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Annual Report - Management of Capital Assets of RS and SSH in 2015 submitted to Parliament by Slovenian Sovereign Holding

Ljubljana, 19 October 2016 – Pursuant to Article 67 of ZSDH-1, imposing the monitoring of operational efficiency of stated-owned enterprises, Slovenian Sovereign Holding (SSH) has prepared the Annual Report - Management of Capital Assets of RS and SSH in 2015. The recommendations regarding best practice in corporate governance suggested by the OECD Guidelines on Corporate Governance of State-Owned Enterprises have been taken into account by SSH. The trend of growth in dividend pay-outs continues: there have been more dividends for the Republic of Slovenia (RS) and for Slovenian Sovereign Holding.

 

As regards the management of state assets, 2015 was a very active year since all key documents enabling the implementation of the active state ownership function have been adopted: the State Assets Management Strategy, Annual Asset Management Plan 2016, Criteria for Measuring Effectiveness of Companies, Corporate Governance Code for SOEs, SSH Asset Management Policy and SSH Recommendations and Expectations. The corporate governance system for SOEs has thus been established and, in the future, it will provide for the focus on the supervision over the implementation of corporate governance systems at the level of companies and over their performance objectives.

 

The operation of the SSH Management Board is focused on achieving targeted return from RS and SSH asset portfolios.

The long-term vision of SSH is generating value for the owner from capital assets. The key activities will therefore be placed  on achieving the returns on equity (ROEs) targeted for the RS and SSH capital assets portfolios as  laid down in the State Assets Management Strategy. Likewise in the future, SSH will provide for the professional competence and expertise of the management by setting high standards and applying the best practices in the management of enterprises and by implementing constant activities for increasing the corporate governance culture in SSH and at the level  of companies managed by/owned by SSH.

 

Sales activities

In 2015, SSH closed and implemented five Sale and Purchase Agreements in regard to capital assets owned by SSH with the total contractual value amounting to EUR 9 million and closed one Sale and Purchase Agreement in regard to the sale of capital assets owned by RS (Nova KBM, d.d.) with the value amounting to EUR 250 million that was completed in April 2016 after the passing of conditions precedent referred to in the Agreement.

 

Dividends paid and ROE of SSH and RS Portfolios for 2015

In 2015, the value of RS capital assets, measured at the book-keeping value, slightly decreased (i.e., by 0.8%, to amount to EUR 10.8 billion), while the value of SSH capital assets increased by 10.6%, amounting to EUR 780.8 million, which was mainly the result of the acquisition of PDP, d.d.. The total value of capital assets in direct ownership of the Republic of Slovenia (and managed by SSH pursuant to ZSDH-1) and SSH thus amounted to EUR 11.6 billion as of 31 December 2016.

 

The return on equity (ROE) of companies in the portfolio (by removing the non-recurring items from the calculations) increased in 2015; specifically, ROE of the RS portfolio increased by 3.1 percentage points, rising to 4.2 %, while ROE of the SSH portfolio remained at the same level as in 2014 (amounting to 11.1 %). Viewing the portfolio as a whole (i.e., the total of assets directly owned by RS and SSH), in 2015, ROE increased by 2.9 percentage points, rising to 4.7 %. The dividend paid-outs increased substantially. The dividend revenue received by RS in 2016 (for the financial year of 2015) amounted to EUR 142,2 million (8.7% growth as compared to 2015), and the dividend revenue received by SSH amounted to EUR 43.8 million (3.3% growth).

 

Future outlook

The main challenge faced by SSH in the future remains to improve the current profitability ratios of portfolio companies which means even more active and more efficient management of all assets.

 

Appendix: Annual Report - Management of Capital Assets of RS and SSH in 2015