News 23. 12. 2020

The Government of the Republic of Slovenia grants its consent to the Asset Management Annual Plan 2021

Ljubljana, 23 December 2020 - At its session of 23 December 2020, the Government of the Republic of Slovenia granted its consent to the Annual Asset Management Plan 2021 ("AAMP"). The adoption of the document is of key importance for SSH acting in the capacity of a central ownership entity of state assets, as it provides the basis for carrying out its activities, it clearly states the owner's expectations for 2021 and enables SSH to track the goals set for 2021.

The year of 2020 was marked by the COVID-19 pandemic which surprised the world in the first quarter of 2020 only to completely change the way the business is done and affecting global macroeconomic conditions. Nevertheless, SSH expects profitable operational results to be achieved at the level of its portfolio of total assets for 2020. As regards the operations of companies from the SSH's portfolio of assets in 2020,  the first estimates [1] show that the return on equity (ROE) of the portfolio can achieve the value of 3.4%, which is by 2,5 percentage points lower than envisaged in AAMP 2020.

According to the latest IMAD's forecasts, a negative economic growth is predicted for Slovenia for 2020; it will presumably stand at -6.7% (according to the data by the Bank of Slovenia, it will amount to -7.6%). This shows a relative successful operation of companies from the portfolio managed by SSH under the current circumstances, in spite of an estimated drop in the ROE indicator.  A fall in the ROE value was also influenced by certain regulatory modifications, such as, for example, amendments to the Legal Act on the methodology for determining the regulatory framework and network charges for the electricity distribution system.  The COVID-19 crisis, however, has had a different impact on the operation of individual companies. The companies from the SSH's portfolio which have been hit the most by the crisis include enterprises from the tourism industry, manufacturing and transport industry. Some other sectors have been less severely affected for now, while the least impact of the COVID-19 crisis has been experienced by the pharmaceutical industry and telecommunications.  

In 2020, RS and SSH will receive the total of EUR 85.9 million of dividends. The lower sum of dividends paid out, as compared to the target value, which was set at EUR 142.4 million in AAMP 2020, is the result of the COVID-19 pandemic and tighter business conditions. These have been reflected in poorer performance results achieved by some companies in 2020 and in the worsening of their financial situation. The lower amount of dividend pay-outs is also the result of restrictions adopted for 2020 by regulatory institutions, in connection with their payment by banks and insurance companies.

The book-value of assets owned by RS and SSH as at 30 June 2020 amounted to EUR 9.88 billion.

Considering the economic forecasts, SSH expects a moderate recovery of operations for the portfolio companies and for ROE for 2021.

A growth in the SSH's portfolio ROE is forecasted for 2021. It is estimated to amount to 4.2%, which is by 0.8 percentage points higher than ROE set for 2020. Considering the assumptions included in the IMAD's scenario, 2021 is  to see a recovery of economic activity in the majority of industries, which, however, could not neutralize the expected fall in economic activity of 2020 (a more detailed review by sectors is given in the General Section of AAMP).

Implementing a relevant dividend policy is one of core activities for the management of state assets, enabling SSH to pursue goals, which aim at the maximisation of cash flows for the owner, while simultaneously take into account the performance results of individual companies, which are included in its management portfolio, and their development needs. The volume of dividend pay-outs planned to be received by RS, SSH and ZPIZ in 2021 amounts to EUR 83.9 million. Under the assumption that no special restrictions will apply for banks and insurance companies with respect to their dividend pay-outs, the dividend sum could be higher by EUR 47.6 million, thus amounting to the total of EUR 131.5 million.

SSH does not plan any more intense activities to be pursued in connection with the sale of capital assets. SSH will try to sell some small shareholdings which were included on the list in 2020, as well as those which RS has acquired or is to acquire on the basis of the Inheritance Act.

SSH will continue to implement all processes and measures necessary for achieving goals set in the Tourism Strategy, as envisaged in the Annual Asset Management Plan 2020. Key asset-management related activities pursued in the tourism industry will be focused, firstly, on the management of assets held in Sava (both, from the aspect of the receivables management as well as from the aspect of a shareholder) and secondly, on the carrying out of activities planned in AAMP for Tourism. SSH will take into consideration circumstances, which have changed the tourism sector due to the COVID-19 pandemic, as well as the impact of such circumstances on the long-term viability and the value of tourism companies.  


[1] It is worth pointing out, that estimates included in AAMP were made when the epidemiological situation was significantly better. The worsening of the epidemiological situation, which we have been witnessing since the middle of October, can have a significant impact on the operational results and may hinder the achievement of the goals set. Likewise, the estimate does not take into account any potential impairment of assets.


AAMP 2021 - general part

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