Business operations of Sava d.d. and the Sava Group in the period January-June 2014 RENEWED FOR THE FUTURE. Sava Group

Transcription

1 Business operations of Sava d.d. and the Sava Group in the period January-June 2014 RENEWED FOR THE FUTURE. Sava Group

2 Business operations of Sava d.d. and the Sava Group, January-June 2014 TABLE OF CONTENTS Table of contents INTRODUCTION page 1. Summary of business operations of the Sava Group and Sava d.d. in the first half of Significant data and indicators Overview of major events and achievements Events and achievements in the period January June Events and achievements after the accounting period 5 4. Presentation of the Sava Group Sava d.d Sava Group 7 5. Managing and governing bodies... 8 BUSINESS ANALYSIS page 1. The Sava share and ownership structure Business operations of Sava d.d. and the Sava Group Business operations of Sava d.d Business operations of the Sava Group 19 FINANCIAL REPORT page 1. Financial statements of the Sava Group with the selected explanatory notes in accordance with International Financial Reporting Standards as adopted by the EU 1.1. Consolidated financial statements of the Sava Group in accordance with International Financial 24 Reporting Standards as adopted by the EU 1.2. Composition of the Sava Group and data about the operations of subsidiaries and associated companies in the period January June Selected explanatory notes to the financial statements of the Sava Group in accordance with 34 International Financial Reporting Standards as adopted by the EU 1.4. Statement of Management Responsibility for the Sava Group Financial statements of Sava d.d. with notes in accordance with Slovene Accounting Standards Financial statements of Sava d.d. with notes in accordance with Slovene Accounting Standards Notes to the financial statements of Sava d.d Financial risk management for Sava d.d Breakdown and notes to the financial statements of Sava d.d Other disclosures Statement of Management Responsibility for Sava d.d. 81 CONTACT

3 introduction Business operations of Sava d.d. and the Sava Group, January-June 2014 INTRODUCTION Summary of business operations of the Sava Group and Sava d.d. in the first half of In view of further unfavourable economic circumstances, the Sava Group and Sava d.d. conducted business in accordance with the plan. In the first half of 2014, the companies of the Sava Group made sales revenues of 28.4 million, which was by 1% less than in the same period last year and by 1% below the planned revenues. At the end of the first half-year, the operating loss of the Sava Group companies amounted to 1.1 million and was significantly lower than last year as well as lower than planned for the period, which was due to business optimisation. A net loss of 6.0 million was made, of which the season-related loss in the companies of Tourism amounted to 1.4 million, while a loss of 4.5 million was due to Sava d.d., where the key cost refers to interest expenses and a reversal of deferred tax receivables. With regard to the end of 2013, the assets and liabilities structure of the Sava Group did not change significantly. Owing to the development of new products and searching for new markets, the companies of Tourism, which generated the majority of Group s revenues, increased their sales with regard to the same period last year and lagged only slightly behind the planned dynamics and that despite of the aggravated conditions in the market. Due to further business optimisations, they reduced their operating loss by 1.2 million if compared to the same period last year and the planned loss by 0.8 million. A minimum operating loss is mainly due to less favourable months for doing business in tourism in the first half of the year. In the period January June 2014, Sava d.d. made a net loss of 4.5 million. Further business optimisations resulted in operating expenses of 1.5 million, which was by half below the last year s result and lower than planned. In addition to interest expenses and a reversal of deferred tax receivables, the critical reason for a negative result lies in impairments of financial investments associated with the movement in the stock exchange market. With regard to the end of 2013, the assets and liabilities structure of Sava d.d. did not change significantly. At the 20 th Shareholders Meeting held on 29 April 2014, a resolution on reducing the share capital according to a simplified procedure was adopted. In terms of its substance, the share capital reduction of 11.4 million represents covering of total retained loss. After the procedure, the value of share capital thus stands at 14.1 million. The Management Board of Sava d.d. has already begun the procedures for the preparation of a revised business and financial restructuring strategy; like the current strategy, also the revised strategy will focus on adequate restructuring of financial liabilities, further consolidation of financial assets and improvement in operative business at all levels of operation. 3

4 Business operations of Sava d.d. and the Sava Group, January-June 2014 INTRODUCTION 2 Significant data and indicators 1 ( in millions) Sava Group according to International Financial Reporting Standards CONSOLIDATED INCOME STATEMENT JAN - JUN 2013 JAN - JUN 2014 Sales Pre-tax profit /loss Net profit / loss EBITDA CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 Dec Dec Dec Dec Jun Jun Balance sheet total Long-term assets Short-term assets Equity capital Long-term liabilities Short-term liabilities Investments in property, plant and equipment INDICATORS Net earnings / loss per share - Equity / balance sheet total - % Liquidity (short-term assets / short-term liabilities) -% SHARE Book value Market value Dividend paid per share NUMBER OF EMPLOYEES Status on the last day of period 2,286 2,256 2, ,210 1,004 4

5 Business operations of Sava d.d. and the Sava Group, January-June 2014 INTRODUCTION Overview of major 3 events and achievements 3.1 Events and achievements in the period January June 2014 JANUARY As one of the Supervisory Board members of Gorenjska banka d.d., Andrej Andoljšek temporarily takes over managing of this associated company of Sava d.d. For the time of his absence, the Supervisory Board of Sava d.d. appoints Aleš Aberšek from among its members as a Management Board member of Sava d.d. Gorenjska banka d.d. submits a restructuring plan and prepares measures for covering a potential capital shortfall, which as shown by the December stress tests could appear in the event of extreme circumstances or an unfavourable macroeconomic scenario. Health centres at Sava Hotels & Resorts destinations are restructured; in doing so, Sava Turizem d.d. implements strategic activities aimed at upgrading its healthcare business. FEBRUARY As capital increase through non-cash contributions failed, a simplified compulsory settlement procedure begins in the associated company NFD Holding d.d. Sava Turizem d.d. finalises the acquisition of the Ljubljana-based company Cardial d.o.o., thereby becoming an 85% owner of this modern specialist outpatients clinic. MARCH The Supervisory Board of Sava d.d. deals with and adopts the audited annual reports of the Sava Group and Sava d.d. for APRIL On 29 April 2014, the 20 th regular Shareholders Meeting of the joint stock company Sava is held in MAY the Livada Prestige hotel in Moravske Toplice. With a 99% majority of the capital present, the shareholders motion all the resolutions proposed in the Call by the Management Board and Supervisory Board of Sava d.d. Neither counter proposals nor announced challenging actions take place at the Shareholders Meeting. By entering the resolution from the Shareholders Meeting in the court register, the share capital of Sava d.d. reduces from the amount of 25,441, to the amount of 14,060, The reduction is carried out with the unchanged number of shares, after which the attributable amount of each share in the share capital after its reduction amounts to At the 12 th regular Supervisory Board meeting of Sava d.d., the Chairman of the Supervisory Board, Aleš Skok, resigns from the Chairman and member of the Supervisory Board position due to his leaving abroad. JUNE Sava d.d. receives purchase consideration totalling 2,478 thousand for selling 4,766 shares of Helios d.d. 3.2 Events and achievements after the accounting period JULY At its 13 th meeting, the Supervisory Board of Sava d.d. appoints Miran Kraševec as the new Chairman and Robert Ličen, MSc, as the Deputy Chairman of the Supervisory Board. The Supervisory Board further becomes acquainted with appointing Jasmina Kovačič as a member of the Supervisory Board employee representative of Sava d.d. 5

6 Business operations of Sava d.d. and the Sava Group, January-June 2014 INTRODUCTION 4 Presentation of the Sava Group 4.1 Sava d.d. Profile of the company Sava d.d. Company name: Sava, družba za upravljanje in financiranje, d. d. Head office: Dunajska cesta 152, 1000 Ljubljana, Slovenia Telephone: Telefax: info@sava.si Homepage: Registration number: VAT-ID No.: SI Court registry date: 26 April 1996 Activity code: holding companies Share capital 14,060, No. of shares 2,006,987 ordinary no-par value shares Share listing: Ljubljana Stock Exchange d.d., stock exchange listing Share designation: SAVA The major business lines of Sava d.d.: Managing companies, in which the company has a majority or significant ownership stake. Forming and managing professional services of Sava d.d. Acquiring and selling securities and other ownership stakes. Managing portfolio investments. Implementing financial engineering tasks. Formation of subsidiaries and companies, and take-overs of ownership stakes in Slovenia and abroad. Leasing of real estate. Business consulting services. All other commercial business that directly or indirectly contributes to achieving the goals of the company and involves the purchase and sale of real estate. Joining in commercial interest associations and concluding commercial contracts of all types. 6

7 Business operations of Sava d.d. and the Sava Group, January-June 2014 INTRODUCTION Finance Controlling Kontroling Organisational scheme of Sava d.d. Korporativno Corporate Communications komuniciranje Management Board of Sava d.d. and Sava Group s Directorate Računovodstvo, Accounting, načrtovanje Plan & in Analysis analize Pravna Legal pisarna Office Notranja Internal revizija Audit Sava d.d. is the management centre of the Sava Group. The management team of Sava d.d. is responsible for managing the investment portfolio and the strategic supervision over the Group, while the management teams in the subsidiaries are responsible for operative business in the subsidiaries. The role of the Sava Group s Directorate is to ensure management and strategic supervision over individual Group s companies, enforce Sava Group s policies and to manage and supervise other companies, in which Sava d.d. holds equity investments. Professional services provide the platform for a decision-making process by the Management Board and report to the Management Board on the implementation of policies and decisions adopted by the Management Board Sava Group The Sava Group operates three divisions: Investment Finance, Tourism and Other Operations. The key divisions for the future development of the Sava Group are Tourism and Investment Finance. As at 30 June 2014, the Group consisted of 10 companies: the parent company Sava d.d. and 9 subsidiaries sub-subsidiaries. INVESTMENT FINANCE 7 This operation is carried out within the company Sava d.d. Its main tasks are to optimise the value of individual investments, provide support in financing Sava s divisions and take care of the assets of the Sava Group. The major financial investment of Sava d.d. is the one in the banking sector: a 44.07% shareholding in the associated company Gorenjska banka d.d. that in the future might take a role in the consolidation processes of the Slovene banking sector. TOURISM The core of the division is the daughter company Sava Turizem d.d., which is the largest tourist services provider in Slovenia. Under the brand name of Sava Hotels & Resorts operating on six destinations Sava Hoteli Bled, Terme Moravske Toplice, Terme Ptuj, Health Resort Radenci, Terme Lendava and Terme Banovci the division offers premium health and wellness services, activity holidays all year round, as well as a creative and stimulating environment for organising diverse events and conferences. OTHER OPERATIONS This division includes the subsidiaries, which prior to adoption of the restructuring strategy of the Sava Group in September 2011, formed the then other operations in addition to Tourism and Investment Finance, and which after an extensive divesting and restructuring process still remain incorporated in the Sava Group.

8 Business operations of Sava d.d. and the Sava Group, January-June 2014 INTRODUCTION 5 Managing and governing bodies Management Board of Sava d.d.: Matej Narat, President of the Management Board Aleš Aberšek, Member of the Management Board Andrej Andoljšek was a Management Board member until 27 January On 28 January 2014, Aleš Aberšek was appointed a temporary Management Board member; his temporary term of office expired on 17 July 2014, on which date he was appointed as a Management Board member with the term of office until 31 March Supervisory Board of Sava d.d.: SHAREHOLDER REPRESENTATIVES Miran Kraševec, Chairman Robert Ličen, MSc, Deputy Chairman Roman Ambrož Miro Medvešek Rok Ponikvar EMPLOYEE REPRESENTATIVES Jasmina Kovačič Lučka Pogačnik Gregor Rovanšek Aleš Skok was Chairman of the Supervisory Board until 16 May 2014 when he resigned from the position of Chairman and member of the Supervisory Board due to his leaving abroad. On 17 July 2014, Miran Kraševec was appointed as the Chairman of the Supervisory Board and Robert Ličen, MSc, as the Deputy Chairman of the Supervisory Board. On 15 July 2014, Workers Council appointed Jasmina Kovačič as the new member of the Supervisory Board employee representative of Sava d.d. 8

9 business analysis Business operations of Sava d.d. and the Sava Group, January-June 2014 BUSINESS ANALYSIS The Sava share and ownership structure 1 In the first half of 2014, the Sava share value moved between 1.6 and 0.2. At the end of this June, the average price per share amounted to 0.7 and compared to the end of 2013, it grew by 0.4. Movement of the Sava share The range of value, within which the Sava share moved, reached the highest point at 1.6 and the lowest point at 0.2. In the first half of 2014, a gradual recovery of domestic economy is observable and, as a result, investor confidence in the domestic capital market increased. In the first half of 2014, liquidity of the Slovene capital market thus increased by 61.7% with regard to the comparable last year s period. Market capitalisation At the end of the first half of 2014, the market capitalisation of Sava shares amounted to 1.3 million, which was higher than at the end of The market capitalisation of all shares in the Ljubljana Stock Exchange amounted to 6.5 billion and compared to the end of 2013 it rose by 26.7%. Movement of the Sava share price from the beginning of July 2013 to the end of June Share price ( ) Turnover ( in thousands) Sava turnover 0 Jul13 Aug13 Sep13 Oct13 Nov13 Dec13 Jan14 Feb14 Mar14 Apr14 May 14 Jun14 0 Sava share price Source: Thomson Reuters Datastream 9

10 Business operations of Sava d.d. and the Sava Group, January-June 2014 BUSINESS ANALYSIS Ownership structure On 30 June 2014, Sava d.d. had 13,801 shareholders entered in the register book, which ranks it among the larger Slovene listed public joint stock companies. The stock of domestic shareholders amounted to 95.7% and that of foreign shareholders to 4.3%. In comparison with the end of 2013, the stock of foreign shareholders did not change. The majority of foreign shareholders originate from Great Britain, the United States of America, Germany, Austria and Croatia. The proportion of legal entities represented 81.1% and that of private individuals 18.9% of company shareholders. The ten major shareholders own 64.61% of total company equity. Ownership structure by category as at 30 June 2014 (%) 4.3 % Domestic shareholders Foreign shareholders 18.9 % 95.7 % 81.1 % Legal entities Private individuals 10 major shareholders as at 30 June major shareholders % shareholding No. of shares Kapitalska družba d.d % 375,542 SDH d.d.* 11.06% 222,029 Finetol d.d. - under receivership 6.87% 137,796 Merkur d.d. 6.72% 134,923 NFD 1, mixed flexible subfund South 5.07% 101,702 NFD Holding d.d. 4.33% 86,915 Probanka d.d. 3.97% 79,582 Gorenjska banka d.d. 2.81% 56,475 TCK d.o.o. 2.61% 52,459 PSL storitve d.d. - under receivership 2.46% 49,351 Total 10 major shareholders 64.61% 1,296,774 Sava d.d. (treasury shares) 1.52% 30,541 Other shareholders 33.87% 679,672 Total % 2,006,987 (*) In accordance with the restructuring of Slovenska odškodninska družba d.d. (SOD d.d.) into the company Slovenski državni holding d.d. (SDH d.d.) The most recent information on the ownership structure of Sava d.d. is available on the Sava homepage at Reltions.html. Company securities Trading with treasury shares In the period from the beginning of July 2013 to the end of June 2014, Sava d.d. did not purchase any treasury shares; on 30 June 2014 it thus owned 30,541 treasury shares in the value of 4,977 thousand valued at the average purchase price. This represents 1.52% of total shares. Sava d.d. received another 32,936 Sava shares in pledge, representing 1.64% of total shares issued. Management Board and Supervisory Board members who own Sava shares At the end of the first half of 2014, the members of the Management Board and Supervisory Board of Sava d.d. held 138 Sava shares, representing 0.007% of total company s capital. In comparison with the end of 2013, the balance did not change. 10

