Annual Report • Feb 27, 2019
Annual Report
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(in HRK '000,000)
| 2017 | 2018 | 2018/2017 | |
|---|---|---|---|
| Total revenues | 1,842.0 | 2,047.8 | 11.2% |
| Sales revenues | 1,755.3 | 1,961.4 | 11.7% |
| Board revenues | 1,447.9 | 1,629.0 | 11.5% |
| Operating expenses | 1,145.2 | 1,264.3 | 10.4% |
| EBITDA | 606.0 | 694.5 | 14.6% |
| Adjusted EBITDA | 622.6 | 702.9 | 12.9% |
| EBIT | 259.5 | 283.5 | 9.3% |
| Adjusted EBIT | 276.1 | 292.0 | 5.8% |
| EBT | 238.6 | 258.1 | 8.1% |
| Net profit | 245.1 | 239.2 | -2.4% |
| EBITDA margin | 34.1% | 34.9% | 80 bp |
| Adjusted EBITDA margin | 35.0% | 35.3% | 30 bp |
| Net debt | 1,772.4 | 2,169.1 | 22.4% |
| Cash and cash equivalents | 287.8 | 261.8 | -9.0% |
| Net debt / Adjusted EBITDA | 2.85 | 3.09 | 8.4% |
| Capital investments | 877.7 | 703.6 | -19.8% |
| Market capitalization | 5,420.3 | 4,468.8 | -17.6% |
| EV | 7,192.6 | 6,637.9 | -7.7% |
| DPS | 0.80 | 0.90 | 12.5% |
| 2017 | 2018 | 2018/2017 | |
|---|---|---|---|
| Accommodation units (capacity) | 20,852 | 21,371 | 2.5% |
| Number of beds | 56,662 | 58,023 | 2.4% |
| Full occupancy days | 127 | 132 | 4.5% |
| Annual occupancy (%) | 35% | 36% | 100 bp |
| Accommodation units sold ('000) | 2,640 | 2,827 | 7.1% |
| Overnights ('000) | 6,173 | 6,460 | 4.6% |
| ADR (in HRK) | 548 | 576 | 5.0% |
| RevPAR (in HRK) | 69,435 | 76,224 | 9.8% |
Note: Details and explanations can be found on page 16 in "Results of the Group".
Valamar Riviera Group continues to assert its leadership position through exceptional results. In 2018 the Group achieved the set goals and double-digit growth in business results despite slower peak-season demand in tourism. The high adjusted EBITDA in the amount of HRK 703 million (+13%; HRK 623 million in 2017) is the result of a 12% increase in sales revenues, as well as in operating efficiency through the growth of adjusted EBITDA margin to 35.3% (35.0% in 2017); the strong increase in operating profit was also contributed by an intensive investment cycle worth more than HRK 700 million.
13%
GROWTH OF ADJUSTED EBITDA TO
703
MILLION HRK
Total revenues were HRK 2,048 million, up 11% vs. last comparable period (HRK 1,842 million in 2017). In total revenues, HRK 1,961 million represented sales revenues (HRK 1,755 million in 2017), while the remaining part was mainly financial income, down HRK 7 million (from HRK 64 million to HRK 57 million). The growth of sales revenues growth was largely driven by 12% higher board revenues that amounted to HRK 1,629 million (HRK 1,448 million in 2017) and 10% higher F&B outlet revenues. Croatia had reported growing demand for several years before experiencing a recent slowdown in tourist turnover during the
/ continued
summer season. Despite these unfavourable trends, Valamar Riviera recorded 6.5 million overnight stays (+5%) during 2018, while the average daily rate increased to HRK 576 (+5%). The HRK 181 million growth in board revenues was mainly driven by: (i) large investments to improve competitiveness and the quality of services and products, (ii) strong business development during 1H 2018, (iii) demand- driven optimization of distribution and prices, (iv) 5 days increase in full occupancy ratio, (v) the development of destination products with added value, and (vi) acquisition of Hoteli Makarska and Valamar Obertauern.
INCREASE IN OPERATING EFFICIENCY TO
35.3% (ADJUSTED EBITDA MARGIN) Pressure on growth of operating costs was successfully reduced by a high level of operative efficiency. Their controlled increase by 10% to a level of HRK 1,264 million was mainly due to: (i) increase in material costs due to increased business volume, (ii) increase in other costs (increase in the costs of accommodation, food and transportation of employees and consolidation of Hotel Makarska and Valamar Obertauern); and (iii) increase in staff costs (payrolls). Payrolls growth was planned in line with the salary increase policy and the new staff hired to ensure service quality in the Premium and Upscale products. However, human resources still remain the greatest challenge for growth and development in the forthcoming period.
Profit before tax grew by HRK 20 million to HRK 258 million. The strong 8% growth was achieved despite higher amortization cost (HRK +64 million coming from earlier large investment cycles), due to excellent operating results. The Group's net profit decreased by HRK 6 million to HRK 239 million, primarily as a result of lower tax revenues mainly due the lower one-off recognition of deferred tax assets related to the achieved tax incentives prescribed by the Act on Investment Promotion (HRK 26 million in 2018, compared to HRK 54 million in 2017).
/ continued
The Company's market capitalization fell by 18% in 2018, coinciding with the decrease in international and national stock market indices. Despite the 22% increase in net debt due to the acquisition of 46.93% of Hoteli Makarska's share capital, purchase of Valamar Obertauern and the large investment cycle that was carried out (over HRK 700 million outflow), the net debt / adjusted EBITDA ratio recorded only a 8% growth to the anticipated level of 3.09, thus confirming the prudent and sustainable debt management and Group's growth.
The Valamar Riviera Group completed its large investment cycle worth over HRK 700 million. The investments included several projects: the repositioning of Rabac as a leading high-end holiday destination was completed with the opening of the Valamar Collection Girandella Maro Suites 5*, and the Valamar Argosy Hotel 4* was repositioned as "designed for adults" accommodation. Moreover, we continued investing in raising camping quality to offer products and services with high added value. The investments also included Imperial's projects and a range of other smaller projects to improve quality operating efficiency, and ensure efficient energy use. Currently, the market demand for the recently developed properties is strong. For details, see "Investments 2018" on page 38.
In line with the previously announced strategic goals, the Group is planning new large investments worth HRK 793 million in 2019. The planned investments represent the continuation of strategical investments to reposition the portfolio towards products and services with high added value while focusing on premium camping in Istria and on Krk and Rab islands. For details, see "2019 Investments" on page 41.
In accordance with our strategic goals for the period up to 2020, we are focusing on investments projects aimed at improving the portfolio properties and services. However, numerous factors reduce the competitiveness of Croatian tourism and hinder further investment potential: VAT and the rate of total contributions to salaries (both among the highest in the Mediterranean), the still unresolved issue of tourism land, skilled labor shortages, the likely introduction of property tax and tourist tax increase.
Croatia's Restructuring and Sales Centre (CERP) accepted Valamar Riviera's binding bid to buy a stake in Hoteli Makarska (726-key portfolio). On 4 April
2019 GROUP'S PLANNED INVESTMENT CYCLE AMOUNTS TO HRK
/ continued
2018 Valamar concluded an agreement on the purchase and transfer of 55.48% of Hoteli Makarska's share capital. Valamar Riviera also concluded a cooperation agreement with Allianz ZB d.o.o., a company for managing mandatory pension funds, to start their acting in concert regarding Hoteli Makarska. After the acquisition of shares, Valamar transferred 30.48% of Hoteli Makarska's share capital to Allianz ZB. After the completion of the takeover bid and transfer of 95,276 shares to its partner Allianz ZB, Valamar Riviera now owns 525,379 shares or 46.93% of the acquired company's share capital. The consolidation of operations started in August 2018. Hoteli Makarska's operations account for 2 percentage points of total revenues and 4 percentage points of adjusted EBITDA growth.
On 20 August 2018, Valamar Riviera disclosed to the investment community that, in their capacity as buyers, Valamar Riviera and Valamar A GmbH (a company in 100% ownership by Valamar Riviera), concluded an agreement on the purchase and transfer of a 100% stake in the company Matthias Aichmann GmbH, that owns the Petersbühel Hotel 4*. The hotel has a prime location in the centre of Obertauern, one of the most popular Austrian winter destinations. It has been operating for over 50 years and features 82 keys and facilities such as wellness, a restaurant and a garage, while the ski lift is in the hotel's immediate vicinity. At the end of November, Valamar opened the hotel, named Valamar Obertauern Hotel 4*, under the Valamar Hotels & Resorts brand. In the same period, the company name was changed to Valamar Obertauern GmbH. Business internationalization is one of the key strategic goals of the company's development in the forthcoming period and this represents a major step forward in the Company's business expansion across Croatia's borders. Business consolidation was initiated from November 2018 and has had no significant impact on total revenues and EBITDA in the observed period due to its seasonal winter business.
Valamar Riviera d.d. and PBZ Croatia osiguranje d.d. (managing mandatory pension funds), submitted on 15 May 2017 a joint offer for the investment and recapitalisation of a bankrupt hospitality company on Hvar Island, Helios Faros d.d. u stečaju, with 591 keys in its portfolio. On 8 November 2018, Valamar Riviera informed the public that the Commercial Court in Split adopted a temporary decision on confirming the Bankruptcy Plan for the investment and recapitalisation of the company Helios Faros. Upon the finality of the Decision confirming the Bankruptcy Plan, under which a total investment of HRK 91.2 million is planned, it will be possible to initiate the planned procedures that should enable the company Helios Faros to exit bankruptcy and develop its operations under the restructuring plan, as well as investments into premium hospitality assets, thus turning Stari Grad into an attractive and well-known destination.
Following the successful acquisition of Hoteli Baška on Krk Island, Imperial on Rab Island, Hoteli Makarska in Makarska, and the first hotel in Austria (Valamar Obertauern), we are considering further expansion by pursuing new partnerships and acquisition opportunities in Croatia and abroad.
2 ACQUISITIONS DURING 2018
The Croatian Business Council for Sustainable Development and the Croatian Chamber of Economy have given the Valamar Riviera a prestigious award: the CSR Indices Award for the field of socially responsible diversity policies and human rights protection.
Valamar Riviera received two valuable recognitions given by the Zagreb Stock Exchange in 2018: Share of the Year by public vote for the 7th consecutive time and Top Turnover Share. Moreover, it won another award for Best Investor Relations, conferred by the business newspaper "Poslovni dnevnik" and the Zagreb Stock Exchange.
In 2018 Valamar Riviera has received numerous awards and certificates: ANWB Top 2018 (ANWB), ADAC Superplatz 2018 (ADAC), World Travel Awards (four awards), World Luxury Hotel Awards (three awards), Employer Partner, Golden Key (Croatia Exporters Association), Silver effective manager for the affirmation of social values and fruitful business cooperation, Family hotel of the year and Best beach on the Adriatic (Croatian Tourism Board and Croatian Chamber of Economy), Travellers Choice (TripAdvisor), Golden Goat - Terra Magica Adventure Mini Golf (Istria Tourist Board), Inovacamp 2018 (Croatian Camping association), Camping2be, Travelife, EU Ecolabel, ISO 50001, ISO 9001, ISO 14001, Codex Alimentarius - HACCP, Gault & Millau 2018, etc.
Valamar's press release is available on the Valamar Riviera corporate website (valamar-riviera.com/en/1Y2018).
MORE THAN 50 AWARDS FOR PRODUCTS AND SERVICES
IN 2018
| Significant Business Events | 9 |
|---|---|
| Results of the Group | 16 |
| Results of the Company | 35 |
| 2018 Investments | 38 |
| 2019 Investments | 41 |
| The Risks of the Company and the Group | 44 |
| Corporate Governance | 50 |
| Related-party Transactions and Branch Offices | 53 |
| Valamar Share | 55 |
| Investors Day and the 2017 Integrated Annual Report and Corporate Social Responsibility |
59 |
| Additional Information | 61 |
| Responsibility for the Annual Financial Statements | 62 |
| Financial Statements according to GFI-POD | 63 |
| Management Board's Decision on Establishing the Annual Financial Statements and on the Proposal of Profit Distribution |
79 |
| Supervisory Board's Decision on Approving the Annual Financial Statements 81 | |
| Supervisory Board's Report on the Performed Supervision of Company's Business Management in 2018 |
82 |
| Supervisory Board's Decision on the Proposal of Profit Distribution | 86 |
| Supervisory Board's Decision on the Proposal of Dividend Payment | 87 |
| Annual Financial Statements Including the Independent Auditor's Report | 90 |
7
Valamar Riviera is the leading tourism group in Croatia. It is also one of the largest investors in Croatian tourism with more than HRK 4 billion invested over the last 14 years. It owns the Valamar All you can holiday umbrella brand and the sub-brands: Valamar Collection, Valamar Collection Resorts, Valamar Hotels & Resorts, Sunny by Valamar and Camping Adriatic by Valamar. With 2018 acquisitions of Hoteli Makarska d.d. in Makarska and the first Valamar hotel in Austria, Valamar Riviera Group is now present in seven attractive destinations, from Istria and Kvarner to Dubrovnik in Croatia and Obertauern in Austria. It operates about 12% of the total categorized tourist accommodation in Croatia. The tourist property portfolio includes 34 hotels and 15 camping resorts. More than 21,000 accommodation units can welcome almost 58,000 guests daily. Therefore, Valamar Riviera is the largest tourism group in Croatia, both in terms of portfolio size and revenues. Valamar Riviera cares for the interests of all its stakeholders: guests, suppliers and partners, local communities and destinations, around 22,000 shareholders and more than 6,000 people employed during peak season, and society at large. Stakeholders' interests are actively promoted through Valamar Riviera's principles of sustainable and socially responsible growth and development. The company aims at growing further through portfolio investments, new acquisitions and partnerships, by developing its destinations and human resources, and by increasing operating efficiency.
New Valamar Riviera's brand strategy
SIGNIFICANT BUSINESS EVENTS /continued
On 27 December 2017, Valamar Riviera submitted a binding bid to buy a 55.48% stake (621,086 shares) in Hoteli Makarska d.d. (hereinafter: Hoteli Makarska), a company seated in Makarska with 726 keys in its portfolio. At the same time, Valamar Riviera concluded a cooperation agreement with AZ, a pension fund management company from Zagreb acting in its own name and on behalf of the mandatory pension funds it manages, to start their acting in concert regarding Hoteli Makarska. On 4 April 2018, Valamar Riviera concluded an agreement with the Republic of Croatia, represented by CERP (Restructuring and Sale Center), regarding the sale and transfer of Hoteli Makarska's shares. With this agreement, Valamar bought 621,086 ordinary shares for a total of HRK 172.7 million. Following this acquisition, on 12 April 2018 Valamar Riviera transferred 30.48% of Hoteli Makarska's share capital (341,218 shares) to its partner AZ and retained 25.00%. On 16 May 2018, HANFA (Croatian Financial Services Supervisory Agency) decided to approve Valamar Riviera's disclosure of the takeover bid for Hoteli Makarska. After the completion of the takeover bid and the transfer of 95,276 shares to AZ, Valamar Riviera owns 525,379 shares or 46.93% of the acquired company's share capital. On 1 August 2018 Valamar Riviera has concluded Hotel management contract with Hoteli Makarska. The consolidation start date is 1 August 2018.
Valamar Riviera and PBZ Croatia osiguranje, a pension fund management company acting in its own name and on behalf of PBZ Croatia osiguranje mandatory pension funds categories: A and B, submitted on 15 May 2017 a joint offer for the investment and recapitalization of Helios Faros, a hospitality company undergoing bankruptcy proceedings from Stari Grad on Hvar Island. The Assembly of bankruptcy creditors of Helios Faros decided on 20 July 2017 to prepare a Bankruptcy Plan, following the investment and recapitalization offer. In this offer, PBZ Croatia osiguranje and Valamar Riviera presented a restructuring plan as well as a six-year plan worth HRK 650 million for investments in hospitality assets. The total renovation and construction of two premium resorts containing around 600 keys would reposition the Helios Faros portfolio as premium accommodation, thus turning Stari Grad into an attractive and well-known destination. Helios Faros would employ around 500 people after the renovation of the Arkada and Lavanda hotels. The Bankruptcy plan would enable Helios Faros to emerge from bankruptcy and continue its business operations in close partnership with the destination, Stari Grad, to bring prosperity to the whole island. PBZ Croatia osiguranje and Valamar Riviera see this project as a confirmation of synergies from the joint activity of a large institutional investor and a strategic tourism investor contributing with its expertise and results. Consequently, Valamar Riviera would manage Helios Faros' development and operations through a model contract related to the management of facilities. On 8 November 2018, Valamar Riviera announced to the general public that the Commercial Court in Split had adopted a provisional Decision on Endorsing the Insolvency Plan for the Investment and Recapitalization of the company Helio Faros. Upon the finality of the Decision confirming the Bankruptcy Plan, under which a total investment of HRK 91.2 million is planned, it will be possible to initiate the planned procedures that should enable the company Helios Faros to exit bankruptcy and develop its operations under the restructuring plan, as well as investments into premium hospitality assets.
IN
2019
WE CONTINUE TO ACTIVELY CONSIDER OPTIONS FOR EXPANSION, PARTNERSHIP AND ACQUISITIONS IN CROATIA AND THE REGION
On 26 January 2018, Valamar Riviera received a notification by EPIC, Goldscheider und Wurmböck Unternehmensberatungsgesellschaft m.b.H. with registered office in Vienna, 8 Plösslgasse, Republic of Austria, regarding the changes in the percentage of voting rights (drop below the voting rights
SIGNIFICANT BUSINESS EVENTS /continued
threshold), caused by the transfer of 55,594,884 shares due to the agreed demerger with takeover: EPIC, Goldscheider und Wurmböck Unternehmensberatungsgesellschaft m.b.H. being the demerging company and EPIC Hospitality Holding GmbH with registered office in Vienna, 8 Plösslgasse, Republic of Austria, being the transferee company. As evidenced by the received notifications, the structure of members in the transferee company is indirectly identical to the structure of members in the demerging company. Consequently, no changes occurred in the controlling persons, since the members in EPIC Hospitality Holding are indirectly the same persons and hold the same stakes as the members in EPIC, Goldscheider und Wurmböck Unternehmensberatungsgesellschaft m.b.H. Consequently, on the same day, Valamar Riviera received a notification by EPIC Hospitality Holding regarding the acquisition of 55,594,884 RIVP shares representing 44.11% of the Company's share capital.
After carrying out the required procedure and pursuant to relevant regulations and the decision rendered by the General Assembly on 8 May 2018, the merger of EPIC Hospitality Holding (transferor) to Valamar Riviera (transferee) was entered in the court register of the Commercial court in Pazin on 15 June 2018. Therefore, Valamar Riviera became the universal legal successor of EPIC Hospitality Holding. The transferee's share package held by the transferor was entirely used as compensation, i.e. share exchange for the members in the transferor (Wurmböck Beteiligungs GmbH, Goldscheider Keramik Gesellschaft m.b.H. and Dr. Franz Lanschützer) proportionally to the size of the stake that each individual member held in the transferor. Thus, the merger and share transfer did not result in any change of controlling persons.
The merger does not significantly affect Valamar Riviera's balance sheet, income statement, employment, operating earnings and other financial and business indicators, and it is also tax neutral for both companies, so the transferee will not be burdened by any additional liabilities. This status change secures continuity in the shareholding structure, thus enabling the continuation of the Company's transparent management, care for employees, focus on destination development and business model sustainability. Therefore, Valamar Riviera retains its marketleading position and the long-term trust of the controlling shareholders.
98% OF THE LOAN PORTFOLIO IS COMPRISED OF LONG-TERM FIXED INTEREST LOANS OR, RESPECTIVELY, LOANS HEDGED BY A DERIVATIVE INSTRUMENTS (IRS) FOR PROTECTION AGAINST INTEREST RATE RISK
On 12 February 2018 and 13 February 2018, Valamar Riviera concluded two club loan agreements with OTP banka Hrvatska and OTP Bank Nyrt from Hungary worth EUR 80 million in total. On 6 March 2018, Valamar Riviera concluded a loan agreement with the European Investment Bank from Luxembourg (EIB) worth EUR 16 million. This is the first EIB transaction in Croatia that involves direct financing of a private sector company with the support of the EU-budget guarantee through the European Fund for Strategic Investments as the financing component of the Investment Plan for Europe. On 11 September 2018, a loan agreement worth EUR 10 million was concluded with Istarska kreditna banka. On 18 December 2018, Valamar Riviera concluded a loan agreement worth EUR 10 million with Erste&Steiermärkische Bank d.d. All these legal transactions were concluded with the aim of financing long-term investments and working capital, and present an additional confirmation of the trust that the investors and the financing community place in the further development of Valamar Riviera.
The Management Board met on 20 February 2018, while the Supervisory Board met on 27 February 2018 to determine the 2017 4Q audited financial statements and the 2017 audited annual financial statements. The General Assembly of Valamar Riviera was held on 8 May 2018 and decided to:
2017 and the Supervisory Board members from performing the supervision of the management of the Company's business in 2017 • Pay a dividend of HRK 0.90 (ninety lipas) per each share. The dividend would be paid out of the retained profit achieved in the years 2015 and 2016. Valamar Riviera's shareholders who opted so, received one quarter of their dividend in rights- company shares.
On 9 May 2018, the Supervisory Board of Valamar Riviera reappointed Mr. Željko Kukurin as Management Board President and Mr. Marko Čižmek as Management Board Member for a new term of office starting from 1 January 2019 to 31 December 2022. In order to further develop Valamar's business, the Supervisory Board adopted a long-term plan of rewarding the management board and key management with Valamar's shares, amounting to 2% of the annual increase in the market capitalization of the shares on the Official market of the Zagreb Stock Exchange.
The Supervisory Boards of Valamar Riviera, Imperial and Hoteli Makarska granted their approval of the 2019 investment cycle in the amount of HRK 636 million, HRK 140 million and HRK 18 million, respectively. The investments are focused on the premium camping segment in Istria and the islands of Krk and Rab, as well as on the opening of Valamar Collection Marea Suites 5*, by which will further develop the offer of premium family vacation in Poreč as well as upgrade the quality of accommodation and services at Valamar Carolina Resort 4*. Numerous other investment projects aimed at upgrading guest amenities in all destinations as well as additional large investments in accommodation for seasonal employees will be continued in line with Valamar's strategic goals until 2020. For details, see "2019 Investments' on page 41.
On 13 December 2018, Valamar Riviera announced that it concluded legal transactions with the company TUI UK on providing hospitality services in its facilities in 2019, with an estimated total annual value of HRK 125.5 million. Through its collaboration with the company TUI UK, one of the leading tour operators in the European outbound market, Valamar Riviera has secured partial occupancy of its hotels, both during high season as well as pre- and post-season in 2019.
Our vision is to be the leader in leisure tourism and create authentic guest experiences in partnership with our destinations.
Valamar Riviera has been pursuing expansion opportunities abroad for some time now, with special focus on opportunities in Austria, seeing that it is a large tourism market with over 120 million overnights per year. Austria has a highly developed leisure tourism segment, and it is recognized for its exemplary sustainability and quality in the development of its destinations and tourism infrastructure. Hence, on 26 July 2018, Valamar Riviera disclosed to the investment community that it had made
a binding offer, and on 20 August 2018 that, in their capacity as buyers, Valamar Riviera and Valamar A GmbH (a company owned by Valamar Riviera d.d.), concluded an agreement on the purchase and transfer of a 100% stake in the company Matthias Aichmann GmbH seated in Obertauern, that owns the Petersbühel Hotel 4*. The hotel has a prime location in the center of Obertauern, one of the most popular Austrian winter destinations. It has been operating for over 50 years and features 82 keys and facilities such as wellness, restaurant and garage. The ski lift is in the hotel's immediate vicinity. At the end of November, Valamar opened a hotel as part of the Valamar Hotels & Resorts brand, under the name Valamar Obertauern Hotel 4*. In the same period Matthias Aichmann changed the company's name to Valamar Obertauern GmbH. Business internationalization is one of the key strategic goals of the company's development in the forthcoming period and this represents a major step forward in the Company's business expansion across Croatia's borders. Consolidation start date is 1 November 2018.
SIGNIFICANT BUSINESS EVENTS /continued
The Management Board presents the 2018 annual audited financial statements.
The Management Board hereby presents the annual audited financial statements for the year 2018. These statements must be viewed in the context of the said mergers and acquisitions, and they provide information on the state of the Company and Group, as well as significant events.
The Company income statement for the reviewed period includes the data of the merged companies Puntižela d.o.o. for the period following the merger, i.e. as of 1 April 2017, and Elafiti Babin Kuk d.o.o. as of 29 December 2017.
The Group income statement for the reviewed period includes the data of companies Hoteli Makarska d.d. and Valamar A GmbH as from 1 August 2018 and Valamar Obertauern GmbH as from 1 November 2018. The Group balance sheet for the reviewed period, as at 31 December 2018, includes data of Hoteli Makarska d.d., Valamar A GmbH and Valamar Obertauern GmbH. Please note that 2018 data cannot be entirely compared to data from the previous period, as the latter do not include data for the company Hoteli Makarska d.d., Valamar A GmbH and Valamar Obertauern GmbH.
| 2017 | 2018 | 2017/2018 | |
|---|---|---|---|
| Total revenues | 1,842,036,109 | 2,047,774,770 | 11.2% |
| Operating income | 1,778,395,862 | 1,990,984,717 | 12.0% |
| Sales revenues | 1,755,286,721 | 1,961,413,631 | 11.7% |
| Board revenues (accomodation and board revenues) 2 |
1,447,866,807 | 1,628,991,417 | 11.5% |
| Operating costs 3 |
1,145,185,720 | 1,264,286,140 | 10.4% |
| EBITDA 4 |
606,042,467 | 694,453,630 | 14.6% |
| Extraordinary operations result and one-off items 5 |
-16,566,528 | -8,441,326 | -49.0% |
| Adjusted EBITDA 6 |
622,608,995 | 702,894,956 | 12.9% |
| EBIT | 259,502,687 | 283,546,818 | 9.3% |
| Adjusted EBIT 6 |
276,069,214 | 291,988,144 | 5.8% |
| EBT | 238,643,759 | 258,081,503 | 8.1% |
| Net profit | 245,087,385 | 239,187,507 | -2.4% |
| EBT margin | 13.4% | 13.0% | -40 bp |
| EBITDA margin | 34.1% | 34.9% | 80 bp |
| Adjusted EBITDA margin 6 |
35.0% | 35.3% | 30 bp |
| 31/12/2017 | 31/12/2018 | 2017/2018 | |
|---|---|---|---|
| Net debt 7 |
1,772,353,634 | 2,169,067,569 | 22.4% |
| Net debt / Adjusted EBITDA | 2.85 | 3.09 | 8.4% |
| Cash and cash equivalents | 287,836,954 | 261,842,353 | -9.0% |
| Capital investments (details in chapter "2018 Investments" | 877,743,649 | 703,559,000 | -19.8% |
| ROE 8 |
9.7% | 8.5% | -120 bp |
| Adjusted ROCE 9 |
6.4% | 5.9% | -50 bp |
| Market capitalization10 | 5,420,289,760 | 4,468,823,546 | -17.6% |
| EV11 | 7,192,643,394 | 6,637,891,115 | -7.7% |
| EPS12 | 1.96 | 1.90 | -3.1% |
| DPS13 | 0.80 | 0.90 | 12.5% |
| 2017 | 2018 | 2017/2018 | |
|---|---|---|---|
| Number of accommodation units (capacity) | 20,852 | 21,371 | 2.5%15 |
| Number of beds | 56,662 | 58,023 | 2.4%15 |
| Full occupancy days | 127 | 132 | 4.5% |
| Annual occupancy (%) | 35% | 36% | 100 bp |
| Accommodation units sold | 2,639,755 | 2,827,338 | 7.1% |
| Overnights | 6,173,142 | 6,459,734 | 4.6% |
| ADR16 (in HRK) | 548 | 576 | 5.0% |
| RevPAR17 (in HRK) | 69,435 | 76,224 | 9.8% |
Valamar Riviera Group continues to assert its leadership position through record results and investments into Croatian and Austrian tourism. 2018 was a year of double-digit growth in operating revenue and operating earnings (EBITDA). Valamar Riviera owes its continued success to the concept of sustainable growth and development led by the principles of corporate social responsibility. It is reflected in: (i) continuous portfolio investments (over HRK 700 million were invested in the preparation for 2018 tourist season, while planned investments for the 2019 amount to HRK 793 million), (ii) acquisitions and partnerships (46.93% of Hoteli Makarska's share capital and the first Valamar hotel in Austria were both successfully acquired in 2018) and (iii) the development of our employees and destinations.
In 2018, total revenues were HRK 2,047.8 million, up by 11.2% (HRK +205.7 million). The total realised revenues were affected by:
(i) strong growth in sales revenues, up by 11.7% (HRK +206.1 million), amounting to HRK 1,961.4 million. The increase of sales revenues was largely driven by 11.5% higher board revenues (HRK 181.1 million) and 10% higher F&B outlet revenues. All marketing segments grew in the January-March period, individuals and allotments in particular. Although Easter holidays occurred in March, strong growth was reported in April as well, especially in the individual and M.I.C.E.18 segment. Due to the earlier occurrence of holidays in the DACH19 market, an expected growth was reported in all the segments in May. The active management of channels and prices drove the strong market feedback reported by all channels in June, except for O.T.A.20, which maintained a controlled growth. During peak season (July-September), growth in board revenues was mainly due to high increase in the direct sales channel, along with controlled decrease of the O.T.A. sales channel's share. Shoulder season (October-December) saw higher group and allotment numbers, as well as an increase in the M.I.C.E. segment in Dubrovnik. Market feedback during the Christmas / New Year period was equally strong, with an increase in the number of American guests in Dubrovnik. 2018 saw 6.5 million overnights (+4.6% as compared to 2017), while the average daily rate grew by 5.0% to HRK 576.
Domestic sales revenues were HRK 180.5 million and represented 8.8% of total revenues (8.1% in 2017). They grew by 20.3% compared to the previous comparable period. International sales revenues were HRK 1,780.9 million, up by HRK 175.7 million and represented by 87.0% of total revenues (87.1% in 2017).
(ii) other operating revenues21 grew by 28.0% (HRK +6.5 million) to HRK 29.6 million, mainly due to the cancelling of long-term provisions for Imperial's litigations.
(iii) financial income fell by -10.8% (HRK -6.9 million) to HRK 56.8 million, mainly due to a lower appreciation of HRK vs. EUR in Q4 2018 compared to last year's comparable period.
(iv) consolidation of Hoteli Makarska and Valamar Obertauern with 2 and 0.1 percentage point contribution to the Group's total revenues, respectively.
Other operating and financial income represented 4.2% of total revenues (4.7% in 2017).
206 MILLION HRK HIGHER SALES REVENUES COMPARED TO 2017
18 M.I.C.E. = Meetings, incentives, conferencing, exhibitions.
19 DACH market represent Germany (D), Austria (A) and Switzerland (CH). 20 O.T.A. = Online travel agencies.
21 Other operating revenues include revenues from the usage of own products, goods and services in the amount of HRK 0.4 million and other operating revenues of HRK 29.2 million.
| (in HRK) | 2017 | 2018 | 2018/2017 |
|---|---|---|---|
| Operating costs23 | 1,145,185,720 | 1,264,286,140 | 10.4% |
| Total operating expenses | 1,518,893,175 | 1,707,437,899 | 12.4% |
| Material costs | 519,753,525 | 552,089,395 | 6.2% |
| Staff cost | 480,161,466 | 541,715,389 | 12.8% |
| Depreciation and amortisation | 346,413,599 | 410,521,539 | 18.5% |
| Other costs | 143,755,460 | 174,686,587 | 21.5% |
| Provisions and value adjustments | 9,612,565 | 7,511,545 | -21.9% |
| Other operating expenses | 19,196,560 | 20,913,444 | 8.9% |
Total operating expenses were HRK 1,707.4 million and grew by 12.4% (HRK +188.5 million). Excluding the operations of Hoteli Makarska and Valamar Obertauern for reasons of comparability, total operating expenses grew by 9%. Breakdown of total operating expenses:
(i) material costs represented 32.3% (34.2% in 2017). Up by 6.2% (HRK +32.3 million) to HRK 552.1 million due to an increase in (a) direct costs of raw materials and consumables (especially food and beverage costs and energy consumption costs) driven by a larger business volume and (b) consolidation of Hoteli Makarska and Valamar Obertauern.
(ii) staff costs represented by an almost equal share in the total operating expenses (31.6% in 2017, 31.7% in 2018). They grew by 12.8% (HRK +61,5 million) to HRK 541.7 million due to the consolidation of Hoteli Makarska and Valamar Obertauern, which accounts for 3% of growth, and due to the efforts invested in securing competitive salaries and other material and non-material work conditions, as well as new staff hired to ensure service quality for the new Premium and Upscale products. Valamar Riviera is thus the first company in Croatia guaranteeing a minimum net income between HRK 5,000 and 7,500 for all its employees.
(iii) amortization costs represented 24.0% (22,5% in 2017). Its 18.5% growth (HRK +64.1 million) to HRK 410.5 million is mainly due to the earlier large investment cycle and consolidation of Hoteli Makarska and Valamar Obertaurn.
(iv) other costs represented 10.2% (9.5% in 2017). 21.5% growth (HRK +30.9 million) amounting to HRK 174.7 million is, among others, due to (a) an increase in the costs of lodging, meals and transportation for employees, (b) an increase in insurance and design, technical and other documentation (for investment purposes) costs, and (c) the consolidation of Hoteli Makarska and Valamar Obertauern operations.
22 Classified accordiong to Annual Financial Statements (GFI POD-RDG).
23 Operating costs include material costs, staff costs, other costs, and other operating costs reduced by extraordinary expenses and one-off items.
(v) provisions and value adjustments with a share of 0.4% (0.6% in 2017). A decrease of HRK 2.1 million to the amount of HRK 7.5 is due to lower-scale provisions for Imperial's litigations.
(vi) other operating expenses represented 1.2% (1.3% in 2017). An increase of HRK 1.7 million to HRK 20.9 million was mainly due to the finalisation of Imperial's litigations.
Operating costs amounted to HRK 1,264.3 million. Pressure on growth of operating costs was successfully reduced by a high level of operative efficiency. Their controlled increase of 10.4% was due to (i) the increase in material costs driven by larger business volume, (ii) the increase in other costs (previously explained), (iii) the increase in staff costs (previously explained), and (iv) the consolidation of Hoteli Makarska and Valamar Obertauern. Excepting the operations of the aforementioned companies for reasons of comparability, operating costs grew by 9%.
Adjusted EBITDA24, marked by strong double-digit growth, reached HRK 702.9 million (HRK 622.6 million in 2017). The increase of HRK 80.3 million (+12.9%) is the result of a further increase in operating efficiency through the growth of the adjusted EBITDA margin from 35.0% to 35.3%, as well as the continuation of the large investment cycle focused on improving competitiveness and the quality of properties and services, the acquisition of Hoteli Makarska and optimization of the distribution and price management in line with increased demand, particularly for properties in which new investments were made. The consolidation of Hoteli Makarska and Valamar Obertauern was initiated in August 2018 and November 2018, respectively, resulting in a 4 percentage point growth in adjusted EBITDA. Stronger operating results were also reflected in the unadjusted EBITDA that soared by 14.6% to HRK 694.5 million. Please note that the strong growth of adjusted and unadjusted EBITDA is influenced by the 2018 negative impact of the lower seasonal EUR/HRK exchange rate.
Profit before tax grew by HRK 19.6 million to HRK 258.1 million. The 8.1% growth was achieved despite higher amortization costs, due to excellent operating results. The Group's net profit amounted to HRK 239.2 million in 2018. The decrease of HRK 5.9 million was primarily a result of lower tax revenues (HRK -24.7 million), reflecting a lower one-time recognition of deferred tax assets25. The EBT margin fell by 40 basis points to 13.0% (13.4% in 2017).
703 MILLION HRK ADJUSTED EBITDA (+13% COMPARED TO 2017)
In 2018, the Group reported a financial result of HRK -25.5 million (HRK -20.9 million in 2017). The financial result, down by HRK 4.6 million compared to the previous year, is mainly due to: (i) higher net (positive) foreign exchange differences amounting to HRK 10.2 million, (ii) the net effect of the HRK 7.7 million increase in financial expenses related to interest on long-term loans for financing large investments, (iii) lower unrealised gains from financial assets amounting to HRK 2.8 million due to a lower positive fair value of FX forwards, and (iv) increase in unrealised expenses from financial assets amounting to HRK 4.0 million, driven by spreading the scope of protection and increased liabilities related to the fair value of interest rate swaps.
Financial income and expenses
26 Net debt: non-current and current liabilities to banks and other financial institutions + liabilities for loans, deposits and other– cash and cash equivalents – long-term and short-term investments in securities – current loans given, deposits, etc. Net debt as at 31 December 2017 (in HRK '000,000) 1,800.0 2,200.0 1,400.0 1,000.0 800.0 1,772.4 24.1 2,169.1 26.1 346.6 Decrease of cash and cash equivalents and similar Increase of current liabilities towards banks and other financial institutions and similar Increase of long-term liabilities towards banks and other financial institutions and similar Net debt as at 31 December 2018 +396.7
Net debt 26
21
22% increase in net debt is the result of the acquisition of Hoteli Makarska and Valamar Obertauern and performed large investment cycle.
In 2018, financial income amounted to HRK 56.8 which is HRK 6.9 million lower than in 2017. Foreign exchange differences and other financial income amounted to HRK 47.7 million, down by HRK 4.7 million primarily due to the absence of positive exchange rate differences on deposits in the last quarter of 2018, as a consequence of the appreciation of the Croatian Kuna. Unrealised gains (income) from financial assets amounted to HRK 4.7 million and fell by HRK 2.8 million due to a lower positive fair value of FX forwards compared to the last year due to the lower appreciation of HRK vs. EUR in 1H 2018. Other financial income amounted to HRK 4 million and increased by HRK 0.9 million.
The Group's financial expenses amounted to HRK 82.3 million and, compared to the previous period, they fell by HRK 2.2 million. The negative foreign currency differences are down by HRK 15.0 million due to the lower HRK vs. EUR depreciation in 2H of 2018 compared to the same period in 2017. Due to an increase in credit liabilities for the financing of large investment cycles in 2017 and 2018, financial expenses related to interest grew by HRK 7.7 million, amounting to HRK 49.9 million. Unrealised expenses from financial assets increased by HRK 4.0 million, driven by spreading the scope of protection and increased liabilities related to the fair value of interest rate swaps. Other financial expenses amounted to HRK 2.7 million, an increase of HRK 1.1 million.
RESULTS OF THE GROUP
/continued Assets and liabilities As at 31 December 2018, the total value of the Group's assets was HRK 5,669.0 million, up by 13.5% compared to 31 December 2017.
Total share capital and reserves grew by 9.6% and totalled HRK 2,758.5 million. Total long-term liabilities grew from HRK 1,915.7 million to HRK 2,284.1 million due to loans contracted to finance this year's investment cycle and, to a smaller part, as a result of the consolidation of Hoteli Makarska and Valamar Obertauern. Almost the entire loan portfolio is comprised of long-term fixed interest loans or, respectively, loans hedged by a derivative instruments (IRS) for protection against interest rate risk.
Total short-term liabilities were HRK 425.8 million, up by 5.7% compared to 31 December 2017. The aforementioned is mainly a result of (i) lower trade payables (down by HRK 19.7 million) given the smaller size of 2017/18 investments (for details, see page 38), (ii) the current repayment of the 2018 long-term debt (up by HRK 24.1 million), (iii) higher liabilities related to advance payments from customers (up by HRK 7.6 million),
and (iv) liabilities related to employees (up by HRK 5.9 million due to a larger consolidation scope and the increased number of employees vs 31/12/2017).
Cash and cash equivalents as at 31 December 2018 amount to HRK 261.8 million. The contracted credit lines for investments and the strong cash potential from business activities ensure a smooth continuation of future investments and potential acquisitions.
| 2017 | 2018 | 2018/2017 | |
|---|---|---|---|
| EBITDA margin | 34.1% | 34.9% | 80 bp |
| Adjusted EBITDA margin | 35.0% | 35.3% | 30 bp |
| EBIT margin | 14.6% | 14.2% | -40 bp |
| Adjusted EBIT margin | 15.5% | 14.7% | -80 bp |
| EBT margin | 13.4% | 13.0% | -40 bp |
| Net profit margin | 13.8% | 12.0% | -180 bp |
| ROA | 4.9% | 4.2% | -70 bp |
| ROE | 9.7% | 8.5% | -120 bp |
| Adjusted ROCE | 6.4% | 5.9% | -50 bp |
| 31/12/2017 | 31/12/2018 | 2018/2017 | |
|---|---|---|---|
| Average share price per (in HRK) | 43.63 | 36.36 | -16.7% |
| Market capitalization (in HRK) | 5,420,289,760 | 4,468,823,546 | -17.6% |
| EV (in HRK) | 7,192,643,394 | 6,637,891,115 | -7.7% |
| EPS (in HRK) | 1.96 | 1.90 | -3.1% |
| DPS (in HRK) | 0.80 | 0.90 | 12.5% |
| EV / Sales revenues | 4.1x | 3.4x | -17.4% |
| EV / EBITDA | 11.9x | 9.6x | -19.5% |
| EV / Adjusted EBITDA | 11.6x | 9.4x | -18.3% |
| EV / EBIT | 27.7x | 23.4x | -15.5% |
| EV / Adjusted EBIT | 26.1x | 22.7x | -12.7% |
| HOTELS AND RESORTS | Total | Premium | ||||
|---|---|---|---|---|---|---|
| 2017 | 2018 | 2018/ 2017 |
2017 | 2018 | 2018/ 2017 |
|
| Number of accommodation units | 8,982 | 9,973 | 11.0% | 1,269 | 1,554 | 22.5% |
| Full occupancy days | 162 | 163 | 0.8% | 174 | 177 | 2.0% |
| Annual occupancy rate (%) | 44% | 45% | 0.8% | 48% | 48% | 2.0% |
| Accommodation units sold | 1,452,014 | 1,625,278 | 11.9% | 220,226 | 275,063 | 24.9% |
| Overnights | 3,115,692 | 3,386,892 | 8.7% | 463,667 | 607,008 | 30.9% |
| ADR16 | 764 | 769 | 0.6% | 1,257 | 1,314 | 4.5% |
| Board revenues (in HRK) | 1,109,581,848 | 1,249,936,599 | 12.6% | 276,758,965 | 361,346,559 | 30.6% |
| RevPAR17 (in HRK) | 123,534 | 125,332 | 1.5% | 218,092 | 232,527 | 6.6% |
| Adjusted EBITDA28 (in HRK) | 642,958,760 | 723,000,739 | 12.4% | 162,000,898 | 220,585,212 | 36.2% |
Hotels and resorts reported a strong +12.6% growth (HRK +140.4 million) and achieved HRK 1,249.9 million in board revenues. The high increase resulted from the earlier large investment cycle, the optimization of the marketing mix and prices, as well as the demand-driven larger number of operating days, especially in the Premium and Upscale segment, and acquisition of Hoteli Makarska and Valamar Obertauern.
