The Supervisory Board, consisting of chairman Marko Voljč, representatives of capital Bachtiar Djalil, Corinna Graf, Karlo Kardov, Miha Košak, Bernard Pasquier and Uroš Slavinec, and representatives of employees Peter Kobal, Drago Krenker, Krešimir Martinjak and Jurij Slemenik, supervises the operations of the company Gorenje d. d. and the Gorenje Group within the powers and authorizations provided by relevant legislation, company Articles of Association, Rules of Procedure, and Code of Conduct. The Management Board regularly reports to the Supervisory Board about a variety of aspects of company operations, and keeps the Supervisory Board informed about other key activities and business events, so that the Supervisory Board can perform its function as entrusted by the shareholders and employees in the best way possible.
In this year, the Supervisory Board monitored in detail the company operations and performance, and the pursuit of Gorenje Group's Strategic Plan. Last year, i.e. in the first year of Strategic Plan execution, the Management Board attained its goals both in terms of revenue and net profit.
With challenging conditions in both downstream and upstream markets, as well as the labour market, the Group maintained stable performance in the first three quarters of this year, as it generated nearly EUR 944 million of sales revenue, which is 4.8 percent more than in the same period last year. In comparable terms, operating profit before depreciation and amortisation (EBITDA) was up by good five percent as it nearly reached EUR 59 million. Net profit at EUR 4.6 million was 12.1 percent higher than in the equivalent period of the year before. As at the end of September 2017, the company's net financial liabilities were 3 percent above the last year's figure, with the increase relative to the start of the year mostly a result of the needs for net working capital financing in the course of the year. The company is working diligently to improve its working capital turnover by stepping up supply chain financing and deleveraging efforts. Considering the typical dynamics within the year, we can expect to see the largest share of revenue in the last quarter. Following the Management Board's announcement that due to negative effects of sales falling short of the plan, particularly in Germany and Great Britain, increase of material and component prices, labour cost pressures, and lower manufacturing productivity related to the launch of mass production of new generations of products, all key goals budgeted for 2017 will not be entirely attainable, the Supervisory Board supports and encourages the Management Board in its intensive efforts to attain its business goals to the greatest extent possible.
It is the Supervisory Board's mission to always work for the benefit of the company, while keeping in mind the importance of Gorenje for a variety of stakeholders. In addition to shareholders, employees, customers, and suppliers, who are our key stakeholders, we have to take a broader view. Gorenje is working with numerous colleges and a variety of institutions, and it supports a range of varied social activities. Thus, it contributes notably to the development of the narrow and broader region in this way, too.
The Supervisory Board also supports the Management Board in its search for strategic partners, as Gorenje Group is, pursuant to the strategic plan, open to potential strategic combinations that would result in an increase in the scope of operations, economies of scale reaped to ensure cost efficiency, consolidation of brand power, access to key distribution channels, and intensification of product innovation and digitization of operations.
Regarding strategic business partnerships in the past, the Supervisory Board wishes to reiterate that it was regularly informed by the Management Board about cooperation with the Panasonic Corporation, about the terms and performance of due diligence at Gorenje Group, as well as about Panasonic's decision not to increase their shareholding and subsequently to scale down the scope of commercial cooperation. Considering the fact that the relevant institutions, having conducted their supervisory proceedings regarding Gorenje's reporting as a public company, did not find any violations, we believe such reporting, too, was appropriate and compliant.
The Supervisory Board also wishes to express its opinion on Philip Sluiter's request for convocation of extraordinary general meeting and his proposal to replace Marko Voljč and Uroš Slavinec.
We believe every shareholder has the right to propose changes in the Supervisory Board if she or he is unhappy with the Supervisory Board's work. The fact is, however, that opinion of a single shareholder cannot be the basis for replacement of Supervisory Board members. Any changes in the Supervisory Board before the expiry of the term of office require a qualified majority of three quarters of all shareholders present and involved in the deliberation at the general meeting. Gorenje prides on its very solid corporate governance, and the Supervisory Board, too, is striving for constant quality improvement. The Supervisory Board's work takes place at sessions that, in addition to the Management Board, often include members of the broader management team. Deliberations at the sessions are always profound and highly critical. Every year, the Supervisory Board, assisted by the Supervisory Board secretary, conducts self-assessment and defines the steps for further improvement. It is understandable that respective members' views on a variety of issues pertaining to Gorenje's challenges may deviate; however, such views have always been exchanged in a sharp, yet respectable dialogue. To date, this has virtually always led to unanimous conclusions and decisions. In other words, we wish to stress the unity of the Supervisory Board and refute any allegations about differences between respective members, as possibly implied by Sluiter's demand for replacement of two members.
In addition to the explanation regarding the terms of office of Supervisory Board members, and the term of office of the President and CEO, we also wish to underscore the importance of the work of Supervisory Board committees.
The Supervisory Board has started the procedures for appointment of the Supervisory Board's Nomination Committee. It shall be the task of the Nomination Committee to define the criteria for the Supervisory Board members for the new term of office lasting four years, from July 21, 2018, to July 21, 2022; to short-list the candidates; and to finally propose the candidates to the Supervisory Board for approval. The Supervisory Board, in turn, shall propose the candidates to the Shareholders Assembly for appointment. As the regular Shareholders Assembly at which Supervisory Board members for the new term of office are to be approved is scheduled for May 11, 2018, the Supervisory Board shall confirm its list of candidates presumably in March or in early April next year.
Upon proposal by the Supervisory Board's Remuneration Committee, chaired by Bernard Pasquier, the Supervisory Board at its session held in July unanimously approved Franjo Bobinac as the new President and CEO for the next five-year term, more precisely until July 20, 2023. With unanimous support, the Supervisory Board confirmed its confidence in Franjo Bobinac as the President and CEO, and it assigned to him the responsibility of managing the company in the period ahead.
Consistently with the high standards of business and ethical conduct pursued by the Gorenje Group, we also have to respond to the allegations of overly congenial relation between the Management Board and the Supervisory Board. It is quite normal that through the long years of work in international business and social area, acquaintance between President and CEO Franjo Bobinac and Gorenje Supervisory Board members has grown closer. However, we emphatically deny that this has affected in any way the Supervisory Board's discussions and decisions regarding Gorenje's business. The Supervisory Board and its committees always address the issues on the agenda with a highly critical and in-depth professional approach.
Gorenje Group is entering a very turbulent period and therefore, stable management is in the best interest of the company and its stakeholders, including its shareholders. The Management Board, however, has to do everything in its power to improve company performance while being proactive in its search for a potential strategic partner. Moreover, the company also has to hold two Shareholders Assemblies within merely a few months, which will (also) involve deliberation on the appointment of new Supervisory Board members. In order to ensure stability and to reach the best possible business results, the Supervisory Board continues to support the Management Board in these activities.
Gorenje, d. d.