Last year, in which the coronavirus pandemic significantly augmented business risks, the Serbian economy managed to record growth in profitability and employment, as well as an increase in financial capacity
In his interview for Diplomacy& Commerce magazine, Director of the Serbian Business Registers Agency (SBRA), Milan Lučić, talks about the latest trends in the Serbian economy and novelties at the Agency he helms.
According to the SBRA report, and despite the coronavirus pandemic, the Serbian economy has managed to maintain the volume of business activities it achieved in 2020, and in addition, to achieve a positive net result. Why is that so?
— Last year, in which the coronavirus pandemic significantly augmented business risks, the Serbian economy managed to record growth in profitability and employment, as well as an increase in financial capacity. The total profit of companies amounted to 433.5 billion dinars, and the profitability is one fifth higher (or 20.7 per cent) compared to the previous year.
The volume of total business activity remained at the 2019 level, meaning that companies generated total revenues of 12,066 billion dinars. In addition, the number of employees increased by 43,600, which brings the total number of employees in the business sector to 1,218,000. Our state provided support to businesses through its economic policy measures that were timely and adequate, which helped the country to face the initial consequences of the COVID-19 pandemic successfully.
The increased profitability of the Serbian economy was complemented by growing rates of return so the return on equity rate was 6.8%, the return on total capital was 3.0%, the operating profit rate stood at 5.7% and the net profit at 3.8%.
The financial capacities of the economy also increased last year, as did the total losses. To overcome the difficulties in doing business, businesses borrowed more, and the problem with maintaining liquidity, which was present in previous years, has been slightly alleviated in the past year. The retail and processing sectors stand out as having the best results.
Out of 100 companies with the highest operating revenues, 98 are large ones, which have generated 98.9% of the revenues of the mentioned 100 companies.
In terms of high profitability, the construction and ICT sectors take the lead. Large systems are the main generators of profit, and the most pronounced profit growth and high profitability were achieved by small and medium-sized companies. After the loss from 2019, last year, public companies recorded positive business results.
The existing financial imbalances in the economy were somewhat mitigated during 2020. Companies reported a negative net working capital of 407 billion dinars, and the amount of funds they lacked to finance fixed assets from long-term sources was 5.2% lower than the previous year. At the same time, they lacked long-term capital in the amount of 2.713 billion dinars to have stable financing of the entire achieved volume of business, i.e. they lacked long-term capital of 2.713 billion dinars for fixed assets and inventory, which is an annual increase of 7.3%.
The wholesale and retail sectors recorded a positive net working capital in the significant amount of 322 billion dinars, double compared to the previous year. Transport, storage and electricity, gas, steam and air conditioning companies recorded the biggest financial imbalance.
Medium-sized companies had a positive net working capital of 276 billion dinars, which is an annual increase of 2.7 times, while the small ones had a positive net working capital of 249 billion dinars, a 13.9% increase. Micro- and large companies did not finance their fixed assets adequately.
How do you explain the almost unchanged ranking of the most successful companies in terms of the volume of their business activity?
— Large systems had the largest volume of business activity. Out of 100 companies with the highest operating revenues, 98 are large ones, which have generated 98.9% of the revenues of the mentioned 100 companies. Furthermore, out of 100 companies with the highest operating revenues in 2020, 86 of them were among the top 100 last year.
The fact that they generated more than a quarter (27.9%) of the operating income of the entire economy speaks of the significant impact that the top 100 companies with the highest operating income have on the total domestic economy.
Additionally, their average share in the basic financial performance of the economy is 24.4%, and they employed 24.4% of all workers in the business sector.
In terms of a large volume of business activity, as in previous years, the wholesale and retail sector and the processing industry take the lead. Companies from these sectors are ranked among the top 100 companies with the highest operating revenues with the highest number of them (36 and 37 respectively) making it to the top 100. In terms of revenue, their shares stand at 32.2% and 26.8% respectively. A large part of business activity was generated by six companies from the electricity and gas supply sector, which generated 16.1% of the operating revenue of the top 100 companies.
Of the one hundred companies with the highest operating revenues, as last year, seven are public companies which generated 15.5% of the revenues of those 100 companies, and they employed a total of 50,611 workers. The companies that generated the highest business revenues last year dominate business activity in the country. The first four ranked companies are the same as last year, while the last year’s 5th and 6th companies have now switched places.
These are public enterprise EPS BEOGRAD, NIS AD NOVI SAD, DELHAIZE SRBIJA DOO BEOGRAD, TIGAR TYRES DOO PIROT, TELEKOM SRBIJA AD BEOGRAD and public enterprise SRBIJAGAS NOVI SAD.
All those companies that have to submit their financial statements in 2022 have to do so in a changed form and within the changed deadlines.
— Following the accounting regulations, we are now implementing a new model of financial reporting. The deadline for submitting regular annual financial statements is March 31, while the ancillary documentation should be submitted by the auditors by June 30 when it comes to the regular annual financial statements and by July 31 for the consolidated annual financial statements. For certain categories of obliged entities, the scope of financial reporting has changed, both in terms of forms to be used in compiling regular annual financial statements and in terms of the volume of documentation.
I would like to announce the launch of an electronic application for the registration of a lien and the new software for the registration of bidders.
To enable electronic compiling and submission of financial statements as per new rules, the SBRA is developing a new information system for receiving, processing and public disclosure of financial statements, which will be available to users as of February 1. Technical and video instructions for users are published on the website www.apr.gov.rs. The SBRA’s Info Centre and Service Desk also give customer support via phone and e-mail. Once the documents are processed, the Agency will publish financial statements online, ensuring full transparency of financial reporting.
Out of all public institutions, the SBRA was the first to start digitalization. Did you complete it and if not, what new projects do you have regarding digitalization?
— The Agency maintains registers as a single centralized electronic database and continuously implements business start-up reform.
The implementation of electronic registers annulled the keeping of paper registers and ensured a faster registration procedure, with easier access to up-to-date data for both state bodies and businesses.
The SBRA has improved certain features that facilitate doing business, and our ultimate goal is electronic registration, as the most efficient way of registration. Following the launch of the service relating to submitting financial statements in electronic form seven years ago, businesses have started using qualified electronic signatures in great numbers, as a prerequisite for the use of similar services provided by the SBRA. After that, we launched the Central Register of Integrated Procedures for Electronic Issuance of Construction Permits, eService for electronic incorporation of sole proprietors and limited liability companies, online registration of financial leasing contracts, etc.
This year’s amendments to the Company Law allow for electronic registration of all remaining legal forms of companies, registration of changes and strike-offs from the register, while as of mid-2023, registering companies could only be done electronically.
What are the SBRA’s future plans and programmes?
— I would like to announce the launch of an electronic application for the registration of pledge rightс and the new software for the registration of bidders, which should facilitate obtaining documentation required for participation in the public procurement procedures.
This year will be dedicated to the harmonization of accounting service providers with accounting regulations, which oblige them to register with the Agency’s register.
Later this year, we will launch the Cultural Institutions Register. Also, we are continuing to participate in cross-border data delivery through the regional web portal called Business and Financial Data Exchange of Southeast Europe or BIFIDEX for short. Additionally, we are going to launch a new SBRA data delivery portal.