Premium hotels and resorts reported a 30.6% increase in board revenues that totalled HRK 361.3 million. The HRK 84.6 million growth was mostly driven by the following: (i) larger number of operating days of the Valamar Collection Girandella Family Hotel 4*, taking into account 2017 investment, (ii) the newly opened Valamar Collection Girandella Maro Suites 5*, (iii) excellent placement of preseason events and post season M.I.C.E. channel, and growth in all segments in peak season, especially in the individual channel at the Valamar Collection Isabella Island Resort 4*/5*, (iv) earlier opening and increase in the direct and group channels at the Valamar Collection Dubrovnik President Hotel 5*, especially M.I.C.E. and groups in preseason accompanied by a great feedback of the allotments in the post season, (v) stable growth in M.I.C.E. during the preseason and post season period, as well as increase in the direct and allotment channels in the Valamar Lacroma Dubrovnik Hotel 4* in the fourth quarter, and (vi) repositioning of the Valamar Collection Imperial Hotel 4* in the Premium segment.
| CONTINUED | Upscale | ||||
|---|---|---|---|---|---|
| 2017 | 2018 | 2018/ 2017 |
|||
| Number of accommodation units | 1,980 | 1,964 | -0.8% | ||
| Full occupancy days | 158 | 171 | 8.5% | ||
| Annual occupancy rate (%) | 43% | 47% | 8.5% | ||
| Accommodation units sold | 312,618 | 336,327 | 7.6% | ||
| Overnights | 729,117 | 781,326 | 7.2% | ||
| ADR16 | 1,009 | 1,026 | 1.7% | ||
| Board revenues (in HRK) | 315,357,057 | 345,096,367 | 9.4% | ||
| RevPAR17 (in HRK) | 159,271 | 175,711 | 10.3% |
Adjusted EBITDA28 (in HRK) 182,909,049 199,921,567 9.3%
Premium and upscale hotel resorts segments are board reveneus growth drivers.
Upscale hotels and resorts reported HRK 345.1 million in board revenues. The strong growth (HRK 29.7 million) was primarily driven by larger volumes, i.e. 781,326 overnights achieved (+7.2%). The drivers of 9.4% growth in board revenues were: (i) larger number of operating days of the TUI Family Life Bellevue Resort 4* as a result of last year's investment, (ii) the Valamar Argosy Hotel 4* due to very strong feedback by the individual channel and very successful placement of groups and M.I.C.E., (iii) good feedback by the direct sales channel as well as good placement of groups during the preseason and in the post season period at the Valamar Hotel & Casa Sanfior 4*, (iv) increase in all segments with notable increase in groups during the preseason at the Valamar Zagreb Hotel 4*, and (v) the Valamar Padova Hotel 4*, due to excellent feedback by the direct channel resulting from the synergy of Valamar Riviera's management of operations as determined by the provisions of the concluded Hotel management contract.
Valamar Argosy Hotel 4*, Dubrovnik
| 2018/ | 2018/ | |||||
|---|---|---|---|---|---|---|
| 2017 | 2018 | 2017 | 2017 | 2018 | 2017 | |
| Number of accommodation units | 3,493 | 3,771 | 8.0% | 2,240 | 2,684 | 19.8% |
| Full occupancy days | 163 | 149 | -8.5% | 156 | 168 | 7.7% |
| Annual occupancy rate (%) | 45% | 41% | -8.5% | 43% | 46% | 7.7% |
| Accommodation units sold | 569,159 | 562,286 | -1.2% | 350,011 | 451,602 | 29.0% |
| Overnights | 1,193,419 | 1,215,124 | 1.8% | 729,489 | 783,434 | 7.4% |
| ADR16 | 672 | 733 | 9.1% | 385 | 290 | -24.6% |
| Board revenues (in HRK) | 382,724,084 | 412,415,854 | 7.8% | 134,741,742 | 131,077,819 | -2.7% |
| RevPAR17 (in HRK) | 109,569 | 109,365 | -0.2% | 60,153 | 48,837 | -18.8% |
| Adjusted EBITDA28 (in HRK) | 224,461,891 | 236,609,302 | 5.4% | 73,586,921 | 65,884,658 | -10.5% |
The midscale segment reported HRK 412.4 million in board revenues and is mostly influenced by the repositioning of the Valamar Collection Imperial Hotel 4* as Premium accommodation, and consolidation of the Valamar Meteor Hotel 4* and the Dalmacija Sunny Hotel by Valamar 3* in Makarska as from August 2018, as well as Valamar Obertauern Hotel 4* from November 2018. If we exclude the results achieved by these facilities, board revenues went up by 3.9%. The drivers of growth were: (i) better operating results of the Valamar Club Dubrovnik Hotel 3*, especially in the individual segment, (ii) increase of the average price and accommodation units sold at the Corinthia Baška Sunny Hotel by Valamar 3*, (iii) the Valamar Crystal Hotel 4*, primarily due to increased physical volumes especially by the placement of group and M.I.C.E. Events in the post season period, (iv) stronger market feedback received by the allotment and M.I.C.E. channels at the Valamar Diamant Hotel 4*, (v) growth in the allotment channel at the Valamar Rubin Hotel 3*, (vi) the repositioning of the Valamar Pinia Hotel 3* into an all-inclusive facility, and (vii) increase in all channels, except for the group channel, at the Valamar Zvonimir Hotel 4*, the Valamar Atrium Baška Residence 4*/5* and the Valamar Villa Adria 4*.
Economy hotels and resorts achieved HRK 131.1 million in board revenues. The economy segment shows a decrease by 2.7%, primarily due to the conversion of Pical apartments and Marina hotel in Rabac into accommodation for employees.
| RESULTS OF | |
|---|---|
| THE GROUP | |
| /continued |
| CAMPING RESORTS | Total Premium |
||||||
|---|---|---|---|---|---|---|---|
| 2017 | 2018 | 2018/ 2017 |
2017 | 2018 | 2018/ 2017 |
||
| Number of accommodation units | 11,870 | 11,398 | -4.0%29 | 3,466 | 4,053 | 16.9% | |
| Full occupancy days | 100 | 105 | 5.4% | 112 | 119 | 5.7% | |
| Annual occupancy rate (%) | 27% | 29% | 5.4% | 31% | 32% | 5.7% | |
| Accommodation units sold | 1,187,741 | 1,202,060 | 1.2% | 388,757 | 480,597 | 23.6% | |
| Overnights | 3,057,450 | 3,072,842 | 0.5% | 1,135,715 | 1,380,392 | 21.5% | |
| ADR16 | 285 | 315 | 10.7% | 343 | 393 | 14.5% | |
| Board revenues (in HRK) | 338,284,959 | 379,054,818 | 12.1% | 133,352,887 | 188,714,620 | 41.5% | |
| RevPAR17 (in HRK) | 28,499 | 33,256 | 16.7% | 38,475 | 46,562 | 21.0% | |
| Adjusted EBITDA28 (in HRK) | 249,621,643 | 283,951,633 | 13.8% | 101,669,058 | 147,343,042 | 44.9% |
Camping resorts achieved a total of HRK 379.1 million in board revenues. Successful optimization of the average rate for mobile homes and camping pitches (+10.6%) resulted in a strong growth in total board revenues by
12.1% (HRK +40.8 million). 29 Decrease in capacity is mainly due to Premium camping resorts reported HRK 188.7 million in board revenues. A 41.5% increase (HRK +55.4 million) is driven by ADR of HRK 393 (+14.5%) and 480,597 accommodation units sold (+23.6%). The high growth rates in physical indicators and ADR are mainly due to: i) excellent business results reported by the Lanterna Premium Camping Resort by Valamar 4* (17% higher board revenues, also due to strong market feedback received by this year's investments in new products and guest amenities, especially mobile homes), and ii) the Ježevac Premium Camping Resort by Valamar 4* going from Upscale to Premium. The rest of the growth is attributed to the strong performance of the Krk Premium Camping Resort by Valamar 5*.
investment in the San Marino Camping Resort by Valamar 4* (the conversion of 3 camping plot zones into a parking lot and the installation of premium mobile homes), as well as the conversion of camping plots into premium mobile homes in the other campsites undergoing investment.
| CAMPING RESORTS / CONTINUED |
Upscale | Midscale | Economy | ||||||
|---|---|---|---|---|---|---|---|---|---|
| 2017 | 2018 | 2018/ 2017 |
2017 | 2018 | 2018/ 2017 |
2017 | 2018 | 2018/ 2017 |
|
| Number of accommodation units | 1,434 | 2,157 | 50.4% | 5,150 | 3,293 | -36.1% | 1,820 | 1,895 | 4.1% |
| Full occupancy days | 117 | 112 | -4.7% | 93 | 95 | 2.0% | 83 | 89 | 6.3% |
| Annual occupancy rate (%) | 32% | 31% | -4.7% | 25% | 26% | 2.0% | 23% | 24% | 6.3% |
| Accommodation units sold | 168,264 | 241,267 | 43.4% | 479,060 | 312,336 | -34.8% | 151,660 | 167,860 | 10.7% |
| Overnights | 398,631 | 653,798 | 64.0% | 1,153,982 | 675,563 | -41.5% | 369,122 | 363,089 | -1.6% |
| ADR16 | 316 | 349 | 10.3% | 252 | 238 | -5.4% | 206 | 190 | -7.8% |
| Board revenues (in HRK) | 53,156,811 | 84,084,654 | 58.2% | 120,533,212 | 74,356,730 | -38.3% | 31,242,049 | 31,898,815 | 2.1% |
| RevPAR17 (in HRK) | 37,069 | 38,982 | 5.2% | 23,405 | 22,580 | -3.5% | 17,166 | 16,833 | -1.9% |
| Adjusted EBITDA28 (in HRK) | 41,528,065 | 65,094,264 | 56.7% | 86,505,421 | 51,179,211 | -40.8% | 19,919,099 | 20,335,116 | 2.1% |
RESULTS OF THE GROUP /continued
Upscale camping resorts reported a 58.2% increase in board revenues. The HRK 84.1 million in board revenues were because: (i) the Ježevac Premium Camping Resort by Valamar 4* went from Upscale to Premium, (ii) the San Marino Camping Resort by Valamar 4* went from Midscale to Upscale, and (iii) the Zablaće Camping Resort by Valamar 4* went from Midscale to Upscale. Excluding the influence of the segmentation shift for the said campsites, the comparable growth was 6% because two campsites reported better operating results: the Marina Camping Resort by Valamar 4* and the Bunculuka Camping Resort by Valamar 4*.
Midscale campsites reported a 38.3% decrease to HRK 74.4 million because the San Marino Camping Resort by Valamar 4* and the Zablaće Camping Resort by Valamar 4* went from Midscale to Upscale. The comparable growth in board revenues was 5% thanks to the stronger results achieved by the other Midscale camping resorts.
Economy campsites reported HRK 31.9 million in board revenues. Despite the earlier closure of Istra Sunny Camping by Valamar 2 * due to the investment, the Economy segment recorded HRK 0.7 million higher board revenue as a result of better business operations of Brioni Sunny Camping by Valamar 2 *.
| DESTINATIONS | Poreč | Rabac | Krk Island | ||||||
|---|---|---|---|---|---|---|---|---|---|
| 2017 | 2018 | 2018/ 2017 |
2017 | 2018 | 2018/ 2017 |
2017 | 2018 | 2018/ 2017 |
|
| Number of accommodation units | 10,584 | 10,511 | -0.7% | 1,971 | 2,124 | 7.8% | 3,577 | 3,496 | -2.3% |
| Full occupancy days | 121 | 127 | 4.8% | 156 | 162 | 3.8% | 126 | 132 | 4.6% |
| Annual occupancy rate (%) | 33% | 35% | 4.8% | 43% | 44% | 3.8% | 35% | 36% | 4.6% |
| Accommodation units sold | 1,282,228 | 1,335,131 | 4.1% | 308,369 | 344,957 | 11.9% | 451,987 | 462,244 | 2.3% |
| Overnights | 3,075,877 | 3,084,331 | 0.3% | 673,169 | 777,279 | 15.5% | 1,063,850 | 1,106,948 | 4.1% |
| ADR16 | 487 | 494 | 1.4% | 635 | 741 | 16.6% | 432 | 460 | 6.5% |
| Board revenues (in HRK) | 624,793,941 | 659,806,559 | 5.6% | 195,916,080 | 255,585,586 | 30.5% | 195,074,956 | 212,477,386 | 8.9% |
| RevPAR17 (in HRK) | 59,032 | 62,773 | 6.3% | 99,399 | 120,332 | 21.1% | 54,536 | 60,777 | 11.4% |
| Adjusted EBITDA28 (in HRK) | 393,293,569 | 416,934,989 | 6.0% | 95,161,189 | 132,217,344 | 38.9% | 129,928,462 | 143,515,370 | 10.5% |
Destination Poreč reported HRK 659.8 million in board revenues. The HRK 35.0 million increase in board revenues was mostly due to the strong performance of Valamar Collection Isabella Island Resort 4*/5*, Valamar Tamaris Resort 4*, Valamar Zagreb Hotel 4*, Valamar Pinia Hotel 3*, Valamar Crystal Hotel 4* and Lanterna Premium Camping Resort by Valamar 4*.
Destination Rabac reported HRK 255.6 million in board revenues. The 30.5% growth was mostly driven by: (i) earlier opening of the Valamar Collection Girandella Family Hotel 4* and the TUI Family Life Bellevue Resort 4* as regards 2017 investment, (ii) the newly opened Valamar Collection Girandella Maro Suites 5* and (iii) the increased physical volumes at the Valamar Hotel & Casa Sanfior 4*.
This destination reported HRK 212.5 million in board revenues that were driven by 1,106,948 overnights achieved, and the average daily rate going up by 6.5% to HRK 460. The main contributors to the total growth are the destination's campsites, especially Krk Premium Camping Resort by Valamar 5*, Ježevac Premium Camping Resort by Valamar 4* and Zablaće Camping Resort by Valamar 4*, along with Corinthia Baška Sunny Hotel by Valamar 3*.
| DESTINATIONS / CONTINUED |
Rab Island | Dubrovnik | Makarska | Obertauern | ||||
|---|---|---|---|---|---|---|---|---|
| 2017 | 2018 | 2018/ 2017 |
2017 | 2018 | 2018/ 2017 |
2018 | 2018 | |
| Number of accommodation units | 2,759 | 2,466 | -10.6% | 1,961 | 1,966 | 0.3% | 726 | 82 |
| Full occupancy days | 96 | 116 | 21.3% | 170 | 175 | 2.9% | / | / |
| Annual occupancy rate (%) | 26% | 32% | 21.3% | 47% | 48% | 2.9% | / | / |
| Accommodation units sold | 264,114 | 286,252 | 8.4% | 333,057 | 343,719 | 3.2% | 53,720 | 1,313 |
| Overnights | 716,510 | 726,183 | 1.4% | 643,736 | 653,266 | 1.5% | 108,710 | 3,017 |
| ADR16 | 499 | 513 | 2.8% | 901 | 928 | 3.0% | 612 | 1,827 |
| Board revenues (in HRK) | 131,842,656 | 146,864,366 | 11.4% | 300,239,175 | 319,007,455 | 6.3% | 32,851,352 | 2,398,715 |
| RevPAR17 (in HRK) | 47,786 | 59,556 | 24.6% | 153,105 | 162,262 | 6.0% | 45,250 | 29,253 |
Adjusted EBITDA28 (in HRK) 80,715,170 88,956,420 10.2% 193,482,014 211,142,776 9.1% 16,456,329 -2,270,855
RESULTS OF THE GROUP /continued
Although the Valamar Collection Imperial Hotel 4* had fewer operating days because of the investments, board revenues in 2018 grew by HRK 15.0 million to HRK 146.9 million. Most of the growth was driven by Valamar Padova Hotel 4* due to successful feedback of the direct channel and Valamar Carolina Hotel & Villas 4*, as well as San Marino Camping Resort by Valamar 3* and Padova Camping Resort by Valamar 3*.
Destination Dubrovnik reported HRK 319.0 million in board revenues. The HRK 18.8 million increase in board revenues was mostly due to stronger operating results reported by Valamar Collection Dubrovnik President Hotel 5*, Valamar Lacroma Dubrovnik Hotel 4*, and Valamar Argosy Hotel 4* and Valamar Club Dubrovnik Hotel 3*.
The hotel and resort consolidation in Makarska from August 2018 contributed HRK 32.9 million to board revenues. In comparison to the comparable previous year period, Makarska reported an increase by 4% in board revenues.
The hotel and resort consolidation in Obertauern from November 2018 contributed HRK 2.4 million to board revenues. In comparison to the comparable previous year period, Obertauern reported an almost 10% increase in board revenues.
| 8 201 ORT AL REP U N AN |
|---|
| RESULTS OF |
|---|
| THE GROUP |
| /continued |
| HOTELS AND RESORTS OVERVIEW | Categorization | Segment | Destination | ||
|---|---|---|---|---|---|
| 2017 | 2018 | 2017 | 2018 | ||
| Valamar Collection Isabella Island Resort | * / ** | * / ** | Premium | Premium | Poreč |
| Valamar Collection Girandella Resort | */** | */** | Premium | Premium | Rabac |
| Valamar Collection Dubrovnik President Hotel | * | * | Premium | Premium | Dubrovnik |
| Valamar Lacroma Dubrovnik Hotel | **** + | **** + | Premium | Premium | Dubrovnik |
| Valamar Collection Imperial Hotel | **** | **** | Midscale | Premium | Rab Island |
| Valamar Tamaris Resort | **** | **** | Upscale | Upscale | Poreč |
| Valamar Riviera Hotel & Residence | **** | **** | Upscale | Upscale | Poreč |
| Valamar Zagreb Hotel | **** | **** | Upscale | Upscale | Poreč |
| TUI Family Life Bellevue Resort | **** | **** | Upscale | Upscale | Rabac |
| Valamar Sanfior Hotel & Casa | **** | **** | Upscale | Upscale | Rabac |
| Valamar Argosy Hotel | **** | **** | Upscale | Upscale | Dubrovnik |
| Valamar Padova Hotel | **** | **** | Upscale | Upscale | Rab Island |
| Valamar Diamant Hotel & Residence | **** | **** | Midscale | Midscale | Poreč |
| Valamar Crystal Hotel | **** | **** | Midscale | Midscale | Poreč |
| Valamar Pinia Hotel | *** | *** | Midscale | Midscale | Poreč |
| Rubin Sunny Hotel by Valamar | *** | *** | Midscale | Midscale | Poreč |
| Allegro Sunny Hotel by Valamar | *** | *** | Midscale | Midscale | Rabac |
| Miramar Sunny Hotel by Valamar | *** | *** | Midscale | Midscale | Rabac |
| Corinthia Baška Sunny Hotel by Valamar | *** | *** | Midscale | Midscale | Krk Island |
| Valamar Zvonimir Hotel | **** | **** | Midscale | Midscale | Krk Island |
| Valamar Atrium Baška Residence | * / ** | * / ** | Midscale | Midscale | Krk Island |
| Valamar Villa Adria | **** | **** | Midscale | Midscale | Krk Island |
| Valamar Koralj Hotel | *** | *** | Midscale | Midscale | Krk Island |
| Valamar Club Dubrovnik Hotel | *** | *** | Midscale | Midscale | Dubrovnik |
| Valamar Carolina Hotel & Villas | **** | **** | Midscale | Midscale | Rab Island |
| San Marino Sunny Resort by Valamar | *** | *** | Midscale | Midscale | Otok Rab |
| Valamar Meteor Hotel | / | **** | / | Midscale | Makarska |
| Dalmacija Sunny Hotel by Valamar | / | *** | / | Midscale | Makarska |
| Valamar Obertauern Hotel | / | **** | / | Midscale | Obertauern, Austria |
| Pical Sunny Hotel by Valamar | ** | ** | Economy | Economy | Poreč |
| Lanterna Sunny Resort by Valamar | ** | ** | Economy | Economy | Poreč |
| Tirena Sunny Hotel by Valamar | *** | *** | Economy | Economy | Dubrovnik |
| Eva Sunny Hotel & Residence by Valamar | ** | ** | Economy | Economy | Rab Island |
| Riviera Sunny Resort by Valamar | / | ** | / | Economy | Makarska |
| CAMPING RESORTS OVERVIEW | Categorization | Segment | Destination | ||
|---|---|---|---|---|---|
| 2017 | 2018 | 2017 | 2018 | ||
| Lanterna Premium Camping Resort by Valamar | **** | **** | Premium | Premium | Poreč |
| Krk Premium Camping Resort by Valamar | * | * | Premium | Premium | Krk Island |
| Ježevac Premium Camping Resort by Valamar | **** | **** | Upscale | Premium | Krk Island |
| Marina Camping Resort by Valamar | **** | **** | Upscale | Upscale | Rabac |
| Bunculuka Camping Resort by Valamar | **** | **** | Upscale | Upscale | Krk Island |
| Zablaće Camping Resort by Valamar | *** | **** | Midscale | Upscale | Krk Island |
| San Marino Camping Resort by Valamar | *** | **** | Midscale | Upscale | Rab Island |
| Orsera Camping Resort by Valamar | *** | *** | Midscale | Midscale | Poreč |
| Solaris Camping Resort by Valamar | *** | *** | Midscale | Midscale | Poreč |
| Škrila Sunny Camping by Valamar | *** | *** | Midscale | Midscale | Krk Island |
| Solitudo Sunny Camping by Valamar | *** | *** | Midscale | Midscale | Dubrovnik |
| Padova Camping Resort by Valamar | *** | *** | Midscale | Midscale | Rab Island |
| Istra Sunny Camping by Valamar | ** | ** | Economy | Economy | Poreč |
| Brioni Sunny Camping by Valamar | ** | ** | Economy | Economy | Pula - Puntižela |
| Tunarica Sunny Camping by Valamar | ** | ** | Economy | Economy | Rabac |
46% OF ACCOMMODATION UNITS IS IN THE PREMIUM AND UPSCALE SEGMENT
Over the years Valamar Riviera has consolidated its portfolio in order to clearly differentiate, develop and reposition its hospitality products. A precise definition of market segments, the innovative development of service concepts, active brand management, profitability increase and return-on-investment optimization demanded a revised segmentation of the portfolio of hospitality properties. Over time, the brand architecture was supplemented and modified, adapting to the changes within the Company, and in 2016, the process of redefining the existing brand strategy was launched; the process was completed and implemented in the second half of 2018. The new brand strategy enables us to increase market reach, improve product and service compatibility with specific market segments, increase guest loyalty and, ultimately, increase the key business indicators.
All you
can
holiday
UMRELLA BRAND OF VALAMAR RIVIERA
Please note that the data provided in the 2018 financial statements cannot be fully compared with the data from the previous year because of the said mergers. Current and prior period items up to the time of the merger, i.e. until 31 March 2017, do not include data for Puntižela d.o.o., and data on Elafiti Babin Kuk d.o.o. up to 29 December 2017 has been excluded as well.
Total revenues in 2018 rose by HRK 152.2 million (+9.0%), amounting to HRK 1,848.2 million. Total sales revenues amounted to HRK 1,768.6 million and represented 96% of total revenues (95% in 2017). Compared to the same period last year, they grew by 9.4%, i.e. HRK 151.9 million. Sales revenues between undertakings in the Group were HRK 18.6 million (HRK 13.9 million in 2017), and mainly represented the management fee for Imperial's properties and Hotel Makarska. Sales revenues outside the Group amounted to HRK 1,750.0 million (HRK 1,602.8 million in 2017). Domestic sales revenues amounted to HRK 162.3 million, i.e. 8.8% of total revenues (8.1% in 2017), up 17.7% in relation to the previous comparable period. International sales revenues amounted to HRK 1.606,3 million and represented 86.9% of total revenues (87.2% in 2017). They grew 8.6% compared to the previous comparable period. Other operating revenues increased by 2% and totalled HRK 20.1 million, representing 1% of total revenues (1% in 2017). Other operating and financial income represented 5% of total revenues (4% in 2017).
Material costs totalled HRK 501.4 million and represented 33% of operating expenses (36% in 2017), signifying a decline in that share. Although direct raw material and material costs (especially food and beverage costs, as well as costs of energy and water consumption) driven by larger business volumes increased by HRK 19.8 million, the total material costs item decreased by HRK 10.4 million primarily due to the absence of lease cost of the Valamar Lacroma Dubrovnik Hotel 4* because of the merger of its owner-company, Elafiti Babin-kuk d.o.o., to Valamar Riveira. Staff costs amount to HRK 487.8 million, representing 32% of operating expenses (32% in 2017). Compared to the same period last year, they grew by HRK 44.0 million. This was mainly due to the efforts invested in securing competitive salaries and other material and non-material work conditions, as well as hiring new employees necessary to ensure service quality for the new Premium and Upscale products.
152 MILLION HRK INCREASE IN SALES REVENUES
Valamar Riviera is therefore the first company in Croatia guaranteeing a minimum net salary between HRK 5,000 and 7,500 for all of its employees. Amortization represented 23% of operating expenses (20% in 2017) and totalled HRK 344.7 million (HRK 283.5 million in 2017). The 22% growth is the result of the earlier large investment cycle that had been carried out. Other costs totalled HRK 159.2 million. The 19% growth is, among other, due to (i) an increase in the costs of lodging and meals for employees, (ii) an increase in insurance costs, and (iii) the design, technical and other documentation for investment purposes. Value adjustments and provisions amounted to HRK 6.3 million and increased by HRK 1.1 million. Other operating expenses amounted to HRK 12.7 million, a decrease of HRK 5.6 million due to the lower value of depreciated assets not written off (demolition due to investment) and lower expenses from previous years.
Valamar Collection Dubrovnik President Hotel 5*, Dubrovnik
RESULTS OF THE COMPANY /continued
Financial income in 2018 was HRK 59.6 million and remained at the same level compared to 2017. The biggest individual item of the decrease are foreign exchange differences and other financial income, down by HRK 3.6 million primarily due to the absence of positive exchange rate differences on deposits in the last quarter of 2018 as a consequence of the appreciation of the Croatian Kuna compared to the Euro. The highest individual growth in 2018 has been reported in income from investment in stakes (shares) of undertakings in the Group amounting to HRK 6.1 million, related to payout of Imperial shares. Unrealised gains from financial assets fell by HRK 2.8 million, mainly due to a lower positive fair value of FX forwards compared to last year.
Financial expenses amounted to HRK 76.0 million. Compared to the same period last year, they fell by HRK 6.1 million. The biggest individual item of the decrease are foreign currency differences and other expenses, down by HRK 14.1 million primarily due to the lower HRK vs. EUR depreciation in 2H of 2018 in relation to last year's comparable period. Interest expenses and similar expenses amounted to HRK 45.3 million, up by HRK 8.1 million due to financial leverage used for intensive investment cycles in 2017 and 2018.
Operating profit rose by HRK 36.5 million, amounting to HRK 276.7 million, driven by the large investment cycle focused on improving competitiveness and the quality of properties and services, as well as active operating efficiency management and demand - driven optimization of prices, marketing mix and sales channels, particularly for properties for which new investments were made. Profit before tax was HRK 260.2 million (HRK 217.7 million in 2017). The Company's gross margin was 15% (13% in 2017). Net profit increased by HRK 7.3 million, amounting to HRK 239.3 million in 2018 (HRK 232.0 million in 2017), resulting from better operating results.
As at 31 December 2018, the total company assets amounted to HRK 4,997.6 million, an increase of 8% compared to 31 December 2017.
Operating profit rose by HRK 37 million to HRK 277 million.
Investments worth HRK 703.6 million were capitalized in the existing portfolio of non-current tangible assets in 2018. 2018 investment cycle was part of our strategy focused on further double-digit business growth and encompasses all of our five destinations, while Valamar's success and growth is based on sustainable and socially responsible investments in products, employees and destinations.
In 2018 we continued with the reposition of our portfolio towards top quality products and services. Opening of the two new resorts in Rabac in 2017 represented the largest investment in Croatia's tourism. In 2018 we completed Valamar Collection Girandella Resort 4*/5* (392 rooms) investment in Rabac by opening the first Kinderhotel in our portfolio - Valamar Collection Girandella Maro Suites 5* (149 rooms). Besides this key project in Rabac, other large investments were carried out at other destinations as well as investments in premium camping.
The investment cycle carried out by Imperial was one of the largest in the history of the company (HRK 72 million). The investments were aimed at improving the quality of properties and services and the competitiveness of the whole destination. The reconstruction and repositioning of Valamar Collection Imperial Hotel 4* as "designed for adults" accommodation was the largest investment on Rab Island.
Investments at Lanterna Premium Camping Resort by Valamar 4* were focused on improving accommodation and overall quality, including the reconstruction of the main road with footpaths and cycling paths. In 2018 the resort included a large number of new features: the brand new familyfriendly Maro Premium Village with 86 mobile homes, 9 glamping tents and other amenities (two swimming pools and children's playgrounds); 18 new mobile homes at Marbello Premium Village; 14 new glamping tents and improved beach at Glamping Village; a new zone for sports, recreation and entertainment –V Sport Park with Terra Magica adventure mini golf and numerous other amenities.
The repositioning of Istra Sunny Camping by Valamar 2* as premium accommodation is divided in three phases, and the first phase was performed in 2018. It included the reconstruction of the municipal infrastructure (electrical and water supply, drainage, optical network, wireless network and the construction of a new main road). It also covered the improvement of several beaches and the reconstruction of the present 117 pitches in the southern part of the camping pitch zone and a new sanitary block.
704 MILLION HRK INVESTMENTS CAPITALIZED IN 2018
We opened our first Kinderhotel, Valamar Collection Girandella Maro Suites 5*. The accommodation, services and amenities at Valamar Collection Girandella Maro Suites 5* are tailored according to the needs of families with children of different ages: from spacious family rooms with children's accessories, indoor and outdoor swimming pools with water attractions and slides, to entertainment activities at the Maro clubs and the Teen Hangout zone. The restaurant includes a children's buffet serving soft drinks and afternoon snacks such as salads, soups and cakes and there is also a play lounge with an indoor playground. There are 50 Kinderhotels in Europe, and this is the third Kinderhotel in Croatia. By its opening, 150 new jobs were opened and over HRK 600 million was invested in Rabac destination which repositioned it as leading high-end holiday destination.
2018 INVESTMENTS
The repositioning of Zablaće Camping Resort by Valamar from 3* to 4* was performed. The investment included 35 new mobile homes, the construction of a new sanitary block and other amenities, landscaping work, infrastructural improvements of camping pitches and the introduction of energy-saving LED lighting.
Investments in Ježevac Premium Camping Resort by Valamar 4* represented a new pool zone featuring a sundeck and slides, a new children's playground, 31 new mobile homes and the replacement of 18 existing mobile homes with new ones. In the 2018 season, the campsite featured an EV charging station and upgraded services in line with premium campsite standards. Škrila Sunny Camping by Valamar 3* featured a new shopping area, redesigned landscape, new mobile homes and energy-saving LED lighting.
Investments at Bunculuka Camping Resort by Valamar 4* were focused on the installation of solar panels and the redesign of the campsite entrance area. After a four-year investment cycle, in 2016 Krk Premium Camping Resort by Valamar became the first 5-star campsite in Croatia. The investments were focused on improving a number of features: overall quality, beach services, landscape, sanitary block and now it also includes an EV charging station.
In May 2018 was the opening of the repositioned Valamar Collection Imperial Hotel 4* on Rab Island: the new "designed for adults" luxury hotel included 136 keys, modern double rooms, a premium restaurant and other improved amenities. Investments in campsites on Rab Island were focused on Lopar Garden Village at San Marino Camping Resort by Valamar 4* that offers new mobile homes.
Moreover, numerous new features were introduced at Padova Camping Resort by Valamar 3*: from the new Marine Premium Village to the introduction of innovative camping concepts such as the spacious "camping suites" and "romantic camping chalets" for couples.
600 MILLION HRK INVESTED IN THE REPOSITIONING OF RABAC DESTINATION AS LEADING HIGH-END HOLIDAY DESTINATION
Investments in Dubrovnik were focused on repositioning hotel accommodation and developing high-quality products and services. The Valamar Argosy Hotel 4* opened the 2018 season offering upgraded service quality and new improved amenities such as the new outdoor pool featuring a new snack bar and terraces, landscape improvements, the total refurbishment of the 308 rooms, reception, lobby and restaurant and the redesign of the common
areas.
The focus of investment projects of the Valamar Group in 2019 will be on repositioning the portfolio towards products and services with high added value. Total investments in all Valamar's destinations will reach HRK 793 million. The development strategy for products and amenities contains ambitious plans for an innovative enhancement of Valamar's offer, with a focus on the upscale and premium sections of the portfolio, both in the hotel and resort segment as well as in the camping resort segment. The development of Valamar's service concepts is a continuous process, which will keep being focused, year after year, on aligning the supply with the most recent market demands, primarily the guests' demands and expectations. We will keep investing in our signature programmes, such as V Level, Maro Holiday, Designed for Adults, V Sport, Stay Fit, Music and Fun, Camping Piazza and others.
Out of the HRK 636 million within the Valamar Riviera's investment cycle, we would like to highlight the investments in camping Istra, which will become the largest 5* camping in Croatia next season. Furthermore, the opening of the luxury family hotel Valamar Collection Marea Suites 5* in Poreč as well as investing in the further improvement of accommodation, products and services in the Lanterna Premium Camping Resort 4* and Ježevac Premium Camping Resort 5* are also planned. Large investments in accommodation for seasonal employees will be continued in line with Valamar's strategic goals.
Istra Sunny Camping 2* in Funtana started its second phase of investments in autumn 2018. This summer Valamar's guests will be able to enjoy a highly decorated camping resort - Istra Premium Camping Resort 5*. Besides becoming a fully textile camping resort, the guests will be more than delighted when they discover a large family water park Aquamar, spreading over 1,000m2 of water areas with a wide range of slides and water attractions, a large entertainment arena with a cinema, stage, children's clubs and playrooms as well as Super Maro children's programmes. The offer will also include one of the best decorated Valamar beaches, Piazza market, restaurants, bars, sport and recreation zone V Sport Park, Terra Magica adventure miniature golf, numerous children's playgrounds, as well as new camping parcels (83), new glamping tents (9), a variety of new mobile homes (135), as well as new luxury mobile homes (4) with private pools. Istra Premium Camping Resort will be a top-class resort with a wide range of amenities and excellent service.
793 MILLION HRK 2019 GROUP'S INVESTMENT CYCLE Work is also in progress at the new Valamar Collection Marea Suites 5* hotel in the Borik area of Poreč, at the location of the current Pinia Sunny Residence by Valamar. Valamar is thereby continuing its development of the Borik zone, through accommodation and amenities with added value; 100 new vacancies are set to become available due to the subject investment. The future Valamar Collection Marea Suites 5* has been designed for families with children, where the guests will have an opportunity to enjoy V level service, luxury suites ranging from 32 to 56 square metres in size and a sea view (108 rooms), more than 200 square metres of appealing pools, Val Marea Sandy Family sandy beach, restaurants, sport facilities and Maro amenities for children of all ages. Special attention will be paid to horticultural decoration and planting new trees, vegetation and decorative plants native to the Istrian climate.
At the Lanterna Premium Camping Resort, as Valamar Riviera's largest camping, we will keep developing the premium segment by installing new mobile homes with a sea view (12) at the Marbello zone, by arranging three camping zones where the guests will be able to enjoy in new mobile homes (136), and by repositioning a part of the existing parcels. We will also continue arranging the beaches at Tarska vala, by reconstructing the sanitation facilities and adding more water areas to the family aquapark, as well as other works aimed at upgrading the service and quality of the amenities.
30 A portion already recorded in 2018.
2019 INVESTMENTS /continued
The investments on the island of Krk are focused on raising the quality and range of accommodation at the Ježevac Premium Camping Resort by Valamar 4*. The high added value of the camping amenities will be further enhanced by new mobile homes (23) in the Lungomare zone, as well as by replacing the existing homes with new ones (20) and expanding the capacity of the camping resort to a total of 661 units. Next year's guests will also be able to enjoy a new central market, while the upgraded amenities for families with children will include Maro club and new children's playgrounds.
HRK 140 million of planned investments on the island of Rab in 2019 represent Imperial's largest investment cycle in the last ten years. Along with numerous projects aimed at improving the quality of services for the guests, the major focus of the new investments will be the reconstruction and repositioning of Valamar Carolina Hotel & Villas 4* and the further upgrade of Padova Camping Resort by Valamar 3* toward the upscale and premium segments by continuing the improvement of accommodation facilities and investing in additional amenities. The investment into Valamar Carolina
Hotel & Villas 4* will increase the capacity (from 152 to 174 rooms), improve the quality of accommodation and other features and services (existing restaurant, lobby bar, public spaces, new adult swimming pool, and wellness and fitness zones) which will made possible the partnership with the TUI Sensimar brand. Valamar Padova Hotel 4* will welcome the new tourist season as a family offer hotel. Projects are planned with the aim of improving energy efficiency by implementing solar heating systems, efficient heat pumps and other.
HRK 17 million worth of investments in Makarska will primarily be aimed at improving the quality and amenities of Meteor Hotel, which will continue its business next season under the Valamar Hotels & Resorts brand.
As stated in our strategic goals, by continuously raising the quality of the portfolio properties and services, we create added value both for our guests and all company stakeholders. However, numerous factors reduce the competitiveness of Croatian tourism and hinder further investment potential: VAT (one of the highest rates in the Mediterranean), the rate of total contributions to salaries, the still unresolved issue of tourism land, skilled labor shortages, the likely introduction of property tax and tourist tax increase. While global trends report low interest rates and market demand focuses on safe tourist destinations, Croatia has the opportunity to reposition its tourism by incentivizing investments in products and services with high added value that stimulate employment and economic growth. Unfortunately, tourism is still not sufficiently recognized as an opportunity for the Croatian economy. Current financing programs supporting tourism growth are insufficient, therefore other measures need to be systematically implemented to significantly increase the growth pace and level Croatia's position with other destinations in the Mediterranean.
42
Tourism is a global industry, closely connected with the real and financial economy, geopolitical position and environmental sustainability. The integrity of this industry will determine its future growth. Given the importance of tourism and its overall impact on society, the Company and the Group monitor and assess risks at micro and macro levels. Moreover, when defining the strategy, particular attention is given to the short and medium–term risk impact in order to maintain business sustainability over time.
When monitoring and assessing risks the Company and Group use a proactive approach thus assessing the potential impact of each individual risk. The Company and Group consider risk management to be a key factor of differentiation among competitors. Risk management aims at creating sustainable value, thus offering reliability and security to numerous stakeholders.
There are five key steps in a risk management process:
The different types of risks facing Valamar Riviera can be classified into the following groups:
• Financial risks
5 KEY STEPS IN RISK MANAGEMENT PROCESS
In their day-to-day business activities, the Company and Group face a number of financial threats, especially:
3) Credit risk; 4) Price risk; 5) Liquidity risk; 6) Share-related risks.
The Company and Group have a proactive approach in mitigating interest rate and foreign exchange risks, by employing available market instruments. Internal risk management goals and policies aim at protecting foreign currency inflows during seasonal activity and partial interest hedging of the principal loan amount.
The Company and Group conduct their business operations across national borders and are exposed to foreign exchange risks. They mainly result from changes in the euro/ kuna exchange rate. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities. Most of the sales revenue generated abroad is denominated in euros, and so is the major part of long-term debt. Hence, for the most part the Company and Group are naturally hedged from exchange rate risks. Since some liabilities are denominated in kunas, the Company and Group actively manage risks by using derivative instruments available on the financial market. The instruments are used according to operating assessments and expected market trends. In this way the assets, liabilities and cash flow are protected from the risk impact.
Variable rate loans expose the Company and Group to cash flow interest rate risk. Actively, the Company and Group resort to derivative instruments in order to hedge cash flow and interest rate by applying interest rate swaps. The economic effect of such swaps is the conversion of variable interest rate loans into fixed interest rate loans for a precommitted hedged part of the loan principal. Therefore, almost the entire loan portfolio is comprised of long-term fixed interest loans or, respectively, loans hedged by a derivative instrument (IRS). The Company and Group have interest-bearing assets (cash assets and deposits) so their revenue and cash flow depend on changes in market interest rates. This becomes evident especially during the season when the Company and Group have significant cash surpluses at their disposal.
Credit risk arises from cash assets, time deposits and receivables. According to the Company and Group sales policy, business transactions are conducted only with customers with suitable credit history, i.e. by agreeing advances, bank securities and (for individual customers) payments made through major credit card companies. The Company and Group continuously strive to monitor their exposure towards other parties and their credit rating as well as obtain security instruments (bills of exchange, promissory notes) in order to reduce bad debt risks related to services provided.