11 Business operations of Sava d.d. and the Sava Group, January-June 2014 BUSINESS ANALYSIS Management Board and Supervisory Board members who own Sava shares Management Board members Position No. of shares 31 Dec % shareholding 31 Dec No. of shares 30 Jun % shareholding 30 Jun Matej Narat President % % Aleš Aberšek* Member % Total % % Supervisory Board members Position No. of shares 31 Dec % shareholding 31 Dec No. of shares 30 Jun % shareholding 30 Jun Aleš Aberšek* Member % - - Gregor Rovanšek Member % % Total % % Total Management and Supervisory Board members % % (*)He carried out the Supervisory Board member office until 28 January 2014 when he was appointed as a temporary Management Board member. On 17 July 2014, his term in the position of a temporary Management Board member expired in accordance with par. 2 of Article 273 of the Companies Act-1, which is why he was appointed as a Management Board member for the term of office from 17 July 2014 to 31 March Key data on the Sava share / / 2014 No. of shares at period end (No. of shares) 2,006,987 2,006,987 2,006,987 2,006,987 2,006,987 2,006,987 Market capitalisation at period end ( in million) Share book value ( ) Share price - highest ( ) lowest ( ) at period end ( ) Average daily liquidity ( in thousands) Average daily trading with shares (No. of shares) Net earnings per share ( ) Dividend per share ( ) Share of dividend in net profit (%) Total amount of dividends paid ( in million) Share yield (%) dividend yield (%) capital yield (%) Price-Earnings ratio (P / E ratio) - highest lowest at period end Price-to-Book ratio (P / B ratio) (%)

12 Business operations of Sava d.d. and the Sava Group, January-June 2014 BUSINESS ANALYSIS Explanations for key data computation for the Sava share: Book value of the Sava share: the equity of the Sava Group without minority interest divided with the weighted average number of ordinary shares excluding treasury shares. Net earnings per Sava share: the net result belonging to Sava d.d. divided with the weighted average number of ordinary shares excluding treasury shares. Share of dividends in net profit: dividend per share divided with net earnings per share Dividend yield: dividend per share divided with the Sava share market price on the last trading day of the period. Capital yield: relative change in the market price of the Sava share at the end of the period with regard to the share market price at the end of the past year. Market capitalisation: multiple of the number of Sava shares and the market price of the share on the last day of the period. The Price-Earnings ratio (P/E): share market price on the last day of the period (or the highest and lowest market price in the period) divided with earnings per share. The Price-to-Book ratio (P/B): share market price on the last trading day of the period divided with the share book value at the end of the period. Further data on the Sava share Stock Exchange Share name Issuer s code Ljubljana Stock Exchange SAVA SAV ISIN- International Securities Identification Number SI Share book value The book value of the Sava share as at 30 June 2014 amounted to 7.9. When calculating the book value, the number of treasury shares is deducted from the total number of shares. Risk associated with investments in the Sava share Such risks are due to: Factors of systematic risk-taking characteristic of 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. Factors of non-systematic risk-taking that are connected with the operation of each individual company (investment, interest, solvency and foreign exchange risk). Cross links with other companies Referring to the criteria defined in the Corporate Governance Code for Public Joint-Stock Companies, Sava d.d. was cross-linked at the end of this first half-year, as follows: In Gorenjska banka d.d. it had a 44.07% equity stake, whereas Gorenjska banka had a 2.81% equity stake in Sava d.d. In the company Merkur d.d. it had a 6.62% equity stake, whereas Merkur had a 6.72% equity stake in Sava d.d. In the company NFD Holding d.d. it had a 24.65% equity stake, whereas NFD Holding d.d. had a 4.33% equity stake in Sava d.d. Approved capital and conditional increase in share capital The Articles of Association of Sava d.d. do not include any provisions in this regard. 12

13 Business operations of Sava d.d. and the Sava Group, January-June 2014 BUSINESS ANALYSIS Business operations of Sava d.d Business operations of Sava d.d. In the period January June 2014, Sava d.d. ran its business in accordance with the plan. A loss of 4.5 million was made. With regard to the end of 2013, the assets and liabilities structure of Sava d.d. did not change significantly. At the 20 th Shareholders Meeting held on 29 April 2014, a resolution on reducing the share capital according to a simplified procedure was adopted. The share capital reduction amounted to 11.4 million and in terms of its substance, it represents covering the total retained loss. After this procedure, the value of share capital thus amounts to 14.1 million. Business performance of Sava d.d. In the first half-year of 2014, Sava d.d. made a net loss of 4.5 million, which lies within the planned values. In the same period last year, the business result of Sava d.d. was significantly better on account of a favourable disposal of the Rubber Manufacturing division. The following major business events influenced the income statement: Sales revenues were halved if compared to the same period last year when in addition to the Rubber Manufacturing division the trademark was sold, too. Operating expenses totalled 1.5 million; they were 21% below the dynamically planned ones and by half lower than last year. In the operating expenses structure, labour costs had a 48% share with 0.7 million, which was 20% below the figure of the same period last year. A profit of 1.3 million was generated at selling financial investments. Impairments of financial investments amounted to 0.5 million. Interests on received loans were accounted for at the agreed 3% interest rate. A reduction in deferred tax receivables totalling 1.3 million, which aggravated the operating result, referred to the deferred tax receivables formed in the past due to impairments of financial investments sold in the accounting period. 13

14 Business operations of Sava d.d. and the Sava Group, January-June 2014 BUSINESS ANALYSIS Overview of significant operations data of Sava d.d. by year ( in millions) JAN - JUN 2013 JAN - JUN 2014 Net sales revenues Other revenues Operating expenses Operating profit or loss Financial result Pre-tax operating result Net profit or loss Financial result by type of activities ( in millions) Financial result Financial result Financial result Financial result Financial result Financial revenues Financial expenses Financial result JAN - JUN 2014 Dividends Selling Rubber Manufacturing with FTN Securities Impairments of financial investments Interests Other Total ACCUMULATED LOSS At the 20 th Shareholders Meeting held on 29 April 2014, a resolution on reducing the share capital according to a simplified procedure was adopted. As to its substance, the share capital reduction of 11.4 million to 14.1 million referred to covering the total retained loss from On 7 May 2014, the resolution was entered in the court register. Net operating profit / loss Jan-Jun Retained loss from previous years 0.0 Accumulated loss as at 30 June

15 Business operations of Sava d.d. and the Sava Group, January-June 2014 BUSINESS ANALYSIS Income statement of Sava d.d. by quarter in 2014 ( in thousands) JAN-MAR 2014 APR-JUN NET SALES REVENUES a) Revenues in domestic market To group enterprises To associated companies 0 3 To others b) Revenues in foreign market 0 0 To group enterprises 0 0 To associated companies 0 0 To others CHANGE IN THE VALUE OF INVENTORIES OF PRODUCTS AND WORK IN PROGRESS CAPITALISED OWN PRODUCTS AND SERVICES OTHER OPERATING REVENUES (with operating revenues from revaluation adjustment) COST OF MERCHANDISE, MATERIALS AND SERVICES a) Cost of merchandise and material sold and cost of material used b) Cost of services LABOUR COST a) Salaries and wages b) Social security cost (pension insurance cost shown separately) Social security cost Pension insurance cost c) Other labour cost AMORTISATION AND DEPRECIATION EXPENSE, WRITE-OFFS a) Amortisation b) Operating expenses from revaluation of intangible and tangible fixed assets 0 0 c) Operating expenses from revaluation of current assets OTHER OPERATING EXPENSES OTHER FINANCIAL REVENUES FROM SHARES 283 1,025 a) Financial revenues from shares in group enterprises 0 0 b) Financial revenues from shares in associated companies 0 0 c) Financial revenues from shares in other entities 283 1,025 č) Financial revenues from other investments

16 Business operations of Sava d.d. and the Sava Group, January-June 2014 BUSINESS ANALYSIS Income statement of Sava d.d. by quarter in 2014 ( in thousands) JAN-MAR 2014 APR-JUN FINANCIAL REVENUES FROM GRANTED LOANS a) Financial revenues from loans granted to group enterprises b) Financial revenues from loans granted to other entities FINANCIAL REVENUES FROM OPERATING RECEIVABLES a) Financial revenues from operating receivables due from group enterprises b) Financial revenues from operating receivables due from other entities 12. FINANCIAL EXPENSES FROM IMPAIRMENTS AND WRIT- OFFS IN FINANCIAL INVESTMENTS FINANCIAL EXPENSES FROM FINANCIAL LIABILITIES -1,659-1,733 a) Financial expenses from borrowings obtained from group enterprises b) Financial expenses from borrowings obtained from banks -1,408-1,418 c) Financial expenses from issued bonds d) Financial expenses from other financial liabilities FINANCIAL EXPENSES FROM OPERATING LIABILITIES 0 0 a) Financial expenses from operating liabilities to group enterprises 0 0 b) Financial expenses from trade payables and bill payables 0 0 c) Financial expenses from other operating liabilities OTHER REVENUES OTHER EXPENSES INCOME TAX DEFERRED TAX -72-1, NET PROFIT/LOSS FOR THE ACCOUNTING PERIOD -2,563-1,959 16

17 Business operations of Sava d.d. and the Sava Group, January-June 2014 BUSINESS ANALYSIS Assets and liabilities structure BALANCE SHEET TOTAL Assets structure of Sava d.d. as at 30 June 2014 and a comparison with 31 December 2013 ( in millions) Property, plant and equipment, investment property Long-term financial investments and assets for sale It amounted to million and compared to the figure at the end of 2013 it was higher by 1.8 million. ASSETS STRUCTURE No significant changes in the assets structure took place in the first half of The book value of sold financial investments amounted to 2.9 million. The value of financial investments grew due to the increased share prices; the increase totalling 6.7 million showed in equity revaluation adjustment. The value of financial investment that Sava d.d. has in the shares of Gorenjska banka d.d. and which as at 30 June 2014 represented 34% of the assets, did not change with regard to the end of the previous year. It amounted to 588 per share, which is below the share book value as shown in the bank s current financial statements. Shortterm financial investments Other assets TOTAL ASSETS 31 Dec Jun Liabilities structure No significant changes in the liabilities structure took place in the first half of As at 30 June 2014, the capital had a 7% share in the balance sheet total, while the portion of uncovered losses in the share capital amounted to 32%. At the 20 th Shareholders Meeting held on 29 April 2014, a resolution on reducing the share capital according to a simplified procedure was adopted. As to its substance, the share capital reduction of 11.4 million to 14.1 million referred to covering the total retained loss from On 7 May 2014, the resolution was entered in the court register. Sava d.d. regularly settles its financial and operating liabilities; in the reported period, the major part of proceeds from selling securities available for sale totalling 2.5 million was earmarked for repayment of loans principals. Liabilities structure of Sava d.d. as at 30 June 2014 and a comparison with 31 December 2013 ( in millions) Capital Longterm liabilities 31 Dec Jun Shortterm liabilities Other liabilities TOTAL LIABILITIES 17

18 Business operations of Sava d.d. and the Sava Group, January-June 2014 BUSINESS ANALYSIS Employee number As at 30 June 2014, Sava d.d. employed 18 associates, or 2 associates less than at the end of 2013, as they were reassigned to a company outside of the Sava Group or left the company. Financial restructuring of Sava d.d. On 23 July 2013, the Management Board of Sava d.d. effectively completed the process of concluding the Master Restructuring Agreement with the organiser, agent and collateral agent of the banks consortium Nova Ljubljanska Banka d.d. and other lending banks. The Agreement refers to restructuring the existing loan obligations of Sava d.d. in the amount of million at a 3% interest rate, the effective date of restructuring being 28 February 2013 and the final date 30 November Signing this Agreement, the lending banks have enabled Sava d.d. to defer payment of the principals under the existing loans. Sava d.d. committed itself to regularly pay 1% interest during this period, whereas a portion of deferred interest will fall due for payment at the end of the contractual period. Under the financial liabilities restructuring procedure, the equivalent arrangements were made with other financial creditors too. The activities of Sava d.d. in connection with the expiration of the Master Restructuring Agreement in 2014 The Management Board of Sava d.d. has already begun the procedures for the preparation of a revised business and financial restructuring strategy; like the current strategy, the revised strategy is founded on an adequate restructuring of financial liabilities, further consolidation of financial assets and improvement in operative business. By signing the Master Restructuring Agreement, the Management Board of Sava d.d. engaged to further consistently implement the envisaged strategy towards divesting the financial assets of the company, reducing costs and improving performance. Based on the public takeover bid published on 28 April 2014, Sava d.d. sold 4,766 shares of Helios d.d. in the first half of 2014, for which it received a consideration of 2,478 thousand. The sum was entirely earmarked for a premature partial repayment of the principals to the lending banks, which was one of the commitments set out in the Master Restructuring Agreement. With regard to the comparable last year s period, operating expenses reduced substantially in the first half of 2014 also due to labour cost cut. 18

19 Business operations of Sava d.d. and the Sava Group, January-June 2014 BUSINESS ANALYSIS 2.2. Business operations of the Sava Group The largest divisions of the Sava Group are represented by managing the financial investments of Sava d.d., its major business being the investment in the banking sector, and the Tourism division. In the first half of 2014, the companies of the Sava Group made sales revenues of 28.4 million, which was by 1% less than in the same period last year and by 1% below the planned revenues. A net loss of 6.0 million was made, of which the season-related loss in Tourism amounted to 1.4 million, while a loss of 4.5 million was due to Sava d.d. With regard to the end of 2013, the assets and liabilities structure of the Sava Group did not change significantly. Business performance The information on business performance including the reference analysis for the same period last year took the current composition of the Sava Group into consideration. The income statement of the Sava Group shows the values actually achieved in SALES REVENUES In the first half of 2014, sales revenues of the Sava Group companies amounted to 28.4 million and were by 1% below the result achieved in the same period last year and lagged 1% behind the planned values. The performance of the Tourism division is still affected by the unfavourable economic circumstances. The new trends in tourist demand show that the number of individual guests decreases while their spending reduces too. The sales and cost policies were adapted to the new trends, which is why Tourism intensifies its presence in various trade shows, develops new products in health tourism and introduces a more aggressive price policy in the market. In the first half of 2014, Tourism generated sales revenues of 28.0 million, which was a 2% improvement on the same period last year and 1% below the planned revenues for the period. The companies of Other Operations, which consist of real estate companies, an energy management company and two smaller service providing companies, generated sales revenues of 0.2 million and had no significant impact on the total volume of Sava Group s sales. Sales revenues of the Sava Group from 2009 to June 2014 ( in millions) Jan - Jun Jan - Jun

20 Business operations of Sava d.d. and the Sava Group, January-June 2014 BUSINESS ANALYSIS OPERATING EXPENSES Operating expenses totalling 30.3 million were by 2% lower than in the same period last year and by 2% lower than planned. Cost of goods, materials and services had a 50% share in the expenses structure, labour cost a 35%, amortisation and write-offs a 13% and other operating expenses a 2% share. NET FINANCIAL EXPENSES Net financial expenses amounted to 3.7 million and were mainly realised in the controlling company Sava d.d. The sum also includes further impairments of financial investments totalling 0.5 million. The Sava Group companies settle their interest liabilities in accordance with the provisions stipulated in the agreements on restructuring the obtained loans. OPERATING LOSS (EBIT) At the end of the first half of 2014, the operating loss of the Sava Group companies totalled 1.1 million and was substantially lower than last year and also below the planned loss for the period. It was mainly made in the controlling company Sava d.d., whereas in the companies of other operations the operating loss was at a minimum. EBITDA and EBIT in the Sava Group from 2009 to June 2014 ( in millions) Jan - Jun Jan - Jun 2014 EBITDA - earnings before interest, taxes, depreciation and amortisation EBIT - earnings before interest and taxes PRE-TAX LOSS Pre-tax profit / loss structure ( in millions) JAN - JUN 2014 Profit / loss from operations less write-offs Impairments of assets in profit/loss Financial result without impairments Profit / loss of associates without impairments PRE-TAX PROFIT/LOSS

