swimming Association

during training for the national swimming team. – Terme 3000 d.o.o.: Mura Football Club and Moravske Toplice Hockey Club.– Zdravili{~e Radenci d.o.o.: Organisation of the International Tennis Youth

Tournament. – Terme Lendava d.o.o.: Lendava Football Club. – Sava Hoteli Bled d.d. and Sava d.d.: Bled Rowing Club. – Savatech d.o.o.: Several sports associations in Kranj and its surroundings.– Sava d.d.: Triglav Kranj Ski Club, ski jumps in Planica, Kranj Handball Club

and Straži{~e Basketball Club, mountain old-timers race in Ljubelj for the Hrast Memorial organised by Trži~ Automobile Association.

– Sava d.d.: Traditional support for Sava Cycling Club, for which we earmark the majority of funds needed for their day-to-day activities and co-fund the race for the Kranj Grand Prix. We sponsored the Rekreatur recreational cycling marathon, which at the 11th tourism forum received the Silver Sower award as the most innovative and creative achievement in tourism that further improves recognition of Slovene tourism services.

CULTURE

In the Sava Group we manage the preservation of our cultural and historical heritage and provide the conditions for the development of the arts and culture as follows:– Sava Hoteli Bled d.d. co-financed events of the Bled Festival and, owing to their

knowledge and experience, specialists from the EU Projects competence centre assisted in acquiring European funds.

SAVA GROUP

STRUCTURE OF FUNDSFOR SPONSORSHIPSAND DONATIONS IN 2008

in %

Sport

Culture

Humanitarian /Social Aid

Profession /Education

Ecology

7

6

13

73

1

165

– Terme 3000 d.o.o. and Sava d.d. co-financed publishing of the Agenda of the Evangelical Church and supported the institution of the Dr. Šiftar Foundation.

– Terme Lendava d.o.o. supported the Vita choir from Lendava, sponsored the Lendava theatre and two performances of Tomaž Pandur’s Caligula in this theatre.

– Terme Ptuj d.o.o. collaborated in organising the Kurent Festival in Ptuj. – Zdravili{~e Radenci d.o.o. supported the exhibition of the Slovene Christmas

crib and, in association with the Community of Ljutomer, the event to mark the 140th anniversary of the Slovene national liberation camp.

– Sava d.d.: • isalong-standingsponsorofthePre{eren Theatre in Kranj and Slovene Drama

Week; • is a sponsor of the Museum of Gorenjska and the birth-place home of

Dr France Pre{eren;• helpedKranjTouristBoardtoholdthePre{erenfairandopenKranjHouse;• sponsored talentedmusicians togetherwith theManagers’Association ina

charity ball in May;• isoneofthefoundersoftheGrowingBookproject;• sponsoredtheSlovenePrimožTrubarProtestantSocietyontheoccasionofthe

500th anniversary of the birth of Primož Trubar; and • isatraditionalsponsorofeventsandsocietiesaimedatpreservingthememory

of the values of the National Liberation Front such as: a memorial march in Dražgo{e, and a charitable event called Only One Flower… organised by the Institution of Franc Rozman Stane.

PROFESSIONAL DEVELOPMENT

We invest in all levels of education – from nursery schools to the academic field: – Savatech d.o.o. supports institutions and schools, through which it is linked

professionally, such as the Maribor Faculty of Chemistry and Chemical Technology, Ljubljana Chemical Institute, and Kranj Technical School Centre.

– Terme 3000 d.o.o. sponsors the national chef team and the 55th Catering and Tourism Meeting.

– Sava Hoteli Bled d.o.o. and Sava d.d. sponsored the Bled Strategic Forum. – Sava d.d.:

• sponsoredthe10th Business Conference in Portorož; • supportedtheconsultationoftheSloveneEconomistsSociety,GlobalSafety

Conference, a consultation of the Slovene Economists Association, Forum of Excellence held by the Slovene Business Excellence Foundation, Slovene Management Academy Society, Slovene Association of Safety Engineers and the International Institute for the Near East and Balkan Studies (IFIMES); and

• donatedfundsforeducationinnurseryandprimaryschools,supportedaliterarycompetition for primary school pupils entitled Rambling in Imagination, an international meeting of talented high school pupils called Physics Day 2008, and together with the Jan institution it provided funds for active summer holidays with educational and creative workshops.

AID IN DISTRESS

The companies of the Sava Group often allocate funds to the Slovene Red Cross or Karitas for aid in distress. In 2008, they donated substantial funds to provide aid in a natural disaster – the storm in Podravje and Pomurje. Furthermore, they sponsored numerous societies and organisations: – Zdravili{~e Radenci d.o.o. supported the Maribor branch of the Slovene Association

of Persons with Work-Related Disability and Coronary Diseases.– Terme Lendava d.o.o. participated in a charity bazaar held by the SILA Women’s

Association.

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Annual Report


– Terme 3000 d.d. joined the campaign run by the Slovene Friends of Youth Association and Slovene Red Cross entitled A Wink to the Sun.

– Sava Hoteli Bled d.d. organised the 10th golf tournament for the President’s Cup. This time the record-breaking sum of raised funds was donated to the Society for Helping Women and Children, Victims of Violence, to establish a second unit of the Safe House in Gorenjska.

– Savatech d.o.o. contributed funds to the Safe House in Gorenjska as well as the Society of Kidney Patients of Gorenjska and the Multiple Sclerosis Association.

– Sava d.d.: • donatedfundstotheAssociationtoCombatBreastCancer,KorakInstitutionfor

Protection and Rehabilitation after Head Injuries, Kranj Society of Osteoporosis Patients, Nova Brazda Alcoholics Anonymous Club, social work centres in Kranj and further afield, and the Kranj Intercommunity Society of the Blind and Weak-Sighted;

• enabledapleasantNewYears’celebration for thehomeless,andawardedblood donors;

• withintheMayor’sMarathonitsupportedtheVinkoDrakslerFoundationtoHelp Addicts and their Relatives (with numerous Sava associates participating); and

• tookpart in theGood Thought campaign to raise funds for the Oncology Institute organised by KAD, and in the campaign organised by Petrol d.d. and the Slovene Red Cross entitled Give a Toy and a Smile.

ENVIRONMENTAL PROTECTION

In all of their activities the companies of the Sava Group displayed their responsibility towards the natural environment, while supporting organisations that assist in resolving environmental issues: – The company Ensa d.o.o. supported the Ecological Society of Gorenjska. – Sava Hoteli Bled d.o.o. regularly supports Bled Society Underwater Activities,

which organises a cleaning campaign of Bled lake. – Sava d.d. earmarked funds for the Ecology Institute Narava 2001 and the Slovene

Association of Environmental Movements, and traditionally it organises the educational clean-up Let’s Clean Kranj campaign together with Kranj Scouts Association and the Municipality of Kranj.

LOCAL COMMUNITY

We support the local community through various activities and simultaneously strive to be on good terms with local residents.

Sava d.d. thus donated computer equipment to Škrlovec – the youth and family day centre, donated gifts for the programme For Our Children Too held by Kranj Social Services Centre, supported cultural performances in Šmartinski Dom in Straži{~e, A Week of Youth in Kranj, Pre{eren Fair and the event Kranj’s People to Mothers together with performing workshops in Kranj and Šen~ur. We donated funds to children from deprived families to have their holidays free of charge.

We invited local residents to attend Sava’s Open Day and a traditional meeting with neighbours to present our efforts covering environmental protection and listen to their proposals and initiatives.

167

6.2. Integration of employees in the social community

Our employees integrate in the social community through a transfer of their knowledge, experiences and abilities.

Event Participants Type of co-operation

55th catering tourism meeting Janez BohoriË, chairman of the Board of Management of Sava d.d.

Presenting opportunities for partnership co-operation with the Tourist Board and tourism sector

Career trade show Career 08 Janez BohoriË, chairman of the Board of Management of Sava d.d.

Presenting a life story and offering advice on successful development to students and young job-seekers in the lecture A Wonderful Career

Planning the development project Gorenjska Goes Up for the period 2007-2023, organised according to the principle of a public-private partnership between the state (EU) and private entrepreneurs

R & D Institute Savatech, EU projects and Personnel, Law and Organisation competence centres

Co-operation in project planning

Meeting of IT club managers at Grand Hotel Toplice, Bled, organised by Sava d.d.

Janez BohoriË, chairman of the Board of Management of Sava d.d.

Welcome speech, presentation of the Sava Group emphasising the role of information technology in Group operations

Georg Pollak, director, and Roman Rešek, assistant director of the Strategic Informatics competence centre, Sava d.d.

Presentation of the development of informatics in the Sava Group

2nd festival of families in Postojna

Irena Ropret, commissioner of the Family-Friendly Company in the Sava Group

Explaining the reasons for accessing the Family-Friendly Company certificate at the round-table debate called Investment in Relations for Higher Profits

Grand Hotel Toplice, Bled: 7th international conference Manageress Excellence organised by the manageress section at the Managers Association and Planet GV whose Golden Sponsor is Sava d.d.

Antonija Pirc, MSc, director of the Strategic Controlling competence centre

Presenting a link between values and leadership emphasising respect for ethical norms in the daily operation of organisations

Sava Hoteli Bled: Strategic Bled forum organised by the Ministry of the Exterior of the Republic of and Centre for a European Future

Stanko Cvenkel, director of Energetika Sava d.o.o.

Presenting opportunities offered in south-eastern Europe in substituting fossil fuels and the significance and advantages of wood biomass

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Annual Report


Event Participants Type of co-operation

Conference in Bled: Sick Leave in Slovenia and Challenges for the Future organised by the company Sava d.d. and Slovene Employers Association

Tatjana Lozar, director of the HR, Law and Organisation competence centre

Presenting a good practice case of minimising sick leave in the Sava Group

Bilbao, Spain: International symposium on occupational health and safety concerning musculoskeletal disorders and a good practice presentation in occupational health and safety on receiving the European award

Vesna »adež, director of Savatech d.o.o., and Janez Fabijan, director of the Safety competence centre

Presenting a good practice case in occupational health and safety: Lighten the Load

Sava Hoteli Bled d.d.: International symposium on occupational health and safety concerning musculoskeletal disorders and a good practice presentation in occupational health and safety on receiving the national award

Janez Fabijan, director of the Safety competence centre, and Ema PintariË, head of occupational health and safety

Presenting a good practice case in occupational health and safety: A Healthy Working Environment

Brdo Congress Centre, Kranj: VIII International Conference on Global Safety

Janez Fabijan, director of the Safety competence centre

Introductory speech at the conference opening

10th Business Conference, Portorož

Iva Žagar, MSc, director of the Business Finance competence centre and procurator at Sava d.d.

Presenting a view of the emerging situation and business opportunities at the international round-table debate Global Financial Crisis and its Consequence for South-Eastern Europe

169

7.1. Environmental protection

The impact on the natural environment is monitored monthly by taking measurements, and various steps are being continually introduced to minimise it. Despite increasing production and hotel accommodation capacity, energy consumption was only slightly higher owing to the efficient use of energy resources. For several years now and in 2008 too there have been no fires with material damage and environmental accidents that would impact the natural and living environment. We are making our employees as well as suppliers and the local community aware about minimising this impact.

We adopted the environmental policy back in 1994 and established and verified an efficient environment management system to control the effects of our operations in both the narrower and broader environment. These are measured monthly, and on the basis of the data obtained we determine measures to minimise any harmful effects. We are continually adapting our policy in accordance with environmental legislation and acting in conformity with international environmental standards. Our employees, business partners, shareholders and the community are acquainted with our achievements and efforts. Raising an awareness and adopting well-founded proposals by all interested parts of the public are both issues addressed by our company.

Our priority goals in the area of environmental protection are:• therationaluseofenergy,rawmaterialsandnaturalresources;• separatecollectionandrecyclingofwastetodecreasethequantityofwastefor

disposal;• thepreventionofenvironmentalpollution;• substitutionofhazardoussubstanceswithlesshazardousones;and• thetrainingofemployees.

ENVIRONMENTAL INDICATORS

We analyse environmental indicators monthly and introduce measures to decrease the impact of our operations on the environment in individual companies and at the level of the entire Sava Group. The monthly analysis includes the following environmental indicators: • Energyconsumption• Drinkingwaterconsumption• Waterpollution• Airpollution• Spaceoccupiedbystoredwaste• Useofhazardoussubstances• Noise

The Safety competence centre ensures that the policy is followed, and attends to the introduction and supervision of the performance of the measures governing environmental protection.

In 2008, the sum of €13,500,000 was invested in environmental protection for sustainable monitoring and measurement, filters, waste and the sewage charge, together with audits, fees, etc. Revenues of €35,000 due to the sale of waste packaging and PE foil were generated.

7. Environmental protection and fire safety

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Annual Report


ENERGY SOURCES

The main energy sources in the Sava Group are electricity, natural gas, heating oil and propane/butane gas. Despite a big increase in production and accommodation capacity, the total consumption of energy at the level of the Sava Group increased by only 0.15% in comparison with the year 2007. This is due to the performance of measures governing the efficient use of energy sources, which in 2008 were repeatedly verified by obtaining the Blue Energy certificate as proof that we used 10 per cent of electricity from renewable sources.

The consumption indicators by type of energy source are as follows:• Heatingoilconsumptiondecreasedby15.2%• Electricityconsumptionincreasedby4.4%• Steamconsumptiondecreasedby8.1%• Propane/butanegasconsumptionincreasedby0.8%• Naturalgasconsumptiondecreasedby2.1%

The consumption of electricity is still the highest (45%), followed by steam (24%) and natural gas (25%). The ratio among these shares does not show any great deviation from previous years.

7.2. Efficient energy management

SAVA GROUP

TOTAL ENERGYCONSUMPTION IN THEPERIOD 2004-2008

energy in MWh

2004 2005 2006 2007 2008

145,000

140,000

135,000

130,000

125,000

120,000

115,000

•

•

•

•

•

•

•

127,808.34

143,989.00

135,614.45

133,411.80 133,611.96

171

ENERGY-RELATED REVIEWS

In 2007, a Team for the Efficient Use of Energy (TEUE) was established within the Safety competence centre to prepare the basis for energy efficiency and be actively involved in conformity with future stricter energy and environmental legislation.

The tasks of TEUE are as follows: – to form a vision in the area of energy and supply of natural resources; – to determine priority operative goals on the basis of monitoring in terms of energy

resource rationalisation and efficient use of energy; and – to provide professional assistance for the company management in this regard. Increased energy efficiency and share of renewable resources is one of the most important measures taken to decrease greenhouse gas emissions and energy costs in Sava Group companies. One of the most important plans for decreasing energy and the consumption of natural resources is the Energy Improvement Project in Zdravili{~e Radenci d.o.o. that was launched in 2008.

SIGNIFICANT RESULTS IN THE DECREASE OF ENERGY CONSUMPTION

Electricity Compared to 2007, electricity consumption decreased in the following companies in 2008:• Savatechd.o.o.andSava-Schäferd.o.o.by2%• Sava-GTId.o.o.by8%• Terme3000d.o.o.by1%• Zdravili{~eRadencid.o.o.by2%

The specific consumption of electricity decreased in the companies: • Terme3000d.o.o.by4.7%• Zdravili{~eRadencid.o.o.by2%• TermeLendavad.o.o.by7.2%

SAVA GROUP

SHARE OF CONSUMEDENERGY RESOURCES IN 2008

in %

Electricity

Steam

Heating oil

Propane/butane gas

Natural gas

6.3

23.7

1.0

24.4

44.6

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Annual Report


Natural gas• Compared to 2007, consumption decreased in the following companies in

2008: • Savatechd.o.o.andSava-Schäferd.o.o.by9%• Zdravili{~eRadencid.o.o.by3%Specific consumption decreased in the company Sava Hoteli Bled d.d. by 0.3%.

Heating oilCompared to 2007, specific consumption decreased in the company Terme 3000 d.o.o. by 7.2% in 2008.

Household gas propane/butaneCompared to 2007, consumption decreased in the company Terme 3000 d.o.o. by 4% in 2008.Specific consumption decreased in the companies:• Terme3000d.o.o.by7.2%• TermePtujd.o.o.by18.8%

DECREASE IN DRINKING WATER CONSUMPTION

Drinking water consumptionIn the companies of the Sava Group the consumption of drinking water in 2008 (with regard to 2007) decreased by 3.5%, despite the operation of new accommodation facilities in Tourism. The decrease is due to our persistence to systematically reduce the consumption of drinking water as follows: • Systematicallydetectdrinkingwaterleaksinthenetworkandeliminatefaultsas

they appear.• Regularlymonitordrinkingwaterconsumption.• Ensuretherationaluseofwater.

SAVA GROUP

DRINKING WATERCONSUMPTION INTHE PERIOD 2004-2008

in m3

2004 2005 2006 2007 2008

640,000

630,000

620,000

610,000

600,000

590,000

580,000

570,000

560,000

550,000

540,000

530,000

•

•

•

•

•

•

•

•

•

•

•

•

607,048

633,374

572,745

590,769

569,792

-3.5%

173

Decrease in drinking water consumption in 2008 in comparison with 2007

Increase in drinking water consumption in 2008 in comparison with 2007

River water consumptionOwing to the installation of separate independent cooling units in the Kranj-based rubber manufacturing companies, river water consumption decreased by 10%, while specific consumption remained at the level of 2007. Despite pumping water from the river Sava, the consumed quantity does not have a perceptible impact on its flow. Simultaneously, with a decrease in river water consumption water recirculation increases; this increase in 2008 was 10% more than in 2007.

Company Decreased consumption (%) Decreased specific consumption (%)

Sava-GTI d.o.o. 49 /

Terme 3000 d.o.o. 33.7 36.2

ZdraviliπËe Radenci d.o.o. 4.7 4.3

CompanyIncreased consumption (%)

Increased specific consumption (%) Reasons for increased consumption

Kranj-based companies 65 45.5

Larger breakdowns in water supply. After a repair the daily consumption

decreased to the level it was before the breakdown.

Sava Hoteli Bled d.d. 23.4 20 /

Terme Lendava d.o.o. 42 29.7 /

Terme Ptuj d.o.o. 11Decreased by

14.5% Operation of the new hotel Primus.

SAVA GROUP

SPECIFIC DRINKING WATERCONSUMPTION ON THE KRANJPREMISES IN THE PERIOD2004-2008

in m3 water/metric tons of product

Average 2004 Average 2005 Average 2006 Average 2007 Average 2008

5.0

4.5

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

•

•

•

•

•

•

•

•

•

•

•

4.3

3.8

1.51.2

2.2

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Annual Report


Geothermal water consumptionOwing to technical improvements geothermal water consumption was reduced in 2008 in the company Sava Hoteli Bled d.d. by 42%, and specific consumption by 44%. In other companies of the Tourism division the quantities of consumed geothermal water in 2008 compared to 2007 are as follows:

Waste water treatmentThe pollution level of waste water is regularly monitored at outlets of individual units in Rubber Manufacturing companies; we are continually decreasing environmental pollution by: • returningwatertoindustrialprocesses;• utilisingclosedcoolingsystems;and• efficientoperationofinternalwastewatertreatmentapparatus.

In 2008, the total amount of waste water in all Sava Group companies was at the level of 2007. It decreased in the companies: • Savatechd.o.o.andSava-Schäferd.o.o.by22%• Terme3000d.o.o.by35%and increased in the companies: • TermeLendavad.o.o.by46%• TermePtujd.o.o.by10%

SAVA GROUP

SPECIFIC RIVER WATERCONSUMPTION IN THECOMPANIES SAVATECH d.o.o.AND SAVA-SCHÄFERIN THE PERIOD 2004-2008

v m3 water/metric tons of product


35.0

30.0

25.0

20.0

15.0

10.0

5.0

0.0

•

•

•

•

•

•

•

•

30.0

23.7

15.7

13.1 13.1

Company Geothermal water consumption (%) Decreased specific consumption (%)

Terme 3000 d.o.o. Increased by 8.3 3.2

Terme Ptuj d.o.o. Increased by 12 12.3

Terme Lendava d.o.o. At the same level 8.9

ZdraviliπËe Radenci d.o.o. At the same level 8.3

175

EMISSIONS OF GREENHOUSE GASES AND ORGANIC SOLVENTS

Greenhouse gas emissionsIn line with the Kyoto protocol Sava Group companies are committed to decreasing the emissions of greenhouse gases. Despite our endeavours to use energy more rationally and change the type of energy source, which in previous years were revealed in decreased CO2 emissions, total CO2 emissions in 2008 increased with regard to 2007, even though by only 1%.

SAVA GROUP

DIRECT AND INDIRECT CO2EMISSIONS DUE TO ENERGYCONSUMPTION IN THE PERIOD2004-2008

CO2 in metric tons

2004 2005 2006 2007 2008

54,000

52,000

50,000

48,000

46,000

44,000

42,000

40,000

•

•

•

•

•

•

•

•

45,324.22

52,612.7551,247.90

48,681.0049,145.63

> 1.0

SAVA GROUP

CONTRIBUTION OF INDIVIDUALENERGY SOURCES TO CO2EMISSIONS IN 2008

in %

Electricity

Steam

Natural gas

Heating oil

Propane/butane gas

4

21

1

61

13

176

Annual Report


Organic solvent emissions In 2008 too, the most deserving of praise for a substantial decrease in air pollution with organic solvents was the waste treatment plant for the thermal incineration of air polluted with organic solvents in the Print programme of the company Savatech d.o.o. Specific solvent emissions decreased by 2.3% when compared to 2007.

USE OF HAZARDOUS SUBSTANCES

We are continually endeavouring to replace hazardous substances with non-hazardous or less hazardous ones. The use of each chemical is carefully examined and safety precautions are being consistently introduced. The specific consumption of hazardous substances is therefore constantly decreasing. There was an increase in the Profiles programme of the company Savatech d.o.o., where due to additional charges of the LCM line with eutectic salt the consumption of this nitrite- and nitrate-based salt increased by 42.1%.

SAVA GROUP

SPECIFIC ORGANIC SOLVENTEMISSIONS IN RUBBERMANUFACTURING IN THEPERIOD 2004-2008

kg / metric tons of product


1.200

1.000

0.800

0.600

0.400

0.200

0.000

•

•

•

•

•

•

•

1.085

0.917

0.7460.692 0.676

SAVA GROUP

SPECIFIC CONSUMPTION OFLCM SALT IN THE PROFILESPROGRAMME IN THE PERIOD2004-2008



8.0

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0

•

•

•

•

•

•

•

•

•

7.2

4.64.2

2.4

3.4

177

LESS WASTE

In Rubber Manufacturing companies the separate collection of waste according to type and property was introduced several years ago:– Non-hazardous industrial waste is deposited. – Wood, metal, paper and plastic are recycled. – Hazardous waste and its packaging is incinerated or processed.– At the end of 2007 we discontinued depositing rubber waste in landfills and

delivered it for incineration instead.

Prior to transportation to an authorised waste treatment centre the quantity of waste is weighed. The quantity of deposited rubber waste decreased by 99.1%, and the specific quantity of rubber waste for incineration increased 8-fold. The specific amount of non-hazardous industrial waste decreased by 28.9%.

On the Kranj premises the quantity of deposited waste as sewage decreased by 29.4% and specific quantity by 21.9%.

SAVA GROUP

SPECIFIC RUBBER WASTEQUANTITY ON THE KRANJPREMISES IN THE PERIOD2004-2008



70.0

60.0

50.0

40.0

30.0

20.0

10.0

0.0

•

•

•

•

•

•

•

•

48.0 49.5

41.4

60.2

38.2

7.4Incineration

Landfill

SAVA GROUP

SPECIFIC QUANTITY OFLANDFILLED SEWAGE WASTEON THE KRANJ PREMISESIN THE PERIOD 2004-2008



25.0

20.0

15.0

10.0

5.0

0.0

•

•

•

•

•

•

20.1 20.5

16.4

10.1

7.9

178

Annual Report


In our endeavours to continually relieve the natural environment with landfilled waste we are examining the recycling of waste from technological processes. Our waste is partly left for further processing and partly for incineration since it has a high heating value.

Owing to planned and systematic handling in 2008, Tourism companies decreased the quantity of waste in 2008:

The only exception was the company Terme Ptuj d.o.o., in which the quantity of landfilled waste increased by 39.4%, and the specific amount by 7.5%, which was due to the opening of a new hotel.

NOISE

The day and night levels of noise in the Kranj-based rubber manufacturing companies were substantially decreased by introducing the following technical measures:• AnoisebarrierinfrontofthesolventpumpingstationnexttothePrintprogramme

building of the company Savatech d.o.o.• AnoisebarrierbythecoolingtoweradjacenttotheElastomerprogrammebuilding

of the company Savatech d.o.o.• Anoisebarrierinfrontoftheapparatusforfilteringairpollutedwithgrindsfrom

the Sava-Schäfer d.o.o. plant• AsilencerontheventilationsystemoutletintheVeloprogrammeofthecompany

Savatech d.o.o. The monitoring results reveal that noise levels during the day and at night do not exceed the prescribed limits.

In hotel rooms of Grand Hotel Toplice we decreased the noise level by: • partialrenovationofwindows,and• installationofsilencersintheventilationsystem.

SYMBIOSIS WITH THE NATURAL ENVIRONMENT

On the golf course of the company Golf in Kamp Bled d.d. visitors are in direct contact with the natural environment. We are therefore additionally committed to continually reducing the impact on the environment. Consequently, the following measures were carried out: • Thepreservationandrenewalofindigenousspeciesofplantsandanimals.• Operationinconformitywiththeprescribedpreservationof41differenthabitat

types, which we determined as prescribed in the specified typology in 2003.• New information boards on 27 holes of both golf courseswere named after

individual birds which nest on the course; these birds are presented on boards and in golf course guides – so-called birdie books – in several languages.

• Intheentiregolfcourseareawelistedplantsandvegetationandstartedaprojectto draft the horticultural map of Bled golf course.

Company Decrease in landfilled waste (%)Decrease in specific quantity of landfilled waste ( %)

Sava Hoteli Bled d.d. 11.7 14.4

Terme 3000 d.o.o. 15.3 18.4

ZdraviliπËe Radenci d.o.o. 37.2 37.6

Terme Lendava d.o.o. 6.5 14.2

179

In 2007, the golf courses of Bled and Moravske Toplice applied jointly to participate in the Life++ programme which aims at: • improvingbioticdiversity;• promotingtourisminharmonywithnature(eco-tourism);and• transferringgoodpracticetoothertouristareas.As the project did not qualify for 2008, we participated once again in the call for tenders in November 2008.

A systematic approach to fire safety resulted in a favourable impact in the area of fire safety. Recently, the number of fires has substantially decreased. In 2008, the Sava Group did not note any fires that would result either in material damage or an environmental accident affecting the natural or living environment.

The risk of fire still exists, despite improvements and good results, so it is vital to be able to identify or anticipate it and instruct employees on how to react in such incidents. Proper handling in the case of an extraordinary occurrence is in fact decisive for the extent of consequences. We therefore undertake the following measures: – In the Rubber Manufacturing companies we regularly check the qualification of

intervention teams to successfully intervene under extraordinary circumstances. – It is a tradition in October for us to participate in the pan-Slovene preventive

campaign October – A Month of Fire Safety. – We are continually monitoring the performance of precautionary fire safety

measures.

In October and November, practical training courses on handling and operating manual fire extinguishers in case of initial fires were organised in certain companies in order to ensure swift, professional and efficient intervention: – The fire drill Fire and Employee Evacuation in the Print programme of the company

Savatech d.o.o. – Fire safety drill A Fire in Hotel Savica in the company Sava Hoteli Bled d.d. – Preventive campaign Hotel Evacuation and Initial Fire Extinguishing in Terme Ptuj

d.o.o. – Preventive campaign Evacuation for Hotel Lipa in Terme Lendava d.o.o.– Fire extinguishing drill in fire safety month Fire Extinguishing Using Manual Fire

Extinguishers at these locations involving the following number of employees: • PanonskeTerme(47employees)• TermeBanovci(14employees)• TermahRadenci(24employees)

In selecting suppliers we give priority to those who have respect for nature incorporated in their business, as well as local suppliers as local supplies put less of a burden on the environment. The selection of suppliers in Purchasing is carried out with the standards: – ISO 14001: The companies Savatech d.o.o. and Sava-Schäfer d.o.o. evaluate

their contractors and suppliers and consider this in their selection. The evaluation is carried out according to the procedure as specified in the control regulations Periodic Evaluation and Selection of New Raw Materials Suppliers.