The Company and Group hold equity securities and are exposed to equity price risk due to security price volatility. Valamar Riviera is not an active participant in the market trade in terms of trading in equity and debt securities. However, with investments in buying Imperial and Hoteli Makarska shares, the company is exposed to the said risk to a certain extent.
The Company and Group have a sound liquidity risk management. Sufficient funds for meeting liabilities are available at any given moment through adequate amounts from contracted credit lines and by ensuring credit line availability in the future. Liquidity risk is managed by generating strong positive net operating cash flows, while capital investments are financed by credit lines. Credit lines in 2019 were arranged with reputable financial institutions. The repayment of the major credit lines coincides with periods of strong cash inflows from operations. The Company and Group monitor the level of available funds through daily cash and debt reports. Long-term cash flow forecasts as well as annual (monthly) forecasts are based on the set budget. After meeting the needs of working capital management the surplus is deposited in the treasury. From there the funds are invested in interest-bearing current accounts, time deposits, money market deposit accounts and marketable securities. Only instruments with suitable maturities and sufficient liquidity are selected, according to the forecast needs for liquid funds.
The market value of shares is the riskiest asset class due to its volatility resulting from the volatile nature of the whole capital market, macroeconomic trends on markets where the Company and Group operate and discrepancies between the expectations of financial analysts and the actual results. Furthermore, other contributing factors are also changes in the dividend policy, various activities in the segment of consolidations, mergers, acquisitions and forming of strategic partnership, the instability of the business model of the Company and Group as well as the fluctuations in the financial results for the Company and Group. In case any negative implications happen to be associated with these factors there is a considerable risk of market value drop that will in turn prevent investors from selling their shares at a fair market price.
The Company and Group are constantly exposed to risks threatening its competitiveness and future stability. Since the Company and Group own real estate, this business model requires a large amount of capital in order to maintain high product and service standards. Various large capital investments in the upgrade of products and services can surpass budget expectations, delay the end of construction works, as well as the town-planning regulations and fiscal policy may be changed. These risks can increase costs for the Company and Group, and have a negative impact on the cash flow and revenues. In the previous period, the company and Group's business decisions improved their results and operating efficiency in the demanding Mediterranean market. These positive trends are expected to continue in the future through a prudent long-term strategic management.
Over 95% of Valamar Riviera's guests come from other countries and they are very careful when choosing their vacation destination in the competitive Mediterranean environment. Stable domicile countries macroeconomic indicators are important decision-making factors especially those relating to exchange rates and the price of goods and services because they directly affect the guests' purchasing power. However small, the share of domestic guests is also important; it is a segment directly influenced by various other macroeconomic indicators: employment/ unemployment rate, GNP rise/fall, industrial production and others. They all have a direct impact not only on the purchasing power of Croatian residents but they also determine whether they will choose to spend their vacation on the Adriatic.
When considering risks related to the tourism and hospitality industry, in previous years, the Croatian economy has been afflicted by the consequences of a global financial crisis and economic standstill. In this period, the tourism and hospitality industry has been among the rare growing industries in Croatia. Moreover, the marked seasonality of this industry leads to insufficient use of the Company and Group's resources. After joining the European Union, the Croatian market became part of a large European market, while safety risks decreased after joining the NATO. The Croatian Tourism Development strategy until 2020 (a government document published in the Official Gazette no. 55/13) defines the kind of tourism Croatia wants and needs to develop using the country's comparative advantages and expertise in order to improve the competitiveness of Croatian tourism. Maintaining the current tourism growth rates in the following years is of vital importance. It can be achieved by strategically developing tourism products and investing in the creation of additional values, which will help distinguish Croatian tourism from its competitors by emphasizing its uniqueness, appeal and quality.
Good management of human resources is vital for the future growth of the Company and Group. Risks related to shortages of specific skills, expertise and jobs are connected with the opening and expansion of the labor market. Valamar Riviera is one of the largest and most desirable employers in tourism. The active approach towards HR management develops key talents and supports investments in training opportunities (HRK 2.5 million was invested in training and professional development during 2018). We determine the needs for new skills and expertise by following emerging global trends in tourism. In this way, we are able to respond to challenges effectively. Through a continual dialogue with our social partners, we have ensured a high level of workers' rights in terms of competitive salaries, reward systems, career development, employees' wellbeing and cooperation with training institutions from all parts of Croatia.
Operational risks are risks connected with direct or indirect losses that arise form inadequate or wrong internal or external processes within the Company and the Group. They include the creation and analysis of financial reporting data (also known as "financial reporting risk") and also the potential insufficient and inadequate internal and external information sharing. When implementing the system of operational risk management, the Company and Group focused on its continuity and complexity due to the size of the organization. The benefits of the system include i) defining and identifying the Company and Group risk profile in relation to the operating risk ii) identifying and managing the known risk occurrences in order to decrease the Company and Group costs and iii) data analysis which indicates the business trends for the Company and Group and trends in the domestic economy. The Company and Group are aware of the reliability of IT business solutions and safety in the cyber world. Hence, they continually upgrade, develop and implement new technologies in everyday business operations. A special focus is given to providing sufficient resources for the development and implementation of new technologies related to ICT, data protection, and upgrade of the current business systems and implementation of new ones.
Despite improved security and political conditions, which have encouraged to a certain extent investments into tourism and hospitality, there are challenges that the Croatian tourism has to face, such as:
Environmental risks can also have an adverse effect on the Company and Group's business results, primarily in terms of customer satisfaction with the whole experience while staying at one of Valamar's properties and this can affect the number of arrivals. The possible risks can include: sea pollution (caused by oil or chemical spillage), but also long-term water quality reduction and coast pollution due to inadequate waste disposal and waste water treatment as well as extensive use of agricultural fertilizers. Other environmental conditions typical for climate changes such as long drought periods or long rainy periods can directly influence the guests' length of stay in the hotels and campsites as well as increasing the operating costs. A number of other natural disasters and calamities (earthquakes, fires, floods and rainstorms), air pollution caused by toxic gas emissions from industrial plants and vehicles, as well excessive urbanization and the introduction of invasive species should also be taken into consideration.
Changes in tax laws and other regulations pose a very serious threat and represent a demanding segment in risk management because in this particular situation the possibilities for the Company and Group are limited. In previous years, there has been a number of important changes in tax and non-tax charging regulations, which have adversely affected the Company and Group profitability:
• In March 2012 the standard VAT rate grew from 23% to 25%, in January 2013 a new 10% VAT rate was introduced only to be replaced within a year by a 13% VAT rate applicable to the tourism and hospitality
industry (January 2014), while in January 2017 a new 25% VAT rate was introduced for F&B (a la carte) services;
Such frequent changes in laws regulating taxes and parafiscal charges often take place only after the business policy and budget for the next financial year have been approved and commercial terms and conditions with partners agreed. All this jeopardizes the Company and Group financial position and future investment plans as well as credibility towards shareholders. The Company and Group are also threatened by changes in regulations governing concession fees for maritime domain and tourism land use, the latter still presenting unresolved legal issues. Given the nature of the Company and Group's business, the right to use parts of the maritime domain as well as land for tourism purposes is of vital importance for future growth, especially for campsite-related operations.
The Company and the Group continuously strive to develop and operate according to good practices of corporate governance. The business strategy, corporate policy, key corporate regulations and business practice are all geared towards creating a transparent and efficient business operation while forging solid bonds with the local community. In order to foster further growth and set high corporate governance standards, the Company adopted its own Corporate Governance Code in 2008 and the Management Board fully complies with its provisions. After the company was listed on the Official market of the Zagreb Stock Exchange, the Company has also complied with the Zagreb Stock Exchange Governance Code. The Company respects and implements the prescribed corporate governance measures (as reported in detail in the prescribed annual questionnaire and published as prescribed on the Zagreb Stock Exchange and Valamar Riviera websites).
2.49% OF THE SHARE CAPITAL RELATES TO TREASURY SHARES (AT THE TIME OF 2018 FINANCIAL STATEMENTS PUBLISHING )
The major direct shareholders according to the Central Depository and Clearing Company data are presented in the overview in the "Valamar Share" section.
The Company defined the process of preparing and disclosing financial reports in a detailed internal document. With this, the financial reporting procedure is set within a system of internal review and risk management. Moreover, in order to monitor and mitigate the financial reporting risk, the Company uses the measures described in "The Risks of the Company and the Group".
The Companies Act and the Company Statute define the General Assembly's authority and prescribe how it meets and works. The meeting invitation, proposals and the adopted resolutions are made public according to the provisions of the Companies Act, Capital Market Act and the Zagreb Stock Exchange Rules. There is a time limit related to the voting right at the General Assembly: according to the provisions of the Croatian Companies Act, shareholders are required to register their participation within the prescribed time limit in order to attend the General Assembly. Under no circumstances can the financial right arising from securities be separated from holding the securities. There are no securities with special control rights nor are there any limitations to voting rights at the Company (one share, one vote). The Company Statute complies with the Croatian Companies Act and defines the procedure of appointing and recalling members of the Management Board and Supervisory Board. There are no limitations based on gender, age, education, profession or similar. The Companies Act determines any amendments to the Company Statute, without any additional limitations. The Management Board members' authority fully complies with the regulations prescribed by the Companies Act.
The Company may acquire treasury shares based on and under the conditions stipulated by the decision of the Main Assembly on Share Buyback of 17 November 2014. The Company does not have a sharebuyback programme or an employee share ownership plan. The Company holds and acquires treasury shares as a form of rewarding the Management and key managers pursuant to the Company acts on the long-term reward plan and for the purpose of dividend payout in rights - Company share to the equity holders. The Company publicly disclosed each acquisition and disposal of treasury shares during 2018.
CORPORATE GOVERNANCE /continued
Management Board: Mr. Željko Kukurin, President of the Management Board, and Mr. Marko Čižmek, Member of the Management Board.
Pursuant to the provisionss of the Capital Market Act and Regulation (EU) no. 596/2014, the Company has determined its senior management, consisting of the key company management: four vice presidents: Alen Benković, Davor Brenko, Ivana Budin Arhanić and David Poropat; and 21 sector directors: Miroslav Dinčić (up to 31 December 2018, from 1 January 2019 Ines Damjanić Šturman), Tomislav Dumančić, Ljubica Grbac, Flavio Gregorović, Marin Gulan, Vlastimir Ivančić, Željko Jurcan, Ivan Karlić, Dario Kinkela, David Manojlović, Sebastian Palma, Mile Pavlica, Tomislav Poljuha, Mirella Premeru, Bruno Radoš, Sandi Sinožić, Martina Šolić, Andrea Štifanić, Mauro Teković, Dragan Vlahović and Ivica Vrkić.
Supervisory Board: Mr. Gustav Wurmböck - Chairman, Mr. Franz Lanschützer - Deputy Chairman, Mr. Mladen Markoč - Deputy Chairman, and members: Mr. Georg Eltz, Mr. Hans Dominik Turnovszky, Mr. Vicko Ferić, and Mr. Valter Knapić (employee representative).
In order to perform efficiently its function and duties as prescribed by the Audit Act, the Supervisory Board has formed the following bodies:
Presidium of the Supervisory Board: Mr. Gustav Wurmböck, Chairman, Mr. Franz Lanschützer and Mr. Mladen Markoč, Presidium Members.
Audit Committee: Mr.Georg Eltz, Chairman and Members: Mr. Franz Lanschützer, Mr. Mladen Markoč, Mr. Vicko Ferić and Mr. Dubravko Kušeta. On 25 January 2018, Mr. Dubravko Kušeta resigned as Audit Committee member, and on 27 February 2018 the Supervisory Board appointed Mr. Gustav Wurmböck in his place. On 24 October 2018, the Supervisory Board increased the number of the Audit Committee members from 5 to 6 and appointed Mr. Hans Dominik Turnovszky as member. From that date the Audit Committee comprises: Mr. Georg Eltz, Chairman, and members: Mr. Franz Lanschützer, Mr. Mladen Markoč, Mr. Vicko Ferić, Mr. Gustav Wurmböck and Mr. Hans Dominik Turnovszky.
Investment Committee: Mr. Franz Lanschützer, Chairman and members: Mr. Georg Eltz, Mr. Vicko Ferić, Mr. Hans Dominik Turnovszky, and Mr. Gustav Wurmböck.
Compliant to effective regulations and Company bylaws, The Management and Supervisory Board primarily act through meetings and by correspondence in their decision-making.
Transactions between related parties within the Group are conducted under standard commercial terms and conditions and at current market prices.
In the reviewed period, revenues from related party transactions totaled HRK 17.1 million31 (2017: HRK 13.9 million) for the Company, and HRK 1.231 (2017: HRK 21 thousand) for the Group. Costs were HRK 1.8 million (2017: HRK 31.2 million32) for the Company, and HRK 966 thousand for the Group (2017: HRK 1.5 million).
As at 31 December 2018, related-party receivables and payables were as follows: receivables totaled HRK 1.9 million for the Company (year-end 2017: HRK 3.4 million), and none for the Group (year-end 2017: none). Payables totaled HRK 304 thousand (year-end 2017: HRK 604 thousand) for the Company, and HRK 52 thousand for the Group (year-end 2017: HRK 425 thousand).
In accordance with the provision of Article 497 of the Companies Act, on 19 February 2019 the Management Board prepared a separate report on the Company's relatedparty transactions and in accordance with Paragraph 3 of Article 497, the Management Board declares that in line with circumstances known at the time when certain legal transactions or actions were undertaken, the Company received suitable consideration and was not harmed.
The following branch offices were registered on 2 September 2011: Podružnica za turizam RABAC, with registered office in Rabac, Slobode 80, Podružnica za turizam ZLATNI OTOK, with registered office in Krk, Vršanska 8. The following branch office was registered on 4 October 2013: Podružnica za turizam DUBROVNIK BABIN KUK, with registered office in Dubrovnik, Dr. Ante Starčevića 45. The following branch office was registered on 1 October 2014: Podružnica za savjetovanje u vezi s poslovanjem i upravljanjem ZAGREB, with registered office in Zagreb, Miramarska 24. The following branch office was registered on 1 April 2017: Podružnica za turizam BRIONI, with registered office in Pula, Puntižela 155.
The branch offices of Rabac, Zlatni otok, Dubrovnik-Babin kuk and Brioni are the drivers of economic growth in their local communities. They operate at their destinations and support their development by promoting further investments and the development of tourism while participating in social and business activities.
The Company also established offices in the Town of Rab on Rab Island and in Makarska to increase the efficiency and streamline the management of operations as determined by the provisions of the concluded Hotel management contracts with Imperial d.d. and Hoteli Makarska d.d.
31 The most part represents the fee regarding the management of Imperial's and Hoteli Makarska's properties and services. The implementation of the Management contract started on 4 January 2017 and 1 August 2018, respectively
32 For the most part refers to the re-invoiced amount arising from the investment made in the reconstruction and upgrading of the hotel Valamar Lacroma owned by subsidiary Elafiti Babin-kuk d.o.o. which was merged on 29 December 2017.
Performance of Valamar Riviera's share and CROBEX and CROBEX 10 indices
(in HRK)
In the period between 1 January 2018 and 31 December 2018, Valamar Riviera acquired 1.397.932 treasury shares at the total acquisition cost of HRK 51,705,655, representing 1.11% of the share capital and disposed of 69,779 treasury shares (0.06% of the share capital) of which 17,800 treasury shares were used for dividend payout, and the remaining part was used for key management remuneration. As at 31 December 2018, the Company held a total of 3,122,604 treasury shares or 2.48% of the share capital. Pursuant to the provisions of Article 474(3) of the Capital Market Act, the Company announces that, at the time of its 2018 financial statement submission, i.e. from the date of its public disclosure, it holds 3,144,105 treasury shares or 2.49% of the share capital.
During 2018, the highest achieved share price in regular trading on the regulated market was HRK 43.60, while the lowest was HRK 31.20. The share price of the Company decreased by 15% in the reviewed period, coinciding with the decrease in international and national stock market indices. In 2018 Valamar Riviera was the most traded share on the Zagreb Stock Exchange with the average regular turnover of HRK 1.1. million per day33.
Apart from the Zagreb Stock Exchange indices, the share is also part of the Vienna Stock Exchange indices (CROX34 and SETX35), the regional SEE Link indices (SEELinX and SEELinX EWI)36 and the world's MSCI Frontier Markets Indexes. Zagrebačka banka d.d. and Interkapital vrijednosni papiri d.o.o. are responsible for the market making in ordinary Valamar Riviera shares listed on the Official Market of the Zagreb Stock Exchange. They provide support to Valamar Riviera's share turnover, which in the period under review averaged 25.4%37.
Valamar Riviera is active in holding meetings, presentations and conference calls with domestic and foreign investors. This approach supports high-level transparency, creates additional liquidity, increases share value and the involvement of potential investors. During 2018 meetings were held on the London Stock Exchange, the Zagreb and Ljubljana Stock Exchange Investor conference in Zagreb, Erste Consumer Conference 2018 in Warsaw, Wood&Co. conference in Bucharest, Erste Group conference in Stegersbach, Wood&Co. conference in Belgrade and Prague and Auerbach Grayson in New York, as well as non-deal roadshows in other European financial centers. Valamar Riviera will continue with this active approach to grow further value for all its stakeholders so the Company's share can be recognized as one of the market leaders on the Croatian capital market and in the CEE region.
80 MEETINGS WITH INSTITUTIONAL INVESTORS IN 2018 The analytical coverage of Valamar Riviera is provided by:
1) ERSTE bank d.d., Zagreb;
2) FIMA vrijednosnice d.o.o., Varaždin;
3) Interkapital vrijednosni papiri d.o.o., Zagreb;
4) Raiffeisenbank Austria d.d., Zagreb;
5) UniCredit Group - Zagrebačka banka d.d., Zagreb.
Valamar Riviera was awarded as the share of the year for the 7th consecutive time, share with the highest turnover and won another award for Best Investor Relations.
Rab was the destination chosen to host the third Investors Day on 12 June 2018. As customary, Valamar's formula of sustainable and socially responsible investments in employees, products and destinations was presented to institutional investors by Management Board President Željko Kukurin and Management Board Member Marko Čižmek. This event was also an opportunity to present the new brand strategy that will serve as a framework for business development in the forthcoming period. Valamar's new brand identity features the "All you can holiday" business concept to create the perfect holiday for each individual guest as well as five new product brands that will be used to differentiate Valamar's portfolio of hotels, resorts and campsites. The new brand strategy sets a clear path and guidelines for the Valamar brand and subbrands on which the company builds its future growth and development. It will increase market reach, improve the compatibility of products and services with specific market segments, increase guest loyalty and boost key business indicators.
On this occasion, the 2017 Integrated annual report and corporate social responsibility was presented to the investors. The report was prepared following G4 GRI guidelines and aims to present a strategic and long-term insight into Valamar's business to all key stakeholders, including shareholders, employees, partners, guests and the community, with special focus on corporate social responsibility that represents the foundation of the company's sustainable business and future development. The report can be found on the Zagreb Stock Exchange website and www.valamar-riviera.com.
The Management Board expresses its gratitude to all shareholders, business partners, and guests for their support and trust, and particularly to all employees for their contribution.
As one of the largest employers in Croatia (as at 31 December 2018, the Group employed 3,242 people of which 1,680 were permanent employees; the Company employed 2,749 people of which 1,337 were permanent employees), the Company and the Group systematically and continuously invest in the development of human resources. An integral strategic approach to human resources management and top practices applied include transparent hiring processes, clear objectives and employees' performance measurement, rewarding systems, opportunities for career advancement, investment in employees' development and encouraging two-way communication.
In the course of 2018, the Company's Management Board managed and represented the company pursuant to regulations and the provisions of the Company Statute, and planned a business policy that was implemented with prudent care. The Company's Management Board will continue to undertake all the necessary measures in order to ensure sustainability and business growth. The audited annual financial statements for 2018 were adopted by the Management Board on 19 February 2018. The Management Board expresses its gratitude to all shareholders, business partners, and guests for their support and trust, and particularly to all employees for their contribution.
Management Board of the Company
In accordance with provisions of Law on Capital Market, Marko Čižmek, Management board member responsible for finance, treasury and IT business as well as relations with institutional investors and Ljubica Grbac director of Department of Finance and Accounting, procurator and person responsible for finance and accounting, together as persons responsible for the preparation of annual reports of the company VALAMAR RIVIERA d.d. seated in Poreč, Stancija Kaligari 1, OIB 36201212847 (hereinafter: Company), hereby make the following
Marko Čižmek Management Board Member
Ljubica Grbac Director of Department of Finance and Accounting
| Tax number (MB): | 3474771 | HR Issuer's Home Member state code: |
|
|---|---|---|---|
| Company registration number (MBS): |
40020883 | ||
| Personal identification number (OIB): | 36201212847 | LEI: | 529900DUWS1DGNEK4C68 |
| Institution code: | 30577 | ||
| Issuing company: | Valamar Riviera d.d. | ||
| Postal code and place: | 52440 | Poreč | |
| Street and house number: | Stancija Kaligari 1 | ||
| E-mail address: | [email protected] | ||
| Internet address: | www.valamar-riviera.com | ||
| Number of employees: (period end) | 3242 | ||
| Consolidated report: | KD | (KN-non consolidated/KD-consolidated) | |
| Audited report: | RD | (RN-non audited/RD-audited) | |
| Companies of the consolidation subject (according to IFRS): |
Seat: | MB: | |
| Valamar Obertauern GmbH | Obertauern | 195893 D | |
| Valamar hotels & resorts GmbH | Frankfurt | 4724750667 | |
| Valamar A GmbH | Tamsweg | 486431 S | |
| Hoteli Makarska d.d. | Makarska | 3324877 | |
| Palme Turizam d.o.o. | Dubrovnik | 2006103 | |
| Magične stijene d.o.o. | Dubrovnik | 2315211 | |
| Pogača Babin Kuk d.o.o. | Dubrovnik | 2236346 | |
| Elafiti Babin Kuk d.o.o. | Dubrovnik | 1273094 | |
| Imperial d.d. | Rab | 3044572 | |
| Bugenvilia d.o.o. | Dubrovnik | 2006120 | |
| Puntižela d.o.o. | Pula | 3203379 |
| Bookkeeping service: | No | ||
|---|---|---|---|
| (bookkeeping service company name) | |||
| Contact person: | Sopta Anka | ||
| (only surname and name) | |||
| Telephone: | 052/408 188 | ||
| E-mail address: | [email protected] | ||
| Auditing company: | Ernst & Young d.o.o. | ||
| (the name of the company) | |||
| Certified auditor: | Berislav Horvat | ||
| (name and surname) |
Documents disclosed:
Financial statements (Balance Sheet, Income Statement, Cash Flow Statement, Statement of Changes in Equity and notes to financial statements)
Management Interim Report;
Declaration of the persons responsible for preparing the issuer's statements;
L.S. (authorized representative's signature)
| ADP | Preceding | Current | |
|---|---|---|---|
| Item | code | year | year |
| 1 | 2 | 3 | 4 |
| A) SUBSCRIBED CAPITAL UNPAID | 001 | ||
| B) NON CURRENT ASSETS (ADP 003+010+020+031+036) | 002 | 4.632.400.572 | 5.310.891.538 |
| I. INTANGIBLE ASSETS (ADP 004 to 009) 1. Research and Development expenditure |
003 004 |
45.224.706 | 53.726.810 |
| 2. Patents, licences, royalties, trademarks and service marks, software and similar rights | 005 | 37.949.592 | 46.298.666 |
| 3. Goodwill | 006 | 6.567.609 | 6.567.609 |
| 4. Prepayments for intangible assets | 007 | ||
| 5. Intangible assets under construction | 008 | 707.505 | 860.535 |
| 6. Other intangible assets | 009 | ||
| II. TANGIBLE ASSETS (ADP 011 to 019) | 010 | 4.440.260.536 | 5.111.237.027 |
| 1. Land | 011 | 874.708.080 | 973.018.037 |
| 2. Property | 012 | 2.871.712.565 | 3.331.975.756 |
| 3. Plants and equipment | 013 | 367.257.268 | 443.971.567 |
| 4. Tools, plants and vehicles | 014 | 101.131.434 | 132.923.120 |
| 5. Biological asset | 015 | ||
| 6. Prepayments for tangible assets | 016 | 24.768.328 | 12.350.960 |
| 7. Assets under construction | 017 | 149.431.796 | 160.356.644 |
| 8. Other tangible assets | 018 | 40.996.707 | 47.000.469 |
| 9. Investments property | 019 | 10.254.358 | 9.640.474 |
| III. NON-CURRENT FINANCIAL ASSETS (ADP 021 to 030) | 020 | 5.417.132 | 20.074.375 |
| 1. Stakes (shares) in undertakings in a Group 2. Investments in other securities of undertakings in a Group |
021 022 |
1.435.245 | |
| 3. Loans, deposits etc given to undertakings in a Group | 023 | ||
| 4. Stakes (shares) in undertakings with participating interest | 024 | ||
| 5. Investments in other securities of undertakings with participating interest | 025 | ||
| 6. Loans, deposits etc given to undertakings with participating interest | 026 | ||
| 7. Investments in securities | 027 | 3.620.830 | 4.289.892 |
| 8. Given loans, deposits and similar | 028 | 191.057 | 15.590.772 |
| 9. Other investments accounted for using the equity method | 029 | ||
| 10. Other non-current financial assets | 030 | 170.000 | 193.711 |
| IV. TRADE RECEIVABLES (ADP 032 to 035) | 031 | 834.499 | 147.290 |
| 1. Receivables from undertakings in a Group | 032 | ||
| 2. Receivables from undertakings with participating interests | 033 | ||
| 3. Trade receivables | 034 | 43.750 | |
| 4. Other receivables | 035 | 790.749 | 147.290 |
| V. DEFERRED TAX ASSETS | 036 | 140.663.699 | 125.706.036 |
| C) CURENT ASSETS (ADP 038+046+053+063) | 037 | 343.822.386 | 332.775.548 |
| I. INVENTORIES (ADP 039 to 045) | 038 | 24.496.814 | 25.447.350 |
| 1. Raw materials and consumables 2. Work in progress |
039 040 |
24.296.180 | 25.241.646 |
| 3. Finished products | 041 | ||
| 4. Merchandise | 042 | 156.426 | 172.328 |
| 5. Prepayments for inventories | 043 | 44.208 | 33.376 |
| 6. Other available-for-sale assets | 044 | ||
| 7. Biological asset | 045 | ||
| II. RECEIVABLES (ADP 047 to 052) | 046 | 30.637.890 | 45.442.095 |
| 1. Receivables from undertakings in a Group | 047 | 231.675 | |
| 2. Receivables from undertakings with participating interest | 048 | 1.380.025 | |
| 3. Trade receivables | 049 | 13.742.895 | 33.928.832 |
| 4. Receivables from employees and members of the undertaking | 050 | 1.226.272 | 1.428.327 |
| 5. Receivables from Government and other institutions | 051 | 13.614.153 | 7.256.256 |
| 6. Other receivables | 052 | 1.822.895 | 1.448.655 |
| III. CURRENT FINANCIAL ASSETS (ADP 054 to 062) | 053 | 850.728 | 43.750 |
| 1. Stakes (shares) in undertakings in a Group | 054 | ||
| 2. Investments in other securities of undertakings in a Group 3. Loans, deposits etc given to undertakings in a Group |
055 056 |
||
| 4. Stakes(shares) in undertakings with participating interest | 057 | ||
| 5. Investments in other securities of undertakings with participating interest | 058 | ||
| 6. Loans, deposits etc given to undertakings with participating interest | 059 | 43.750 | |
| 7. Investments in securities | 060 | ||
| 8. Given loans, deposits and similar | 061 | 746.646 | |
| 9. Other financial assets | 062 | 104.082 | |
| IV. CASH AND CASH EQUIVALENTS | 063 | 287.836.954 | 261.842.353 |
| D) PREPAYMENTS AND ACCRUED INCOME | 064 | 20.382.090 | 25.278.400 |
| E) TOTAL ASSETS (ADP 001+002+037+064) | 065 | 4.996.605.048 | 5.668.945.486 |
| F) OFF-BALANCE SHEET ITEMS | 066 | 54.545.066 | 58.014.172 |
| ADP | Preceding | Current | |
|---|---|---|---|
| Item | code | year | year |
| 1 | 2 | 3 | 4 |
| LIABILITIES | |||
| A) CAPITAL AND RESERVES (ADP 068 to 070+076+077+081+084+087) | 067 | 2.516.174.910 | 2.758.532.748 |
| I. SHARE CAPITAL | 068 | 1.672.021.210 | 1.672.021.210 |
| II. CAPITAL RESERVES | 069 | 3.602.906 | 5.304.283 |
| III. RESERVES FROM PROFIT (ADP 071+072-073+074+075) | 070 | 102.055.847 | 94.297.196 |
| 1. Legal reserves | 071 | 83.601.061 | 83.601.061 |
| 2. Reserves for own shares | 072 | 44.815.284 | 96.815.284 |
| 3. Own stocks and shares (deductible items) | 073 | -35.889.621 | -86.119.149 |
| 4. Statutory reserves | 074 | ||
| 5. Other reserves | 075 | 9.529.123 | |
| IV. REVALUATION RESERVES | 076 | ||
| V. FAIR VALUE RESERVES (ADP 078 to 080) | 077 | 634.097 | 905.282 |
| 1. Fair value of financial assets available for sale | 078 | 634.097 | 905.282 |
| 2. Efficient portion of cash flow hedge | 079 | ||
| 3. Efficient portion of foreign net investment hedge | 080 | ||
| VI. RETAINED EARNINGS OR LOSS CARRIED FORWARD (ADP 082-083) | 081 | 263.138.894 | 348.674.430 |
| 1. Retained earnings | 082 | 263.138.894 | 348.674.430 |
| 2. Loss carried forward | 083 | ||
| VII. PROFIT OR LOSS FOR THE FINANCIAL YEAR (ADP 085-086) | 084 | 243.596.016 | 235.337.282 |
| 1. Profit for the financial year | 085 | 243.596.016 | 235.337.282 |
| 2. Loss for the financial year | 086 | ||
| VIII. MINORITY INTEREST | 087 | 231.125.940 | 401.993.065 |
| B) PROVISIONS (ADP 089 to 094) | 088 | 58.356.183 | 77.311.656 |
| 1. Provisions for pensions, severance pay and similar libabilities | 089 | 5.446.558 | 10.114.484 |
| 2. Provisions for tax obligations | 090 | ||
| 3. Provisions for litigations in progress | 091 | 52.909.625 | 67.197.172 |
| 4. Provisions for renewal of natural resources | 092 | ||
| 5. Provision for costs within warranty period | 093 | ||
| 6. Other provisions | 094 | ||
| C) NON-CURRENT LIBILITIES (ADP 096 to 106) | 095 | 1.915.658.762 | 2.284.143.535 |
| 1. Liabilites to related parties | 096 | ||
| 2. Liabilities for loans, deposits etc of undertakings in a Group | 097 | ||
| 3. Liabilities to undertakings with participating interest | 098 | ||
| 4. Liabilities for loans, deposits etc of undertakings with participating interest | 099 | ||
| 5. Liabilities for loans, deposits and other | 100 | 9.046.000 | 8.943.000 |
| 6. Liabilities to banks and other financial institutions | 101 | 1.852.267.505 | 2.198.942.318 |
| 7. Liabilities for advance payments | 102 | ||
| 8. Trade payables | 103 | 81.000 | |
| 9. Amounts payable for securities | 104 | ||
| 10. Other non-current liabilities | 105 | 1.585.824 | 7.615.740 |
| 11. Deffered tax | 106 | 52.759.433 | 68.561.477 |
| D) CURRENT LIABILITIES (ADP 108 to 121) | 107 | 402.912.295 | 425.784.158 |
| 1. Liabilities to undertakings in a Group | 108 | 198.872 | 3.785.129 |
| 2. Liabilities for loans, deposits etc of undertakings in a Group | 109 | ||
| 3. Liabilities to undertakings with participating interest | 110 | ||
| 4. Liabilities for loans, deposits etc of undertakings with participating interest | 111 | ||
| 5. Liabilities for loans, deposits and other | 112 | 103.000 | 103.000 |
| 6. Liabilities to banks and other financial institutions | 113 | 203.141.559 | 227.211.496 |
| 7. Amounts payable for prepayment | 114 | 31.365.529 | 38.933.044 |
| 8. Trade payables | 115 | 132.651.065 | 112.908.087 |
| 9. Liabilities upon loan stocks | 116 | ||
| 10. Liabilities to emloyees | 117 | 22.455.819 | 28.396.296 |
| 11. Taxes, contributions and similar liabilities | 118 | 11.077.721 | 11.757.015 |
| 12. Liabilities arising from share in the result | 119 | 230.130 | 250.516 |
| 13. Liabilities arising from non-current assets held for sale | 120 | ||
| 14. Other current liabilities | 121 | 1.688.600 | 2.439.575 |
| E) ACCRUED EXPENSES AND DEFERRED INCOME | 122 | 103.502.898 | 123.173.389 |
| F) TOTAL LIABILITIES (ADP 067+088+095+107+122) | 123 | 4.996.605.048 | 5.668.945.486 |
| G) OFF-BALANCE SHEET ITEMS | 124 | 54.545.066 | 58.014.172 |
| ADP | Preceding | Current | |
|---|---|---|---|
| Item | code | period | period |
| 1 | 2 | 3 | 4 |
| I. OPERATING INCOME (ADP 126+127+128+129+130) | 125 | 1.778.395.862 | 1.990.984.717 |
| 1. Revenues from sales with undertakings in a Group | 126 | 189.245 | |
| 2. Sales revenues (outside the Group) | 127 | 1.755.097.476 | 1.961.413.631 |
| 3. Revenues from use of own products, goods and services | 128 | 5.211.178 | 361.270 |
| 4. Other operating revenues with undertakings in a Group | 129 | ||
| 5.Other operating revenues (outside the Group) | 130 | 17.897.963 | 29.209.816 |
| II. OPERATING EXPENSES (ADP 132+133+137+141+142+143+146+153) | 131 | 1.518.893.175 | 1.707.437.899 |
| 1. Changes in inventories of finished products and work in progress | 132 | ||
| 2. Material costs (ADP 134 to 136) | 133 | 519.753.525 | 552.089.395 |
| a) Cost of raw materials & consumables | 134 | 299.650.484 | 328.413.023 |
| b) Cost of goods sold | 135 | 2.952.180 | 3.380.801 |
| c) Other costs | 136 | 217.150.861 | 220.295.571 |
| 3. Staff costs (ADP 138 to 140) | 137 | 480.161.466 | 541.715.389 |
| a) Net salaries | 138 | 292.865.456 | 331.617.032 |
| b) Employee income tax | 139 | 119.910.409 | 135.404.814 |
| c) Tax on payroll | 140 | 67.385.601 | 74.693.543 |
| 4. Depreciation and amortisation | 141 | 346.413.599 | 410.521.539 |
| 5. Other expenditures | 142 | 143.755.460 | 174.686.587 |
| 6. Value adjustment (ADP 144+145) | 143 | 126.181 | 385.273 |
| a) non-current assets (without financial assets) | 144 | ||
| b) current asssets (without financial assets) | 145 | 126.181 | 385.273 |
| 7. Provisions (ADP 147 to 152) | 146 | 9.486.384 | 7.126.272 |
| a) Provision for pensions, severance payments and other employment benefits |
147 | 5.446.558 | 4.409.973 |
| b) Provisions for tax liabilities | 148 | ||
| c) Provisions for litigations in progress | 149 | 3.653.477 | 2.688.556 |
| d) Provisions for renewal of natural resources | 150 | ||
| e) Provision for costs within warranty period | 151 | ||
| f) Other provisions | 152 | 386.349 | 27.743 |
| 8. Other operating expenses | 153 | 19.196.560 | 20.913.444 |
| III. FINANCIAL INCOME (ADP 155 to 164) | 154 | 63.640.247 | 56.790.053 |
| 1. Income from stakes (shares) in undertakings in a Group | 155 | ||
| 2. Income from stakes (shares) in undertakings with participating interest | 156 | ||
| 3. Income from other non-current financial investments and loans to | |||
| undertakings in a Group | 157 | ||
| 4. Other interest income from undertakings in a Group | 158 | ||
| 5. Foreign exchange differences and other financial income from undertakings in a Group |
159 | ||
| 6. Income from other non-current financial investments and loans | 160 | ||
| 7. Other interest income | 161 | 655.416 | 528.885 |
| 8. Foreign exchange differences and other financial income | 162 | 52.405.389 | 47.598.882 |
| 9. Unrealized gains (income) from the financial assets | 163 | 7.520.020 | 4.696.029 |
| 10. Other financial income | 164 | 3.059.422 | 3.966.257 |
| IV. FINANCIAL COSTS (ADP 166 to 172) | 165 | 84.499.175 | 82.255.368 |
| 1. Interest expenses and similar expenses with undertakings in a Group | 166 | ||
| 2. Foreign exchange differences and other expenses with | |||
| undertakings in a Group | 167 | ||
| 3. Interest expenses and similar | 168 | 42.218.873 | 49.874.101 |
| 4. Foreign exchange differences and other expenses | 169 | 33.867.818 | 18.895.559 |
| 5. Unrealized loss (expenses) from the financial assets | 170 | 6.761.354 | 10.757.668 |
| 6. Value adjustment expense on financial assets (net) | 171 | ||
| 7. Other financial expenses | 172 | 1.651.130 | 2.728.040 |
| V. SHARE OF PROFIT FROM UNDERTAKINGS WITH PARTICIPATING INTEREST | 173 | ||
| VI. SHARE OF PROFIT FROM JOINT VENTURES | 174 | ||
| VII. SHARE OF LOSS FROM UNDERTAKINGS WITH PARTICIPATING INTEREST | 175 | ||
| VIII. SHARE OF LOSS FROM JOINT VENTURES | 176 | ||
| IX. TOTAL INCOME (ADP 125+154+173+174) | 177 | 1.842.036.109 | 2.047.774.770 |
| X. TOTAL EXPENSES (ADP 131+165+175+176) | 178 | 1.603.392.350 | 1.789.693.267 |
| XI. PROFIT OR LOSS BEFORE TAX (ADP 177-178) | 179 | 238.643.759 | 258.081.503 |
| 1. Profit before tax (ADP 177-178) | 180 | 238.643.759 | 258.081.503 |
| 2. Loss before tax (ADP 178-177) | 181 | ||
| XII. INCOME TAX EXPENSE | 182 | -6.443.626 | 18.893.996 |
| XIII. PROFIT OR LOSS FOR THE PERIOD (ADP 179-182) | 183 | 245.087.385 | 239.187.507 |
| 1. Profit for the period (ADP 179-182) | 184 | 245.087.385 | 239.187.507 |
| 2. Loss for the period (ADP 182-179) | 185 |
| Item | ADP | Preceding | Current |
|---|---|---|---|
| code | period | period | |
| 1 | 2 | 3 | 4 |
| XIV. PROFIT OR LOSS FROM DISCONTINUED OPERATIONS BEFORE TAX (ADP 187-188) |
186 |
|---|---|
| 1. Profit before tax from discontinued operations | 187 |
| 2. Loss before tax from discontinued operations | 188 |
| XV. INCOME TAX EXPENSE FROM DISCONTINUED OPERATIONS | 189 |
| 1. Profit for the period from discontinued operations (ADP 186-189) | 190 |
| 2. Loss for the period from discontinued operations (ADP 189-186) | 191 |
| XVI. PROFIT OR LOSS BEFORE TAX (ADP 179+186) | 192 |
|---|---|
| 1. Profit before tax (ADP 192) | 193 |
| 2. Loss before tax (ADP 192) | 194 |
| XVII. INCOME TAX EXPENSE (ADP 182+189) | 195 |
| XVIII. PROFIT OR LOSS FOR THE PERIOD (ADP 192-195) | 196 |
| 1. Profit for the period (ADP 192-195) | 197 |
| 2. Loss for the period (ADP 195-192) | 198 |
| XIX. PROFIT OR LOSS FOR THE PERIOD (ADP 200+201) | 199 | 245.087.385 | 239.187.507 |
|---|---|---|---|
| 1. Attributable to parent company's shareholders | 200 | 243.596.016 | 235.337.283 |
| 2. Attributable to non-controlling interests | 201 | 1.491.369 | 3.850.224 |
| I. PROFIT OR LOSS FOR THE PERIOD | 202 | 245.087.385 | 239.187.507 |
|---|---|---|---|
| II. OTHER COMPREHENSIVE INCOME /LOSS BEFORE TAX (ADP 204 to 211) |
203 | 450.979 | 338.982 |
| 1. Exchange differences arising from foreign operations | 204 | ||
| 2. Revaluation of non-current assets and intangible assets | 205 | ||
| 3. Gains or loss available for sale investments | 206 | 450.979 | 338.982 |
| 4. Gains or loss on net movement on cash flow hedges | 207 | ||