21 Business operations of Sava d.d. and the Sava Group, January-June 2014 BUSINESS ANALYSIS NET LOSS In the period January June 2014, the Sava Group made a net loss of 6.0 million, of which seasonrelated loss in Tourism companies totalled 1.4 million, while a loss of 4.5 million was due to Sava d.d. Net profit / loss in the Sava Group from 2009 to June 2014 ( in millions) Jan - Jun 2013 Jan - Jun 2014 Income statement of the Sava Group by quarter in 2014 ( in thousands) JAN - MAR 2014 APR - JUN 2014 Net sales revenues from goods sold and services rendered 11,997 16,398 Change in inventories 0-15 Other operating revenues Operating revenues 12,329 16,887 Cost of goods, materials and services -7,299-7,831 Labour cost -5,331-5,354 Depreciation and amortisation -1,915-1,903 Other write-offs Other operating expense Operating expenses -15,043-15,295 Operating profit / loss -2,714 1,592 Financial revenues 457 1,199 Financial expenses -2,745-2,562 Net financial revenues / expenses -2,288-1,363 Net revenues / expenses of associates 0 0 Pre-tax profit / loss -5, Income tax -72-1,200 Net profit/ loss for the year -5,

22 Business operations of Sava d.d. and the Sava Group, January-June 2014 BUSINESS ANALYSIS Assets and liabilities structure BALANCE SHEET TOTAL, ASSETS AND LIABILITIES STRUCTURE As at 30 June 2014, the balance sheet total of the Sava Group amounted to million and was by 0.5 million lower than at the end of CAPITAL AND LIABILITIES No significant changes in the liabilities structure of the Sava Group took place in the first half of Comparison of the liabilities structure of the Sava Group as at 30 June 2014 and 31 December 2013 ( in millions) In the assets structure, financial investments had a 38% share, property, plant and equipment a 49% share, while other assets (inventories, operating receivables, granted loans, deferred tax receivables and other) had a 13% share Capital had a 5% share in the liabilities structure, 200 long-term debts a 20% and short-term debts a 75% share. ASSETS No significant changes in the assets structure of the Sava Group took place in the first half of Comparison of the assets structure of the Sava Group as at 30 June 2014 and 31 December 2013 ( in millions) Capital Long-term liabilities Short-term liabilities TOTAL CAPITAL AND LIABILITIES 31 Dec Jun Investments In the first half of 2014, a sum of 2.1 million was earmarked for investments, which were entirely realised in the Tourism division Fixed Investments assets and in associates investment property Long-term securities Other assets TOTAL ASSETS 31 Dec Jun Employee number in the Sava Group As at 30 June 2014, the Sava Group employed 1,004 associates or 31 associates more than at the end of the previous year. The majority of employees are employed with the Tourism division. Financial restructuring of Sava d.d. and Sava Turizem d.d. The explanations about the financial restructuring are given in the financial part of the semi-annual report of the Sava Group, under Selected explanatory notes to the business events and transactions in the period January June 2014, paragraph e). 22

23 Business operations of Sava d.d. and the Sava Group, January-June 2014 BUSINESS ANALYSIS računovodsko poročilo financial report Sava Group 23

24 1 Financial statements of the Sava Group with the selected explanatory notes in accordance with International Financial Reporting Standards as adopted by the EU 1.1 Consolidated financial statements of the Sava Group in accordance with International Financial Reporting Standards as adopted by the EU Consolidated statement of financial position ( in thousands) 30 Jun Jun Dec ASSETS Property, plant and equipment 151, , ,358 Intangible assets Investment property 8,276 10,885 8,355 Investments in associates 86, ,949 86,217 Long-term securities available for sale 36,534 34,147 31,426 Long-term loans Deferred tax receivables 8,956 20,555 10,806 Long-term assets 292, , ,608 Assets for sale Inventories 4,200 5,418 4,265 Operating and other receivables 6,945 13,776 5,544 Income tax receivable Short-term financial investments Granted loans 21,050 19,391 24,594 Cash and cash equivalent 845 2,656 1,239 Short-term assets 33,040 41,241 35,642 Assets 325, , ,250 24

25 30 Jun Jun Dec EQUITY AND LIABILITIES Issued capital 14,061 25,442 25,442 Share premium Reserves 4,977 4,977 4,977 Fair value reserve 7,779-4,214 1,068 Treasury shares -4,977-4,977-4,977 Translation reserve Retained net profit / loss -6,145 38,083-11,500 Total equity attributable to equity holders of the parent 15,695 59,311 15,010 Minority interest 1,164 1,139 1,166 Capital 16,859 60,450 16,176 Long-term provisions 3,194 2,808 2,961 Deferred government grants 8,909 9,321 9,068 Obtained long-term loans 52,152 69,062 54,216 Long-term operating liabilities Deferred tax liabilities Long-term liabilities 64,255 81,191 66,245 Liabilities for sale Short-term financial liabilities 223, , ,890 Short-term operating liabilities 16,041 16,097 13,055 Short-term costs and accrued revenues 4,602 6,175 3,884 Short-term liabilities 244, , ,829 Total liabilities 308, , ,074 Total equity and liabilities 325, , ,250 25

26 Consolidated income statement ( in thousands) JAN-JUN 2014 JAN-JUN 2013 Revenues from goods sold and services rendered 28,395 29,928 Change in inventories of products and work in progress Other operating revenue Operating revenue 29,216 30,939 Cost of goods, materials and services -15,130-16,999 Labour cost -10,685-12,466 Depreciation and amortisation -3,818-4,232 Other write-offs Other operating expense Operating expenses -30,339-34,806 Operating profit / loss -1,123-3,867 Financial revenues 1,656 10,666 Financial expenses -5,307-10,978 Net financial revenues/ expenses -3, Share in profit of associates 0 0 Share in loss of associates 0 0 Impairments of financial investments in associates 0-1,078 Net expense from associates 0-1,078 Pre-tax loss -4,774-5,257 Tax -1, Net loss for the year -6,046-5,999 Net loss for the year attributable to: Equity holders of the parent -6,025-5,986 - arising from a discontinued operation 0 0 Minority interest Net loss for the period -6,046-5,999 Basic loss per share ( ) Diluted loss per share ( )

27 Consolidated statement of comprehensive income ( in thousands) JAN-JUN 2014 JAN-JUN 2013 Net loss for the period -6,046-5,999 Other comprehensive income - Items not to be reclassified in profit or loss Foreign currency translation differences Net loss for hedging of net investment in foreign currency transactions Deferred tax on revaluation of fixed assets Effective portion of changes in fair value of cash flow hedges Net change of fair value in cash flow hedging to be transferred to profit or loss Change in fair value of available-for-sale financial assets 8, Deferred tax on change in fair value of available-for-sale financial assets - Change in fair value of investments in associates transferred to profit or loss - Change in fair value of available-for-sale financial assets transferred to profit or loss - Deferred tax on change in fair value of available-for-sale financial assets transferred to profit or loss , Actuarial gains / losses in pension scheme with retirement benefits Deferred tax on change of fair value in investments in associates Other comprehensive income for the period, net of deferred tax 6, Total comprehensive income for the period 665-6,431 Comprehensive income for the period attributable to: Owners of the company 686-6,418 Minority interest Total comprehensive income for the period 665-6,431 27

28 Consolidated cash flow statement ( in thousands) 28 CASH FLOWS FROM OPERATING ACTIVITIES JAN-JUN 2014 JAN-JUN 2013 Net profit / loss -6,046-5,999 Adjustments for: Depreciation of property, plant and equipment 3,676 4,070 Depreciation of intangible assets Depreciation of investment property Write-off and impairments of property, plant and equipment 0 0 Write-off of investments in progress 0 0 Impairments of inventories 0 0 Impairments of receivables Write-offs and impairments of intangible assets 0 0 Loss in sale of intangible assets 0 0 Proceeds in sale of intangible assets 0 0 Write-offs and impairments of investment property Impairment of financial assets 495 1,532 Impairments of investments in associates 0 1,078 Proceeds from sale of plant, property and equipment 0 0 Loss at disposal of property, plant and equipment 0 0 Proceeds from sale of investment property Loss in sale of investment property 0 0 Foreign currency translation difference 0 0 Profit in sale of long-term securities -1, Loss in sale of securities 0 0 Loss in sale of associates 0 0 Share in profit of associates 0 0 Dividends and share in profit received Share in loss of associates 0 0 Foreign exchange difference 0 0 Impairment of granted loans 0 0 Impairment of loans granted to associates 0 0 Proceeds from acquisition of a subsidiary 0 0 Interest expense 4,808 9,446 Interest revenue Income tax liability / receivable 0 0 Income from operations prior to change in operating equity and provisions 1,659 10,116 Change in long-term receivables 1,850-1,262 Change in short-term receivables -1,412-18,585 Change in inventories Change in short-term operating liabilities 741-3,265 Change in long-term operating liabilities Change in provisions Change in government grants Acquired cash in operations 3,695-13,410 Paid income tax 0 0 Net cash flow from operations 3,695-13,410

29 CASH FLOW FROM INVESTMENT ACTIVITIES JAN - JUN 2014 JAN - JUN 2013 Purchase of property, plant and equipment -2,092-2,025 Proceeds from sale of property, plant and equipment Purchase of intangible assets Proceeds from sale of intangible assets 4 0 Purchase of investment property Proceeds from sale of investment property 0 2,300 Proceeds from sale of subsidiaries 0 70,400 Purchase of subsidiaries Proceeds from sale of associates 0 0 Proceeds from repaid loans 3,544 3,973 Expenses for granted loans 0-3,846 Purchase of long-term securities Proceeds from sale of long-term securities 2, Received dividends of associates 0 0 Other dividends and shares in profit 14 0 Received interests Net cash flow from investment activities 4,023 75,649 CASH FLOWS IN FINANCING ACTIVITIES Increase in capital 0 0 Acquisition of own shares 0 0 Other changes in capital Proceeds from obtained long-term loans 0 0 Expenditures for obtained long-term loans Proceeds from obtained short-term loans 0 0 Expenses for obtained short-term loans -4,973-53,031 Expenses for dividends of Group's shareholders 0 0 Paid interests -2,580-6,349 Net cash flow from financing activities -8,112-60,134 Net increase or decrease in cash and cash equivalents ,105 Cash and cash equivalents at year begin 1, Cash and cash equivalents from companies for sale 0 0 Cash and cash equivalents at the end of the period 845 2,656 29

30 Consolidated statement of changes in equity ( in thousands) Issued capital Share premium Reserves Reserves for own shares Reserves for fair value of financial assets Reserves from a change in the value of financial investments in associated companies Reserves for fair value of interest rate swaps Own shares Translation reserve Net profit/ loss for the Retained financial net profit / year loss Capital attributed to owners of the controlling interest Non-controlling interest Balance as at 31 Dec , ,977 1,822-5, , ,181 84,940 65,728 1,568 67,296 Total comprehensive income Loss for the year , , ,999 Other comprehensive income Foreign currency translation differences Effective portion of changes in fair values of cash flow hedges - interest rate swaps Change in fair value of available-for-sale financial assets Deferred tax on change in fair value of availablefor-sale financial assets Change in fair value of investments in associates Change in fair value of available-for-sale financial assets transferred to profit or loss Deferred tax on change in fair value of availablefor-sale financial assets transferred to profit or loss Total comprehensive income , , ,431 Transactions with owners, recorded directly in equity Dividend pay-out Transfer of net loss of the previous year in the retained net profit ,181-99, Acquisition of own shares Decrease in minority interest due to exchange rate change Decrease in minority interest due to purchase of stakes Total transactions with owners recorded in capital ,181-99, Changes in capital 0 Covering a loss -58, , Formation of reserves for own shares Other changes in capital Total changes in capital -58, , Balance as at 30 Jun , ,977 1,390-5, , ,986 44,069 59,310 1,139 60,450 Total 30

31 Consolidated statement of changes in equity ( in thousands) Issued capital Share premium Reserves Reserves for own shares Reserves for fair value of financial assets Reserves from a change in the value of financial investments in associated companies Reserves for fair value of interest rate swaps Own shares Translation reserve Net profit/ loss for the Retained financial net profit / year loss Capital attributed to owners of the controlling interest Non-controlling interest Balance as at 31 Dec , ,977 1, , ,569 44,069 15,010 1,166 16,176 Total comprehensive income Loss for the year , , ,046 Other comprehensive income , , ,710 Items not to be reclassified in profit or loss Foreign currency translation differences Effective portion of changes in fair values of cash flow hedges - interest rate swaps Change in fair value of available-for-sale financial assets Deferred tax on change in fair value of available-for-sale financial assets Change in fair value of investments in associates Change in fair value of available-for-sale financial assets transferred to profit or loss Deferred tax on change in fair value of available-forsale financial assets transferred to profit or loss , , , , , , Total comprehensive income , , Transactions with owners, recorded directly in equity Transfer of net loss of the previous year in the retained net profit ,569-55, Acquisition of own shares Increase in minority interest due to acquisition of companies Increase in minority interest due to change in ownership of the company Total transactions with owners recorded in capital ,569-55, Changes in capital 0 Covering a loss -11, , Formation of reserves for own shares Other changes in capital Total changes in capital -11, , Balance as at 30 Jun , ,977 7, , , ,695 1,164 16,859 0 Total 31

32 1.2 Composition of the Sava Group and data about the operations of subsidiaries in the period January June 2014 As at 30 June 2014, the Sava Group consisted of 10 companies: the parent company Sava d.d. and 9 subsidiaries. The financial statements of all these companies are included in the consolidated financial statements of the Sava Group. In all companies, the capital and control rights are in accord. In February 2014, Sava Turizem d.d. acquired an 85% share of Cardial d.o.o. The value of investment amounted to 350 thousand, the value of company s capital on the acquisition date amounted to 124 thousand; the remaining - 15% - share represents the company s own share. List of companies that besides the parent company Sava d.d. are included in the Sava Group, with a comparison of shareholdings as at 30 June 2014 and 31 December 2013: TOURISM % shareholding 30 Jun % shareholding 31 Dec Change in % shareholding in 2014 SAVA TURIZEM d.d., Ljubljana 99.05% 99.05% 0.00% - Cardial d.o.o., Ljubljana (owned by Sava Turizem d.d.) 85.00% 0.00% 85.00% - Sava Zdravstvo d.o.o., Ljubljana (owned by Sava Turizem d.d.) % % 0.00% - Sava TMC d.o.o., Ljubljana (owned by Sava Turizem d.d.) % % 0.00% REAL ESTATE SAVA NEPREMIČNINE d.o.o., Ljubljana % % 0.00% SAVA NOVA d.o.o., Zagreb, Croatia % % 0.00% OTHER OPERATIONS GIP SAVA KRANJ d.o.o., Ruma, Serbia % % 0.00% ENERGETIKA ČRNOMELJ d.o.o., Ljubljana 50.68% 50.68% 0.00% SAVA IT d.o.o., Ljubljana % % 0.00% List of associates with a comparison of shareholdings as at 30 June 2014 and 31 December 2013 % shareholding 30 Jun % shareholding 31 Dec SAVA, d.d., družba za upravljanje in financiranje - as a parent company Change in % shareholding in 2014 Controlling stake** 30 Jun Gorenjska banka d.d., Kranj* 44.07% 44.07% 0.00% 48.82% - NFD Holding d.d., Ljubljana 24.65% 24.65% 0.00% 24.65% SAVA TURIZEM d.d. - as a parent company - Gorenjska banka d.d., Kranj 0.16% 0.16% 0.00% 0.17% * 34,287 shares of Gorenjska banka d.d., Kranj, are under a fiduciary ownership of Abanka Vipa d.d., Ljubljana. The fiduciary saves them in favour of the holders of SA03 bonds issued by Sava d.d. as collateral for the liabilities arising from the bonds until their maturity, which is on 30 November Gorenjska banka d.d. is not included in the consolidated financial statements (amendments to IFRS 10), the reasons being presented in the preceding report. ** The controlling stake is calculated as a ratio between the number of shares owned by Sava d.d. and total number of issued shares of the associated company, less own shares. 32