– OHSAS 18001: In accordance with an assessment methodology we obtain data from questionnaires which are used as the basis to assess a contractor. One of the criterion is risk assessment. On signing an agreement or order, safety data sheets and General Safety Instructions for Contractors are submitted.

7.3. Fire safety

7.4. Concern for the environment in the supply chain of materials and services

180

Annual Report


Responsibility towards the environment will be demonstrated further by meeting legal requirements and enhanced by the introduction of state-of-the-art methods and standards governing improvements in environmental protection. In the company Savatech d.o.o. activities will be focused on obtaining the integral environmental permit, while in Tourism we will:– preserve the biotic diversity of plants and animals; – endeavour further to build a road by-pass to relieve the hotel surroundings and

Lake Bled of exhaust fumes; and– continue to adapt hotels to meet EKO standards.

Concern for the environment begins with our employees, so we will continue to ensure their health and safety at work. This involves strengthening the safety culture, which involves preventing risk and promoting co-operation. Due to the fact that the working population is ageing, special attention is devoted to ergonomically designed equipment at the work-place.

In a healthy and safe environment we shall be able to plan and pursue our future activities jointly with our employees, thus bearing in mind that nature preserved is the best heritage for future generations.

7.5. Environmental safety in the future

Annual Report 08

181

IV.FinancialReport

Integrity knows no exception.

This applies everywhere, in all relations,

irrespective of the hierarchy, and it means

that one stands behind what has been agreed.

Integrity is closely linked to reliability, and

in business finance with the reliability of

information in particular. Through integrity

we build our reputation, co-operation, trust,

benevolence and credibility.

We live ourvalues.

INTEGRITYEma Pintar,MSc (Economics), head of treasury, CC Business Finance, Sava d.d.

Annual Report

08

184

IV.FinancialReport

1.Financial statements of the Sava Group with notes in accordance with International Financial Reporting Standards as adopted by the EU

1.1. Consolidated financial statements of the Sava Group

Consolidated income statement for the year 2008€ in thousands

Notes 2008 2007

Revenues from goods sold and services rendered 231,754 188,234

Change in inventories of products and work in progress 2,918 6,412

Other operating income 1.3.10. 3,153 4,462

Operating revenue 237,825 199,108

Cost of goods, materials and services -156,677 -118,219

Labour cost 1.3.11. -57,228 -53,873

Depreciation and amortisation -15,728 -15,192

Other write-offs 1.3.12. -11,591 -245

Other operating expense 1.3.13. -2,472 -2,604

Operating expenses -243,696 -190,133

Operating income -5,871 8,975

185

€ in thousands

Notes 2008 2007

Financial income 1.3.14. 20,543 13,232

Financial expense 1.3.14. -38,904 -14,765

Net financing expense 1.3.14. -18,361 -1,533

Share in income of associates 1.3.15. 24,536 34,199

Pre-tax profit 304 41,641

Tax 1.3.16. 1,616 -2,379

Net profit for the year 1,920 39,262

Net profit for the year attributable to:

Equity holders of the parent 2,346 39,293

Minority interest -426 -31

Net profit for the period 1,920 39,262

Basic earnings per share (€) 1.17 19.61

Diluted earnings per share (€) 1.17 19.61

Annual Report

186

IV. Financial Report

Consolidated balance sheet at 31/12/2008

€ in thousands

Notes 31/12/2008 31/12/2007

ASSETS

Property, plant and equipment 1.3.17. 252,211 257,513

Intangible assets 1.3.18. 974 1,096

Investment property 1.3.19. 49,395 29,553

Investments in associates 1.3.20. 318,135 284,732

Non-current equity securities 1.3.21. 186,795 269,500

Non-current receivables 1.3.22. 7,888 7,914

Non-current assets 815,398 850,308

Inventories 1.3.23. 42,349 42,596

Trade and other receivables 1.3.24. 28,829 35,916

Current tax receivable 1,401 4,382

Short-term investments 1.3.25. 1,030 668

Current loans 1.3.26. 29,436 15,330

Cash and cash equivalent 1.3.27. 3,199 2,513

Current assets 106,244 101,405

Total assets 921,642 951,713

187

€ in thousands

Notes 31/12/2008 31/12/2007

EQUITY AND LIABILITIES

Issued capital 83,751 83,751

Share premium 125,608 125,608

Reserves 55,199 52,913

Fair value reserve 60,691 119,635

Treasury shares -224 -224

Translation reserve 99 0

Retained earnings 155,076 161,035

Total equity attributable to equity holders of the parent 480,200 542,718

Minority interest 2,251 2,690

Total equity 1.3.28. 482,451 545,408

Non-current provisions 1.3.29. 7,845 7,723

Deferred government grants 1.3.30. 12,597 12,033

Non-current interest-bearing borrowings 1.3.31. 193,436 150,580

Non-current operating liabilities 300 242

Deferred tax liabilities 1.3.32. 4,384 32,690

Non-current liabilities 218,562 203,268

Current interest-bearing borrowings 1.3.31. 184,212 148,001

Current operating liabilities 1.3.33. 34,473 51,627

Accrued expenses 1.3.34. 1,944 3,409

Current operating liabilities 220,629 203,037

Total liabilities 439,191 406,305

Total equity and liabilities 921,642 951,713

Annual Report

188


Consolidated statement of cash flows for the year 2008€ in thousands

2008 2007

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 1,920 39,262

Adjustments for:

Depreciation of property, plant and equipment 14,727 14,384

Depreciation of intangible assets 206 260

Depreciation of investment property 794 548

Impairment of property, plant and equipment 10,794 216

Impairment of intangible assets 7 0

Impairment of investment property 283 0

Impairment of financial investments 14,878 221

Negative goodwill 0 -997

Proceeds from sale of plant, property and equipment -237 -95

Loss at disposal of property, plant and equipment 473 14

Proceeds from sale of investment property -479 -1,216

Loss from sale of investment property 135 0

Profit in sale of non-current securities -1,497 -8,544

Loss in sale of securities 911 11

Share in income of associates -24,536 -34,199

Other dividends received -17,035 -2,742

Share in profit of Group companies 0 -26

Interest expenses 19,192 12,775

Interest revenue -1,468 -1,635

Income tax liability -1,616 2,379

Income from operations prior to change in operating capital and provisions 17,452 20,616

Change in non-current receivables -666 731

Change in current receivables 9,661 -14,252

Change in inventories 248 -10,669

Change in current operating liabilities -14,303 -1,675

Change in non-current operating liabilities -1,852 22,193

Change in provisions 122 1,072

Change in government grants 564 1,924

Acquired cash in operations 11,226 19,940

Paid income tax -527 -2,414

Net cash flow from operations 10,699 17,526

189

€ in thousands

2008 2007

CASH FLOW FROM INVESTMENT ACTIVITIES

Purchase of property, plant and equipment equipment -20,774 -37,289

Proceeds from sale of property, plant and equipment equipment 1,511 12,721

Purchase of intangible assets -92 -155

Purchase of investment properties -23,079 -9,073

Proceeds from sale of investment properties 1,310 6,351

Purchase of subsidiaries -75 -936

Purchase of associates -24,352 -127,965

Proceeds from current financial investments 44 0

Purchase of current financial investments 0 -454

Proceeds from repaid loans 103,227 38,247

Expenses for granted loans -116,643 -26,520

Purchase of equity securities available for sale -44,605 -11,609

Proceeds from sale of non-current securities 28,414 25,826

Received dividends of associates 15,485 10,620

Other dividends received 17,035 2,742

Received interests 1,468 1,635

Net cash flow from investment activities -61,126 -115,859

CASH FLOWS IN FINANCING ACTIVITIES

Other increase in equity 145 1,519

Proceeds from granted non-current loans 86,241 84,563

Expenditures for granted non-current loans -27,434 -18,565

Proceeds from granted current loans 363,788 260,076

Expenses for granted current loans -346,478 -211,208

Expenses for dividends of Group's shareholders -5,957 -5,610

Paid interests -19,192 -12,775

Net cash flow from financing activities 51,113 98,000

Net increase or decrease in cash and cash equivalents 686 -333

Cash and cash equivalents at year begin 2,513 2,846

Cash and cash equivalents at end of period 3,199 2,513

Annual Report

190


Consolidated statement of changes in equity for the year 2008

€ in thousands

Issued capital

Share premium Reserves

Fair value reserve

Treasury shares

Trans- lation

reserveRetained earnings

Majority interest

Minority interest Total

Balance at 31/12/2006 83,750 125,608 46,888 39,970 -224 0 133,378 429,370 3,162 432,532

Profit 2007 0 0 0 0 0 0 39,293 39,293 -31 39,262

Profit allocation to reserves 0 0 6,026 0 0 0 -6,026 0 0 0

Dividend and bonus 0 0 0 0 0 0 -5,610 -5,610 0 -5,610

Revaluation of securities available for sale to fair value 0 0 0 85,577 0 0 0 85,577 0 85,577

Decrease due to sale of securities 0 0 0 -6,366 0 0 0 -6,366 0 -6,366

Increase for hedging againstinterest-based risk 0 0 0 454 0 0 0 454 0 454

Selling company with minority interest 0 0 0 0 0 0 0 0 -1,960 -1,960

Decrease in minority interest due to purchase of stakes 0 0 0 0 0 0 0 0 1,519 1,519

Other 1 0 -1 0 0 0 0 0 0

Balance at 31/12/2007 83,751 125,608 52,913 119,635 -224 0 161,035 542,718 2,690 545,408

Balance at 31/12/2007 83,751 125,608 52,913 119,635 -224 0 161,035 542,718 2,690 545,408

Profit 2008 0 0 0 0 0 0 2,346 2,346 -426 1,920

Dividend payout 0 0 0 0 0 0 -6,011 -6,011 0 -6,011

Profit allocation to reserves 0 0 2,286 0 0 0 -2,286 0 0 0

Change in fair value of securities available for sale 0 0 0 -58,579 0 0 0 -58,579 0 -58,579

Increase for hedging againstinterest-based risk 0 0 0 -44 0 0 0 -44 0 -44

Decrease due to sale of securities available for sale 0 0 0 -321 0 0 0 -321 0 -321

Decrease in minority interest due to purchase of stakes 0 0 0 0 0 0 0 0 -67 -67

Positive difference in purchase of minority interest 0 0 0 0 0 0 -8 -8 0 -8

Translation difference 0 0 0 0 0 99 0 99 54 153

Balance at 31/12/2008 83,751 125,608 55,199 60,691 -224 99 155,076 480,200 2,251 482,451

191

1.2. Composition of the Sava Group

On 31 December 2008 the Sava Group consisted of 31 companies: the parent company Sava d.d., 28 subsidiaries – daughter companies, and 2 joint ventures. The financial statements of all these companies are included in the consolidated financial statements of the Sava Group. In all companies the capital and voting rights are in accord.

List of companies that besides the parent company Sava d.d. are included in the Sava Group, with a comparison of ownership stakes as at 31 December 2008 and 31 December 2007

% ownership 31/12/2008

% ownership 31/12/ 2007

Change in % of ownership

2008

RUBBER MANUFACTURING DIVISION

SAVATECH d.o.o., Kranj 100.00% 100.00% 0.00%

SAVA-GTI d.o.o., Kranj 100.00% 100.00% 0.00%

SAVA-ROL d.o.o., Zagreb 76.00% 76.00% 0.00%

SAVA-SCHÄFER d.o.o., Kranj 50.00% 50.00% 0.00%

SAVAPRO d.o.o., Kranj* 60.00% 60.00% 0.00%

- SAVARUS d.o.o., Jaroslavl, Russia (owned by SAVAPRO, d.o.o.)* 99.50% 99.50% 0.00%

- FOREIGN TRADE NETWORK

SAVA TRADE GmbH, Munich, Germany 100.00% 100.00% 0.00%

SAVA TRADE sp.z.o.o., Warsaw, Poland 100.00% 100.00% 0.00%

SAVA TRADE spol.s.o.o., Prague, Czech Republic 100.00% 100.00% 0.00%

SAVA TRADE d.o.o., Split, Croatia 70.00% 70.00% 0.00%

SAVATECH TRADE Ltd., London, Great Britain 100.00% 100.00% 0.00%

SAVATECH CORP., Port Orange, Florida 95.00% 95.00% 0.00%

TOURISM DIVISION

SAVA HOTELI BLED d.d., Bled 96.71% 96.71% 0.00%

TERME 3000 d.o.o., Moravske Toplice 100.00% 97.74% 2.26%

ZDRAVILI©»E RADENCI d.o.o., Radenci 100.00% 100.00% 0.00%

TERME LENDAVA d.o.o., Lendava 100.00% 98.64% 1.36%

TERME PTUJ d.o.o., Ptuj 100.00% 100.00% 0.00%

REAL ESTATE DIVISION

SAVA IP d.o.o., Ljubljana 100.00% 100.00% 0.00%

- IP Nova d.o.o., Ljubljana (owned by SAVA IP d.o.o.) 100.00% 100.00% 0.00%

- IP NOVA A d.o.o., Ljubljana (owned by SAVA IP d.o.o.) 100.00% 100.00% 0.00%

- SAVA IPN d.o.o., Ljubljana (owned by SAVA IP d.o.o.) 100.00% 100.00% 0.00%

- SAVA IMG d.o.o., PoreË (owned by SAVA IP d.o.o.) 50.00% 50.00% 0.00%

SAVA NOVA, d.o.o., Zagreb 100.00% 100.00% 0.00%

Annual Report

192


* The company Savapro d.o.o. and the company Savarus d.o.o. were included in Rubber Manufacturing in 2008.

** The company Gea Sol International d.o.o. is stagnant.

CHANGES IN THE COMPOSITION OF THE SAVA GROUP

There were no changes in the composition of the Sava Group in 2008.

CHANGES IN THE OWNERSHIP OF SUBSIDIARIES In the company Terme Lendava d.o.o. and the company Terme 3000 d.o.o. a transfer of a minority interest was carried out to Sava d.d. as a principal shareholder. The ownership of Zdravili{~e Radenci d.o.o. was transferred from Terme 3000 d.o.o. to the holding company Sava d.d. At 31/12/2008 all more important companies are under direct Sava d.d. ownership.

OTHER CHANGES

The status of the companies Terme 3000 d.o.o. and Terme Lendava d.o.o. changed from a joint stock company to a limited liability company. The company Sava Hoteli Bled d.o.o. restructured from a limited liability company to a joint stock company. The scope of business in these companies did not change. The company Terme Radenci d.o.o. was renamed Zdravili{~e Radenci d.o.o.

INCREASE IN CAPITAL OF SUBSIDIARIES

In 2008, the holding company Sava d.d. increased capital in the following subsidiaries:– the company Savatech d.o.o. with an investment in kind totalling €2,197,000;– the company Terme Ptuj d.o.o. with an investment in kind totalling €6,000,000;– the company Sava IP d.o.o. with an investment in kind totalling €8,000,000.


% ownership 31/12/ 2007


2008

OTHER OPERATIONS

SAVA MEDICAL IN STORITVE d.o.o., Kranj 100.00% 100.00% 0.00%

GIP SAVA KRANJ d.o.o., Ruma, Serbia 100.00% 100.00% 0.00%

ENERGETIKA SAVA d.o.o., Kranj 100.00% 100.00% 0.00%

ENERGETIKA »RNOMELJ d.o.o., Kranj 50.68% 50.68% 0.00%

ENSA BH d.o.o., Srbac, Bosnia and Herzegovina 100.00% 100.00% 0.00%

SAVA ENSA dooel., Skopje, Macedonia 100.00% 100.00% 0.00%

GEA SOL International d.o.o., Kranj ** 100.00% 100.00% 0.00%

193

ASSOCIATED COMPANIES IN THE SAVA GROUP

There were no important changes in the ownership of larger associated companies in 2008, however, a 37.5% stake in the company Limb d.o.o. was sold at book value.In 2008, Sava d.d. utilised its priority right to enter 405,875 newly issued shares by Abanka Vipa d.d. The amount of payment totalled €24.4 million.

Changes in the ownership of associated companies

REPRESENTATION OFFICES IN THE SAVA GROUP

As part of the Sava Group the company Savatech d.o.o., Kranj, has representation offices, these being in Moscow and Trieste.

% ownership 31/ 12/ 2008



2008

SAVA, d.d., družba za upravljanje in financiranje, Kranj (as the parent company)

- Gorenjska Banka d.d., Kranj 45.90% 45.90% 0.00%

- Abanka Vipa d.d., Ljubljana 23.83% 23.82% 0.01%

- Limb d.o.o., Ptuj 0.00% 37.50% -37.50%

- Job d.o.o., Maribor 27.00% 27.00% 0.00%

SAVA HOTELI BLED, d.d. (as the parent company)

- Gorenjska Banka d.d., Kranj 0.16% 0.16% 0.00%

TERME LENDAVA d.o.o. (as the parent company)

- Turizem Lendava d.o.o. 33.00% 33.00% 0.00%

ENSA BH d.o.o., Srbac (as the parent company)

- Parensa d.o.o., Srbac, Bosnia and Herzegovina 40.00% 40.00% 0.00%

Annual Report

194


Sava d.d. is a company domiciled in the Republic of Slovenia. The address of the registered head office is Škofjeloška cesta 6, 4000 Kranj. The consolidated financial statements for the year ended on 31 December 2008 refer to the Sava Group, which includes the parent company Sava d.d., its subsidiaries, joint ventures and the Group’s interest in associated companies.

a) Statement of complianceThe consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU.The Board of Management approved the issue of the financial statements on 24 March 2009.

b) Basis of measurementThe consolidated financial statements are prepared on the historical cost basis except for property, plant and equipment, whose definition of values is explained further in the report, and the financial instruments classified as available for sale and derivatives that are stated at their fair value.Cost of property, plant and equipment on the day of transition to IFRS is considered the fair value of these assets.

c) Functional and presentation currencyThe consolidated financial statements are presented in Euro, which is the functional currency of the company. All financial information is presented in Euro, rounded to the nearest thousand.

d) Application of estimates and assumptionsThe preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and for all future periods which the revision affects.

1.3. Notes to the financial statements of the Sava Group in accordance with International Financial Reporting Standards as adopted by theEuropean Union

1.3.1. The reporting company

1.3.2. Basis of preparation

195

The data about important estimates of uncertainties and critical judgments, which the management prepared in the process of implementing the accounting policies and which have the strongest effect on the amounts in financial statements, are described in the following items:

• Item21–accountingbusinessthatincludesleasing• Item27–measuringliabilitiesforcertainearnings• Items27and34–provisionsandcontingentliabilities• Item33–assessingfinancialinstruments

The companies in the Sava Group have consistently applied the accounting policies for all periods shown in the enclosed consolidated financial statements.

a) Basis of consolidationThe Sava Group includes the parent company Sava d.d., 28 subsidiaries, 2 jointly controlled entities and 5 associated companies. The consolidated financial statements of the Group include the financial statements of subsidiaries, whereas the financial statements of the joint venture companies are included in proportion to the ownership stake and, in the case of the associated companies, the equity accounting method is considered, i.e. the attributable profit is added to the financial result of the Group. The parent company and subsidiaries prepare individual financial statements in accordance with SAS, whereas adjustments to IFRSs are carried out for the needs of consolidation.

SubsidiariesSubsidiaries are entities controlled by Sava d.d. Control exists when the parent company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In all subsidiaries the capital and voting rights are in accord.The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Joint venturesJoint ventures are those entities over whose activities the Group has joint control, established by contractual agreement between the Group and the contractual partner. The consolidated financial statements include the partner’s proportionate share of the entity’s assets, liabilities, revenues and expenses with items of a similar nature on a line by line basis, from the date that joint control commences until the date that joint control ceases.

AssociatesAssociates are those entities in which the Sava Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Sava Group’s share of the total recognised gains and losses of associates on an equity accounting basis, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest in an associate, the Group’s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an associate.The capital and voting rights in associates are in accord.

1.3.3. Significant accounting policies

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Transaction eliminated on consolidationIntra-group balances and any unrealised gains and losses or income and expenses arising from transactions within the Sava Group are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates are eliminated to the extent of the Group’s interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

b) Foreign currency

Foreign currency transactionsTransactions in foreign currencies are translated to the functional currency at the reference exchange rate of the ECB ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to the functional currency at the reference exchange rate of the ECB ruling at that date. Foreign exchange gains/losses present differences between the repayment value in functional currency at the beginning of the period adjusted by the amount of effective interest and payments during the period and the repayment value in foreign currency calculated at the reference exchange rate of the ECB at the period end. The foreign exchange gains/losses arising on translation are recognised in the income statement.Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to the functional currency at the reference exchange rate of the ECB ruling at the transaction date. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Euro at the reference exchange rate of the ECB ruling at the date the fair value was determined.Foreign exchange gains/losses arising from the retranslation are recognised in the income statement, which is not the case with gains/losses arising from the calculation of capital instruments available for sale, or non-financial liability determined to hedge against risk.

Foreign operationsThe assets and liabilities of foreign operations are translated to Euro at the reference exchange rate of the ECB ruling at the balance sheet date. The revenues and expenses of foreign operations are translated to Euro at rates ruling at the dates of transactions. Foreign exchange gains/losses arising on retranslation are recognised directly in a separate component of equity.

c) Financial instruments

Non-derivative financial instrumentsNon-derivative financial instruments include investments in equity and debtor’s securities, operating and other receivables, cash and cash equivalents, received and granted loans, operating and other liabilities.Non-derivative financial instruments are initially recognised at fair value increased by costs which directly relate to the transaction.Non-derivative financial instruments are recognised if the group becomes a party to the contractual provisions of the instrument. The recognition of financial assets is eliminated when contractual rights of the group towards the cash flows expire or the financial instrument is transferred to another party including risks and benefits. Purchases and sales carried out in an ordinary way are accounted for on the day when the group obliges itself to purchase or sell an asset. The recognition of financial liabilities is eliminated when the contractual liabilities of the group are expired, terminated or interrupted.

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CashCash and cash equivalents include cash on hand, on transaction accounts and call deposits. Overdrafts on transaction accounts subject to settlement on call and being a component of managing monetary assets in the Group, are included under cash and cash equivalents in the cash flow statement.

Financial assets available for saleInvestments in the group in securities are classified under financial assets available for sale. Securities available for sale are ownership securities of companies listed on the stock exchange, as well as companies that are not listed.Investments in shares and stakes of the companies are stated at fair values. The change in fair values is recognised directly in equity. After eliminating the recognition of these investments, the profit or loss as previously recognised in equity should be recognised in the net profit/loss for the financial year. The fair value of securities available for sale, which are listed on the stock exchange, equals the announced uniform price of these shares at the balance sheet day. The fair value of shares and stakes of listed companies is estimated on the basis of the most recent known transactions.If a decrease in fair value of a financial asset available for sale was recognised directly as a negative surplus from revaluation and there exists an impartial evidence that the asset is impaired over a long-term period, the impairment is recognised in the income statement as a financial expense. It is considered that impartial evidence for the examination of a financial investment exists when the fair value of the financial asset on the balance sheet date is 20% lower than the cost value of the financial asset. The examination of the impairment of the financial asset is carried out separately for each investment or group of investments

OthersOther non-derivative financial instruments are measured according to their repayment value by applying the method of effective interest, reduced by the amount of losses due to impairment.

Derivative financial instrumentsThe Group does not hold or issue derivative financial instruments for trading purposes.The Group uses derivative financial instruments to hedge its exposure to interest rates.

Derivative financial instruments are recognised initially at cost; costs related to a transaction are recognised in profit or loss upon its appearance. After initial recognition derivative financial instruments are measured at fair value, while related changes are dealt with as described further in the report.

Cash flow hedgingChanges in fair value of a derivative financial instrument determined to hedge its exposure to risk are recognised directly in equity, provided that hedging was successful. If hedging is unsuccessful, changes in fair value are shown in profit or loss. When a hedging instrument does not meet the criteria for designation of the hedge relationship, or it expires or is sold, terminated or exercised, the hedge relationship ceases to exist. The cumulative gain or loss remains in equity and is recognised when the forecasted transaction occurs.

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When a non-financial asset is subject to hedge, the amount recognised in equity is transferred under the carrying amount of the asset following its recognition. In other cases, the amount being recognised in equity is transferred to the income statement for the period, in which the asset that is hedged against risk influences the profit.

Hedging against risksWith derivative financial instruments which hedge monetary assets and liabilities in a foreign currency, hedging against risk is not performed. Changes in the fair value of derivative financial instruments are recognised in the income statement as part of foreign exchange gains and losses.

Share capitalOrdinary no-par value sharesAdditional costs that can be attributed directly to the issue of ordinary shares and share options are shown as a reduction in equity.

Repurchase of treasury sharesRepurchase of treasury shares is shown as a deductible equity item.

DividendsDividends are recognised under liabilities and are shown in the period in which the Shareholders’ Meeting adopts a resolution on dividend payment

d) Property, plant and equipment

Recognition and measurement Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.Value at cost includes costs that are directly attributed to the purchase of an asset. The cost of self-constructed assets includes cost of materials, direct labour costs and other costs directly attributed to its putting into intended use, and costs of dismantling and removing property, plant and equipment and restoring the site at which they are located. Interests on loans for acquiring property, plant and equipment do not enhance the cost value.

Certain items of property, plant and equipment with different useful lives are accounted for as separate property, plant and equipment.

Reclassification under investment propertyProperty that is being constructed or developed for future use as investment property is dealt with as property and shown at cost until the date of its completion, at which time it is reclassified as investment property.

If an owner-occupied property changes to an investment property, this property is measured at its fair value and is reclassified as investment property. The gain which appears in the repeated measurement is recognised directly in equity, while the loss is recognised directly in the income statement.

Subsequent costsThe group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. All other costs are recognised in the income statement as an expense as incurred.

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DepreciationDepreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated. The suitability of the method and useful lives are reviewed on the day of reporting.

Estimated useful lives in the current and comparable period are as follows:

Manufacturing buildings 25 to 80 years

Hotels, commercial buildings, warehouses 20 to 71 years

Office buildings 25 to 40 years

Manufacturing equipment in rubber manufacturing 4 to 20 years

Hotel furnishings 5 to 20 years

Computer equipment 2 to 5 years

Other equipment 6 to 20 years

e) Intangible assets

Goodwill (negative goodwill)Goodwill (negative goodwill) represents amounts arising on acquisition of subsidiaries, associated companies and joint ventures.

AcquisitionsGoodwill represents the difference between the cost of the acquisition and stake of the group in the net fair value of assets, liabilities and contingent liabilities of an acquired company. If the difference is negative (negative goodwill) it is recognised directly in the income statement. In associated companies the value of goodwill is included in the carrying amount of the investment in the associate.

Acquisition of minority sharesGoodwill (negative goodwill) which arises in the acquisition of minority stakes in subsidiaries represents the difference between the acquisition costs of an additional investment and the carrying amount of purchased assets on the day of exchange. It is recognised directly in capital.

Subsequent measurementGoodwill is stated at cost less any accumulated impairment losses.

Research and developmentExpenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense is incurred.

Other intangible assetsOther intangible assets that are acquired by the Group and whose useful lives are limited are stated at cost less accumulated amortisation and impairment losses.