| 5. Gains or loss on net investments hedge | 208 | ||
| 6. Share of the other comprehensive income/loss of associates | 209 | ||
| 7. Acturial gain/loss on post employment benefit obligations | 210 | ||
| 8. Other changes in capital (minorities) | 211 | ||
| III. TAX ON OTHER COMPREHENSIVE INCOME OF THE PERIOD | 212 | 90.195 | 67.796 |
| IV. NET OTHER COMPREHENSIVE INCOME OR LOSS FOR THE YEAR (ADP 203-212) |
213 | 360.784 | 271.186 |
| V. TOTAL COMPREHENSIVE INCOME/LOSS FOR THE PERIOD (ADP 202+213) |
214 | 245.448.169 | 239.458.693 |
| VI. TOTAL COMPREHENSIVE INCOME/LOSS FOR THE PERIOD (ADP 216+217) |
215 | 245.448.169 | 239.458.693 |
|---|---|---|---|
| 1. Attributable to parent company's shareholders | 216 | 243.956.800 | 235.608.469 |
| 2. Attributable to non-controlling interests | 217 | 1.491.369 | 3.850.224 |
| ADP | Preceding | Current | |
|---|---|---|---|
| Item | code | period | period |
| 1 | 2 | 3 | 4 |
| CASH FLOW FROM OPERATING ACTIVITIES | |||
| 1. Profit before taxes | 001 | 238.643.759 | 258.081.503 |
| 2. Adjustments (ADP 003 to 010) | 002 | 396.630.365 | 461.705.290 |
| a) Depreciation and amortisation | 003 | 346.413.599 | 410.521.539 |
| b) Profit and loss from sales and value adjustments of non-current tangible and intangible assets |
004 | 10.701.234 | 5.841.704 |
| c) Profit and loss from sales and unrealised profit and loss and value adjustments of financial assets |
005 | -211.830 | 1.118.573 |
| d) Income from interest and dividends | 006 | -625.283 | -273.758 |
| e) Interest expenses | 007 | 43.870.004 | 50.071.190 |
| f) Provisions | 008 | 10.681.641 | 23.210.743 |
| g) Foreign exchange differences (unrealized) | 009 | -14.199.000 | -28.784.701 |
| h) Other adjustments for non-cash transactions and unrealized profit and loss | 010 | ||
| I. Increase or decrease of cash flow before changes in working capital (ADP 001+002) |
011 | 635.274.124 | 719.786.793 |
| 3. Changes in working capital (ADP 013 to 016) | 012 | 3.955.741 | -24.860.677 |
| a) Increase or decrease of current liabilities | 013 | -2.906.436 | 6.473.299 |
| b) Increase or decrease of current receivables | 014 | 14.229.358 | -37.600.790 |
| c) Increase or decrease of inventories | 015 | -5.251.075 | -950.536 |
| d) Other increase or decrease of working capital | 016 | -2.116.106 | 7.217.350 |
| II. Cash from operating activities (ADP 011+012) | 017 | 639.229.865 | 694.926.116 |
| 4. Interest | 018 | -42.778.920 | -45.792.353 |
| 5. Income tax paid | 019 | 6.749.820 | -8.450.097 |
| A) NET CASH FLOW FROM OPERATING ACTIVITIES (ADP 017 to 019) | 020 | 603.200.765 | 640.683.666 |
| CASH FLOW FROM INVESTMENT ACTIVITIES | |||
| 1. Proceeds from sale of non-current assets | 021 | 3.504.147 | 5.144.096 |
| 2. Proceeds from selling financial instruments | 022 | 1.808.303 | 50.000 |
| 3. Proceeds from interest rates | 023 | 829.138 | 776.958 |
| 4. Proceeds from dividends | 024 | 74.640 | 87.080 |
| 5. Proceeds from repayment of given loans and savings | 025 | 11.226.988 | 949.241 |
| 6. Other proceeds from investment activities | 026 | ||
| III. Total cash proceeds from investment activities (ADP 021 to 026) | 027 | 17.443.216 | 7.007.375 |
| 1. Purchase of non-current tangible and intangible assets | 028 | -894.589.185 | -730.451.033 |
| 2. Purchase of financial instruments | 029 | ||
| 3. Loans and deposits for the period | 030 | -10.637.180 | -175.646 |
| 4. Acquisition of subsidiary, net of acquired cash | 031 | -6.207.552 | -170.827.965 |
| 5. Other payments from investment activities | 032 | ||
| IV. Total cash payments from investment activities (ADP 028 to 032) | 033 | -911.433.917 | -901.454.644 |
| B) NET INCREASE OF CASH FLOW FROM INVESTMENT ACTIVITIES (ADP 027+033) | 034 | -893.990.701 | -894.447.269 |
| CASH FLOW FROM FINANCIAL ACTIVITIES | |||
| 1. Proceeds from increase of subscribed capital | 035 | ||
| 2. Proceeds from issuing equity-based and debt-based financial instruments | 036 | ||
| 3. Proceeds from loan principal, loans and other borrowings | 037 | 582.241.320 | 605.645.120 |
| 4. Other proceeds from financial activities | 038 | ||
| V. Total proceeds from financial activities (ADP 035 to 038) | 039 | 582.241.320 | 605.645.120 |
| 1. Repayment of loan principals, loans and other borrowings and debt-based financial instruments |
040 | -179.917.851 | -209.765.109 |
| 2. Dividends paid | 041 | -98.347.226 | -116.405.354 |
| 3. Payment of finance lease liabilities | 042 | ||
| 4. Re-purchase of treasury shares and decrease in subscribed share capital | 043 | -51.705.655 | |
| 5. Other payments from financial activities | 044 | ||
| VI. Total cash payments from financing activities (ADP 040 to 044) | 045 | -278.265.077 | -377.876.118 |
| C) NET CASH FLOW FROM FINANCIAL ACTIVITIES (ADP 039+045) | 046 | 303.976.243 | 227.769.002 |
| 1. Cash and cash equivalents-unrealized foreign exchange differences | 047 | ||
| D) NET INCREASE OR DECREASE OF CASH FLOW (ADP 020+034+046+047) | 048 | 13.186.307 | -25.994.601 |
| E) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD F) CASH AND CASH EQUIVALENTS AT THE END OF PERIOD (ADP 048+049) |
049 050 |
274.650.647 287.836.954 |
287.836.954 261.842.353 |
Distributable to majority owners
| Description | ADP | Subscribed Share capital |
Capital re- serves | Legal reserves Reserves for | own shares | Treasury shares and shares (de ductible item) |
Statutory reserves |
Other re- serves | Revaluation reserves |
Fair value of financial as- sets available for sale |
Efficient por tion of cash flow hedge |
Efficient por tion of foreign net invest ment hedge |
Retained earnings/ loss carried forward |
Net profit/ loss for the period |
Total distrib utable to ma jority owners |
Minority (non controlling) interest |
Total capital and reserves |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 (3 to 6 - 7 + 8 to 15) |
17 | 18 (16+17) |
| Previous period | |||||||||||||||||
| 1. Balance at 1 January of the previous period | 01 | 1.672.021.210 | 2.204.690 | 67.198.750 | 44.815.284 | 37.141.295 | 9.529.123 | 273.313 | 36.580.064 | 342.313.777 2.137.794.916 | 235.842.123 2.373.637.039 | ||||||
| 2. Changes in accounting policies | 02 | ||||||||||||||||
| 3. Error correction | 03 | ||||||||||||||||
| 4. Balance at 1 January of the previous period (ADP 01 to 03) | 04 | 1.672.021.210 | 2.204.690 | 67.198.750 | 44.815.284 | 37.141.295 | 9.529.123 | 273.313 | 36.580.064 | 342.313.777 2.137.794.916 | 235.842.123 2.373.637.039 | ||||||
| 5. Profit/loss for the period | 05 | 243.596.016 | 243.596.016 | 1.491.369 | 245.087.385 | ||||||||||||
| 6. Foreign currency translation differences- foreign operations | 06 | ||||||||||||||||
| 7. Changes in revaluation reserves of non-current tangible and intangible | 07 | ||||||||||||||||
| assets | |||||||||||||||||
| 8. Profit or loss from re-evaluation of finacial assets held for sale | 08 | 450.979 | 450.979 | 450.979 | |||||||||||||
| 9. Profit or loss from cash flow hedge | 09 | ||||||||||||||||
| 10. Profit or loss from foreign net investment hedge | 10 | ||||||||||||||||
| 11. Share in other comprehensive income/loss from undertakings with par- ticipating interest |
11 | ||||||||||||||||
| 12. Actuarial gains/losses from defined benefit plans | 12 | ||||||||||||||||
| 13. Other changes in capital (minorities) | 13 | ||||||||||||||||
| 14. Taxation of transactions recognized directly in equity | 14 | -90.195 | -90.195 | -90.195 | |||||||||||||
| 15. Increase/decrease of subscribed share capital (except by reinvested | |||||||||||||||||
| profit and in pre-bankruptcy settlement) | 15 | ||||||||||||||||
| 16. Increase of subscribed share capital by profit reinvestment | 16 | ||||||||||||||||
| 17. Increase of subscribed share capital in pre-bankruptcy settlement | 17 | ||||||||||||||||
| 18. Repurchase of own shares/stakes | 18 | -1.251.675 | 1.251.675 | 1.251.675 | |||||||||||||
| 19. Share in profit/dividend payout | 19 | ||||||||||||||||
| 20. Other distribution to majority owners | 20 | 1.398.216 | -99.352.192 | -97.953.976 | -97.953.976 | ||||||||||||
| 21. Transfer to reserves according to annual plan | 21 | 16.402.311 | 325.911.021 -342.313.777 | -445 | -6.207.552 | -6.207.997 | |||||||||||
| 22. Increase in reserves in pre-bankruptcy settlement | 22 | ||||||||||||||||
| 23. Balance at 31 December of previous period (ADP 04 to 22) | 23 | 1.672.021.210 | 3.602.906 | 83.601.061 | 44.815.284 | 35.889.620 | 9.529.123 | 634.097 | 263.138.893 | 243.596.016 2.285.048.970 | 231.125.940 2.516.174.910 | ||||||
| ADDITION TO STATEMENT OF CHANGES IN EQUITY (only for IFRS adopters) | |||||||||||||||||
| I. OTHER COMPREHENSIVE INCOME OF PREVIOUS PERIOD NET OF TAX (ADP 06 to 14) |
24 | 360.784 | 360.784 | 360.784 | |||||||||||||
| II. COMPREHENSIVE INCOME OR LOSS FOR THE PREVIOUS PERIOD (ADP 05+24) |
25 | 360.784 | 243.596.016 | 243.956.800 | 1.491.369 | 245.448.169 | |||||||||||
| III. TRANSACTIONS WITH OWNERS IN THE PREVIOUS PERIOD, RECOGNIZED DIRECTLY IN EQUITY (ADP 15 to 22) |
26 | 1.398.216 | 16.402.311 | -1.251.675 | 226.558.829 -342.313.777 | -96.702.746 | -6.207.552 -102.910.298 | ||||||||||
| Current period | |||||||||||||||||
| 1. Balance at 1 January of current period | 27 | 1.672.021.210 | 3.602.906 | 83.601.061 | 44.815.284 | 35.889.620 | 9.529.123 | 634.097 | 263.138.893 | 243.596.016 2.285.048.970 | 231.125.940 2.516.174.910 | ||||||
| 2. Changes in accounting policies | 28 | ||||||||||||||||
| 3. Error correction | 29 | ||||||||||||||||
| 4. Balance at 1 January of current period (ADP 27 to 29) | 30 | 1.672.021.210 | 3.602.906 | 83.601.061 | 44.815.284 | 35.889.620 | 9.529.123 | 634.097 | 263.138.893 | 243.596.016 2.285.048.970 | 231.125.940 2.516.174.910 | ||||||
| 5. Profit/loss for the period | 31 | 235.337.282 | 235.337.282 | 3.850.224 | 239.187.506 | ||||||||||||
| 6. Foreign currency translation differences- foreign operations | 32 | ||||||||||||||||
| 7. Changes in revaluation reserves of non-current tangible and intangible | 33 | ||||||||||||||||
| assets | |||||||||||||||||
| 8. Profit or loss from re-evaluation of finacial assets held for sale | 34 | 338.982 | 338.982 | 338.982 | |||||||||||||
| 9. Profit or loss from cash flow hedge | 35 | ||||||||||||||||
| 10. Profit or loss from foreign net investment hedge | 36 | ||||||||||||||||
| 11. Share in other comprehensive income/loss from undertakings with par ticipating interest |
37 | ||||||||||||||||
| 12. Actuarial gains/losses from defined benefit plans | 38 | ||||||||||||||||
| 13. Other changes in capital (minorities) | 39 | ||||||||||||||||
| 14. Taxation of transactions recognized directly in equity | 40 | -67.797 | -67.797 | -67.797 | |||||||||||||
| 15. Increase/decrease of subscribed share capital (except by reinvested | |||||||||||||||||
| profit and in pre-bankruptcy settlement) | 41 | ||||||||||||||||
| 16. Increase of subscribed share capital by profit reinvestment | 42 | ||||||||||||||||
| 17. Increase of subscribed share capital in pre-bankruptcy settlement | 43 | ||||||||||||||||
| 18. Repurchase of own shares/stakes | 44 | 51.705.655 | -51.705.655 | -51.705.655 | |||||||||||||
| 19. Share in profit/dividend payout | 45 | 356.885 | -393.563 | -111.730.149 | -110.979.701 | -110.979.701 | |||||||||||
| 20. Other distribution to majority owners | 46 | 1.344.492 | -1.082.563 | 2.427.055 | 2.427.055 | ||||||||||||
| 21. Transfer to reserves according to annual plan | 47 | 52.000.000 | -9.529.123 | 197.265.686 -243.596.016 | -3.859.453 | 167.016.901 | 163.157.448 | ||||||||||
| 22. Increase in reserves in pre-bankruptcy settlement | 48 | ||||||||||||||||
| 23. Balance as at 31 December of the current period (ADP 30 to 48) | 49 | 1.672.021.210 | 5.304.283 | 83.601.061 | 96.815.284 | 86.119.149 | 905.282 | 348.674.430 | 235.337.282 2.356.539.683 | 401.993.065 2.758.532.748 | |||||||
| ADDITION TO STATEMENT OF CHANGES IN EQUITY (only for IFRS adopters) | |||||||||||||||||
| I. OTHER COMPREHENSIVE INCOME OF CURRENT PERIOD, NET OF TAX (ADP 32 to 40) |
50 | 271.185 | 271.185 | 271.185 | |||||||||||||
| II. COMPREHENSIVE INCOME OR LOSS FOR THE CURRENT PERIOD | |||||||||||||||||
| (ADP 31 + 50) | 51 | 271.185 | 235.337.282 | 235.608.467 | 3.850.224 | 239.458.691 | |||||||||||
| III. TRANSACTIONS WITH OWNERS IN THE CURRENT PERIOD, RECOGNIZED DIRECTLY IN EQUITY (ADP 41 to 48) |
52 | 1.701.377 | 52.000.000 | 50.229.529 | -9.529.123 | 85.535.537 -243.596.016 -164.117.754 | 167.016.901 | 2.899.147 |
| Issuer name: Valamar Riviera d.d. |
Notes to the financial statements are prepared in accordance with the International Financial Reporting Standards (hereinafter: IFRS) in a way that they need to: |
|---|---|
| OIB: 36201212847 | a) provide information on the basis for the preparation of financial statements and certain accounting policies applied in accordance with International |
| Reporting period: | Accounting Standard 1 (IAS 1), |
| 01.01.2018. to 31.12.2018. | |
| b) disclose information to IFRSs that is not presented in the statement of financial position, statement of comprehensive income, statement of cash flow and statement of changes in shareholder's equity, |
|
| c) provide additional information that is not presented in the statement of |
financial position, statement of comprehensive income, statement of cash flow and statement of changes in shareholder's equity, but is important for understanding any of them.
| Tax number (MB): | 3474771 | HR Issuer's Home Member state code: |
|
|---|---|---|---|
| Company registration number (MBS): |
40020883 | ||
| Personal identification number (OIB): | 36201212847 | LEI: | 529900DUWS1DGNEK4C68 |
| Institution code: | 30577 | ||
| Issuing company: | Valamar Riviera d.d. | ||
| Postal code and place | 52440 | Poreč | |
| Street and house number: | Stancija Kaligari 1 | ||
| E-mail address: | [email protected] | ||
| Internet address: | www.valamar-riviera.com | ||
| Number of employees: (period end) | 2749 | ||
| Consolidated report: | KN | (KN-non consolidated/KD-consolidated) | |
| Audited report: | RD | (RN-non audited/RD-audited) | |
| Companies of the consolidation | |||
| subject (according to IFRS): | Seat: | MB: | |
| Bookkeeping service: | No | (bookkeeping service company name) | |
| Sopta Anka | |||
| Contact person: | (only surname and name) | ||
| Telephone: | 052/408 188 | ||
| [email protected] | |||
| E-mail address: | |||
| Auditing company: | Ernst & Young d.o.o. (the name of the company) |
||
| Certified auditor: | Berislav Horvat | ||
| (name and surname) |
Documents disclosed:
Financial statements (Balance Sheet, Income Statement, Cash Flow Statement, Statement of Changes in Equity and notes to financial statements)
Management Interim Report;
Declaration of the persons responsible for preparing the issuer's statements;
L.S. (authorized representative's signature)
| ADP | Preceding | Current | |
|---|---|---|---|
| Item | code | year | year |
| 1 | 2 | 3 | 4 |
| A) SUBSCRIBED CAPITAL UNPAID | 001 | ||
| B) NON CURRENT ASSETS (ADP 003+010+020+031+036) | 002 | 4.321.068.373 | 4.745.258.461 |
| I. INTANGIBLE ASSETS (ADP 004 to 009) 1. Research and Development expenditure |
003 004 |
44.533.715 | 52.117.007 |
| 2. Patents, licences, royalties, trademarks and service marks, software and similar rights | 005 | 37.646.206 | 44.689.688 |
| 3. Goodwill | 006 | 6.567.609 | 6.567.609 |
| 4. Prepayments for intangible assets | 007 | ||
| 5. Intangible assets under construction | 008 | 319.900 | 859.710 |
| 6. Other intangible assets | 009 | ||
| II. TANGIBLE ASSETS (ADP 011 to 019) | 010 | 3.697.439.264 | 3.956.425.253 |
| 1. Land | 011 | 633.926.337 | 644.865.439 |
| 2. Property | 012 | 2.416.617.894 | 2.589.871.537 |
| 3. Plants and equipment | 013 | 345.844.344 | 398.353.730 |
| 4. Tools, plants and vehicles | 014 | 89.672.494 | 113.623.233 |
| 5. Biological asset | 015 | ||
| 6. Prepayments for tangible assets | 016 | 23.166.558 | 3.269.078 |
| 7. Assets under construction | 017 | 137.209.673 | 150.627.634 |
| 8. Other tangible assets | 018 | 40.747.606 | 46.174.128 |
| 9. Investments property | 019 | 10.254.358 | 9.640.474 |
| III. NON-CURRENT FINANCIAL ASSETS (ADP 021 to 030) | 020 | 456.347.314 | 635.859.184 |
| 1. Stakes (shares) in undertakings in a Group | 021 | 452.395.427 | 616.200.941 |
| 2. Investments in other securities of undertakings in a Group | 022 | ||
| 3. Loans, deposits etc given to undertakings in a Group | 023 | ||
| 4. Stakes (shares) in undertakings with participating interest | 024 | ||
| 5. Investments in other securities of undertakings with participating interest | 025 | ||
| 6. Loans, deposits etc given to undertakings with participating interest | 026 | ||
| 7. Investments in securities | 027 | 3.620.830 | 3.959.812 |
| 8. Given loans, deposits and similar | 028 | 191.057 | 15.558.431 |
| 9. Other investments accounted for using the equity method | 029 | ||
| 10. Other non-current financial assets | 030 | 140.000 | 140.000 |
| IV. TRADE RECEIVABLES (ADP 032 to 035) | 031 | 188.176 | 147.290 |
| 1. Receivables from undertakings in a Group | 032 | ||
| 2. Receivables from undertakings with participating interests | 033 | ||
| 3. Trade receivables | 034 | ||
| 4. Other receivables | 035 | 188.176 | 147.290 |
| V. DEFERRED TAX ASSETS | 036 | 122.559.904 | 100.709.727 |
| C) CURENT ASSETS (ADP 038+046+053+063) | 037 | 291.552.583 | 228.130.083 |
| I. INVENTORIES (ADP 039 to 045) | 038 | 23.913.513 | 22.899.786 |
| 1. Raw materials and consumables | 039 | 23.767.779 | 22.761.740 |
| 2. Work in progress | 040 | ||
| 3. Finished products 4. Merchandise |
041 042 |
145.734 | 138.046 |
| 5. Prepayments for inventories | 043 | ||
| 6. Other available-for-sale assets | 044 | ||
| 7. Biological asset | 045 | ||
| II. RECEIVABLES (ADP 047 to 052) | 046 | 29.405.487 | 36.668.851 |
| 1. Receivables from undertakings in a Group | 047 | 3.392.515 | 1.879.447 |
| 2. Receivables from undertakings with participating interest | 048 | ||
| 3. Trade receivables | 049 | 12.221.884 | 29.757.242 |
| 4. Receivables from employees and members of the undertaking | 050 | 1.171.905 | 1.366.667 |
| 5. Receivables from Government and other institutions | 051 | 10.812.531 | 2.275.769 |
| 6. Other receivables | 052 | 1.806.652 | 1.389.726 |
| III. CURRENT FINANCIAL ASSETS (ADP 054 to 062) | 053 | 832.773 | 28.300 |
| 1. Stakes (shares) in undertakings in a Group | 054 | ||
| 2. Investments in other securities of undertakings in a Group | 055 | ||
| 3. Loans, deposits etc given to undertakings in a Group | 056 | 25.800 | 28.300 |
| 4. Stakes (shares) in undertakings with participating interest | 057 | ||
| 5. Investments in other securities of undertakings with participating interest | 058 | ||
| 6. Loans, deposits etc given to undertakings with participating interest | 059 | ||
| 7. Investments in securities | 060 | ||
| 8. Given loans, deposits and similar | 061 | 702.891 | |
| 9. Other financial assets | 062 | 104.082 | |
| IV. CASH AND CASH EQUIVALENTS | 063 | 237.400.810 | 168.533.146 |
| D) PREPAYMENTS AND ACCRUED INCOME | 064 | 19.416.287 | 24.218.271 |
| E) TOTAL ASSETS (ADP 001+002+037+064) | 065 | 4.632.037.243 | 4.997.606.815 |
| F) OFF-BALANCE SHEET ITEMS | 066 | 54.545.066 | 54.446.042 |
| ADP | Preceding | Current | |
|---|---|---|---|
| Item | code | year | year |
| 1 | 2 | 3 | 4 |
| LIABILITIES | |||
| A) CAPITAL AND RESERVES (ADP 068 to 070+076+077+081+084+087) | 067 | 2.395.468.296 | 2.474.760.657 |
| I. SHARE CAPITAL | 068 | 1.672.021.210 | 1.672.021.210 |
| II. CAPITAL RESERVES | 069 | 3.602.906 | 5.304.283 |
| III. RESERVES FROM PROFIT (ADP 071+072-073+074+075) | 070 | 102.055.847 | 94.297.196 |
| 1. Legal reserves | 071 | 83.601.061 | 83.601.061 |
| 2. Reserves for own shares | 072 | 44.815.284 | 96.815.284 |
| 3. Own stocks and shares (deductible items) | 073 | -35.889.621 | -86.119.149 |
| 4. Statutory reserves | 074 | ||
| 5. Other reserves | 075 | 9.529.123 | |
| IV. REVALUATION RESERVES | 076 | ||
| V. FAIR VALUE RESERVES (ADP 078 to 080) | 077 | 634.097 | 905.282 |
| 1. Fair value of financial assets available for sale | 078 | 634.097 | 905.282 |
| 2. Efficient portion of cash flow hedge | 079 | ||
| 3. Efficient portion of foreign net investment hedge | 080 | ||
| VI. RETAINED EARNINGS OR LOSS CARRIED FORWARD (ADP 082-083) | 081 | 385.175.162 | 462.953.210 |
| 1. Retained earnings | 082 | 385.175.162 | 462.953.210 |
| 2. Loss carried forward | 083 | ||
| VII. PROFIT OR LOSS FOR THE FINANCIAL YEAR (ADP 085-086) | 084 | 231.979.074 | 239.279.476 |
| 1. Profit for the financial year | 085 | 231.979.074 | 239.279.476 |
| 2. Loss for the financial year | 086 | ||
| VIII. MINORITY INTEREST | 087 | ||
| B) PROVISIONS (ADP 089 to 094) | 088 | 31.597.492 | 35.699.314 |
| 1. Provisions for pensions, severance pay and similar libabilities | 089 | 4.665.359 | 7.894.989 |
| 2. Provisions for tax obligations | 090 | ||
| 3. Provisions for litigations in progress | 091 | 26.932.133 | 27.804.325 |
| 4. Provisions for renewal of natural resources | 092 | ||
| 5. Provision for costs within warranty period | 093 | ||
| 6. Other provisions | 094 | ||
| C) NON-CURRENT LIBILITIES (ADP 096 to 106) | 095 | 1.739.431.226 | 2.001.600.459 |
| 1. Liabilites to related parties | 096 | ||
| 2. Liabilities for loans, deposits etc of undertakings in a Group | 097 | ||
| 3. Liabilities to undertakings with participating interest | 098 | ||
| 4. Liabilities for loans, deposits etc of undertakings with participating interest | 099 | ||
| 5. Liabilities for loans, deposits and other | 100 | ||
| 6. Liabilities to banks and other financial institutions | 101 | 1.721.763.614 | 1.978.757.713 |
| 7. Liabilities for advance payments | 102 | ||
| 8. Trade payables | 103 | ||
| 9. Amounts payable for securities | 104 | ||
| 10. Other non-current liabilities | 105 | 1.585.824 | 7.615.740 |
| 11. Deffered tax | 106 | 16.081.788 | 15.227.006 |
| D) CURRENT LIABILITIES (ADP 108 to 121) | 107 | 369.130.888 | 374.287.286 |
| 1. Liabilities to undertakings in a Group | 108 | 377.577 | 196.105 |
| 2. Liabilities for loans, deposits etc of undertakings in a Group | 109 | ||
| 3. Liabilities to undertakings with participating interest | 110 | ||
| 4. Liabilities for loans, deposits etc of undertakings with participating interest | 111 | ||
| 5. Liabilities for loans, deposits and other | 112 | ||
| 6. Liabilities to banks and other financial institutions 7. Amounts payable for prepayment |
113 114 |
184.701.848 30.708.993 |
203.359.113 34.734.630 |
| 8. Trade payables | 115 | 121.224.757 | 102.714.900 |
| 9. Liabilities upon loan stocks | 116 | ||
| 10. Liabilities to emloyees 11. Taxes, contributions and similar liabilities |
117 118 |
20.606.875 10.270.639 |
22.822.891 9.464.523 |
| 12. Liabilities arising from share in the result | 119 | 72.403 | 9.600 |
| 13. Liabilities arising from non-current assets held for sale | 120 | ||
| 14. Other current liabilities | 121 | 1.167.796 | 985.524 |
| E) ACCRUED EXPENSES AND DEFERRED INCOME | 122 | 96.409.341 | 111.259.099 |
| F) TOTAL LIABILITIES (ADP 067+088+095+107+122) | 123 | 4.632.037.243 | 4.997.606.815 |
| G) OFF-BALANCE SHEET ITEMS | 124 | 54.545.066 | 54.446.042 |
| ADP | Preceding | Current | |
|---|---|---|---|
| Item | code | period | period |
| 1 | 2 | 3 | 4 |
| I. OPERATING INCOME (ADP 126+127+128+129+130) | 125 | 1.636.413.207 | 1.788.691.935 |
| 1. Revenues from sales with undertakings in a Group | 126 | 13.865.641 | 18.501.792 |
| 2. Sales revenues (outside the Group) | 127 | 1.602.798.436 | 1.750.101.402 |
| 3. Revenues from use of own products, goods and services | 128 | 5.191.926 | 328.628 |
| 4. Other operating revenues with undertakings in a Group | 129 | 46.785 | 53.245 |
| 5.Other operating revenues (outside the Group) | 130 | 14.510.419 | 19.706.868 |
| II. OPERATING EXPENSES (ADP 132+133+137+141+142+143+146+153) | 131 | 1.396.220.124 | 1.512.025.945 |
| 1. Changes in inventories of finished products and work in progress | 132 | ||
| 2. Material costs (ADP 134 to 136) | 133 | 511.785.310 | 501.402.765 |
| a) Cost of raw materials & consumables | 134 | 274.645.200 | 294.408.484 |
| b) Cost of goods sold | 135 | 2.850.429 | 3.276.436 |
| c) Other costs | 136 | 234.289.681 | 203.717.845 |
| 3. Staff costs (ADP 138 to 140) | 137 | 443.751.031 | 487.757.455 |
| a) Net salaries | 138 | 269.924.542 | 297.438.400 |
| b) Employee income tax | 139 | 111.612.209 | 123.009.680 |
| c) Tax on payroll | 140 | 62.214.280 | 67.309.375 |
| 4. Depreciation and amortisation | 141 | 283.465.960 | 344.691.659 |
| 5. Other expenditures | 142 | 133.772.749 | 159.208.901 |
| 6. Value adjustment (ADP 144+145) | 143 | 112.132 | 296.981 |
| a) non-current assets (without financial assets) | 144 | ||
| b) current asssets (without financial assets) | 145 | 112.132 | 296.981 |
| 7. Provisions (ADP 147 to 152) | 146 | 5.086.540 | 5.978.624 |
| a) Provision for pensions, severance payments and other employment benefits |
147 | 4.665.359 | 3.939.257 |
| b) Provisions for tax liabilities | 148 | ||
| c) Provisions for litigations in progress | 149 | 421.181 | 2.039.367 |
| d) Provisions for renewal of natural resources | 150 | ||
| e) Provision for costs within warranty period | 151 | ||
| f) Other provisions | 152 | ||
| 8. Other operating expenses | 153 | 18.246.402 | 12.689.560 |
| III. FINANCIAL INCOME (ADP 155 to 164) | 154 | 59.584.924 | 59.553.898 |
| 1. Income from stakes (shares) in undertakings in a Group | 155 | 6.050.776 | |
| 2. Income from stakes (shares) in undertakings with participating interest | 156 | ||
| 3. Income from other non-current financial investments and loans to | |||
| undertakings in a Group | 157 | ||
| 4. Other interest income from undertakings in a Group | 158 | ||
| 5. Foreign exchange differences and other financial income from | 159 | ||
| undertakings in a Group | |||
| 6. Income from other non-current financial investments and loans 7. Other interest income |
160 161 |
467.081 | 459.866 |
| 8. Foreign exchange differences and other financial income | 162 | 48.589.480 | 44.543.942 |
| 9. Unrealized gains (income) from the financial assets | 163 | 7.520.020 | 4.696.029 |
| 10. Other financial income | 164 | 3.008.343 | 3.803.285 |
| IV. FINANCIAL COSTS (ADP 166 to 172) | 165 | 82.068.385 | 76.012.814 |
| 1. Interest expenses and similar expenses with undertakings in a Group | 166 | ||
| 2. Foreign exchange differences and other expenses with | |||
| undertakings in a Group | 167 | ||
| 3. Interest expenses and similar | 168 | 37.199.453 | 45.277.357 |
| 4. Foreign exchange differences and other expenses | 169 | 31.145.877 | 17.040.290 |
| 5. Unrealized loss (expenses) from the financial assets | 170 | 6.761.354 | 10.757.668 |
| 6. Value adjustment expense on financial assets (net) | 171 | 5.629.924 | |
| 7. Other financial expenses | 172 | 1.331.777 | 2.937.499 |
| V. SHARE OF PROFIT FROM UNDERTAKINGS WITH PARTICIPATING INTEREST | 173 | ||
| VI. SHARE OF PROFIT FROM JOINT VENTURES | 174 | ||
| VII. SHARE OF LOSS FROM UNDERTAKINGS WITH PARTICIPATING INTEREST | 175 | ||
| VIII. SHARE OF LOSS FROM JOINT VENTURES | 176 | ||
| IX. TOTAL INCOME (ADP 125+154+173+174) | 177 | 1.695.998.131 | 1.848.245.833 |
| X. TOTAL EXPENSES (ADP 131+165+175+176) | 178 | 1.478.288.509 | 1.588.038.759 |
| XI. PROFIT OR LOSS BEFORE TAX (ADP 177-178) | 179 | 217.709.622 | 260.207.074 |
| 1. Profit before tax (ADP 177-178) | 180 | 217.709.622 | 260.207.074 |
| 2. Loss before tax (ADP 178-177) | 181 | ||
| XII. INCOME TAX EXPENSE | 182 | -14.269.452 | 20.927.598 |
| XIII. PROFIT OR LOSS FOR THE PERIOD (ADP 179-182) | 183 | 231.979.074 | 239.279.476 |
| 1. Profit for the period (ADP 179-182) | 184 | 231.979.074 | 239.279.476 |
| 2. Loss for the period (ADP 182-179) | 185 |
| Item | ADP | Preceding | Current |
|---|---|---|---|
| code | period | period | |
| 1 | 2 | 3 | 4 |
| XIV. PROFIT OR LOSS FROM DISCONTINUED OPERATIONS BEFORE TAX (ADP 187-188) |
186 |
|---|---|
| 1. Profit before tax from discontinued operations | 187 |
| 2. Loss before tax from discontinued operations | 188 |
| XV. INCOME TAX EXPENSE FROM DISCONTINUED OPERATIONS | 189 |
| 1. Profit for the period from discontinued operations (ADP 186-189) | 190 |
| 2. Loss for the period from discontinued operations (ADP 189-186) | 191 |
| XVI. PROFIT OR LOSS BEFORE TAX (ADP 179+186) | 192 |
|---|---|
| 1. Profit before tax (ADP 192) | 193 |
| 2. Loss before tax (ADP 192) | 194 |
| XVII. INCOME TAX EXPENSE (ADP 182+189) | 195 |
| XVIII. PROFIT OR LOSS FOR THE PERIOD (ADP 192-195) | 196 |
| 1. Profit for the period (ADP 192-195) | 197 |
| 2. Loss for the period (ADP 195-192) | 198 |
| XIX. PROFIT OR LOSS FOR THE PERIOD (ADP 200+201) | 199 | 231.979.074 | 239.279.476 |
|---|---|---|---|
| 1. Attributable to parent company's shareholders | 200 | 231.979.074 | 239.279.476 |
| 2. Attributable to non-controlling interests | 201 |
| I. PROFIT OR LOSS FOR THE PERIOD | 202 | 231.979.074 | 239.279.476 |
|---|---|---|---|
| II. OTHER COMPREHENSIVE INCOME /LOSS BEFORE TAX (ADP 204 to 211) |
203 | 450.979 | 338.982 |
| 1. Exchange differences arising from foreign operations | 204 | ||
| 2. Revaluation of non-current assets and intangible assets | 205 | ||
| 3. Gains or loss available for sale investments | 206 | 450.979 | 338.982 |
| 4. Gains or loss on net movement on cash flow hedges | 207 | ||
| 5. Gains or loss on net investments hedge | 208 | ||
| 6. Share of the other comprehensive income/loss of associates | 209 | ||
| 7. Acturial gain/loss on post employment benefit obligations | 210 | ||
| 8. Other changes in capital (minorities) | 211 | ||
| III. TAX ON OTHER COMPREHENSIVE INCOME OF THE PERIOD | 212 | 90.195 | 67.796 |
| IV. NET OTHER COMPREHENSIVE INCOME OR LOSS FOR THE YEAR (ADP 203-212) |
213 | 360.784 | 271.186 |
| V. TOTAL COMPREHENSIVE INCOME/LOSS FOR THE PERIOD (ADP 202+213) |
214 | 232.339.858 | 239.550.662 |
| VI. TOTAL COMPREHENSIVE INCOME/LOSS FOR THE PERIOD (ADP 216+217) |
215 |
|---|---|
| 1. Attributable to parent company's shareholders | 216 |
| 2. Attributable to non-controlling interests | 217 |
| ADP | Preceding | Current | |
|---|---|---|---|
| Item | code | period | period |
| 1 | 2 | 3 | 4 |
| CASH FLOW FROM OPERATING ACTIVITIES | |||
| 1. Profit before taxes | 001 | 217.709.622 | 260.207.073 |
| 2. Adjustments (ADP 003 to 010) | 002 | 323.378.635 | 382.377.351 |
| a) Depreciation and amortisation | 003 | 283.465.960 | 344.691.659 |
| b) Profit and loss from sales and value adjustments of non-current tangible and intangible assets |
004 | 10.492.924 | 4.448.024 |
| c) Profit and loss from sales and unrealised profit and loss and value adjustments of financial assets |
005 | -211.830 | 1.440.100 |
| d) Income from interest and dividends | 006 | -436.947 | -204.629 |
| e) Interest expenses | 007 | 38.531.230 | 46.213.364 |
| f) Provisions | 008 | 6.707.753 | 7.049.970 |
| g) Foreign exchange differences (unrealized) | 009 | -13.101.550 | -27.175.314 |
| h) Other adjustments for non-cash transactions and unrealized profit and loss | 010 | -2.068.905 | 5.914.177 |
| I. Increase or decrease of cash flow before changes in working capital (ADP 001+002) |
011 | 541.088.257 | 642.584.424 |
| 3. Changes in working capital (ADP 013 to 016) | 012 | 33.035.631 | -21.944.066 |
| a) Increase or decrease of current liabilities | 013 | 1.433.296 | 4.209.742 |
| b) Increase or decrease of current receivables | 014 | 37.262.296 | -27.169.779 |
| c) Increase or decrease of inventories | 015 | -5.659.961 | 1.015.971 |
| d) Other increase or decrease of working capital | 016 | ||
| II. Cash from operating activities (ADP 011+012) | 017 | 574.123.888 | 620.640.358 |
| 4. Interest | 018 | -38.109.984 | -42.657.019 |
| 5. Income tax paid | 019 | 102.419 | 53.533 |
| A) NET CASH FLOW FROM OPERATING ACTIVITIES (ADP 017 to 019) | 020 | 536.116.323 | 578.036.872 |
| CASH FLOW FROM INVESTMENT ACTIVITIES | |||
| 1. Proceeds from sale of non-current assets | 021 | 3.469.847 | 5.144.096 |
| 2. Proceeds from selling financial instruments | 022 | 1.808.303 | 50.000 |
| 3. Proceeds from interest rates | 023 | 639.234 | 707.828 |
| 4. Proceeds from dividends | 024 | 579.153 | 6.152.793 |
| 5. Proceeds from repayment of given loans and savings | 025 | 11.143.895 | 905.491 |
| 6. Other proceeds from investment activities | 026 | 338.416 | 333.341 |
| III. Total cash proceeds from investment activities (ADP 021 to 026) | 027 | 17.978.848 | 13.293.549 |
| 1. Purchase of non-current tangible and intangible assets | 028 | -860.324.118 | -630.494.466 |
| 2. Purchase of financial instruments | 029 | ||
| 3. Loans and deposits for the period | 030 | -10.615.679 | -175.676 |
| 4. Acquisition of subsidiary, net of acquired cash | 031 | -6.207.552 | -165.484.114 |
| 5. Other payments from investment activities | 032 | ||
| IV. Total cash payments from investment activities (ADP 028 to 032) B) NET INCREASE OF CASH FLOW FROM INVESMENT ACTIVITIES (ADP 027+033) |
033 034 |
-877.147.349 -859.168.501 |
-796.154.256 -782.860.707 |
| CASH FLOW FROM FINANCIAL ACTIVITIES | |||
| 1. Proceeds from increase of subscribed capital | 035 | ||
| 2. Proceeds from issuing equity-based and debt-based financial instruments | 036 | ||
| 3. Proceeds from loan principal, loans and other borrowings | 037 | 582.241.802 | 488.930.130 |
| 4. Other proceeds from financial activities | 038 | ||
| V. Total proceeds from financial activities (ADP 035 to 038) | 039 | 582.241.802 | 488.930.130 |
| 1. Repayment of loan principals, loans and other borrowings and debt-based financial instruments |
040 | -161.094.158 | -189.538.155 |
| 2. Dividends paid | 041 | -98.342.353 | -111.730.149 |
| 3. Payment of finance lease liabilities | 042 | ||
| 4. Re-purchase of treasury shares and decrease in subscribed share capital | 043 | -51.705.655 | |
| 5. Other payments from financial activities | 044 | ||
| VI. Total cash payments from financing activities (ADP 040 to 044) | 045 | -259.436.511 | -352.973.959 |
| C) NET CASH FLOW FROM FINANCIAL ACTIVITIES (ADP 039+045) | 046 | 322.805.291 | 135.956.171 |
| 1. Cash and cash equivalents-unrealized foreign exchange differences | 047 | ||
| D) NET INCREASE OR DECREASE OF CASH FLOW (ADP 020+034+046+047) | 048 | -246.887 | -68.867.664 |
| E) CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD | 049 | 237.647.697 | 237.400.810 |
| F) CASH AND CASH EQUIVALENTS AT THE END OF PERIOD (ADP 048+049) | 050 | 237.400.810 | 168.533.146 |
| Distributable to majority owners | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Description | ADP | Subscribed Share capital |
Capital re- serves | Legal reserves Reserves for | own shares | Treasury shares and shares (de- ductible item) |
Statutory reserves |
Other re- serves | Revaluation reserves |
Fair value of financial as- sets available for sale |
Efficient por- tion of cash flow hedge |
Efficient por- tion of foreign net invest- ment hedge |
Retained earnings / loss carried forward |
Net profit/ loss for the period |
Total distrib- utable to ma- jority owners |
Minority (non controlling) interest |
Total capital and reserves |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 (3 to 6 - 7 + 8 to 15) |
17 | 18 (16+17) |
| Previous period | |||||||||||||||||
| 1. Balance at 1 January of the previous period | 01 | 1.672.021.210 | 2.204.690 | 67.198.750 | 44.815.284 | 37.141.295 | 9.529.123 | 273.313 | 228.523.684 336.657.721 2.324.082.480 | 2.324.082.480 | |||||||
| 2. Changes in accounting policies | 02 | ||||||||||||||||
| 3. Error correction | 03 | ||||||||||||||||
| 4. Balance at 1 January of the previous period (ADP 01 to 03) | 04 | 1.672.021.210 | 2.204.690 | 67.198.750 | 44.815.284 | 37.141.295 | 9.529.123 | 273.313 | 228.523.684 336.657.721 2.324.082.480 | 2.324.082.480 | |||||||
| 5. Profit/loss for the period | 05 | 231.979.074 | 231.979.074 | 231.979.074 | |||||||||||||
| 6. Foreign currency translation differences- foreign operations | 06 | ||||||||||||||||
| 7. Changes in revaluation reserves of non-current tangible and intangible assets | 07 | ||||||||||||||||
| 8. Profit or loss from re-evaluation of finacial assets held for sale | 08 | 450.979 | 450.979 | 450.979 | |||||||||||||
| 9. Profit or loss from cash flow hedge | 09 | ||||||||||||||||
| 10. Profit or loss from foreign net investment hedge | 10 | ||||||||||||||||
| 11. Share in other comprehensive income/loss from undertakings with | |||||||||||||||||
| participating interest | 11 | ||||||||||||||||
| 12. Actuarial gains/losses from defined benefit plans | 12 | ||||||||||||||||
| 13. Other changes in capital (minorities) | 13 | ||||||||||||||||
| 14. Taxation of transactions recognized directly in equity | 14 | -90.195 | -90.195 | -90.195 | |||||||||||||
| 15. Increase/decrease of subscribed share capital (except by reinvested | 15 | ||||||||||||||||
| profit and in pre-bankruptcy settlement) | |||||||||||||||||
| 16. Increase of subscribed share capital by profit reinvestment | 16 | ||||||||||||||||
| 17. Increase of subscribed share capital in pre-bankruptcy settlement | 17 | ||||||||||||||||
| 18. Repurchase of own shares/stakes | 18 | -1.251.674 | 1.251.674 | 1.251.674 | |||||||||||||
| 19. Share in profit/dividend payout | 19 | ||||||||||||||||
| 20. Other distribution to majority owners | 20 | 1.398.216 | -99.352.193 | -97.953.977 | -97.953.977 | ||||||||||||
| 21. Transfer to reserves according to annual plan | 21 | 16.402.311 | 256.003.671 -336.657.721 | -64.251.739 | -64.251.739 | ||||||||||||
| 22. Increase in reserves in pre-bankruptcy settlement | 22 | ||||||||||||||||
| 23. Balance at 31 December of previous period (ADP 04 to 22) | 23 | 1.672.021.210 | 3.602.906 | 83.601.061 | 44.815.284 | 35.889.621 | 9.529.123 | 634.097 | 385.175.162 | 231.979.074 2.395.468.296 | 2.395.468.296 | ||||||
| ADDITION TO STATEMENT OF CHANGES IN EQUITY (only for IFRS adopters) | |||||||||||||||||
| I. OTHER COMPREHENSIVE INCOME OF PREVIOUS PERIOD NET OF TAX (ADP 06 to 14) |
24 | 360.784 | 360.784 | 360.784 | |||||||||||||
| II. COMPREHENSIVE INCOME OR LOSS FOR THE PREVIOUS PERIOD | |||||||||||||||||
| (ADP 05+24) | 25 | 360.784 | 231.979.074 | 232.339.858 | 232.339.858 | ||||||||||||
| III. TRANSACTIONS WITH OWNERS IN THE PREVIOUS PERIOD, RECOGNIZED DI RECTLY IN EQUITY (ADP 15 to 22) |
26 | 1.398.216 | 16.402.311 | -1.251.674 | 156.651.478 -336.657.721 -160.954.042 | -160.954.042 | |||||||||||
| Current period | |||||||||||||||||
| 1. Balance at 1 January of current period | 27 | 1.672.021.210 | 3.602.906 | 83.601.061 | 44.815.284 | 35.889.621 | 9.529.123 | 634.097 | 385.175.162 | 231.979.074 2.395.468.296 | 2.395.468.296 | ||||||
| 2. Changes in accounting policies | 28 | ||||||||||||||||
| 3. Error correction | 29 | ||||||||||||||||
| 4. Balance at 1 January of current period (ADP 27 to 29) | 30 | 1.672.021.210 | 3.602.906 | 83.601.061 | 44.815.284 | 35.889.621 | 9.529.123 | 634.097 | 385.175.162 | 231.979.074 2.395.468.296 | 2.395.468.296 | ||||||
| 5. Profit/loss for the period | 31 | 239.279.476 | 239.279.476 | 239.279.476 | |||||||||||||
| 6. Foreign currency translation differences- foreign operations | 32 | ||||||||||||||||
| 7. Changes in revaluation reserves of non-current tangible and intangible assets |
33 | ||||||||||||||||
| 8. Profit or loss from re-evaluation of finacial assets held for sale | 34 | 338.982 | 338.982 | 338.982 | |||||||||||||
| 9. Profit or loss from cash flow hedge | 35 | ||||||||||||||||
| 10. Profit or loss from foreign net investment hedge | 36 | ||||||||||||||||
| 11. Share in other comprehensive income/loss from undertakings with | |||||||||||||||||
| participating interest | 37 | ||||||||||||||||
| 12. Actuarial gains/losses from defined benefit plans | 38 | ||||||||||||||||
| 13. Other changes in capital (minorities) | 39 | ||||||||||||||||
| 14. Taxation of transactions recognized directly in equity | 40 | -67.797 | -67.797 | -67.797 | |||||||||||||
| 15. Increase/decrease of subscribed share capital (except by reinvested | 41 | ||||||||||||||||
| profit and in pre-bankruptcy settlement) | |||||||||||||||||
| 16. Increase of subscribed share capital by profit reinvestment | 42 | ||||||||||||||||
| 17. Increase of subscribed share capital in pre-bankruptcy settlement | 43 | ||||||||||||||||
| 18. Repurchase of own shares/stakes | 44 | 51.705.655 | -51.705.655 | -51.705.655 | |||||||||||||
| 19. Share in profit/dividend payout | 45 | 356.885 | -393.563 | -111.730.149 | -110.979.701 | -110.979.701 | |||||||||||
| 20. Other distribution to majority owners | 46 | 1.344.492 | -1.082.564 | 2.427.056 | 2.427.056 | ||||||||||||
| 21. Transfer to reserves according to annual plan | 47 | 52.000.000 | -9.529.123 | 189.508.197 -231.979.074 | |||||||||||||
| 22. Increase in reserves in pre-bankruptcy settlement | 48 | ||||||||||||||||
| 23. Balance as at 31 December of the current period (ADP 30 to 48) | 49 | 1.672.021.210 | 5.304.283 | 83.601.061 | 96.815.284 | 86.119.149 | 905.282 | 462.953.210 | 239.279.476 2.474.760.657 | 2.474.760.657 | |||||||
| ADDITION TO STATEMENT OF CHANGES IN EQUITY (only for IFRS adopters) | |||||||||||||||||
| I. OTHER COMPREHENSIVE INCOME OF CURRENT PERIOD, NET OF TAX (ADP 32 to 40) |
50 | 271.185 | 271.185 | 271.185 | |||||||||||||
| II. COMPREHENSIVE INCOME OR LOSS FOR THE CURRENT PERIOD | 51 | 271.185 | 239.279.476 | 239.550.661 | 239.550.661 | ||||||||||||
| (ADP 31 + 50) | |||||||||||||||||
| III. TRANSACTIONS WITH OWNERS IN THE CURRENT PERIOD, RECOGNIZED DI RECTLY IN EQUITY (ADP 41 to 48) |
52 | 1.701.377 | 52.000.000 | 50.229.528 | -9.529.123 | 77.778.048 -231.979.074 -160.258.300 | -160.258.300 |
| Issuer name: Valamar Riviera d.d. |
Notes to the financial statements are prepared in accordance with the International Financial Reporting Standards (hereinafter: IFRS) in a way that they need to: |
|---|---|
| OIB: 36201212847 | a) provide information on the basis for the preparation of financial statements and certain accounting policies applied in accordance with International |
| Reporting period: | Accounting Standard 1 (IAS 1), |
| 01.01.2018. to 31.12.2018. | |
| b) disclose information to IFRSs that is not presented in the statement of financial position, statement of comprehensive income, statement of cash flow and statement of changes in shareholder's equity, |
|
| c) provide additional information that is not presented in the statement of |
financial position, statement of comprehensive income, statement of cash flow and statement of changes in shareholder's equity, but is important for understanding any of them.