33 Sales revenues of subsidiaries in the period January June 2014, capital of subsidiaries as at 30 June 2014 and operating profit/loss of subsidiaries in the period January June 2014: ( in thousands): Sales revenues Jan-Jun 2014 Equity value 30 Jun Operating profit/loss Jan-Jun 2014 TOURISM 28,937 92,794-1,388 SAVA TMC d.o.o., Dunajska cesta 152, 1000 Ljubljana Sava Turizem d.d., Dunajska cesta 152, 1000 Ljubljana 27,596 91,741-1,742 Cardial d.o.o., Zaloška cesta 69, 1000 Ljubljana Sava Zdravstvo d.o.o., Dunajska cesta 152, 1000 Ljubljana REAL ESTATE 4 1, SAVA NEPREMIČNINE d.o.o., Dunajska cesta 152, 1000 Ljubljana 3 3,721-2 SAVA NOVA d.o.o., Fra Filipa Grabovca 14, Zagreb, Croatia 1-1, OTHER OPERATIONS GIP SAVA KRANJ d.o.o., Industrijski put bb, Ruma, Serbia Sava IT d.o.o., Dunajska cesta 152, 1000 Ljubljana ENERGETIKA ČRNOMELJ d.o.o., Dunajska cesta 152, 1000 Ljubljana SUBSIDIARIES TOTAL 29,097 95,641-1,578 Sales revenues of subsidiaries in the period January June 2013, capital of subsidiaries as at 30 June 2013 and operating profit/loss of subsidiaries in the period January June 2013 ( in thousands): Sales revenues Jan-Jun 2013 Equity value 30 Jun Operating profit/loss Jan-Jun 2013 TOURISM 28,232 90,113-2,785 SAVA TMC d.o.o., Dunajska cesta 152, 1000 Ljubljana Sava Turizem d.d., Cankarjeva 6, 4260 Bled 27,458 89,808-3,018 - Sava Golf d.o.o., Dunajska cesta 152, 1000 Ljubljana Sava Zdravstvo d.o.o., Dunajska cesta 152, 1000 Ljubljana REAL ESTATE 0 5, SAVA NEPREMIČNINE d.o.o., Dunajska cesta 152, Ljubljana 0 6, SAVA NOVA d.o.o., Fra Filipa Grabovca 14, Zagreb, Croatia OTHER OPERATIONS 2,406 1, GIP SAVA KRANJ d.o.o., Industrijski put bb, Ruma, Serbia Sava IT d.o.o., Škofjeloška cesta 6, 4000 Kranj ENERGETIKA d.o.o., Škofjeloška cesta 6, 4000 Kranj ENERGETIKA ČRNOMELJ d.o.o., Škofjeloška cesta 6, 4000 Kranj ENSA BH d.o.o., Prijeblezi BB, Srbac, Bosnia and Herzegovina 1, BRAMIR d.o.o., Kralja Petra Krešimira IV, Mostar, Bosnia and Herzegovina SAVA ENSA dooel., Ul Veljko Vlahović br. 16/4, 1000 Skopje, Macedonia SUBSIDIARIES TOTAL 30,638 97,291-3,255 33

34 1.3 Selected explanatory notes to the financial statements of the Sava Group in accordance with International Financial Reporting Standards as adopted by the EU The reporting company The controlling company Sava d.d. is domiciled in Dunajska cesta 152, 1000 Ljubljana. The consolidated financial statements of the Sava Group, which include the controlling company Sava d.d., its subsidiaries, and the interests in the associated companies, have been drawn for the period ending on 30 June Basis of preparation a) Statement of compliance The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU, in compliance with the explanations (IFRICs) as adopted by the International Accounting Standards Board (IASB), and in accordance with the Companies Act. The Management Board approved the issue of the financial statements on 19 August b) Basis of measurement The consolidated financial statements are prepared on the historical cost basis except for the financial instruments classified as available for sale and derivative financial instruments that are stated at their fair values Significant accounting policies The companies in the Sava Group have consistently applied the determined accounting policies for all the periods shown in the enclosed consolidated financial statements. The accounting policies, which had been already presented in the annual report of the Sava Group for 2013, did not change. However, we further give the information as follows: BUSINESS COMBINATIONS In 2014, an 85% share in the company Cardial d.o.o. was acquired, which now represents a new subsidiary in the Sava Group. DRAWING UP A CASH FLOW STATEMENT The cash flow statement has been prepared taking into consideration the data from the income statement for the period January June 2014 (for the past period January-June 2013), the balance sheet data as at 30 June 2014 and 31 December 2013 (for the past period 30 June 2013 and 31 December 2012), and other required data. The cash flow statement excludes the values not connected with the revenues and expenses. c) Functional and presentation currency The consolidated financial statements are presented in euro, which is the functional currency of the company. All financial information is presented in euro, rounded to one thousand units. When adding together, minor differences can appear due to rounding off. The Sava Group companies, which have their head office outside of Slovenia, use the following currencies: HRK, RSD. 34

35 Selected explanatory notes to more important business events and transactions in the period January June 2014 a) Write-offs in inventories, revaluations of receivables In the first half of 2014, revaluation adjustments in receivables totalling 184 thousand were formed in Tourism. In the first half of 2013, real property was impaired in the value of 141 thousand and revaluation adjustments in receivables were formed to the amount of 370 thousand. b) Losses due to impairments of financial assets In the first half of 2014, securities available for sale were impaired in the amount of 495 thousand. In the reported period, the recognised losses arising from the impairments of financial investments were not reversed. The valuation of a financial investment in the shares of Gorenjska banka d.d., Kranj, did not change if compared to the one at 31 December At the end of the year, the value will be reviewed. In the first half of 2013, the following financial assets were impaired: Impairments of securities available for sale in the amount of 1,532 thousand. Impairments of investments in the associates in the amount of 1,078 thousand d) Acquisitions and disposals of fixed assets and investment property In February 2014, Sava Turizem d.d. acquired an 85% share in Cardial d.o.o. The remaining 15% - share is owned by the company. The investment value totalled 350 thousand, the value of capital on the acquisition day amounted to 124 thousand; in financial statements, the difference between the purchase price and the value of attributable capital totalling 245 thousand was recognised as goodwill. In the first half-year, neither fixed assets nor investment property were disposed, while investments of 2,105 thousand were mainly realised in Tourism. In the first half of 2013, Sava d.d. sold land in the Labore location in Kranj as part of selling the Rubber Manufacturing division with the Foreign Trade Network. Sales value amounted to 2,300 thousand, at which a profit of 126 thousand was generated. The value of investments in this period amounted to 2,025 thousand. e) Financial restructuring and the activities in connection with the expiration of the Master Restructuring Agreement in 2014 The recognised losses arising from impairments of financial assets were not reversed during this period. c) Reversal of provisions for restructuring expenses In the first half of 2014, no reversal of provisions for restructuring expenses took place. In the first half of 2013, provisions for severance pays totalling 57 thousand were used at Sava d.d. 35

36 36 SAVA D.D. On 23 July 2013, the Management Board of Sava d.d. effectively completed the process of concluding the Master Restructuring Agreement with the organiser, agent and collateral agent of the banks consortium Nova Ljubljanska Banka d.d. and other lending banks. The Agreement refers to restructuring the existing loan obligations of Sava d.d. in the amount of million at a 3% interest rate, the effective date of restructuring being 28 February 2013 and the final date 30 November Signing this Agreement, the lending banks have enabled Sava d.d. to defer payment of the principals under the existing loans. Sava d.d. committed itself to regularly pay 1% interest during this period, whereas a portion of deferred interest will fall due for payment at the end of the contractual period. Under the framework of financial liabilities restructuring procedure, the equivalent arrangements were made with other financial creditors too. By signing the Master Restructuring Agreement, the Management Board of Sava d.d. engaged to further consistently implement the envisaged strategy towards divesting the financial assets of the company, reducing costs and improving performance. Based on the public takeover bid, Sava d.d. sold 4,766 shares of Helios d.d. in the first half of 2014, for which it received a consideration of 2,478 thousand. The sum was entirely earmarked for a partial premature repayment of the principals to the lending banks, which is one of the commitments set out in the Master Restructuring Agreement. With regard to the comparable last year s period, operating expenses reduced substantially in the first half of 2014, also due to labour cost cut. The Management Board of Sava d.d. has already begun the procedures for the preparation of a revised business and financial restructuring strategy; similarly to the current strategy, the revised strategy is based on a suitable restructuring of financial liabilities, further consolidation of financial assets and improvement in operative business. SAVA TURIZEM D.D. On 2 July 2013, the Management Board of Sava Turizem d.d. signed the agreement on restructuring financial liabilities with the lending banks. One of the lending banks did not join the agreement, however, it made an annex to the loan agreement with Sava Turizem d.d., which stipulates the conditions that equal the conditions from the restructuring agreement made with the lending banks. Under the agreement, the existing loan obligations of Sava Turizem d.d. of 49.7 million were restructured, the interest rate being 3m EURIBOR + 5%, the effective date being 2 July 2013 and the final date 2 August In the light of uniform conditions for restructuring of financial liabilities, the company regularly settles all of its liabilities arising from the principals and interests to the lending banks. f) Denationalisation procedures in Sava Turizem d.d. Denationalisation claim Höhn - Šarič Zdravilišče Radenci d.o.o. is one of the parties in the Höhn-Šarič denationalisation procedure. The applicants of the denationalisation claim require a part of the property within the health resort to be returned. Based on the proposal for issuance of a temporary order, the property which is subject of the procedure, was separated out from the ownership restructuring of the company until the denationalisation procedure is finished, therefore Sava Turizem d.d. keeps this property under off-balance. In 2012, the Administrative unit Gornja Radgona issued a denationalisation order for the nationalised company Zdravilišče Slatina Radenci, Hoehn in Comp., public trading company in Radenci, based on which the request for denationalisation of the nationalised company Kuranstalt Sauberbrun Radein Aktiengesellschaft with a 48 % share owned by Wilhemina Hoehn Šarič was rejected. The party filing the denationalisation request filed an appeal through the proxy, which the competent Ministry rejected and confirmed the decision made by the

37 first-instance administrative body. The parties filing the request appealed against the decision by the second-instance body, the issue is still pending at the administrative court. On 12 June 2014, the Administrative unit Gronja Radgona, issued a Report on the Established Legal and Actual Status of the Subject Matter and proposed the denationalisation claim also as regard a 48% share owned by Ante Šarič to be rejected. A decision by the first-instance administrative body is expected to be issued. At the Novo mesto District Court, a non-contentious proceedings on returning the seized assets in accordance with Article 145 ZIKS is in progress, at which the parties filing the request demand a 48% share of the assets claimed to be seized from Dr Ante Šarič. On 19 June 2013, the first-instance court issued a decision, based on which it rejected a proposal for returning the seized assets. The first-instance court order is final (order by the Ljubljana Higher Court of 19 March 2014). An appeal for extraordinary judicial review was lodged with the Supreme Court of the Republic of Slovenia, which has not yet decided about the matter. Due to the complexity of legal and actual issues, the outcome of denationalisation procedure cannot be predicted in this phase, which is why any future liabilities of the company arising thereof cannot be estimated. In years past, the company Sava Turizem d.d. entirely renovated one of its facilities, which is subject to a denationalisation procedure. This facility was excluded from the ownership restructuring until the completion of the denationalisation procedure. The company management estimates that once the procedure is completed, it will repurchase the remaining part of the property. Denationalisation claim Dermastja The subject of the denationalisation claim is a onethird stake in the old Park hotel. The request for a temporary order was filed in after the term expiration, therefore a temporary order was not issued, and the administrative body decided that claimants were not entitled to returning the ownership stake in kind. The claimant, and claimants who subsequently entered a dispute, filed in a lawsuit against the resolution concerning the privatisation at the Administrative Court, which rejected it. The lawsuit was then filed at the Supreme Court, which has not yet made a decision regarding this matter. The Management Board of the company estimates that the claimants will fail in their litigation procedure. g) Other explanations As at 30 June 2014: No unsettled significant obligations commitments for purchase of fixed assets existed. No option contracts were made. No significant changes took place as regards the course of existing court proceedings other than the explained denationalisation procedures. No retroactive corrections of mistakes were made. No extraordinary transactions between the related companies took place. No transfers between the levels of fair value hierarchies used in measuring the fair value of financial instruments took place. No other reclassification of financial assets due to the changed purpose or use of these assets were made. No significant changes in contingent liabilities appeared. The key information by segment is given under 1.2 of the financial report for the Sava Group. 37

38 Other disclosures a) Disclosing fair value of financial instruments Disclosing fair value of financial instruments ( in thousands) 30 Jun Dec Jun Dec Book value Fair value Book value Fair value Securities available for sale 36,534 36,534 31,426 31,426 Assets for sale Long-term receivables financial leasing Other long-term receivables Short-term receivables 6,945 6,945 5,544 5,544 Derivative financial instruments interest rate swaps Granted loans 21,050 21,050 24,594 24,594 Cash and cash equivalents ,239 1,239 Long-term loans at fixed interest rate Issued bonds at fixed interest rate -26,515-2,439-26,515-5,303 Long-term loans at variable interest rate -52,141-52,141-54,200-54,200 Liabilities for sale Long-term operating liabilities Short-term loans -221, , , ,146 Derivative financial instruments interest rate swaps -1,401-1,401-2,034-2,034 Liabilities for dividends Short-term operating liabilities -16,041-16,041-13,055-13,055 b) Classification of financial instruments with regard to their fair value computation In terms of hierarchy, financial instruments valued at fair value are classified in three levels: Level 1: assets or liabilities at stock exchange price as at 30 June. Level 2: assets or liabilities that are not classified as Level 1, their value being determined directly or indirectly based on the market data. Level 3: assets or liabilities whose value cannot be acquired from the market data. Classification of financial instruments with regard to their fair value computation ( in thousands) 30 Jun Dec Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Securities available for sale 36,543 1,306 31,499 3,729 31,426 3,604 23,999 3,823 Derivative financial instruments - assets Derivative financial instruments - liabilities , , , ,034 0 Total 35,133 1,306 30,098 3,729 29,392 3,604 21,965 3,823 38

39 c) Explanations to the individual components and various explanations regarding the capital of the Sava Group Based on the resolution from the Shareholders Meeting of Sava d.d., a decision on a simplified share capital reduction was entered in the court register on 7 May 2014; the capital reduced by 11,381 thousand, which in terms of substance represented covering of the past losses of Sava d.d. Structure of retained net profit / net loss 30 Jun Dec Retained profit from previous years balance at 1 Jan. -11,500-14,241 Decrease by paid dividends of Sava d.d. 0 0 Net operating profit/loss of the accounting period attributable to Sava d.d. Covering the loss of Sava d.d. according to a simplified share capital reduction procedure -6,025-55,569-6,025-55,569 Retained net profit / net loss -6,145-11,500 DIVIDENDS Like in 2013, also in 2014 no dividends were paid. NET EARNINGS PER SHARE Share capital is divided in 2,006,987 ordinary nominal no-par value shares, which all have voting rights and are freely transferrable. All shares are paid-in to the full amount. The company has no bonds to be converted into shares. Weighted average number of ordinary shares 30 Jun Dec No. of total shares 2,006,987 2,006,987 Own shares -30,541-30,541 Weighted average number of shares 1,995,423 1,995,423 Net loss attributable to ordinary shares JAN-JUN 2014 JAN-JUN 2013 Net profit/loss for the accounting period ( in thousands) -6,046-5,999 Net profit /loss for the accounting period attributable to the owners of the parent ( in thousands) -6,025-5,986 Weighted average number of ordinary shares 1,995,423 1,995,423 Basic net loss per share ( ) The diluted net loss per share equals the basic net loss per share, since capital is composed of ordinary shares only. 39

40 Events after the balance sheet date The events that took place after the balance sheet date are described in the business part of the semiannual report. None of these events requires adjustments in the consolidated financial statements. 1.4 Statement of Management Responsibility for the Sava Group The Management Board confirms the consolidated financial statements of the Sava Group for the period ending on 30 June The Management Board 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 company s assets and operating results for the first half of The Management Board is further responsible for the proper managing of its accounting procedures, establishing, operation and maintaining of internal control in relation to the preparation and fair presentation of the financial statements, which do not contain any material misstatements originating from fraud or error, and for adopting suitable measures to secure assets and other funds. The Management Board confirms herewith that the financial statements and the selected explanatory notes have been produced on the assumption of going concern for the companies within the Group and in compliance with the relevant legislation and International Financial Reporting Standards as adopted by the European Union. Matej Narat President of the Management Board Aleš Aberšek Member of the Management Board Ljubljana, 19 August