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Subsequent expenditureSubsequent expenditure on intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

AmortisationAmortisation is accounted on a straight-line basis over the estimated useful lives of intangible assets. Intangible assets are amortised from the date they are available for use. In current and comparable year the estimated useful lives for software and other patents and licence are five years.

f) Investment property

Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. For evaluating investment properties the cost model is applied. When it should be decided whether an asset is an investment property or property, plant and equipment, the asset is an investment property if more than 20% of its entire value is used as an investment property.

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated.The useful lives for investment property are the same as for property, plant and equipment.

g) Inventories

Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.The item cost of other inventories includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of overheads based on normal operating capacity. The use of inventories is stated at weighted average prices. Inventories in the Real Estate division include interest expenses for loans hired for a specific project.

h) Construction work in progress

Construction work in progress is stated at gross uncharged value to be paid by a customer for contracting work to date. The value of construction work in progress is stated at cost plus profit to date less a provision for foreseeable losses and less progress billings. Cost includes all expenditure related directly to specific projects and allocation of fixed and variable overheads incurred in the Group’s contract activities based on normal operating capacity also expenditures for loans hired for individual projects.

Construction work in progress is represented as a part of operating receivables in the balance sheet. If payments by a customer exceed the recognised profit, the difference is stated as deferred revenue in the balance sheet.

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i) Impairment of assets

Financial assetsFinancial assets are impaired when impartial evidence exists, which shows that the expected future cash flows from this asset is decreased as a result of one or several events.

Impairment loss related to financial assets stated at payment value is calculated as the difference between the net value of an asset and the future expected cash flows, discounted at an originally valid interest rate. Impairment loss related to a financial asset intended for sale is charged at its present fair value.

With an important financial asset an impairment estimate is performed individually. The impairment estimate of other financial assets is carried out collectively with regard to their common characteristic in risk exposure.

The Group states all impairment losses in the income statement for the period. The possible loss in connection with financial assets available for sale recognised directly in equity is transferred in profit or loss.

Non-financial assetsThe Group examines the remaining carrying amount of non-financial assets of the Group except for investment property, inventories and deferred tax receivables in order to ascertain whether they are impaired. If they are impaired, the recoverable value of the asset is estimated. The estimate of goodwill and intangible assets with anindefinite useful life not yet available for sale is carried every time to date.

Impairment of assets or cash-generating items is recognised when its carrying amount exceeds its recoverable value. A cash generating unit is the smallest group of assets which generates financial inflows that to a great extent do not depend on financial inflows from other assets or groups of assets. Impairment is stated in the income statement. Loss recognised in a cash-generating unit arising from an impairment is classified so as to first reduce the carrying amount of the goodwill allocated to the cash-generating unit, and then on other assets of the unit (group of units) in proportion to the carrying amount of each item in the group.

The recoverable amount of an asset or a cash-generating unit is the greater of their fair values in use or fair value less selling costs. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

j) Operating and other receivables

Other operating and other receivablesOperating and other receivables are stated at their historical value less impairment loss.

k) Employee earnings

Liabilities for short-term employee earnings are measured without discounting and stated under expenses as work in connection with definite short-term earnings is done.

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l) Provisions

A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

m) Warranties

A provision for warranties is recognised when the underlying products or services are sold. The provision is based on historical warranty data and considering all possible outcomes with regard to their probability.

n) Onerous contracts

A provision for onerous contracts is recognised when the expected benefits to be derived by the Group are lower than the unavoidable cost of meeting its obligation under the contract. Provisions are measured at the lower of current value of the expected costs for terminating the contract or the expected costs for continuing the contractual relationship. Before the Group forms a provision, it recognises possible losses from the asset value impairment related to the contract.

o) Provisions for retirement bonuses and jubilee benefits

Provisions are formed in the amount of the estimated future payments for retirement bonuses and jubilee benefits discounted at the balance sheet date, for employees in those countries where a legal commitment for payment of retirement bonuses and jubilee benefits exists. The calculation considers total costs of retirement bonuses and costs of expected jubilee benefits until retirement and applies the projected unit method. The actuary gains or actuary losses in the current business years are entirely recognised in the income statement when ascertained.

p) Revenue

Revenue from goods soldRevenue from goods sold is recognised at fair value of received payment or receivable less paybacks and discounts, rebates for further sale and quantity discounts. Revenue is shown when the buyer has assumed all significant risk and rewards of ownership and there exists a certainty regarding the recovery of the consideration due, associated costs or the possible return of goods or products and when the Group ceases to make further decisions about sold products.Transfer of risks and rewards depends on individual provisions of the sale contract. When selling goods a transfer is performed when the goods arrive in a customer’s warehouse, and in certain international consignments a transfer is performed when the goods are loaded on a truck.

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Revenue from services renderedRevenue from services rendered is recognised in the income statement with regard to the stage of completion to date. The stage of completion is assessed by surveys of work performed. Revenue from services in the Tourism division is recognised as a service is rendered. When revenue from a tourist arrangement relates to two accounting periods they are deferred with regard to the number of days in each individual accounting period.

Revenue from construction contractsAs soon as the outcome of a construction contract can be estimated reliably, contract revenue and expense are recognised in the income statement in proportion to the stage of the contract completion. Contract revenue includes the initial amount determined upon the contract conclusion and possible changes in the volume of work under contract, requirements and performance bonuses when it is probable they will result in revenue and can be measured reliably.

The stage of completion is assessed in surveys of work performed. When the outcome of a construction contract cannot be measured reliably, contract revenue is recognised only in the part of incurred contract costs, for which it is probable to be paid.Expected losses arising from the contract are recognised as incurred.

Rental incomeRental income from investment property is recognised in the income statement on a straight line basis over the term of the lease.

Government grantsInitially government grants are recognised in financial statements as deferred revenue when there is a reasonable assurance that it will be received and that the Group will comply with the conditions attaching to it.Grants that compensate the Group for expenses incurred are recognised as revenue in the income statement on a systematic basis in the same periods in which the expenses are incurred. Grants that compensate the Group for the cost of an asset are strictly recognised in the income statement as other operating income on a systematic basis over the useful life of the asset.

q) Financing income and financing costs

Net financing income comprises interest revenues, dividend income, appropriation of financial assets available for sale, foreign exchange gains and gains arising from instruments for hedging against risk which are recognised in the income statement. Interest revenues are recognised as they arise by using the effective interest rate method. Dividend income is recognised in the income statement when the shareholder’s right for payment is exercised.

Net financing costs comprise interest payable on borrowings calculated, foreign exchange loss, impairment losses in the value of financial assets and losses arising from hedging against risk, which are recognised in the income statement. The expense of lease payments is recognised in the income statement using the effective interest rate method.

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r) Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Deferred tax from tax losses was not accounted for.

s) Net earnings per share

Share capital of the Group is divided into ordinary no-par value shares, therefore the Group states the basic earnings of the share. The basic earnings of the share is calculated so as to divide profit or loss attributable to ordinary shareholders with the weighted number of ordinary shares in the business year.The adjusted net earnings per share equal the basic net earnings of the share as the group has no priority or exchangeable bonds. The number of issued shares did not change during the year.

t) Segment reporting

A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The Group’s segment reporting is based on business segments.

u) New standards and interpretations not yet adopted

Numerous new standards, amendments to standards and interpretations that are not yet effective for the year ended 31 December 2008, and have thus not been applied in preparing the financial statements are presented below:

1. IFRS 8 Operating Segments (effective from 1 January 2009) The Standard introduces the “management approach”. IFRS 8 that the Group will

have to take into account during the preparation of the 2009 financial statements requires segment disclosure based on internal reports which will be evaluated regularly by the Group’s Chief Operating Decision Maker in deciding how to allocate resources and in assessing performance.

Currently the Group presents segment information in respect of its business and

geographical segments.

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2. Revised IAS 23 Borrowing costs (effective from 1 January 2009) The revised standard removes the option to expense borrowing costs and requires

that an entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset.

The revised IAS 23 will become mandatory for the Group’s 2009 consolidated financial statements and will constitute a change in accounting policy for the Group. In accordance with the transitional provisions the Group will apply the revised IAS 23 to qualifying assets for which capitalisation of borrowing costs commences on or after the effective date.

3. Amendments to IFRS 2 Share-based Payment (effective from 1 January 2009) The amendments to the standard clarify the definition of vesting conditions and

introduce the concept of non-vesting conditions. Non-vesting conditions are to be reflected in grant-date fair value and failure to meet non-vesting conditions will generally result in treatment as a cancellation.

The amendments to IFRS 2 are not relevant to the Group’s operations as the Group does not have any share-based compensation plans.

4. Amendments to IAS 1 Presentation of Financial Statements (effective from 1 January

2009) The amended standard requires information in financial statements to be aggregated

on the basis of shared characteristics and introduces a statement of comprehensive income. Items of income and expense and components of other comprehensive income may be presented either in a single statement of comprehensive income (effectively combining the income statement and all non-owner changes in equity in a single statement), or in two separate statements (a separate income statement followed by a statement of comprehensive income).

The Group will prepare two separate statements in the consolidated financial statements for 2009.

5. Amendment to IAS 27, Consolidated and Separate Financial Statements (effective

from 1 January 2009) The amendments remove the definition of “cost method” currently set out in IAS

27, and instead require all dividends from a subsidiary, jointly controlled entity or associate to be recognised as income in the separate financial statements of the investor when the right to receive the dividend is established.

Amendments to IAS 27 are not relevant as these are the consolidated financial statements of the Group.

Amendments will be relevant to individual statements as dividends will be recognised earlier and not only upon payment.

6. Amendments to IAS 32 Financial Instruments: Presentation, and IAS 1 Presentation of Financial Statements (effective from 1 January 2009)

The amendments introduce an exemption to the principle otherwise applied in IAS 32 for the classification of instruments as equity; the amendments allow certain puttable instruments issued by an entity that would normally be classified as liabilities to be classified as equity if, and only if, they meet certain conditions.

The amendments are not relevant to the Group’s consolidated financial statements as none of the Group companies have issued in the past any puttable instruments that would be affected by the amendments.

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7. IFRIC 13 Customer Loyalty Programmes (effective from 1 January 2008) It addresses the accounting by entities that participate in customer loyalty

programmes for their customers. It relates to customer loyalty programmes under which the customer can redeem credits for awards such as free or discounted goods or services.

IFRIC 13, which becomes mandatory for the Group’s 2009 financial statements, is not expected to have any impact on the consolidated financial statements.

In view of the accounting policies that are applied in the Group and the breakdowns, it is required to determine the fair value of both financial and non-financial assets and liabilities. The Group determined fair values of individual groups of assets for measuring and reporting purposes in accordance with the methods described below. Where additional explanations in respect of assumptions for the determination of fair values are required, these are mentioned in notes to individual items of assets or liabilities of the Group.

Investment propertyAn external, independent valuation company, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued and which has not been recently acquired, values the Group’s portfolio at least every 5 years. The fair value is based on market value being the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

If current prices in the active market cannot be determined, the value of investment property is prepared by considering the aggregate value of the expected cash flows from rents receivables. A yield which reflects the specific risks is applied in the calculation of property value on the basis of discounted net cash flows at the annual level.

Where appropriate, the valuation reflects the type of tenants actually in occupation or responsible for meeting lease commitments or likely to be in occupation after letting vacant accommodation and the market’s general perception of their creditworthiness, the allocation of maintenance and insurance responsibilities between lessor and lessee and the remaining economic life of the property. It has been assumed that whenever rent reviews or lease renewals are pending with anticipated reversionary increases, all notices and where appropriate counter notices have been served validly and within the appropriate time.

InventoriesThe fair value of inventories in business mergers is stated at their estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses and extra gain in respect of the quantity of work invested in completion of business and selling of inventories.

Investments in equity and debts securitiesThe fair value of financial instruments classified as held for trading and available for sale is their quoted bid price at the balance sheet date. The fair value of shares and stakes which are not listed is estimated on the basis of recent transactions or their financial statements. If for a certain financial investment an option contract has been made, the fair value is ascertained considering the price in the option contract.

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Operating and other receivablesThe fair value of operating and other receivables, except construction work in progress whose maturity is longer than one year, is calculated as the current value of future cash flows discounted at the market interest rate to date.

Derivative instrumentsThe fair value of interest rate swaps is based on the offer by financial institutions. The suitability of these offers is determined by using the method of discounted future net cash flows considering the maturity of an individual transaction and using market interest rates for similar instruments on the valuation date.

Non-derivative financial instrumentsFor the purpose of reporting the fair value is calculated considering the current value of future payments of the principal and interest discounted at the market interest rate on the day of reporting.

The companies of the Sava Group are exposed to various forms of financial risk, which is due to the diversity of their operations. Financial risks are monitored and managed centrally in the parent company of the Sava Group, within the operations of the Business Finance competence centre. The Sava Group has defined a uniform appearance with banks and a standard financial policy. Methodologies and instructions defining the procedures for the efficient identification, management, control and monitoring of financial risks have been created. A group of financial risks that we would like to emphasise is divided as follows: credit risk, interest rate risk, solvency risk and foreign currency risk.

CREDIT RISK

This involves the risk that a customer engaged in an agreement on a financial instrument will not meet its obligations, thus causing the company to make a financial loss. Credit risk is directly connected with commercial risk and presents a danger that trade receivables or receivables due from other business partners will be settled with a delay or not at all. For this purpose we devote special attention to customer solvency. To decrease exposure to this risk we make use of the customer rating system, ongoing compensations and supervision over bad payers. The majority of trade receivables in manufacturing and partly also in tourism services is insured with SID (Prva Kreditna Zavarovalnica d.d.) based in Ljubljana. In the real estate business it is not always possible to have insurance, therefore measures to minimise exposure to credit risk rely on our own customer rating and insurance estimates.

INTEREST RATE RISK

This involves the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. At the level of the Sava Group we have defined a standard approach for all companies with banks and a standard interest rate policy within the Group; however, the interest rate policy is managed by each separate bank and depends on the structure of its credit sources. Most bank loans are hired at a variable interest rate (EURIBOR, LIBOR, NLB PRIME). In 2008, major structural changes appeared in the interest rate, which depends on the structure of bank credit sources and their income policy. The fact is that in the case of a fixed interest rate we are not exposed to any risk of its change, yet a fixed interest rate is usually set much higher as is presently the case with a variable interest rate plus fixed surcharges.

1.3.5. Financial risk management

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To hedge against interest rate risk due to the anticipated future increase in the variable part of interest rate, we utilise the interest rate swaps offered by banks for hedging against interest rate risk. This type of hedging is applied for covering 9.1% of long-term credit indebtedness in the parent company Sava d.d., and 13.7% of long-term credit indebtedness in the Sava Group. With regard to the great counter-effects or changes in the expectations that had been caused by the global financial crisis, we were forced to use additional or counter financial instruments to maintain the achieved favourable financial position. Consequently, we adhere to the principle of prudent management of this type of risk, its regular monitoring and implementation of timely measures. Interest rate risk is indirectly reduced through the efficient management of current assets and pertaining operating and financial liabilities.

SOLVENCY RISK

This involves the risk that a company may encounter difficulties in raising financial assets to meet its financial obligations, or it is in financial distress. In accordance with the internal liquidity system we plan and monitor cash flows. In this way we are able to quickly perceive and promptly find efficient solutions to reduce this kind of risk. By cash pooling within Sava d.d. on a daily basis, we avoid contracting unnecessary debts outside of the Group.

Taking into account their favourable balance structure and high credit rating, the parent company and Sava Group companies have agreed on a satisfactory level of credit indebtedness with banks, despite the financial crisis. To preserve system liquidity we have established overdraft credits on business accounts and revolving credit lines, which both help to maintain solvency.

FOREIGN CURRENCY RISK

This involves the risk that the value of financial instruments will fluctuate due to changes in foreign currency exchange rates. As the Sava Group also operates outside of the European monetary unit, a part of its realisation is made in unconvertible currencies. This type of risk appears especially in the rubber manufacturing and energy management sectors in the states outside of the Euro region, in particular Poland, Russia and the former Yugoslav countries. The financial crisis affected these regions and their national currencies more than other parts of the Euro region; we mostly manage this risk with the so-called natural hedging, meaning that inflows and outflows in these currencies are balanced. The financial position of the Group that refers to assets and liabilities is exposed to the influence of fluctuations in certain foreign currency exchange rates. We are exposed to foreign currency risk with credits that were hired in Swiss francs and converted to the domestic currency. The value of financial assets, which refer to investments in shares and stakes of foreign companies and are exposed to foreign currency risk at the same time, were insured by concluding a forward contract.

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MANAGING EQUITY

The Board of Management of Sava d.d. maintains an optimum equity structure as foreseen in the business plans, thereby assuring the confidence of investors, creditors, the market and sustainable development of the whole Sava Group. The dividend policy is defined in the strategic documents and anticipates the long-term stable payment of dividends. The Supervisory Board monitors the return on equity and the amount of paid dividends. Sava d.d. has neither introduced an employee stock option scheme, nor makes any additional purchases of treasury shares. In the reporting year the structure of the Supervisory Board changed, but there were no changes to the method of capital management.Regulatory bodies do not have any capital requirements towards the parent company or subsidiaries in the Sava Group.

The Sava Group reports by business and geographical segment. The basic reporting form, which arises from the business segments, is founded on the internal organisational structure and management of the Group.

The prices of transfers among segments are measured on a pure business basis.

Financial results, assets and liabilities by segment include items that can be attributed directly to the segment, which is provided by the suitable legal in formal organisational structure of the Group.

BUSINESS SEGMENTS

The Sava Group includes the following business segments:• RubberManufacturingdivisionwiththeForeignTradeNetwork• Tourismdivision• RealEstatedivision• InvestmentFinancedivision• OtherOperations

GEOGRAPHICAL SEGMENTS

In stating information by geographical segment, the income of individual segments is shown in regions where customers operate.The assets of the segment are stated in respect of their geographical position.

1.3.6. Segment reporting

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Segment information is presented in respect of the Group’s business segments that are included in the Sava Group’s division.The operation by a particular division is presented in the business part of the annual report.

Data by business segment for the year 2008

Shares in the net profit of associated companies refer entirely to the Investment Finance division and are shown under item 1.3.15.

1.3.7. Data by business segment

€ in thousands

RUBBER MANUFAC-

TURING WITH

FOREIGN TRADE

NETWORK TOURISMREAL

ESTATE

OTHER OPERA-

TIONS

INVEST- MENT

FINANCE

Excluding Group

operations Total

Revenues from goods sold 100,792 0 44,784 207 0 -21,079 124,705

Revenues from services rendered 5,660 67,529 322 3,303 3,141 -9,960 69,995

Rental income 0 750 1,677 1,375 5,291 -3,823 5,270

Revenues from merchandise sold 30,882 748 0 155 0 -1 31,785

Change in inventories 1,287 0 1,604 0 0 27 2,918

Other operating income 727 1,019 31 369 637 371 3,154

Total revenues 139,348 70,045 48,418 5,409 9,069 -34,464 237,825

Share in the profit of associated companies 0 0 0 0 24,536 0 24,536

Net profit for the year 2 -19,334 1,173 -148 4,573 15,653 1,920

Assets 71,843 191,749 83,249 11,957 653,721 -90,877 921,642

Liabilities 33,968 89,368 64,523 6,928 297,783 -53,378 439,191

Purchase of property, plant and equipment 3,598 12,523 1,884 813 798 276 19,892

Depreciation 4,173 8,598 514 498 2,019 -75 15,727

Impairment in property, plant and equipment 0 10,173 0 0 0 0 10,173

211

Data by business segment for the year 2007

Data by geographical segment

Consolidated sales revenues by geographical segment.

The assets are not segmented due to the fact that the carrying amount of assets relating to the companies in Slovenia represents 97.6% of the total assets of the Group (in 2007: 97.1%).

€ in thousands

RUBBER MANUFAC-

TURING WITH

FOREIGN TRADE

NETWORK TOURISMREAL

ESTATE

OTHER OPERA-

TIONS

INVEST- MENT

FINANCE

Excluding Group

operations Total

Revenues from goods sold 126,555 0 19,392 56 0 -22,089 123,914

Revenues from services rendered 5,537 62,969 398 2,925 2,782 -19,474 55,138

Rental income 0 746 713 1,229 6,178 -4,462 4,404

Revenues from merchandise sold 3,834 850 0 94 0 0 4,778

Change in inventories 1,566 0 4,875 0 0 -29 6,412

Other operating income 822 751 203 410 2,338 -62 4,462

Total revenues 138,313 65,316 25,581 4,714 11,298 -46,115 199,108

Share in the profit of associated companies 0 0 0 0 34,199 0 34,199

Net profit for the year 3,515 -106 1,115 -177 12,053 22,863 39,262

Assets 65,325 212,464 64,897 18,304 691,602 -100,879 951,713

Liabilities 32,391 96,632 55,315 9,740 275,396 -63,170 406,304

Purchase of property, plant and equipment 3,420 25,060 14 6,678 5,736 -3,427 37,481

Depreciation 3,885 8,508 184 326 2,344 -55 15,192

Impairment in property, plant and equipment 3 0 0 0 0 0 3

€ in thousands

Slovenia EU Other Total

2008 128,662 77,940 25,153 231,754

2007 89,135 77,629 21,470 188,234

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212


In 2008, a resolution was adopted to transfer 1.36% of minority interest in the company Terme Lendava d.d. to the principal shareholder Sava d.d. The capital of the company Terme Lendava d.o.o. amounted to €4,905,000 on the day of acquisition, the purchased part of capital totalled €67,000, and the payment for the acquired stake €75,000. The positive difference totalling €8,000 was shown directly in the debit of retained profit in the capital of the Sava Group. The ownership of the company Zdravili{~e Radenci d.o.o. was transferred to the holding company Sava d.d.; thus all more important subsidiaries are under a direct Sava d.d. ownership.

In 2007, Sava’s tourist companies in Bled were integrated by merging the companies Golf in Kamp Bled d.d. and Grand Hotel Toplice Bled d.o.o. to the company G&P Hoteli Bled d.o.o. The united company was renamed Sava Hoteli Bled, Hotelirstvo in Turizem d.o.o.Through additional purchases the stake in the company Terme 3000 d.d., Moravske Toplice, was increased by a 0.13 percentage point. In the General Meeting of Terme 3000 a resolution was adopted to transfer 2.26% of the shares of minority owners to the principal shareholder Sava d.d. The resolution on share transfer was entered in the register at the beginning of 2008, therefore at 31/12/2007 the investment was entirely dealt with without the minority shareholders.In the company Terme Lendava d.d. a 5.62% stake was purchased. The difference to 7.84% represented the indirect ownership due to share transfer from Terme 3000 d.d., the parent company of Terme Lendava d.d., to the holding company Sava d.d.The increase in the ownership of Terme Radenci d.o.o. in the amount of 2.39% is the change of indirect ownership due to the increased ownership in Terme 3000 d.d., which is the parent company of Terme Radenci d.o.o.

Acquisitions of additional ownership stakes in subsidiaries in 2007

1.3.8. Acquisitions and disposals of ownership stakes in subsidiaries

€ in thousands

Acquisition date

Company equity on

acquisition date

Acquired stake

Purchased equity

Payment for acquired

stakeNegative goodwill

2007

TERME 3000 d.d. Moravske Toplice

further purchases 42,361 2.39% 1,012 630 -382

Terme Lendava d.d.

further purchases

and change in indirect ownership 4,903 7.84% 384 306 -78

Terme Radenci d.o.o.

change in indirect

ownership 22,422 2.39% 536 0 -536

Total 1,933 936 -997

213

Disposals of ownership stakes in subsidiaries in 2008 and 2007 There were no disposals of companies in 2008.In 2007 there were no disposals of companies; decreases in the ownership of companies were due to the joining of the Republic of Slovenia as a shareholder in the company Energetika ^rnomelj d.o.o., and the joining of a strategic partner in the company Savapro d.o.o. in connection with the manufacture of rubber profiles in Russia.

1.3.9. Joint ventures Two companies are included in the Sava Group, in which the parent company has a

50% stake: Sava Schäfer d.o.o., Kranj and Sava IMG d.o.o., Pore~. In consolidating we have applied the proportionate consolidation method and we present below the appropriate portion of assets, liabilities, revenues and expenses.

€ in thousands

2008 2007

Income statement

Revenues from goods sold and services rendered 1,760 1,868

Other operating income -9 41

Cost of goods, materials and services -1,151 -1,148

Labour costs -467 -454

Other operating expenses -94 -77

Tax -7 -53

Net profit for the year 32 177

Balance sheet

Property, plant and equipment 708 610

Non-current receivables 9 9

Inventories 73 113

Operating and other receivables 352 316

Interest-bearing loans 11 81

Cash and cash equivalents 3 4

Assets 1,156 1,133

Equity 760 817

Provisions 51 44

Non-current borrowings 0 0

Non-current operating liabilities 0 0

Current borrowings 96 0

Current operating liabilities 249 272

Equity and liabilities 1,156 1,133

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214


1.3.10. Other operating income

1.3.11. Labour costs

1.3.12. Impairment losses and write-offs

Other labour costs include paid employee holiday allowance, other compensations in accordance with the collective agreement (meals and commuting to and from work), and provisions for retirement bonuses and employee jubilee benefits as additionally accounted on the basis of a change in the number of employees in the Group.2,739 employees were employed in 2008 on average, while in 2007 the employee number totalled 2,631.

€ in thousands

2008 2007

Reversal of provisions not used 627 580

Income from government incentives 408 844

Realised negative goodwill in purchase of subsidiaries 0 997

Net proceeds from sale of property, plant and equipment 716 1,311

Other operating income 1,402 730

Total 3,153 4,462

€ in thousands

2008 2007

Wages and salaries 41,552 39,050

Social security expenses 7,264 6,779

Other labour costs 8,412 8,044

Total 57,228 53,873

€ in thousands

2008 2007

Impairment of property, plant and equipment 10,173 3

Write-offs of property, plant and equipment 1,256 227

Write-offs of intangible assets 8 0

Write-offs of investment property 135 0

Inventories 20 15

Total 11,591 245

In 2008, impairments in receivables were included under financial expenses therefore the comparison data for 2007 was corrected in the amount of €667,000.

215

1.3.13.Other operating expenses

Due to the fact that performance of the company Zdravili{~e Radenci d.o.o. was lower than expected, an assessment of property, plant and equipment was prepared on 30/06/2008. The estimate of assessment was carried out by an authorised appraiser of companies and an authorised appraiser of property, plant and equipment, registered at the Slovene Auditing Institute in conformity with the international standards for value assessing. The value was tested for the entire company as a cash-generating unit. The value in use was considered for the value of assessment. A 9-10% discount rate was considered in the calculations. On the basis of assessment property, plant and equipment were impaired in the amount of €10,173,000.

Survey of carrying amounts of revaluated assets in the company Zdravilišče Radenci d.o.o.

Other operating expenses do not represent a significant share in the operating expenses structure and mainly refer to contributions for the use of urban land.

€ in thousands

Type of tangible fixed asset

Carrying amount before

impairment Impairment

Carrying amount at

31/12/2008

Land 3,356 -990 2,366

Office building 27,807 -8,128 19,679

Equipment 2,891 -772 2,119

Investment property 979 -283 696

Total 35,033 - 10,173 24,860

€ in thousands

2008 2007

Forming long-term provisions 415 1,066

Other operating expenses 2,057 1,538

Total 2,472 2,604

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1.3.14.Net financing expenses

€ in thousands

2008 2007

Net gain on disposal of equity securities 1,497 8,544

Dividend income on available for sale financial assets 17,035 2,742

Interest income 1,466 1,635

Foreign exchange gains* 0 114

Others 545 197

Total financing income 20,543 13,232

Interest expenses -19,192 -12,775

Impairment of equity securities -14,878 -222

Foreign exchange losses* -3,054 0

Net loss on disposal of financial investments -911 -11

Impairment of receivables** -417 -667

Others -452 -1,090

Total financing expenses -38,904 -14,765

Net financing income -18,361 -1,533

* Foreign exchanges gains and losses were mutually settled in 2008, therefore the comparison data for 2007 was corrected too.