VALAMAR RIVIERA d.d. MANAGEMENT BOARD Number: 62-1/19. Poreč, 19 February 2019
Pursuant to Articles 250a, 250b, 300a and 300b of the Companies Act, Articles 462 and 463 of the Capital Market Act, Articles 3 and 4 of the Content and structure of the Issuer's annual report and form and manner of delivering it to the Croatian Financial Services Supervisory Agency Regulation and Articles 19, 20, 21 and 24 of the Accounting Act, at its meeting held on 19 February 2019, the Management Board of Valamar Riviera d.d. from Poreč, 1 Stancija Kaligari (hereinafter: Valamar Riviera d.d. or the Company) rendered the following
I The Annual Report of Valamar Riviera d.d. is hereby determined as stated in the text of the enclosed "2018 ANNUAL REPORT".
The audited non-consolidated and consolidated Annual financial statements for the year 2018 are hereby determined, and consist of the following: Statement of Financial Position (Balance Sheet), Income Statement, Statement of Other Comprehensive Income, Statement of Cash Flow, Statement of Changes in Equity and Notes to Financial Statements, as stated in the text that is an integral part of the Report from point I of this decision.
It is hereby determined that the Auditor, Ernst & Young d.o.o. from Zagreb, 50 Radnička cesta, produced the Auditor's report for 2018, as stated in the text that is an integral part of the Report from point I of this decision.
The Management Report on the Company's status for the period from 01/01/2018 to 31/12/2018 is hereby determined, as stated in the text that is an integral part of the Report from point I of this decision.
The proposed decision to distribute the Company's realized profits in 2018 totaling HRK 239,279,475.64 to the Company's retained profits is hereby determined.
Pursuant to Article 300b of the Companies Act:
MANAGEMENT BOARD'S DECISION ON ESTABLISHING THE ANNUAL FINANCIAL STATEMENTS AND ON THE PROPOSAL OF PROFIT DISTRIBUTION /continued
decision for the distribution of profits pursuant to point V of this Decision, and to pass it as such to be adopted at the General Assembly.
Pursuant to Article 129 of the Zagreb Stock Exchange Rules, the Zagreb Stock Exchange will be informed of this Decision.
After the Supervisory Board decides on the matters presented in point VI, the reports determined in this Decision and the proposal for the distribution of profits from point V will be released in the prescribed period, pursuant to Article 462 and Article 463 of the Capital Market Act and Article 4 Content and structure of the Issuer's annual report and form and manner of delivering it to the Croatian Financial Services Supervisory Agency Regulation.
Upon their adoption, the following decisions and reports will be submitted to the Financial Agency to be disclosed in the prescribed period, pursuant to Article 30 of the Accounting Act: this Decision together with the proposed decision on the distribution of profits in point V, the reports determined by this Decision and the decisions rendered by the Supervisory board in point VI.
For the attention of:
VALAMAR RIVIERA d.d. SUPERVISORY BOARD Number: 68-1/19. Poreč, 26 February 2019
Pursuant to Article 300d, and Article 300c of the Companies Act and Management Board Decision no. 62-1/19 dated 19/02/2019, at its meeting held on 26 February 2019, the Supervisory Board of Valamar Riviera d.d. from Poreč rendered the following
I
The Supervisory Board hereby approves the 2018 ANNUAL REPORT of Valamar Riviera d.d. that also includes the following:
Pursuant to Article 300d of the Companies Act, by granting approval as stated in point I of this Decision, the 2018 Annual Financial Statements of Valamar Riviera d. d. from Poreč are considered to be approved both by the Management Board and by the Supervisory Board.
Gustav Wurmböck Supervisory Board Chairman
VALAMAR RIVIERA d.d. SUPERVISORY BOARD Number: 68-2/19. Poreč, 26 February 2019
Pursuant to Article 263, paragraph 3 and Article 300c, paragraph 3 of the Companies Act, at its meeting held on 26 February 2019, the Supervisory Board of Valamar Riviera d.d. from Poreč rendered the following
to the General Assembly of VALAMAR RIVIERA d.d. from Poreč on the performed supervision of the Company's business management in 2018
In the course of the year 2018 (i.e. reporting period), the Supervisory Board consisted of: Gustav Wurmböck, Chairman, Franz Lanschützer and Mladen Markoč, Deputy Chairmen, and Members: Georg Eltz, Hans Dominik Turnovszky, Vicko Ferić and Valter Knapić.
Apart from the Supervisory Board, the Supervisory Board members formed the following three bodies:
on 25 January 2018, the Supervisory Board appointed Mr. Gustav Wurmböck in his place on 27 February 2018. On 24 October 2018 the Supervisory Board increased the number of Audit Committee members that went from 5 to 6 and appointed Hans Dominik Turnovszky as committee member. Ever since, the Audit Committee has consisted of the following members: Georg Eltz, Chairman and Members Franz Lanschützer, Mladen Markoč, Vicko Ferić, Gustav Wurmböck and Hans Dominik Turnovszky.
II
In the course of 2018, the Supervisory Board regularly received written reports on business operations, as well as other reports, proposals and decisions by the Management Board. The Supervisory Board examined and rendered its decisions pertaining to the said reports, proposals and decisions pursuant to regulations and provisions of the Company's Statute. During the year 2018, the Supervisory Board held fourteen SUPERVISORY BOARD'S REPORT ON THE PERFORMED SUPERVISION OF COMPANY'S BUSINESS MANAGEMENT IN 2018 /continued
(14) meetings out of which nine (9) were held via correspondence, all pursuant to the Company's Statute. At the said meetings, it discussed numerous issues related to the Company's business and also supervised the management of the Company's business.
The Supervisory Board committees together with the Management Board and other responsible persons and experts held nineteen (19) meetings in 2018. During the said meetings, they examined documents and proposals pertaining to which the Supervisory Board rendered its decisions. This improved the Supervisory Board's efficiency and understanding of the Company's business while performing the supervision.
Pursuant to its duties, the Supervisory Board performed the supervision through meetings, committees and through documents and detailed information submitted by the Management Board in the course of 2018 and therefore
that Valamar Riviera d.d. from Poreč conducts its business pursuant to the law, Company Statute and other regulations and decisions of the Company.
The Supervisory Board devoted particular attention to the examination of the reports and proposals submitted by the Management Board and consisting of the following:
2) Proposal regarding the distribution of profit and dividend payout 3) Report on Related Party Transactions in 2018 and Auditor's Examination Report
At its meeting in the presence of the Auditor, Ernst & Young d.o.o. from Zagreb, the Audit Committee, followed by the Supervisory Board, examined the submitted annual financial statements for 2018 and established that they reflected the business records of the Company and rendered a veritable presentation of the position of the company in terms of business and assets, and therefore had no objections to them.
Pursuant to the previously submitted opinion by the Audit Committee, the Supervisory Board has no objection to the Auditor's report on the performed audit. Furthermore, the Supervisory Board has no objections to the Annual Management Report on the Company's Status.
The Supervisory Board also has no objection after examining the submitted Management Board Report on Related Party Transactions with the Auditor's examination report.
Besides the examination of the documents specified in the previous point, pursuant to the Company Statute, the Supervisory Board supervised the management of the Company's business by previously considering the Management Board proposals that required the Supervisory Board's approval. In that part, the Supervisory Board paid particular attention to approving the conditions for concluding legal transactions, concessions and the management of real estate. Furthermore, the Supervisory Board particularly focused on the approval of each loan and regularly monitored the Company's financial status and cash flow.
Besides the above mentioned, the Supervisory Board regularly reviewed the monthly business results by focusing on each individual property and the Company as a whole in relation to the previously adopted business plans. In this area, special attention was devoted to the 2019 business plan.
Furthermore, in the course of 2018, the Supervisory Board particularly focused on reviewing, directing and approving the planned investments SUPERVISORY BOARD'S REPORT ON THE PERFORMED SUPERVISION OF COMPANY'S BUSINESS MANAGEMENT IN 2018 /continued
at all stages of their preparation and execution. This was done by considering the actual need to improve the overall level of quality and standards of the facilities and providing a realistic estimate of the opportunities to sell such facilities and services on source markets as well as them being financially justifiable and profitable.
The Supervisory Board examined and approved the cross-border merger between EPIC Hospitality Holding GmbH and the Company (as transferee). This process was completed when the merger was recorded in the court register on 15 June 2018.
The Supervisory Board particularly monitored the Management Board in the processes of expressing interest for the purchase of shares and business stakes and potential acquisitions of strategic importance for the Company.
One of the most important activities to which the Supervisory Board devoted particular attention in 2018 was the acquisition of shares in HOTELI MAKARSKA d.d. from Makarska (in partnership with Allianz ZB d.o.o. društvo za upravljanje obveznim mirovinskim fondom from Zagreb, acting in its own name and on behalf of AZ Obvezni mirovinski fond kategorije A, personal identification number (OIB) 15220336427, and in its own name and on behalf of AZ Obvezni mirovinski fond kategorije B, personal identification number (OIB) 59318506371, with whom it had previously established a collaboration to act in concert regarding HOTELI MAKARSKA d.d.). The acquisition was carried out pursuant to the contract on share purchase and transfer from the Republic of Croatia and in the course of a takeover bid pursuant to the provisions of the Act on the Takeover of Joint Stock Companies.
Furthermore, the Supervisory Board also devoted particular attention to the first acquisitions of business stakes in Austria, i.e. the companies Valamar A GmbH (SPV) and Valamar Obertauern GmbH.
Finally, the Supervisory Board especially monitored the Management Board regarding the management of hospitality facilities and services of IMPERIAL d.d. Rab, pursuant to the concluded Management Contract that has been implemented since 4 January 2017 and of HOTELI MAKARSKA d.d. Makarska pursuant to the concluded Management Contract that has been implemented since 30 July 2018.
Furthermore, pursuant to the Company Statute, the Supervisory Board reappointed Željko Kukurin as Management Board President and Marko Čižmek as Management Board Member for a new term of office starting on 1 January 2019 and ending on 31 December 2022.
VI
Pursuant to what has been previously stated, and according to the comprehensive insight gained through the supervision of the Company's business management and information received during the course of work of the Supervisory Board and its committees in the period from 1 January to 31 December 2018, and the conducted examinations from point V of this Report, at its meeting held on 26 February 2019, the Supervisory Board
and hereby, according to Article 300d of the Companies Act, the Annual Financial Statements of Valamar Riviera d.d. from Poreč for 2018 are considered to be approved both by the Management Board and by the Supervisory Board.
SUPERVISORY BOARD'S REPORT ON THE PERFORMED SUPERVISION OF COMPANY'S BUSINESS MANAGEMENT IN 2018 /continued
the Management Board statement given in the Report on Related Party Transactions in 2018 pursuant to the provisions of Article 497, paragraph 3 of the Companies Act
the Auditor's examination by Ernst & Young d.o.o. of the Management Board Report on Related Party Transactions in 2018.
Gustav Wurmböck Supervisory Board Chairman
VALAMAR RIVIERA d.d. SUPERVISORY BOARD Number: 68-3/19. Poreč, 26 February 2019
Pursuant to Article 300d, and Article 300c of the Companies Act and the Management Board Decision no. 62-1/19 dated 19/02/2019, at its meeting held on 26 February 2019, the Supervisory Board of Valamar Riviera d.d. from Poreč rendered the following
I
The proposal to distribute HRK 239,279,475.64 of the Company's achieved profit in 2018 in the Company's retained profit is hereby determined.
It is proposed that the General Assembly accepts the proposal determined in point I of this decision that was previously approved by the Supervisory and Management Board.
Gustav Wurmböck Supervisory Board Chairman
VALAMAR RIVIERA d.d. SUPERVISORY BOARD Number: 68-4/19. Poreč, 26 February 2019
At its meeting held on 26 February 2019, the Supervisory Board of Valamar Riviera d.d. rendered the following
I
The Supervisory Board hereby agrees with the proposed Decision on Dividend Payout, pursuant to the enclosed Management Board Decision number: 62-3/19 dated 19 February 2019, as follows:
"With reference to the meaning of the provisions of Article 275, paragraph 1, point 2 of the Companies Act, the General Assembly of Valamar Riviera dioničko društvo za turizam, with registered office in Poreč, 1 Stancija Kaligari (hereinafter: the Company) rendered on ______________ 2019 the following
The shareholders of the Company shall be paid a dividend of HRK 1.00 (one) per each share.
The dividend shall be paid out of the retained profit achieved in 2016.
All Company shareholders as owners of shares registered in their accounts of dematerialized securities in the system of the Central Depository and Clearing Company (Središnje klirinško depozitarno društvo d.d.) as at 16 May 2019 (record date) are eligible for dividend payout.
The company shareholders have the possibility to have one quarter of their dividend paid out in company shares. One fourth of the total dividend a shareholder is entitled to shall be determined as follows: the dividend tax and surtax (if applicable to a shareholder) shall first be deducted from the number of shares multiplied by the dividend amount per share, and then it shall be divided by the average daily company share price achieved on the official market of the Zagreb Stock Exchange on the day this decision is rendered, and then divided by 4 and resulting in ¼ of rights (shares) rounded to the next smaller integer. The remaining part will be paid out in cash. The Company shall use treasury shares for the payment in rightscompany shares.
V
Those shareholders who wish to have a quarter of their dividend paid out in rights-company shares, must have their written, hand-signed statement submitted to the Central Depository and Clearing Company by 30 May 2019 at the latest.
The shareholders can find the application form on the corporate website: www.valamar-riviera.com.
The shareholders who do not submit their statement to have their dividend paid out in rights - company shares or whose statement will not be submitted to the Central Depository and Clearing Company by 30 May 2019, will receive their dividend in cash.
Company shareholders shall receive their dividend on 7 June 2019 (payment date)."
It is hereby proposed that the General Assembly adopts the proposal established in point I of this decision, which was previously approved by the Supervisory Board and Management Board.
Gustav Wurmböck Supervisory Board Chairman
This version of the financial statements is a translation from the Croatian language original. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of the report takes precedence over this translation.
| Responsibility for the financial statements | 91 |
|---|---|
| Independent Auditors' Report to the shareholders of Valamar Riviera d.d., Poreč | 92 |
| Statement of comprehensive income | 97 |
| Statement of financial position | 98 |
| Statement of changes in shareholder's equity | 100 |
| Statement of cash flows | 102 |
| Notes (form an integral part of the financial statements) | 103 |
Pursuant to the Croatian Accounting Law, the Management Board is responsible for ensuring that financial statements are prepared for each financial year in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union, which give a true and fair view of the state of affairs and results of Valamar Riviera d.d. (˝the Company˝) and its subsidiaries (˝the Group˝) for that period.
After making enquiries, the Management Board has a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, the Management Board continues to adopt the going concern basis in preparing the financial statements.
In preparing consolidated and separate financial statements, the responsibilities of the Management Board include ensuring that:
The Management Board is responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Company and the Group, and must also ensure that the financial statements comply with the Croatian Accounting Law. The Management Board is also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Signed by the Management Board on 19 February 2019:
Željko Kukurin President of the Management Board
Marko Čižmek Member of the Management Board
TO THE SHAREHOLDERS OF VALAMAR RIVIERA D.D.
We have audited the separate financial statements of Valamar Riviera d.d. (the Company), and consolidated financial statements of Valamar Riviera d.d. and it's subsidiaries (the Group) which comprise the separate and consolidated statement of financial position as at 31 December 2018, the separate and consolidated statement of comprehensive income, separate and consolidated statement of changes in equity and separate and consolidated statement of cash flows for the year then ended, and notes to the separate and consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying separate and consolidated financial statements give a true and fair view of the financial position of the Company and the Group as at 31 December 2018 and of their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by EU ("IFRS as adopted by EU").
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the separate and consolidated financial statements section of our report.
We are independent of the Company and the Group in accordance with
the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the separate and consolidated financial statements of the current period. These matters were addressed in the context of our audit of the separate and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the separate and consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the separate and consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying separate and consolidated financial statements.
INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF VALAMAR RIVIERA D.D. /continued
Impairment of the tourism property (separate and consolidated financial statements)
Refer to Notes 2.6. and 2.8. of Accounting Policies, Note 4 (a) of Critical Accounting estimates, and Note 14 on Property, Plant and Equipment of the Financial Statements.
The carrying amount of property, plant and equipment of the Group as at 31 December 2018 was HRK 5,101,597 thousand (Company: HRK 3,946,785 thousand) and it represented approximately 90% and 79% of the total assets of the Group and the Company, respectively. Property, plant and equipment mostly consists of tourism properties and related assets and is included in the statement of financial position at historical cost less accumulated depreciation and impairment, where required. Assets that are depreciated are examined for a potential impairment when events or changed circumstances indicate that the book value may not be recoverable.
The estimation process is complex and highly subjective and is based on the assumptions.
Due to the above factors and significant impact on the separate and consolidated financial statements, impairment of tourism properties was determined as key audit matter.
Our audit procedures related to impairment of property, plant and equipment included, among others:
Management is responsible for the other information. Other information consists of the information included in the Annual Report which includes the Management report and Corporate Governance Statement, other than the separate and consolidated financial statements and our auditor's report thereon. Our opinion on the separate and consolidated financial statements does not cover the Other information including the Management report and Corporate Governance Statement.
In connection with our audit of the separate and consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the separate and consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. With respect to the Management Report and Corporate Governance Statement, we also performed procedures required by the Accounting Act. Those procedures include considering whether the Management Report includes the disclosures required by Article 21 of the Accounting Act, and whether the Corporate Governance Statement includes the information specified in Article 22 of the Accounting Act.
Based on the procedures undertaken, to the extent we are able to assess it, we report that:
elements of Corporate Governance Statement containing the
information referred to in Article 22, paragraph 1, items 3 and 4 of the Accounting Act, included in the Company's and the Group's annual report are prepared in accordance with requirements of the Accounting Act and are consistent, in all material respects, with the enclosed separate and consolidated financial statements;
In addition, in the light of the knowledge and understanding of the entity and its environment obtained in the course of the audit, we are also required to report if we have identified material misstatements in the Management Report, Corporate Governance Statement and Annual report. We have nothing to report in this respect.
Management is responsible for the preparation and fair presentation of the separate and consolidated financial statements in accordance with IFRSs as adopted by EU, and for such internal control as management determines is necessary to enable the preparation of separate and consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the separate and consolidated financial statements, management is responsible for assessing the Company's and Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company and the Group or to cease operations, or has no realistic alternative but to do so.
Audit Committee is responsible for overseeing the Company's and Group's financial reporting process.
Our objectives are to obtain reasonable assurance about whether the separate and consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these separate and consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company and the Group to cease to continue as a going concern.
We communicate with Audit Committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with Audit Committee, we determine those matters that were of most significance in the audit of the separate and consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF VALAMAR RIVIERA D.D. /continued
In compliance with Article 10 (2) of Regulation (EU) No. 537/2014 of the European Parliament and the Council, we provide the following information in our independent auditor's report, which is required in addition to the requirements of International Standards on Auditing:
We were initially appointed as the auditors of the Company by the General Meeting of Shareholders on 4 May 2017 and our uninterrupted engagement has lasted for two years.
We confirm that our audit opinion on the separate and consolidated financial statements expressed herein is consistent with the additional report to the Audit Committee of the Company, which we issued on 22 February 2019 in accordance with Article 11 of Regulation (EU) No. 537/2014 of the European Parliament and the Council.
We declare that no prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No. 537/2014 of the European Parliament and the Council were provided by us to the Company and the Group. In addition, there are no other non-audit services which were provided by us to the Company and its controlled undertakings and which have not been disclosed in the separate and consolidated financial statements.
The partner in charge of the audit resulting in this independent auditor's report is Berislav Horvat.
26 February 2019
Ernst & Young d.o.o. Radnička cesta 50 Zagreb Republic of Croatia
Berislav Horvat President of the Board and Certified auditor
FOR THE YEAR ENDED 31 DECEMBER 2018
These financial statements were approved by the Management Board of the Company on 19 February 2019.
Management Board President: Željko Kukurin
Management Board Member: Marko Čižmek
The notes below form an integral parts of these financial statements.
| GROUP | COMPANY | |||||
|---|---|---|---|---|---|---|
| (all amounts in thousands of HRK) | Note | 2017 | 2018 | 2017 | 2018 | |
| Sales revenue | 5 | 1,755,287 | 1,961,414 | 1,616,664 | 1,768,603 | |
| Other income | 6 | 24,948 | 21,701 | 22,181 | 24,712 | |
| Cost of materials and services | 7 | (519,754) | (551,753) | (511,785) | (501,403) | |
| Staff costs | 8 | (543,083) | (622,547) | (502,800) | (560,837) | |
| Depreciation and amortisation | 14,15,16 | (346,414) | (410,522) | (283,466) | (344,692) | |
| Other operating expenses | 9 | (109,344) | (115,315) | (97,869) | (103,522) | |
| Other gains/(losses) – net | 10 | 6,073 | (3,756) | (222) | (3,821) | |
| Operating profit | 267,713 | 279,222 | 242,703 | 279,040 | ||
| Finance income | 625 | 274 | 437 | 205 | ||
| Finance costs | (29,671) | (21,286) | (25,430) | (19,038) | ||
| Finance costs – net | 11 | (29,046) | (21,012) | (24,993) | (18,833) | |
| Share of net profit/(loss) of equity-accounted investees | 18 | (24) | (128) | - | - | |
| Profit before tax | 238,643 | 258,082 | 217,710 | 260,207 | ||
| Income tax | 12 | 6,444 | (18,894) | 14,269 | (20,928) | |
| Profit for the year | 245,087 | 239,188 | 231,979 | 239,279 | ||
| Other comprehensive income | ||||||
| Items that cannot be reclassified P&L account | ||||||
| Change in financial assets value | 20 | 451 | 339 | 451 | 339 | |
| Tax on other comprehensive income | (90) | (68) | (90) | (68) | ||
| Total comprehensive income for the year | 245,448 | 239,459 | 232,340 | 239,550 | ||
| Profit attributable to: | ||||||
| Owners of the Parent Company | 243,596 | 235,337 | - | - | ||
| Non-controlling interests | 32 | 1,491 | 3,851 | - | - | |
| 245,087 | 239,188 | - | - | |||
| Total comprehensive income attributable to: | ||||||
| Owners of the Parent Company | 243,957 | 235,608 | - | - | ||
| Non-controlling interests | 32 | 1,491 | 3,851 | - | - | |
| 245,448 | 239,459 | - | - | |||
| Earnings per share (in HRK) attributable to equity holders of the Group during the year: | ||||||
| - basic and diluted | 13 | 1.96 | 1.90 | - | - |
97
| GROUP 31 December |
COMPANY 31 December |
|||||
|---|---|---|---|---|---|---|
| (all amounts in thousands of HRK) | Note | 2017 | 2018 | 2017 | 2018 | |
| ASSETS | ||||||
| Non-current assets | ||||||
| Property, plant and equipment | 14 | 4,430,006 | 5,101,597 | 3,687,185 | 3,946,785 | |
| Investment property | 15 | 10,254 | 9,640 | 10,254 | 9,640 | |
| Intangible assets | 16 | 45,225 | 53,727 | 44,534 | 52,117 | |
| Investment in subsidiaries | 17 | 189 | - | 450,905 | 616,201 | |
| Interest in joint venture | 18 | 1,247 | - | 1,490 | - | |
| Deferred tax assets | 25 | 140,664 | 125,706 | 122,560 | 100,710 | |
| Financial assets | 20 | 3,791 | 4,484 | 3,761 | 4,100 | |
| Derivative financial instruments | 24 | 91 | - | 91 | - | |
| Loans and deposits | 21 | 423 | 15,706 | 379 | 15,706 | |
| Trade and other receivables | 23 | 603 | - | - | - | |
| 4,632,493 | 5,310,860 | 4,321,159 | 4,745,259 | |||
| Current assets | ||||||
| Inventories | 22 | 24,497 | 25,447 | 23,913 | 22,900 | |
| Trade and other receivables | 23 | 50,470 | 68,447 | 48,519 | 61,163 | |
| Income tax receivable | 308 | 1,908 | 63 | 9 | ||
| Loans and deposits | 21 | 986 | 441 | 969 | 393 | |
| Derivative financial instruments | 24 | 13 | - | 13 | - | |
| Cash and cash equivalents | 26 | 287,837 | 261,842 | 237,401 | 168,533 | |
| 364,111 | 358,085 | 310,878 | 252,998 | |||
| Total assets | 4,996,604 | 5,668,945 | 4,632,037 | 4,998,257 | ||
| EQUITY AND LIABILITIES | ||||||
| Share capital | 27 | 1,672,021 | 1,672,021 | 1,672,021 | 1,672,021 | |
| Treasury shares | 27 | (35,889) | (86,119) | (35,889) | (86,119) | |
| Capital reserves | 28 | 3,116 | 4,817 | 3,603 | 5,304 | |
| Fair value reserves | 28 | 634 | 905 | 634 | 905 | |
| Legal reserves | 28 | 83,601 | 83,601 | 83,601 | 83,601 | |
| Other reserves | 28 | 68,851 | 120,851 | 22,451 | 135,334 | |
| Retained earnings | 28 | 492,716 | 560,463 | 649,047 | 663,714 | |
| 2,285,050 | 2,356,539 | 2,395,468 | 2,474,760 | |||
| Non-controlling interest | 32 | 231,125 | 401,993 | - | - | |
| Total equity | 2,516,175 | 2,758,532 | 2,395,468 | 2,474,760 | ||
98
| GROUP 31 December |
COMPANY 31 December |
|||||
|---|---|---|---|---|---|---|
| (all amounts in thousands of HRK) | Note | 2017 | 2018 | 2017 | 2018 | |
| LIABILITIES | ||||||
| Non-current liabilities | ||||||
| Borrowings | 29 | 1,861,314 | 2,207,885 | 1,721,764 | 1,978,758 | |
| Trade and other payables | 30 | 43,436 | 50,476 | 41,980 | 48,755 | |
| Derivative financial instruments | 24 | 952 | 5,162 | 952 | 5,162 | |
| Deferred tax liabilities | 25 | 52,759 | 68,561 | 16,082 | 15,227 | |
| Provisions | 31 | 58,356 | 77,312 | 31,597 | 35,699 | |
| 2,016,817 | 2,409,396 | 1,812,375 | 2,083,601 | |||
| Current liabilities | ||||||
| Borrowings | 29 | 202,703 | 227,247 | 184,702 | 203,359 | |
| Trade and other payables | 30 | 234,952 | 242,293 | 214,458 | 207,841 | |
| Derivative financial instruments | 24 | 706 | 2,454 | 706 | 2,454 | |
| Income tax liability | 1,039 | 555 | 1,040 | - | ||
| Provisions | 31 | 24,212 | 28,468 | 23,288 | 26,242 | |
| 463,612 | 501,017 | 424,194 | 439,896 | |||
| Total liabilities | 2,480,429 | 2,910,413 | 2,236,569 | 2,523,497 | ||
| Total equity and liabilities | 4,996,604 | 5,668,945 | 4,632,037 | 4,998,257 |
| GROUP | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands of HRK) | Note | Share capital |
Treasury shares |
Capital reserves |
Legal reserves |
Fair value reserves |
Other reserves |
Retained earnings |
Total | Non controlling interests |
Total |
| Balance as at 1 January 2017 | 1,672,021 | (37,141) | 1,718 | 67,199 | 273 | 68,851 | 364,874 | 2,137,795 | 235,842 | 2,373,637 | |
| Profit for the year | - | - | - | - | - | - | 243,596 | 243,596 | 1491 | 245,087 | |
| Other comprehensive income | 28 | - | - | - | - | 361 | - | - | 361 | - | 361 |
| Total comprehensive income | - | - | - | - | 361 | - | 243,596 | 243,957 | 1491 | 245,448 | |
| Transfer to legal reserves | 28 | - | - | - | 16,402 | - | - | (16,402) | - | - | - |
| Treasury shares released | - | 1,252 | 1,398 | - | - | - | - | 2,650 | - | 2,650 | |
| Dividends | 28 | - | - | - | - | - | - | (99,352) | (99,352) | - | (99,352) |
| Change in non-controlling interest | 28 | - | - | - | - | - | - | - | - | (6,208) | (6,208) |
| Total contributions by and distributions to company owners, recognised directly in equity |
- | 1,252 | 1,398 | 16,402 | - | - | (115,754) | (96,702) | (6,208) | (102,910) | |
| Balance at 31 December 2017 | 1,672,021 | (35,889) | 3,116 | 83,601 | 634 | 68,851 | 492,716 | 2,285,050 | 231,125 | 2,516,175 | |
| Profit for the year | - | - | - | - | - | - | 235,337 | 235,337 | 3,851 | 239,188 | |
| Other comprehensive income | 28 | - | - | - | - | 271 | - | - | 271 | - | 271 |
| Total comprehensive income for the year | - | - | - | - | 271 | - | 235,337 | 235,608 | 3,851 | 239,459 | |
| Transfer to legal reserves | 28 | - | - | - | - | - | 52,000 | (52,000) | - | - | - |
| Treasury shares released | 27 | - | 1,476 | 1,368 | - | - | - | - | 2,844 | - | 2,844 |
| Treasury shares purchased | 27 | - | (51,706) | - | - | - | - | - | (51,706) | - | (51,706) |
| Dividends | 28 | - | - | - | - | - | - | (111,730) | (111,730) | - | (111,730) |
| Merger effect | 36b | 333 | - | - | - | - | 333 | 333 | |||
| Change in non-controlling interest | - | - | - | - | - | - | - | - | 20,196 | 20,196 | |
| Subsidiary acquisition - non-controlling interest | 17, 28 | - | - | - | - | - | - | - | - | 146,821 | 146,821 |
| Subsidiary acquisition | 28 | - | - | - | - | - | - | (3,860) | (3,860) | - | (3,860) |
| Total contributions by and distributions to company owners, recognised directly in equity |
- | (50,230) | 1,701 | - | - | 52,000 | (167,590) | (164,119) | 167,017 | 2,898 | |
| Balance at 31 December 2018 | 1,672,021 | (86,119) | 4,817 | 83,601 | 905 | 120,851 | 560,463 | 2,356,539 | 401,993 | 2,758,532 |
ANNUAL REPORT 2018
The notes below form an integral parts of these financial statements.
| (in thousands of HRK) | Note | Share capital | Treasury shares |
Capital reserves |
Legal reserves |
Fair value reserves |
Other reserves |
Retained earnings |
Total |
|---|---|---|---|---|---|---|---|---|---|
| Balance as at 1 January 2017 | 1,672,021 | (37,141) | 2,205 | 67,199 | 273 | 124,614 | 494,911 | 2,324,082 | |
| Profit for the year | - | - | - | - | - | - | 231,979 | 231,979 | |
| Other comprehensive income | 28 | - | - | - | - | 361 | - | - | 361 |
| Total comprehensive income | - | - | - | - | 361 | - | 231,979 | 232,340 | |
| Effect of merger of Puntižela d.o.o. | 28 | - | - | - | - | - | (10,087) | - | (10,087) |
| Effect of merger of Elafiti Babin kuk d.o.o. | 28 | - | - | - | - | - | (54,165) | - | (54,165) |
| Transfer to legal reserves | 28 | - | - | - | 16,402 | - | - | (16,402) | - |
| Treasury shares released | 27 | - | 1,252 | 1,398 | - | - | - | - | 2,650 |
| Dividends | 28 | - | - | - | - | - | (37,911) | (61,441) | (99,352) |
| Total contributions by and distributions to company owners, recognised directly in equity |
- | 1,252 | 1,398 | 16,402 | - | (102,163) | (77,843) | (160,954) | |
| Balance at 31 December 2017 | 1,672,021 | (35,889) | 3,603 | 83,601 | 634 | 22,451 | 649,047 | 2,395,468 | |
| Profit for the year | - | - | - | - | - | - | 239,279 | 239,279 | |
| Other comprehensive income | 28 | - | - | - | - | 271 | - | - | 271 |
| Total comprehensive income for the year | - | - | - | - | 271 | - | 239,279 | 239,550 | |
| Subsidiary loss cover | 28 | - | - | - | - | - | 60,883 | (60,883) | - |
| Merger effect | 36b | - | - | 333 | - | - | - | - | 333 |
| Transfer to treasury shares reserve | 28 | - | - | - | - | - | 52,000 | (52,000) | - |
| Treasury shares released | 27 | - | 1,476 | 1,368 | - | - | - | - | 2,844 |
| Treasury shares acquired | 27 | - | (51,706) | - | - | - | - | - | (51,706) |
| Dividends | 28 | - | - | - | - | - | - | (111,730) | (111,730) |
| Total contributions by and distributions to company owners, recognised directly in equity |
- | (50,230) | 1,701 | - | - | 112,883 | (224,613) | (160,258) | |
| Balance at 31 December 2018 | 1,672,021 | (86,119) | 5,304 | 83,601 | 905 | 135,334 | 663,714 | 2,474,760 |
The notes below form an integral parts of these financial statements.
FOR THE YEAR ENDED 31 DECEMBER 2018
| GROUP | COMPANY | |||||
|---|---|---|---|---|---|---|
| (all amounts in thousands of HRK) | Note | 2017 | 2018 | 2017 | 2018 | |
| Cash flow generated from operating activities | ||||||
| Cash from operations | 34 | 639,230 | 694,926 | 574,125 | 620,648 | |
| Income tax (paid)/received | 12 | 6,749 | (8,450) | 102 | 54 | |
| Net cash inflow from operating activities | 645,979 | 686,476 | 574,227 | 620,702 | ||
| Cash flow from investment activities | ||||||
| Cash from merger of subsidiary | 36a | - | - | 338 | - | |
| Cash from merger of parent company | 36b | - | - | - | 333 | |
| Purchase of property, plant and equipment | 14 | (866,050) | (709,404) | (832,459) | (610,372) | |
| Purchase of intangible assets | 16 | (28,539) | (21,047) | (27,865) | (20,122) | |
| Proceeds from disposal of property, plant and equipment | 3,504 | 5,144 | 3,470 | 5,144 | ||
| Acquisition of subsidiary | 17, 37 | (6,208) | (170,828) | (6,208) | (165,485) | |
| Proceeds from disposal of financial assets | 1,808 | 50 | 1,808 | 50 | ||
| Loans granted | (10,637) | (176) | (10,616) | (176) | ||
| Loan repayments received | 11,227 | 949 | 11,144 | 905 | ||
| Dividend received | 75 | 87 | 579 | 6,153 | ||
| Interest received | 829 | 777 | 639 | 708 | ||
| Net cash outflow from investment activities | (893,991) | (894,448) | (859,170) | (782,862) | ||
| Cash flow from financing activities | ||||||
| Dividend payment | 28 | (98,347) | (116,405) | (98,342) | (111,730) | |
| Purchase of treasury shares | 28 | - | (51,706) | - | (51,706) | |
| Interest paid | (42,779) | (45,792) | (38,110) | (42,657) | ||
| Proceeds from borrowings | 582,242 | 605,645 | 582,242 | 488,930 | ||
| Repayments of borrowings | (179,918) | (209,765) | (161,094) | (189,545) | ||
| Net cash inflow from financing activities | 261,198 | 181,977 | 284,696 | 93,292 | ||
| Net increase/(decrease) in cash and cash equivalents | 13,186 | (25,995) | (247) | (68,868) | ||
| Cash and cash equivalents at beginning of year | 274,651 | 287,837 | 237,648 | 237,401 | ||
| Cash and cash equivalents at year end | 26 | 287,837 | 261,842 | 237,401 | 168,533 | |
The notes below form an integral parts of these financial statements.
