News 22. 10. 2021

Annual Report - Management of Capital Assets of RS and SSH for 2020 Submitted to Parliament

Ljubljana, 22 October 2021 – Slovenian Sovereign Holding (SSH) has prepared the Annual Report - Management of Capital Assets of RS and SSH for 2020 pursuant to Article 67 of ZSDH-1 which has imposed on SSH the task of monitoring business performance of SOEs.

Performance results for 2020, the year which significantly makred by the COVID-19 pandemic, show that the portfolio's ROE amounted to 4.3%. It has to be pointed out that the result does not include a one-off impact of the impairment of assets held by HSE due to TEŠ, neither one-off positive impact recorded by NLB on account of its take-over of Komerciajlna banka Beograd. Considering all of the above-mentioned items, ROE of the portfolio amounted to 2.2% in 2020. The effects of the COVID-19 crisis had a different impact on the operation of individual companies. The companies from the SSH's portfolio which were hit the most by the crisis include enterprises from the tourism industry, manufacturing, and transport industry. Some other sectors were less severely affected, and the least impact of the COVID-19 crisis was experienced by the pharmaceutical industry and telecommunications. A fall in the ROE value was also negatively affected 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.

RS and SSH received the total of EUR 150.9 million of dividend income in 2021 (for FY 2020). The total sum of dividends increased significantly compared to the preceding year and was higher than planned for 2020. Regulators relaxed their conditions on dividend pay-outs applicable to banks and insurance companies, which enabled them to pay out dividends. In nominal terms, Krka was one of the individual companies that contributed the most to dividend income and was followed by Zavarovalnica Triglav, NLB, Telekom Slovenije, Gen energija and Petrol. The above mentioned six companies paid 78% of all dividends. 

The concentration of assets in the portfolio continues to be high – top 10 companies represented as much as 79% of the portfolio assets, and 20 largest companies 97% of the book-value of the entire portfolio. Only the largest company, DARS, which is classified as a strategic asset, took up almost 30% of the portfolio's value, and together with other strategic assets - their share is on the increase - represented 80.9% of the portfolio's value.  Measured by book-value, the value of direct ownership stakes of RS and SSH amounted to EUR 9.9 billion at the end of 2020.

Enhancing sustainability of SOE's operations is at the forefront of asset management

Management and supervisory boards are responsible for a company's long-term resilience in a business environment which changes fast also because of the consequences of climate change.

By adopting recommendations addressed to portfolio companies in July 2020, SSH aimed at encouraging SOEs to pursue economic, social and environmental transformation of their business strategies and models which should lead to better competitiveness, lower risk levels and sustainable performance in the long term. In order to promote sustainable operations, SSH adopted other measures by way of which it introduced additional sustainability indicators in the internal monitoring of companies and defined additional qualitative goals to be included in the annual business plans of portfolio companies; in addition, sustainability topics were included on the agenda of periodic meetings with companies. as well as in the education programme.

For success in sustainability, it is crucial that sustainable operations are integrated into all corporate governance systems at the level of companies. In order to maintain the competitiveness of their companies, manage risks and opportunities, ensure financial performance and meet stakeholder's expectations, management and supervisory bodies will have to incorporate the new reality into their own corporate culture, constantly strengthen competencies in this field and cooperate constructively in achieving the long-term sustainability.

Appendix: Annual Report - Management of Capital Assets of RS and SSH in 2020 

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