** In 2008, impairments of receivables were included under financing expenses, therefore the comparison data for 2007 was corrected in the amount of €667,000.

€ in thousands

2008 2007

Research and development costs 3,886 3,550

Restructuring costs 0 0

Direct operating expenses for investment property 1,541 1,498

- rent-generating 1,249 1,389

- revenue non-generating 292 109

Other data about expenses

217

Income from share of profit in associates mainly refers to Gorenjska Banka d.d., Kranj, and Abanka Vipa d.d., which became associated in 2007. Income from share of profit in associates is 28% lower than in the same period last year.

€ in thousands

2008 2007

Gorenjska Banka d.d. 19,589 24,503

Abanka Vipa d.d. 4,865 8,709

Merkur d.d.* 0 920

Other associated companies 82 67

Associated companies total 24,536 34,199

1.3.16.Income tax expenses

* At 31/12/2007 the financial investment in Merkur d.d. was transferred from investments in

associates to non-current securities available for sale.

Comparison between the actual and calculated tax rate

€ in thousands

rate 2008 rate 2007

Pre-tax profit in accordance with IFRSs 303 41,641

Income tax by applying the official rate 22.0% 67 23.0% 9,577

Tax rate effect in foreign operations -7.6% -23 0.2% 83

Tax non-deductible expenses 672.1% 2,039 3.2% 1,349

Tax free revenues -3,579.1% -10,859 -20.4% -8,500

Changed tax base due to transition to a new accounting method resulting from past changes in the accounting policies -2.0% -6 0.0% 0

Tax benefits not recognised in the income statement -129.8% -394 -0.7% -299

Effect by companies operating with a loss* 2,491.8% 7,560 0.4% 169

Effective tax rate -532.6% -1,616 5.7% 2,379

* The deferred tax receivables for tax on tax losses for the year 2008 in the amount of €7,560,000 were not recognised.

1.3.15.Share in profit of associates

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218


1.3.17. Property, plant and equipment

Income tax expenses recognised in the income statement

Movement of property, plant and equipment in the Sava Group in 2008

The data about the value of impaired assets is stated under item 1.3.12.

€ in thousands

2008 2007

Assessed tax in the current year

- for the current year -521 -2,414

Total -521 -2,414

DEFERRED TAX

- recently arisen and withdrawn temporary differences 2.137 35

Total 2,137 35

Tax to the debit of the income statement 1,616 -2,379

€ in thousands

COST Land BuildingsPlant and

machineryOther

equipmentPPE under

construction Total

Balance at 31/12/2007 29,344 279,039 95,745 18,138 4,296 426,562

Acquisitions 249 2,481 4,071 1,387 11,703 19,892

Increase in advance payment 0 0 0 0 2,637 2,637

Decrease in advance payments 0 0 0 0 -1,755 -1,755

Put into use 0 3,387 944 2,562 -6,893 0

Transfers 0 1,403 -7 49 -368 1,077

Disposals -133 -1,851 -197 -370 -66 -2,617

Write-offs 0 -957 -1,659 -916 0 -3,532

Impairments -990 -15,928 -3,233 -246 0 -20,397

Balance at 31/12/2008 28,470 267,574 95,664 20,604 9,554 421,866

ACCUMULATED DEPRECIATION

Balance at 31/12/2007 0 -113,054 -45,565 -10,430 0 -169,049

Transfers 0 116 0 0 0 116

Disposals 0 513 103 254 0 870

Write-offs 0 414 1,609 722 0 2,745

Impairments 0 7,922 2,354 114 0 10,390

Depreciation 0 -5,050 -7,712 -1,964 0 -14,726

Balance at 31/12/2008 0 -109,140 -49,211 -11,304 0 -169,654

CARRYING AMOUNT

Balance at 31/12/2007 29,344 165,985 50,180 7,708 4,296 257,512

Balance at 31/12/2008 28,470 158,434 46,453 9,301 9,554 252,212

219

Movement of property, plant and equipment in the Sava Group in 2007

€ in thousands

COST Land BuildingsPlant and

machineryOther

equipmentPPE under

construction Total

Balance at 31/12/2006 28,236 268,271 80,095 12,970 13,586 403,158

Acquisitions 1,108 9,394 18,995 1,302 6,489 37,289

Increase 0 2,624 2,971 21 -5,617 0

Put into use 0 0 0 0 2,261 2,261

Transfers 0 -922 -3,561 4,538 -355 -300

Disposals 0 -114 -613 -46 -12,068 -12,840

Write-offs 0 -216 -2,138 -648 0 -3,002

Impairments 0 0 -4 0 0 -4

Balance at 31/12/2007 29,344 279,037 95,745 18,138 4,305 426,562


Balance at 31/12/2006 0 -107,576 -43,588 -6,382 0 -157,545

Transfers 0 -86 2,879 -2,904 0 -111

Disposals 0 8 154 38 0 200

Write-offs 0 169 2,010 610 0 2,789

Impairments 0 0 1 0 0 1

Depreciation 0 -5,569 -7,020 -1,792 -1 -14,382

Balance at 31/12/2007 0 -113,054 -45,565 -10,430 -1 -169,049

CARRYING AMOUNT

Balance at 31/12/2006 28,236 160,695 36,507 6,588 13,394 245,613

Balance at 31/12/2007 29,344 165,984 50,180 7,708 4,304 257,513

Survey of mortgage values

€ in thousands

Carrying amount of mortgaged assets Value of mortgages on real estate

Sava d.d. 6,743 6,000

Sava IP d.o.o. 41,065 34,183

IP NOVA d.o.o. 8,692 5,775

SAVA NOVA d.o.o. 586 356

Terme 3000 d.o.o. 50,602 4,086

ZdravilišËe Radenci d.o.o. 54,124 8,480

Terme Ptuj d.o.o. 6,536 5,063

Terme Lendava d.o.o. 3,658 2,371

Sava Hoteli Bled d.d.* 76 -

Total 172,082 66,314

* The mortgage has not been cancelled yet.

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220


1.3.18. Intangible assets Movement of intangible assets in the Sava Group in 2008 and 2007

€ in thousands

COST VALUE 2008 2007

At year beginning 2,078 1,570

Additions 92 155

Transfers 0 355

Decreases 0 -2

Write-offs -18 0

Balance at year end 2,151 2,078


At year beginning -982 -778

Transfers 0 57

Write-offs 12 0

Amortisation -206 -260

Balance at year end -1,177 -982

CARRYING AMOUNT

At year beginning 1,096 792

Balance at year end 974 1,096

In the income statement the amortisation of intangible assets is included under depreciation and amortisation. The value of intangible assets mainly represents the investment in property rights.

221

1.3.19. Investment property Investment property is mainly real estate under operating lease.

Movement of investment property in the Sava Group in 2008

€ in thousands

COST VALUE

Land - investment

property

Buildings - investment

property Total

Balance at 31/12/2007 7,795 30,028 37,823

Acquisitions 404 22,675 23,079

Transfers from other assets 0 -1,194 -1,194

Disposals -60 -1,308 -1,368

Impairments 0 -559 -559

Balance at 31/12/2008 8,139 49,642 57,781


Balance at 31/12/2007 0 -8,270 -8,270

Disposals 0 402 402

Impairments 0 276 276

Depreciation 0 -794 -794

Balance at 31/12/2008 0 -8,386 -8,386

CARRYING AMOUNT

Balance at 31/12/2007 7,795 21,758 29,553

Balance at 31/12/2008 8,139 41,256 49,395

€ in thousands

COST VALUE

Land - investment

property

Buildings - investment

property Total

Balance at 31/12/2006 11,144 25,760 36,904

Acquisitions 589 8,484 9,073

Disposals -3,938 -4,216 -8,154

Balance at 31/12/2007 7,795 30,028 37,823


Balance at 31/12/2006 0 -10,741 -10,741

Disposals 0 3,019 3,019

Depreciation 0 -548 -548

Balance at 31/12/2007 0 -8,270 -8,270

CARRYING AMOUNT

Balance at 31/12/2006 11,144 15,019 26,163

Balance at 31/12/2007 7,795 21,758 29,553

Movement of investment property in the Sava Group in 2007

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222


1.3.20. Investments in associates

The fair value of investment property does not differ much from the carrying amount as the prevailing part of real estate under operating lease has been constructed recently, and there have not been any significant changes in the real estate market since then.

The Sava Group companies have their stakes in the following associates:

Movement of investments in associates

Important financial data about the associate Gorenjska Banka d.d., Kranj

€ in thousands

Stake in %31/12/2008

Stake in % 31/12/2007

Value 31/12/2008

Value 31/12/2007

Gorenjska Banka d. d., Kranj 46.06 46.06 175,784 169,932

Abanka Vipa d.d., Ljubljana 23.83 23.82 141,291 113,807

JOB d.o.o., Maribor 27.00 27.00 437 370

Limb d.o.o., Ptuj 0.00 37.50 0 0

Turizem Lendava d.o.o., Lendava 33.00 33.00 3 3

Panensa d.o.o., Srbac, BIH 40.00 40.00 620 620

Total 318,135 284,732

€ in thousands

2008 2007

Initial balance 284,732 176,263

Acquisitions 0 127,965

Attributable profits 24,536 34,199

Paid dividends -15,485 -10,620

Transfers 0 -43,075

Increase in capital 24,352 0

End of year balance 318,135 284,732

€ in thousands

2008 2007

Assets 1,825,832 1,732,976

Liabilities and provisions 1,470,210 1,364,673

Equity 355,622 368,303

Revenues 159,101 142,704

Net profit 42,530 53,198

223

1.3.21. Non-current securities available for sale

Important financial data about the associate Abanka Vipa d.d., Ljubljana

* The data has been prepared on the basis of the Group's consolidated financial statements

OTHER EXPLANATIONS IN RESPECT OF THE ASSOCIATED COMPANIES In the consolidated statements of the Sava Group investments in associates are recognised on an equity accounting basis. In 2008, the share of Abanka Vipa d.d. was listed on the Ljubljana Stock Exchange; the fair value of the investment in Abanka Vipa d.d. taking into account the share price at 31/12/2008 amounted to €107,720,000. In assessing the value of Abanka Vipa d.d. we applied a combination of assessment methods. As a primary method we applied the method of a net present value of future cash flows, at which a sufficiently extensive basis of comparable international companies has enabled us to combine the future cash flow method with the method of comparable companies. Within the framework of sensitivity analysis a discount rate between 6.9% and 7.9% was applied. Despite using a conservative approach, the estimated value of Abanka Vipa d.d. corresponds to the level of the bank’s share value in our financial statements.

In the Sava Group non-current securities are all classified as available for sale. They represent a financial potential that in the future will be invested in accordance with the business strategy of the Group. The major part of equity securities are shares of the companies that are listed on the Ljubljana or other stock exchanges. More than 99 per cent of them are located in the holding company Sava d.d.In 2007, the investment in shares of Merkur d.d. was stated under non-current securities available for sale. The value of investment, which is valued according to the option contract where the price is agreed at €424.94 for a share, amounts to €111,692,000.

Put option contracts in the amount of €119,836,000 are stated under non-current securities available for sale. The value of call option contracts amounts to €5,094,000.

Types of non-current securities

€ in thousands

2008* 2007*

Assets 3,911,012 3,517,074

Liabilities and provisions 3,574,240 3,163,892

Equity 336,772 353,182

Revenues 270,631 215,531

Net profit 20,414 36,810

€ in thousands

31/12/2008 31/12/2007

Shares of listed companies 55,417 256,668

Shares and stakes of unlisted companies 123,954 12,832

Mutual funds 7,424 0

Total 186,795 269,500

Annual Report

224


1.3.22. Non-current receivables

Movement of non-current securities

The contract about the financial leasing of unfurnished offices for the needs of government bodies was concluded for a period of 15 years. The contract interest rate amounts to 6.686% in the first half of the year, while in the second half year it was 7.609%. The contract interest rate is subject to annual adjustment with regard to a change in the 12-month Euribor rate.

In 2008, financial revenues arising from financial lease in the amount of €391,000 were realised whereas in the same period last year they totalled €353,000. The expected future financial revenue arising from finance lease calculated at an effective interest rate totals €2,661,000.

The discounted lowest amount of rent for financial lease where a 6.125% discount rate was used, amounts to €6,876,000; the fair value of principle is €4,225,000.

47% of other non-current operating receivables refer to approved loans to employees for the purchase of flats. These loans are insured by placing a borrower’s mortgage on the property. The remaining of non-current receivables are trade receivables.

€ in thousands

31/12/2008 31/12/2007

Balance at 01/01 269,500 128,603

Acquisitions 44,605 11,609

Change in fair value -84,292 109,859

Disposals -28,148 -23,646

Transfer in connection with associates 0 43,075

Impairment -14,870 0

Balance at 31/12 186,795 269,500

€ in thousands

Non-current receivables 31/12/2008 31/12/2007

Finance lease receivables 6,721 7,103

Granted non-current loans 477 256

Other 690 555

Total 7,888 7,914

225

1.3.23. Inventories

Analysis of maturity of non-current receivables

Movement of non-current receivables

* In 2008, advances for inventories were stated under receivables, therefore the comparison data for 2007 was corrected too.

In 2008, the companies of the Sava Group formed an allowance in inventories in the amount of €20,000, and in 2007 in the amount of €15,000.

€ in thousands

Non-current receivables

31/12/2008

1 − 5 years

More than 5 years

Finance lease receivables 2,713 4,008

Granted non-current loans 433 44

Other 661 29

Total 3,807 4,081

€ in thousands

31/12/2008 31/12/2007

Balance at 01/01 7,914 8,709

Increase 631 259

Repayments -657 -1,054

Balance at 31/12 7,888 7,914

€ in thousands

31/12/2008 31/12/2007

Materials 6,041 6,019

Work and projects in progress 23,773 26,368

Finished goods and merchandise 12,535 10,210

Total* 42,349 42,596

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226


1.3.24. Current operating and other receivables

1.3.25. Current financial investments

1.3.26. Current loans

Other receivables in the amount of €1,407,000 include the short-term portion of finance lease totalling €463,000.In 2008, the companies of the Sava Group formed a provision in trade receivables totalling €417,000. In 2007, the provision in trade receivables amounted to €667,000.

Current financial investments totalling €1,030,000 (in 2007 totalling €668,000) entirely refer to the value of interest rate swaps (in 2007 totalling €618,000). Additional disclosures in connection with the derivative financial instruments are shown under item 1.3.31.

€ in thousands

31/12/2008 31/12/2007

Trade receivables 22,848 23,603

Receivables temporary not charged 1,838 4,096

Receivables due from associates 1 0

Advances paid 442 1,471

Receivables for VAT and other taxes 2,293 4,687

Other receivables 1,407 2,059

Total 28,829 35,916

€ in thousands

31/12/2008 31/12/2007

Originated loans 26,731 12,885

Current portion of non-current loans 2,705 2,445

Total 29,436 15,330

227

1.3.27. Cash and cash equivalents

1.3.28. Equity and reserves

The agreed overdraft credit on transaction accounts amounted to €3,260,000.

Issued capital and share premium

Number of traded sharesThe approved share capital that was totally paid in amounted to €83,751,567.51. It is divided into 2,006,987 ordinary personal no-par value shares. The shareholders are entitled to a dividend in accordance with the resolution as adopted by the Shareholders’ Meeting. The ownership structure and its changes are described in the chapter The Sava Share and Ownership Structure.The balance and movement of equity is clear from the statement in changes of equity.

Share premiumThe share premium amounts to €125,608,000. It originates from:• equityreservesthatwereformedonthebasisoftheprivatisationregulationsin

the amount of €50,821,000;• revaluatingissuedcapitalbypriceindices,whichaccordingtoSloveneAccounting

Standards was carried out until the end of 2001, in the amount of €53,305,000; and

• theadditionallypaidincapitalin2004thatamountedto€21,482,000.

ReservesReserves amounted to €55,199,000 and include:• Legalreservestotalling€7,182,000.• Reservesfortreasurysharesintheamountof€224,000 in accordance with the

Companies Act.• Other reserves totalling €47,793,000, which were formed according to the

resolution by the Board of Management. The Board of Management pursuant to Slovene legislation has a legitimate option to allocate one half of the profit for the current year as determined according to Slovene Accounting Standards into other revenue reserves. In 2008, the Board of Management allocated €2,286,000, and in 2007 €6,026,000 to other revenue reserves.

Reserves for treasury sharesAt 31/12/2008 the company had 3,289 treasury shares, which represents 0.16% of the total number of issued shares. The cost of shares amounted to €224,000. This amount reduces the total equity. No changes appeared in 2008.

Foreign currency translation reserveForeign currency translation reserve in the amount of €99,000 was entirely due to the foreign exchange gains/losses which originated from translating individual items in the financial statements of subsidiaries abroad from their national to the reporting currency.

€ in thousands

31/12/2008 31/12/2007

Cash in hand and on accounts 3,199 2,513

Total 3,199 2,513

Annual Report

228


Fair value reserveFair value reserve amounts to €60,691,000. The amount of €60,117,000 includes revaluation effects of securities available for sale to a fair value less deferred tax liability in relation to these effects. The amount of €574,000 represents the ascertained fair value of derivative financial instruments – interest rate swaps.

Retained earningsRetained earnings amount to €155,076,000 and include retained earnings from previous years in the amount of €155,024,000 less a positive difference in the purchase of minority interest totalling €8,000 and increased by the remaining net profit for the year which was not allocated to other revenue reserves totalling €60,000.

Dividends

Net earnings per shareShare capital is divided into 2,006,987 ordinary personal no-par value shares that all have voting rights and are freely transferable. All shares are paid in full. The company has no bonds available to be converted into shares.

Weighted number of ordinary shares

Net earnings belonging to ordinary shares

The corrected net earnings per share equals the net earnings per share, since equity is composed only of ordinary shares.

2008 2007

Dividend per ordinary share in the year (€) 3.00 2.80

Total amount of paid dividends to the debit of retained profit (€ in thousands) 6,011 5,610

Number of shares

2008 2007

Number of shares at 01/01 2,006,987 2,006,987

Decreased by treasury shares -3,289 -3,289

Weighted average number of ordinary shares 2,003,698 2,003,698

2008 2007

Net earnings for the financial year (€ in thousands) 1,920 39,262

Net earnings for the financial year attributable to the owners of the parent company 2,346 39,293

Weighted average number of exercised ordinary shares 2,003,698 2,003,698

Basic net earnings per share (€) 1.17 19.61

229

The appropriation of profit is only possible within the amount determined in accordance with Slovene legislation. The legislation regulates that a parent company may distribute the accumulated profit as determined in individual financial statements compiled in accordance with Slovene Accounting Standards. At 31/12/2008 the accumulated profit amounted to €29,169,000.

Reserves that are determined in accordance with IFRSs are not available for distribution. The exception is other revenue reserves as presented in accordance with Slovene Accounting Standards, which may be allocated to a distribution with the approval of the Board of Management. At 31/12/2008 reserves amounted to €47,793,000.

Minority interest, total equity of subsidiaries, net profit/loss of subsidiariesThe minority interest, attributable equity and profit for the subsidiaries are calculated indirectly, through the ownership by the parent company.In 2008, minority interest decreased by €67,000 due to the additional purchase of stakes in subsidiaries and increased by €54,000 due to foreign exchange fluctuations. The decrease in minority interest by €426,000 includes losses attributable to minority interest.

Minority interest relates to the following companies:

2008 2007

Retained net profit for the financial year for the Sava Group according to IFRS (€ in thousands) 155,076 161,035

Accumulated profit of the company Sava d.d. for the financial year according to SAS (€ in thousands) 29,169 32,893

On-distributable reserve (€ in thousands) 125,907 128,142

€ in thousands

Share of minority interestCapital belonging

to minority interestProfit belonging

to minority interest

31/12/2008 31/12/2007 31/12/2008 31/12/2007 31/12/2008 31/12/2007

Sava ROL d.o.o., Zagreb 24.00% 24.00% 38 41 0 3

Savapro d.o.o., Kranj 40.00% 40.00% 1,146 1,134 12 -65

Savarus d.o.o., Yaroslavl, Russia 40.30% 40.30% -406 -33 -428 -33

Savatrade Inc., Port Orange, Florida 5.00% 5.00% 11 7 4 2

Sava Trade d.o.o., Split 30.00% 30.00% 0 2 -2 -2

Sava Hoteli Bled d.d., Bled 3.29% 3.29% 1,161 1,142 18 47

Terme Lendava d.o.o., Lendava 0.00% 1.36% 0 67 0 0

Energetika »ernomelj d.o.o., Kranj 49.32% 49.32% 301 330 -30 17

Total 2,251 2,690 -426 -31

Annual Report

230


1.3.29. Provisions

1.3.30. Government grants

Provisions for liabilities to employees include liabilities for retirement bonuses and employee jubilee benefits in the amount as determined by the actuary calculation. A recalculation of provisions was made at the end of the year taking into account changes in the number of employees in the companies. Upon their retirement employees receive 3 average gross salaries. Jubilee benefits are paid to employees for every 10 years of services in a company.Provisions for law suits are formed after consulting lawyers who estimated the outcome of law suits filed and other claims that relate to the denationalisation procedure. The largest amount of the formed provisions for an allegedly caused damage amounts to €1,200,000 or 30% of the sued amount. The company estimates that it is not liable for damages, however, it formed this provision on the assumption that the plaintiff could submit new evidence due to which the court would partly comply with the plaintiff.

Movement of deferred government grants

Provisions due to relief in payment of social security contributions are formed in accordance with the Law on Employment Rehabilitation and Disabled Persons Employment. They are used for covering various expenses as set out in the mentioned law, in particular to cover depreciation in plant, property and equipment in the disablement company.The grants that the companies of the Tourism division obtained from the structural funds were utilised for the renovation of tourist facilities such as the building of a 5* hotel in Moravske Toplice, renovation of Hotel Radin in Radenci, construction of apartments in Lendava, building of the 4* Grand Hotel Primus, a swimming poolcomplex in Ptuj and renewal of the family hotel Savica in Bled.

€ in thousands

31/12/2007 Decrease Increase 31/12/2008

Provisions for retirement bonuses and similar liabilities 5,762 -215 297 5,844

Provisions for law suits and other claims 1,601 -108 0 1,493

Warranties 150 0 0 150

Others 210 -20 168 358

Total 7,723 -343 465 7,845

€ in thousands

31/12/2007 Increase Decrease 31/12/2008

Provisions from release in contribution payment 2,139 459 -311 2,287

Funding by EU and other funds 9,894 914 -498 10,310

Total 12,033 1,373 -809 12,597

231

1.3.31. Interest-bearing borrowings

The explanation below provides information as to the terms and conditions for interest-bearing borrowings. More information about the company’s exposure to interest and exchange rate risk is contained in Item 1.3.34 – Financial instruments.

Terms and conditions for hiring interest-bearing borrowings

€ in thousands

31/12/2008 31/12/2007

NON-CURRENT BORROWINGS

Borrowings from domestic banks 185,527 148,320

Borrowings from foreign banks 0 0

Borrowings from others 7,909 2,260

Total non-current borrowings 193,436 150,580

CURRENT BORROWINGS

Current portion in non-current borrowings from banks 41,906 29,136

Current borrowings from domestic banks 129,137 104,820

Current borrowings from others 12,179 13,564

Liabilities for dividend payments 535 481

Liabilities for interest rate swaps 456 0

Total current borrowings 184,212 148,001

Total borrowings 377,648 298,581

Non-current borrowings Interest rate in %Maturity of last

instalment Type of insurance

Borrowings from associate3M EURIBOR + 0.60

6M EURIBOR + 0.60 to 0.85 2012 - 2016bills of exchange, letter of comfort

Borrowings from domestic bank

1M EURIBOR + 1.35 to 1.80 3M EURIBOR + 0.55 to 2.87 6M EURIBOR + 0.65 to 1.30

12M EURIBOR + 1 3M CHF LIBOR + 0.64

NLB PRIME + 0.40 from 4.30 to 4.60 2009 - 2020

bills of exchange, surety, letter of comfort,

mortgage, payment order, compensation,

of liabilities, cession of future receivables,

pledge of deposit

Borrowings from foreign bank - - -

Others

TOM + 0.50 to 2.5 3M EURIBOR + 0.35 to 0.50

6M EURIBOR + 1 to 3 EBRD + 1

4.00 2009 - 2025

bills of exchange, surety, mortgage,

bank guarantee

Annual Report

232


1.3.32. Deferred tax liabilities

Maturity of non-current borrowings

Classification of borrowings in respect of a fixed and variable interest rate

The amount does not include other financial liabilities from unpaid dividends to shareholders, which at 31/12/2008 totalled €535,000, and liabilities from interest rate swaps totalling €456,000.

Deferred tax liabilities relate to the following items:

€ in thousands

31/12/2008 31/12/2007

Between 1 and 2 years 72,938 42,654

Between 2 and 5 years 86,778 82,402

More than 5 years 33,720 25,524

Total 193,436 150,580

€ in thousands

Fixed interest rate

Variable interest rate Total

Non-current loans 0 193,436 193,436

Current loans 34,811 148,410 183,221

Total 34,811 341,845 376,656

€ in thousands

31/12/2008 31/12/2007

Liabilities - revaluation of securities to fair value 5,705 34,065

Receivables - newly formed long-term provisions -3 -1

Receivables - provisions according to actuary calculation, disputes -1,327 -1,422

Liabilities - subsidiaries abroad 8 48

Total 4,384 32,690

Non-current borrowings Interest rate in %Maturity of last

instalment Type of insurance

Borrowings from associate6M EURIBOR + 0.95 to 2.00

from 5.00 to 6.10 2009bills of exchange,

surety

Borrowings from domestic bank

1M EURIBOR + 0.85 to 2.50 3M EURIBOR + 1.05 to 2.30 6M EURIBOR + 1.50 to 1.90

1M CHF LIBOR + 1.40 to 1.50 from 6.30 to 7.50 2009

bills of exchange, letter of comfort,

mortgage, compensation of liabilities

Borrowings from foreign bank - - -

Others6M EURIBOR + 1.70

3.70 2009 bills of exchange

233

1.3.33. Current operating liabilities

1.3.34. Current provisions

Movement of deferred tax liabilities:

Liabilities originating from interest from interest-bearing borrowings are included under other operating liabilities. The data for the previous year was adjusted.

88% of the amount totalling €1,944,000 are accrued costs for interest expenses for bank loans and already provided but not yet charged services on buildings and other accrued costs.

€ in thousands

31/12/2008 31/12/2007

Balance at 01/01 32,690 10,626

Change in deferred tax liability - through the income statement -2,137 -35

Change in receivables for provisions for retirement bonuses 56 39

Impairments of securities -2,193 -74

Change in deferred tax liability - through capital -26,169 22,099

Change in liability due to revaluation of securities to fair value -26,130 22,179

Other changes in liabilities -39 -80

Balance at 31/12 4,384 32,690

€ in thousands

31/12/2008 31/12/2007

Trade payables 22,439 28,682

Liabilities for received advances 2,472 9,749

VAT and other taxes 2,540 4,512

Employee payables 4,132 5,244

Other operating liabilities 2,889 3,440

Total 34,473 51,627

€ in thousands

31/12/2008 31/12/2007

Current provisions 1,944 3,409

Annual Report

234


FINANCIAL RISKS

These are managed centrally in the holding part of the competence centre Business Finance. At the Group level we have determined a standardised approach for all companies with banks and a uniform interest policy within the Group and others.

Foreign currency risk is managed by levelling inflows and outflows.

In 2008, a forward contract was concluded whose nominal value amounts to €6.5 million and is intended for hedging against foreign currency risk in connection with a financial investment in Croatia. At 31/12 the value of the instrument equalled zero, therefore the effects were not recognised in the Group statements.

Interest risk has the most important effect on operations since the majority of loans with banks are hired at a variable interest rate (EURIBOR, LIBOR, NLB PRIME).At the Group level we have determined a standardised approach for all companies with banks and a uniform interest policy within the Group and others. At Sava d.d. interest rate swaps offered by banks are used. The interest risk is indirectly minimised through continual improvements in managing current assets, thereby reducing business liabilities.