FOR THE YEAR ENDED 31 DECEMBER 2018
Valamar Riviera d.d., Poreč ("the Company") has been registered in accordance with Croatian laws and regulations. The Company is registered with the Commercial Court in Pazin. The principle activity of the Company is the provision of accommodation in hotels, resorts and campsites, food preparation and catering services as well as the preparation and serving of beverages. The registered office of Valamar Riviera d.d. is in Poreč, Stancija Kaligari 1.
Valamar Riviera Group consists of Valamar Riviera d.d., Poreč, joint-stock company for tourism services (the Parent Company) and its subsidiaries (the Group) as follows:
Pogača Babin kuk d.o.o., Dubrovnik, 33% ownership, joint venture until 26 October 2018, when the business share was sold pursuant to the Agreement covering the purchase and transfer of shares in Pogača Babin kuk d.o.o.
Puntižela d.o.o., 100% ownership (subsidiary until 31 March 2017, date of merger into the Parent Company, taking effect from 1 April 2017)
The Company's shares are listed on the Zagreb Stock Exchange d.d. and were traded in 2018 in accordance with the relevant regulations on the organised market.
The presentation method of the Statement of financial position and the Statement of comprehensive income for the Valamar Riviera Group in the consolidated and separate financial statements is shown below. The following table presents the effects of various mergers and acquisitions within the group on comparable data of the Company and the Group.
| Table 1 | GROUP | COMPANY | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Statement of financial position |
Statement of comprehensive income |
Statement of financial position |
Statement of comprehensive income |
|||||||
| Company | Note | 31.12. 2017 |
31.12. 2018 |
2017 | 2018 | 31.12. 2017 |
31.12. 2018 |
2017 | 2018 | |
| Puntižela d.o.o. | a | | | 1.1-31.12 | 1.1-31.12 | | | 1.4-31.12 | 1.1-31.12 | |
| Elafiti Babin kuk d.o.o. | b | | | 1.1-31.12 | 1.1-31.12 | | | 30.12.-31.12 | 1.1-31.12 | |
| Hoteli Makarska d.d. | c | – | | - | 1.8-31.12 | – | – | - | - | |
| Valamar A GmbH | d | – | | - | 1.8-31.12 | – | – | - | - | |
| Valamar Obertauern GmbH | e | – | | - | 1.11-31.12 | – | – | - | - | |
| Epic Hospitality Holding GmbH | f | – | | - | 16.6-31.12 | – | | - | 16.6-31.12 |
Transactions of the mergers above were recorded according to the accounting method applicable to mergers of companies under joint control. Results of the merged companies are accounted for in the Statement of Comprehensive Income of Valamar Riviera d.d. from the date of merger, while the Statement of comprehensive income of the Group for the previous year includes the results of the merged companies for the whole year, as detailed in Table 1 above.
c) On 4 April 2018, the Agreement regarding the purchase and transfer of HOTELI MAKARSKA d.d. shares was concluded between the Republic of Croatia, represented by the Center for Restructuring and Sale (CERP), as seller, and Valamar Riviera d.d. as buyer. The Company acquired 621,086 shares, nominal value HRK 200.00 per share, for the amount of HRK 172,662 thousand, which makes 55.48% of share capital of HOTELI MAKARSKA d.d.. The Company concluded a Collaboration Agreement with Allianz ZB d.o.o. društvo za upravljanje obveznim mirovinskim fondom, a pension fund company from Zagreb which acts in its own name and on behalf of the mandatory pension funds it manages (AZ Obvezni mirovinski
fond kategorije A, personal identification number (OIB) 15220336427 and AZ Obvezni mirovinski fond kategorije B, personal identification number (OIB) 59318506371) (hereinafter: AZ ) in order to start joint activity regarding the purchase of HOTELI MAKARSKA d.d. shares. On 12 April 2018, the Company sold 341,218 (30.48%) shares of HOTELI MAKARSKA d.d. to AZ, at the purchase price.
On 27 June 2018, the public acquisition of HOTELI MAKARSKA d.d. was concluded pursuant to the regulations of the Act on the Acquisition of Limited Companies, whereby Valamar Riviera d.d. acquired 340,887 (30.45%) shares of Hoteli Makarska d.d., of which 95,376 (8.51%) shares were sold to AZ on 3 August 2018.
Valamar Riviera d.d., together with AZ, acquired the control over HOTELI MAKARSKA d.d. on 31 July 2018 when all decisions adopted at the General Meeting of Hoteli Makarska d.d. held on 17 July 2018, were entered in the court register. At the said meeting, the Statute was changed and new members of the Supervisory Board were elected.
Upon completion of all the procedures mentioned above, the Company holds 525,379 (46.93%) shares of Hoteli Makarska d.d.
GmbH, concluded on 18 August 2018. After all relevant changes have been entered into authorised court registers, the Company acquired the control over Valamar Obertauern GmbH.
f) On 26 January 2018, Valamar Riviera was notified by EPIC, Goldscheider und Wurmböck Unternehmensberatungsgesellschaft m.b.H. with registered office in Vienna, Plösslgasse 8, the Republic of Austria, regarding the changes to the voting rights percentage. The change in the percentage of voting rights, i.e. slipping under the voting rights threshold, was due to the transfer of 55,594,884 shares of Valamar Riviera d.d. pursuant to the demerger agreement and status change - demerger of EPIC, Goldscheider und Wurmböck Unternehmensberatungsgesellschaft m.b.H., as the demerging company, and EPIC Hospitality Holding GmbH, based in Vienna, Plösslgasse 8, the Republic of Austria, as the transferee company. As evidenced by the received notifications, the shareholder structure of the transferee company is indirectly identical to the shareholder structure of the demerging company. Consequently, no changes occurred in the controlling parties, since the shareholders in EPIC Hospitality Holding GmbH are indirectly the same parties and hold the same stakes as the shareholders in EPIC, Goldscheider und Wurmböck Unternehmensberatungsgesellschaft m.b.H.
The cross-border merger of EPIC Hospitality Holding GmbH, Vienna into Valamar Riviera d.d. was entered in the court register on 15 June 2018, pursuant to the Decision of the Commercial Court in Pazin No. Tt-18/2913-3 dated 15 June 2018. The legal effect of the said merger started as of 16 June 2018, when Valamar Riviera d.d. became the universal legal successor of EPIC Hospitality Holding GmbH. As the merged company held 55,594,884 shares of the acquirer, these shares were transferred to the members of the merged company in exchange for their shares in proportion to the shares that each member had in the merged company and thus members of the merged company became direct shareholders of Valamar Riviera d.d
The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented herein.
The financial statements of the Company and Group have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). The financial statements have been prepared under the historical cost method, except for the financial assets at fair value through profit or loss and financial assets through comprehensive income.
The preparation of financial statements in accordance with IFRS requires the use of certain significant accounting estimates. It also requires management to exercise its judgment in the process of applying the Company's and Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are relevant to the financial statements, are disclosed in the notes.
These financial statements represent the unconsolidated and consolidated financial position and results of the Company and the Group, respectively.
Subsidiaries are all entities (incl. special purpose companies) in which the Group has control over the financial and operating policies, which generally goes hand in hand with holding more than half of the voting rights.
The existence and effect of potential voting rights that are currently exercisable or exchangeable are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is effectively transferred to the Group. They are de-consolidated from the date such control ceases.
In the consolidated financial statements, all within-Group transactions, balances and unrealised gains and losses on transactions between the Group companies are eliminated. Where necessary, accounting policies of subsidiaries have been adjusted to ensure consistency with the policies adopted by the Group.
(b) Changes in ownership interests in subsidiaries without change of control Transactions with non-controlling shareholders that do not result in loss of control are accounted for by the Group as equity transactions – that is, as transactions with the majority owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
The Group's interests in jointly controlled ventures are accounted for under the equity method. Under this method, an interest in a jointly controlled entity is initially recorded at cost and adjusted thereafter for the post-acquisition change in the venture's share of net assets of the jointly controlled entity. The profit or loss of the venture includes the venture's share of the profit or loss of the jointly controlled entity. In the separate financial statements, the Company's interest in joint venture is measured at purchase cost less impairment.
The Company discloses its subsidiaries in the separate financial statements at cost value less impairment (Note: Investment in subsidiaries).
Merger of entities classified as companies from parties under common control are accounted for using book values (carryover basis accounting). Under this method, the assets and liabilities of the entities under common control are transferred to the predecessor entities' carrying amounts. Related goodwill inherent in the predecessor entity's original acquisitions is also recorded in these financial statements. Any difference between the carrying amount of the net assets and the consideration paid is accounted for in these financial statements as an adjustment to equity.
The operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is a person or group responsible for allocating the resources and assessing the performance of the operating segments. The chief operating decision-makers are the Company and Group Management, which are in charge of managing the hotel and tourist properties and facilities.
The items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (functional currency). The financial statements are presented in Croatian kuna (HRK), which is the Company's functional and Group's presentation currency.
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.
Foreign exchange gains and losses relating to borrowings and cash and cash equivalents are recorded in the statement of comprehensive income within 'finance income/(costs) – net'. All other foreign exchange losses and gains are recorded in the statement of comprehensive income within 'other gains/ (losses) – net'.
Property, plant and equipment are included in the statement of financial position at historical cost less the accumulated depreciation and impairment, where required. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that the future economic benefits associated with the item shall flow to the Company and Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they incurred. The cost of replacement of larger items of property, plant and equipment is capitalised, and the carrying amount of replaced parts is derecognised.
Land, arts and assets under construction are not depreciated. Depreciation of other items of property, plant and equipment is calculated using the straight-line method to allocate their cost over their estimated useful lives, as follows:
2.6 Property, plant and equipment / CONTINUED
* except as stated in Note 4
Depreciation is calculated for each asset until the asset is fully depreciated or to its residual values if significant. The residual value of an asset is the estimated amount that the Company and Group would currently obtain from disposal of the asset less the estimated costs of disposal if the asset were already of the age and in the condition expected at the end of its useful life. The residual value of an asset is nil if the Company and Group expect to use the asset until the end of its physical life. The operating assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount.
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisition of a subsidiary is included in intangible assets. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Separately acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimated useful lives of up to 4 years.
The Company determines the impairment indicators of the property, plant and equipment identified as separate cash generating units by using the GOP multiplicator and segment carrying net book values, which is determined by comparing the individual property segment (identified as separate cash generating units' ("CGUs") carrying values with the gross operating profit ("GOP").
If the determined ratios and multiples are not in line with expected amounts or targeted levels (at individual cash generating unit level), the recoverable amount is based as the higher amount of fair value less the costs of disposal and its value in use.
Determination of impairment indicators, determination of the fair value of assets (or group of assets), and estimation of future cash flows, which are based on the projections of expected cash flows, applicable discount rates, useful lives and remaining values require significant judgement by the management.
Determination of fair value less the costs of disposal is based on the market approach, which uses the prices and other relevant information generated by the market transactions involving identical or comparable (i.e. similar) assets, liabilities or a group of assets and liabilities, such as a business. The Company and Group use internal and external valuations.
The non-current assets are classified in the statement of the financial position as 'Non-current assets held for sale' if their carrying amount shall be recovered principally through a sale transaction rather than through continuing use. The non-current assets classified as held for sale are measured at the lower of their carrying and fair value, less the costs to sell. The assets should be available for immediate sale in their present condition and their sale should be very likely. Gains and losses on the sale of non-current assets held for sale are included in the statement of comprehensive income within 'other gains/(losses) – net'.
Investment property, principally comprising business premises, is held for long-term rental yields or appreciation and is not occupied by the Company or the Group. Investment property is treated as a long-term investment unless it is intended to be sold in the next year and a buyer has been identified, in which case it is classified within the current assets.
Investment property is carried at historical cost less the accumulated depreciation and provision for impairment, where required. Investments in progress are not depreciated. Depreciation is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives (using a depreciation rate of 4%).
Subsequent expenditure is capitalised only when it is probable that the future economic benefits associated with it shall flow to the Company and the Group, and the cost can be measured reliably. All other repairs and maintenance costs are expensed when incurred. If an investment property becomes owner-occupied, it is reclassified to property, plant and equipment and its carrying amount at the date of reclassification becomes its deemed cost to be subsequently depreciated.
The Company classifies its financial assets in the following categories: financial assets at fair value through profit or loss, financial assets at fair value through other comprehensive income (OCI), and financial assets at amortised cost. The classification depends on the purpose for which the financial assets were acquired. The Management determines the classification of financial assets at initial recognition and re-evaluates this designation at every reporting date.
This category includes financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by the Management. Assets in this category are classified as current assets except derivative financial instruments.
The Company measures financial assets at fair value through OCI if both of the following conditions are met:
For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognised
2.11 Financial assets / CONTINUED 2.11.1 Classification / CONTINUED
in the statement of profit or loss and computed in the same manner as for the financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative fair value change recognised in OCI is recycled to profit or loss.
The Company measures financial assets at amortised cost if both of the following conditions are met:
Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Financial assets at amortised cost include trade receivables.
Regular purchases and sales of financial assets are recognised on the trade-date – the date on which the Company committed to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss.
Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed in the statement of comprehensive income.
Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership. Loans and receivables are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.
Gains or losses arising from changes in the fair value of the "financial assets at fair value through profit or loss" category are presented in the statement of comprehensive income within "other (losses)/gains – net" in the period in which they arise.
The interest on securities calculated using the effective interest method is recognised in the statement of comprehensive income as part of other income. Dividends on equity instruments are recognised in the statement of comprehensive income as part of other income when the right to receive payments is established.
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Company establishes fair value by using valuation techniques. These include the use of recent arm's length transactions and references to other instruments that are substantially the same, discounted cash flow analysis and option pricing models, making maximum use of market inputs and relying as little as possible on entity-specific inputs.
The Company recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive.
2.11 Financial assets / CONTINUED
2.11.3 Impairment of financial assets / CONTINUED
ECLs are recognised in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
For trade receivables and contract assets, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
Financial assets are written off when there is no reasonable expectation of recovery.
Derivative financial instruments include forward contracts in foreign currencies and interest rate swaps. Derivative financial instruments are recognised in the statement of financial position at fair value. The fair value is determined according to the market value, if appropriate. All derivatives are recorded in the statement of financial position as assets when their fair value is positive, and as liabilities when their fair value is negative. These derivatives do not classify as hedge accounting and are recognised as derivatives held for trading.
The Company and the Group lease certain property, plant and equipment. The leases of property, plant and equipment, where the Company and the Group bear substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at lease commencement at the lower of fair value of the leased property or the present value of minimum lease payments. In accordance with the Tourist Land Act, the Company and the Group make so-called advance payments of the concession fees, and the annual concession fee for tourist land area is reported as expense in the current period.
Each lease payment is allocated between the liability and finance charges so as to achieve a constant interest rate on the outstanding finance balance. The corresponding rental obligations, net of finance charges, are included in other current and non-current liabilities depending on maturity.
The interest element of the finance costs is charged to the statement of comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life or the lease term.
Leases in which a significant portion of risks and rewards of ownership are not retained by the Company and the Group are classified as operating leases. Payments made under operating leases are charged to the statement of comprehensive income on a straight-line basis over the period of the lease. Assets under lease are disclosed in the Statement of financial position in the line "Property, plant and equipment". Assets are depreciated on the straight line basis as for similar assets. Revenue from lease is recognised according to period of the lease.
Inventories are stated at the lower of cost and net realisable value. The cost is determined using the weighted average method. Net realisable value is the estimated selling price in the ordinary course of business, less the applicable variable selling expenses.
Small inventory is written-off in full at the moment of commencement of the use (porcelain, glass, metal, kitchen appliances, sports inventory, work clothing and other small items), except of the part of small inventory (linens, sheets and towels) for which the useful life is estimated up to 3 years.
Trade receivables are amounts due from the customers for the services provided in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less the impairment.
Cash and cash equivalents comprise cash in hand, deposits held at call with banks and other short-term highly liquid instruments with original maturities of three months or less.
Ordinary shares are classified as equity. Where the Company and the Group purchase their equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes), is deducted from the equity attributable to the Company and Group equity holders until the shares are issued or purchased. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included into the equity attributable to the Company and Group equity holders.
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of comprehensive income over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility shall be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility shall be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it refers.
Borrowings are classified as current liabilities unless the Company and the Group have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
Trade payables are obligations to pay for goods or services that have been acquired, i.e. provided in the ordinary course of business from, i.e. by the suppliers. Accounts payable are classified as current liabilities if the payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
The tax expense for the period comprises current and deferred tax. Tax
2.20 Current and deferred income tax / CONTINUED
is recognised in the statement of comprehensive income, except to the extent in which it refers to items recognised in equity. In that case, tax is also recognised in equity.
Management periodically evaluates positions taken in tax returns with respect to situations in which the applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognised using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither the accounting nor the taxable profit or loss. Deferred income tax is determined using tax rates (and tax acts) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit shall be available, against which the temporary differences can be utilised. Deferred income tax is provided on temporary differences arising from investments in subsidiaries and associated companies, except where the timing of the temporary difference reversal is controlled by the Company and the Group and it is probable that the temporary difference shall not be reversed in the foreseeable future.
Investment tax credits are incentives arising from government incentive schemes, which enable the Company and the Group to reduce their income tax liability or liabilities arising from other specified taxes in future periods, and are linked to the construction or acquisition of certain assets and / or the performance of certain activities and / or the fulfilment of certain specific conditions prescribed in the relevant regulation on investment incentives adopted by the relevant authorities. Tax investment credits are recognised as a deferred tax asset and an income tax benefit when the criteria for recognition is fulfilled (Note 12) in the amount which the Company and the Group shall be able to utilize until the incentive expires. Deferred tax assets recognised as a result of investment tax credits is utilised during the period of the incentive, i.e. until the expiration of the credits (if so specified) in accordance with and subject to the availability of the tax obligations in the future years, against which the credits can be offset.
In the normal course of business, the Company and the Group make payments to mandatory pension funds on behalf of their employees through salary deductions as required by law. All contributions made to the mandatory pension funds are recorded as salaries expense when incurred. The Company and the Group do not have any other pension scheme and, consequently, have no other obligations in respect of employee pensions. In addition, the Company and the Group are not obliged to provide any other post-employment benefits.
Termination benefits are recognized when the Company and the Group terminate employment contracts of employees before their normal retirement date in accordance with pension and labor regulations. The Company and the Group recognize termination benefits when they have made an individual decision on the termination of an employment agreement due to business or personal reasons, whereby the liability to pay termination benefits are objectively determined, in accordance with regulations and by-laws.
The Company and the Group recognise a provision for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation. In addition, the Company and the Group recognise a liability for accumulated compensated absences based on unused vacation days at the reporting date and if the liability can be reliably estimated.
The Company and the Group recognise the obligation for long-term employee benefits (severance payments and jubilee awards) evenly over the period in which the benefit is realised, based on the actual number of years of service. The long-term employee benefit obligation includes the assumptions on the number of employees to whom the benefits should be paid, the estimated cost of the benefits and the discount rate.
Provisions are recognised when: the Company and the Group have a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources shall be required to settle the obligation; and the amount has been reliably estimated.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. The increase in the provision due to passage of time is recognised as interest expense.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as interest expense.
Revenue comprises the fair value of the consideration received or receivable for the sale of services in the ordinary course of Company's and Group's activities. Revenue is shown net of value-added tax and after eliminating sales within the Group.
The Company and the Group recognise revenue when the amount of revenue can be reliably measured, when it is probable that future economic benefits shall flow to the entity and when specific criteria have been met for each of the Company's and Group's activities as described below.
Revenue from hotel and tourist services is recognised in the period in which the services are provided.
Revenue for rental services is generally recognised in the period in which the services are provided using a straight-line basis over the terms of contracts with lesser and presented in Statement of comprehensive income within 'Revenue'.
Interest income is recognised on a time-proportion basis using the effective interest method. When a receivable is impaired, the Company and the Group reduce the carrying amount to its recoverable amount being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continue unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate.
Dividend income is recognised when the right to receive payment is established.
Earnings per share are determined by dividing the profit or loss attributable to equity holders of the Group by the weighted average number of participating shares outstanding during the reporting year.
The Tax Authorities require the settlement of VAT on a net basis. VAT related to sales and purchases is recognised and disclosed in the statement of financial position on a net basis. Where a provision has been made for the impairment of receivables, the impairment loss is recorded for the gross amount of the debtor, including VAT.
The following new standards and amendments to the existing standards issued by the International Accounting Standards Board and the interpretations issued by the International Financial Reporting Interpretations Committee and adopted by the European Union are effective for the current period:
IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments: Recognition and Measurement for annual periods beginning on or after 1 January 2018, bringing together all three aspects of the accounting for financial instruments: classification and measurement; impairment; and hedge accounting. Except for hedge accounting, retrospective application is required, but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. The Company and the Group adopted this standard on 1 January 2018 and did not restate comparative information. The Company and the Group performed an analysis of the effects of applying the listed standard and the Management concluded that its adoption does not have a material impact on the financial statements of the Company and the Group.
IFRS 15 replaces IAS 11 Construction Contracts, IAS 18 Revenue and related interpretations and it applies, with limited exceptions, to all revenue arising from contracts with customers. IFRS 15 establishes a fivestep model to account for revenue arising from contracts with customers and requires that revenue be recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.
IFRS 15 requires entities to exercise judgment, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires relevant disclosures.
The Company and the Group adopted this standard on 1 January 2018 and did not restate comparative information. The Company and the Group performed an analysis of the effects of applying the listed standard and the Management concluded that its adoption does not have a material impact on the financial statements of the Company and the Group.
IFRS 2: Classification and Measurement of Share-Based Payment Transactions (Amendments)
The Amendments provide requirements on the accounting for the effects
of vesting and non-vesting conditions on the measurement of cash-settled share-based payments, for share-based payment transactions with a net settlement feature for withholding tax obligations and for modifications to the terms and conditions of a share-based payment that changes the classification of the share-based payment transaction from cash-settled to equity-settled. The Management has performed an analysis of the effects of applying the listed standard and considers that it does not have a material impact on the financial statements of the Company and the Group.
The Amendments clarify when an entity should transfer property, including property under construction or development into, or out of investment property. The Amendments state that a change in use occurs when the property meets, or ceases to meet, the definition of investment property and there is evidence of the change in use. A mere change in the Management's intentions for the use of a property does not provide evidence of a change in use. The Management has performed an analysis of the effects of applying the listed standard and considers that it does not have a material impact on the financial statements of the Company and the Group.
The Interpretation clarifies the accounting for transactions that include the receipt or payment of advance consideration in a foreign currency. The Interpretation covers foreign currency transactions when an entity recognizes a non-monetary asset or a non-monetary liability arising from the payment or receipt of advance consideration before the entity recognizes the related asset, expense or income. The Interpretation states that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, then the entity must determine a date of the transactions for each payment or receipt of advance consideration. The Management has performed an analysis of the effects of applying the listed standard and considers that it does not have a material impact on the financial statements of the Company and the Group.
At the date of authorization of these financial statements the following standards, revisions and interpretations adopted by the EU were in issue but not yet effective:
• IFRS 16: Leases
IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees - leases of "lowvalue" assets (e.g., personal computers) and short-term leases (i.e., leases with a lease term of 12 months or less). At the commencement date of a lease, a lessee will recognize a liability to make lease payments (i.e., the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e., the right-of-use asset). Lessees will be required to separately recognize the interest expense on the lease liability and the depreciation expense on the right-of-use asset. Lessees will be also required to remeasure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those payments). The lessee will generally recognize the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.
2.26 New and amended standards and interpretations / CONTINUED Standards and Interpretations issued by IASB and adopted by the EU but not yet effective / CONTINUED
Lessor accounting under IFRS 16 is substantially unchanged with regard to today's accounting under IAS 17. Lessors will continue to classify all leases using the same classification principle as in IAS 17 and distinguish between two types of leases: operating and finance leases. IFRS 16 also requires lessees and lessors to make more extensive disclosures than under IAS 17. IFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted, but not before an entity applies IFRS 15. A lessee can choose to apply the standard using either a full retrospective or a modified retrospective approach. The standard's transition provisions permit certain reliefs. In 2018, the Company and the Group performed a preliminary assessment of the potential effect of adopting IFRS 16 on its financial statements and estimated that the impact of its application will be in increasing the balance sheet amount for the Company and the Group in the total of HRK 17 mil.
• IFRS 9: Prepayment features with negative compensation (Amendment)
The Amendment is effective for the annual reporting periods beginning on or after 1 January 2019 with earlier application permitted. The Amendment allows financial assets with prepayment features that permit or require a party to a contract either to pay or receive reasonable compensation for the early termination of the contract (so that, from the perspective of the holder of the asset there may be 'negative compensation'), to be measured at amortised cost or at fair value through other comprehensive income. The Management has performed an analysis of the effects of applying the listed standard and considers that it does not have a material impact on the financial statements of the Company and the Group.
• IAS 28: Long-term Interests in Associates and Joint Ventures (Amendments)
The Amendments are effective for annual reporting periods beginning on or after 1 January 2019 with earlier application permitted. The Amendments relate to whether the measurement, in particular the impairment requirements, of long-term interests in associates and joint ventures that, in substance, form a part of the 'net investment' in the associate or joint venture should be governed by IFRS 9, IAS 28 or a combination of both. The Amendments clarify that an entity applies IFRS 9 Financial Instruments, before it applies IAS 28, to such long-term interests for which the equity method is not applied. In applying IFRS 9, the entity does not take account of any adjustments to the carrying amount of long-term interests that arise from applying IAS 28. These Amendments have not yet been endorsed by the EU. The Management has performed an analysis of the effects of applying the listed standard and considers that it does not have a material impact on the financial statements of the Company and the Group.
The Interpretation is effective for annual periods beginning on or after 1 January 2019 with earlier application permitted. The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12. The Interpretation provides guidance on considering uncertain tax treatments separately or together, examination by tax authorities, the appropriate method to reflect uncertainty and accounting for changes in facts and circumstances. The Management has performed an analysis of the effects of applying the listed standard and considers that it does not have a material impact on the financial statements of the Company and the Group.
The Amendments are effective for annual periods beginning on or after 1 January 2019 with earlier application permitted. The Amendments require entities to use updated actuarial assumptions to determine
2.26 New and amended standards and interpretations / CONTINUED Standards and Interpretations issued by IASB and adopted by the EU but not yet effective / CONTINUED
current service cost and net interest for the remainder of the annual reporting period after a plan amendment, curtailment or settlement has occurred. The Amendments also clarify how the accounting for a plan amendment, curtailment or settlement affects applying the asset ceiling requirements. These Amendments have not yet been endorsed by the EU. The Management has performed an analysis of the effects of applying the listed standard and considers that it does not have a material impact on the financial statements of the Company and the Group.
• Conceptual Framework in IFRS standards
The IASB issued the revised Conceptual Framework for Financial Reporting on 29 March 2018. The Conceptual Framework sets out a comprehensive set of concepts for financial reporting, standard setting, guidance for preparers in developing consistent accounting policies and assistance to others in their efforts to understand and interpret the standards. The IASB also issued a separate accompanying document, Amendments to References to the Conceptual Framework in IFRS Standards, which sets out the amendments to affected standards in order to update references to the revised Conceptual Framework. Its objective is to support the transition to the revised Conceptual Framework for companies that develop accounting policies using the Conceptual Framework when no IFRS Standard applies to a particular transaction. For preparers who develop the accounting policies based on the Conceptual Framework, it is effective for annual periods beginning on or after 1 January 2020.
• IFRS 3: Business Combinations (Amendments)
The IASB issued amendments in Definition of a Business (Amendments to IFRS 3) aimed at resolving the difficulties that arise when an entity determines whether it has acquired a business or a group of assets.
The Amendments are effective for business combinations for which the acquisition date is in the first annual reporting period beginning on or after 1 January 2020 and to asset acquisitions that occur on or after the beginning of that period, with earlier application permitted. These Amendments have not yet been endorsed by the EU. The Management has performed an analysis of the effects of applying the listed standard and considers that it does not have a material impact on the financial statements of the Company and the Group.
• IAS 1: Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors:
The Amendments are effective for annual periods beginning on or after 1 January 2020 with earlier application permitted. The Amendments clarify the definition of material and how it should be applied. The new definition states that, 'Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity'.
In addition, the explanations accompanying the definition have been improved. The Amendments also ensure that the definition of material is consistent across all IFRS Standards. These Amendments have not yet been endorsed by the EU. The Management has performed an analysis of the effects of applying the listed standard and considers that it does not have a material impact on the financial statements of the Company and the Group.
• The IASB has issued the Annual Improvements to IFRSs 2015 – 2017 Cycle, which is a collection of amendments to IFRSs.
2.26 New and amended standards and interpretations / CONTINUED Standards and Interpretations issued by IASB and adopted by the EU but not yet effective / CONTINUED
The amendments are effective for annual periods beginning on or after 1 January 2019 with earlier application permitted. These annual improvements have not yet been endorsed by the EU. The Management has performed an analysis of the effects of applying the listed standard and considers that it does not have a material impact on the financial statements of the Company and the Group
• IFRS 3: Business Combinations and IFRS 11 Joint Arrangements
The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business.
The amendments to IFRS 11 clarify that, when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business.
• IAS 12: Income Taxes
The amendments clarify that the income tax consequences of payments on financial instruments classified as equity should be recognised according to where the past transactions or events that generated distributable profits has been recognised.
• IAS 23: Borrowing Costs
The amendments clarify paragraph 14 of the standard that, when a qualifying asset is ready for its intended use or sale, and some of the specific borrowing related to that qualifying asset remains outstanding at that point, that borrowing is to be included in the funds that an entity borrows generally.
In their day-to-day business activities, the Company and the Group face a number of financial risks, especially market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Company and the Group have a proactive approach in mitigating the interest rate and foreign exchange risks by using available market instruments. Internal risk management goals and policies aim at protecting the foreign currency inflows during seasonal activity and partial interest hedging of the principal loan amount.
The Company and the Group conduct their business operations across national borders and are exposed to foreign exchange risks. They mainly result from changes in the EUR/HRK exchange rate. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities.
Most of the sales revenue generated from foreign customers and long-term debt is denominated in euros. Hence, the Company and the Group are, for the most part, naturally hedged from exchange rate risks. Since some liabilities are denominated in HRK, the Company and the Group actively manage the risks by using derivative instruments available on the financial market. The instruments are used according to operating assessments and expected market trends. In this manner, the assets, liabilities and cash flow are protected from the risk impact.
At 31 December 2018, if the EUR had weakened/strengthened by 1% against the HRK, with all other variables held constant, the net profit of the Group for the year would have been HRK 17,694 thousand (2017: HRK 15,016 thousand) higher/(lower) mainly as a result of foreign exchange gains/(losses) on translation of EUR denominated trade receivables, borrowings and foreign cash funds.
Variable rate loans expose the Company and the Group to cash flow interest rate risk. Periodically, the Company and the Group use derivative instruments in order to hedge cash flow and interest rate by applying interest rate swaps. The economic effect of such swaps is the conversion of variable interest rate loans into fixed interest rate loans for a precommitted hedged part of the loan principal. The Company and the Group have interest-bearing assets (cash and deposits) so their revenue and cash flow depend on changes in market interest rates. This becomes evident especially during the season when the Company and the Group have significant cash surpluses at their disposal.
At 31 December 2018, if interest rates on currency-denominated borrowings had been higher/lower by 1 percentage point, with all other variables held constant, the profit of the Group for the year would have been HRK 4,230 thousand (2017: HRK 4,197 thousand) higher/(lower), mainly as a result of higher/(lower) interest expense on variable-rate borrowings.
At 31 December 2018, if interest rates on currency-denominated deposits had been 1 percentage point higher/(lower), with all other variables held constant, the profit of the Group for the year would have been HRK 529 thousand (2017: HRK 1,368 thousand) higher/(lower), mainly as a result of higher/(lower) interest income on variable rate deposits.
3.1 Financial risk factors / CONTINUED (a) Market risk / CONTINUED
The Company and the Group hold equity and debt securities and are exposed to equity price risk due to price volatility. The Company and the Group are not active participants in the market trade in terms of trading with equity and debt securities. However, with the HRK 293 million invested in acquiring shares of Imperial d.d., Rab and HRK 146 million in acquiring shares of Hoteli Makarska d.d., Makarska, the Company is exposed to the said risk to a certain extent.
As at 31 December 2018, if the indices of the ZSE had been higher/ (lower) by 6.54% for 2018 (which was the average index movement), with all other variables held constant, reserves of the Group within equity and other comprehensive income would have been HRK 230 thousand higher/(lower) as a result of gains/(losses) on equity securities available for sale.
Credit risk arises from cash, time deposits and receivables. According to the Company's and Group's sales policy, business transactions are conducted only with customers with suitable credit history, i.e. by agreeing advances, bank securities and (for individual customers) payments made through major credit card companies. The Company and the Group continuously monitor their exposure towards customers and their credit rating as well as obtain security instruments in order to reduce bad debt risks related to services provided.
The Company and the Group have a sound liquidity risk management. Sufficient funds for meeting the liabilities are available at any given moment through adequate amounts from contracted credit lines and by ensuring credit line availability in the future. Liquidity risk is managed by generating strong positive net operating cash flows, while capital investments are financed by credit lines. As at 31 December 2018, the Company has contracted unused credit lines with financial institutions for 2019 in the total amount of HRK 370,879 thousand, and the Group in the total amount of HRK 373,104. The repayment of the major credit lines coincides with periods of strong cash inflows from operations. The Company and the Group monitor the level of available funds through daily cash and debt reports. Long-term cash flow forecasts as well as annual (monthly) forecasts are based on the set budget.
After meeting the requirements of working capital management, the surplus is deposited in the treasury. From there the funds are invested in interest-bearing current accounts, time deposits, money market deposits accounts and marketable securities. Only instruments with suitable maturities and sufficient liquidity are selected, according to the forecasted requirements for liquid funds.
3.1 Financial risk factors / CONTINUED (c) Liquidity risk / CONTINUED
The expected contractual cash flows for financial liabilities of the Group and the Company according to contracted maturities are analysed in the table below. The amounts stated below include interest, if applicable, and represent undiscounted cash flows.
| (in thousands of HRK) | Less than | 3 months-1 | 1-3 | 3-6 | Over |
|---|---|---|---|---|---|
| 3 months | year | years | years | 6 years | |
| As at 31 December 2017 | |||||
| Trade and other payables | 128,304 | 12,388 | 43,436 | - | - |
| Borrowings | 37,151 | 210,505 | 435,317 | 610,553 | 1,096,939 |
| Derivative financial instruments | - | 706 | 789 | 163 | - |
| Total liabilities (contractual maturities) | 165,455 | 223,599 | 479,542 | 610,716 | 1,096,939 |
| As at 31 December 2018 | |||||
| Trade and other payables | 105,157 | 13,512 | 50,476 | - | - |
| Borrowings | 46,283 | 232,526 | 565,092 | 767,754 | 1,148,239 |
| Derivative financial instruments | 325 | 2,129 | 3,604 | 1,348 | 210 |
| Total liabilities (contractual maturities) | 151,765 | 248,167 | 619,172 | 769,102 | 1,148,449 |
| (in thousands of HRK) | Less than 3 months |
3 months-1 year |
1-3 years |
3-6 years |
Over 6 years |
|---|---|---|---|---|---|
| As at 31 December 2017 | |||||
| Trade and other payables | 116,373 | 12,388 | 41,980 | - | - |
| Borrowings | 37,099 | 189,847 | 397,987 | 568,439 | 1,032,995 |
| Derivative financial instruments | - | 706 | 789 | 163 | - |
| Total liabilities (contractual maturities) | 153,472 | 202,941 | 440,756 | 568,602 | 1,032,995 |
| As at 31 December 2018 | |||||
| Trade and other payables | 94,202 | 13,512 | 48,755 | - | - |
| Borrowings | 41,529 | 208,641 | 503,822 | 691,511 | 1,036,261 |
| Derivative financial instruments | 325 | 2,129 | 3,604 | 1,348 | 210 |
| Total liabilities (contractual maturities) | 136,056 | 224,282 | 556,181 | 692,859 | 1,036,471 |
The Company's and Group's objectives when managing capital are to safeguard the Company's and Group's ability to continue as a going concern in order to provide returns for the owner and to maintain an optimum capital structure to reduce the cost of capital.
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. The quoted market price used for financial assets held by the Company and the Group is the current bid price. The fair value of financial instruments that are not traded in the active market is determined by using valuation techniques. The Company and the Group use a variety of methods and make assumptions that are based on market conditions existing at each reporting date.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values.
Quoted market prices for similar instruments are used for long-term debt.
The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Company and the Group for similar financial instruments.
IFRS 13 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources; unobservable inputs reflect the Company's market assumptions. These two types of inputs have created the following fair value hierarchy:
3.3 Fair value estimation / CONTINUED
| (in thousands of HRK) | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| As at 31 December 2017 | ||||
| Assets measured at fair value | ||||
| Financial assets - equity securities | 3,791 | - | - | 3,791 |
| Derivative financial instruments | - | 104 | - | 104 |
| Total assets measured at fair value | 3,791 | 104 | - | 3,895 |
| Liabilities measured at fair value | ||||
| Derivative financial instruments | - | 1,658 | - | 1,658 |
| Total liabilities measured at fair value | - | 1,658 | - | 1,658 |
| As at 31 December 2018 | ||||
| Assets measured at fair value | ||||
| Financial assets - equity securities | 4,484 | - | - | 4,484 |
| Total assets measured at fair value | 4,484 | - | - | 4,484 |
| Liabilities measured at fair value | ||||
| Derivative financial instruments | - | 7,616 | - | 7,616 |
| Total liabilities measured at fair value | - | 7,616 | - | 7,616 |
3.3 Fair value estimation / CONTINUED
| (in thousands of HRK) | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| As at 31 December 2017 | ||||
| Assets measured at fair value | ||||
| Financial assets - equity securities | 3,761 | - | - | 3,761 |
| Derivative financial instruments | - | 104 | - | 104 |
| Total assets measured at fair value | 3,761 | 104 | - | 3,865 |
| Liabilities measured at fair value | ||||
| Derivative financial instruments | - | 1,658 | - | 1,658 |
| Total liabilities measured at fair value | - | 1,658 | - | 1,658 |
| As at 31 December 2018 | ||||
| Assets measured at fair value | ||||
| Financial assets - equity securities | 4,100 | - | - | 4,100 |
| Total assets measured at fair value | 4,100 | - | - | 4,100 |
| Liabilities measured at fair value | ||||
| Derivative financial instruments | - | 7,616 | - | 7,616 |
| Total liabilities measured at fair value | - | 7,616 | - | 7,616 |
The Company and the Group make estimates and assumptions about uncertain events, including estimates and assumptions about the future. Such accounting assumptions and estimates are regularly evaluated, and are based on historical experience and other factors such as the expected flow of future events that can be rationally assumed in existing circumstances, but nevertheless necessarily represent the sources of estimation uncertainty. These and other key sources of estimation uncertainty, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below.
The Company determines the impairment indicators of property, plant and equipment as identified as separate cash generating units by using the gross operating profit ("GOP") multiplier and segment carrying net book values, which are determined by comparing the property segment carrying values with the GOP.
If the determined ratios and multiples are not in line with expected amounts or targeted levels (at individual cash generating unit level), the recoverable amount is determined as the higher amount of fair value less costs of disposal and its value in use. Furthermore, recoverable amount is determined for newly acquired properties (including those via business combinations). To determine recoverable amount, the Company and the Group use both internal and external valuations.
Determination of impairment indicators, determination of the fair value of assets (or group of assets), and estimation of future cash flows, which are based on expected cash flows models, future capital investments, applicable discount rates, useful lives and remaining values require significant judgement by the Management. The Management also considers occupancy rates, revenue per available room, market growth with externally derived data including external hotel industry reports.
Determination of fair value less the costs of disposal is based on the market approach, which uses prices and other relevant information generated by market transactions involving identical or comparable (i.e. similar) assets, liabilities or a group of assets and liabilities, such as business.
By using a certain asset, the Company and the Group use the economic benefits contained in this asset, which diminish more intensely with economic and technological aging. Consequently, in the process of determining the useful life of an asset, in addition to assessing the expected physical utilisation, it is necessary to consider the changes in demand on the tourist market, which shall cause a faster economic obsolescence as well as a more intense development of new technologies. Current business operations in the hotel industry impose the need for more frequent investments, and this circumstance contributes to the fact that the useful life of an asset is decreasing.
Based on historical information, and in line with the technical department, the useful life of buildings components was assessed by the Management to be 10 to 25 years, except with the newly acquired company in Austria where the useful life of buildings is estimated at 40 years. The useful lives of equipment and other assets have also been assessed.
The useful life of property, plant and equipment shall be periodically revised to reflect any changes in circumstances since the previous assessment. Changes in estimate, if any, shall be reflected prospectively in a revised depreciation charge over the remaining, revised useful life.