41 financial report Sava d.d. 41

42 2 Financial statements of Sava d.d. with notes in accordance with Slovene Accounting Standards 2.1 Financial statements of Sava d.d. in accordance with Slovene Accounting Standards Balance sheet of Sava d.d. as at 30 June 2014 ( in thousands) 42 ASSETS Notes 30 Jun Dec A. FIXED ASSETS 228, ,374 I. INTANGIBLE FIXED ASSETS AND LONG-TERM DEFERRED COSTS AND ACCRUED REVENUES Long-term industrial property rights Goodwill Advances for intangible fixed assets Long-term deferred development costs Other long-term deferred costs and accrued revenues 0 0 II. TANGIBLE FIXED ASSETS Land and buildings 0 0 a) Land 0 0 b) Buildings Plant and machinery Other equipment Tangible fixed assets under construction 0 0 a) Tangible fixed assets under construction and manufacture 0 0 b) Advances for tangible fixed assets 0 0 III. INVESTMENT PROPERTY ,331 2, Leased to subsidiaries Leased to other companies 1,827 1, Not leased IV. LONG-TERM FINANCIAL INVESTMENTS , , Long-term financial investments except loans 215, ,492 a) Shares and stakes in Group companies 93,234 93,234 b) Shares and stakes in associates 86,028 85,915 c) Other shares and stakes 36,451 31,343 č) Other long-term financial investments Long-term loans 423 3,377 a) Long-term loans to Group companies 423 3,377 b) Long-term loans to other entities 0 0 c) Long-term unpaid called-up capital 0 0

43 Notes 30 Jun Dec V. LONG-TERM OPERATING RECEIVABLES Long-term operating receivables to Group companies Long-term operating trade receivables Long-term receivables to other entities 0 0 VI. DEFERRED TAX RECEIVABLES , ,602 10,874 B. SHORT-TERM ASSETS 21,759 20,886 I. ASSETS (GROUPS FOR DISPOSAL) FOR SALE 0 0 II. INVENTORIES Material Work in process Products and merchandise Advances for inventories 0 0 III. SHORT-TERM FINANCIAL INVESTMENTS ,531 16, Short-term financial investments except loans 0 0 a) Shares and stakes in Group companies 0 0 b) Other shares and stakes 0 0 c) Other short-term financial investments Short-term loans 16,531 16,010 a) Short-term loans to Group companies 4,284 1,356 b) Short-term loans to other entities 12,247 14,654 c) Short-term unpaid called-up capital 0 0 IV. SHORT-TERM OPERATING RECEIVABLES ,127 4, Short-term operating liabilities to Group companies 3,428 3, Short-term trade receivables Short-term operating receivables to other entities 1,625 1,382 V. CASH Cash on hand and accounts Short-term deposits 0 0 a) Short-term deposits in subsidiaries 0 0 b) Short-term deposits in associates 0 0 c) Short-term deposits in other entities 0 0 C. SHORT-TERM DEFERRED COSTS AND ACCRUED REVENUES 4 57 ASSETS TOTAL 250, ,317 43

44 LIABILITIES Notes 30 Jun Dec A. CAPITAL ,305 15,117 CALLED-UP CAPITAL 14,061 25, Share capital 14,061 25, Uncalled capital (as a deductible item) 0 0 II. CAPITAL RESERVES 0 0 III. REVENUE RESERVES Legal reserves Reserves for treasury shares and own business stakes 4,977 4, Treasury shares and own business shares (as a deductible item) -4,977-4, Statutory reserves Other revenue reserves 0 0 IV. REVALUATION RESERVE 7,767 1,056 - From tangible fixed assets From intangible fixed assets From long-term financial investments 7,767 1,056 - From short-term financial investments 0 0 V. RETAINED NET PROFIT OR LOSS FROM PREVIOUS PERIODS 0 0 VI. NET PROFIT OR LOSS FOR THE FINANCIAL YEAR -4,522-11,381 B. PROVISIONS AND LONG-TERM ACCRUED COSTS AND DEFERRED REVENUES Provisions for pensions and similar liabilities Other provisions Long-term accrued costs and deferred revenues

45 Notes 30 Jun Dec C. LONG-TERM LIABILITIES I. LONG-TERM FINANCIAL LIABILITIES Long-term financial liabilities to Group companies Long-term financial liabilities to banks Long-term financial liabilities arising from bonds Other long-term financial liabilities II. LONG-TERM OPERATING LIABILITIES Long-term operating liabilities to Group companies Long-term trade payables Long-term bills payables Long-term operating liabilities arising from advances Other long-term operating liabilities 0 0 III. DEFERRED TAX LIABILITIES Č. SHORT-TERM LIABILITIES , ,145 I. LIABILITIES INCLUDED IN GROUPS FOR DISPOSAL 0 0 II. SHORT-TERM FINANCIAL LIABILITIES 223, , Short-term financial liabilities to Group companies 3,835 3, Short-term financial liabilities to banks 185, , Short-term liabilities arising from bonds 26,515 26, Other short-term financial liabilities 8,110 8,744 III. SHORT-TERM OPERATING LIABILITIES 7,192 5, Short-term operating liabilities to Group companies Short-term trade payables Short-term bills payables Short-term operating liabilities arising from advances Other short-term operating liabilities 6,921 5,083 D. SHORT-TERM ACCRUED COSTS AND DEFERRED REVENUES TOTAL LIABILITIES 250, ,317 The notes form an integral part of the financial statements and should be read in conjunction with the financial statements. 45

46 Income statement of Sava d.d. for the period January June 2014 ( in thousands) Notes JAN-JUN 2014 JAN-JUN NET SALES REVENUES a) Revenues in domestic market To Group companies To associated companies 3 0 To others b) Revenues in foreign market To Group companies 0 16 To associated companies 0 0 To others CHANGE IN THE VALUE OF INVENTORIES OF PRODUCTS AND WORK IN PROGRESS CAPITALISED OWN PRODUCTS AND SERVICES OTHER OPERATING REVENUES (with operating revenues from revaluation adjustment) , COST OF MERCHANDISE, MATERIALS AND SERVICES ,159 a) Cost of merchandise and materials sold and cost of raw materials and consumables used b) Cost of services , LABOUR COST a) Salaries and wages b) Social security cost Social security cost Pension insurance cost c) Other labour cost AMORTISATION AND DEPRECIATION EXPENSE, WRITE-OFFS a) Amortisation b) Operating expenses from revaluation of intangible and tangible fixed assets 0 0 c) Operating expenses from revaluation of current assets OTHER OPERATING EXPENSES LOSS / PROFIT FROM OPERATIONS -1,088 2, OTHER FINANCIAL REVENUES FROM SHARES ,308 25,563 a) Financial revenues from shares in Group companies 0 24,302 b) Financial revenues from shares in associated companies 0 0 c) Financial revenues from shares in other entities 1, č) Financial revenues from other investments 0 1, FINANCIAL REVENUES FROM GRANTED LOANS a) Financial revenues from loans granted to Group companies b) Financial revenues from loans granted to other entities FINANCIAL REVENUES FROM OPERATING RECEIVABLES 27 0 a) Financial revenues from operating receivables due from Group companies 26 0 b) Financial revenues from operating receivables due from other entities

47 13. FINANCIAL EXPENSES FROM IMPAIRMENTS AND WRITE-OFFS IN FINANCIAL INVESTMENTS Notes JAN-JUN 2014 JAN-JUN , FINANCIAL EXPENSES FROM FINANCIAL LIABILITIES ,392-8,054 a) Financial expenses from borrowings obtained from Group companies b) Financial expenses from borrowings obtained from banks -2,826-6,799 c) Financial expenses from issued bonds d) Financial expenses from other financial liabilities FINANCIAL EXPENSES FROM OPERATING LIABILITIES 0 0 a) Financial expenses from operating liabilities to Group companies 0 0 b) Financial expenses from trade payables and bill payables 0 0 c) Financial expenses from other operating liabilities OTHER REVENUES OTHER EXPENSES INCOME TAX DEFERRED TAX , NET PROFIT/LOSS FOR THE ACCOUNTING PERIOD -4,522 17,799 The notes form an integral part of the financial statements and should be read in conjunction with the financial statements. Statement of other comprehensive income of Sava d.d. for the period January June 2014 ( in thousands) JAN-JUN 2014 JAN-JUN 2013 Net loss /profit for the period -4,522 17,799 Other comprehensive income: - Items that might be reclassified in profit or loss subsequently - Change in fair value of available-for-sale financial assets 8, Deferred tax on change in fair value of available-for-sale financial assets Change in fair value of investments in associates Change in fair value of available-for-sale financial assets transferred to profit or loss - Deferred tax from change in fair value of available-for-sale financial assets transferred to profit or loss -1,294-11, ,039 - Deferred tax from change in fair value of investments in associates Other comprehensive income for the period, net of income tax in the period 6,711-10,918 Total comprehensive income for the period 2,189 6,880 47

48 Cash flow statement of Sava d.d. for the period January June 2014 ( in thousands) A. Cash flows from operating activities JAN-JUN 2014 JAN-JUN 2013 a) Net profit for the financial year -4,522 17,799 Pre-tax profit -3,250 18,519 Profit tax and other taxes not included in operating expenses -1, b) Adjustments for: 2,259-20,701 Depreciation Operating revenues from revaluation in connection with items of investing and financing activities Operating expenses from revaluation in connection with items of investing and financing activities -1-5, Financial revenues excluding financial revenues from operating receivables -1,686-26,148 Financial expenses excluding financial expenses from operating liabilities 3,887 10,589 c) Change in net current assets (and accruals, deferrals, provisions and deferred tax receivables and liabilities) of balance sheet items 896 9,639 Opening minus closing operating receivables ,055 Opening minus closing deferred costs and accrued revenues Opening minus closing deferred tax receivables 1,272 0 Opening minus closing assets (groups for disposal) for sale 0 0 Opening minus closing inventories 0 0 Closing minus opening operating liabilities Closing minus opening accrued costs and deferred revenues and provisions 258 1,093 Closing minus opening tax liabilities č) Surplus in inflows from operating activities or surplus in outflows from operating activities (a+b+c) B. Cash flows from investing activities -1,367 6,736 a) Inflows from investing activities 9,653 24,732 Revenues from received interests and shares in profit in relation to investing activities -22 3,390 Revenues from disposal of intangible fixed assets 0 0 Revenues from disposal of tangible fixed assets 5 1 Revenues from disposal of investment property 0 2,299 Revenues from disposal of long-term financial investments 2,878 1,655 Revenues from disposal of short-term financial investments 6,792 17,387 b) Outflows from investing activities -4,407-21,293 Expenses for purchase of intangible fixed assets 0-8 Expenses for purchase of tangible fixed assets 0-84 Expenses for purchase of investment property 0 0 Expenses for purchase of long-term financial investments -11-3,096 Expenses for purchase of short-term financial investments -4,396-18,105 c) Surplus in inflows from investing activities or surplus in outflows from investing activities (a+b) 5,246 3,439 48

49 C. Cash flows from financing activities JAN-JUN 2014 JAN-JUN 2013 a) Inflows from financing activities 0 2,091 Revenues from paid-in capital 0 0 Revenues from increase in long-term financial liabilities 0 0 Revenues from increase in short-term financial liabilities 0 2,091 b) Outflows from financing activities -4,004-11,752 Expenses for interests related to financing -1,522-7,197 Expenses for return of capital 0 0 Expenses for repayment of long-term financial liabilities -4-1,264 Expenses for repayment of short-term financial liabilities -2,478-3,291 Expenses for payment of dividends and other shares in profit 0 0 c) Surplus in inflows from financing activities or surplus in expenses from financing activities (a+b) -4,004-9,661 Č. Cash and cash equivalents at end of period a) Net increase in cash and cash equivalents (sum of Ač, Bc and Cc) b) Cash and cash equivalents at beginning of period

50 Statement of changes in equity of Sava d.d. for the period from 31 December 2013 to 30 June 2014 ( in thousands) Called up capital I Capital reserves II Revenue reserves III Revaluation reserve IV Retained net profit/ loss from previous periods V Net profit/loss for the financial year VI Share capital Uncalled capital (as a deductible item) Capital reserves Legal reserves Reserve for treasury shares and own business stakes Treasury shares and own business stakes (as a deductible Statutory item) reserves Other revenue reserves Revaluation Retained net reserves profit Retained net loss Net profit for the financial year Net loss for the financial year I/1 I/2 II III/1 III/2 III/3 III/4 III/5 IV V/1 V/2 VI/1 VI/2 A.1 BALANCE AT 31 DEC , ,977-4, , ,381 15,117 A.2 INITIAL BALANCE AT 1 JAN , ,977-4, , ,381 15,117 B.1. Changes in equity - transactions with owners B.2. Total comprehensive income for the period a) Entry of net profit/loss for the period b) Change in fair value of available-for-sale financial assets c) Deferred tax from a change in fair value of available for-sale financial assets č) Change in fair value of available-for-sale financial assets transferred to profit or loss d) Deferred tax from a change in fair value of available-for-sale financial assets transferred to profit or loss e) Other components of comprehensive income for the period Total capital , ,522 2, ,522-4, , , , , B.3. Changes within equity -11, ,381 0 a) Allocation of the remaining portion of net profit for the comparative period to other capital items b) Settling a loss as a deductible capital item , , , , C. END BALANCE AT 30 JUN , ,977-4, , ,522 17,305 50

51 Statement of changes in equity of Sava d.d. for the period from 31 December 2012 to 30 June 2013 ( in thousands) Called up capital I Capital reserves II Revenue reserves III Revaluation reserve IV Retained net profit/ loss from previous periods V Net profit/loss for the financial year VI Share capital Uncalled capital (as a deductible item) Capital reserves Legal reserves Reserve for treasury shares and own business stakes Treasury shares and own business stakes (as a deductible Statutory item) reserves Other revenue reserves Revaluation Retained net reserves profit Retained net loss Net profit for the financial year Net loss for the financial year I/1 I/2 II III/1 III/2 III/3 III/4 III/5 IV V/1 V/2 VI/1 VI/2 A.1 BALANCE AT 31 DEC , ,977-4, , , ,036 37,729 A.2 INITIAL BALANCE AT 1 JAN , ,977-4, , , ,036 37,729 B.1. Changes in equity - transactions with owners B.2. Total comprehensive income for the period a) Entry of net profit/loss for the period b) Change in fair value of available-for-sale financial assets c) Deferred tax from a change in fair value of available for-sale financial assets č) Change in fair value of available-for-sale financial assets transferred to profit or loss d) Deferred tax from a change in fair value of availablefor-sale financial assets transferred to profit or loss Total capital , , , ,799 17, , , , ,039 B.3. Changes within equity -58, , ,036 0 a) Allocation of the remaining portion of net profit for the comparative period to other capital items b) Settling a loss as a deductible capital item , , , , C. END BALANCE AS AT 30 JUN , ,977-4, , , ,611 51

52 Statement of changes in equity of Sava d.d. for the period from 31 December 2012 to 31 December 2013 ( in thousands) Called up capital I Capital reserves II Revenue reserves III Revaluation reserve IV Retained net profit/ loss from previous periods V Net profit/loss for the financial year VI Share capital Uncalled capital (as a deductible item) Capital reserves Legal reserves Reserve for treasury shares and own business stakes Treasury shares and own business stakes (as a deductible Statutory item) reserves Other revenue reserves Revaluation reserves Retained net profit Retained net loss Net profit for the financial year Net loss for the financial year I/1 I/2 II III/1 III/2 III/3 III/4 III/5 IV V/1 V/2 VI/1 VI/2 A.1 BALANCE AT 31 DEC , ,977-4, , , ,036 37,729 A.2. INITIAL BALANCE AT 1 JAN , ,977-4, , , ,036 37,729 B.1. Changes in equity - transactions with owners B.2. Total comprehensive income for the period a) Entry of net profit/loss for the period b) Change in fair value of available-for-sale financial assets c) Deferred tax from a change in fair value of available for-sale financial assets č) Change in fair value of available-for-sale financial assets transferred to profit or loss d) Deferred tax from a change in fair value of available-forsale financial assets transferred to profit or loss e) Other components of comprehensive income for the period Total capital , ,381-22, ,381-11, , , , , B.3. Changes within equity -58, , ,036 1 a) Allocation of the remaining portion of net profit for the comparative period to other capital items b) Settling a loss as a deductible capital item , , , , C. END BALANCE AS AT 31 DEC , ,977-4, , ,381 15,117 Calculation of the accumulated loss for Sava d.d. as at 30 June 2014 ( in thousands) Jun Dec NET PROFIT OR LOSS FOR THE ACCOUNTING PERIOD -4,522-11,381 Retained loss as at 1 Jan. -11,381-58,310 Decrease due to payment of dividends/stakes 0 0 Decrease / reversal of capital reserves 0 0 Decrease /reversal of revenue reserves 0 0 Increase (additional formation) of revenue reserves 0 0 Other changes 11,381 58,310 Accumulated loss at the end of the accounting period -4,522-11,381