To hedge against interest risk due to the anticipated future increase in the variable part of interest rate, we already started to utilise the interest rate swaps offered by banks in 2006. At the end of 2008 the company Sava d.d. had concluded six financial instruments, which refer to hedging against interest risk in the total amount of €63.4 million. Interest rate swap transactions are used to hedge against changes in the variable interest rate of EURIBOR and LIBOR.

1.3.35. Financial instruments

€ in thousands

31/12/2008 31/12/2007

Total in € € USD CHF

Other curren-

cies Total in € EUR USD CHF

Other curren-

cies

Trade receivables 22,847 21,554 872 33 388 23,603 22,505 905 6 187

Insured bank loans -269,241 -262,256 0 -6,983 -2 -212,210 -195,910 0 -16,300 0

Loans from associates -87,328 -80,594 0 -6,734 0 -70,066 -64,022 0 -6,044 0

Trade payables and other liabilities -34,473 -32,940 -230 0 -1,303 -51,627 -51,080 -306 -4 -237

Other received loans -21,079 -21,079 0 0 0 -16,305 -16,305 0 0 -0

Gross exposure of balance sheet -389,274 -375,315 642 -13,684 -917 -326,605 -304,812 599 -22,342 -50

Sales planned for the next year 221,236 204,823 2,539 0 13,874 218,932 213,540 1,970 0 3,422

Purchases planned for the next year -135,585 -135,585 0 0 0 -131,126 -131,126 0 0 0

Gross exposure 85,651 69,238 2,539 0 13,874 87,806 82,414 1,970 0 3,422

Net exposure -303,623 -306,077 3,181 -13,684 12,957 -238,799 -222,398 2,569 -22,342 3,372

235

The effective part of interest risk management as a difference between receivables and liabilities amounts to €574,000 (€618,000 in 2007) and is included in the consolidated financial statements of the Sava Group under fair value reserves as an equity item. The fair value of interest rate swaps is announced on the Bloomberg portal.

The value was calculated according to the discounted future cash flows model.Managing interest rate risk was successful as it fluctuated in a range between 80% and 125%.9% of the long-term credit portfolio in the parent company Sava d.d. was covered using this type of hedging.

Managing interest rate risk at Sava d.d. using interest rate swaps

Solvency risk. We have established a standardised financial policy, planning cash flows and continually improving these processes. With daily cash pooling within the Sava Group we avoid unnecessary contracting of debts outside of the Group. Taking into account their favourable balance structure and high credit rating, the Sava Group companies have agreed on a satisfactory level of credit indebtedness with banks, despite the financial crisis. To preserve system liquidity we have granted bank overdraft and revolving credit lines, which both help to maintain solvency. Considering all of the above-mentioned facts, the solvency risk is low.

€ in thousands

31/12/2008Carrying amount

Contracted cash flows

6 months or less

6 - 12 months 1 - 2 years 2 - 5 years

More than 5 years

Assets 1.030 1.030 189 421 420 0 0

Liabilities -455 -455 -25 -430 0 0 0

Total 575 575 164 -9 420 0 0

€ in thousands



6 months or less


More than 5 years

Assets 618 618 142 238 238 0 0

Liabilities 0 0 0 0 0 0 0

Total 618 618 142 238 238 0 0

Annual Report

236


€ in thousands



6 months or less


More than 5 years

Non-derivative financial liabilities

Insured bank loans (excluding associates) 269,241 -282,882 -93,763 -28,314 -56,736 -79,003 -25,066

Trade payables and other liabilities 34,473 -34,539 -32,533 -460 -1,107 -424 -15

Loans from associated companies 87,328 -89,807 -47,921 -6,241 -12,736 -19,558 -3,351

Other received loans 21,079 -21,819 -14,866 -677 -6,276 0 0

Bank overdraft 0 0 0 0 0 0 0

Finance lease liabilities 0 0 0 0 0 0 0

Derivative financial liabilities

Interest rate swaps used as risk hedging instruments 455 -455 -25 -430 0 0 0

Total 412,576 -429,501 -189,108 -36,122 -76,854 -98,985 -28,432

€ in thousands



6 months or less


More than 5 years

Non-derivative financial liabilities

Insured bank loans (excluding associates) 212,210 -249,111 -76,958 -47,593 -34,573 -62,316 -27,671

Trade payables and other liabilities 51,627 -51,627 -44,323 -143 -7,079 -30 -52

Loans from associated companies 70,066 -75,493 -21,124 -15,347 -12,278 -26,744 0

Other received loans 16,305 16,508 -16,027 -481 0 0 0

Bank overdraft 0 0 0 0 0 0 0

Finance lease liabilities 260 -260 -56 -56 -112 -36 0

Derivative financial liabilities

Interest rate swaps used as risk hedging instruments 0 0 0 0 0 0 0

Total 350,468 -392,999 -158,488 -63,139 -54,042 -89,126 -27,723

237

Credit risk. This is reduced by using a standardised policy of pursuing the credit ability of our customers and other business partners. The result is a continual decrease in tied-up assets in receivables and the volume of due receivables. The companies from Rubber Manufacturing have their receivables insured with SID – Prva Kreditna Zavarovalnica d.d., Ljubljana. In the real estate business measures to minimise exposure to credit risk mainly rely on their our customer rating systems and additional insurances.

Trade receivables by geographical region

Balance and movement of accumulated depreciation of trade receivables

Maturity of trade receivables

€ in thousands

Trade receivables by geographical region

Carrying amount

2008 2007

Slovenia 7,612 8,014

EU 10,637 11,802

Other 4,598 3,787

Total 22,847 23,603

€ in thousands

2008 2007

Initial balance 1,824 1,525

Increase of impairment 417 667

Reversal of impairment -400 -368

End balance 1,841 1,824

€ in thousands

Maturity of trade receivables outside of the Group

Gross receivable Impairment Gross receivable Impairment

2008 2008 2007 2007

Not past due 17,902 34 19,331 0

Past due 0 - 30 days 4,103 0 3,021 12

Past due 31 - 120 days 896 53 1,341 140

Past due more than one year 1,787 1,754 1,734 1,672

Total 24,688 1,841 25,427 1,824

Annual Report

238


Sensitivity analysis of financial risk

Sensitivity to interest rate changeIn financial risk we are highly exposed to a change in the interest rate. In comparison with 2007 the interest rate structure of credits in the entire Sava Group with the banking system changed in 2008. At 31/12/2008 the structure consisted of a 60% share in the variable part (EURIBOR, LIBOR, NLB PRIME, with EURIBOR having the greatest part), and a 40% share of the fixed part of interest rate. Each 25 basic points of a decrease in the variable part of the average interest rate at the unchanged level of indebtedness at 31/12/2008 would decrease interest expenses by €878,000. Each 50 basic points of an increase in the fixed part of the average interest rate at the unchanged level of indebtedness at 31/12/2008 would increase interest expenses by €1,756,000.

Sensitivity to enhanced indebtednessIf the Sava Group contracted additional debts of €10 million with the banking system, the interest with regard to the present average interest rate of 4.18% as valid at 31/12/2008 would increase by €418,000.

Sensitivity to exchange rate changeThe gross exposure to CHF amounted to 3.5%, therefore the sensitivity to this exchange rate is minimum.

Fair values of financial instruments

€ in thousands

2008 2008 2007 2007

Book value Fair value Book value Fair value

Securities available for sale 186,795 186,795 269,500 269,500

Non-current receivables − financial leasing 6,721 4,225 7,103 4,879

Other current receivables 1,167 1,167 811 811

Short-term receivables 28,522 28,522 34,752 34,752

Derivative financial instruments − interest rate swap 1,030 1,030 618 618

Granted loans 29,436 29,436 15,330 15,330

Cash and cash equivalents 3,199 3,199 2,513 2,513

Non-current loans at a fixed interest rate 0 0 4,136 4,068

Non-current loans at a variable interest rate 193,436 193,436 146,444 146,444

Non-current operating liabilities 300 300 242 242

Current loans 184,212 184,212 148,001 148,001

Derivative financial instruments − interest rate swap 456 456 0 0

Current operating liabilities 34,473 34,473 51,627 51,627

239

ESTIMATING FAIR VALUES

Securities available for saleThe fair value of available-for-sale securities that are listed equals the bid market price on the balance sheet date. The fair value of shares and stakes of unlisted companies is estimated on the basis of the last known transactions.

Interest-bearing loans and borrowingsThe fair value is estimated as a discounted value of expected cash flows from the principal and interests, whereby the effective interest rate equals the contracting interest rate which fluctuates and in respect of loan type it changes monthly or every three months.

Current receivables and liabilitiesFor receivables and liabilities with a remaining life of less than one year, the notional amount is deemed to reflect the fair value.

To define the contracting revenues we applied the method of the stage of completion where the stage of completion is defined as the ratio between contracting expenses at the accounting date and total contracting expenses.

Disclosures in relation to unfulfilled building contracts

1.3.36. Unfulfilled construction contracts

€ in thousands

SOTO»JE PROJECT 2008 2007

Contract revenues recognised as revenue in the period 8,529 2,665

Incurred expenses 7,594 2,539

Recognised gains 935 126

Received advances - 7,052

Retained customer payments - -

Total amount of incurred expenses increased by recognised gains (less recognised loss) until 31/12/2008 8,529 2,665

Gross receivable due from a customer for contracting work as net amount of incurred expenses increased by recognised gains, less recognised loss and progress billings 8,529 2,665

Annual Report

240


1.3.37. Contingencies

1.3.38. Related parties

At 31/12/2008 the Sava Group states no contingencies. All known liabilities are included in the consolidated financial statements.

Related parties include subsidiaries and associates, members of supervisory boards, board of management of the parent company and subsidiaries in the Group and their closer family members.

Relations with subsidiaries

Business relations among the companies of the Sava Group relate to the purchase and sale of raw materials, finished products and merchandise. Services provided within the Sava Group companies are mainly rents for real estate and equipment, the use of brand name and services by competence centres.Transactions among related parties are performed on an arm’s length basis.

Sales revenues from the disposal of subsidiaries in 2008, equity of subsidiaries at 31/12/2008 and income statement of subsidiaries in 2008:

€ in thousands

Sales revenues

2008

Equity value

31/12/2008Profit/loss

2008

Profit/loss - excluding

effects of extra-

ordinary events

2008

a) Rubber Manufacturing with the foreign trade network 137,334 37,875 2 2

- SAVATECH d.o.o., Kranj 96,202 29,596 306 306

- SAVA-GTI d.o.o., Kranj 7,635 2,409 319 319

- SAVA ROL d.o.o., Zagreb, Croatia 522 160 5 5

- SAVA-SCHÄFER d.o.o., Kranj* 3,520 1,518 64 64

- SAVAPRO d.o.o., Kranj 0 2,864 30 30

- SAVARUS d.o.o., Jaroslavl, Russia 2,603 -964 -1,067 -1,067

- Sava Trade Gmbh, Munich, Germany 13,307 954 268 268

- Sava Trade sp.z o.o., Warsaw, Poland 3,404 29 -79 -79

- Sava Trade spol.s.o.o., Prague, Czech Republic 4,788 1,017 84 84

- Sava Trade d.o.o., Split, Croatia 836 0 -8 -8

- SavaTech Trade Ltd., London, Great Britain 2,305 66 -7 -7

- Savatech Corp. Port Orange, Florida 2,212 226 87 87

241

€ in thousands

Sales revenues

2008

Equity value

31/12/2008Profit/loss

2008

Profit/loss - excluding

effects of extra-

ordinary events

2008

b) Tourism 69,027 102,381 -19,334 -1,247

- SAVA HOTELI BLED d.d., Bled 23,500 35,279 561 1,240

- PANONSKE TERME 45,527 67,102 -19,895 -2,487

- TERME 3000 d.o.o., Moravske Toplice 18,939 33,872 -7,959 -724

- TERME LENDAVA d.o.o., Lendava 4,793 5,165 287 287

- TERME PTUJ d.o.o., Ptuj 8,737 17,264 -1,336 -1,336

- ZDRAVILI©»E RADENCI d.o.o., Radenci 13,058 10,801 -10,887 -714

c) Real Estate 46,783 18,726 1,173 1,173

- SAVA IP d.o.o., Ljubljana 44,178 18,202 1,013 1,013

- IP NOVA d.o.o., Ljubljana 686 206 122 122

- SAVA NOVA d.o.o., Zagreb, Croatia 1,919 299 38 38

- SAVA IPN d.o.o., Ljubljana 0 8 0 0

- SAVA IMG d.o.o., PoreË, Croatia* 0 3 0 0

- IP NOVA A d.o.o., Ljubljana 0 8 0 0

d) Other Operations 5,040 5,029 -148 -148

- ENERGETIKA (energy manangement) 2,068 2,077 -199 -199

- ENERGETIKA SAVA d.o.o., Kranj 1,340 -289 -80 -80

- ENERGETIKA »RNOMELJ d.o.o., Kranj 367 610 -60 -60

- ENSA BH d.o.o., Srbac, Bosnia and Herzegovina 189 1,750 -60 -60

- SAVA ENSA dooel, Skopje, Macedonia 172 6 1 1

- SAVA MEDICAL IN STORITVE d.o.o., Kranj 2,946 2,952 49 49

- GIP SAVA KRANJ d.o.o., Ruma, Serbia 26 -2 2 2

- GEA SOL International d.o.o., Kranj 0 2 0 0

SUBSIDIARIES 258,184 164,011 -18,307 -220

* Total revenues, total equity and total profit/loss are shown in companies under 50% control

Annual Report

242


Relations with associates

Gorenjska Banka d.d., Kranj

The companies in the Sava Group raise loans and make deposits with Gorenjska Banka. Terms and conditions for these transactions equal those effective for other companies with a similar rating.

Survey of transactions with Gorenjska Banka d.d.

Various interest rates are charged on loans from Gorenjska Banka d.d.: 6-month EURIBOR + 0.60 to 2.00 and 5.00 %.

Abanka Vipa d.d., LjubljanaThe companies in the Sava Group raise loans with and make deposits at Abanka Vipa d.d. Terms and conditions for these transactions equal those effective for other companies with a similar rating.

Survey of transactions with Abanka Vipa d.d.

Various interest rates are charged on loans from Abanka Vipa d.d.: 3-month EURIBOR + 0.6%, 6-month EURIBOR + 0,60% to 1.00% and 6.10%.

Ownership of the Sava share 2008 2007

Number of Sava d.d. shares owned by Gorenjska Banka 52,500 52,500

Ownership stake of Gorenjska Banka in Sava d.d. 2.62 % 2.62 %

€ in thousands

2008 2007

Balance of received loans at 01/01 33,620 22,509

New loans 27,733 34,141

Repayment of loans -25,695 -22,854

Foreign currency difference 691 -176


Balance of made deposits at 31/12 0 208

€ in thousands

2008 2007


New loans 36,300 40,300



Balance of deposits made at 31/12 0 0

243

Relations with natural persons

Related natural persons own 2,890 shares in the parent company Sava d.d., which represents 0.144 per cent of ownership.

Ownership of the Sava share at 31/12/2008

Gross income* in 2008

* Gross income includes salaries, bonuses and other proceeds.

Company receivables due from related natural persons

Receivables relate to granted housing loans to employees. Loans were granted at the effective market interest rate on the day of loan approval. There are no liabilities of companies to related natural persons.

The events that appeared after the balance sheet date are described in Chapter 4.2 in the business part of the annual report. Among the events there were none which would affect the assets or liabilities balance as shown in the financial statements for the year 2008, or the going concern assumption.

No. of shares Stake in capital

Board of Management of Sava d.d. members 2,563 0.128%

Closer family members of Sava d.d. Board members 72 0.004%

Sava d.d. Supervisory Board members 122 0.006%

Managers in subsidiaries 133 0.007%

Supervisory Board members in subsidiaries 0 0.000%

Total 2,890 0.144%

€ in thousands

2008 2007

Board members and members of management in Group companies 2,983 2,979

Other employees with managerial contracts in Group companies 8,347 6,999

Supervisory Board members in Group companies 344 328

€ in thousands

31/12/2008 31/12/2007

Board members and members of management in Group companies 0 4

Other employees with managerial contracts in Group companies 154 70

Supervisory Board members in Group companies 0 0

1.3.39. Events after the balance sheet date

Annual Report

244


1.4. Statement by the Board of Management for the Sava Group

The Board of Management confirms the financial statements of the Sava Group for the year that ended on 31 December 2008.

The Board of Management confirms that when drawing up the consolidated financial statements the corresponding accounting policies were consistently applied, and the consolidated report gives a true and fair view of the financial position of the Sava Group and the results of its operations for the year 2008.

The Board of Management is responsible for the proper managing of its accounting procedures, and establishing and maintaining internal controlling in relation to the preparation and fair presentation of the financial statements, which do not contain any material misstatements originating from a fraud or error, and for adopting suitable measures to secure assets and other funds. The Board of Management confirms herewith that the financial statements and the notes have been produced on the basis of the assumption that the companies in the group will proceed with their operations and in accordance with the current legislation and International Financial Reporting Standards as adopted by the European Union.

Vinko Perčič Janez Bohorič Member of the Board Chairman of the Board

Emil Vizovišek Member of the Board

24 March 2009

245

1.5. Independent auditor’s report for the Sava Group

I feel the responsibility as a whole

which unites knowledge and humanity or

ethics. First of all, it means doing good for

people. Knowledge is thus a prerequisite –

but not the only one. We have to be humane

and we doctors in the Radenci health resort

strive for that goal. We are people who use

our expertise to help others, build mutual trust

and the trust patients have in themselves. By

doing so we spread optimism.

We live ourvalues.

RESPONSIBILITYAndrej Vugrinec, MD, internal medicine specialist, ZdravilišËe Radenci d.o.o., Tourism division

Annual Report

08

248

IV.FinancialReport

2.Financial statments of the company Sava d.d. with notes in accordance with Slovene Accounting standards

2.1.Financial statements of the company Sava d.d. in accordance with Slovene Accounting Standards

Balance sheet of the company Sava d.d. as at 31/12/2008

€ in thousands

Notes 31/12/2008 31/12/2007

ASSETS

A. FIXED ASSETS 606,473 637,847

I. INTANGIBLE FIXED ASSETS AND LONG-TERM DEFERRED COSTS AND ACCRUED REVENUES 2.4.1. 88 194

1. Long-term industrial property rights 88 194

2. Goodwill 0 0

3. Advances for intangible fixed assets 0 0

4. Long-term deferred development costs 0 0

5. Other long-term deferred costs and accrued revenues 0 0

II. TANGIBLE FIXED ASSETS 2.4.2. 8,191 10,500

1. Land and buildings 4,545 4,660

a) Land 0 0

b) Buildings 4,545 4,660

249

€ in thousands

Notes 31/12/2008 31/12/2007

2. Plant and machinery 3,110 4,414

3. Other equipment 405 200

4. Tangible fixed assets under construction 131 1,226

a) Tangible fixed assets under construction and manufacture 120 1,226

b) Advances for tangible fixed assets 11 0

III. INVESTMENT PROPERTY 2.4.3. 53,135 53,759

1. Leased to subsidiaries 36,616 37,506

2. Leased to other companies 14,101 14,449

3. Not leased 2,418 1,804

IV. LONG-TERM FINANCIAL INVESTMENTS 2.4.4. 542,050 572,532

1. Long-term financial investments except loans 539,282 570,665

a) Shares and stakes in Group companies 132,574 105,798

b) Shares and stakes in associates 220,260 195,908

c) Other shares and stakes 186,448 268,959

d) Other long-term financial investments 0 0

2. Long-term loans 2,768 1,867

a) Long-term loans to Group companies 2,768 1,863

b) Long-term loans to other entities 0 4

c) Long-term unpaid called-up capital 0 0

250

Annual Report


€ in thousands

Notes 31/12/2008 31/12/2007

V. LONG-TERM OPERATING RECEIVABLES 2.4.5. 322 433

1. Long-term operating receivables to Group companies 0 0

2. Long-term operating trade receivables 0 0

3. Long-term receivables to other entities 322 433

VI. DEFERRED TAX RECEIVABLES 2.4.6. 2,687 429

B. SHORT-TERM ASSETS 47,178 53,706

I. ASSETS (GROUPS FOR DISPOSAL) FOR SALE 0 0

II. INVENTORIES 0 0

1. Material 0 0

2. Work in process 0 0

3. Products and merchandise 0 0

4. Advances for inventories 0 0

III. SHORT-TERM FINANCIAL INVESTMENTS 2.4.7. 41,885 36,428

1. Short-term financial investments except loans 1,030 668

a) Shares and stakes in Group companies 0 0

b) Other shares and stakes 0 50

c) Other short-term financial investments 1,030 618

2. Short-term loans 40,855 35,760

a) Short-term loans to companies in the Group 16,039 24,491

b) Short-term loans to other entities 24,816 11,269

c) Short-term unpaid called-in capital 0 0

IV. SHORT-TERM OPERATING RECEIVABLES 2.4.8. 5,275 17,240

1. Short-term operating liabilities to Group companies 4,007 11,773

2. Short-term trade receivables 575 702

3. Short-term operating receivables to other entities 693 4,765

V. CASH AND CASH EQUIVALENTS 2.4.9. 18 38

1. Cash on hand and accounts 18 38

2. Short-term deposits 0 0

a) Short-term deposits in Group companies 0 0

b) Short-term deposits in associates 0 0

c) Short-term deposits in other entities 0 0

251

€ in thousands

Notes 31/12/2008 31/12/2007

C. SHORT-TERM DEFERRED COSTS AND ACCRUED REVENUES 70 49

ASSETS TOTAL 653,721 691,602

LIABILITIES

A. CAPITAL 2.4.10 355,938 416,206

I. CALLED-UP CAPITAL 83,751 83,751

1. Share capital 83,751 83,751

2. Uncalled capital (as a deductible item) 0 0

II. CAPITAL RESERVES 125,608 125,608

III. REVENUE RESERVES 54,975 52,689

1. Legal reserves 7,182 7,182

2. Reserves for treasury shares and own business stakes 224 224

3. Treasury shares and own business shares (as a deductible item) -224 -224

4. Statutory reserves 0 0

5. Other revenue reserves 47,793 45,507

IV. SURPLUS FROM REVALUATION 62,435 121,264

- from tangible fixed assets 0 0

- from intangible fixed assets 0 0

- from long-term financial investments 62,435 121,264

- from short-term financial investments 0 0

V. RETAINED NET PROFIT OR LOSS FROM PREVIOUS PERIODS 26,882 26,867

VI. NET PROFIT OR LOSS FOR THE FINANCIAL YEAR 2,287 6,027

B. PROVISIONS AND LONG-TERM ACCRUED COSTS AND DEFERRED REVENUES 2.4.12. 1,240 1,157

1. Provisions for pensions and similar liabilities 918 898

2. Other provisions 322 239

3. Long-term accrued costs and deferred revenues 0 20

C. LONG-TERM LIABILITIES 2.4.13 130,194 132,584

I. LONG-TERM FINANCIAL LIABILITIES 122,001 98,328

1. Long-term financial liabilities to Group companies 0 0

2. Long-term financial liabilities to banks 116,001 98,328

3. Long-term financial liabilities arising from bonds 0 0

4. Other long-term financial liabilities 6,000 0

252

Annual Report


€ in thousands

Notes 31/12/2008 31/12/2007

II. LONG-TERM OPERATING LIABILITIES 0 0

1. Long-term operating liabilities to Group companies 0 0

2. Long-term trade payables 0 0

3. Long-term bill payables 0 0

4. Long-term operating liabilities arising from advances 0 0

5. Other long-term operating liabilities 0 0

III. DEFERRED TAX LIABILITIES 8,193 34,256

D. SHORT-TERM LIABILITIES 2.4.14. 165,525 140,259

I. LIABILITIES INCLUDED IN GROUPS FOR DISPOSAL 0 0

II. SHORT-TERM FINANCIAL LIABILITIES 161,648 131,866

1. Short-term financial liabilities to Group companies 16,701 13,342

2. Short-term financial liabilities to banks 131,893 105,017

3. Short-term liabilities arising from bonds 0 0

4. Other short-term financial liabilities 13,054 13,507

III. SHORT-TERM OPERATING LIABILITIES 3,877 8,393

1. Short-term operating liabilities to Group companies 143 882

2. Short-term trade payables 1,606 2,409

3. Short-term bill payables 0 0

4. Short-term operating liabilities arising from advances 22 82

5. Other short-term operating liabilities 2,106 5,020

E. SHORT-TERM ACCRUED COSTS AND DEFERRED REVENUES 2.4.15. 824 1,396

TOTAL LIABILITIES 653,721 691,602

253

Income statement of the company Sava d.d. for the period January – December 2008

€ in thousands

Notes 2008 2007

1. NET SALES REVENUES 2.4.17. 8,432 8,960

a) Revenues in domestic market 8,429 8,957

To companies in the Group 6,794 7,053

To associates 0 123

To others 1,635 1,781

b) Revenues in foreign markets 3 3

To companies in the Group 3 3

To associates 0 0

To others 0 0

2. CHANGE IN THE VALUE OF INVENTORIES OF PRODUCTS AND WORK IN PROGRESS 0 0

3. CAPITALISED OWN PRODUCTS AND SERVICES 0 0

4. OTHER OPERATING REVENUES (with operating revenues from revaluation adjustment) 2.4.18. 637 2,338

5. COSTS OF MERCHANDISE, MATERIALS AND SERVICES 2.4.20. -6,793 -5,501

a) Cost of merchandise and material sold and cost of material used -468 -344

b) Cost of services -6,325 -5,157

6. LABOUR COSTS 2.4.21. -3,953 -4,546

a) Salaries and wages -3,120 -3,539

b) Social security cost (pension insurance cost shown separately) -571 -623

- Social security cost -236 -263

- Pension insurance cost -335 -360

c) Other labour costs -262 -384

7. AMORTISATION AND DEPRECIATION EXPENSES, WRITE-OFFS 2.4.22. -2,309 -2,528

a) Amortisation -2,019 -2,344

b) Operating expenses from revaluation of intangible and tangible fixed assets -146 -2

c) Operating expenses from revaluation of current assets -144 -182

8. OTHER OPERATING EXPENSES 2.4.23. -334 -251

254

Annual Report


For the calculation of the accumulated profit see page 259 of the annual report.

