Annual Report – Management of Capital Assets of RS and SSH for 2021 submitted to Parliament
Ljubljana, 27 October 2022 – Slovenian Sovereign Holding (SSH) has prepared the Annual Report – Management of Capital Assets of RS and SSH for 2021, pursuant to Article 67 of ZSDH-1, which requires SSH to monitor the performance of state-owned companies.
SSH achieved and even exceeded its 2021 targets set for the management of RS and SSH capital assets. In 2022 (for FY 2021), the dividend income paid out by companies in the SSH asset management portfolio will amount to the total of EUR 182.9 million, of which EUR 123.0 million will be distributed to RS, and 59.9 million to SSH. This sum is significantly higher than in 2021 (for FY 2020) and on a par with the targets set in AAMP. The largest dividend payers are Zavarovalnica Triglav, Krka, NLB, Telekom, Petrol and Luka Koper which contributed 83% of all dividend pay-out.
The return on equity (ROE) of RS and SSH portfolio is above the target value as it amounts to at 6.1%, which is 1.8 percentage points higher than the 2020 target and 1.9 percentage points above the 2021 target. The general recovery of the Slovenian economy, which exceeded expectations, contributed significantly to these results, while various anti-COVID measures also had an impact.
All pillars, except Energy sector, show a significantly better performance in 2021 than in 2020. The Transport pillar shows the biggest relative improvement in 2021, after having been hit the hardest in the previous year by the effects of the COVID-19 crisis. Despite lower ROE than achieved in the previous year, the results of the 2021 Energy pillar can be assessed as favourable, while the results of the Finance and Tourism & Economy pillars can be regarded as very good. Among individual companies or groups, Krka, the two insurance companies, Petrol, NLB and GEN stood out in terms of 2021 results.
In 2021, the book value of the RS and SDH equity holdings increased slightly to €10.3 billion at the end of the year, up by €0.4 billion from €9.9 billion at the end of 2020. The change in value is mainly due to the ongoing operations of the companies under SSH management, as there were no significant sales or acquisitions of equity investments taking place in 2021.
Good corporate governance deals with establishing and putting in place efficient mechanisms which aim to achieve long-term corporate value, financial and sustainable performance as well as other corporate objectives. Several projects which aimed at developing corporate governance were implemented in 2021, specifically, the Remuneration Policy for Management Bodies was adopted, an analysis was carried out of compliance with the Corporate Governance Code and the SSH Recommendations and Expectations by the SOEs, which led to the preparation of major amendments and additions to the Corporate Governance Code in 2021. In cooperation with experts from the Centre of Business Excellence of the Faculty of Economics, the University of Ljubljana, and external corporate experts, SSH also prepared a guide for supervisory boards of state-owned enterprises on governing corporate culture.
In the past year, in line with its mandate, SSH implemented the State's commitments to the low-carbon transition in the Annual Asset Management Plan 2022, in which recommendations and specific expectations have been set out for companies in relation to ESG factors.
The global and European economic environment has changed significantly over the last year. Uncertainty in the broader business environment requires priorities and challenges to be adjusted both as regards corporate governance and supervision as well as in the area of capital asset management. As a result, in this and in the coming year, SSH will pay particular attention to the application of crisis management models, the development of appropriate risk management systems, and the provision of appropriate competences at the level of supervisory and management bodies in areas that are important for companies to respond adequately to the new and changed economic circumstances. The portfolio companies need to develop appropriate strategies and plans with clear measures to enable them to respond quickly to any changes in business circumstances, thereby ensuring that their objectives are pursued as steadily and successfully as possible, even in challenging economic circumstances.
Appendix: Annual Report – Management of Capital Assets of RS and SSH for 2021