Due to the transition from public to private ownership, e.g. in the transformation and privatisation process and the fact that the properties of the Company that were used in the transformation process were appraised in the share capital of the Company, and a
(c) Land ownership / CONTINUED
part was not appraised, there are certain ambiguities and proceedings regarding the ownership of a part of the land within the majority of tourist companies. The Company has approximately 1.77 million m2 of land in clear and undisputed ownership, and land which is subject to determining the status of co-ownership or ownership in accordance with the regulations of the Act on Tourist and Other Construction Land not appraised in the transformation and privatisation process, that came into force on 1 August 2010 (hereinafter the Act) amounts to approximately 3.24 million m2. On 31 January 2011, the Company submitted requests for concessions pursuant to the Act in appropriate legal deadline and prescribed content.
Concessions are required: a) for approximately 2.28 million m2 of land in the camps to determine the co-ownership shares of the Republic of Croatia and for which, according to relevant wage regulations, advance concession fee of approximately HRK 5.5 mil. per year; and b) for approximately 960 thousand m2 of land in tourist resorts and hotels that should determine the ground plan of the hotels, apartments and other estimated buildings and land owned by the Company and other land owned by the local government and for which, according to relevant regulations, an advance concession fee is paid in the amount of approximately HRK 1.5 mil. per year.
A more detailed description of proceedings and unsolved situations for properties of the Company are disclosed in the Note 33.
Deferred tax assets represents the amount of income tax recoverable through future deductions from taxable profits and are recognised in the financial position statement. Deferred tax assets are recognised to the extent of the tax benefit that shall probably be achieved. While determining the future taxable profits and the amount of tax benefits that shall likely be generated in the future, the Company Management makes judgments and applies estimations based on the taxable profits from previous years and expectations of future income that are believed to be reasonable under the existing circumstances.
Under the Act on Investment Incentives from 2014, the Company has achieved total investment tax credit incentives of HRK 178,831 thousand based on investments in the Valamar Isabella Resort and destination Rabac from 2014 up to 31 December 2017.
The Company has fulfilled the requirements of preserving the properties and of additional employment in the period 2016-2017, and for the year ended 31 December 2017 it has utilised HRK 81,899 thousand of tax incentives and recognised remaining tax incentives of HRK 96,932 thousand as the deferred tax asset.
Under the 2015 Act on Investment Incentives and the 2016 Regulation on Investment Incentives, the Company achieved total tax incentives of HRK 25,771 thousand based on reported new investments in reconstruction and repositioning of accommodation facilities (Camp Istra 5*, Valamar Collection Marea Suites 5* and Valamar Collection Pical Resort (4*/5*)) realised up to the 31 December 2018. The Company in 2018 utilised HRK 49,154 thousand of tax incentives.
The Group acquired company Hoteli Makarska d.d. on 31 July 2018. Assets and liabilities of the subsidiary are included into the consolidated financial position statement of the Group as at 31 December 2018, while the parent company's share in the subsidiary plus the subsidiary's capital and reserves have been eliminated. Income and expenses of Hoteli Makarska d.d. realised in the period from 1 August (date of acquisition) until 31 December 2018 are included in the Group's consolidated statement of comprehensive income. Mutual transactions from the acquisition date until the date of the financial statements, i.e. 31 December 2018, are excluded from the consolidated statement of financial position and consolidated statement of comprehensive income.
(e) Consolidation / CONTINUED
The Group acquired two companies in Austria, Valamar A GmbH on 31 July and Valamar Obertauern GmbH on 31 October 2018. Assets and liabilities of subsidiaries are included into the consolidated statement of financial position of the Group as at 31 December 2018, while the parent company's share in the subsidiaries plus capital and reserves of the subsidiaries have been eliminated. Income and expenses of Valamar A GmbH realised in the period from 1 August and of Valamar Obertauern GmbH realised from 1 November, both until 31 December 2018, are included into the Group's consolidated statement of comprehensive income. Mutual transactions from the acquisition date until the date of financial statements, i.e. 31 December 2018, are excluded from the consolidated statement of financial position and consolidated statement of comprehensive income.
Following the management approach of IFRS 8, operating segments are reported in accordance with the internal reporting provided to the Group's Management (the chief operating decision-makers) who are responsible for allocating resources to the reportable segments and assessing its performance.
The Group records operating revenues and expenses by types of services rendered in three basic segments: hotels and apartments, camping and other business segments. Revenue was divided between segments according to the organisational principle, where all of the income generated from camping profit centres was reported in the camping segment, and all of the income generated from hotel and apartment profit centres was reported in that segment. Other business segments include revenue from sports activities, laundry services, other rentals of properties and revenue generated from the central services and central kitchens.
The segment information related to reportable segments for the year ended 31 December 2017 is as follows:
| (in thousands of HRK) | Hotels and apartments |
Camping | Other business segments |
Total |
|---|---|---|---|---|
| Total sales | 1,292,813 | 420,780 | 116,408 | 1,830,001 |
| Inter-segment revenue | (4,337) | (149) | (70,228) | (74,714) |
| Revenue from external customers | 1,288,476 | 420,631 | 46,180 | 1,755,287 |
| Depreciation and amortisation | 249,415 | 70,069 | 26,930 | 346,414 |
| Net finance income/(expense) net | (23,462) | (8,016) | 2,433 | (29,046) |
| Write-off of fixed assets | 5,169 | 6,837 | 2 | 12,008 |
| Profit/(loss) of segment | 665,293 | 289,026 | (261,962) | 692,357 |
| Total assets | 3,104,787 | 986,334 | 434,077 | 4,525,198 |
| Total liabilities | 2,238,805 | 42,918 | 48,607 | 2,330,330 |
Borrowings are allocated to the Hotels and apartments segment due to the pledge that serve as loan insurance.
The segment information related to reportable segments for the year ended 31 December 2018 is as follows:
| GROUP |
|---|
| ------- |
| (in thousands of HRK) | Hotels and apartments |
Camping | Other business segments |
Total |
|---|---|---|---|---|
| Total sales | 1,472,590 | 445,196 | 143,517 | 2,061,303 |
| Inter-segment revenue | (1,367) | (23) | (98,499) | (99,889) |
| Revenue from external customers | 1,471,223 | 445,173 | 45,018 | 1,961,414 |
| Depreciation and amortisation | 288,325 | 84,793 | 37,404 | 410,522 |
| Net finance income/(expense) net | (16,688) | (7,031) | 2,707 | (21,012) |
| Write-off of fixed assets | 7,048 | 593 | 262 | 7,903 |
| Profit/(loss) of segment | 761,140 | 309,435 | (301,938) | 768,637 |
| Total assets | 3,571,045 | 1,177,461 | 477,806 | 5,226,312 |
| Total liabilities | 2,608,292 | 44,817 | 52,920 | 2,706,029 |
All hotels, apartments and camping (operating assets) are located in the Republic of Croatia, except the hotel own by the newly acquired company Valamar Obertauern GmbH located in Austria.
Borrowings are allocated to the Hotels and apartments segment due to the pledge that serve as loan insurance.
Reconciliation of the profit per segment with profit before tax is as follows:
| GROUP | ||
|---|---|---|
| (in thousands of HRK) | 2017 | 2018 |
| Revenue | ||
| Revenue from segments | 1,830,001 | 2,061,303 |
| Inter-segment revenue | (74,714) | (99,889) |
| Total revenue | 1,755,287 | 1,961,414 |
| Profit | ||
| Profit from segments | 692,357 | 768,637 |
| Other unallocated expenses | (417,476) | (483,800) |
| Elimination of inter-segment profit/(loss) | (36,238) | (26,755) |
| Total profit before tax | 238,643 | 258,082 |
The reconciliation of segment assets and liabilities with the Group's assets and liabilities is as follows:
| GROUP | ||||
|---|---|---|---|---|
| 2017 | 2018 | |||
| (in thousands of HRK) | Assets | Liabilities | Assets | Liabilities |
| Segment assets/liabilities | 4,525,198 | 2,330,330 | 5,226,312 | 2,706,029 |
| Hotels and apartments segment | 3,104,787 | 2,238,805 | 3,571,045 | 2,608,292 |
| Camping segment | 986,334 | 42,918 | 1,177,461 | 44,817 |
| Other segment | 434,077 | 48,607 | 477,806 | 52,920 |
| Unallocated | 471,406 | 150,099 | 442,633 | 204,384 |
| Investments in joint ventures | 1,247 | - | - | - |
| Investment in subsidiaries | 189 | - | - | - |
| Other financial assets | 3,791 | - | 4,484 | - |
| Loans and deposits | 1,409 | - | 16,147 | - |
| Cash and cash equivalents | 287,837 | - | 261,842 | - |
| Income tax receivable | 308 | - | 1,908 | - |
| Other receivables | 35,857 | - | 32,546 | - |
| Deferred tax assets/liabilities | 140,664 | 52,759 | 125,706 | 68,561 |
| Other liabilities | - | 42,773 | - | 61,010 |
| Derivative financial assets/ liabilities | 104 | 1,658 | - | 7,616 |
| Provisions | - | 52,909 | - | 67,197 |
| Total | 4,996,604 | 2,480,429 | 5,668,945 | 2,910,413 |
The Group's hospitality services are provided in Croatia and Austria to domestic and foreign customers. The Group's sales revenues are classified according to the customers' origin.
| 1,755,287 | 1,961,414 | |
|---|---|---|
| Revenue from sales to foreign customers | 1,605,192 | 1,780,867 |
| Revenue from sales to domestic customers | 150,095 | 180,547 |
| (in thousands of HRK) | 2017 | 2018 |
Foreign sales revenues can be classified according to the number of overnights based on the customers' origin, as follows:
| GROUP | ||||
|---|---|---|---|---|
| Sales to foreign customers | 2017 | % | 2018 | % |
| EU members | 1,438,810 | 89.63 | 1,580,598 | 88.75 |
| Other | 166,382 | 10.37 | 200,269 | 11.25 |
| 1,605,192 | 100.00 | 1,780,867 | 100.00 |
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (In thousand HRK) | 2017 | 2018 | 2017 | 2018 |
| Income from cassa sconto | 2,848 | 3,968 | 2,797 | 3,795 |
| Income from donations and other | 1,973 | 2,903 | 1,750 | 2,538 |
| Income from provision release | 2,423 | 1,730 | 67 | 974 |
| Reimbursed costs | 3,045 | 1,563 | 2,935 | 1,480 |
| Income from insurance and legal claims | 1,457 | 1,519 | 1,196 | 1,251 |
| Income from own consumption | 5,211 | 446 | 5,192 | 329 |
| Dividend income | 75 | 87 | 579 | 6,153 |
| Other income | 7,916 | 9,485 | 7,665 | 8,192 |
| 24,948 | 21,701 | 22,181 | 24,712 |
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (In thousand HRK) | 2017 | 2018 | 2017 | 2018 |
| Raw materials and supplies | ||||
| Raw materials and supplies used /i/ | 172,795 | 195,910 | 158,401 | 175,696 |
| Energy and water used | 87,338 | 97,892 | 79,257 | 86,427 |
| Small inventory | 23,858 | 21,320 | 22,476 | 18,837 |
| 283,991 | 315,122 | 260,134 | 280,960 | |
| External services | ||||
| Maintenance | 60,741 | 53,866 | 56,675 | 48,616 |
| Marketing, promotion and fairs | 37,948 | 40,649 | 36,418 | 39,647 |
| Commission fees (agencies and credit cards) | 38,489 | 40,489 | 35,351 | 35,984 |
| Communal fees | 22,975 | 27,733 | 21,857 | 26,207 |
| Telecommunication and transport | 14,449 | 15,182 | 13,626 | 14,036 |
| Rent /ii/ | 14,029 | 13,745 | 42,862 | 13,846 |
| Recreation services | 12,560 | 13,190 | 11,316 | 11,446 |
| Laundry services | 6,485 | 7,740 | 6,485 | 7,622 |
| Services of arrangement and other contents | 9,985 | 4,612 | 9,484 | 4,205 |
| Other services | 18,102 | 19,425 | 17,577 | 18,834 |
| 235,763 | 236,631 | 251,651 | 220,443 | |
| 519,754 | 551,753 | 511,785 | 501,403 |
/i/ Cost of materials and services of the Company is comprised of raw materials and supplies used of HRK 24,856 thousand, food and beverage costs of HRK 141,486 thousand and other materials and supplies used of HRK 9,354 thousand (2017: cost of raw materials and supplies used of HRK 22,018 thousand, food and beverage costs of HRK 127,280 thousand and other materials and services costs of HRK 9,104 thousand).
/ii/ Company rental costs in 2017 mainly relate to the lease contract for the hotel Lacroma of HRK 28,642 thousand from subsidiary Elafiti Babin kuk d.o.o. until the merger on 29 December 2017.
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (In thousand HRK) | 2017 | 2018 | 2017 | 2018 |
| Net salaries | 292,865 | 331,594 | 269,924 | 297,438 |
| Pension contributions | 88,335 | 96,155 | 74,921 | 83,908 |
| Health insurance contributions | 61,753 | 75,074 | 61,697 | 67,621 |
| Other (contributions and taxes) | 37,209 | 38,791 | 37,209 | 38,790 |
| Termination benefits | 600 | 823 | 273 | 580 |
| Other staff costs /i/ | 62,321 | 80,110 | 58,776 | 72,500 |
| 543,083 | 622,547 | 502,800 | 560,837 | |
| Number of employees at 31 December | 2,854 | 3,242 | 2,565 | 2,749 |
/i/ Other staff costs comprise remunerations for temporary services in the amount of HRK 14.3 mil. for the Company (2017: HRK 16 mil.) and HRK 15.1 mil. for the Group (2017: HRK 16.5 mil.), fees and transportation costs, jubilee awards and similar.
| GROUP | COMPANY | ||||
|---|---|---|---|---|---|
| (In thousand HRK) | 2017 | 2018 | 2017 | 2018 | |
| Municipal and similar charges and contributions | 51,804 | 55,186 | 47,798 | 50,773 | |
| Professional services | 18,398 | 23,384 | 16,863 | 21,012 | |
| Write-off of property, plant and equipment /i/ | 12,008 | 9,436 | 11,635 | 7,903 | |
| Entertainment | 7,212 | 7,674 | 7,058 | 7,168 | |
| Insurance premiums | 5,452 | 6,543 | 4,785 | 6,061 | |
| Bank charges | 2,508 | 3,392 | 2,117 | 2,853 | |
| Provisions | 4,041 | 2,716 | 421 | 2,039 | |
| Impairment of assets | 126 | 385 | 112 | 297 | |
| Collection of receivables previously written-off | (300) | (351) | (300) | (341) | |
| Other | 8,095 | 6,950 | 7,380 | 5,757 | |
| 109,344 | 115,315 | 97,869 | 103,522 |
/i/ Write-off of property, plant and equipment of the Group relates to demolition of parts of buildings as a part of new investments. Demolition of buildings amounts to HRK 7,859 thousand, and HRK 1,577 thousand relates to other write-offs.
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (In thousand HRK) | 2017 | 2018 | 2017 | 2018 |
| Net foreign exchange gains/(losses) | 3,795 | (168) | 3,294 | 226 |
| Net gains on sale of property, plant and equipment | 1,307 | 3,593 | 1,142 | 3,455 |
| Changes in fair value of forwards and interest rate swaps |
749 | (3,687) | 749 | (3,687) |
| Gains on disposal of financial assets | 212 | - | 212 | - |
| Realised net gains/(losses) from changes in value of forwards and interest rate swaps |
10 | (2,375) | 10 | (2,375) |
| Share fair value adjustment | - | - | (5,629) | - |
| Net loss from share sold | - | (1,119) | - | (1,440) |
| 6,073 | (3,756) | (222) | (3,821) |
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (In thousand HRK) | 2017 | 2018 | 2017 | 2018 |
| Interest income | 625 | 274 | 437 | 205 |
| 625 | 274 | 437 | 205 | |
| Interest expense | (43,870) | (50,071) | (38,531) | (46,213) |
| Net foreign exchange gains from financing activities | 14,199 | 28,785 | 13,101 | 27,175 |
| (29,671) | (21,286) | (25,430) | (19,038) | |
| Financial expense - net | (29,046) | (21,012) | (24,993) | (18,833) |
During 2018 the Company capitalised borrowing costs of HRK 220 thousand with a capitalisation rate from 0.97% to 1.81%, while the Group capitalised the borrowing costs of HRK 255 thousand with a capitalisation rate from 0.97% to 2.01%.
Income tax comprise:
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (In thousand HRK) | 2017 | 2018 | 2017 | 2018 |
| Current tax | 6,111 | 4,128 | - | - |
| Deferred tax | (12,555) | 14,766 | (14,269) | 20,928 |
| Tax (income)/expense | (6,444) | 18,894 | (14,269) | 20,928 |
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (In thousand HRK) | 2017 | 2018 | 2017 | 2018 |
| Profit before tax | 238,643 | 258,082 | 217,710 | 260,207 |
| Income tax | 43,009 | 46,218 | 39,188 | 46,837 |
| Tax exempt income | (385) | (4,051) | (357) | (1,446) |
| Non-deductible expenses | 1,384 | 2,612 | 1,087 | 1,308 |
| Investment tax credits | (54,123) | (25,771) | (54,123) | (25,771) |
| Recognition of deferred tax assets previously not recognised | (63) | (114) | (64) | - |
| Recognition of other deferred tax assets | 3,734 | - | - | - |
| Tax (income)/expense | (6,444) | 18,894 | (14,269) | 20,928 |
| Effective tax rate | - | 7.32% | - | 8.04% |
Croatian tax legislation does not allow tax losses to be transferred among group companies. In accordance with the regulations of the Republic of Croatia, the Tax Authority may at any time inspect the Group Company's books and records within three years following the year in which the tax liability was reported, and may impose additional tax assessments and penalties.
The Tax Administration has issued a ruling concerning the tax audit for the year 2010 for the company Rabac d.d., which was merged with the company Valamar Riviera d.d. on 1 September 2011. According to this ruling, there is an increase in the tax liabilities of HRK 4,428 thousand. The Company has lodged an appeal against the aforementioned ruling. The appeal was accepted. In the repeated proceedings, the Tax Authority issued a ruling, which stated that the tax liability should be reduced to the amount of HRK 1,201 thousand. The Company has lodged an appeal against the aforementioned ruling. As the appeal was rejected in 2017, the Company initiated an administrative dispute.
The Tax Administration has issued a ruling concerning the tax audit for the year 2011 for the company Dubrovnik Babin kuk d.d., which was merged to Valamar Riviera d.d. on 31 October 2013. According to this ruling, the tax liability should be increased by HRK 1,304 thousand. The
Company has lodged an appeal against the aforementioned decision. As the appeal was rejected by the second instance court, the Company initiated an administrative dispute in 2017.
The Company Management believes that the outcome of this matter shall not have a material effect on the financial position and performance of the Company. During 2014, in accordance with the Act on Investment Incentives, the Company became entitled to a tax incentive. Under the Act on Investment Incentives from 2014, the Company has achieved total investment tax credit incentives of HRK 178,831 thousand based on the investments into the Valamar Isabella Resort and destination Rabac from 2014 until 31 December 2017.
The Company has fulfilled the requirements of preserving the properties and of additional employment in the period 2016-2017, and for the year ended 31 December 2017 utilised HRK 81,899 thousand of tax incentives and recognised remaining tax incentives of HRK 96,932 thousand as deferred tax asset.
Under the 2015 Act on Investment Incentives and the 2016 Regulation on Investment Incentives, the Company achieved total tax incentives of HRK 25,771 thousand based on reported new investments in reconstruction and repositioning of accommodation facilities (Camp Istra 5*, Valamar Collection Marea Suites 5* and Valamar Collection Pical Resort (4*/5*)) realised until 31 December 2018. The Company utilised HRK 49,154 thousand of tax incentives in 2018 (Note 25).
Basic earnings per share are calculated by dividing the profit/(loss) for the year of the Group by the weighted average number of shares ordinary in issue during the year, excluding the ordinary shares purchased by the Company and held as treasury shares.
Diluted earnings per share are equal to basic, since the Group/Company did not have any convertible instruments and share options outstanding during both years.
| 2017 | 2018 | |
|---|---|---|
| Profit attributable to equity holders (in thousands of HRK) | 243,596 | 235,337 |
| Weighted average number of shares | 124,207,204 | 123,968,146 |
| Basic/diluted earnings per share (in HRK) | 1.96 | 1.90 |
| (In thousand HRK) | Land | Buildings | Plant and equipment |
Furniture, tools and horticulture |
Assets under construction |
Total |
|---|---|---|---|---|---|---|
| As at 1 January 2017 | ||||||
| Cost | 873,211 | 5,082,912 | 597,573 | 313,477 | 200,353 | 7,067,526 |
| Accumulated depreciation and impairment | - | (2,559,921) | (371,628) | (205,077) | - | (3,136,626) |
| Carrying amount | 873,211 | 2,522,991 | 225,945 | 108,400 | 200,353 | 3,930,900 |
| Year ended 31 December 2017 | ||||||
| Opening carrying amount | 873,211 | 2,522,991 | 225,945 | 108,400 | 200,353 | 3,930,900 |
| Reclassification from investment property and intangible assets | - | (993) | 5,796 | (4,805) | - | (2) |
| Additions | 1,497 | 609,363 | 198,373 | 66,124 | (26,153) | 849,204 |
| Disposals and write-offs | - | (10,404) | (493) | (797) | - | (11,694) |
| Depreciation | - | (249,244) | (62,363) | (26,795) | - | (338,402) |
| Carrying amount at year end | 874,708 | 2,871,713 | 367,258 | 142,127 | 174,200 | 4,430,006 |
| As at 31 December 2017 | ||||||
| Cost | 874,708 | 5,651,533 | 794,679 | 346,819 | 174,200 | 7,841,939 |
| Accumulated depreciation and impairment | - | (2,779,820) | (427,421) | (204,692) | - | (3,411,933) |
| Carrying amount | 874,708 | 2,871,713 | 367,258 | 142,127 | 174,200 | 4,430,006 |
| Year ended 31 December 2018 | ||||||
| Opening carrying amount | 874,708 | 2,871,713 | 367,258 | 142,127 | 174,200 | 4,430,006 |
| Hoteli Makarska d.d. acquisition at fair value (Note 37a) | 83,458 | 231,715 | 14,832 | 5,981 | 635 | 336,621 |
| Valamar Obertauern GmbH acquisition at fair value (Note 37b) | 3,692 | 56,367 | 1,516 | - | 19 | 61,594 |
| Transfer within the assets | - | (416) | 1,659 | (1,465) | 17 | (205) |
| Additions | 11,851 | 464,312 | 140,694 | 67,799 | (2,144) | 682,512 |
| Disposals and write-offs | (692) | (8,146) | (2,748) | (498) | (18) | (12,102) |
| Depreciation | - | (283,569) | (79,238) | (34,022) | - | (396,829) |
| Carrying amount at year end | 973,017 | 3,331,976 | 443,973 | 179,922 | 172,709 | 5,101,597 |
| As at 31 December 2018 | ||||||
| Cost | 973,017 | 6,339,931 | 918,040 | 397,370 | 172,709 | 8,801,067 |
| Accumulated depreciation and impairment | - | (3,007,955) | (474,067) | (217,448) | - | (3,699,470) |
| Carrying amount | 973,017 | 3,331,976 | 443,973 | 179,922 | 172,709 | 5,101,597 |
As at 31 December 2018, the carrying amount of land and buildings of the Group pledged as collateral for borrowings amounted to HRK 2,105,236 thousand (2017: HRK 1,746,280 thousand).
| (In thousand HRK) | Land | Buildings | Plant and equipment |
Furniture, tools and horticulture |
Assets under construction |
Total |
|---|---|---|---|---|---|---|
| As at 1 January 2017 | ||||||
| Cost | 595,575 | 4,238,985 | 576,947 | 290,639 | 197,568 | 5,899,714 |
| Accumulated depreciation and impairment | - | (2,433,005) | (369,935) | (200,849) | - | (3,003,789) |
| Carrying amount | 595,575 | 1,805,980 | 207,012 | 89,790 | 197,568 | 2,895,925 |
| Year ended 31 December 2017 | ||||||
| Opening carrying amount | 595,575 | 1,805,980 | 207,012 | 89,790 | 197,568 | 2,895,925 |
| Effect of merger of subsidiary (Note 36a) | 36,855 | 219,307 | 776 | 133 | 1,723 | 258,794 |
| Additions | 1,497 | 595,283 | 196,196 | 65,300 | (38,915) | 819,361 |
| Disposals and write-offs | - | (10,359) | (230) | (727) | - | (11,316) |
| Depreciation | - | (193,593) | (57,910) | (24,076) | - | (275,579) |
| Carrying amount at year end | 633,927 | 2,416,618 | 345,844 | 130,420 | 160,376 | 3,687,185 |
| As at 31 December 2017 | ||||||
| Cost | 633,927 | 5,318,739 | 793,484 | 346,607 | 160,376 | 7,253,133 |
| Accumulated depreciation and impairment | - | (2,902,121) | (447,640) | (216,187) | - | (3,565,948) |
| Carrying amount | 633,927 | 2,416,618 | 345,844 | 130,420 | 160,376 | 3,687,185 |
| Year ended 31 December 2018 | ||||||
| Opening carrying amount | 633,927 | 2,416,618 | 345,844 | 130,420 | 160,376 | 3,687,185 |
| Transfer within the assets | - | (416) | 1,659 | (1,465) | 17 | (205) |
| Additions | 11,631 | 408,501 | 126,305 | 61,739 | (6,496) | 601,680 |
| Disposals and write-offs | (692) | (6,871) | (2,515) | (462) | - | (10,540) |
| Depreciation | - | (227,961) | (72,939) | (30,435) | - | (331,335) |
| Carrying amount at year end | 644,866 | 2,589,871 | 398,354 | 159,797 | 153,897 | 3,946,785 |
| As at 31 December 2018 | ||||||
| Cost | 644,866 | 5,500,575 | 862,578 | 383,079 | 153,897 | 7,544,995 |
| Accumulated depreciation and impairment | - | (2,910,704) | (464,224) | (223,282) | - | (3,598,210) |
| Carrying amount | 644,866 | 2,589,871 | 398,354 | 159,797 | 153,897 | 3,946,785 |
Assets under construction of the Group in the amount of HRK 172,708 thousand mainly refer to the investment in hotels and apartments of HRK 70,084 thousand, investment in camping of HRK 56,106 thousand, the reconstruction, extension and adaptation of commercial buildings of HRK 29,844 thousand, advances paid to suppliers for investments of HRK 12,351 thousand and other investments of HRK 4,323 thousand.
Of the Group's total value of equipment, leased equipment under operating leases is as follows:
| (in thousands of HRK) | 2017 | 2018 |
|---|---|---|
| Cost | 133,356 | 134,047 |
| Accumulated depreciation as at 1 January | (101,237) | (100,943) |
| Depreciation charge for the year | (3,796) | (3,948) |
| Carrying amount | 28,323 | 29,156 |
The operating lease relates to the lease of hospitality facilities and shops to third parties. During 2018, the Group realised rental income of HRK 43,537 thousand (2017: HRK 40,953 thousand). All lease agreements are renewable, usually for period of 1 to 3 years and there is no purchase option.
| (in thousands of HRK) | GROUP | COMPANY |
|---|---|---|
| As at 31 December 2017 | ||
| Cost | 17,111 | 17,111 |
| Accumulated depreciation | (6,857) | (6,857) |
| Carrying amount | 10,254 | 10,254 |
| Year ended 31 December 2018 | ||
| Opening carrying amount | 10,254 | 10,254 |
| Depreciation | (614) | (614) |
| Carrying amount at year end | 9,640 | 9,640 |
| As at 31 December 2018 | ||
| Cost | 17,111 | 17,111 |
| Accumulated depreciation | (7,471) | (7,471) |
| Carrying amount | 9,640 | 9,640 |
As at 31 December 2018, the fair value of investment property (office space) approximates the carrying value. As at 31 December 2018, properties pledged as collateral for loans amounted to HRK 6,782 thousand (2017: HRK 7,252 thousand).
| (in thousands of HRK) | Goodwill /i/ | Software | Total |
|---|---|---|---|
| As at 1 January 2017 | |||
| Cost | 6,568 | 42,958 | 49,526 |
| Accumulated amortisation | - | (25,446) | (25,446) |
| Carrying amount | 6,568 | 17,512 | 24,080 |
| Year ended 31 December 2017 | |||
| Opening carrying amount | 6,568 | 17,512 | 24,080 |
| Reclassification to property, plant and equipment | - | 2 | 2 |
| Additions | - | 28,539 | 28,539 |
| Amortisation | - | (7,396) | (7,396) |
| Carrying amount at year end | 6,568 | 38,657 | 45,225 |
| As at 31 December 2017 | |||
| Cost | 6,568 | 72,181 | 78,749 |
| Accumulated amortization | - | (33,524) | (33,524) |
| Carrying amount | 6,568 | 38,657 | 45,225 |
| Year ended 31 December 2018 | |||
| Opening carrying amount | 6,568 | 38,657 | 45,225 |
| Valamar Obertauern GmbH acquisition at fair value (Note 37b) | - | 313 | 313 |
| Hoteli Makarska d.d. acquisition at fair value (Note 37a) | - | 16 | 16 |
| Transfer within the assets | - | 205 | 205 |
| Additions | - | 21,047 | 21,047 |
| Amortisation | - | (13,078) | (13,078) |
| Disposals and write-offs | - | (1) | (1) |
| Carrying amount at year end | 6,568 | 47,159 | 53,727 |
| As at 31 December 2018 | |||
| Cost | 6,568 | 93,690 | 100,258 |
| Accumulated amortisation | - | (46,531) | (46,531) |
| Carrying amount | 6,568 | 47,159 | 53,727 |
| (in thousands of HRK) | Goodwill /i/ | Software | Total |
|---|---|---|---|
| As at 1 January 2017 | |||
| Cost | - | 42,952 | 42,952 |
| Accumulated amortisation | - | (25,609) | (25,609) |
| Carrying amount | - | 17,343 | 17,343 |
| Year ended 31 December 2017 | |||
| Opening carrying amount | - | 17,343 | 17,343 |
| Effect of merger of subsidiary (Note 36a) | 6,568 | 32 | 6,600 |
| Additions | - | 27,865 | 27,865 |
| Amortisation | - | (7,274) | (7,274) |
| Carrying amount at year end | 6,568 | 37,966 | 44,534 |
| As at 31 December 2017 | |||
| Cost | 6,568 | 71,151 | 77,719 |
| Accumulated amortisation | - | (33,185) | (33,185) |
| Carrying amount | 6,568 | 37,966 | 44,534 |
| Year ended 31 December 2018 | |||
| Opening carrying amount | 6,568 | 37,966 | 44,534 |
| Transfer within the assets | - | 205 | 205 |
| Additions | - | 20,121 | 20,121 |
| Amortisation | - | (12,743) | (12,743) |
| Carrying amount at year end | 6,568 | 45,549 | 52,117 |
| As at 31 December 2018 | |||
| Cost | 6,568 | 91,427 | 97,995 |
| Accumulated amortisation | - | (45,878) | (45,878) |
| Carrying amount | 6,568 | 45,549 | 52,117 |
/i/ Impairment tests for goodwill Goodwill is allocated to the cashgenerating unit (CGUs) for the transferred subsidiary Puntižela d.o.o., Pula that was merged to the parent company on 31 March 2017. The recoverable amount of the cashgenerating unit is determined based on the value-in-use calculations. These calculations use cash flow projections based on 5-year financial projections approved by the Management.
| (in thousands of HRK) | 2017 | 2018 |
|---|---|---|
| At beginning of the year | 668,830 | 450,905 |
| Acquisition of subsidiaries /i/ | 6,208 | 165,485 |
| Valamar Hotels & Resorts GmbH liquidation /ii/ | - | (189) |
| Merger of subsidiaries /iii/ | (218,502) | - |
| Decrease in share value | (5,629) | - |
| At year end | 450,905 | 616,201 |
| (in thousands of HRK) | OWNERSHIP | 2017 | 2018 |
|---|---|---|---|
| Palme turizam d.o.o., Dubrovnik | 100.00% | 115,448 | 115,448 |
| Magične stijene d.o.o., Dubrovnik | 100.00% | 5,577 | 5,577 |
| Bugenvilia d.o.o., Dubrovnik | 100.00% | 38,542 | 38,542 |
| Valamar Hotels & Resorts GmbH, Frankfurt am Main /ii/ | 100.00% | 189 | - |
| Imperial d.d., Rab /i/ | 56.21% | 291,149 | 292,709 |
| Hoteli Makarska d.d., Makarska /i/ | 46.93% | - | 146,064 |
| Valamar A GmbH, Tamsweg /i/ | 100.00% | - | 16,105 |
| Valamar Obertauern GmbH, Obertauern /i/ | 10.00% | - | 1,756 |
| 450,905 | 616,201 |
The subsidiaries Bugenvilia d.o.o., Elafiti Babin kuk d.o.o. until merger and Palme turizam d.o.o. generate revenue from rent of property to the Company, while Magične stijene d.o.o., Valamar Hotels & Resorts GmbH until liquidation and Valamar A GmbH do not have business activity. Until the merger, Puntižela d.o.o. generated revenue from performing hospitality activities (camping and hostel accommodation). Imperial d.d. and Hoteli Makarska d.d. generate revenues from performing their registered activities, primarily from hospitality activities (services of accommodation, food and drinks in hotels and campings). Valamar Obertauern GmbH performs seasonal hospitality activity in its only hotel (during winter).
According to the agreement, the Group controlled 33.33% of Pogača Babin kuk d.o.o. At the moment of incorporating the Company, the Group invested 49.67% of share capital or HRK 1,490 thousand, but has the right to 1/3 of realised profit or loss. On 26 October 2018, the Company sold its share in Pogača Babin kuk d.o.o.
Adjustment of share in joint venture with share in net assets of Pogača Babin kuk d.o.o.
| GROUP | ||
|---|---|---|
| (in thousands of HRK) | 2017 | 2018 |
| At beginning of year on equity basis | 1,366 | 1,247 |
| Dividends paid | (95) | - |
| Share in net profit/(loss) | (24) | (128) |
| Share sold (26 October 2018) | - | (1,119) |
| At end of year on equity basis | 1,247 | - |
| Share sold (26 October 2018) At end of year at acquisition cost |
- 1,490 |
(1,490) - |
|---|---|---|
| At beginning of year at acquisition cost | 1,490 | 1,490 |
| (in thousands of HRK) | 2017 | 2018 |
| (in thousands of HRK) | 2017 | 2018 |
|---|---|---|
| At beginning of year | 4,477 | 4,403 |
| Net profit/(loss) for the year | (72) | (385) |
| At end of year (26 October 2018) | 4,405 | 4,018 |
| Share in net assets from joint venture (33.33%) | 1,468 | 1,340 |
| Dividends paid related to previous years | (126) | (221) |
| Dividends paid related to current year | (95) | - |
| Carrying amount | 1,247 | 1,119 |
POGAČA BABIN KUK d.o.o. (100%)
| (in thousands of HRK) | 2017 | 2018 |
|---|---|---|
| Assets: | ||
| Non-current assets | 459 | 370 |
| Current assets | 3,370 | 2,895 |
| 3,829 | 3,265 | |
| Liabilities: | ||
| Short-term liabilities | 901 | 222 |
| 901 | 222 | |
| Net assets | 2,928 | 3,043 |
| Income | 8,945 | 6,911 |
| Expenses | (9,017) | (7,296) |
| Profit /(loss) before tax | (72) | (385) |
| Share in profit /(loss) of joint venture (33.33%) | (24) | (128) |
| (in thousands of HRK) | Cash, loans and receivables |
Financial assets |
Financial assets through compre hensive income |
Total |
|---|---|---|---|---|
| 31 December 2017 | ||||
| Assets at the reporting date | ||||
| Financial assets not measured at fair value | ||||
| Trade receivables | 18,579 | - | - | 18,579 |
| Loans and deposits | 1,409 | - | - | 1,409 |
| Cash and cash equivalents | 287,837 | - | - | 287,837 |
| Financial assets measured at fair value | ||||
| Financial assets | - | 3,791 | - | 3,791 |
| Derivative financial instruments | - | - | 104 | 104 |
| Total | 307,825 | 3,791 | 104 | 311,720 |
| (in thousands of HRK) | Cash, loans and receivables |
Financial assets |
Financial assets through compre hensive income |
Total |
| 31 December 2018 | ||||
| Assets at the reporting date | ||||
| Financial assets not measured at fair value | ||||
| Trade receivables | 40,312 | - | - | 40,312 |
| Loans and deposits | 16,147 | - | - | 16,147 |
| Cash and cash equivalents | 261,842 | - | - | 261,842 |
| Financial assets measured at fair value | ||||
| Financial assets | - | 4,484 | - | 4,484 |
| Total | 318,301 | 4,484 | - | 322,785 |
| (in thousands of HRK) | Cash, loans and receivables |
Financial assets |
Financial assets through compre hensive income |
Total |
|---|---|---|---|---|
| 31 December 2017 | ||||
| Assets at the reporting date | ||||
| Financial assets not measured at fair value | ||||
| Trade receivables | 19,643 | - | - | 19,643 |
| Loans and deposits | 1,348 | - | - | 1,348 |
| Cash and cash equivalents | 237,401 | - | - | 237,401 |
| Financial assets measured at fair value | ||||
| Financial assets | - | 3,761 | - | 3,761 |
| Derivative financial instruments | - | - | 104 | 104 |
| Total | 258,392 | 3,761 | 104 | 262,257 |
| (in thousands of HRK) | Cash, loans and receivables |
Financial assets |
Financial assets through compre hensive income |
Total |
| 31 December 2018 | ||||
| Assets at the reporting date | ||||
| Financial assets not measured at fair value | ||||
| Trade receivables | 36,407 | - | - | 36,407 |
| Loans and deposits | 16,099 | - | - | 16,099 |
| Cash and cash equivalents | 168,533 | - | - | 168,533 |
| Financial assets measured at fair value | ||||
| Financial assets | - | 4,100 | - | 4,100 |
| Total | 221,039 | 4,100 | - | 225,139 |
The above-mentioned amounts of financial assets represent the Group's maximum exposure to credit risk at the reporting date. The carrying values approximate their fair value due to their short-term maturity.
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 |
| Liabilities at reporting date | ||||
| Financial liabilities – at amortised cost: | ||||
| Trade and other payables | 184,128 | 169,145 | 170,741 | 156,469 |
| Borrowings | 2,064,016 | 2,435,132 | 1,906,465 | 2,182,117 |
| 2,248,144 | 2,604,277 | 2,077,206 | 2,338,586 | |
| Financial liabilities at fair value through profit or loss: | ||||
| Derivative financial instruments | 1,658 | 7,616 | 1,658 | 7,616 |
| 2,249,802 | 2,611,893 | 2,078,864 | 2,346,202 |
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 |
| Loans and deposits | ||||
| Loans and deposits | 516 | 588 | 428 | 512 |
| 516 | 588 | 428 | 512 |
The credit quality of other financial assets is stated in the following notes.
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 |
| Listed equity securities /i/ | 3,621 | 4,290 | 3,621 | 3,960 |
| Other | 170 | 194 | 140 | 140 |
| 3,791 | 4,484 | 3,761 | 4,100 |
/i/ Investments in securities represent less than 1% ownership interests and are presented at fair value.
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 |
| At beginning of year | 4,936 | 3,791 | 4,906 | 3,761 |
| Change in fair value recognised in other comprehen sive income |
446 | 339 | 446 | 339 |
| Disposal | (1,591) | - | (1,591) | - |
| Subsidiaries acquisition | - | 354 | - | - |
| At end of year | 3,791 | 4,484 | 3,761 | 4,100 |
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 |
| Loans | 1,169 | 269 | 1,108 | 254 |
| Deposits | 240 | 15,878 | 240 | 15,845 |
| Total | 1,409 | 16,147 | 1,348 | 16,099 |
| Less: non-current portion | (423) | (15,706) | (379) | (15,706) |
| Current portion | 986 | 441 | 969 | 393 |
Loans include the amount of HRK 147 thousand (2017: HRK 188 thousand) due from employees for housing loans at an interest rate of 1% payable by 2025. The loans are not secured with any collateral. Loans include the amount of HRK 78 thousand, which refer to a long-term loan due in 2019. This long-term loan has been secured by a pledge right over the property. Most of the deposits are term deposits securing the bank receivables in a total amount of HRK 15.5 mil.
The carrying amounts of short-term loans and deposits approximate their fair value. The fair value of non-current loans and deposits of Group is HRK 15,703 thousand (2017: HRK 413 thousand) and the fair value of noncurrent loans and deposits of the Company is HRK 15,703 thousand (2017: HRK 370 thousand). The fair value is calculated based on the cash flows discounted at a rate of 1.68% (2017: 2.13%), which presents the yield to maturity on the bond of the Republic of Croatia with maturity in 2025.
All given loans and deposits are denominated in HRK.