€ in thousands

Notes 2008 2007

9. OPERATING PROFIT -4,320 -1,528

10. FINANCIAL REVENUES FROM SHARES 2.4.24. 34,646 21,974

a) Financial revenues from shares in Group companies 733 26

b) Financial revenues from shares in associates 15,438 10,588

c) Financial revenues from shares in other companies 18,475 11,284

d) Financial revenues from other investments 0 76

11. FINANCIAL REVENUES FROM GRANTED LOANS 2.4.25. 4,936 2,857

a) Financial revenues from loans granted to Group companies 2,050 1,392

b) Financial revenues from loans granted to other entities 2,886 1,465

12. FINANCIAL REVENUES FROM OPERATING RECEIVABLES 2.4.26. 11 74

a) Financial revenues from operating receivables due from Group companies 1 0

b) Financial revenues from operating receivables due from other entities 10 74

13. FINANCIAL EXPENSES FROM IMPAIRMENTS AND WRITE-OFFS OF FINANCIAL INVESTMENTS 2.4.27. -15,781 -232

14. FINANCIAL EXPENSES FROM FINANCIAL LIABILITIES 2.4.28. -17,186 -10,480

a) Financial expenses from borrowings obtained from Group companies -287 -358

b) Financial expenses from borrowings obtained from banks -16,832 -8,786

c) Financial expenses from issued bonds 0 0

d) Financial expenses from other financial liabilities -67 -1,336

15. FINANCIAL EXPENSES FROM OPERATING LIABILITIES 2.4.29. -10 -33

a) Financial expenses from operating liabilities due to Group companies 0 0

b) Financial expenses from trade payables and bill payables -4 -4

c) Financial expenses from other operating liabilities -6 -29

16. OTHER REVENUES 2.4.30. 103 18

17. OTHER EXPENSES 2.4.30. -53 -62

18. TAX ON PROFIT 2.4.31. 0 -526

19. DEFERRED TAXES 2,227 -9

20. NET PROFIT FOR THE FINANCIAL YEAR 4,573 12,053

255

Cash flow statement of the company Sava d.d. for the period January – December 2008€ in thousands

2008 2007

A. CASH FLOWS FROM OPERATING ACTIVITIES

a) Net profit for the financial year 4,573 12,053

Pre-tax profit 2,346 12,588

Profit tax and other taxes 2,227 -535

b) Adjustments for: -5,055 -14,058

Depreciation 2,019 2,344

Operating revenues from revaluation in connection with items of investing and financing activities -605 -2,285

Operating expenses from revaluation in connection with items of investing and financing activities 146 2

Financial revenues excluding financial revenues from operating receivables -39,582 -24,831

Financial expenses excluding financial expenses from operating liabilities 32,967 10,712

c) Change in net current assets (and accruals, deferrals, provisions and deferred tax receivables and liabilities) balance sheet items 4,277 -15,395

Opening minus closing operating receivables 12,097 -15,085

Opening minus closing deferred costs and accrued revenues -21 -4

Opening minus closing deferred tax receivables -2,258 -182

Opening minus closing assets (groups for disposal) for sale 0 0

Opening minus closing inventories 0 0

Closing minus opening operating liabilities -4,669 249

Closing minus opening accrued costs and deferred revenues and provisions -489 884

Closing minus opening tax liabilities -383 -1,257

d) Surplus in inflows from operating activities or surplus of outflows from operating activities 3,795 -17,400

B. CASH FLOWS FROM INVESTING ACTIVITIES

a) Inflows from investing activities 172,755 138,993

Revenues from received interests and shares in profit in relation to investing activities 36,113 15,738

Revenues from disposal of intangible fixed assets 0 0

Revenues from disposal of tangible fixed assets 45 14,347

Revenues from disposal of investment property 867 7,217

Revenues from disposal of long-term financial investments 28,313 25,813

Revenues from disposal of short-term financial investments 107,417 75,878

256

Annual Report


€ in thousands

2008 2007

b) Outflows from investing activities -208,941 -229,544

Expenses for purchase of intangible fixed assets 0 -17

Expenses for purchase of tangible fixed assets -809 -5,736

Expenses for purchase of investment properties -821 -727

Expenses for purchase of long-term financial investments -81,176 -154,141

Expenses for purchase of short-term financial investments -126,135 -68,923

c) Surplus in inflows from investing activities or surplus in outflows from investing activities -36,186 -90,551

C. CASH FLOWS FROM FINANCING ACTIVITIES

a) Inflows from financing activities 351,328 444,497

Revenues from paid-in capital 0 0

Revenues from increase in long-term financial liabilities 55,000 79,977

Revenues from increase in short-term financial liabilities 296,328 364,520

b) Outflows from financing activities -318,957 -336,555

Expenses for interests related to financing -13,761 -9,492

Expenses for return of capital 0 0

Expenses for repayment of long-term financial liabilities -20,808 -12,692

Expenses for repayment of short-term financial liabilities -278,431 -308,766

Expenses for payment of dividends and other shares in profit -5,957 -5,605

c) Surplus in inflows from financing activities or surplus in expenses from financing activities 32,371 107,942

D. CASH AND CASH EQUIVALENTS AT END OF PERIOD 18 38

x) Net increase in cash and cash equivalents -20 -9

y) Cash and cash equivalents at beginning of period 38 47

257

Statement of changes in equity of the company Sava d.d. for the period from 31/12/2007 to 31/12/2008

€ in thousands

Called-up capital I

Capital reserves

IIRevenue reserves

III

Surplus from

revaluation IV

Retained net profit

or loss from previous periods

V

Net profit or loss for the

financial year

VI

Total capital

Share capital

Uncalled capital

(as a deductible

item)Capital

reservesLegal

reserves

Reserves for

treasury shares

and own business

stakes

Treasury shares

and own business

stakes (as a

deductible item)

Statutory reserves

Other reserves

Surplus from

revaluation

Retained net profit

Net profit for the

financial year

I/1 I/2 II III/1 III/2 III/3 III/4 III/5 IV V/1 VI/1

A. INITIAL BALANCE 31/12/2007 83,751 0 125,608 7,182 224 -224 0 45,507 121,264 26,867 6,027 416,206

B. Transfer to equity 0 0 0 0 0 0 0 0 6,206 0 4,573 10,779

a) Entry of called-up capital 0 0 0 0 0 0 0 0 0 0 0 0

b) Entry of uncalled capital 0 0 0 0 0 0 0 0 0 0 0 0

c) Entry of subscribed capital 0 0 0 0 0 0 0 0 0 0 0 0

d) Entry of additional paid-in capital 0 0 0 0 0 0 0 0 0 0 0 0

e) Entry of net profit or loss for the financial year 0 0 0 0 0 0 0 0 0 0 4,573 4,573

f) Entry of equity revaluation adjustments 0 0 0 0 0 0 0 0 0 0 0 0

g) Other increases in capital 0 0 0 0 0 0 0 6,206 0 0 6,206

h) Purchase of treasury shares and own business stakes 0 0 0 0 0 0 0 0 0 0 0 0

C. Transfer within equity 0 0 0 0 0 0 0 2,286 0 6,026 -8,312 0

a) Allocation of net profit for the financial year according to the resolution by the Board of Management and Supervisory Board 0 0 0 0 0 0 0 2,286 0 0 -2,286 0

b) Allocation of net profit to additional reserves according to the resolution by the Shareholders' Meeting 0 0 0 0 0 0 0 0 0 0 0 0

c) Balancing loss as a deductible capital item 0 0 0 0 0 0 0 0 0 0 0 0

d) Forming reserves for treasury shares and own business stakes from other capital items 0 0 0 0 0 0 0 0 0 0 0 0

e) Decrease in reserves for treasury shares and own business stakes and allocation to other capital items 0 0 0 0 0 0 0 0 0 0 0 0

f) Payment (accounting) of dividends in form of shares 0 0 0 0 0 0 0 0 0 0 0 0

g) Other allocations within capital items 0 0 0 0 0 0 0 0 0 6,026 -6,026 0

D. Transfer from equity 0 0 0 0 0 0 0 0 -65,035 -6,011 -1 -71,047

a) Dividend payment 0 0 0 0 0 0 0 0 0 -6,011 0 -6,011

b) Return of capital 0 0 0 0 0 0 0 0 0 0 0 0

c) Using surplus form revaluation (for assets impairment) 0 0 0 0 0 0 0 0 0 0 0 0

d) Transfer of surplus from revaluation (under operating revenues or financial revenues) 0 0 0 0 0 0 0 0 0 0 0 0

e) Other decreases in capital items 0 0 0 0 0 0 0 0 -65,035 0 -1 -65,036

f) Disposal or withdrawal of treasury shares and own business stakes 0 0 0 0 0 0 0 0 0 0 0 0

E. END BALANCE 31/12/2008 83,751 0 125,608 7,182 224 -224 0 47,793 62,435 26,882 2,287 355,938

Annual Report

258


Statement of changes in equity of the company Sava d.d. for the period from 31/12/2006 to 31/12/2007

€ in thousands

Called-up capital I

Capital reserves

IIRevenue reserves

III

Surplus from

revaluation IV

Retained net profit

or loss from previous periods

V

Net profit or loss for the

financial year

VI

Total capital

Share capital

Uncalled capital

(as a deductible

item)Capital

reservesLegal

reserves

Reserves for

treasury shares

and own business

stakes

Treasury shares

and own business

stakes (as a

deductible item)

Statutory reserves

Other reserves

Surplus from

revaluation

Retained net profit

Net profit for the

financial year

I/1 I/2 II III/1 III/2 III/3 III/4 III/5 IV V/1 VI/1

A. INITIAL BALANCE 31/12/2006 83,750 0 125,608 7,182 224 -224 0 39,482 39,835 20,571 11,906 328,334

B. Transfer to equity 1 0 0 0 0 0 0 -1 87,795 0 12,053 99,848

a) Entry of called-up capital 0 0 0 0 0 0 0 0 0 0 0 0

b) Entry of uncalled capital 0 0 0 0 0 0 0 0 0 0 0 0

c) Entry of subscribed capital 0 0 0 0 0 0 0 0 0 0 0 0

d) Entry of additional paid-in capital 0 0 0 0 0 0 0 0 0 0 0 0

e) Entry of net profit or loss for the financial year 0 0 0 0 0 0 0 0 0 0 12,053 12,053

f) Entry of equity revaluation adjustments 0 0 0 0 0 0 0 0 0 0 0 0

g) Other increases in capital 1 0 0 0 0 0 0 -1 87,795 0 0 87,795

h) Purchase of treasury shares and own business stakes 0 0 0 0 0 0 0 0 0 0 0 0

C. Transfer within equity 0 0 0 0 0 0 0 6,026 0 11,906 -17,932 0

a) Allocation of net profit for the financial year according to the resolution by the Board of Management and Supervisory Board 0 0 0 0 0 0 0 6,026 0 0 -6,026 0

b) Allocation of net profit to additional reserves according to the resolution by the Shareholders' Meeting 0 0 0 0 0 0 0 0 0 0 0 0

c) Balancing loss as a deductible capital item 0 0 0 0 0 0 0 0 0 0 0 0

d) Forming reserves for treasury shares and own business stakes from other capital items 0 0 0 0 0 0 0 0 0 0 0 0

e) Decrease in reserves for treasury shares and own business stakes and allocation to other capital items 0 0 0 0 0 0 0 0 0 0 0 0

f) Payment (accounting) of dividends in form of shares 0 0 0 0 0 0 0 0 0 0 0 0

g) Other allocations within capital items 0 0 0 0 0 0 0 0 0 11,906 -11,906 0

D. Transfers from equity 0 0 0 0 0 0 0 0 -6,366 -5,610 0 -11,976

a) Dividends payment 0 0 0 0 0 0 0 0 0 -5,610 0 -5,610

b) Return of capital 0 0 0 0 0 0 0 0 0 0 0 0

c) Using surplus form revaluation (for assets impairment) 0 0 0 0 0 0 0 0 0 0 0 0

d) Transfer of surplus from revaluation (under operating revenues or financial revenues) 0 0 0 0 0 0 0 0 0 0 0 0

e) Other decreases in capital items 0 0 0 0 0 0 0 0 -6,366 0 0 -6,366

f) Disposal or withdrawal of treasury shares and own business stakes 0 0 0 0 0 0 0 0 0 0 0 0

E. END BALANCE 31/12/2007 83,751 0 125,608 7,182 224 -224 0 45,507 121,264 26,867 6,027 416,206

259

Calculation of the accumulated profit for the company Sava d.d. as at 31/12/2008

€ in thousands

31/12/2008 31/12/2007

NET PROFIT OR LOSS FOR THE FINANCIAL YEAR 4,573 12,053

Retained profit at 01/01 32,893 32,477

Decrease due to payment of dividends -6,011 -5,611

Increase (additional allocation) of revenue reserves -2,286 -6,026

Accumulated profit 29,169 32,893

Annual Report

260


2.2.Notes to the financial statements of the company Sava d.d.

2.2.1. Basis for drawing the financial statements

2.2.2. Significant accounting policies

STATEMENT OF COMPLIANCE

The financial statements have been prepared in accordance with Slovene Accounting Standards 2006, which had been issued by the Slovene Institute of Auditors. The Board of Management approved the issue of financial statements on 17 February 2009.

FUNCTIONAL CURRENCY

The financial statements are presented in euros, which as of 1 January 2007 has been the functional currency of the company.All financial information is presented in euros, rounded to one thousand units.

CHANGES IN ACCOUNTING POLICIES

There were no changes in accounting policies in 2008.

FOREIGN CURRENCY TRANSACTIONS

Transactions in foreign currencies are translated to the functional currency at the reference exchange rate of the ECB ruling at the transaction date.Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated to the functional currency at the reference exchange rate of the ECB ruling at last day of the accounting period. Foreign exchange gains/losses present differences between the repayment value in functional currency at the beginning of the period adjusted by the amount of effective interest and payments during the period and the repayment value in foreign currency calculated at the reference exchange rate of ECB at the period end.Non-monetary assets and liabilities that are stated at original value in foreign currency are translated to functional currency at the reference exchange rate of the ECB ruling at the transaction date. Foreign exchange losses/gains are recognised in the income statement.

INTANGIBLE FIXED ASSETS

Intangible fixed assets have their useful lives defined. They are measured at cost less depreciation adjustment and accumulated losses due to impairment.

Cost also includes import and non-refundable purchasing taxes. Cost does not include the interests accrued by the appearance of an intangible fixed asset.

261

TANGIBLE FIXED ASSETS

Tangible fixed assets are measured at cost less depreciation adjustment and accumulated loss due to impairment.At initial recognition a tangible fixed asset is valued at cost. The cost includes its purchase expense, import and non-refundable purchasing taxes and expenses which can be attributed directly to its placement in service for the intended use, especially expenses for its transport and installation and estimated cost of its dismantling, removal and restoration. Costs do not increase the interests on loans for acquiring a tangible fixed asset until it is put in service for use.

Those parts of tangible fixed assets that have different useful lives are calculated as individual fixed assets.

Property which is built or developed to be used as investment property in the future is dealt with as a tangible fixed asset and recognised at cost until the date of completion when it becomes investment property.

SUBSEQUENT EXPENDITURES IN CONNECTION WITH TANGIBLE FIXED ASSETS

Subsequent expenditures in connection with a tangible fixed asset increase its cost value if the future economic benefits embodied in the assets are higher than originally estimated.

Repairs of or maintaining tangible fixed assets are intended for renewing or preserving the future economic benefits expected on the basis of the originally estimated level of asset efficiency. They are recognised as expenses as incurred.

INVESTMENT PROPERTY

Investment properties are properties which are held either to earn rental income or for capital appreciation or both. Investment properties are not intended for the manufacture of products, supply of goods, providing services or for office purposes like tangible fixed assets. Investment properties are also not intended for short-term sale.

In cases when a decision should be made as to whether a property is an investment property or a tangible fixed asset, the property is classified as investment property when more than 20 per cent of the property is used as investment property.

When an investment property becomes owner-occupied, it is reclassified as property, fixtures and fittings.

Investment properties are stated at the cost value model less depreciation adjustment and accumulated loss due to impairment.

For the needs of disclosure the fair value of investment properties is ascertained. The fair values are based on market values, being the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

262

Annual Report


DEPRECIATION

The carrying amount of a tangible fixed asset, intangible fixed asset and investment property is decreased through depreciation.

We use the method of depreciation on a straight-line basis considering thereby the useful life of an asset. Land is not depreciated. The remaining value of a tangible fixed asset is not assessed.

Intangible fixed asset, tangible fixed asset and investment property start to be depreciated on the first day of the next month when it is available for use.

The depreciation rates are based on the useful lives of the assets and amount to:

The useful lives of investment property equal those valid for property of the same kind which is kept as tangible fixed assets.

IMPAIRMENT OF INTANGIBLE ASSETS, TANGIBLE ASSETS AND INVESTMENT PROPERTY

Once a year the company examines the remaining carrying amount of intangible assets, tangible assets and investment property in order to ascertain whether they are impaired. If they are impaired, the recoverable value of the asset is estimated.

Impairment of assets or cash-generating items is recognised when its carrying amount exceeds its recoverable value. A cash-generating unit is the smallest group of assets which generates financial inflows that to a great extent do not depend on financial inflows from other assets or groups of assets. Impairment is stated in the income statement. Loss recognised in a cash-generating unit arising from an impairment is allocated to other assets of the unit (group of units) in proportion to the carrying amount of each item in the group.

The recoverable amount of an asset or a cash-generating unit is the greater of their fair values in use or fair value less selling costs. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Current year Past year

Intangible fixed asset from 10.0 to 20.0 from 10.0 to 20.0

Buildings from 2.0 to 5.0 from 2.0 to 5.0

Plant and machinery from 5.0 to 33.3 from 5.0 to 33.3

Other equipment from 10.0 to 25.0 from 10.0 to 25.0

263

FINANCIAL INVESTMENTS

In the balance sheet financial investments are stated as long- and short-term financial investments. Long-term financial investments are those which are in possession for more than one year, and are not held for trading.

Financial investment in capital, proprietary securities of other companies or debtor’s securities of other companies or the state as well as approved loans are initially recognised at the cost of purchase, which equals either the paid sum of money or its equivalents, or the fair value of other substitutions for a purchase by the investor on the exchange day increased by costs that can be attributed directly to the investment.

In the financial statements long-term financial investment in subsidiaries and associates are valued at cost. The transferred shares in profit increase financial revenue.

With regard to the purpose of their acquisition, the investments in debtor and proprietary securities are dealt with as available for sale. These financial instruments are recognised or not recognised on the transaction day. The fair value of listed securities available for sale equals the bid price of these shares on the balance sheet date. The fair value of shares and stakes of companies which are not listed is assessed on the basis of their recent transactions or financial statements. If for a certain financial investment an option contract is made, the fair value is ascertained on the basis of the price as defined in the option contract.

The fair value of securities available for sale is assessed at least every three months. The gain from the change in the fair value is recognised in equity as a revaluation reserve, and the loss as a negative revaluation reserve.

If a decrease in the fair value of a financial instrument available for sale was recognised directly as a negative revaluation reserve and there exists impartial evidence that the asset is long-term impaired, the impairment is recognised in the income statement as a financial expense. It is considered that impartial evidence for the examination of a financial investment exists when the fair value of the financial asset on the balance sheet date is 20% lower than the cost value of the financial asset. The examination of the impairment in the financial asset is carried out separately for each investment or group of investments.

The fair value of an interest swap is the estimated amount that the company would receive or pay upon suspending the interest rate swap at the balance sheet date, considering thereby current interest rate and current borrowing power of swap participants. RECEIVABLES

At their initial recognition the receivables of all types are shown in the amounts that arise from the corresponding documents on condition that they will be paid. The original receivables can later be increased, or irrespective of payment or any other settlement, decreased by every amount, which is proven by an agreement.

The advances in the balance sheet are shown in relation with things they refer to.

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Receivables, which are assumed not be settled within the due term and in the total amount, respectively, are considered doubtful and, if a court procedure has already begun, disputable.

The revaluation adjustments in receivables are formed as follows:• a 100 per cent adjustment in all sued receivables and receivables filed in a

bankruptcy proceeding and obligatory enforcement proceeding; and• a100percentadjustmentforreceivableswhichaccordingtothebestprofessional

judgement are doubtful and there is a reasonable doubt about the outcome of a possible law suit due to customer insolvency.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash balances on transaction accounts.

CAPITAL

The total capital comprises called-up capital, capital reserves, revenue reserves, revaluation reserve, retained net profit or loss from previous periods, and net profit/loss for the financial year.

Repurchased treasury shares are stated as deductible item in capital.

LONG-TERM PROVISIONS

Provisions are recognised if a company due to a past event has legal or indirect liabilities that can be reliably estimated and it is likely that to settle the liability an outflow of assets which assure economic benefits will be required. The amount of provision is defined by discounting the expected future cash flows using a pre-taxdiscount rate that reflects current market assessments of the time value of money and the risks specific to the liability.

In accordance with the legal regulations, collective agreement and internal book of rules the company is obliged to pay employee jubilee benefits and retirement amounts, for which it forms long-term provisions. There are no other retirement liabilities.

Provisions are formed in the amount of the future estimated payments for retirement amounts and jubilee benefits discounted on the balance sheet date. The calculation was made on 31 December 2005 for every employee and it considered the cost of retirement amount and cost of all expected jubilee benefits until retirement. The chosen discount interest rate amounts to 2.75% annually and represents a yield from long-term government bonds. The calculation was made by an authorised actuary using the projected method unit. The recalculation of provisions on 31 December 2006, 31 December 2007 and 31 December 2008 took into account a change in the employee number. If the employee number changes by more than 10 per cent, the authorised actuary will repeatedly revise the suitability of the provision amount.

Government grants are recognised in financial statements as deferred revenue when received and there is a reasonable assurance that it will comply with the conditions attaching to it. Grants that compensate for expenses incurred are recognised as revenue on a systematic basis in the same periods in which the expenses are incurred. Grants are strictly recognised in the income statement as other operating income on a systematic basis over the useful life of the asset.

265

LIABILITIES

Liabilities are either financial or operating, short-term or long-term.

All liabilities are initially recognised with the amounts arising from the corresponding documents about their appearance, which prove the receipt of cash or redemption of any operating liability.

Long-term liabilities are further increased by imputed interests or decreased by repaid amounts and any other settlements, agreed upon with a creditor. The book value of long-term liabilities equals their original value decreased by repayment of the principal and transfers under short-term liabilities until the need for a revaluation adjustment of long-term debts appears.

The book value of short-term liabilities equals their original value adjusted by their increases or decreases as agreed upon with the creditors until the need for their revaluation adjustment appears.

Short-term and long-term liabilities of all kinds are initially shown with the amounts which arise from the corresponding documents on condition that the creditors request their repayment. The liabilities are later increased with imputed yields (interests, other compensations), about which an agreement is made with the creditor. Liabilities are decreased by repaid amounts and any other settlements in agreement with the creditor.

When measuring long-term liabilities the company follows the policy that the interest rate being agreed upon does not considerably differ from the effective interest rate if the difference is not more than one percentage point. SHORT-TERM ACCRUALS AND DEFERRALS

Short-term accruals and deferrals include receivables and other assets and liabilities that are anticipated to appear within a year and whose appearance is probable and their size reliably estimated. Receivables and liabilities relate to the known and not yet known legal entities or natural persons towards whom actual receivables and debts will then appear, while assets include products and services to their debit.

Deferred costs and accrued revenues include short-term accrued revenues and short-term deferred costs. Accrued costs and deferred revenues include short-term deferred revenues and short-term accrued cost.

RECOGNITION OF REVENUES

Revenues are recognised if the enhancement of economic benefits in the accounting period is connected with an increase in an asset or a decrease in a liability and such an increase could be reliably measured. Revenues are recognised when it is legitimate to expect they will result in earnings if these were not already implemented at their appearance.

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Operating revenues

Revenue from goods sold is recognised at fair value of received payment or receivable less paybacks and discounts, rebates for further sale and quantity discounts. Revenue is shown when the buyer has assumed all significant risk and rewards of ownership and there exists a certainty regarding the recovery of the consideration due, associated costs or the possible return of goods or products and when the Group ceases to make further decisions about sold products.

Revenues from rents from investment property are recognised in expenses on a straight line basis during the rent period.

Revenues from received subsidies or endowments are measured in amounts that are approved for this purpose.

Operating revenues from revaluation arise upon the disposal of tangible fixed assets, intangible fixed assets and investment property as surpluses of their selling value over their carrying amount.

Financial revenues

Financial revenues include interest revenues from investments, revenues from dividends, revenues from disposal of financial funds available for sale, foreign exchange gains and proceeds from hedging instruments when they are recognised in the income statement. Interest revenues are recognised as they arise by using an effective interest rate method. Revenues from dividends are recognised in the income statement in the period when the Shareholders’ Meeting adopts a resolution about dividend payment.

Other revenues consist of extraordinary items. They appear in actually incurred amounts. RECOGNITION OF EXPENSES

Expenses are recognised if a decrease in economic benefits in the accounting period is connected with a decrease in assets or an increase in liabilities and this decrease could be reliably measured.

Operating expenses

Operating expenses are recognised when the material is used and service provided, respectively, in the period, to which they relate.

Operating expenses from revaluation arise in connection with tangible fixed assets, intangible fixed assets and current assets due to their impairment.

Financial expenses

Financial expenses include expenses for interest, foreign exchange losses, losses due to impairment in the value of financial assets and loss of hedging instruments, which are recognised in the income statement.In the income statement the expenses for borrowing are recognised according to the effective rate method.

Other expenses

Other expenses consist of extraordinary items. They appear in actually incurred amounts.

267

INCOME TAX AND DEFERRED TAX

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

NET EARNINGS PER SHARE

Share capital of the Group is divided into ordinary personal no-par value shares, therefore the company states the basic earnings per share. The basic earnings of the share is calculated so as to divide profit or loss with the weighted number of ordinary shares in the business year.

The adjusted net earnings per share equal the basic earning per share as the company is not in possession of any priority shares or exchangeable bonds.There were no changes in the number of issued shares during the year.

SEGMENT REPORTING

The company has not defined either business or geographical segments.

CRITERIA OF IMPORTANCE FOR DISCLOSURES

The company states the accounting policies at least for the assets and liabilities whose value exceeds 10 per cent of the value of assets or liabilities at the balance sheet date.

The company discloses an individual asset or debt at least when it exceeds 10 per cent of the balance sheet total. Lower amounts are disclosed when the company evaluates them of importance for a fair view of its business.

DRAWING UP CASH FLOWS STATEMENT

The cash flow statement has been prepared in accordance with SAS 26 – variant II. It has been prepared by considering the data from the income statement for the period January-December 2008 (for the past period 2007), the balance sheet data as at 31/12/2008 and 31/12/2007 (for the past period 31/12/2007 and 31/12/2006), and other required data. The cash flow statement excludes values which are not connected with revenues and expenses.

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Sava d.d. is exposed to the following financial risks:

CREDIT RISK

This involves a risk that a customer engaged in an agreement about buying products or services will not meet its obligations and will cause the company to make a financial loss.

Credit risk is directly connected with commercial risk and presents a danger that trade receivables or receivables due from other business partners will be settled with delay or not at all.

Sava d.d. mainly sells its services to its subsidiaries where the risk of non-payment is low. In financial markets we devote special attention to customer solvency. To decrease exposure to this risk we make use of the customer rating system with supervision over bad payers and ongoing compensations.

The credit risk is low for Sava d.d.

SOLVENCY RISK

This involves a risk that a company will not be able to fulfil its financial liabilities in due time.

In the Sava Group, a uniform financial policy and centralised management with financial assets have been established. With daily balancing the cash pooling inside of the Sava Group we avoid contracting unnecessary debts outside of the Group. The parent company enjoys a high rating with all banks in Slovenia, therefore it can make up periodical deficiencies outside of the system.

Despite the financial crisis, the solvency risk is low for Sava d.d. INTEREST RATE RISK

This involves a risk that the costs of indebtedness and securities will fluctuate due to changes in market interest rates.

At the level of the Sava Group we have defined a uniform appearance of all companies with banks and a standard interest rate policy within the Group. Sava d.d. uses interest rate swaps offered by banks. Interest rate risk is reduced through continual improvements in managing current assets, thereby reducing indebtedness.

The interest rate risk is low for Sava d.d..

FOREIGN CURRENCY RISK

This involves a risk that the value of assets or sources will fluctuate due to changes in foreign currency exchange rates, in which our assets or their sources are nominated.

As the company mainly conducts business in the Euro region, it is not very exposed to foreign currency risk. In 2008, Sava d.d. started to apply forward contracts to hedge against the foreign currency risk.

The exposure to foreign currency risk is low for Sava d.d.

2.3. Financial risk management for the company Sava d.d

269

MANAGING CAPITAL

The Board of Management of Sava d.d. maintains the capital structure, which assures the confidence of investors, creditors, the market and sustainable development of the whole Sava Group.

The dividend policy is defined in the strategic documents and anticipates the long-term stable payment of dividends. The Supervisory Board monitors the return on equity and the amount of paid dividends.

Sava d.d. has no programme of granting stock options to its employees and does not make any additional purchases of treasury shares.

In the reporting year the structure of the Supervisory Board changed, but there were no changes to the method of capital management.

Regulatory bodies do not have any capital requirements towards the parent company or subsidiaries in the Sava Group.