53 2.2 Notes to the financial statements of Sava d.d Basis for drawing the financial statements REPORTING COMPANY Sava d.d., Družba za upravljanje in financiranje, Dunajska cesta 152, 1000 Ljubljana, is the controlling company of the Sava Group. The financial statements of Sava d.d. have been drawn up for the period ending on 30 June 2014 and have not been audited. The ownership structure of Sava d.d. is explained in the chapter about the Sava share and ownership structure, which forms a part of the semi-annual business report. The semi-annual report can be accessed on the company s website at STATEMENT OF COMPLIANCE The financial statements have been prepared in accordance with Slovene Accounting Standards, which had been issued by the Slovene Institute of Auditors. The Management Board approved the issue of financial statements on 19 August FUNCTIONAL CURRENCY The financial statements are presented in Euro currency, which as of 1 January 2007 has been the functional currency of the company. The financial information is presented in euros, rounded to one thousand units. When adding together, minor differences can appear due to rounding up. CHANGES IN ACCOUNTING POLICIES In 2014, there were no changes in the accounting policies. 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 period end. Foreign exchange losses/gains are recognised in the income statement. 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. Nonmonetary items and liabilities shown in foreign currency and measured at fair value are translated to euros at the reference exchange rate of ECB ruling at the day when fair value is determined. Foreign exchange losses/gains are recognised in the income statement Significant accounting policies INTANGIBLE 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, as well as interest on loans for acquisition of an intangible fixed asset until it is placed in service for use. TANGIBLE FIXED ASSETS Tangible fixed assets are measured at cost less depreciation adjustment and accumulated loss due to impairment. 53

54 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, installation, and estimated cost of its dismantling, removal and restoration. Costs are increased due to the interests on loans for acquiring a tangible fixed asset until it is placed in service for use. Those parts of tangible fixed assets that have different useful lives are calculated as individual fixed assets. SUBSEQUENT EXPENDITURES IN CONNEC- TION 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 when incurred. INVESTMENT PROPERTY Investment property is property which is held either to earn rental income or for capital appreciation or both. Investment property is not intended for the manufacture of products, supply of goods, providing services or for office purposes. Investment property is 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 an owner-occupied property, the property is classified as an investment property when more than 20% of the property is used as an investment property. When an investment property becomes owner-occupied, it is reclassified as property, fixtures and fittings. Investment property is stated at cost value model less depreciation adjustment and accumulated loss due to impairment. The fair value of investment properties is ascertained for the needs of disclosure. 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 straightline 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 they are available for use. The depreciation rates are based on the useful lives of the assets and in percentage, they amount to: Current year Past year Intangible fixed assets 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 Equipment from 5.0 to 33.3 from 5.0 to 33.3 The useful lives of investment property equal those valid for property of the same kind, which is kept as tangible fixed assets. 54

55 IMPAIRMENT OF INTANGIBLE ASSETS, TANGIBLE FIXED ASSETS AND INVESTMENT PROPERTY At least 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 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. 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 the paid sum of money or its equivalents. In the financial statements, long-term financial investment in subsidiaries and associates are valued at cost. In the parent company, the associates are valued at cost and they examined at least once a year whether indication for impairment exists. Impairment estimate is based on the examination of recoverable value, i.e. verifying the value in use (estimate of discounted cash flows) and fair value; the recoverable value is the higher of both. With regard to the purpose of their acquisition, the investments in debtor and proprietary securities are dealt with as available for sale. They are divided into investments in shares of listed companies, investments in shares and stakes of unlisted companies and investments in mutual funds. These financial instruments are recognised or reversed 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 ascertained by examining whether indication for impairment exists. The fair value of securities available for sale is assessed at least every three months, the last evaluation was carried out on 30 June The change in fair value is recognised in capital as a 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 financial asset. The examination of the impairment in the financial asset is carried out individually 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, thereby considering the current interest rate and borrowing power of swap participants. 55

56 56 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. 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% adjustment in all sued receivables and receivables filed in a bankruptcy proceeding and obligatory enforcement proceeding; and a 100% adjustment for receivables which according to the best professional judgement are doubtful and the outcome of law suit is uncertain due to customer insolvency. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise cash balances on transaction accounts. CAPITAL Total capital of a company is its liability towards its owners, which falls due if the company discontinues its operation. It is determined on the basis of the amounts invested by the owners, and the amounts that appeared during operation and belong to the owners. It is decreased by a loss from operations, repurchased own shares and withdrawals (payments). The total capital comprises share capital, capital reserves, revenue reserves, retained net profit, fair value reserve and own shares as a deductible item. LONG-TERM AND SHORT-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-tax discount 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 in the amount of the estimated future payments of retirement amounts and jubilee benefits discounted at the balance sheet date. There are no other retirement liabilities. Provisions for the reorganisation include direct costs of reorganisation and refer to foreseen payments to employees in connection with the changed organisational structure of Sava d.d. LIABILITIES Liabilities are 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 de-

57 creases 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 shortterm 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. Operating revenues Revenues from services rendered are recognised in the income statement with regard to the level of transaction completeness on the reporting date. The level of completeness is estimated with a survey of the work performed. Revenues from investment property rentals are recognised in expenses on a straight-line basis during the rental period. Revenues from received subsidies or endowments are measured in amounts that are approved for this purpose. Operating revenues from revaluation arise upon 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 assets 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 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. 57

58 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, and losses due to impairment in the value of financial assets and loss of risk 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 except for those, which are attributed to intangible, and tangible fixed assets under construction and preparation, respectively. Other expenses Other expenses consist of extraordinary items; they appear in actually incurred amounts. INCOME TAX AND DEFERRED TAX Income tax on the profit or loss for the financial year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to the 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 business 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 reporting purposes. The amount of deferred tax is shown in amount expected to be paid upon elimination of temporary differences, based on the laws enacted or substantively enacted at the balance sheet date. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax relief could be realised. Net earnings per share Share capital of the company is divided into ordinary personal no-par value shares; therefore, the company states the basic earnings per share. The basic earnings of the share are calculated by dividing profit or loss with the weighted number of ordinary shares in the business year. The diluted net earnings per share equal the basic earnings per share, as the company is not in possession of any preference shares or exchangeable bonds. The number of issued shares did not change during the year. Criteria of importance for disclosures The company states the accounting policies at least for the assets and liabilities whose value exceeds 10% 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% 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 a cash flow 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-June 2014 (for the past period January-June 2013), the balance sheet data as at 30 June 2014 and 31 December 2013 (for the past period 30 June 2013 and 31 December 2012), and other required data. The cash flow statement excludes the values not connected with the revenues and expenses. 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. 58

59 2.3. Financial risk management for Sava d.d 59 Sava d.d. is exposed to the following financial risks: RISK OF A CHANGE IN THE FAIR VALUE OF ASSETS (PRICE RISK) Risk of a change in the fair value is the risk that the company will suffer a loss of economic benefits due to the changed value of a financial asset. This is one of the critical risks Sava d.d. is exposed to as it is strongly connected with achieving the planned return and the implementation of the outlined strategy. Risks of fair value changes are reduced through diversifying the investment portfolio and active supervision over the operations of the companies, in which Sava d.d. holds a significant equity share. In accordance with the adopted long-term strategy and commitments as per master restructuring agreement, we have produced a plan for divesting certain investments in order to assure adequate solvency. In the first half of 2014, a gradual economic recovery is observable in Slovenia (the result of further growth in exports and investments in public infrastructure), as well as a gradual improvement in liquidity of the Ljubljana Stock Exchange, which renewed investor trust in the domestic capital market. General economic circumstances affect the value of financial investments of Sava d.d., at which the risk of changes in the fair value still remains high. INTEREST RATE RISK This involves a risk that the value of financial instrument and costs of contracting debt will fluctuate due to changes in the market interest rates. In July 2013, Sava d.d. made an agreement with all lending banks on restructuring the financial liabilities, which expires at the end of November The company agreed upon uniform conditions and interest rate, which upon signing the agreement became a fixed interest rate and applies to total financial liabilities. Prior to restructuring, Sava d.d. had more than 50% of its credit portfolio tied to the EURIBOR reference interest rate, whereas suitable financial instruments that expire in April 2015 were contracted to hedge against the interest rate risk. When the restructuring arrangement will expire, the exposure to the changes in interest rates will grow again. In the presented and uncertain economic circumstances, the risk of changes in the market interest rate is high. CREDIT RISK This involves a risk that a customer engaged in a business relationship will not meet its obligations and will cause the company 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. generates majority of its revenues by selling its services to its subsidiaries where the risk of nonpayment is low. Special attention is devoted to monitoring solvency of customers outside of the Group with which Sava d.d. has established a business relationship. We regularly monitor open and outstanding receivables, the maturity structure of receivables and movement of average payment terms. We have an established customer rating system available for supervision over bad payers and carry out on-going compensations. The major portion of the increased credit risk of Sava d.d. arises from the transactions made in the past with NFD Holding d.d. Sava d.d. granted two short-term loans to NFD Holding d.d. As at 30 June 2014, the value of loans granted to NFD Holding d.d. amounted to 17,806 thousand. In the past year, NFD Holding d.d. restructured its financial liabilities with lending banks, and, as a result, the

60 loans relationship with Sava d.d. too. The estimated value of the obtained collateral for the granted loans amounted to 9,407 thousand. Owing to insufficient collateral value, the loans were impaired in the amount of 10,034 thousand, the net value of the loans granted to NFD Holding d.d. thus amounts to 7,772 thousand. Considering the above-mentioned business events, we estimate credit risk for Sava d.d. as high. SOLVENCY RISK This involves a risk that a company will not be able to fulfil its financial liabilities in due time. In Sava d.d., the solvency risk is managed by introducing a uniform financial policy for the companies operating within the Group. The goal of such arrangement is to assure suitable liquidity of the parent company and subsidiaries, and to ensure all group companies financing under most favourable conditions. As the adverse economic situation continues, the circumstances in the money markets remained fierce in the first half of 2014 too. As the domestic banking system is still being recovered, additional finance sources are less available, which deteriorates the conditions for providing adequate solvency and on-going settlement of liabilities. Sava d.d. continues to devote much of its attention to provision of liquidity of the company, regular settlement of financial liabilities and arranging the relations with the financial creditors. In the first half year of 2014, Sava d.d. participated in the public bid for selling the shares of Helios d.d.; the received consideration of 2,478 thousand was earmarked for a premature repayment of liabilities to the lending banks. Owing to the continued difficult circumstances in money markets, and, above all, expiration of the financial restructuring arrangement, on the very same day of which the principals from the received loans and the prevailing part of the interests accruing will mature for payment, the solvency risk at Sava d.d. remains very high. FOREIGN CURRENCY RISK This involves a risk of losing economic benefits due to the changes in the foreign currency exchange rates. Sava d.d. mainly does business in the Euro Zone, but it still has minor investments in the markets of Serbia, Macedonia, and Bosnia and Herzegovina, which is why it is exposed to the changes in the exchange rates of the Serbian dinar and Macedonian denar. With regard to the share of foreign currency operations, this risk is considered low. MANAGEMENT OF CAPITAL An adequate capital structure ensures investor, creditor and market trust as well as sustainable development of the Sava Group. In 2011, Sava d.d. revised its long-term business strategy, which rests upon financial restructuring of liabilities and divesting of financial investments. Owing to the planned and implemented activities, the capital structure will improve, while investor and other partners trust in the business and long-term development of the company will enhance. Sava d.d. has no programme of granting stock options to its employees. Regulatory bodies do not have any capital requirements towards the parent company or subsidiaries in the Sava Group. 60

61 2.4. Breakdown and notes to the financial statements of Sava d.d Intangible fixed assets and long-term deferred costs and accrued revenues In the first half of 2014, depreciation of intangible fixed assets was accounted for in the amount of 1 thousand. Movement of intangible fixed assets and long-term deferred costs and accrued revenues ( in thousands) Cost value Long-term deferred development costs Property rights Investments in acquired rights to industrial property and other rights Advances for intangible long-term assets Goodwill of acquired company Other long-term deferred costs and accrued revenues Balance as at 1 Jan Increase, purchase Decrease Balance as at 30 Jun VALUE ADJUSTMENT Balance as at 1 Jan Decrease Depreciation Balance as at 30 Jun CARRYING AMOUNT Balance as at 1 Jan Balance as at 30 Jun Total Tangible fixed assets As at 30 June 2014, the value of tangible fixed assets totals 213 thousand and is not significantly different from the value at the end of Tangible fixed assets include an asset under financial lease whose book value amounts to 16 thousand. In the period January June 2014, the depreciation of tangible fixed assets was accounted for in the amount of 27 thousand. 61

62 Movement of tangible fixed assets ( in thousands) Cost value Land Buildings Plant and machinery Other equipment Tangible fixed assets under construction and manufacture Advances for tangible fixed assets Balance as at 1 Jan Increase, purchase Decrease Balance as at 30 Jun VALUE ADJUSTMENT Balance as at 1 Jan Decreases Depreciation Balance as at 30 Jun CARRYING AMOUNT Balance as at 1 Jan Balance as at 30 Jun Total Investment property Investment property amounts to 2,331 thousand and did not change significantly with regard to the end of the past year. A mortgage for a long-term syndicated loan is placed on the BTC real property in Ljubljana whose book value amounts to 1,439 thousand. As at 30 June 2014, the balance of unpaid loan amounts to 94,969 thousand. In leasing out the investment property, revenues of 153 thousand and expenses of 67 thousand were made. Expenses of 6 thousand were recognised in connection with the investment property not leased out. In the first half year of 2014, depreciation of investment property was accounted for in the value of 31 thousand. We estimate that the fair value of investment property does not significantly deviate from the book values. 62

63 Movement of investment property ( in thousands) Cost value Land-investment property Buildings-investment property Balance as at 1 Jan ,184 4,528 5,712 Purchase, increase Decrease due to sale Balance as at 30 Jun ,184 4,528 5,712 VALUE ADJUSTMENT Balance as at 1 Jan ,350-3,350 Decrease due to sale Depreciation Balance as at 30 Jun ,381-3,381 CARRYING AMOUNT Balance as at 1 Jan ,184 1,178 2,362 Balance as at 30 Jun ,184 1,147 2,331 Total Long-term financial investments 63 Long-term financial investments amounting to 216,136 thousand represented 86% of the balance sheet total. In comparison with the end of the previous year, their value increased by 2,267 thousand in net terms. a) Shares and stakes in Sava Group companies Shares and stakes in Sava Group companies totalled 93,234 thousand and did not change if compared to the end of the previous year. The entire ownership stake of Sava Turizem d.d. was pledged for the loans obtained by Sava d.d., its book value amounting to 88,960 thousand. The entire ownership stake in the company Sava Nepremičnine d.o.o. was pledged for the loans obtained by Sava TMC d.o.o., the book value of which amounted to 3,907 thousand. Disclosures in connection with the composition of the Sava Group, share in capital, amount of capital and operating result of the subsidiaries are presented in the financial part of the semi-annual report of the Sava Group. b) Shares and stakes in the associated companies The value of shares and stakes in the associated companies totalled 86,028 thousand and compared to the end of the previous year it slightly grew on account of the increased stock exchange prices. The prevailing portion is represented by a financial investment in Gorenjska banka d.d., Kranj, whose value did not change in comparison with the end of the previous year. It amounts to 588 per a share, which is lower than the book value of a share shown in the current financial statements of the bank. Sava d.d. pledged 139,480 shares of Gorenjska banka d.d. for the obtained loans, issued bonds and the loan obtained by a subsidiary. The book value of pledged shares amounted to 82,017 thousand. Disclosures in connection with the composition of the Sava Group and share in capital are presented in the financial part of the semi-annual report of the Sava Group. c) Other shares and stakes Other shares and stakes totalling 36,451 thousand were by 5,108 thousand higher in net terms than in the previous year. The net increase is due to the growth of stock exchange prices. Other shares and stakes include listed securities available for sale totalling 1,223 thousand, un-