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 |
| Raw materials and supplies | 12,861 | 15,503 | 11,609 | 13,096 |
| Trade goods, small inventory and packaging material | 11,636 | 9,944 | 12,304 | 9,804 |
| 24,497 | 25,447 | 23,913 | 22,900 |
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 |
| Domestic receivables | 15,007 | 24,305 | 12,981 | 18,887 |
| Foreign receivables | 8,190 | 20,266 | 6,941 | 17,881 |
| Related parties receivables | - | - | 3,393 | 1,853 |
| Provision for impairment of trade receivables | (8,851) | (9,262) | (7,701) | (7,010) |
| Trade receivables – net | 14,346 | 35,309 | 15,614 | 31,611 |
| Accrued income | 4,005 | 4,938 | 3,801 | 4,731 |
| Interest receivables | 228 | 65 | 228 | 65 |
| 18,579 | 40,312 | 19,643 | 36,407 | |
| Less: non-current portion | (603) | - | - | - |
| Current portion | 17,976 | 40,312 | 19,643 | 36,407 |
| Prepaid expenses | 11,749 | 12,924 | 10,987 | 12,175 |
| VAT receivable | 13,006 | 4,645 | 10,592 | 2,596 |
| Advances to suppliers | 5,272 | 5,479 | 5,270 | 5,313 |
| Receivables from employees | 1,226 | 1,391 | 1,172 | 1,367 |
| Receivables from state institutions | 299 | 707 | 158 | 320 |
| Other receivables | 942 | 2,989 | 697 | 2,985 |
| Total current receivables | 50,470 | 68,447 | 48,519 | 61,163 |
| Total trade and other receivables | 51,073 | 68,447 | 48,519 | 61,163 |
Movements in the provisions for impairment of trade and other receivables:
| COMPANY | |||
|---|---|---|---|
| 2017 | 2018 | 2017 | 2018 |
| 11,813 | 8,851 | 9,500 | 7,701 |
| 314 | 1,485 | 376 | 297 |
| (1,695) | (458) | (1,686) | (444) |
| (1,581) | (616) | (489) | (544) |
| 8,851 | 9,262 | 7,701 | 7,010 |
| 2017 | 2018 | 2017 | 2018 |
| 4,935 | 20,131 | 7,975 | 21,428 |
| 9,411 | 15,178 | 7,639 | 10,183 |
| GROUP GROUP |
COMPANY |
Trade and other receivables are carried at amortised cost.
As at 31 December 2018, the maturities of the trade receivables, which are past due, but not impaired are as follows:
14,346 35,309 15,614 31,611
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 |
| Up to one month | 1,877 | 4,962 | 1,814 | 4,229 |
| One to two months | 2,244 | 3,087 | 2,136 | 1,913 |
| Two to three months | 1,645 | 3,182 | 1,568 | 1,721 |
| Over three months up to 1 year | 3,645 | 3,947 | 2,121 | 2,320 |
| 9,411 | 15,178 | 7,639 | 10,183 |
The carrying amounts of trade and other receivables are denominated in the following currencies:
| GROUP | COMPANY | ||||
|---|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 | |
| EUR | 8,142 | 20,690 | 6,896 | 18,313 | |
| HRK | 6,204 | 14,619 | 8,718 | 13,298 | |
| 14,346 | 35,309 | 15,614 | 31,611 |
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. The Group holds advances, bills of exchange and promissory notes, and periodically mortgage as collection security. The carrying amounts of trade and other receivables approximate their fair value since they are short-term.
| 2017 | 2018 | |||
|---|---|---|---|---|
| Receivables | Liabilities | Receivables | Liabilities | |
| Fair value of the interest rate swap | 104 | 1,586 | - | 7,616 |
| Market value of foreign currency forward contracts | - | 72 | - | - |
| Total | 104 | 1,658 | - | 7,616 |
| Less the non-current portion: | (91) | (952) | - | (5,162) |
| Fair value of interest rate swap | 13 | 634 | - | 2,454 |
| Market value of foreign currency forward contracts | - | 72 | - | - |
| Current portion | 13 | 706 | - | 2,454 |
Interest rate swaps and foreign currency forwards
As at 31 December 2018, the contracted value of outstanding interest rate swaps amounts to HRK 690,807 thousand (2017: HRK 207,067 thousand).
There are no contracted foreign currency forwards as at 31 December 2018 (2017: HRK 37,891 thousand).
As at 31 December 2018, the weighted average base interest rate fixed by the interest rate swap contract for a loan in EUR is 0.47%, while the base variable interest rate (EURIBOR) is -0.31%. Fair value gains and losses on interest rate swaps are recognised directly in the Statement of comprehensive income within the finance costs until the repayment of borrowings with a final maturity as at 29 December 2027.
| (in thousands of HRK) | Property, plant and equipment |
Financial assets |
Trade recei vables and inventories |
Provisions | Tax losses |
Tax incentive for investment |
Total |
|---|---|---|---|---|---|---|---|
| As at 1 January 2017 | 37,336 | 2,474 | 3,709 | 4,451 | - | 83,668 | 131,638 |
| Credited to the income | - | - | - | 1,296 | 128 | 54,123 | 55,547 |
| Debited to the income | (3,813) | (1,703) | (13) | (5) | (128) | (40,859) | (46,521) |
| As at 31 December 2017 | 33,523 | 771 | 3,696 | 5,742 | - | 96,932 | 140,664 |
| Increase – Hoteli Makarska d.d. acquisition (37a) | - | - | - | 824 | - | - | 824 |
| Increase – Valamar Obertauern GmbH acquisition (37b) |
227 | - | - | - | 3,101 | - | 3,328 |
| Credited to the income | 72 | 1,120 | - | 940 | 2,766 | 25,771 | 30,669 |
| Debited to the income | (79) | (34) | (10) | (502) | - | (49,154) | (49,779) |
| As at 31 December 2018 | 33,743 | 1,857 | 3,686 | 7,004 | 5,867 | 73,549 | 125,706 |
| (in thousands of HRK) | Property, plant and equipment |
Financial assets |
Trade recei vables and inventories |
Provisions | Tax losses |
Tax incentive for investment |
Total |
|---|---|---|---|---|---|---|---|
| As at 1 January 2017 | - | 2,473 | 3,708 | 3,766 | - | 83,668 | 93,615 |
| Increase of tax assets – merger effect (Note 36a) | 15,474 | - | - | - | 128 | - | 15,602 |
| Credited to the income | - | 1,013 | - | 915 | - | 54,123 | 56,051 |
| Debited to the income | - | (1,703) | (13) | (5) | (128) | (40,859) | (42,708) |
| As at 31 December 2017 | 15,474 | 1,783 | 3,695 | 4,676 | - | 96,932 | 122,560 |
| Credited to the income | - | 1,120 | - | 799 | - | 25,771 | 27,690 |
| Debited to the income | (79) | (34) | (10) | (263) | - | (49,154) | (49,540) |
| As at 31 December 2018 | 15,395 | 2,869 | 3,685 | 5,212 | - | 73,549 | 100,710 |
| (in thousands of HRK) | Financial assets |
Fair value of land and buildings |
Total |
|---|---|---|---|
| As at 1 January 2018 | 89 | 52,670 | 52,759 |
| Increase – Hoteli Makarska d.d.acquisition (Note 37a) | - | 17,755 | 17,755 |
| Increase – Valamar Obertauern GmbH acquisition (Note 37b) | - | 2,323 | 2,323 |
| Debited to the income | - | (4,344) | (4,344) |
| Credited to the other comprehensive income | 68 | - | 68 |
| As at 31 December 2018 | 157 | 68,404 | 68,561 |
| (in thousands of HRK) | Financial assets |
Fair value of land and buildings |
Total |
|---|---|---|---|
| As at 1 January 2018 | 89 | 15,993 | 16,082 |
| Debited to the income | - | (923) | (923) |
| Credited to the other comprehensive income | 68 | - | 68 |
| As at 31 December 2018 | 157 | 15,070 | 15,227 |
| GROUP | COMPANY | ||||
|---|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 | |
| Giro-accounts and current accounts | 105,793 | 149,323 | 104,529 | 143,324 | |
| Cash in hand | 50 | 393 | - | - | |
| Foreign currency accounts | 12,268 | 63,155 | 9,731 | 10,374 | |
| Time deposits up to one month | 169,726 | 48,971 | 123,141 | 14,835 | |
| 287,837 | 261,842 | 237,401 | 168,533 |
The interest rate on cash and cash equivalents is up to 0.30% (2017: up to 0.80%).
The carrying amounts of cash and cash equivalents are denominated in the following currencies:
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 |
| HRK | 124,076 | 166,462 | 122,769 | 160,308 |
| EUR | 162,751 | 94,141 | 113,858 | 7,310 |
| CHF | 247 | 687 | 101 | 465 |
| Other | 763 | 552 | 673 | 450 |
| 287,837 | 261,842 | 237,401 | 168,533 |
The authorised and registered share capital of the Company in 2018 amounts to HRK 1,672,021 thousand (2017: HRK 1,672,021 thousand) and comprises 126,027,542 ordinary shares (2017: 126,027,542) with no prescribed nominal value. All the shares are fully paid.
The ownership structure as at 31 December is as follows:
| 2017 | Number of shares | % |
|---|---|---|
| Epic, Goldscheider und Wurmböck Unternehmensberatungsgesellschaft m.b.H., Wien |
55,594,884 | 44.11 |
| Satis d.o.o., Zagreb | 6,500,564 | 5.16 |
| Enitor d.o.o., Zagreb | 2,720,950 | 2.16 |
| Zagrebačka banka d.d./Skrbnik, Zagreb | 1,889,067 | 1.50 |
| Hrvatska poštanska banka/Skrbnik, Zagreb | 1,846,184 | 1.46 |
| PBZ d.d./The Bank of New York as custodian/Skrbnik, Zagreb | 1,742,413 | 1.38 |
| Societe Generale-Splitska banka d.d./Skrbnik, Split | 1,067,013 | 0.85 |
| PBZ d.d./State street client account/Skrbnik, Zagreb | 1,020,957 | 0.81 |
| Bilbija Igor | 974,250 | 0.77 |
| Bogdanović Zoran | 690,711 | 0.55 |
| Treasury shares | 1,794,451 | 1.42 |
| Other shareholders - free float | 50,186,098 | 39.82 |
| Total | 126,027,542 | 100.00 |
| 2018 | Number of shares | % |
| Goldscheider Keramik Gesellschaft m.b.H., Wien | 25,017,698 | 19.85 |
| Wurmböck Beteiligungs GmbH, Wien | 25,017,698 | 19.85 |
| Satis d.o.o., Zagreb Lanschutzer Franz |
6,524,904 5,587,788 |
5.18 4.43 |
| Enitor d.o.o., Zagreb | 2,720,950 | 2.16 |
| Hrvatska poštanska banka/Skrbnik, Zagreb | 1,856,036 | 1.47 |
| PBZ d.d./The Bank of New York as custodian/Skrbnik, Zagreb | 1,348,216 | 1.07 |
| Zagrebačka banka d.d./Skrbnik, Zagreb | 1,117,027 | 0.89 |
| OTP banka d.d./Skrbnik, Split | 1,067,013 | 0.85 |
| PBZ d.d./State street client account/Skrbnik, Zagreb | 1,008,110 | 0.80 |
| Treasury shares | 3,122,604 | 2.48 |
| Other shareholders - free float | 51,639,498 | 40.97 |
In 2018, there were no changes in share/equity capital of the Company.
As previously reported, based on the decision adopted by the Company's General Assembly held on 24 July 2013, the registered capital was increased by a conversion of the reinvested profit of the year 2012 by HRK 52,200 thousand. The distribution of the reinvested profit of HRK 52,200 thousand in future periods may result in tax obligations given it is based on a tax incentive.
The Company has acquired and released treasury shares during 2018.
The Company has acquired 1,397,932 treasury shares, accounting for 1.11% of the share capital in the total amount of HRK 51,706 thousand and effectively disposed 69,779 treasury shares, accounting for 0.05% of the share capital in the total amount of HRK 1,476 thousand, of which 17,800 shares on paid-out dividends in accordance with the resolution adopted by the General Assembly on 8 May 2018, as explained in Note 28b.
As at 31 December 2018, the Company owned 3,122,604 of their treasury shares (2017: 1,794,451), which represents 2.48% (2017: 1.42%) of the Company's registered capital.
The capital reserves of the Group increased during the year in the amount of HRK 1,701 thousand and at 31 December 2018 amount to HRK 4,817 thousand (2017: HRK 3,116 thousand).
As at 31 December 2018, the capital reserves of the Company amounted to HRK 5,304 thousand (2017: HRK 3,603 thousand).
| (in thousands of HRK) | 2017 | 2018 |
|---|---|---|
| Legal reserves | 83,601 | 83,601 |
| Fair value reserves | 634 | 905 |
| Other reserves | 68,851 | 120,851 |
| Retained earnings | 492,716 | 560,463 |
| 645,803 | 765,820 | |
| Changes in reserves: | ||
| Legal reserves | ||
| At beginning of the year | 67,199 | 83,601 |
| Transfer from retained earnings | 16,402 | - |
| At year end | 83,601 | 83,601 |
| Fair value reserves | ||
| At beginning of the year | 273 | 634 |
| Change in fair value financial assets | 357 | 271 |
| Effect of selling financial assets | 4 | - |
| At year end | 634 | 905 |
| Other reserves | ||
| At beginning of the year | 68,851 | 68,851 |
| Transfer to treasury shares reserve | - | 52,000 |
| At year end | 68,851 | 120,851 |
| Retained earnings | ||
| At beginning of the year | 364,874 | 492,716 |
| Result for the year | 243,596 | 235,337 |
| Transfer to legal reserves | (16,402) | - |
| Transfer to other reserves | - | (52,000) |
| Dividends | (99,352) | (111,730) |
| Subsidiary acquisition | - | (3,860) |
| At year end | 492,716 | 560,463 |
b) Reserves and retained earnings / CONTINUED
| (in thousands of HRK) | 2017 | 2018 |
|---|---|---|
| Legal reserves | 83,601 | 83,601 |
| Fair value reserve | 634 | 905 |
| Other reserves | 22,451 | 135,334 |
| Retained earnings | 649,047 | 663,714 |
| 755,733 | 883,554 | |
| Changes in reserves: | ||
| Legal reserves | ||
| At beginning of the year | 67,199 | 83,601 |
| Transfer from retained earnings | 16,402 | - |
| At year end | 83,601 | 83,601 |
| Fair value reserves | ||
| At beginning of the year | 273 | 634 |
| Change in fair value of financial assets | 357 | 271 |
| Effect of selling financial assets | 4 | - |
| At year end | 634 | 905 |
| Other reserves | ||
| At beginning of the year | 124,614 | 22,451 |
| Merger of subsidiaries (Note 36a) | (64,252) | - |
| Transfer to treasury shares reserve | - | 52,000 |
| Dividends | (37,911) | - |
| Loss coverage - subsidiaries merger | - | 60,883 |
| At year end | 22,451 | 135,334 |
| Retained earnings | ||
| At beginning of the year | 494,911 | 649,047 |
| Result for the year | 231,979 | 239,279 |
| Transfer to legal reserves | (16,402) | - |
| Transfer to other reserves | - | (52,000) |
| Dividends | (61,441) | (111,730) |
| Transfer to other reserves | - | (60,883) |
| At year end | 649,047 | 663,714 |
b) Reserves and retained earnings / CONTINUED
The legal reserve is required under Croatian law and shall be built up at a minimum of 5% of the profit for the year until the total legal reserve reaches 5% of the Company's share capital. As at 31 December 2018, the legal reserves of the Group and the Company amounted to HRK 83,601thousand or 5.00% of the share capital (2017: HRK 83,601 thousand or 5.00% of the share capital). This reserve is not distributable.
On the basis of a decision of the General Assembly and in accordance with the regulations, the Company creates treasury share reserves. As at 31 December 2018, treasury share reserves amounted to HRK 96,815 thousand.
As at 31 December 2018, other reserves of the Group amounted to HRK 120,851 thousand. As at 31 December 2018, other reserves of the Company amounted to HRK 135,334 thousand.
On the basis of a decision adopted by the General Assembly held on 8 May 2018, the Company paid out a dividend of HRK 0.90 per share, which amounted to HRK 111,730 thousand, from which HRK 110,980 thousand was paid in cash, and the remaining part by assigning 17,800 shares of the Company.
As at 31 December 2018, the fair value reserves of the Company and the Group amounted to HRK 905 thousand. This reserves are not distributable and relate to the fair value of financial assets.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 /continued
| GROUP | ||||
|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 |
| Current | ||||
| Bank borrowings | 202,703 | 227,218 | 184,702 | 203,359 |
| Finance lease | - | 29 | - | - |
| 202,703 | 227,247 | 184,702 | 203,359 | |
| Non-current | ||||
| Bank borrowings | 1,861,314 | 2,207,874 | 1,721,764 | 1,978,758 |
| Finance lease | - | 11 | - | - |
| 1,861,314 | 2,207,885 | 1,721,764 | 1,978,758 | |
| Total borrowings | 2,064,017 | 2,435,132 | 1,906,466 | 2,182,117 |
All banks have secured their borrowed funds with a pledge over Group's hotel facilities with a net book value of HRK 2,112,018 thousand (2017: HRK 1,753,532 thousand) (Note 14 and 15).
As at 31 December 2018, the Company had unused lines of credit contracted with financial institutions for 2019 in the total amount of HRK 370,879 thousand, and the Group in the total amount of HRK 373,104.
The carrying amount of borrowings is denominated in EUR. Effective interest rates at the reporting date were as follows:
| 2017 | 2018 | ||||
|---|---|---|---|---|---|
| (in thousands of HRK) | % | (in thousands of HRK) | % | ||
| Borrowings: | |||||
| EUR | 2,016,269 | 1.0%-6.0% | 2,340,377 | 0.99%-6.0% | |
| HRK | 47,748 | 1.0%-2.0% | 94,755 | 1.0%-2.0% | |
| 2,064,017 | 2,435,132 |
| 2017 | ||||
|---|---|---|---|---|
| (in thousands of HRK) | % | (in thousands of HRK) | % | |
| Borrowings: | ||||
| EUR | 1,893,004 | 1.0%-3.0% | 2,169,732 | 0.99-3.0% |
| HRK | 13,462 | 2.0% | 12,385 | 2.0% |
| 1,906,466 | 2,182,117 |
Maturities of non-current borrowings are as follows:
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 |
| 1-3 years | 352,218 | 475,194 | 319,357 | 421,480 |
| 3-6 years | 514,212 | 672,301 | 476,565 | 603,585 |
| Over 6 years | 994,884 | 1,060,390 | 925,842 | 953,693 |
| 1,861,314 | 2,207,885 | 1,721,764 | 1,978,758 |
The carrying amounts and fair value of non-current borrowings are as follows:
| CARRYING AMOUNTS | FAIR VALUE | ||||
|---|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 | |
| Group | 1,861,314 | 2,207,885 | 1,834,567 | 2,178,134 | |
| Company | 1,721,764 | 1,978,758 | 1,710,223 | 1,963,536 |
The fair value is based on discounted cash flows discounted using a rate based on the weighted average interest rate on Group's borrowings of 2.05% (2017: 2.31%). The carrying amounts of current portion of noncurrent borrowings approximate their fair value due to short term maturity.
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 |
| Trade payables | 132,425 | 112,834 | 120,999 | 102,604 |
| Trade payables – related parties | 425 | 52 | 604 | 304 |
| Interest payable | 5,348 | 3,021 | 4,664 | 2,044 |
| Concession fees payable | 45,930 | 53,238 | 44,474 | 51,517 |
| 184,128 | 169,145 | 170,741 | 156,469 | |
| Minus: non-current portion /i/ | (43,436) | (50,476) | (41,980) | (48,755) |
| Current portion | 140,692 | 118,669 | 128,761 | 107,714 |
| Liabilities for dividend | 230 | 251 | 72 | 10 |
| Liabilities to employees | 43,612 | 52,638 | 38,974 | 42,781 |
| Liabilities for taxes and contributions and similar charges |
10,553 | 11,815 | 9,724 | 10,037 |
| Advances received | 31,366 | 38,937 | 30,709 | 34,738 |
| Other liabilities | 8,499 | 19,983 | 6,218 | 12,561 |
| Other current liabilities | 234,952 | 242,293 | 214,458 | 207,841 |
| Total trade payables and other liabilities | 278,388 | 292,769 | 256,438 | 256,596 |
/i/ Separated long-term obligation part for a concession fee for tourist land.
The carrying amount of financial liabilities are denominated in the following currencies:
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 |
| EUR | 10,464 | 11,529 | 9,705 | 6,592 |
| GBP | 246 | 134 | 246 | 134 |
| HRK | 173,418 | 157,482 | 160,790 | 149,743 |
| 184,128 | 169,145 | 170,741 | 156,469 |
| (in thousands of HRK) | Termination benefits and jubilee awards |
Legal proceedings |
Bonuses | Total |
|---|---|---|---|---|
| As at 1 January 2018 | 5,602 | 52,909 | 24,057 | 82,568 |
| Additional provisions | 4,926 | 2,749 | 27,052 | 34,727 |
| Company acquisitions | 1,529 | 19,622 | 345 | 21,496 |
| Used during year | (125) | (6,429) | (22,883) | (29,437) |
| Reversed during year | (757) | (1,654) | (1,163) | (3,574) |
| As at 31 December 2018 | 11,175 | 67,197 | 27,408 | 105,780 |
| 2018 | ||||
| Current portion | 1,060 | - | 27,408 | 28,468 |
| Non-current portion | 10,115 | 67,197 | - | 77,312 |
| (in thousands of HRK) | Termination benefits and jubilee awards |
Legal proceedings |
Bonuses | Total |
|---|---|---|---|---|
| As at 1 January 2018 | 4,665 | 26,932 | 23,288 | 54,885 |
| Additional provisions | 4,343 | 2,039 | 25,827 | 32,209 |
| Used during year | - | - | (22,114) | (22,114) |
| Reversed during year | (709) | (1,167) | (1,163) | (3,039) |
| As at 31 December 2018 | 8,299 | 27,804 | 25,838 | 61,941 |
| 2018 | ||||
| Current portion | 404 | - | 25,838 | 26,242 |
| Non-current portion | 7,895 | 27,804 | - | 35,699 |
The provisions for legal proceedings from previous years primarily refer to the land sold for construction purposes in Dubrovnik in 1995 with a total surface area of 11,239 m2, which was not included in the share capital of subsidiary Dubrovnik – Babin kuk d.d. during the transformation and privatisation. A number of buyers were not able to register their ownership title over the stated land, and consequently initiated legal proceedings with the Municipal Court in Dubrovnik with the aim of terminating their sales contracts and on the basis of expectation of future payments recorded based on the value of the aforementioned land according to the sales contracts.
In the year 2018, the Company made new provisions for legal proceedings in the amount of HRK 2,039 thousand, mainly with regard to two disputes concerning land ownership on the island of Krk: first related to the sold land not partially estimated in the conversion process and the privatisation of Zlatni otok d.d., so the buyer regressively claims the amount that paid to the Republic of Croatia for the not estimated part; and second related to the property owners' request, whose small part of property is included in the Krk camping, for benefit payments from usufruct.
Legal cases of the Group include Company's land ownership disputes and legal proceedings of Imperial d.d. and Hoteli Makarska d.d.
The increase in the Group's legal cases provision during 2018 is the result of additional provisions made on the basis of legal advisers estimations regarding the land ownership disputes and outcomes of ongoing legal cases.
| OWNERSHIP AT 31 DECEMBER | |||
|---|---|---|---|
| Country | 2017 | 2018 | |
| Palme turizam d.o.o. | Croatia | 100.00% | 100.00% |
| Magične stijene d.o.o. | Croatia | 100.00% | 100.00% |
| Bugenvilia d.o.o. | Croatia | 100.00% | 100.00% |
| Valamar hotels & resorts GmbH | Germany | 100.00% | - |
| Imperial d.d. /i/ | Croatia | 55.91% | 56.21% |
| Hoteli Makarska d.d. /i/ | Croatia | - | 46.93% |
| Valamar A GmbH | Austria | - | 100.00% |
| Valamar Obertauern GmbH | Austria | - | 100.00% |
/i/ Non-controlling interest in Group's assets of HRK 401,993 thousand in 2018 (2017: HRK 231,125 thousand) refers to a non-controlling interest in Imperial d.d. of 43.79% or HRK 227,896 thousand (2017: 44.09%) and Hoteli Makarska d.d. of 53.07% or HRK 174,097 thousand.
In the ordinary course of business, the Company is plaintiff and defendant in various legal actions. In the financial statements for the year ended on 31 December 2018, provisions for certain legal proceedings have been made for which the Company anticipates outflows of HRK 27,804 thousand.
A transformation and privatisation audit was carried out for the Company during 2002 and 2003, with a separate audit for Riviera Poreč d.d. (formerly Riviera Holding d.d., Riviera Adria d.d., now Valamar Riviera d.d.) and for companies merged into Valamar Riviera d.d.: Rabac d.d., Zlatni Otok d.d. and Dubrovnik Babin kuk d.d. The reports claim that the transformation and privatisation process had not been performed entirely in accordance with legal regulations, primarily in relation to properties that are not appraised in the Company's equity, but are owned by the Company and are partly recorded in the land records, as well as properties that are reported in the Company's equity, but have not yet been recorded in the land registry. The Company, as well as its legal predecessors, submitted timely objections to the transformation and privatisation audit reports to the State Audit Office, but at the date of issue of these financial statements, they had not received any response from the State Audit Office with respect to the objection of the Company and/or the legal predecessors of the Company.
The outcome of these proceedings is not expected to have a significant impact on the financial position or results of the Company or the Group.
To protect their interests, the Company is conducting a number of legal and/ or administrative procedures, which primarily refer to land excluded from the valuation in the process of transformation and privatisation, but partially registered by the Company and to a portion on which catering and other facilities have been built or are in function (in the Lanterna and Solaris resorts and the Lanterna, Solaris, Istra, Ježevac, Krk and Škrila camping grounds) as well as procedures in relation to land in Dubrovnik, which was appraised, but not registered, and land which has been sold, but was not appraised. The outcome and the result of the legal and other proceedings cannot be predicted with any degree of certainty, but a resolution is expected in accordance with the Act on Tourist and Other Construction Land not Appraised in Transformation and Privatisation Processes, and in relation to land in the area of Dubrovnik, through settlement. On 1 August 2010, the Act on Tourist and Other Construction Land not Appraised in Transformation and Privatisation Processes ("the ZOTZ") entered into force, on the basis of the provisions of which the ownership and co-ownership over land not appraised in the transformation and privatisation processes should finally be determined, and in the spirit of the provisions of which all disputes that are ongoing in relation to unappraised tourist land, primarily the land in the area of Poreč, Rabac and Krk, shall be resolved. The Company initiated procedures in accordance with the provisions of the ZOTZ within the prescribed period, through submission of a request on 31 January 2011 for concessions on tourist land in camping grounds and tourist land in tourist resorts, as well as requests for verification of plots/land groundplan surface area of appraised buildings (hotels, apartments and other appraised buildings) and other prescribed requests. The ownership and/ or co-ownership by the Company of the portion of land not appraised in the transformation and privatisation procedures shall be determined by the outcome of these procedures. The aforementioned procedures have not been completed yet, however, the Company makes so-called advance payments of the concession fees for tourist land to the competent authorities.
The Company is in the process of harmonisation and negotiations with the CERP and the Croatian State Prosecution related to land in Dubrovnik.
The outcome of these procedures is not expected to have a significant impact on the financial statements or results of the Company or the Group.
The contracted capital commitments of the Company in respect to investments in tourism facilities as at 31 December 2018 amounted to HRK 382,492 thousand (2017: HRK 240,421 thousand).
The contracted capital commitments of the Group in respect to investments in tourism facilities as at 31 December 2018 amounted to HRK 522,808 thousand (2017: HRK 312,021 thousand).
The future minimum lease payments under non-cancellable leases are payable as follows:
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 |
| Up to 1 year | - | 154 | - | 154 |
| From 2 to 5 years | - | 498 | - | 498 |
| Total | - | 652 | - | 652 |
The lease agreements represent operating lease for motor vehicles for the period between 1 and 5 years.
Adjustment of profit with cash generated from operations:
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 |
| Profit before taxation | 238,643 | 258,082 | 217,710 | 260,207 |
| Adjustments for: | ||||
| Depreciation and amortisation | 346,414 | 410,522 | 283,466 | 344,692 |
| Net gains on sale of property, plant and equipment and intangible assets |
(1,307) | (3,593) | (1,142) | (3,455) |
| Write-off of property, plant and equipment | 12,008 | 9,436 | 11,635 | 7,903 |
| Provision for impairment of trade and other receivables – net |
(1,382) | 1,027 | (1,310) | (147) |
| Finance costs – net | 29,046 | 21,012 | 24,993 | 18,833 |
| Fair value gains from financial assets – net | (212) | 1,119 | (212) | 1,440 |
| Fair value gains from financial instruments – net and financial assets |
(759) | 6,062 | (759) | 6,062 |
| Increase in provisions – net | 10,682 | 23,211 | 6,708 | 7,050 |
| Share of (profit)/loss in joint venture - net | 24 | 128 | - | - |
| Changes in: | ||||
| - Trade and other receivables | 14,230 | (37,601) | 37,262 | (27,162) |
| - Inventories | (5,251) | (951) | (5,660) | 1,016 |
| - Trade and other payables | (2,906) | 6,472 | 1,434 | 4,209 |
| Cash generated from operations | 639,230 | 694,926 | 574,125 | 620,648 |
Related parties are those companies, which have the power to exercise control over the other party or are under common control or which have a significant influence on the other party in doing business or making financial decisions or is directly or indirectly involved in the management or supervision.
The related parties in the Valamar Group in 2017 and 2018 are: Puntižela d.o.o., Pula (merged 31 March 2017), Epic Goldscheider & Wurmböck Unternehmensberatungsgesellschaft m.b.H, Wien (until the demerger with takeover, based of the agreement from 20 December 2017), EPIC Hospitality Holding GmbH, Wien (until the demerger with takeover, based of the agreement from 20 December 2017 and merger 15 June 2018), Wurmböck Beteiligungs GmbH, Wien (since 16 June 2018), Bugenvillia d.o.o., Dubrovnik, Scapus d.o.o., Zagreb (until 5 April 2017), Satis d.o.o., Zagreb, Enitor d.o.o., Zagreb, Elafiti Babin kuk d.o.o. (merged 29 December 2017), Magične stijene d.o.o., Palme turizam d.o.o., Valamar Hotels and Resorts GmbH, Frankfurt am Main, in liquidation (until 15 June 2018), Imperial d.d., Rab, Valamar A GmbH (since 23 June 2018), Valamar Obertauern GmbH (since 18 August 2018), Hoteli Makarska (since 17 July 2018).
Valamar Riviera d.d., Poreč is the parent company of the subsidiaries:
In 2017, the company EPIC, Goldscheider und Wurmböck Unternehmensberatungsgesellschaft m.b.H., headquartered in Vienna, Plösslgasse 8, Republic of Austria (hereinafter: EPIC) had final control, held 44.11% shares of Valamar Riviera d.d. EPIC and has reported the transfer of all 44.11% of shares to EPIC Hospitality Holding GmbH, headquartered in Vienna, Plösslgasse 8, Republic of Austria (hereinafter: Epic Hospitality), following the agreement of 20 December 2017 on the demerger and status changes - demerger with takeover. On 15 June 2018, Epic Hospitality was merged with the Company with legal effect as of 16 June 2018.
As of 4 January 2017, the Agreement between Imperial d.d. and Valamar Riviera d.d. in relation to the management of the hotel and tourist facilities and amenities is valid, on the basis of the decision adopted by the General Assembly of Imperial d.d. of 12 December 2016. The subject of the Contract is the provision of management and business activities related to hotels, apartments, resorts and/or camping grounds, and other immovable or movable property. A common name for this type of contract is a hotel management agreement or hotel management contract. For the management services rendered, Valamar Riviera d.d. is entitled to compensation for management services consisting of basic and incentive fees, and fees for advisory in respect of the management and implementation of investments. The contract also stipulates reservation centre fees, which are determined as a specified amount (percentage) of the total value of realised reservations.
The contract was concluded for a period of 10 years with the possibility of termination or extension.
As of 30 July 2018, the Agreement between Hoteli Makarska d.d. and Valamar Riviera d.d. in relation to the management of the hotel and tourist facilities and amenities is valid, on the basis of the decision adopted by
the General Assembly of Hoteli Makarska d.d. of 17 July 2018. The subject of the Contract is the provision of management and business activities concerning hotels, apartments and/or resorts and other immovable or movable property. A common name for this type of contract is a hotel management agreement or hotel management contract. For the management services rendered, Valamar Riviera d.d. is entitled to compensation for management services consisting of basic and incentive fees, and fees for advisory services in respect of the management and implementation of investments. The contract also stipulates reservation centre fees, which are determined as a specified amount (percentage) of the total value of realised reservations. Additionally, for the initial and "pre-opening" services executed before the opening of fully renovated and rebranded facilities, Valamar Riviera d.d. is entitled to a compensation the amount of which depends on the accommodation type and size. The contract was concluded for a period of 25 years with the possibility of termination or extension.
| GROUP | ||
|---|---|---|
| (in thousands of HRK) | 2017 | 2018 |
| Sale of services | ||
| Other related parties to the owners and corporate governance bodies | 21 | 1 |
| 21 | 1 | |
| Purchase of services | ||
| Other related parties to the owners and corporate governance bodies | 1,474 | 966 |
| 1,474 | 966 | |
| Liabilities | ||
| Other related parties to the owners and corporate governance bodies | 425 | 52 |
| 425 | 52 |
| (in thousands of HRK) | 2017 | 2018 |
|---|---|---|
| Sale of services | ||
| Subsidiaries | 13,912 | 17,059 |
| Other related parties to the owners and corporate governance bodies | 21 | 1 |
| 13,933 | 17,060 | |
| Purchase of services | ||
| Subsidiaries | 29,736 | 864 |
| Other related parties to the owners and corporate governance bodies | 1,474 | 966 |
| 31,210 | 1,830 | |
| Dividend income | ||
| Subsidiaries | 95 | 6,051 |
| 95 | 6,051 | |
| Trade and other receivables | ||
| Subsidiaries | 3,393 | 1,853 |
| 3,393 | 1,853 | |
| Other receivables | ||
| Subsidiaries | - | 26 |
| - | 26 | |
| Trade and other payables | ||
| Subsidiaries | 179 | 252 |
| Other related parties to the owners and corporate governance bodies | 425 | 52 |
| 604 | 304 | |
| Loans given | ||
| Subsidiaries | 26 | 28 |
| 26 | 28 |
| GROUP | COMPANY | |||
|---|---|---|---|---|
| (in thousands of HRK) | 2017 | 2018 | 2017 | 2018 |
| Salaries | 3,815 | 5,112 | 2,849 | 3,613 |
| Pension contributions | 677 | 872 | 337 | 381 |
| Health insurance contribution | 949 | 1,234 | 693 | 877 |
| Other costs (contribution and taxes) | 1,984 | 2,653 | 1,542 | 1,994 |
| 7,425 | 9,871 | 5,421 | 6,865 |
The key management of the Group in 2018 consists of 17 members (2017: 10 members).
During 2018 the Company paid Supervisory Board fees in the amount of HRK 2,827 thousand (2017: HRK 2,155 thousand).
The merger of Puntižela d.o.o into Valamar Riviera d.d. was entered in the court register on March 31 2017. The legal effect of the merger started as of 1 April 2017. After the registration of the merger, Puntižela d.o.o. ceased to exist and Valamar Riviera d.d. became the universal legal successor of the merged company: all the assets, rights and liabilities of Puntižela d.o.o. were transferred to Valamar Riviera d.d.
The merger of Elafiti Babin kuk d.o.o. into Valamar Riviera d.d. was entered in the court register on 29 December 2017. The legal effect of the merger started as of 30 December 2017. After the registration of the merger, Elafiti Babin kuk d.o.o. ceased to exist and Valamar Riviera d.d. became the universal legal successor of the merged company: all the assets, rights and liabilities of Elafiti Babin kuk d.o.o. were transferred to Valamar Riviera d.d.
The statement of comprehensive income of the Group includes the results of the merged companies for the entire current year. The statement of comprehensive income of the Company includes the results of the merged companies from the merger date.
The assets and liabilities at the merger date in 2017 are:
| PUNTIŽELA d.o.o. | ELAFITI BABIN KUK d.o.o. |
||
|---|---|---|---|
| (in thousands of HRK) | 31 March 2017 | 29 December 2017 | Total |
| Assets | |||
| Property, plant and equipment (Note 14) | 29,294 | 229,500 | 258,794 |
| Intangible assets (Note 16) | 6,600 | - | 6,600 |
| Deferred tax assets (Note 25) | 128 | 15,474 | 15,602 |
| Trade and other receivables | 143 | 220 | 363 |
| Cash and cash equivalents | 336 | 2 | 338 |
| Liabilities | |||
| Payables and other liabilities | (10,122) | (117,325) | (127,447) |
| Net assets acquired | 26,379 | 127,871 | 154,250 |
| Less: elimination of the Company's share in subsidiary (Note 17) |
(36,466) | (182,036) | (218,502) |
| Net effect on equity at merger (Note 28) | (10,087) | (54,165) | (64,252) |
The cross-border merger of EPIC Hospitality Holding GmbH, Vienna into Valamar Riviera d.d. was entered in the court register on 15 June 2018. The legal effect of the said merger started as of 16 June 2018. On the date of registration of the merger, the merged company ceased to exist, and Valamar Riviera d.d. became the universal legal successor of EPIC Hospitality Holding GmbH and took over all its assets and liabilities.
| EPIC HOLDING HOSPITALITY GmbH 15 June 2018 |
|
|---|---|
| Assets | |
| Cash and cash equivalents | 333 |
| Net assets acquired | 333 |
| Net effect on equity at merger (capital reserves) | 333 |
The assets and liabilities at the merger date in 2018 are:
Valamar Riviera d.d., together with AZ, acquired control of HOTELI MAKARSKA d.d. on 31 July 2018 when all decisions, adopted at the General Meeting of Hoteli Makarska d.d. held on 17 July 2018, were entered in the court register. On the said meeting, the Statute was changed and the members of the Supervisory Board were replaced.
The acquisition cost was formed based on fair value of consideration transferred in the amount of HRK 172,577 thousand.
The Company incurred acquisition relating cost of HRK 1,380 thousand of legal fees and due diligence costs. These cost have been included in other operating expenses.
| (in thousands of HRK) | Fair value at acquisition date |
|---|---|
| Property, plant and equipment | 336,621 |
| Intangible assets | 16 |
| Deferred tax assets | 824 |
| Financial assets | 296 |
| Inventories | 1,166 |
| Trade and other receivables | 20,957 |
| Cash and cash equivalents | 40,944 |
| Assets acquired | 400,824 |
| Long term liabilities | (19,562) |
| Deferred tax liabilities | (17,755) |
| Provisions | (21,022) |
| Short term liabilities | (189) |
| Trade and other payables | (22,898) |
| Liabilities acquired | (81,426) |
| Total identifiable net assets acquired | 319,398 |
amount of HRK 146,821 thousand.
The fair value of properties and land at the acquisition date differs from the carrying values. The fair value of properties and land was determined by value in use which is based on discounted cash flows for individual properties (cash-generating units). The fair value of other assets and liabilities at the acquisition date corresponds to the carrying value of these assets. On the day of acquisition, the share of non-controlling interests in the
equity of the acquired company amounts to 44.55%, according to what is stated non-controlling interest in the
179ANNUAL REPORT 2018
| (in thousands of HRK) | Fair value at acquisition date |
|---|---|
| Non-current assets | 337,758 |
| Current assets | 63,066 |
| Non-current liabilities | (58,340) |
| Current liabilities | (23,086) |
| Fair value of net assets acquired | 319,398 |
| Non-controlling interest (44.55%) | 146,821 |
| Fair value of net assets after non-controlling interest | 172,577 |
| Acquisition cost | 172,577 |
| Cash acquired Hoteli Makarska d.d. | (40,944) |
| Acquisition cost, net of cash acquired | 131,633 |
The Company has acquired directly a 10% stake and indirectly, via the company Valamar A GmbH, a 90% stake in Valamar Obertauern GmbH, based in Obertauern, Austria.
The acquisition cost was formed based on the fair value of consideration transferred in the amount of HRK 17,565 thousand.
The Company incurred acquisition relating cost of HRK 809 thousand of legal fees and due diligence costs. These cost have been included in other operating expenses.
| (in thousands of HRK) | Fair value at acquisition date |
|---|---|
| Property, plant and equipment | 61,594 |
| Intangible assets | 313 |
| Deferred tax assets | 3,328 |
| Trade and other receivables - long term assets | 15 |
| Financial assets | 24 |
| Inventories | 184 |
| Trade and other receivables - short term assets | 133 |
| Cash and cash equivalents | 4,991 |
| Assets acquired | 70,582 |
| Long term liabilities | (47,199) |
| Deferred tax liabilities | (2,323) |
| Provisions | (53) |
| Trade and other payables | (3,442) |
| Liabilities acquired | (53,017) |
| Total identifiable net assets acquired | 17,565 |
| (in thousands of HRK) | Fair value at acquisition date |
|---|---|
| Non-current assets | 65,274 |
| Current assets | 5,308 |
| Non-current liabilities | (49,575) |
| Current liabilities | (3,442) |
| Fair value of net assets acquired | 17,565 |
| Acquisition cost | 17,565 |
| Cash acquired Valamar Obertaurn GmbH | (4,991) |
| Acquisition cost, net of cash acquired | 12,574 |
The legal effect of the Decision adopted by the Commercial Court in Split dated 21 November 2018, which confirmed the Bankruptcy Plan (discussed at the bankruptcy creditors' hearing on 8 November 2018) of the company HELIOS FAROS d.d. u stečaju, from Stari Grad, is expected in the first quarter of 2019. The bankruptcy plan has been prepared following the Investment and recapitalisation offer made for the company HELIOS FAROS d.d., which was submitted on 15 May 2017 by Valamar Riviera d.d. together with PBZ Croatia osiguranje dioničko društvo za upravljanje obveznim mirovinskim
fondovima, a mandatory pension fund company from Zagreb (hereinafter: PBZ CO). The Company and PBZ CO have established a cooperation to start their joint activity regarding the investment and recapitalisation of the company HELIOS FAROS d.d. u stečaju.
After the reporting date, the Company and the Group did not have any other significant events which would require adjustment or disclosure in these financial statements.
Stancija Kaligari 1 52440 Poreč, Hrvatska T +385 (52) 408 002 F +385 (52) 451 608 E [email protected] W www.valamar.com
Stancija Kaligari 1 52440 Poreč, Hrvatska T +385 (52) 408 159 F +385 (52) 451 608 E [email protected] W www.valamar-riviera.com
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