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Intangible assets totalling €88,000 include the purchased licences for the use of MySAP.com, Data protector, Lotus Notes and antivirus software applications In 2008, depreciation in the amount of €107,000 was computed.

Movement of intangible fixed assets

2.4. Breakdown and notes to the financial statements of the company Sava d.d.

2.4.1. Intangible fixed assets and long-term deferred costs and accrued revenues

€ in thousands

Long-term deferred develop-

ment costs

Property rights

Advances for intagible

long-term assets

Goodwill of acquired

company

Other long-term

deferred costs and

accrued revenues TOTAL

Capitalised costs of

investments in foreign

fixed assets

Investments in acquired

rights to industrial

property and other rights

COST VALUE

Balance at 31/12/2007 0 0 633 0 0 0 633

Increase, purchase 0 0 0 0 0 0 0

Put into use 0 0 0 0 0 0 0

Increase due to acquisition 0 0 0 0 0 0 0

Transfers 0 0 0 0 0 0 0

Decrease 0 0 0 0 0 0 0

Decrease due to disposals 0 0 0 0 0 0 0

Write-offs 0 0 0 0 0 0 0

Impairment 0 0 0 0 0 0 0

Balance at 31/12/2008 0 0 633 0 0 0 633

VALUE ADJUSTMENT

Balance at 31/12/2007 0 0 -438 0 0 0 -438

Increase, purchase 0 0 0 0 0 0 0

Put into use 0 0 0 0 0 0 0


271

€ in thousands

Long-term deferred develop-

ment costs

Property rights

Advances for intagible

long-term assets

Goodwill of acquired

company

Other long-term

deferred costs and

accrued revenues TOTAL

Capitalised costs of

investments in foreign

fixed assets

Investments in acquired

rights to industrial

property and other rights

Decrease 0 0 0 0 0 0 0


Transfers 0 0 0 0 0 0 0

Write-offs 0 0 0 0 0 0 0


Depreciation 0 0 -107 0 0 0 -107

Balance at 31/12/2008 0 0 -545 0 0 0 -545

CARRYING AMOUNT

Balance at 31/12/2007 0 0 194 0 0 0 194

Balance at 31/12/2008 0 0 88 0 0 0 88

2.4.2. Tangible fixed assets Tangible fixed assets totalling €8,191,000 represent 1.3% of the balance sheet total.

In comparison with the previous year fixed assets are 22% lower. Fixed assets are free of encumbrances.

The following significant changes in tangible fixed assets appeared in 2008: • CapitalwasincreasedinthecompanySavatechd.o.o.withaninvestmentinkind;

the book value of these fixed assets totalled €2,066,000.• €798,000 were allocated to investments, of which €212,000 were earmarked

for the renewal of the Sava main office building; €32,000 for the renewal of the manufacturing facility Sava-GTI in Ptuj; €329,000 for computer equipment and €225,000 for other equipment.

• The depreciation of tangible fixed assets was computed in the amount of€731,000.

• Thesaleandwrite-offoffixedassetswerecarriedoutwhosecarryingamounttotalled €57,000.

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Movement of tangible fixed assets

€ in thousands

Land BuildingsPlant and

machineryOther

equipment

Tangible fixed assets under construction

and manufacture

Advances for tangible fixed

assets TOTAL

COST VALUE

Balance at 31/12/2007 0 7,843 21,286 856 1,226 0 31,211

Purchase, increase 0 41 446 191 120 0 798

Increase in advances 0 0 0 0 0 11 11

Decrease in advances 0 0 0 0 0 0 0

Put into use 0 0 835 82 -917 0 0

Increase in capital through investment in kind 0 0 -9,014 -291 0 0 -9,305


Transfers 0 0 0 0 -264 0 -264

Decrease 0 0 0 0 -45 0 -45


Write-offs 0 0 -320 -36 0 0 -356


Balance at 31/12/2008 0 7,884 13,233 802 120 11 22,050

VALUE ADJUSTMENT

Balance at 31/12/2007 0 -3,183 -16,872 -656 0 0 -20,711

Purchase, increase 0 0 0 0 0 0 0

Put into use 0 0 0 0 0 0 0

Increase in capital through investment in kind 0 0 6,953 286 0 0 7,239


Transfers 0 0 0 0 0 0 0

Decrease 0 0 0 0 0 0 0


Write-offs 0 0 319 25 0 0 344


Depreciation 0 -156 -523 -52 0 0 -731

Balance at 31/12/2008 0 -3,339 -10,123 -397 0 0 -13,859

CARRYING AMOUNT

Balance at 31/12/2007 0 4,660 4,414 200 1,226 0 10,500

Balance at 31/12/2008 0 4,545 3,110 405 120 11 8,191

273

2.4.3. Investment property Investment property in the amount of €53,135,000 represents 8% of the balance

sheet total; compared to last year it is 1% lower. A mortgage is placed on the real estate of GH Toplice with the Panorama restaurant and pertaining facilities (hotels Trst, Korotan and Jadran) for a loan hired with Pokojninska Družba A d.d. whose present value totals €6,743,000. At 31/12/2008 the balance of the unpaid loan totalled €6,000,000.

The following significant changes in investment property appeared in 2008:• €821,000 were earmarked for investments in existing investment property. • The depreciation of investment property was computed in the amount of

€1,181,000.• Investmentpropertywassoldwhosecarryingamounttotalled€528,000.

According to our estimates the carrying amount of investment property equals its fair value. The assessment of value was not carried out by an appraiser.

274

Annual Report


Movement of investment property

€ in thousands

COST VALUE

Land- investment properties

Buildings- investment properties Total

Balance at 31/12/2007 18,331 60,549 78,880

Purchase, increase 550 271 821

Transfers 0 264 264

Increase due to acquisitions 0 0 0

Decrease due to selling -193 -544 -737

Decrease due to disposals 0 0 0

Write-offs 0 0 0

Impairment 0 0 0

Balance at 31/12/2008 18,688 60,540 79,228

VALUE ADJUSTMENT

Balance at 31/12/2007 0 -25,121 -25,121

Purchase, increase 0 0 0

Transfers 0 0 0

Increase due to acquisitions 0 0 0

Decrease due to selling 0 209 209

Decrease due to disposals 0 0 0

Write-offs 0 0 0

Impairment 0 0 0

Depreciation 0 -1,181 -1,181

Balance at 31/12/2008 0 -26,093 -26,093

CARRYING AMOUNT

Balance at 31/12/2007 18,331 35,428 53,759

Balance at 31/12/2008 18,688 34,447 53,135

275

2.4.4. Long-term financial investments

Long-term financial investments totalling €542,050,000 represents 83% of the balance sheet total and are 5% lower than last year.

Shares and stakes in the Sava Group companies totalling €132,574,000 are 25% higher than last year. The changes in the Sava Group composition are described in chapter 1.2. of the financial report of the Sava Group.

Shares and stakes in the associated companies totalling €220,260,000 are 12% higher than last year and mainly represent the investment in Gorenjska Banka d.d. and that in ABANKA VIPA d.d., which in 2008 was increased in the amount of €24,352,000.The financial investment in Gorenjska Banka d.d. totals €89,444,000 and is valued at cost. The financial investment in ABANKA VIPA d.d. amounts to €130,529,000 and is valued at cost. The fair value of the investment in ABANKA VIPA d.d. totals €107,720,000.The changes in the composition of the associated companies are described in Chapter 1.2. of the financial report of the annual report of the Sava Group.

Other shares and stakes totalling €186,448,000 are 31% lower than last year. Other shares and stakes included listed and unlisted securities totalling €179,560,000 and other long-term shares in the amount of €6,888,000. At 31/12/2008 securities are valued at fair value. Due to the changed market situation fair value of other shares and stakes decreased by €99,034,000 in 2008.

77% of securities available for sale are shares of the companies Merkur d.d. and NFD 1 d.d.The value of the financial investment in the company Merkur d.d., Naklo amounts €111,692,000 and is valued according to the put option contract, in which the price was agreed at €424.94 for a share.Under other shares and stakes the company has the put option contracts concluded whose value amounts to €119,836,000. The value of the call option contracts totals €5,094,000.

Long-term loans totalling €2,768,000 mainly represented long-term loans to the companies in the Sava Group; 30% of loans were insured with bills of exchange.

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Movement of long-term financial investments

€ in thousands

Long-term financial investments, excluding loans Long-term loans

TOTAL LONG- TERM

FINAN- CIAL

INVEST- MENTS

Stocks and

shares in the Group

Stocks and

shares in asso-

ciates

Other stocks

and shares

Other long- term

financial investments

Total long- term

financial investments,

excluding loans

Long-term

loans to Group

companies

Other long- term loans

Long-term

unpaid called-up

capital

Total long-term

loans

GROSS VALUE

Balance at 31/12/2007 105,798 196,501 269,995 0 572,294 1,863 4 0 1,867 574,161

Purchase 10,579 0 44,605 0 55,184 213 0 0 213 55,397

Increase in capital through money paid in

8,000 24,352 0 0 32,352 0 0 0 0 32,352

Increase in capital through investment in kind

8,197 0 0 0 8,197 0 0 0 0 8,197

Increase due to acquisition 0 0 0 0 0 0 0 0 0 0

Decrease 0 -593 -28,148 0 -28,741 0 0 0 0 -28,741

Transfers 0 0 0 0 0 692 -4 0 688 688

Revaluation 0 0 -84,164 0 -84,164 0 0 0 0 -84,164

Balance at 31/12/2008 132,574 220,260 202,288 0 555,122 2,768 0 0 2,768 557,890

VALUE ADJUSTMENT

Balance at 31/12/2007 0 -593 -1,036 0 -1,629 0 0 0 0 -1,629

Purchase 0 0 0 0 0 0 0 0 0 0

Increase in capital through investment in kind

0 0 0 0 0 0 0 0 0 0

Increase due to acquisition 0 0 0 0 0 0 0 0 0 0

Decrease 0 593 66 0 659 0 0 0 0 659

Transfers 0 0 0 0 0 0 0 0 0 0

Revaluation 0 0 -14,870 0 -14,870 0 0 0 0 -14,870

Balance at 31/12/2008 0 0 -15,840 0 -15,840 0 0 0 0 -15,840

NET VALUE

Balance at 31/12/2007 105,798 195,908 268,959 0 570,665 1,863 4 0 1,867 572,532

Balance at 31/12/2008 132,574 220,260 186,448 0 539,282 2,768 0 0 2,768 542,050

277

Long-term operating receivables totalling €322,000 are 26% lower than last year. Long-term operating receivables referred to long-term loans to employees for the purchase of flats. These loans are insured by a creditor’s mortgage on flats. The interest rate for granted housing loans amounts from TOM + 2% to TOM + 3%. Long-term operating receivables will fall due in 2013 at the latest.

Movement of long-term operating receivables

2.4.5. Long-term operating receivables

€ in thousands

2008 2007

Balance at 01/01 433 699

Newly formed receivables from change in variable part of interest rate 6 11

Repayment of receivables -117 -277

Balance at 31/12 322 433

Deferred tax receivables due from the state are formed in the amount of €2,687,000, and are due to the formed provisions for employee retirement bonuses and jubilee benefits, and a provision for guarantees in connection with the revaluation of securities to fair value and impairments of securities.

Movements of deferred tax receivables

2.4.6. Deferred tax receivables

€ in thousands

2008 2007

Balance at 01/01 429 247

Increase in receivables due to revaluation of securities to a fair value 258 280

Decrease in receivables due to revaluation of securities to a fair value -15 -86

Decrease in receivables due to sale of securities -213 -3

Increase in receivables due to impairment of securities 2,231 0

Decrease in receivables for provisions for retirement amounts -8 -7

Other changes 5 -2

Balance at 31/12 2,687 429

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278


2.4.7. Short-term financial investments

2.4.8. Short-term operating receivables

2.4.9. Cash and cash equivalents

2.4.10. Capital

Short-term financial investments totalling €41,885,000 have a 6% share in the balance sheet total. Short-term financial investments except loans totalling €1,030,000 are entirely the value of interest rate swaps. 39% of short-term loans in the amount of €40,855,000 are short-term loans to Sava Group companies, the remaining amount represents loans to other companies in Slovenia and deposits in banks. 16% of short-term loans are insured with bills of exchange.

Short-term operating receivables totalling €5,275,000 have a 1% share in the balance sheet total and are lower than last year due to the repayment of a receivables referring to the facility Kare A.

Short-term operating receivables due from Group companies in the amount of €4,007,000 are receivables from charged rentals, other services and the sale of real estate in the Sava Group. Short-term receivables due from customers outside of the Group in the amount of €575,000 are receivables from charged rentals and other services. Short-term operating receivables due from other entities totalling €693,000 are mainly receivables due from the state.

In 2008, the value adjustment in trade receivables increased by €142,000. The value adjustment in trade receivables at 31/12/2008 amounted to €737,000.

Short-term receivables are not insured.

Short-term operating receivables by maturity at 31/12/2008

The agreed amount of overdraft credit on transaction accounts amounts to €3,260,000.

The capital in the amount of €355,938,000 is 14% lower than in the previous year. In the structure of financing sources the capital has a 54% share.

In 2008, the following changes were carried out in capital:• Netprofitforthefinancialyearwasgeneratedintheamountof€4,573,000.• InaccordancewiththeresolutionbytheBoardofManagementotherrevenuereserves

increased by 50% of the generated net profit in the amount of €2,286,000.

€ in thousands

31/12/2008 TOTAL Due Not due

IV) Short-term operating receivables 5,275 823 4,452

1. Short-term receivables due from companies in the Group 4,007 366 3,641

2. Short-term trade receivables 575 457 118

3. Short-term operating liabilities to other entities 693 0 693

279

2.4.11. Dividends and net earnings per share

• AccordingtotheresolutionbytheShareholders’Meetingtheamountof€6,011,000 was earmarked for dividends.

• Thesurplusfromrevaluationincreasedby€753,000 and decreased by €302,000 on account of selling securities, increased by €5,453,000 and decreased by €64,690,000 due to revaluation of securities at fair value, and decreased by €43,000, which presents the effect of interest rate swaps.

• Ownsharesamountedto€224,000 and with regard to last year they remained unchanged. The number of treasury shares at 31/12/2008 amounted to 3,289, or 0.16% of all issued shares.

Under capital reserves the following amounts are stated:

Surplus from revaluation of long-term financial investments

The surplus from revaluation of long-term investments amounts to €62,435,000 at 31/12/2008 and is significantly lower in comparison with the end of the previous year. The surplus from revaluation included: • Apositivesurplusfromrevaluationtotalling€64,577,000, which at 96% referred

to the valuation of financial investment in Merkur d.d. in accordance with the put/call option contract.

• Anegativesurplusfromrevaluationtotalling€2,142,000 referred to the financial investment in the company Nacionalna Finan~na Družba 1 d.d. and the company Zavarovalnica Triglav d.d.

The share capital is divided into 2,006,987 ordinary personal no-par value shares, which have voting rights and are freely transferable. All shares have been paid in full.

€ in thousands

2008 2007

Share premium 21,482 21,482

Other capital reserves 48,535 48,535

Payment exceeding net value - repurchased treasury shares 2,286 2,286

Transfer from general equity revaluation adjustments 53,305 53,305

CAPITAL RESERVES total 125,608 125,608

2008 2007

Dividend per ordinary share in the year (€) 3.00 2.80

Total amount of dividends to the debit of retained profit (€ in thousands) 6,011 5,610

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Weighted number of shares

Net profit attributable to shares

At 31/12/2008 the company stated under provisions and long-term accrued costs and deferred revenues in amount of €1,240,000, which at 74% represented provisions for retirement amounts and jubilee bonuses. The remaining sum was due to other contingencies arising from guarantees and lawsuits.At the end of the year provisions for retirement bonuses and jubilee bonuses were recalculated, thereby considering the changed employee number in the company.

Movement of provisions and long-term accrued costs and deferred revenues

2008 2007

No. of all shares on 01/01 2,006,987 2,006,987

Treasury shares -3,289 -3,289

Weighted average number of shares at 31/12 2,003,698 2,003,698

2008 2007

Net profit for the financial year (€ in thousands) 4,573 12,053

Weighted average number of shares 2,003,698 2,003,698

Basic net earnings per share (in €) 2.28 6.02

2.4.12. Provisions and long-term accrued costs and deferred revenues

€ in thousands

Provisions for pensions

and similar liabilities

Other provisions

Long-term accrued costs and deferred

revenues Total

Balance at 01/01 898 239 20 1,157

Newly formed provisions 32 120 9 161

Drawing of provisions -12 -37 -29 -78

Balance at 31/12 918 322 0 1,240

281

At 31/12/2008 the company stated long-term liabilities of €122,001,000, or 19% of the financing sources structure; they were 24% higher than in the previous year. Long-term loans are hired with UniCredit Banka Slovenija d.d., BAWAG Banka d.d., Abanka Vipa d.d., Gorenjska Banka d.d., NLB Banka d.d., Raiffeisen Banka d.d., SKB Banka d.d., Banka Sparkasse d.d., BKS Bank AG and Pokojninska Družba A d.d. The hired loans are mainly nominated in Euro. The interest rate for obtained long-term loans is 1-month Euribor + 1.80%, 3-month Euribor + 0.55% to 1.35%, 6-month Euribor + 0.60% to 3.00% and 3-month LiborCHF + 0.64%. The loans are insured with blank bills of exchange. The total amount of insured long-term loans amounted to €122,001,000.

In line with the interest risk management policy an insurance was arranged in 2008 for the interest rate fluctuation for long-term loans totalling €60 million and CHF5 million.

The maturity of long-term financial liabilities was as follows: • in2010 €57,799,000• in2011 €31,145,000 • in2012 €20,601,000• in2013€9,446,000• in2014 €3,010,000

Movement of long-term financial liabilities

Deferred tax liability in the amount €8,193,000 is formed in connection with assessing financial investments at fair value. In 2008, deferred tax liability decreased due to the revaluation of securities at fair value and a decrease in the tax rate.

2.4.13. Long-term liabilities

€ in thousands

2008 2007

Balance at 01/01 98,328 17,225

Hiring new loans 55,000 105,979

Exchange rate gains/losses 716 28

Repayment of loans 0 0

Transfer under a short-term part during year -1,350 -5,523

Transfer under a short-term part at 31/12 -30,693 -19,381

Balance at 31/12 122,001 98,328

Annual Report

282


Movement of deferred tax liability

Short-term liabilities totalling €165,525,000 are 18% higher than last year; in the structure of financing sources they have a 25% share.

Short-term financial liabilities to Sava Group companies in the amount of €16,701,000 are due to the management of financial sources of Sava Group companies. The liabilities have not matured yet and are not insured. The interest rate for obtained short-term loans from the Group companies amounts from 3.7% to 4.82%.

Short-term liabilities to banks totalling €131,893,000 are 26% higher than last year. All short-term loans are hired with banks in Slovenia, the interest rate being from 1-month Euribor + 0.85% to 1.90%, 3-month Euribor + 1.05% to 2.30% and 6-month Euribor + 0.95% to 1.90%.All short-term financial liabilities to banks have not matured yet and are insured with bills of exchange.

92% of other short-term financial liabilities in the amount of €13,054,000 are loans from legal entities outside of the Sava Group.

91% of short-term operating liabilities to Group companies totalling €143,000 and short-term trade payables totalling €1,606,000 have not matured yet.

Other short-term operating liabilities in the amount of €2,106,000 represent liabilities to the state, liabilities for wages and salaries and various other liabilities.

Short-term accrued costs and deferred revenues totalling €824,000 mainly represent accrued costs for interest on loans.

2.4.14. Short-term liabilities

2.4.15. Short-term accrued costs and deferred revenues

€ in thousands

2008 2007

Balance at 01/01 34,256 11,886

Increase in liabilities due to revaluation of securities to fair value 56 26,603

Decrease in liabilities due to revaluation of securities to fair value and changed tax bracket -26,034 -2,328

Decrease in liabilities due to sale of securities -85 -1,905

Balance at 31/12 8,193 34,256

283

Securities available for saleThe fair value of securities available for sale that are listed equals the announced standard bid market price at the balance sheet date. The fair value of shares and stakes of unlisted companies is estimated on the basis of last known transactions or their operations.

Interest-bearing loans and borrowingsThe fair value is estimated as a discounted value of expected cash flow from the principal and the interest, whereby the effective interest rate equals the contracting interest rate, which is variable.

Short-term receivables and liabilitiesFor receivables and liabilities with a remaining life of less than one year, the notional value is deemed to reflect the fair value. Fair values of financial instruments

Net sales revenues of Sava d.d. mainly presented inter-company sales within the Sava Group, and were created from leasing out real estate and equipment and providing other services. In 2008, the joint stock company Sava d.d. made net sales revenues of €8,432,000, or 6% less than in the previous year; the main reason for that was that the rent for the equipment in Savatech d.o.o. was no longer charged, since its capital was increased with an investment in kind.

2.4.16. Estimating fair values

2.4.17. Net sales revenues

€ in thousands

31/12/2008 31/12/2007

Book value Fair value Book value Fair value

Securities available for sale 186,448 186,448 268,959 268,959

Long-term receivables 322 322 433 433

Short-term receivables 5,275 5,275 17,240 17,240

Approved loans 43,623 43,623 37,627 37,627

Cash and cash equivalents 18 18 38 38

Long-term loans 122,001 122,001 98,328 98,328

Short-term loans 161,648 161,648 131,866 131,866

Short-term operating liabilities 3,877 3,877 8,393 8,393

Annual Report

284


Net sales revenues were mainly generated in Slovenia.

95% of other operating revenues with operating revenues from revaluation totalling €637,000 arose from the sale of real estate. The rest of operating revenues was mainly revenues in connection with subsidies and revenues from settling of receivables that were already written-off.

The costs in the amount of €13,389,000 referred to overheads; last year these costs amounted to €12,826,000.

Survey of costs of merchandise, materials and services by type of cost

2.4.18. Other operating revenues (with operating revenues from revaluation adjustment)

2.4.19. Costs by functional group

2.4.20. Costs of merchandise, materials and services

€ in thousands

2008 2007

Net sales revenues from services 3,141 2,782

Net sales revenues from rents 5,291 6,178

Total net sales revenues 8,432 8,960

€ in thousands

2008 2007

Cost of material 468 344

Cost of transportation services 70 62

Cost of maintenance services 2,734 1,464

Cost of rentals 287 243

Cost refunds to employees 51 44

Cost of payment transactions, bank services and insurance premiums 149 144

Cost of intellectual and personal services 1,381 1,183

Cost of fairs, advertising and office allowances 665 585

Cost of other services 988 1,432

TOTAL 6,793 5,501

285

Labour costs in the amount of €3,953,000 were 13% lower than last year, which is due to payment of variable parts of salaries. The company showed the premiums charged for additional pension insurance in the amount of €46,000.At 31/12/2008 the holding company Sava d.d employs 64 associates, and the average number of employees on the basis of man-hours was 57.79.

Amortisation and depreciation expenses, write-offs totalled €2,309,000 and were 14% lower than in the previous year. Depreciation and operating revenues from revaluation comprises the following items: • Depreciationofintangibleassets–€107,000• Depreciationoftangiblefixedassets–€731,000• Depreciationofinvestmentproperty–€1,181,000• Expenses from revaluation at selling investment property in the amount of

€135,000• Expenses from revaluation at elimination of fixed assets from use totalling

€11,000Expenses from revaluation in current assets totalling €144,000 referred to formed adjustments in trade receivables.

Other operating expenses totalling €334,000 mainly included paid contributions for urban real estate as well as the housing and compensation fund.

Financial revenues from shares totalling €34,646,000 were 58% higher than in the previous year due to dividends paid out in a significantly higher amount.

Financial revenues from shares in Group companies totalling €733,000 included received dividends from the subsidised companies Sava Medical in Storitve d.o.o. , Sava Schäfer d.o.o. and Sava Rol d.o.o.

Financial revenues from shares in associates totalling €15,438,000 mainly included received dividends from Gorenjska Banka d.d. and Abanka Vipa d.d.

92% of financial revenues in other companies totalling €18,475,000 were received dividends from other companies, 8% were revenues from the sale of securities.

Financial revenues from granted loans approved to the Group companies in the amount of €2,050,000, and financial revenues from loans approved to other entities in the amount of €2,886,000 were higher than last year and mainly included computed interest from approved loans, interest from short-term deposits and interest rate swaps, foreign exchange gains and revenues from charged guaranties.

2.4.21. Labour costs

2.4.22. Amortisation and depreciation expenses, write-offs

2.4.23. Other operating expenses

2.4.24. Financial revenues from shares

2.4.25. Financial revenues from granted loans

Annual Report

286


Financial revenues from operating receivables in the amount of €11,000 included foreign exchange gains/losses and interest charged to customers.

Financial expenses from impairment and write-offs of financial investments in the amount of €15,781,000 mainly presented an impairment in securities due to a decrease in stock exchange prices in the amount of €14,870 and a loss in the sale of securities totalling €911,000. An impairment in financial investments was made in line with the accounting policy referring to the valuation of financial investments.

Financial expenses from financial liabilities totalling €17,186,000 were 64% higher than last year due to a significant increase in indebtedness.Financial expenses from loans obtained from the Sava Group companies totalling €287,000 were interest expenses for loans obtained from the Sava Group companies.Financial expenses from bank loans totalling €16,832,000 were computed interest and foreign exchange gains/losses for obtained bank loans.

Financial expenses from operating liabilities totalling €10,000 mainly included foreign exchange losses.

Other revenues totalling €103,000 mainly represented received compensations. Other expenses totalling €53,000 represented expenses and paid compensation.

Sava d.d. had no liabilities charged for tax on profit for 2008, since the prevailing part of the realised revenues was untaxed pursuant to tax legislation. Expenses which are not tax deductible included revaluation in receivables, formed provisions and other expenses not recognised in accordance with the Corporate Income Tax Act. In 2008, the company Sava d.d. did not exercise any tax benefits, since a tax loss was shown. Deferred taxes in the amount of €2,227,000 mainly represented deferred tax from impairments of long-term financial investments.

2.4.26. Financial revenues from operating receivables

2.4.27. Financial expenses from impairments and write-offs of financial investments

2.4.28. Financial expenses from financial liabilities

2.4.29. Financial expenses from operating liabilities

2.4.30. Other revenues and other expenses

2.4.31. Tax on profit

287

€ in thousands

COMPARISON BETWEEN THE ACTUAL AND CALCULATED TAX RATE

2008 2007

Rate Amount Rate Amount

Pre-tax profit 2,346 12,588

Tax on profit applying the official rate 22% 516 23% 2,895

Effect by tax rates in other countries 0 0

Amounts having a negative impact on tax base 17,511 3,376

- amount from revenue increase to level of tax-deductible revenues 0 21

- amount from expense decrease to level of tax-deductible expenses 15,702 1,802

- amount of expense for which tax was deducted 0 0

- possible other amounts having impact on tax rate increase 1,809 1,553

Effect of increase in tax rate on special profits 0 0

Amounts having positive effect on tax base 34,185 13,554

- amount from revenue decrease to level of tax-deductible revenues 33,193 13,554

- amount from expense increase to level of tax-deductible expenses 992 0

- possible other amounts impacting tax rate decrease (e.g. amount of revenues for which tax was already deducted) 0 0

Changed tax base due to transition to new accounting method resulting from changes in accounting policy 12 11

Tax benefits

- applied, having effect on tax liability decrease 0 112

- remaining, to be utilised in the following years 62 0

Tax loss

- applied, having effect on tax liability decrease 0 0

- originating from the current year - remaining for utilisation in the following years 14,341 0

Adjustments for previous years 0 0

TAX ASSESSED FOR THE CURRENT YEAR 0.0% 0 4.2% 526

Increase/decrease of deferred tax -2,227 9

TAX IN THE INCOME STATEMENT -94.9% -2,227 4.3% 535

Annual Report

288


2.4.32. Survey of receivables and liabilities for deferred taxes

2.4.33. Shares in profit

2.5. Other disclosures

2.5.1. Contingencies

The Shareholders’ Meeting has not approved shares in the profit to those who are not shareholders.