64 listed securities available for sale amounting to 3,729 thousand and an investment in a mutual fund totalling 31,499 thousand whose value increased most with regard to the previous year. In the first half of 2014, securities available for sale whose value amounted to 2,878 thousand were sold. A profit of 1,294 thousand was generated in this transaction; the major part of the received purchase consideration was earmarked for loan repayment to the banks. The value of investment in NFD 1, mutual fund, amounted to 31,499 thousand, the fair value being ascertained by using the stock exchange price on the last accounting day. Despite a 23.35% ownership stake, the investment in NFD 1, mutual fund, is considered as available for sale and not as an associated company. The company NFD 1, mutual fund, is managed by the management company, in which Sava d.d. has no ownership stake. The Supervisory Board of the company solely supervises the fund operation. Furthermore, NFD 1 restructured from a closed mutual fund to an open mutual fund in 2011, after which Sava d.d. became the owner of a certain number of mutual fund coupons and has no influence on managing the fund whatsoever. The total % - share in NFD 1, mutual fund, was pledged for the loans obtained by Sava d.d. The book value of pledged shares amounted to 31,499 thousand. After restructuring and renaming the company for sub-fund management NFD d.o.o. to Alpen Invest d.o.o., the company NFD 1, mutual fund, renamed Alpen.Si, mixed flexible sub-fund - SouthEast Europe. The renaming is effective as of 31 July The value of other shares and stakes amounted to 4,952 thousand, and included 1,468,221 shares of Hoteli Bernardin d.d., 13,500 shares of Kompas Bled d.d, 4,987 shares of Pokojninska Družba A d.d., and 9,874 shares of Jubmes Banka d.d., which were pledged for the loans obtained by Sava d.d. The book value of the pledged shares amounts to 3,399 thousand. Types of securities available for sale ( in thousands) 30 Jun Dec Shares of listed companies 1,223 3,521 Shares of unlisted companies 3,729 3,823 Mutual funds 31,499 23,999 Total 36,451 31,343 d) Long-term loans to Group companies A long-term loan to a Sava Group company totalling 423 thousand is insured with bills of exchange and pledging the movable and real property. Interest rate on the long-term loan to a Group company amounts to 3.0%. 64

65 Movement of long-term financial investments ( in thousands) GROSS VALUE Balance as at 1 Jan Purchase, increase Share capital increase with cash contributions Share capital increase with non-cash contributions Increase due to acquisitions Long-term financial investments, excluding loans Stocks and shares in Group companies Stocks and shares in associates Other stocks and shares Total long-term financial investments, excluding loans Other longterm financial investments Longterm loans to Group companies Longterm loans to other entities Long-term loans Longterm unpaid called-up capital Total longterm loans Total longterm financial investments 105, , , ,952 3, , , Decrease , , ,123 Transfers , ,954-2,954 Write-off Revaluation , , ,582 Balance as at 30 Jun VALUE ADJUSTMENT Balance as at 1 Jan Purchase, increase Share capital increase with non-cash contributions Increase due to acquisitions 105, , , , ,845-12,150-23,672-80, , , Decrease 0 0 8, , ,245 Transfers Write-off Revaluation Balance as at 30 Jun NET VALUE Balance as at 1 Jan Balance as at 30 Jun ,150-23,672-72, , ,710 93,234 85,915 31, ,492 3, , ,869 93,234 86,028 36, , ,136 65

66 2.4.5 Long-term operating receivables Movement of long-term operating receivables ( in thousands) 30 Jun Dec Balance as at 1 Jan Newly formed receivables 0 0 Repayment of receivables 0-10 Impairment of receivables 0 0 End balance Deferred tax receivables Deferred tax receivables referred to revaluation of financial investments in securities available for sale to fair value and amounted to 9,602 thousand as at 30 June In 2014, Sava d.d. neither formed any new nor eliminated the remaining deferred tax receivables. This was due to extremely demanding and uncertain economic circumstances in the domestic market, which strongly affect the conditions for selling financial investments. Owing to these circumstances, the conditions in terms of value and time cannot be defined precisely enough. Deferred tax receivables arising from tax losses were not accounted for, as it is estimated that no such revenues would be generated in the near future, which in addition to the deferred receivables from impairments of financial liabilities would also cover for deferred taxes arising from tax losses. The amount of not accounted for deferred tax receivables arising from tax loss using a 17% tax rate amounted to 39,840 thousand as at 31 December Movement of deferred tax receivables ( in thousands) 30 Jun Dec Balance as at 1 Jan. 10,874 20,669 Decrease in receivables due to sale of securities - through profit or loss -1,272-9,753 End balance 9,602 10, Short-term financial investments 66 The value of short-term financial investments totalling 16,531 thousand did not significantly change with regard to the end of the previous year. They entirely refer to the following short-term loans: Short-term loans to Group companies amounting to 4,284 thousand are partly uninsured and partly insured with bills of exchange, movable and real property. Short-term deposits to banks totalling 4,474 thousand. Loans to other entities NFD Holding, d.d., - in total gross amount of 17,806 thousand, with a formed value adjustment as at 30 June 2014 amounting to 10,034 thousand, the net value of receivable was recognised at 7,772 thousand. The syndicated loan totalling 16,749 thousand is insured with bills of exchange and securities, which include 9,154,192 shares of Hoteli Bernardin d.d., 346,243 shares of NFD 1, 647,318 shares of Istrabenz d.d., 166,484 shares of Melamin d.d., 5,806 shares of Krka d.d., 893 shares of Petrol d.d. and 32,936 shares of Sava d.d. With all the mentioned shares, Sava d.d. is partly the first-entered lien-holder and partly the secondentered lien-holder. The estimated value of securities received in pledge amounts to 9,407 thousand, while the loan bears a 2.70% interest rate. The other loan totalling 1,057 thousand is secured with bills of exchange and does not bear interest.

67 2.4.8 Short-term operating receivables Short-term operating receivables of 5,127 thousand increased by 478 thousand compared to the end of the previous year. The increase mainly referred to the interest receivables arising from the granted loans. Short-term operating receivables by maturity ( in thousands) 30 Jun Total Due Not due Short-term operating receivables 5, , Short-term receivables due from Group companies 3, , Short-term trade receivables Short-term operating liabilities to other entities 1, ,609 VALUATION ADJUSTMENTS IN TRADE RECEIVABLES FOR SERVICES As at 30 June 2014, the balance of valuation allowance in trade receivables amounted to 160 thousand. No additional impairments of receivables took place in the first half of Movement of value adjustments in trade receivables for services ( in thousands) 30 Jun Dec Balance as at 1 Jan Increase in value adjustment 0 68 Decrease in value adjustment 0-47 Balance at period end The age structure of receivables is shown in chapter Financial instruments financial risks Cash and cash equivalents Cash totalling 101 thousand referred to the assets on the business account Capital 67 The value of capital of Sava d.d. which totalled 17,305 thousand ( 15,117 thousand at the end of 2013) was by 2,188 thousand higher than at the end of the previous year. The loss made in the first half of 2014 represented 32% of share capital. In the liabilities structure, capital had a 7% share. Changes in capital In the first half year of 2014, the following changes took place: The loss in the accounting period totalled 4,522 thousand. The revaluation reserve increased by 6,711 thousand. At the 20 th Shareholders Meeting of Sava d.d. a decision on a simplified reduction of share capital by 11,381 thousand was adopted to cover the accumulated loss as at 31 December The share capital of the company thus amounts to 14,061 thousand. Reserves for own shares within other revenue reserves As at 30 June 2014, reserves for own shares amounted to 4,977 thousand, the number of own shares totalled 30,541, representing 1.52% of total issue of shares. With regard to the end of 2013, no changes occurred in the first half of Sava d.d. received another 32,936 Sava shares in pledge, representing 1.64% of totally issued shares. Revaluation reserve from long-term financial investments Revaluation reserve from long-term financial investments includes only positive surpluses, which amounted to 7,767 thousand (at the end of 2013: 1,056 thousand).

68 Paid dividends, weighted average number of shares and net loss per share Paid dividends ( in thousands) Dividend per ordinary share in the year ( ) Total amount of dividends to the debit of retained profit ( in thousands) 0 0 The share capital is divided in 2,006,987 ordinary personal no-par value shares, which all have voting rights and are freely transferable. All shares have been paid in full. The company has no bonds for conversion to shares. Weighted average number of shares ( in thousands) 30 Jun Dec No. of all shares as at 1 Jan. 2,006,987 2,006,987 Own shares -30,541-30,541 Weighted average number of shares as at 30 Jun. 1,995,423 1,995,423 Net loss attributable to shares ( in thousands) 30 Jun Dec Net loss for the financial year ( in thousands) -4,522 17,799 Weighted average number of shares 1,995,423 1,995,423 Basic net loss per share (in ) The diluted net profit / loss per share equalled the net profit / loss per share as capital consists of ordinary shares only Provisions and long-term accrued costs and deferred revenues The value of provisions and long-term accrued costs and deferred revenues totalling 116 thousand entirely referred to the provisions for retirement amounts and jubilee benefits. Movement of provisions and long-term accrued costs and deferred revenues ( in thousands) Provisions for retirement amounts and similar obligations Other provisions Long-term accrued costs and deferred revenues Balance as at 1 Jan Use of provisions Balance as at 30 Jun Total Restructuring of financial liabilities On 23 July 2013, a Master Restructuring Agreement was entered into by Sava d.d., Nova Ljubljanska banka d.d. as the organiser, agent and collateral agent of banks consortium, and other lending banks, thereby effectively finalising the process of regulating of the existent financial liabilities of Sava d.d. 68 Major data: Amount: million Interest rate: 3% Date of restructuring taking effect: 28 February 2013 Final date: 30 November 2014 Interests of 1% p.a. fall due for payment quarterly; the difference of 2% p.a. falls due for payment on the final date.

69 Long-term liabilities As at 30 June 2014, the company showed long-term liabilities of 805 thousand (2013: 231 thousand), which mainly referred to deferred tax liabilities. Movement of deferred tax liabilities ( in thousands) 30 Jun Dec Balance as at 1 Jan ,283 Increase of liabilities at revaluation of securities to fair value in other comprehensive income Decrease of liabilities die to selling securities in other comprehensive income ,038 Other changes in other comprehensive income End balance Short-term liabilities 69 Short-term liabilities totalling 230,876 thousand were by 1,269 thousand lower than at the end of the previous year; in the finance sources structure they had a 92% share. The explanation about the value of assets of Sava d.d., put as collateral for the obtained loans is given in chapter SHORT-TERM FINANCIAL LIABILITIES Short-term financial liabilities to Group companies totalling 3,835 thousand did not change with regard to the end of the previous year. Liabilities have not matured yet and are secured with the pledged securities. The interest rate for short-term loans obtained from the Group companies amounts to 3.0%. Short-term financial liabilities to banks amounting to 185,224 thousand were by 2,478 thousand lower than at the end of the previous year. The decrease was due to repayment of principal amounts of loans. Short-term loans are hired at a 3.0% interest rate with the banks in Slovenia and abroad. Short-term financial liabilities to banks have not matured yet and are secured. Short-term liabilities arising from bonds Liabilities arising from bonds were stated at 26,515 thousand. Total nominal value of the bonds issue amounted to 26,500 thousand, during the issue procedure in 2009 another 15 thousand were paid in based on the placed binding bids. Liabilities arising from bonds fall due for payment in Additional explanations in connection with the issue of bonds: Type of bond: ordinary bond nominated in euro, nominal, issued in non-materialised form entered in the Central Securities Depository at KDD d.d. Ljubljana. Bonds listing: in the bonds market of the Ljubljana Stock Exchange under the designation SA03. Denomination structure: total issue includes 26,500 denominations at 1, each. Interest rate: under the Master Restructuring Agreement made with all creditors, the interest rate amounts to 3.00% p.a. and is fixed. The interests of 1.00% p.a. (payable interest) are settled quarterly in arrears, the interests of 2.00% p.a. (deferred interest) fall due for payment together with the principal amount on 30 November Collateral: bonds are secured with 34,287 shares of Gorenjska banka d.d. The book value of the pledged shares amounts to 20,161 thousand.

70 Other short-term financial liabilities totalling 8,110 thousand included: The loan of 6,000 thousand obtained from A Pokojninska družba d.d., the interest rate being 3.00%. The obtained loan is secured with a mortgage on the real property of Grand Hotel Toplice with the Panorama restaurant and the hotel building Savica. Liabilities from hedging against interest rate risk totalling 1,401 thousand. Liabilities for unpaid dividends totalling 709 thousand. Overview of loans outside of the Group, either at a fixed and variable interest rate ( in thousands) Fixed interest rate Variable interest rate Total Long-term loans Short-term loans 191, ,224 Total 191, ,235 SHORT-TERM OPERATING LIABILITIES Total short-term liabilities were recognised at 7,192 thousand and mainly referred to the liabilities arising from interests on obtained bank loans and to the sellers of securities arising from the call option contract; the latter are secured by placing a land debt on the real property Perovo owned by Sava Nepremičnine d.o.o Short-term accrued costs and deferred revenues Short-term accrued costs and deferred revenues totalling 966 thousand refer to short-term accrued costs in connection with reorganising Sava d.d., deferred interest on loans and other accrued costs Net sales revenues Sava d.d. made net sales revenues amounting to 441 thousand (in the first half of 2013: 927 thousand), 57% of which referred to sales within the Sava Group. Revenues were made in leasing out the real property and providing other services. Overview of net sales revenues ( in thousands) JAN-JUN 2014 JAN-JUN 2013 Net sales revenues from services Net sales revenues from rents Total net sales revenues

71 Other operating revenues (with operating revenues from revaluation) In the first half of 2014, other operating revenues were at a minimum, whereas in the same period last year they totalled 5,210 thousand and were generated in the sale of hotel real property to a company of the Tourism division Cost by functional group Total semi-annual operating expenses amounting to 1,530 thousand (in the first half of 2013: 3,186 thousand) referred to general overheads Cost of goods, material and services Cost of goods, materials and services had a 48% share in the operating expenses structure. They amounted to 729 thousand and compared to the same period last year, when they amounted to 2,159 thousand, they reduced by 66%. Overview of cost of goods, materials and service by type of ( in thousands) JAN-JUN 2014 JAN-JUN 2013 Cost of material Cost of transportation services 2 4 Cost of maintenance services Cost of rents Refunds to employees 6 5 Cost of payment transactions, bank services and insurance premiums Cost of intellectual and personal services 296 1,476 Cost of fairs, advertising and office allowances Cost of other services Total 729 2, Labour cost Labour cost of 742 thousand (in the first half of 2013: 924 thousand) had a 48% share in the operating expenses structure. Compared to the same period last year, they were down by 20% due to downsizing. As at 30 June 2014, Sava d.d. employed 18 associates (24 employees as at 30 June 2013) Amortisation, depreciation expenses and write-offs These amounted to 59 thousand and entirely refer to depreciation Financial revenues from stakes Financial revenues from stakes totalling 1,308 thousand are mainly due to the sale of securities available for sale. Compared to the same period last year when they amounted to 25,563 thousand due to selling the Rubber Manufacturing division they were considerably lower. 71

72 Financial revenues from granted loans Financial revenues from loans granted amounted to 378 thousand in the first half of 2014 and were by 35% lower than in the same period last year Financial expenses from impairments and write-offs of financial investments Financial expenses from impairments and write-offs of financial investments amounting to 495 thousand were lower than in the same period last year when they amounted to 2,535 thousand Financial expenses from financial liabilities Financial expenses from financial liabilities totalling 3,392 thousand referred to a 3% interest rate for the obtained loans under the restructuring agreement (in the first half of 2013: 8,054 thousand). Last year s comparative data does not correspond entirely, as the restructuring of loans was signed after the end of the semi-annual financial period, based on which the interest rate was reduced retroactively, whereas the financial statements were correspondingly corrected in the third quarter Corporate income tax For 2014, Sava d.d. had no corporate income tax payable. The deferred tax totalling 1,272 thousand, which aggravates the operating result of the accounting period, was due to selling financial investments that had been impaired in the past Overview of deferred tax receivables and liabilities Overview of deferred tax receivables and liabilities as at 30 June 2014 ( in thousands) 30 Jun Receivables Liabilities Net Financial investments 9, ,808 Total 9, ,808 Overview of deferred tax receivables and liabilities as at 31 December 2013 ( in thousands) 31 Dec Receivables Liabilities Net Financial investments 10, ,658 Total 10, ,658 72