Mortgages totalling €6,000,000 included the balance of a loan received from Pokojninska Družba A d.d.96% of approved guarantees totalling €28,796,000 referred to loans received by the subsidised companies in the Sava Group, other guarantees were due to the companies outside of the Group. Interest rate swaps totalling €63,021,000 represent a contracting value of the insurance for a long-term credit portfolio. The put option contracts totalling €5,094,000 referred to other shares and stakes.

€ in thousands

Receivables Liabilities Net

Financial investments 2,489 8,193 -5,704

Provisions 198 0 198

TOTAL 2,687 8,193 -5,506

€ in thousands

31/12/2008Structure

2008 31/12/2007Structure

2007INDEX

2008/2007

Mortgages 6,000 5.8% 0 0.0% -

Issued guarantees 28,796 27.8% 15,689 27.5% 184

Interest rate swaps 63,021 60.9% 28,022 49.1% 225

Contracts with a possibility of purchasing

5,094 4.9% 12,783 22.4% 40

Other 520 0.5% 520 0.9% 100

TOTAL 103,431 100.0% 57,014 100.0% 181

289

Important events that appeared after the balance sheet date are disclosed in the business report Chapter 4.2.

Owing to their nature, these events do not affect the balance of assets and liabilities stated in the financial statements for the year 2008, or the presumption that the company will proceed with its operations.

Related parties include subsidiaries and associates, Supervisory Board members, Board of Management members and their close family members.

RELATIONS AMONG COMPANIES IN THE SAVA GROUP

Business relations between Sava d.d. and its subsidiaries relate to:• Providedservices,whichincluderentofpropertyandequipment,useofbrand

name, and services provided by the competence centres of knowledge.• Financialoperationsinconnectionwithmanaginginterest-bearingborrowings

and loans.

Business among related parties is performed under the same conditions as valid in an ordinary arm’s length transaction.The capital of subsidiaries at 31/12/2008 and net profit of subsidiaries for the year 2008 are stated under item 1.3.38 – Chapter: Explanations to the Financial Statements of the Sava Group.

RELATIONS WITH ASSOCIATED COMPANIES

Gorenjska Banka d.d. and Abanka Vipa d.d. are the most important associates of the company Sava d.d.

GORENJSKA BANKA D.D.

Sava d.d. raises loans with Gorenjska Banka d.d. The terms and conditions for these transactions are equal to those effective for other companies with a similar rating.

2.5.2. Influence by events after the balance sheet date

2.5.3. Converting capital by means of cost of living

2.5.4. Related parties

€ in thousands

Capital % growth Calculated effectDecrease

in profit / loss

CAPITAL - calculation for cost of living 416,206 2.10% 8,740 -4,167

Annual Report

290


Ownership of the Sava share

Survey of transactions with Gorenjska Banka d.d.

ABANKA VIPA D.D.

Sava d.d. raises loans with Abanka Vipa d.d. The terms and conditions for these transactions are equal to those effective for other companies with a similar rating.

Survey of transactions with Abanka Vipa d.d.

RELATIONS WITH NATURAL PERSONS

Related natural persons own 2,890 Sava shares, which represents 0.144 per cent of ownership.

31/12/2008 31/12/2007

No. of Sava d.d. shares owned by Gorenjska Banka d.d. 52,500 52,500

Ownership stake of Gorenjska Banka d.d. in Sava d.d. 2.62% 2.62%

€ in thousands

2008 2007




Revaluation of foreign currency loans 0 0


€ in thousands

2008 2007




Revaluation of foreign currency loans 0 0


291

Ownership of the Sava share

Data about the group of persons

In 2008, the total gross income of the Sava d.d. Board of Management members amounted to €1,051,000. This sum consists of gross salaries, gross bonuses and other income.In 2008, the total net income of the Board of Management members amounted to €499,000, or 47 per cent of gross income.

35 employees with managerial contracts received a gross income totalling €2,136,000. This sum consists of gross salaries, gross bonuses and other income.At 31/12/2008 Sava showed receivables from loans approved to other employees with managerial contracts in the amount of €13,000. The interest rate for loans amounts to TOM+2%; in 2008 loans in the amount of €5,000 were repaid, and last instalment falls due in 2012.

In 2008, the gross income of Supervisory Board members amounted to €328,000. The major share in this amount is bonuses to the Supervisory Board in accordance with the resolution by the Shareholders Meeting, the remaining sum being attendance fees.

Survey of income of the Board of Management

Related persons

31/12/2008 31/12/2007

Number Share Number Share

Sava d.d. Board of Management members 2,563 0.128% 2.563 0.128%

Close family members of the Sava d.d. Board of Management members 72 0.004% 72 0.004%

Sava d.d Supervisory Board members 122 0.006% 122 0.006%

Directors of subsidiaries 133 0.006% 440 0.022%

Supervisory Board members in subsidiaries 0 0.000% 530 0.026%

€ in thousands

Name, surname Gross salaryGross

bonuses Gross other

income

Total in gross

amountTotal in net

amount

Janez BohoriË Chairman of the Board

205 150 16 371 175

Emil Vizoviπek Member of the Board

190 138 14 342 163

Vinko PerËiË Member of the Board

190 138 10 338 161

TOTAL 585 426 40 1,051 499

Annual Report

292


According to the agreement with KPMG Slovenija d.o.o. the cost of auditing the financial statements of the company for the year 2008 amounts to €48,000 and the cost of other services €3,000.

In the preparation of cash flow statements the following more important transactions were excluded as non-monetary items: • IncreaseincapitalofthecompanySavatechd.o.o.withaninvestmentinkind

totalling €2,197,000.• IncreaseincapitalofthecompanyTermePtujd.o.o.withaninvestmentinkind

totalling €6.000.• PurchaseofthecompanyZdravili{~eRadencid.o.o.intheamountof€6,573,000,

which represented a part of a transaction that had been settled by compensation with a credit.

2.5.5. Disclosing business with the selected auditor

2.5.6. Cash flows

293

The Board of Management confirms the financial statements of the company Sava d.d. for the year that ended on 31 December 2008, which have been prepared in accordance with Slovene Accounting Standards 2006.

The Board of Management confirms that when drawing up the financial statements the corresponding accounting policies were consistently applied, the accounting estimates were elaborated according to the principle of prudence and cost efficiency, and that the annual report gives a true and fair view of the company’s assets and business results in the year 2008.

The Board of Management is responsible for the proper managing of its accounting procedures and establishing and maintaining internal controlling in relations to the preparation and fair presentation of the financial statements, which do not contain any material mis-statements originating from fraud or error, and for adopting suitable measures to secure assets and other funds. The Board of Management confirms herewith that the financial statements and the notes have been produced on the assumption that the company will proceed with its operations and in accordance with current legislation and Slovene Accounting Standards.

Vinko Perčič Janez Bohorič Member of the Board Chairman of the Board

Emil Vizovišek Member of the Board

17 February, 2009

2.6. Statement by the Board of Management for the company Sava d.d.

Annual Report

294


2.7. Independent auditor’s report for the company Sava d.d.

295

Global Compact principles and GRI Reporting

GRI G3 Reference Indicator: Pages:

General Strategy and Analysis

1.1 About the relevance and incorporation of sustainable development in the company strategy

20-25, 76-82, 138-139

1.2 Key impacts, risks and opportunities of sustainable development 26-48, 49-62, 138-139, 140-146, 147-156

Organisational Profile

2.1- 2.9 Presentation, structure, key data and ownership structure of the company 10-11, 12-15, 16-17, 18-19, 66-71, 96-108, 191-193

2.10 Important acknowledgements and awards 45, 140-146, 159-162

Report Parameters

3.1-3.13 Manner and report scope 16-17, 31-35, 41-45, 75, 86-95, 96-108, 109-118, 184-245, 248-294, 295

Governance Structure and Management Systems

4.1- 4.10 Bodies, structure, governance and management systems and policy 26-30, 36-48, 49-50, 59, 76-82, 120-123, 124, 127, 128, 131, 133

4.11-4.13 Commitments to external initiatives and co-operation with associations and institutions

26-27, 36, 124, 127, 128-130, 131-132, 140-146, 152-153, 155-156, 157-158, 159-162, 163-168, 169, 175, 180

4.14-4.17 Stakeholder and community engagement 18-19, 36-45, 62, 66-68, 76-80, 120-123, 124-126, 128, 138-180

Economic Performance Indicators

EC 1-2 Economic value generated, employee compensation, donations and other community investment

16-17,51-54, 59-62, 86-118, 140-146, 149-151, 163-168, 184-293

EC 4 Financial assistance received from government 18-19, 83-85, 131-132, 142, 152, 186-187

EC 6 Purchasing policy and local suppliers 124-126

Human Rights Indicators

HR 4-5 Non-discrimination at employing, right to exercise freedom of association and collective bargaining

139, 147-153, 155

HR 6-7 Non-existence of child and forced and compulsory labour 139

HR 9 Respecting rights of indigenous people 76-77, 139

Labour Practices & Decent Work Indicators

LA 1 Employment 17, 52, 76-80, 95, 115, 147-149

LA 4-5 Labour / management relations 140-146, 149, 150-151, 154

LA 6-9 Occupational health and safety 17, 140-146, 149, 153, 154, 157-158

LA 10-12 Training and education 131-132, 140-146, 150-151, 159, 169, 179-180

LA 13-14 Diversity and equal opportunities 104, 139, 149-152

Environmental Indicators

EN 1-2 Materials 169, 175-178

EN 3-7 Energy 17, 104-105, 169, 170, 171-172, 179

EN 8,10 Water 17, 169, 172-174

EN 11-15 Biodiversity 132, 157-158, 178-179

EN 16-25 Emissions, Effluents, and Waste 17, 157-158, 172-178

EN 26 Products and services 18-19, 51-58, 104-105, 120-123, 127, 128-130, 131-132, 138-139, 140-146, 157-158, 159-162, 163-168, 169-180

Social Performance Indicators

SO 1, 5 Community and participation in public policy development 18-19, 26-27, 120-123, 124-126, 127, 128-130, 131-132, 138-139, 140-146, 149-153, 157-158, 159-162, 163-168, 179-180

Product and Service Responsibility

PR 2,4,7,9 Complete compliance with laws and regulations (customer health and safety, product and service labelling, marketing communications)

41-45, 120-123, 127, 128-130, 138-139, 159-162, 169, 179-180

PR 5 Pursuing customer satisfaction 54-55, 76-85, 96-99, 99-100, 120-123, 128-130

296

Annual Report

Contact persons in the Sava Group

Sava d.d. − HoldingŠkofjelo{ka c. 6, 4000 Kranj

BOARD OF MANAGEMENT

Janez Bohorič, Chairman tel: +386 4 206 52 15, fax: +386 4 206 64 46 e-mail: janez.bohoric≤sava.sihttp://www.sava.si

Emil Vizovišek, Member tel: +386 4 206 52 10, fax: +386 4 206 64 46 e-mail: emil.vizovisek≤sava.sihttp://www.sava.si

Vinko Perčič, Member tel: +386 4 206 53 25, fax: +386 4 206 64 46 e-mail: vinko.percic≤sava.sihttp://www.sava.si

PROCURATORS Iva Žagar MSc tel: +386 4 206 63 46, fax: +386 4 206 64 46 e-mail: iva.zagar≤sava.sihttp://www.sava.si

Miran Hudetel: +386 4 206 59 46, fax: +386 4 206 64 06e-mail: miran.hude≤sava.sihttp://www.sava.si

Competence Centres of Knowledge

CORPORATE COMMUNICATIONSLidija Bregar, Director tel: +386 4 206 58 19, fax: +386 4 206 64 01 e-mail: lidija.bregar≤sava.si http://www.sava.si

STRATEGIC FINANCEMiha Dolinar, Director tel: +386 4 206 59 88, fax: +386 4 206 64 46 e-mail: miha.dolinar≤sava.sihttp://www.sava.si

BUSINESS FINANCEIva Žagar MSc, Directortel: +386 4 206 63 46, fax: +386 4 206 64 46 e-mail: iva.zagar≤sava.sihttp://www.sava.si

RISK MANAGEMENTVlasta Mekiš, Directortel: +386 4 206 51 36, fax: +386 4 206 64 46e-mail: vlasta.mekis≤sava.si

HR, LAW & ORGANISATIONTatjana Lozar, Director tel: +386 4 206 56 16, fax: +386 4 206 64 60e-mail: tatjana.lozar≤sava.sihttp://www.sava.si

STRATEGIC CONTROLLING Antonija Pirc MSc, Directortel: +386 4 206 52 00, fax: +386 4 206 64 04e-mail: antonija.pirc≤sava.sihttp://www.terme3000.si

STRATEGIC ACCOUNTING, PLANNING & ANALYSISMojca Globočnik, Director tel: +386 4 206 56 01, fax: +386 4 206 64 46 e-mail: mojca.globocnik≤sava.si http://www.sava.si INTERNAL AUDITDuša Haložan Sedej MSc, Directortel: +386 4 206 53 26, fax: +386 4 206 64 46 e-mail: dusa.sedej≤sava.sihttp://www.sava.si

STRATEGIC INFORMATICSGeorg Pollak, Director tel: +386 4 206 53 07, fax: +386 4 206 64 46 e-mail: georg.pollak≤sava.sihttp://www.sava.si

297

STRATEGIC PURCHASINGMarko Štebe, Director tel: +386 4 206 63 73, fax: +386 4 206 64 22 e-mail: marko.stebe≤sava.sihttp://www.sava.si COST CONTROL & OPERATIONAL EXCELLENCEEmil Vizovišek, Board Membertel: +386 4 206 52 10, fax: +386 4 206 64 46 e-mail: emil.vizovisek≤sava.sihttp://www.sava.si

QUALITY SYSTEMSJože Vodičar MSc, Directortel: +386 4 206 52 85, fax: +386 4 206 64 36 e-mail: joze.vodicar≤sava.si http://www.sava.si

SAFETYJanez Fabijan, Directortel: +386 4 206 53 78, fax: +386 4 206 64 42e-mail: janez.fabijan≤sava.si http://www.sava.si

EU PROJECTSZvonko Belič, Directortel: +386 4 206 52 98, fax: +386 4 206 64 60e-mail: zvonko.belic≤sava.sihttp://www.sava.si

Divisions

RUBBER MANUFACTURING SAVATECH d.o.o., KranjŠkofjelo{ka c. 6, 4000 KranjIgor Hafnar, Director tel: +386 4 206 58 56, fax: +386 4 206 64 60 e-mail: igor.hafnar≤sava.sihttp://www.savatech.si

Vesna Čadež, Director tel: +386 4 206 51 79, fax: +386 4 206 64 60 e-mail: vesna.cadez≤sava.sihttp://www.savatech.si

Mira Rjavec, Worker Director tel: +386 4 206 53 77, fax: +386 4 206 64 60 e-mail: mira.rjavec≤sava.sihttp://www.savatech.si

SAVA-SCHÄFER d.o.o., KranjŠkofjelo{ka c. 6, 4000 KranjGregor Ažman, Director tel: +386 4 206 61 31, fax: +386 4 206 64 05 e-mail: gregor.azman≤sava.sihttp://www.sava-schaefer.si


SAVA-GTI d.o.o., PtujRogozni{ka cesta 32, 2250 PtujAnton Rogina, Director tel: +386 2 787 93 30, fax: +386 2 787 93 40 e-mail: anton.rogina≤sava.sihttp://www.sava-gti.si


SAVA ROL d. o. o., ZagrebFallerovo {etali{te 22, 10000 ZagrebDarko Vodanović, Director tel. & fax: +385 1 366 74 89 e-mail: sava-rol≤zg.hinet.hrhttp://www.sava-rol.hr

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SAVAPRO d.o.o., KranjŠkofjelo{ka c. 6, 4000 KranjIgor Hafnar, Director tel: +386 4 206 58 56, fax: +386 4 206 64 60 e-mail: igor.hafnar≤sava.sihttp://www.savatech.si

Vesna Čadež, Director tel: +386 4 206 51 79, fax: +386 4 206 64 60 e-mail: vesna.cadez≤sava.sihttp://www.savatech.si

SAVARUS d.o.o., JaroslavlSpartakovskaja 1d, 150036 JaroslavlDenis Šmigoc, DirectorTel.: + 78961 1604858e-mail: denis.smigoc≤sava.sihttp://www.sava.sihttp://www.savatech.si

Foreign Trade Network

SAVA TRADE G.m.b.H., MunichKobellstrasse 4, 80336 MunichZlatko Smrdel, Director tel: +49 89 544 14 30, fax: +49 89 532 89 51 e-mail: zlatko.smrdel≤sava-trade.dehttp://www.sava-trade.de

SAVA TRADE Sp.z o.o., WarsawUl. Przyparkowa 19, 05-850 Ozarow MazowieckiJaka Slavinec, Directortel: +48 22 721 01 86fax: +48 22 721 13 62e-mail: jaka.slavinec≤savatrade.com.plhttp://www.savatrade.com.pl

SAVA TRADE s.r.o., PragueU Elektry 650/50, Budova K, 190 00 Praha 9Milan Vik, Director tel: +420 22 494 19 66, +420 22 494 25 59 fax: +420 22 494 25 59 e-mail: milan.vik≤savatrade.cz http://www.savatrade.cz

Samo Janc, Procuratortel: +386 4 206 63 85, fax: +386 4 206 63 90e-mail: samo.janc≤sava.sihttp://www.savatech.si

SAVATECH TRADE Ltd., LondonBourne House, 475 Godstone Road, Whyteleafe, Surrey CR3 OBL, United KingdomBoštjan Podjed, Director tel: +44 883 621 106, fax: +44 883 621 107 e-mail: bostjan.podjed≤savatech.co.uk http://www.savatech.co.uk/

SAVA TRADE d.o.o., SplitDomovinskog rata 7, 21000 SplitLjiljana Koštić, Directortel: +385 2 134 42 00, fax.: +385 2 134 42 19e-mail: sava.trade.split≤st.t-com.hr

SAVATECH CORP., Port Orange413 Oak Place, Blgd 5-J, Port Orange, FL 32127, USATony Šimunac, Director tel: +1 386 760 07 06, fax: +1 386 760 87 54 e-mail: savatrade≤bellsouth.net http://www.savatrade.com

Trieste representation officeZona Artigianale »Zgonik«, Stacione di Prosecco, 29/a, 34010 Sgonico (TS), ItaliaNiko Golemac, Managertel: +39 040 2528 140, fax: +39 040 252 90 63 e-mail: niko.golemac≤sava.sie-mail: paolo.leghissa≤sava.si http://www.savatech.it

Moscow representation officeDmitrija Uljanova 16/2, app. 127, 117292 MoscowBranimir Anđelić, Managertel: +749 5 775 38 46, fax: +749 5 981 63 03 e-mail: branimir.andjelic≤savatech.ru http://www.savatech.ru


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TOURISM

Andrej Šprajc MSc, Division Director tel: +386 2 512 23 00, fax: +386 2 512 22 77 e-mail: andrej.sprajc≤terme3000.si http://www.terme3000.si

SAVA HOTELI BLED d.d., BledCankarjeva 6, 4260 BledFedja Pobegajlo, Chairman of the Management Boardtel: +386 4 579 17 14, fax: +386 4 579 16 01e-mail: fedja.pobegajlo≤hotelibled.comhttp://www.hotelibled.com

Tamara Zajc, Member of the Management Boardtel: +386 4 579 16 29, fax: +386 4 579 16 01e-mail: tamara.zajc≤hotelibled.comhttp://www.hotelibled.com

Tine Brodnjak, Procuratortel: +386 4 579 17 27, fax: +386 4 579 17 01e-mail: tine.brodnjak≤hotelibled.comhttp://www.hotelibled.com

TERME 3000 d.o.o., Moravske TopliceKranj~eva cesta 12, 9226 Moravske TopliceAndrej Šprajc MSc, Directortel: +386 2 512 23 00, fax: +386 2 512 22 77 e-mail: andrej.sprajc≤terme3000.si http://www.terme3000.si

Ivanka Ajlec, Directortel: +386 2 512 23 00, fax: +386 2 512 50 85e-mail: ivanka.ajlec≤terme3000.sihttp://www.terme3000.si

Zdravilišče Radenci d.o.o., RadenciZdravili{ko naselje 12, 9252 RadenciMladen Kučiš, Directortel: +386 2 520 10 00, fax: +386 2 520 27 23e-mail: mladen.kucis≤zdravilisce-radenci.sihttp://www.zdravilisce-radenci.si

Milan Karoli, Directortel: +386 2 520 10 00, fax: +386 2 520 27 23e-mail: milan.karoli≤zdravilisce-radenci.sihttp://www.zdravilisce-radenci.si

Terme Banovci, VeržejBanovci 1a, 9241 VeržejLea Hofman, Managertel: +386 2 513 14 00, fax: +386 2 587 17 03e-mail: lea.hofman≤terme-banovci.sihttp://www.terme-banovci.si

Hotel Jeruzalem, LjutomerGlavni trg 5, 9240 LjutomerBranko Smodiš, Managertel: +386 2 584 16 61, fax: +386 2 584 16 66e-mail: branko.smodis≤hotel-jeruzalem.sihttp://www.zdravilisce-radenci.si

TERME LENDAVA d.o.o., LendavaTom{i~eva 2a, 9220 LendavaIgor Magdič, Directortel: +386 2 577 44 40, fax: +386 2 577 44 18 e-mail: igor.magdic≤terme-lendava.sihttp://www.terme-lendava.si

Aleksander Varga, Procuratortel: +386 2 577 44 40, fax: +386 2 577 44 18e-mail: aleksander.varga≤terme-lendava.sihttp://www.terme-lendava.si

TERME PTUJ d.o.o., PtujPot v toplice 9, 2251 PtujAndrej Klasinc, Directortel: +386 2 749 45 10, fax: +386 2 749 45 20 e-mail: andrej.klasinc≤terme-ptuj.sihttp://www.terme-ptuj.si

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Annual Report

REAL ESTATE

SAVA IP d.o.o., LjubljanaDav~na ulica 1, 1000 LjubljanaJože Kavčič, Director tel: +386 1 430 41 50, fax: +386 1 231 31 70 e-mail: joze≤sava-ip.sihttp://www.sava-ip.si

IP NOVA d.o.o., LjubljanaDav~na ulica 1, 1000 LjubljanaGorazd Rous, Directortel: +386 1 430 41 50, fax: +386 1 231 31 70e-mail: gorazd≤sava-ip.sihttp://www.sava-ip.si Ana Finc, Procuratortel: +386 1 430 41 50, fax: +386 1 231 31 70e-mail: ana.finc≤sava-ip.sihttp://www.sava-ip.si

IP NOVA A d.o.o., LjubljanaDav~na ulica 1, 1000 LjubljanaGorazd Rous, Directortel: +386 1 430 41 50, fax: +386 1 231 31 70e-mail: gorazd≤sava-ip.sihttp://www.sava-ip.si

Ana Finc, Procuratortel: +386 1 430 41 50, fax: +386 1 231 31 70e-mail: ana.finc≤sava-ip.sihttp://www.sava-ip.si

SAVA IPN d.o.o., LjubljanaDav~na ulica 1, 1000 LjubljanaGorazd Rous, Directortel: +386 1 430 41 50, fax: +386 1 231 31 70e-mail: gorazd≤sava-ip.sihttp://www.sava-ip.si

Ana Finc, Procuratortel: +386 1 430 41 50, fax: +386 1 231 31 70e-mail: ana.finc≤sava-ip.sihttp://www.sava-ip.si

SAVA IMG d.o.o., PorečPartizanska 13, Pore~Jože Kavčič, Directortel: +386 1 430 41 50, fax: +386 1 231 31 70e-mail: joze≤sava-ip.sihttp://www.sava-ip.si

Stevo Žufić, Directortel: +385 5 243 15 66, fax: +385 5 242 28 43e-mail: zuf≤immobilien-img.comhttp://www.sava-ip.si

SAVA NOVA d.o.o., ZagrebFra Filipa Grabovca 14, 10000 ZagrebJože Kavčič, Directortel: +385 1 465 01 29, fax: +385 1 465 01 22 e-mail: joze≤sava-ip.sihttp://www.sava-ip.si


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OTHER OPERATIONS

SAVA MEDICAL IN STORITVE d.o.o., KranjŠkofjelo{ka c. 6, 4000 KranjMaksimiljan Fijačko, Director tel: +386 4 206 53 97, fax: +386 4 206 64 42 e-mail: maksimiljan.fijacko≤sava.sihttp://www.sava.si


GIP SAVA KRANJ d.o.o., RumaIndustrijski put bb, 22400 RumaMaksimiljan Fijačko, Director tel: +386 4 206 53 97, fax: +386 4 206 64 42 e-mail: maksimiljan.fijacko≤sava.sihttp://www.sava.si

ENERGETIKA SAVA d.o.o., KranjŠkofjelo{ka c. 6, 4000 KranjStanko Cvenkel, Directortel: +386 4 206 57 77, fax: +386 4 206 64 04e-mail: stanko.cvenkel≤sava.sihttp://www.sava.si

ENERGETIKA ČRNOMELJ d.o.o., KranjŠkofjelo{ka c. 6, 4000 KranjStanko Cvenkel, Directortel: +386 4 206 57 77, fax: +386 4 206 64 04e-mail: stanko.cvenkel≤sava.sihttp://www.sava.si

ENSA BH d.o.o., SrbacPrijeblezi BB, 78429 Srbac, Bosnia and HerzegovinaStanko Cvenkel, Directortel: +386 4 206 57 77, fax: +386 4 206 64 04e-mail: stanko.cvenkel≤sava.sihttp://www.sava.si

SAVA ENSA dooel, SkopjeUl. Veljko Vlahovi} br. 16/4, 1000 Skopje, MacedoniaNebojša Davidovski, Directortel: +389 2 312 01 40, fax: +389 2 312 01 40e-mail: nebojsa.davidovski≤sava.sihttp://www.sava.si

ASSOCIATED COMPANIES

GORENJSKA BANKA d.d., KranjBleiweisova cesta 1, 4000 KranjGorazd Trček, President of the Management Boardtel: +386 4 208 40 00, fax: +386 4 202 15 03e-mail: info≤gbkr.sihttp://www.gbkr.si

Srečko Korber, Member of the Management Boardtel: +386 4 208 40 00, fax: +386 4 202 15 03e-mail: info≤gbkr.sihttp://www.gbkr.si

JOB d.o.o., MariborCofova ulica 8, 2000 MariborJasmin Osmanović, Directortel: +386 2 229 85 10, fax: +386 2 229 85 13e-mail: job≤siol.nethttp://www.job.si

ABANKA VIPA d.d., LjubljanaSlovenska cesta 58, 1517 LjubljanaAleš Žajdela MSc, President of the Management Boardtel: +386 1 471 81 00, fax: +386 1 432 51 65e-mail: info≤abanka.sihttp://www.abanka.si

Radovan Jereb MSc, Member of the Management Boardtel: +386 1 471 81 00, fax: +386 1 432 51 65e-mail: info≤abanka.sihttp://www.abanka.si

Gregor Hudobivnik, Member of the Management Boardtel: +386 1 471 81 00, fax: +386 1 432 51 65e-mail: info≤abanka.sihttp://www.abanka.si

Sava, d.d.Annual Report 2008

PublisherSava d.d.

ConceptSava d.d.

EditorSava d.d.Vesna Muravec

TextSava d.d.Studio Kernel, d.o.o.

English translation Sava d.d.Lea Mežek

English proofreadingMark A. Valentine

DesignKreattiva Advertising, d.o.o.

Print^ukGraf

PhotographyFabio Nemi

May 2009

www.sava.si

Sava - Annual Report 2008

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Transcript of Sava - Annual Report 2008