73 2.5. Other disclosures Contingent assets, contingent liabilities and mortgages The item mortgages totalling 1,439 thousand included the book value of investment property, pledged for the obtained syndicated loan. 83% of the issued guarantees and sureties amounting to 579 thousand referred to the loans obtained by a subsidiary in the Sava Group. Interest rate swaps totalling 4,000 thousand represented the contracting value of the collateral made for the obtained loans portfolio. The pledged securities amounting to 209,781 thousand - a detailed explanation is given under The pledge of other assets totalling 23,938 thousand represents the balance of a receivable due from NFD Holding and the balance of assets on a deposit account with NLB. Overview of the off-balance sheet items ( in thousands) 30 Jun Structure 30 Jun Dec Structure 31 Dec Index 2014/2013 Mortgages 1, % 1, % 98 Issued guarantees % % 84 Interest rate swaps 4, % 6, % 67 Pledged securities 209, % 204, % 102 Other pledged assets 23, % 21, % 111 Total 239, % 234, % Pledged assets for the obtained long-term and short-term loans of Sava d.d. as at 30 June 2014 As at 30 June 2014, Sava d.d. showed financial liabilities from the obtained loans outside of the Sava Group totalling 217,739 thousand. For these loans, own assets and the assets of the subsidiaries are pledged totalling 242,746 thousand. For the loans of subsidiaries, Sava d.d. pledged further assets in the value of 6,030 thousand. For the liabilities of Sava d.d., totalling 1,577 thousand, which originate from the call option contract for shares, a land debt of 2,485 thousand was created in the form of a notarial protocol on the assets owned by Sava Nepremičnine d.o.o. whose book value amounted to 1,414 thousand. Breakdown of financial liabilities of Sava d.d. arising from the loans obtained outside of the Sava Group ( in thousands) Type of financial liabilities Long-term financial liabilities Short-term financial liabilities Total financial liabilities - To the associated banks (GB) 0 25,631 25,631 - To other banks 0 159, ,593 - To other partners 0 6,000 6,000 - From issued bonds 0 26,515 26,515 Total 0 217, ,739 73

74 Pledged assets of Sava Turizem d.d., Ljubljana, and Sava TMC d.o.o., Ljubljana, for the loans obtained by Sava d.d. ( in thousands) Type of assets Mortgages on the real property owned by Sava Turizem d.d. Book value of pledge - Family hotel Savica with the associated land 4,722 Mortgages on the real property owned by Sava TMC d.o.o. - Grand Hotel Toplice and Panorama Restaurant 8,896 Total value of pledged assets 13,618 Breakdown of pledged assets of Sava d.d. by type of assets for the loans obtained by Sava d.d. ( in thousands) Type of assets Pledged assets: Book value of pledge - Pledged shares of companies owned by Sava d.d. 205,874 - Pledged stakes in companies owned by Sava d.d. 3,907 - Pledged real property owned by Sava d.d. 1,439 - Pledged assets business account (GB) and escrow account (NLB) 4,569 - Pledged assets receivables NFD 19,369 TOTAL VALUE OF PLEDGED ASSETS OF SAVA D.D. 235,158 BALANCE SHEET TOTAL OF SAVA D.D. AS AT 30 JUN ,069 Share of pledged assets in the balance sheet total 94.0% Breakdown by type of pledged shares Type of assets Pledged shares Available number of shares Pledged number of shares for loans of Sava d.d. Pledged number of shares for loans of subsidiaries and other liabilities Number of unpledged shares Book value of pledge - in thousands - NFD1, share subfund NF1N 37,498,152 37,498, ,498 - Shares of Gorenjska banka d.d. - GBKR 146, ,870 3,610 6,580 82,017 - Shares of Hoteli Bernardin d.d. - HBPN 1,468,221 1,468, ,320 - Shares of Sava Turizem d.d. - SHBR 39,308,317 39,308, ,960 - Shares of Kompas Hoteli Bled d.d. - KHIR 13,500 13, Shares of Merkur d.d. - MER 251, , Shares of Pokojninska družba A d.d. - PDAR 4,987 4, Shares of Jubmes banka a.d. - JBMN 13,638 9, , Total value of pledged shares 205,874 74

75 Breakdown by type of pledged stakes Type of assets Pledged stakes Available percentage of ownership Pledged percentage of ownership for loans of Sava d.d. Pledged percentage of ownership for loans of subsidiaries Percentage of unpledged ownership Book value of pledge - in thousands - Sava Nepremičnine d.o.o % 0.0% 100% 0.0% 3,907 Total value of pledged stakes 3,907 Mortgages on the real property owned by Sava d.d. ( in thousands) Type of assets Book value of pledge Mortgages on real property - Real property BTC, Ljubljana 1,439 Total value of pledged real property 1,439 Loan debt for other liabilities of Sava d.d. created on the real property owned by Sava Nepremičnine d.o.o. ( in thousands) Type of assets Book value of pledge Land debt on the real property owned by Sava Nepremičnine d.o.o. - Land Perovo 1,414 Total value of pledged real property 1, Financial instruments financial risks FOREIGN EXCHANGE RISK Sava d.d. does business in euros only. INTEREST RATE RISK Prior to restructuring its financial liabilities, Sava d.d. had more than 50% of its credit portfolio tied to the reference interest rate EURIBOR. In accordance with hedging against interest rate risk arising from the expected future change in the reference EURI- BOR interest rate, Sava d.d. has from the period financed at EURIBOR interest rate a derivative financial instrument for hedging against interest rate risk that expires in April Total nominal value of transaction amounts to 4 million as at 30 June 2014.Total value of interest rate swaps as a difference between the receivables and liabilities is negative and totals 1,401 thousand at the end of June 2014 (at the end of 2013: a negative amount of 2,034 thousand). The average interest rate for the loan hired by Sava d.d. amounted to 3.00% as at 30 June

76 Interest rate risk management at Sava d.d. using a financial instrument ( in thousands) 30 Jun Book value Interest rate swaps Contracted cash flows 6 months or less 6 12 months 1 2 years 2 5 years More than 5 years Assets Liabilities -1,401-1, Total -1,401-1, Dec Interest rate swaps Assets Liabilities -2,034-2, Total -2,034-2, SOLVENCY RISK Overview of solvency risk ( in thousands) 30 Jun Book value Contracted cash flows 6 months or less 6 12 months 1 2 years 2 5 years More than 5 years Non-derivative financial liabilities 229, , , Secured bank loans (excluding associated companies) 159, , , Loans from Group companies 3,835-3,987-3, Trade payables and other liabilities 7,192-7,192-7, Borrowings from associated companies 25,631-26,656-26, Bonds 26,515-27,409-27, Other financial liabilities 6,709-6,733-6, Overdrafts on bank accounts Liabilities from financial lease Derivative financial liabilities 1,401-1, Interest rate swaps for hedging against risk 1,401-1, Total 230, , , Dec Non-derivative financial liabilities 230, ,401-3, , Secured bank loans (excluding associated companies) 161, , , Loans from Group companies 3,835-4, , Trade payables and other liabilities 5,349-5,349-2,089-3, Borrowings from associated companies 25,974-28, , Bonds 26,515-27, , Other financial liabilities 6,710-6, , Overdrafts on bank accounts Liabilities from financial lease Derivative financial liabilities 2,034-2, Interest rate swaps for hedging against risk 2,034-2, Total 232, ,435-4, ,

77 CREDIT RISK Overview of trade receivables by territory ( in thousands) Book value 30 Jun Dec Slovenia 1,960 1,848 Other EU countries 1,542 1,419 Other 0 0 Total 3,502 3,267 Overview of balance and movement of value adjustment in trade receivables ( in thousands) 30 Jun Dec Balance as at 1 Jan Increased value adjustment 0 68 Decreased value adjustment 0-47 Balance at period end Maturity of trade receivables ( in thousands) 30 Jun Dec Gross receivables Impairment Net receivables Gross receivables Impairment Net receivables Not past due 3, ,451 3, ,238 Past due from 0 to 30 days Past due from 31 to 120 days Past due more than 120 days Total 3, ,502 3, ,267 SENSITIVITY ANALYSIS TO FINANCIAL RISKS 77 Sensitivity analysis to the interest rate change Currently, Sava d.d. is not sensitive to the change of the reference interest rate as under the Master Restructuring Agreement made with all creditors of the company with validity until the end of November 2014 it has its total credit portfolio tied to a uniform fixed interest rate of 3% p.a. The average interest rate as at 30 June 2014 did not change if compared to the average interest rate as at 31 December The credit portfolio is still strongly sensitive to the interest rate change. If the interest rate changed by 50 basis points, the annual interest expense would increase by 1,136 thousand taking into account the indebtedness of Sava d.d. at the end of Sensitivity analysis to the increased indebtedness As at 30 June 2014, Sava d.d. had short-term financial liabilities from obtained loans and bonds totalling million. Upon restructuring its financial liabilities, it assumed certain commitments in terms of a restricted increase in indebtedness. For this reason, the company is not exposed to changes in relation to indebtedness increase. Sensitivity analysis to the changes of foreign currency value Sava d.d. has inflows and outflows balanced, and the major part of assets tied to the domestic currency. For this reason, the company is not exposed to the changes of the value of foreign currencies.

78 2.5.4 Estimating fair values SECURITIES AVAILABLE FOR SALE The fair value of listed securities available for sale equals the announced standard bid market price at the balance sheet date. The fair value of shares and stakes of unlisted companies equals the cost value less any impairment based on examination for impairment signs. GRANTED AND OBTAINED LOANS The fair value is estimated as a discounted value of the expected cash flows from the principal and interests, whereby the effective interest rate equals the contracting interest rate, which is variable. ISSUED BONDS The fair value of issued bonds was ascertained by using the stock exchange price in the bonds listing in the Ljubljana Stock Exchange. SHORT-TERM RECEIVABLES AND LIABILITIES For 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 ( in thousands) 30 Jun Dec Book value Fair value Book value Fair value Securities available for sale 36,451 36,451 31,343 31,343 Long-term receivables Short-term receivables 5,127 5,127 4,649 4,649 Granted loans 16,954 16,954 19,387 19,387 Cash and cash equivalents Long-term loans Issued bonds 26,515 2,439 26,515 5,303 Short-term loans 223, , , ,796 Short-term operating liabilities 7,192 7,192 5,349 5, Hierarchy of fair values In terms of hierarchy, financial instruments valued at fair value are classified in three levels: Level 1: assets or liabilities at stock exchange price on the last day of accounting period. Level 2: assets or liabilities, which are not classified at level 1; their value is defined directly or indirectly based on the market data. Level 3: assets or liabilities whose value cannot be obtained from the market data. 78

79 Hierarchy of financial instruments considering their fair value ( in thousands) 30 Jun Dec Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Securities available for sale 36,451 1,223 31,499 3,729 31,343 3,521 23,999 3,823 Derivative financial instruments assets Derivative financial instruments liabilities , , , ,034 0 Total 35,050 1,223 30,098 3,729 29,309 3,521 21,965 3, Converting capital by means of living ( in thousands) CAPITAL - calculation for cost of living Capital % growth Calculated effect Operating result less calculation effect 14, % 112-4, Related parties Related parties include subsidiaries and associates, Supervisory Board members, Management Board members and their closer family members. RELATIONS AMONG COMPANIES IN THE SAVA GROUP Business relations between Sava d.d. and its subsidiaries relate to: Provided services, which include use of brand name, and services provided by the professional services. Financial operations in connection with managing granted and obtained loans. Transactions among the Sava Group companies are performed under the same conditions as valid in an ordinary arm s length transaction. The capital of subsidiaries as at 30 June 2014, operating income and net operating result of subsidiaries for the period January - June 2014, are disclosed in the notes to the financial statements of the Sava Group. RELATIONS WITH THE ASSOCIATED COMPANIES As at 30 June 2014, the associated companies of Sava d.d. are Gorenjska banka d.d. and NFD Holding d.d. Gorenjska banka d.d., Kranj Sava d.d. raises loans with Gorenjska banka d.d. Terms and conditions for these transactions equal those effective for other companies with a similar rating. Ownership of the Sava share ( in thousands) 30 June Dec No. of Sava d.d. shares owned by Gorenjska banka d.d. 56,475 56,475 Ownership stake of Gorenjska banka d.d. in Sava d.d. 2.81% 2.81% 79

80 Transactions with Gorenjska banka d.d. obtained loans ( in thousands) 30 Jun Dec Balance of received loans as at 1 Jan. 25,974 35,537 Hiring new loans 0 0 Repayment of loans ,563 Balance of received loans at period end 25,631 25,974 Balance of deposits at period end 0 0 Other major transactions with Gorenjska banka d.d. The balance of short-term operating liabilities arising from interests to Gorenjska banka d.d. amounted to 704 thousand as at 30 June 2014 ( 444 thousand at 31 December 2013). In doing business with Gorenjska Banka d.d. in the first half of 2014, interest expenses of 391 thousand were made (in 2013: 909 thousand). NFD HOLDING d.d., Ljubljana As at 30 June 2014, the balance of the receivable arising from the granted loans due from NFD Hold- ing d.d. amounted to 17,806 thousand (31 December 2013: 17,806 thousand). As at 30 June 2014, operating receivables from interest on loans amounted to 1,567 thousand (31 December 2013: 1,348 thousand). In the first half of 2014, interest revenues amounted to 219 thousand (2013: 441 thousand). RELATIONS WITH NATURAL PERSONS Related natural persons own 138 Sava shares, representing 0.007% of ownership. Ownership of the Sava share 30 Jun Dec Number Shareholding Number Shareholding Sava d.d. Management Board members % % Closer family members of Sava d.d. Management % % Sava d.d. Supervisory Board members % % Directors of subsidiaries % % Supervisory Board members of subsidiaries % % The name list of the Management Board and Supervisory Board members who own Sava shares is disclosed in the business part of the semi-annual report, chapter The Sava share and ownership structure. 80 Data about the group of persons Management Board In the first half of 2014, gross remuneration of the Management Board members amounted to 186 thousand and their net remunerations to 93 thousand or 50% of the gross amount. In comparison with the same period last year, gross remunerations of the Management Board members reduced by 32%. Data about the group of persons other employees with individual contracts of employment In the first half of 2014, gross remunerations of employees with individual contracts of employment amounted to 360 thousand, or 11% less than in the same period last year. Data about the group of persons Supervisory Board and its commissions In the first half of 2014, gross remunerations of the Supervisory Board members and Supervisory Board commission members amounted to 72 thousand. The amount included attendance fees and payments for performing the function.

81 Influence of events after the balance sheet date on the financial statements of Sava d.d. Important events that took place after the balance sheet date are disclosed in the business part of the semi-annual report. The nature of these events neither affects the balance of assets and liabilities shown in the financial statements of Sava d.d. for the first half of 2014 nor the going-concern presumption Statement of Management Responsibility for Sava d.d. The Management Board of Sava d.d., Ljubljana, confirms the financial statements of the company Sava d.d. for the period ending on 30 June 2014, which have been prepared in accordance with Slovene Accounting Standards. The Management Board 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 good management, and the report gives a true and fair view of the company s assets and business results. The Management Board is responsible for the proper managing of its accounting procedures, establishing, operation and maintaining internal control in relation to the preparation and fair presentation of the financial statements, which do not contain any material misstatements originating from fraud or error, and for adopting suitable measures for securing assets and other funds. The Management Board confirms herewith that the financial statements and the notes have been produced on the assumption of going concern and in compliance with the relevant legislation and Slovene Accounting Standards. Matej Narat President of the Management Board Aleš Aberšek Member of the Management Board Ljubljana, 19 August